SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
STANDARD FINANCIAL, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
[LETTERHEAD]
August 6, 1997
Dear Stockholder,
I am pleased to invite you to attend a special meeting (the "Special
Meeting") of Stockholders of Standard Financial, Inc. ("Standard") which will
begin at 10:00 a.m. local time on September 4, 1997 at Marie's Ashton Place, 341
West 75th Street, Willowbrook, Illinois.
At the Special Meeting, you will be asked to approve the Agreement and Plan
of Reorganization, dated as of March 16, 1997, and as amended (the
"Reorganization Agreement"), by and among Standard, TCF Financial Corporation
("TCF") and TCF National Bank Illinois, a subsidiary of TCF. The Reorganization
Agreement provides for, among other things, a strategic combination of Standard
and TCF (the "Combination").
If the Combination occurs, the Reorganization Agreement provides that each
outstanding share of common stock of Standard, par value $.01 per share (the
"Standard Common Stock"), will be exchangeable for cash and/or shares of common
stock of TCF, par value $.01 per share (the "TCF Common Stock"), according to a
formula (the "Consideration Formula"). The amount of cash and/or shares of TCF
Common Stock to be received in the Combination is determined by the average
daily closing sales price of TCF Common Stock during the 30 consecutive full
trading days ending on the third business day immediately prior to either the
Special Meeting or the date on which the last regulatory approval required to
consummate the Combination has been obtained and all required waiting periods
have expired, whichever date is closer to the effective date of the Combination
(the "Average TCF Stock Price"). Based on the Average TCF Stock Price for the
applicable 30-day period ending on July 8, 1997, the Consideration Formula would
have yielded an amount of consideration equal to $25.59 per share of Standard
Common Stock (assuming that the value of the TCF Common Stock portion of the
consideration was equal to the Average TCF Stock Price on that date).
Stockholders of Standard will have the right to elect to receive cash, TCF
Common Stock or a combination of the two in exchange for their shares, subject
to certain limitations, as described in the enclosed Proxy Statement/Prospectus.
If the Combination occurs, Standard stockholders will no longer hold any
interest in Standard, other than through their interest in shares of TCF Common
Stock, if any. TCF Common Stock trades on the New York Stock Exchange under the
symbol "TCB."
The Combination is expected to be tax-free to Standard stockholders for
federal income tax purposes with respect to any TCF Common Stock received in
exchange for Standard Common Stock. Any cash received, however, may be subject
to federal income tax, as more fully described in the accompanying Proxy
Statement/Prospectus.
I encourage you to read carefully the Notice of Special Meeting and Proxy
Statement/Prospectus, which accompany this letter, as they contain more
information about the Reorganization Agreement and the transactions contemplated
thereby.
The proposed Combination must be approved by Standard's stockholders. It is
important that your shares are represented at the Special Meeting, whether or
not you plan to attend. I urge you to cast your vote as soon as possible. To
vote, simply complete, date, sign and return the enclosed proxy card in the
enclosed postage-paid envelope. Even if you may have voted by proxy, you may
attend the Special Meeting and vote your shares in person.
Standard's Board of Directors has received an opinion of Wasserstein Perella
& Co., Inc., Standard's financial advisor, to the effect that, as of the date of
such opinion, the consideration to be received by the stockholders of Standard
in the Combination is fair to the Standard stockholders from a financial point
of view.
AFTER CAREFUL CONSIDERATION, THE STANDARD BOARD OF DIRECTORS HAS DETERMINED
THAT THE TERMS OF THE REORGANIZATION AGREEMENT ARE FAIR TO, AND IN THE BEST
INTERESTS OF, STANDARD AND ITS STOCKHOLDERS. ACCORDINGLY, THE STANDARD BOARD OF
DIRECTORS UNANIMOUSLY APPROVED THE REORGANIZATION AGREEMENT AND RECOMMENDS THAT
YOU VOTE "FOR" THE APPROVAL AND ADOPTION OF THE REORGANIZATION AGREEMENT AND
EACH OF THE TRANSACTIONS CONTEMPLATED THEREBY.
Sincerely,
[LOGO]
David H. Mackiewich
President and Chief Executive Officer
P.S. Until you receive a letter which explains how to exchange your shares of
Standard Common Stock for cash and/or shares of TCF Common Stock, please
hold on to your Standard stock certificates. PLEASE DO NOT SEND IN YOUR
STANDARD STOCK CERTIFICATES AT THIS TIME.
[LETTERHEAD]
STANDARD FINANCIAL, INC.
800 BURR RIDGE PARKWAY
BURR RIDGE, ILLINOIS 60521
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON SEPTEMBER 4, 1997
A Special Meeting of Stockholders (the "Special Meeting"), of Standard
Financial, Inc., a Delaware corporation, ("Standard"), will be held at 10:00
a.m. local time on September 4, 1997 at Marie's Ashton Place, 341 West 75th
Street, Willowbrook, Illinois to consider and vote upon:
1. A proposal to approve and adopt the Agreement and Plan of
Reorganization, dated as of March 16, 1997, and as amended (the
"Reorganization Agreement"), by and among Standard, TCF Financial
Corporation, a Delaware corporation ("TCF") and TCF National Bank Illinois
("TCF Illinois"), a national bank subsidiary of TCF, and each of the
transactions contemplated thereby. The Reorganization Agreement provides
for, among other things, a strategic combination of Standard and TCF (the
"Combination"). The Combination, which is described fully in the
accompanying Proxy Statement/Prospectus, will occur in several
contemporaneous steps: FIRST, Standard will form a new, wholly-owned interim
savings association ("Interim Bank"), and Interim Bank will form a new,
wholly-owned subsidiary ("New Sub") under Delaware law; SECOND, New Sub will
merge with and into Standard, with Standard being the surviving corporation,
with certificates representing common stock of Standard being converted into
an equivalent number of shares of common stock of Interim Bank; THIRD,
Standard will dissolve and, pursuant to the dissolution, will transfer all
of its assets (including the stock of Standard Federal Bank for savings, a
Standard subsidiary ("Standard Bank")) to Interim Bank, and Interim Bank
will assume all of Standard's liabilities and obligations; FOURTH, Interim
Bank will merge with and into TCF Illinois, with TCF Illinois as the
resulting institution; and FIFTH, Standard Bank will merge with and into TCF
Illinois, with TCF Illinois as the resulting institution. The transactions
contemplated by the Reorganization Agreement are more fully described in the
accompanying Proxy Statement/Prospectus. A copy of the Reorganization
Agreement is attached as Appendix A to the Proxy Statement/Prospectus.
2. Such other business as may properly come before the Special Meeting,
including any motion to adjourn the Special Meeting, if necessary, to
solicit additional proxies, or any adjournments or postponements thereof.
The Board of Directors has fixed the close of business on July 11, 1997 as
the record date (the "Record Date") for determining which stockholders are
entitled to notice of, and to vote at, the Special Meeting, or any adjournments
or postponements thereof.
Standard stockholders may exercise dissenters' rights in connection with the
proposed Combination, as described in greater detail in the accompanying Proxy
Statement/Prospectus. See "THE COMBINATION--Dissenters' Rights."
THE STANDARD BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
STOCKHOLDERS VOTE FOR THE PROPOSAL TO APPROVE AND ADOPT
THE REORGANIZATION AGREEMENT AND EACH OF THE
TRANSACTIONS CONTEMPLATED THEREBY.
By order of the Board of Directors,
[LOGO]
Leonard A. Metheny, Sr.
Vice President and Secretary
Burr Ridge, Illinois
August 6, 1997
PLEASE COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY PROMPTLY
IN THE ENCLOSED POSTAGE-PAID ENVELOPE WHETHER
OR NOT YOU PLAN TO ATTEND THE MEETING
STANDARD FINANCIAL, INC. TCF FINANCIAL CORPORATION
800 Burr Ridge Parkway 801 Marquette Avenue, Suite 302
Burr Ridge, Illinois 60521 Minneapolis, MN 55402
PROXY STATEMENT
FOR
SPECIAL MEETING OF STOCKHOLDERS OF
STANDARD FINANCIAL, INC.
TO BE HELD ON
SEPTEMBER 4, 1997
------------------------
TCF FINANCIAL CORPORATION
PROSPECTUS
FOR
SHARES OF COMMON STOCK
OF TCF FINANCIAL CORPORATION
TO BE ISSUED PURSUANT TO THE
AGREEMENT AND PLAN OF REORGANIZATION,
DATED AS OF MARCH 16, 1997, AND AS AMENDED,
BY AND AMONG
STANDARD FINANCIAL, INC., TCF FINANCIAL CORPORATION
AND TCF NATIONAL BANK ILLINOIS
------------------------
This Proxy Statement/Prospectus is being furnished in connection with the
solicitation of proxies by the Board of Directors of Standard Financial, Inc.
("Standard") to be used at a special meeting of its stockholders (the "Special
Meeting"). The Special Meeting will be held on September 4, 1997 at Marie's
Ashton Place, 341 West 75th Street, Willowbrook, Illinois, commencing at 10:00
a.m., local time. The purpose of the Special Meeting is to consider and vote
upon a proposal to approve and adopt the Agreement and Plan of Reorganization,
dated as of March 16, 1997, and as amended (the "Reorganization Agreement"), by
and among Standard, TCF Financial Corporation ("TCF") and TCF National Bank
Illinois ("TCF Illinois"), a national bank subsidiary of TCF, and the
transactions contemplated thereby. A copy of the Reorganization Agreement is
attached as Appendix A to this Proxy Statement/Prospectus and incorporated by
reference herein. As more fully described herein, the Reorganization Agreement
provides for, among other things, a strategic combination of Standard and TCF
(the "Combination"). The Combination, which is described fully in the
accompanying Proxy Statement/Prospectus, will occur in the following
contemporaneous steps: FIRST, Standard will form a new, wholly-owned interim
savings association ("Interim Bank") and Interim Bank will form a new,
wholly-owned subsidiary ("New Sub") under Delaware law; SECOND, New Sub will
merge with and into Standard, with Standard being the surviving corporation and
a wholly-owned subsidiary of Interim Bank, with certificates representing common
stock of Standard being converted into an equivalent number of shares of common
stock of Interim Bank; THIRD, Standard will dissolve and, pursuant to the
dissolution, will transfer all of its assets (including the stock of Standard
Federal Bank for savings, a Standard subsidiary ("Standard Bank")) to Interim
Bank, and Interim Bank will assume all of Standard's liabilities and
obligations; FOURTH, Interim Bank will be merged with and into TCF Illinois,
with TCF Illinois as the resulting institution; and FIFTH, Standard Bank will be
merged with and into TCF Illinois, with TCF Illinois as the resulting
institution. The first three steps of the Combination are sometimes referred to
in this Proxy Statement/Prospectus as the "Conversion/ Reincorporation."
In accordance with the terms of the Reorganization Agreement, the
Combination will occur after approval of the Reorganization Agreement by the
stockholders of Standard, the receipt of all requisite
regulatory approvals, the expiration of the applicable waiting periods and the
satisfaction or waiver of all other conditions. At the effective time of the
Combination, each share of common stock of Standard, par value $.01 per share
("Standard Common Stock"), outstanding immediately prior to consummation of the
Combination (other than dissenters' shares, treasury shares or shares held by
TCF or any subsidiary thereof except for shares held in a fiduciary capacity or
in satisfaction of a debt previously contracted) shall be exchangeable for an
amount of cash and/or shares of common stock of TCF, par value $.01 per share
(including the associated preferred share purchase rights described in
"DESCRIPTION OF TCF CAPITAL STOCK--TCF Common Stock--Preferred Share Purchase
Rights") (the "TCF Common Stock"), based on a formula set forth in the
Reorganization Agreement (the "Consideration Formula"). See "SUMMARY--Terms of
the Combination" and "THE COMBINATION--The Consideration Formula." Subject to
limitations, stockholders of Standard will be offered an election to receive
cash, TCF Common Stock, or a combination of the two, in exchange for their
shares, as described in this Proxy Statement/ Prospectus. See "THE
COMBINATION--Consideration Election." No fractional shares of TCF Common Stock
will be issued, and cash will be paid in lieu thereof.
Standard Common Stock and TCF Common Stock are traded on the Nasdaq National
Market and the New York Stock Exchange, respectively. The closing market prices
of Standard Common Stock and TCF Common Stock were $21.125 and $44.625,
respectively, on March 14, 1997 (the last trading day prior to the public
announcement of the Combination) and were $24.75 and $50.375, respectively, on
July 8, 1997.
TCF has filed a Registration Statement on Form S-4 pursuant to the
Securities Act of 1933, as amended, with respect to up to 6,000,000 shares of
TCF Common Stock to be issued in connection with the Combination. The
Consideration Formula, and the determination of the number of shares of TCF
Common Stock to be issued and the amount of cash to be paid as a result of the
Combination, are described herein.
This Proxy Statement/Prospectus constitutes a Prospectus of TCF with respect
to the shares of TCF Common Stock to be issued in connection with the
Combination.
STANDARD STOCK CERTIFICATES SHOULD NOT BE RETURNED TO STANDARD UNTIL AFTER
RECEIPT OF A LETTER OF TRANSMITTAL TO BE PROVIDED TO STANDARD STOCKHOLDERS UPON
CONSUMMATION OF THE COMBINATION.
IF YOU HAVE ANY QUESTIONS, PLEASE CALL GEORGESON & COMPANY INC., WHO IS
ACTING AS THE INFORMATION AGENT, AT (800) 223-2064.
------------------------
THE SECURITIES TO BE ISSUED IN THE COMBINATION HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION, THE OFFICE OF THRIFT
SUPERVISION, ANY STATE SECURITIES COMMISSION OR ANY OTHER GOVERNMENTAL AGENCY,
NOR HAS THE COMMISSION, THE OFFICE OF THRIFT SUPERVISION, ANY STATE COMMISSION
OR ANY OTHER AGENCY PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROXY
STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE SECURITIES OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS, DEPOSITS OR OTHER
OBLIGATIONS OF ANY BANK OR SAVINGS ASSOCIATION AND ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE BANK INSURANCE FUND, THE SAVINGS
ASSOCIATION INSURANCE FUND OR ANY OTHER GOVERNMENTAL AGENCY.
------------------------
This Proxy Statement/Prospectus, the accompanying notice and form of proxy
are first being mailed to stockholders of Standard on or about August 6, 1997.
2
TABLE OF CONTENTS
PAGE
-----
AVAILABLE INFORMATION...................................................................................... 4
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE............................................................ 4
SUMMARY.................................................................................................... 6
COMPARATIVE MARKET PRICE DATA.............................................................................. 14
COMPARATIVE UNAUDITED PER-SHARE DATA....................................................................... 15
SELECTED HISTORICAL AND UNAUDITED PRO FORMA COMBINED FINANCIAL DATA........................................ 17
THE SPECIAL MEETING........................................................................................ 22
THE COMBINATION............................................................................................ 24
General.................................................................................................. 24
Background of and Reasons for the Combination............................................................ 24
Opinion of Financial Advisor to Standard................................................................. 29
Opinion of Financial Advisor to TCF...................................................................... 33
Structure of the Combination............................................................................. 37
Effects of the Combination............................................................................... 38
The Consideration Formula................................................................................ 40
Consideration Election................................................................................... 44
Conditions to the Combination............................................................................ 46
Regulatory Approvals..................................................................................... 47
Business Pending the Combination......................................................................... 48
Certain Covenants........................................................................................ 50
Effective Time of the Combination; Termination and Amendment............................................. 51
Termination Fees......................................................................................... 52
Interests of Certain Persons in the Combination.......................................................... 54
Resale Considerations With Respect to the TCF Common Stock............................................... 56
Certain Federal Income Tax Consequences.................................................................. 57
Accounting Treatment of the Combination.................................................................. 59
Dissenters' Rights....................................................................................... 59
Expenses of the Combination.............................................................................. 62
DESCRIPTION OF TCF CAPITAL STOCK........................................................................... 62
COMPARISON OF THE RIGHTS OF STOCKHOLDERS................................................................... 65
RECENT DEVELOPMENTS........................................................................................ 74
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION......................................................... 75
ADJOURNMENT OF SPECIAL MEETING............................................................................. 86
LEGAL MATTERS.............................................................................................. 86
TAX OPINIONS............................................................................................... 86
EXPERTS.................................................................................................... 87
OTHER MATTERS.............................................................................................. 87
APPENDIX A: Agreement and Plan of Reorganization, dated as of March 16, 1997, and as amended,
by and among Standard Financial, Inc., TCF Financial Corporation and TCF
National Bank Illinois......................................................... A
APPENDIX B: Opinion of Wasserstein Perella & Co., Inc........................................ B
APPENDIX C: Section 262 of the Delaware General Corporation Law (Dissenters' Rights)......... C
------------------------
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION
NOT CONTAINED IN THIS PROXY STATEMENT/PROSPECTUS, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION SHOULD NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY TCF OR STANDARD. THIS PROXY STATEMENT/PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO PURCHASE, THE
SECURITIES OFFERED BY THIS PROXY STATEMENT/ PROSPECTUS, OR THE SOLICITATION OF A
PROXY, IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH AN OFFER,
SOLICITATION OF AN OFFER OR PROXY SOLICITATION. NEITHER THE DELIVERY OF THIS
PROXY STATEMENT/PROSPECTUS NOR ANY DISTRIBUTION OF THE SECURITIES OFFERED
PURSUANT TO THIS PROXY STATEMENT/PROSPECTUS SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE INFORMATION SET
FORTH HEREIN OR IN THE AFFAIRS OF TCF OR STANDARD OR ANY OF THEIR RESPECTIVE
SUBSIDIARIES SINCE THE DATE OF THIS PROXY STATEMENT/ PROSPECTUS.
------------------------
3
AVAILABLE INFORMATION
TCF has filed with the Securities and Exchange Commission (the "Commission")
a Registration Statement on Form S-4 (the "TCF Registration Statement") under
the Securities Act of 1933, as amended (the "Securities Act"), with respect to
the shares of TCF Common Stock which may be issued in connection with the
Combination described herein. As permitted by the rules and regulations of the
Commission, this Proxy Statement/Prospectus omits certain information, exhibits
and undertakings contained in the TCF Registration Statement. For further
information, reference is made to the TCF Registration Statement, including all
amendments thereto, and all exhibits and schedules filed as part thereof or
incorporated by reference therein. Statements contained herein concerning
provisions of documents are necessarily summaries of the provisions, and each
statement is qualified in its entirety by reference to the copy of the
applicable document filed with the Commission. The TCF Registration Statement,
and all exhibits and schedules filed as a part thereof, can be inspected and
copied at prescribed rates at the public reference facilities maintained by the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the Commission's regional offices at Citicorp Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661, and 7 World Trade
Center, New York, New York 10048. The Commission maintains a web site that
contains reports, proxy statements, registration statements and other
information regarding registrants that file electronically with the Commission
at http://www.sec.gov.
TCF and Standard are currently subject to the informational requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith, file reports, proxy statements and other information with
the Commission. Copies of such materials may be obtained at prescribed rates
from the Commission. In addition, with respect to Standard, such materials may
also be inspected and copied at the public reference facilities maintained by
the Office of Thrift Supervision (the "OTS") at the Office of Public
Information, Office of Thrift Supervision, 1700 G Street, N.W., Washington, D.C.
20552, and may be obtained at prescribed rates from such office by written
request. The TCF Common Stock is listed for quotation on the New York Stock
Exchange ("NYSE"). The Standard Common Stock is quoted on the Nasdaq National
Market. Consequently, reports, proxy statements and other information concerning
TCF and Standard can also be inspected at the offices of the NYSE, 20 Broad
Street, New York, New York 10005 (with respect to TCF) and at the offices of the
Nasdaq National Market, 1735 K Street, N.W., Washington, D.C. 20006 (with
respect to Standard).
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by TCF (File No. 0-16431) and Standard (File
No. 0-24082) with the Commission pursuant to the Exchange Act are incorporated
herein by reference:
(a) TCF's (i) Annual Report on Form 10-K for the year ended December 31,
1996; (ii) Quarterly Report on Form 10-Q for the quarter ended March 31,
1997, and (iii) Current Reports on Form 8-K, dated January 27, 1997,
February 19, 1997, March 5, 1997, March 21, 1997, April 11, 1997, May 21,
1997, May 30, 1997, June 5, 1997, June 12, 1997 and July 1, 1997;
(b) Standard's (i) Annual Report on Form 10-K for the year ended
December 31, 1996 as amended by its Amended Annual Report on Form 10-K/A for
the year ended December 31, 1996, dated July 16, 1997; (ii) Quarterly Report
on Form 10-Q for the quarter ended March 31, 1997; and (iii) Current Report
on Form 8-K, dated March 20, 1997; and
(c) All other documents filed by either TCF or Standard pursuant to
Sections 13(a), 13(c), 14, or 15(d) of the Exchange Act, subsequent to the
date of this Proxy Statement/Prospectus and prior to the Special Meeting.
In addition, on June 24, 1997, TCF acquired Winthrop Resources Corporation,
a Minnesota corporation ("Winthrop"), in a tax-free stock-for-stock merger
transaction in which TCF issued approximately 6,700,000 shares of TCF Common
Stock. Certain financial information of Winthrop is incorporated by
4
reference from exhibits to TCF's Registration Statement on Form S-4 (File No.
333-25905) on file with the Commission. See "RECENT DEVELOPMENTS--Winthrop."
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Proxy Statement/Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Proxy
Statement/Prospectus.
THIS PROXY STATEMENT/PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH
ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. TCF AND STANDARD HEREBY
UNDERTAKE TO PROVIDE WITHOUT CHARGE TO EACH PERSON, INCLUDING ANY BENEFICIAL
OWNER, TO WHOM A COPY OF THIS PROXY STATEMENT/PROSPECTUS HAS BEEN DELIVERED,
UPON WRITTEN OR ORAL REQUEST OF ANY SUCH PERSON, A COPY OF ANY AND ALL OF THE
DOCUMENTS REFERRED TO ABOVE THAT HAVE BEEN OR MAY BE INCORPORATED BY REFERENCE,
OTHER THAN EXHIBITS TO SUCH DOCUMENTS (UNLESS SUCH EXHIBITS ARE SPECIFICALLY
INCORPORATED BY REFERENCE INTO SUCH DOCUMENTS). DOCUMENTS RELATING TO TCF ARE
AVAILABLE UPON WRITTEN OR ORAL REQUEST FROM MR. GREGORY J. PULLES, SECRETARY,
TCF FINANCIAL CORPORATION, 801 MARQUETTE AVENUE, SUITE 302, MINNEAPOLIS,
MINNESOTA 55402; TELEPHONE NUMBER (612) 475-7910. DOCUMENTS RELATING TO STANDARD
ARE AVAILABLE UPON WRITTEN OR ORAL REQUEST FROM MR. LEONARD A. METHENY, SR.,
VICE PRESIDENT/ SECRETARY, STANDARD FINANCIAL, INC., 800 BURR RIDGE PARKWAY,
BURR RIDGE, ILLINOIS 60521; TELEPHONE NUMBER (630) 986-4900. TO ENSURE TIMELY
DELIVERY OF SUCH DOCUMENTS, ANY REQUEST SHOULD BE MADE BEFORE AUGUST 25, 1997.
5
SUMMARY
THE FOLLOWING IS A SUMMARY OF CERTAIN INFORMATION CONTAINED ELSEWHERE IN
THIS PROXY STATEMENT/ PROSPECTUS AND IS NOT INTENDED TO BE A COMPLETE STATEMENT
OF THE MATTERS DESCRIBED HEREIN. REFERENCE IS MADE TO, AND THIS SUMMARY IS
QUALIFIED IN ITS ENTIRETY BY, THE MORE DETAILED INFORMATION CONTAINED ELSEWHERE
IN THIS PROXY STATEMENT/PROSPECTUS AND IN THE APPENDICES ATTACHED HERETO,
INCLUDING THE REORGANIZATION AGREEMENT, A COPY OF WHICH IS ATTACHED HERETO AS
APPENDIX A.
THE SPECIAL MEETING
The Special Meeting will be held at Marie's Ashton Place, 341 West 75th
Street, Willowbrook, Illinois on September 4, 1997 at 10:00 a.m., local time.
Only the holders of record of the outstanding shares of Standard Common Stock at
the close of business on July 11, 1997 (the "Record Date") will be entitled to
notice of and to vote at the Special Meeting. At the Record Date, 16,210,435
shares of Standard Common Stock were outstanding and entitled to vote.
At the Special Meeting, Standard stockholders will be asked to consider and
vote upon (i) a proposal to approve the Reorganization Agreement and the
transactions contemplated thereby and (ii) the transaction of such other
business as may properly come before the Special Meeting, including any motion
to adjourn the Special Meeting, if necessary, to solicit additional proxies, or
any adjournments or postponements of the Special Meeting. The affirmative vote
of the holders of a majority of the outstanding shares of Standard Common Stock
is required to approve the Reorganization Agreement and the transactions
contemplated thereby. Assuming a quorum is present, the affirmative vote of the
holders of a majority of the outstanding shares of Standard Common Stock, voting
in person or by proxy, would be required to approve a motion to adjourn the
Special Meeting, if necessary. See "THE SPECIAL MEETING."
As of the Record Date, the directors and executive officers of Standard and
their affiliates beneficially owned and were entitled to vote in the aggregate
803,164 shares, or 4.95%, of the issued and outstanding Standard Common Stock,
excluding shares subject to options and shares that may be deemed beneficially
owned because a director or officer serves as a fiduciary.
THE PARTIES TO THE COMBINATION
TCF. TCF is a Delaware corporation and a bank holding company under the
Bank Holding Company Act, as amended (the "BHCA"). TCF's direct and indirect
wholly-owned banking subsidiaries are TCF National Bank Minnesota ("TCF
Minnesota"), TCF National Bank Wisconsin ("TCF Wisconsin"), TCF Illinois, Great
Lakes National Bank Michigan ("Great Lakes Michigan"), Great Lakes National Bank
Ohio ("Great Lakes Ohio") and TCF National Bank Colorado ("TCF Colorado"),
(collectively TCF Minnesota, TCF Wisconsin, TCF Illinois, Great Lakes Michigan,
Great Lakes Ohio and TCF Colorado are called the "TCF Banks"), all of which are
national bank associations. TCF Minnesota currently conducts business through 75
branch offices in Minnesota. TCF Wisconsin currently conducts business through
27 branch offices in Wisconsin. TCF Illinois currently conducts business through
35 branch offices in Illinois. Great Lakes Michigan currently conducts business
through 56 branch offices in Michigan. Great Lakes Ohio currently conducts
business through eight branches in Ohio. TCF Colorado opened its first five
branches in Colorado on July 1, 1997. In addition, a consumer finance company
subsidiary of TCF Minnesota, TCF Financial Services, Inc., conducts business
through 61 offices in 16 states. Other direct or indirect subsidiaries of TCF
sell insurance products, annuities and mutual funds, make mortgage loans and
engage in certain other activities. On June 24, 1997, TCF acquired Winthrop, a
financial services company based in Minnetonka, Minnesota, which leases
computers, telecommunications equipment, point-of-sale systems and other
business-essential equipment to companies throughout the United States. See
"RECENT DEVELOPMENTS--Winthrop." On May 23, 1997, Great Lakes Ohio entered into
a purchase and sale agreement pursuant to which the eight branches of Great
Lakes Ohio will
6
be sold to The Fifth Third Bank of Cincinnati, Ohio. See "RECENT
DEVELOPMENTS--Ohio Branches." The deposits of the TCF Banks are insured to the
maximum extent provided by law by the Savings Association Insurance Fund
("SAIF") and the Bank Insurance Fund ("BIF"), which are administered by the
Federal Deposit Insurance Corporation ("FDIC"). The principal business of the
TCF Banks consists of attracting deposits from the general public and investing
such deposits, together with other funds, in consumer loans, residential real
estate loans, commercial real estate loans, commercial business loans and
mortgage-backed and investment securities. TCF's executive offices are located
at 801 Marquette Avenue, Suite 302, Minneapolis, Minnesota 55402, and its
telephone number is (612) 661-6500. At March 31, 1997, TCF had total assets of
$7 billion, total liabilities of $6.4 billion and stockholders' equity of $541.9
million.
STANDARD. Standard is a Delaware corporation which was organized as a
holding company for Standard Bank in connection with Standard Bank's conversion
from a federally chartered mutual savings association to a federally chartered
stock association in July 1994. Standard Bank currently operates 14 full-service
branches on the southwest side of Chicago and in the nearby western and
southwestern suburbs. The principal business of Standard Bank is attracting
retail deposits from the general public and investing those deposits, together
with funds generated from other operations, primarily in residential mortgage
loans secured by one- to- four family, owner-occupied homes. To a lesser extent,
Standard Bank also originates and purchases residential mortgage loans secured
by multi-family properties, consumer loans, commercial real estate loans, home
equity lines of credit and other loans. Standard has four direct or indirect
subsidiaries: Standard Bank; Capital Equities Corporation; Standard Financial
Mortgage Corporation; and SFB Insurance Agency, Inc. (sometimes referred to
collectively in this Proxy Statement/ Prospectus as the "Standard
Subsidiaries"). The deposits of Standard Bank are insured to the maximum extent
provided by law by the SAIF, which is administered by the FDIC. Standard's
principal executive offices are located at 800 Burr Ridge Parkway, Burr Ridge,
Illinois 60521-6486, and its telephone number is (630) 986-4900. At March 31,
1997, Standard had total assets of $2.5 billion, total liabilities of $2.2
billion and stockholders' equity of $271.3 million.
All information contained in this Proxy Statement/Prospectus relating to TCF
has been provided by TCF, and all information contained herein relating to
Standard has been provided by Standard.
TERMS OF THE COMBINATION
The Combination, as described in the Reorganization Agreement, will occur in
the following contemporaneous steps: FIRST, Standard will form Interim Bank and
Interim Bank will form New Sub; SECOND, New Sub will merge (the "Initial
Merger") with and into Standard, with Standard being the surviving corporation
and a wholly-owned subsidiary of Interim Bank, with certificates representing
Standard Common Stock being converted into an equivalent number of shares of
common stock of Interim Bank ("Interim Bank Common Stock"); THIRD, Standard will
dissolve and, pursuant to the dissolution, will transfer all of its assets
(including the stock of Standard Bank) to Interim Bank, and Interim Bank will
assume all of Standard's liabilities and obligations; FOURTH, Interim Bank will
be merged with and into TCF Illinois (the "Merger"), with TCF Illinois as the
resulting institution (the "Resulting Institution"); and FIFTH, Standard Bank
will be merged with and into TCF Illinois (the "Subsequent Merger"), with TCF
Illinois as the Resulting Institution. Certificates representing shares of
Standard Common Stock issued and outstanding immediately prior to the
Combination (other than dissenters' shares, treasury shares or shares held by
TCF or any subsidiary thereof except for shares held in a fiduciary capacity or
in satisfaction of a debt previously contracted) (the "Outstanding Standard
Shares") will be converted into and will represent the shares of Interim Bank
Common Stock that will be converted into the right to receive the number of
shares of TCF Common Stock, cash, or a combination thereof, determined in
accordance with the Consideration Formula (the "Consideration"). Subject to
limitations, stockholders of Standard will be offered an election to receive
cash, TCF Common Stock, or a combination of the two, in exchange for their
shares, as described in this Proxy Statement/Prospectus. See "THE
COMBINATION--Consideration Election." No fractional
7
shares of TCF Common Stock will be issued, and cash will be paid in lieu
thereof. In this Proxy Statement/ Prospectus, references to Standard Common
Stock after or in connection with the second step of the Combination are deemed
to refer to Interim Bank Common Stock unless the context requires otherwise.
The Combination will be effective on the date specified by the Office of the
Comptroller of the Currency ("OCC") in its approval of the Merger and agreed to
by TCF Illinois and Interim Bank (the "Effective Date").
The Reorganization Agreement provides that, at the close of business on the
Effective Date (the "Effective Time"), each of the Outstanding Standard Shares
will be converted into the right to receive an amount of cash and/or shares of
TCF Common Stock which when combined, equals the value per share (based on the
Average TCF Stock Price, as defined) under the applicable Consideration Formula
from the following chart (the "Consideration Value Per Share"):
AVERAGE TCF STOCK PRICE CONSIDERATION VALUE PER SHARE
- ---------------------------------------------------------------- ----------------------------------------------
GREATER THAN$54.00.............................................. $12.50 + 0.24643 X Average TCF Stock Price
LESS THAN or =$54.00 - GREATER THAN$47.75....................... $25.81*
LESS THAN or =$47.75 - GREATER THAN or =$43.75.................. $12.50 + 0.27869 X Average TCF Stock Price
LESS THAN$43.75 - GREATER THAN or =$37.50....................... $24.69*
LESS THAN$37.50................................................. $12.50 + 0.32514 X Average TCF Stock Price
- ------------------------
* The TCF Common Stock portion of the Consideration is valued at the Average
TCF Stock Price.
The "Average TCF Stock Price" is the average of the daily closing sales
prices of TCF Common Stock during the 30 consecutive full trading days ending on
the "Determination Date." The "Determination Date" is the third business day
immediately prior to either (i) the date of the Special Meeting of the holders
of Standard Common Stock to which this Proxy Statement/Prospectus relates or
(ii) the date on which the last regulatory approval required to consummate the
Combination has been obtained and all statutory or regulatory waiting periods
have expired, whichever is closer to the Effective Date. The fair market value
of the Consideration actually received by each Standard stockholder may be more
or less on a per share basis than the Consideration Value Per Share because (x)
the Consideration Value Per Share is calculated using an average stock price
(the Average TCF Stock Price) and (y) the fair market value of TCF Common Stock
may fluctuate between the Determination Date and the date upon which each
Standard stockholder receives the Consideration (see "THE COMBINATION--The
Consideration Formula" and "THE COMBINATION--Consideration Election").
The aggregate Consideration will consist of cash and TCF Common Stock. If
the Average TCF Stock Price is within a range from and including $43.75 to and
including $47.75, the aggregate Consideration will consist of (i) cash equal to
the product of $12.50 multiplied by the number of Outstanding Standard Shares
plus (ii) a number of shares of TCF Common Stock equal to the product of 0.27869
multiplied by the number of Outstanding Standard Shares. If the Average TCF
Stock Price is greater than $47.75 or less than $43.75, the aggregate
Consideration will be equal to the applicable Consideration Value Per Share from
the chart above, multiplied by the number of Outstanding Standard Shares, and
TCF will determine the allocation of aggregate Consideration between cash and
TCF Common Stock subject to certain limitations on the maximum and minimum
portion of aggregate Consideration constituted by cash. See "THE
COMBINATION--Consideration Election--Allocation Procedures."
The Combination is structured as a cash election merger, in which each
holder of Outstanding Standard Shares will be permitted to elect to receive in
exchange for each Outstanding Standard Share held the Consideration Value Per
Share in the form of all TCF Common Stock, all cash (without interest), or a
combination of the two. Although a Standard stockholder may designate the
relative amounts of TCF Common Stock and cash that such Standard stockholder
desires to receive in the Combination, the proportionate amounts of TCF Common
Stock and cash actually received by a Standard stockholder will
8
depend upon the proportionate amount of TCF Common Stock and cash that Standard
stockholders elect to receive in the aggregate when compared to the
proportionate amount of TCF Common Stock and cash comprising the aggregate
Consideration. If the aggregate number of shares of TCF Common Stock elected by
Standard stockholders to be received as Consideration in the Combination is
greater or lesser than the number of shares of TCF Common Stock comprising a
portion of aggregate Consideration, a Standard stockholder may receive
Consideration comprised of TCF Common Stock and cash in a different combination
than elected by such stockholder and Standard stockholders electing to receive
all TCF Common Stock or all cash may receive some combination of TCF Common
Stock and cash. See "THE COMBINATION--Consideration Election." The transaction
is expected to be a tax-free exchange for Standard's stockholders to the extent
they receive shares of TCF Common Stock. See "THE COMBINATION--Certain Federal
Income Tax Consequences."
Assuming, for purposes of illustration only, that the Combination had
occurred on July 8, 1997, using the number of shares of Standard Common Stock
outstanding on that date of 16,210,435 shares and the Average TCF Stock Price
for the 30-day period ending on that date of $46.97, the Consideration Value Per
Share would have been $25.59 and TCF would have paid an aggregate of
approximately $203 million in cash (excluding cash paid to holders of
outstanding stock options to purchase Standard Common Stock, as described below)
and issued approximately 4,518,000 shares of TCF Common Stock (valued at
approximately $212 million, as determined by valuing such TCF Common Stock at
the Average TCF Stock Price on that date), for a total of approximately $415
million in aggregate Consideration (cash and TCF Common Stock combined) to
holders of Standard Common Stock. See "THE COMBINATION-- Consideration
Election." Under such circumstances, former Standard stockholders would have
held approximately 9.6% of the shares of TCF Common Stock outstanding after the
Combination (using the number of shares of TCF Common Stock outstanding on July
8, 1997 of 42,450,294 shares and adding to such amount the approximately
4,518,000 shares of TCF Common Stock assumed to be issued in the Combination).
No fractional shares of TCF Common Stock, and no certificates representing
such fractional shares, shall be issued upon the surrender for exchange of
certificates representing Standard Common Stock. In lieu of any fractional
share, TCF shall pay to each holder of Standard Common Stock who otherwise would
be entitled to receive a fractional share of TCF Common Stock an amount of cash
(without interest) equal to the product of (i) the Average TCF Stock Price
multiplied by (ii) the fractional share interest to which such holder would
otherwise be entitled.
The Reorganization Agreement also provides that, immediately prior to the
Effective Time, all outstanding stock options to purchase Standard Common Stock
(each a "Standard Stock Option") shall be cancelled, and Standard shall pay to
each holder, for each Standard Stock Option held, an amount of cash equal to the
"market value" of the Standard Stock Option on the Effective Date less the
"exercise price" of the Standard Stock Option, with such market value being
equal to the Consideration Value Per Share.
OPINION OF FINANCIAL ADVISOR TO STANDARD
Wasserstein Perella & Co., Inc. ("Wasserstein"), Standard's financial
advisor, has rendered its written opinion to the Board of Directors of Standard,
dated March 16, 1997 and as affirmed on August 6, 1997, that, as of the date of
the opinion, the consideration to be received in the Combination by the holders
of the Standard Common Stock is fair, from a financial point of view, to the
holders of Standard Common Stock. The opinion of Wasserstein, which is attached
hereto as Appendix B, should be read in its entirety. See "THE
COMBINATION--Opinion of Financial Advisor to Standard" for a further description
of the opinion of Wasserstein and of the fees payable to Wasserstein by
Standard.
9
DISSENTERS' RIGHTS
Under the Delaware General Corporation Law (the "DGCL"), holders of Standard
Common Stock who dissent from the Reorganization Agreement and who comply with
the requisite statutory procedures will be entitled to receive in cash an
appraised value of their shares (such shares, "Dissenting Shares"). The value so
determined could be more than, the same as or less than the value of the
Consideration Value Per Share to be received pursuant to the Reorganization
Agreement by those holders of Standard Common Stock who do not dissent. See "THE
COMBINATION--Dissenters' Rights."
RECOMMENDATION OF THE BOARD OF DIRECTORS OF STANDARD
The Board of Directors of Standard has determined that the Combination is in
the best interests of Standard and the stockholders of Standard and,
accordingly, has unanimously approved the Reorganization Agreement and the
Combination. THE BOARD OF DIRECTORS OF STANDARD UNANIMOUSLY RECOMMENDS THAT ITS
STOCKHOLDERS VOTE FOR THE REORGANIZATION AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED THEREBY. SEE "THE COMBINATION--BACKGROUND OF AND REASONS FOR THE
COMBINATION."
EFFECTIVE TIME OF THE COMBINATION
The Combination shall become effective at the Effective Time, which will be
at the close of business on the Effective Date. The Effective Time will occur
only after the receipt of all requisite regulatory approvals from the OCC, the
OTS and any other applicable authority (collectively referred to as the "Bank
Authority"), the approval of the Reorganization Agreement by the requisite vote
of Standard's stockholders and the satisfaction or waiver of all other
conditions to the Combination. See "THE COMBINATION--Effective Time of the
Combination; Termination and Amendment."
CONDITIONS TO THE COMBINATION; WAIVER AND AMENDMENT
Consummation of the Combination is subject to various conditions, including,
without limitation, obtaining the requisite approval of the Reorganization
Agreement by the stockholders of Standard, and receipt of all necessary
regulatory approvals pertaining to the Combination, including approvals from the
OTS and the OCC. Applications for approval of the Combination have been filed
with the OTS and the OCC. There can be no assurance that all requisite
regulatory approvals will be obtained by TCF promptly or at all. If the
Combination is not consummated on or before October 31, 1997, either TCF or
Standard may terminate the Reorganization Agreement. See "THE
COMBINATION--Conditions to the Combination" and "THE COMBINATION--Regulatory
Approvals."
Substantially all of the conditions to consummation of the Combination
(except for required stockholder and regulatory approvals) may be waived at any
time by the party for whose benefit they were created, and the Reorganization
Agreement may be amended at any time by written agreement of the parties. See
"THE COMBINATION--Effective Time of the Combination; Termination and Amendment."
NO SOLICITATION OF THIRD-PARTY ACQUISITION PROPOSALS
The Reorganization Agreement includes a "no solicitation" provision which
prohibits Standard from soliciting or encouraging submission of third-party
acquisition proposals, but permits Standard to negotiate with and furnish
non-public information to third parties if Standard's Board of Directors
determines, after consultation with Standard's legal counsel, that there is a
reasonable likelihood that it has a fiduciary duty to do so. See "THE
COMBINATION--Certain Covenants."
10
TERMINATION; TERMINATION FEES
The Reorganization Agreement may be terminated prior to the Effective Date:
(i) by mutual consent of TCF and Standard, if the Board of Directors of each so
determines by vote of a majority of the members of its entire board; (ii) by
either TCF or Standard, if any of the conditions to such party's obligation to
consummate the transactions contemplated in the Reorganization Agreement shall
have become impossible to satisfy (unless such impossibility shall be due to the
action or failure to act in breach of the Reorganization Agreement by the party
seeking to terminate the Reorganization Agreement); (iii) by Standard, if the
Reorganization Agreement is not duly approved by the stockholders of Standard at
a meeting of stockholders (or any adjournment thereof) duly called and held for
such purposes; (iv) by either TCF or Standard, if the Effective Date is not on
or before October 31, 1997 (unless the failure to consummate the Combination by
such date shall be due to the action or failure to act in breach of the
Reorganization Agreement by the party seeking to terminate the Reorganization
Agreement); (v) by Standard, if the Average TCF Stock Price (on the
Determination Date) is less than $37.50 subject, however, to TCF's right under
the Reorganization Agreement to increase the value of cash and/or TCF Common
Stock offered to stockholders of Standard (in such an event, if TCF elects not
to make such an increase, the Standard Board of Directors will consider
resoliciting proxies (see "THE COMBINATION-- Effective Time of the Combination;
Termination and Amendment")); (vi) by Standard, if, in accordance with Section
7.1(f) of the Reorganization Agreement, it receives a tender offer which
Standard's Board of Directors determines is more favorable to Standard
stockholders; (vii) by TCF, if, after March 16, 1997, any Person shall have
commenced (as such term is used in Rule 14d-2(b) under the Exchange Act) a bona
fide tender offer or exchange offer to acquire at least 25% of the then
outstanding shares of Standard Common Stock, and thereafter the Board of
Directors of Standard shall have withdrawn, or materially adversely modified or
changed its recommendation of the Reorganization Agreement and the Combination;
(viii) by (A) TCF, if Standard commits a willful breach of its obligations under
the Reorganization Agreement, or (B) Standard, if TCF commits a willful breach
of its obligations under the Reorganization Agreement, and in each instance such
willful breach is not cured within ten days after receipt by the breaching party
of written demand for cure by the non-breaching party (for purposes of the
Reorganization Agreement, a "willful breach" means a knowing and intentional
violation by a party of any of its covenants, agreements or obligations under
the Reorganization Agreement); or (ix) by TCF or Standard pursuant to Section
5.6 (b) of the Reorganization Agreement. Any party desiring to terminate the
Reorganization Agreement shall give written notice of such termination and the
reasons therefor to the other party. Under certain circumstances of termination
a termination fee ranging from $1 million to $15 million is payable. See "THE
COMBINATION--Termination Fees."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The Conversion/Reincorporation and the Merger are intended to qualify as
reorganizations under Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "Code") and the Subsequent Merger is intended to qualify as a
liquidation under Section 332 of the Code. Therefore, in general, no gain or
loss will be recognized by TCF or Standard as a result of the Combination. In
general, a Standard stockholder will not recognize any gain or loss as a result
of the receipt of TCF Common Stock in exchange for Standard Common Stock, but
will recognize gain, if any, with respect to any cash received pursuant to an
election to receive cash, or in lieu of any fractional share of TCF Common
Stock, or as otherwise provided in the Reorganization Agreement. The income tax
basis of the TCF Common Stock received generally will equal the income tax basis
of the Standard Common Stock surrendered, reduced by any cash received in the
Combination and increased by any gain recognized in the Combination, and the
holding period of the TCF Common Stock received will include the holding period
of the Standard Common Stock surrendered. The obligation of Standard to
consummate the Combination is subject to the prior receipt by Standard of an
opinion of Skadden, Arps, Slate, Meagher & Flom (Illinois) ("Skadden") addressed
to Standard to the effect that the Combination will qualify under Sections
368(a) and 332 of the Code. The obligation of TCF to consummate the Combination
is subject to the prior receipt by TCF of an opinion of
11
Fried, Frank, Harris, Shriver & Jacobson addressed to TCF to the effect that the
Combination will qualify under Sections 368(a) and 332 of the Code. See "THE
COMBINATION--Certain Federal Income Tax Consequences." EACH STANDARD STOCKHOLDER
SHOULD CONSULT HIS OR HER OWN TAX ADVISOR CONCERNING ANY APPLICABLE FEDERAL,
FOREIGN, STATE, OR LOCAL INCOME TAX CONSEQUENCES OF THE COMBINATION.
ACCOUNTING TREATMENT OF THE COMBINATION
It is intended that the Combination be accounted for as a "purchase" for
accounting and financial reporting purposes. See "THE COMBINATION--Accounting
Treatment of the Combination."
INTERESTS OF CERTAIN PERSONS
Certain members of Standard's Board of Directors and management may be
deemed to have interests in the Combination in addition to their interests as
stockholders of Standard generally. The Reorganization Agreement provides that,
as of the Effective Time, one member of the Board of Directors of Standard,
currently expected to be David H. Mackiewich, will become a director of TCF.
Following the Combination, the Board of Directors of the Resulting Institution
will consist of eight directors of TCF Illinois immediately prior to the
Combination and seven directors of Standard. The Executive Chairman of the Board
of the Resulting Institution will be David H. Mackiewich. Standard Stock Options
that have been awarded to various executives and officers of Standard and
Standard Bank will vest at the Effective Time and will result in payment to
those executives and officers of the cash value of the options based on the
Consideration Formula. Shares of restricted stock awarded to various executives
and officers will also vest at the Effective Time. Assuming a Consideration
Value Per Share of $25.00, the cash value of the stock options and the value of
restricted stock grants vesting in connection with the Combination for the five
named executives in Standard's most recent proxy statement would be an aggregate
of $9,266,100. The Reorganization Agreement also provides for indemnification of
Standard's directors, officers, employees and agents for claims against them
arising out of or in connection with activities prior to the Effective Time and
requires the Resulting Institution to maintain in effect, for a period of three
years after the Effective Time, directors' and officers' liability insurance
comparable to that maintained by TCF (or to continue the existing insurance
maintained by Standard) as of the date of the Reorganization Agreement for acts
or omissions prior to the Combination. In addition, certain of Standard's
executive officers are parties to employment agreements and "change in control"
agreements, which will be triggered by the Combination and will result in lump
sum cash payments to any executive whose employment is terminated or not
continued within a specified period after the Combination is consummated.
Assuming, again, a Consideration Value Per Share of $25.00, if all Standard
executives with change in control contracts were to have a qualifying
termination of employment, the aggregate amount of payments due under the change
in control contracts would be $9,054,500, exclusive of the stock option and
stock vesting amounts described earlier.
TCF management has indicated to David H. Mackiewich its intention to award
30,000 shares of TCF Common Stock to Mr. Mackiewich after the Effective Time in
the form of a restricted stock award. The award is intended to provide Mr.
Mackiewich with a restricted stock award comparable to those provided to other
TCF executives. Vesting of the shares will be subject to performance-based
requirements that generally apply to restricted stock grants to TCF executives.
TCF has also indicated its intention that the Resulting Institution will enter
into an employment agreement with Kurtis D. Mackiewich, the son of David H.
Mackiewich and currently an officer of Standard, after the Effective Time at his
current compensation and with other terms substantially similar to existing
employment contracts with other Standard executives. TCF also intends to renew
the employment contracts and change in control agreements of David H. Mackiewich
and Thomas M. Ryan. See "THE COMBINATION--Effects of the Combination--Effect on
Employees of Standard" and "THE COMBINATION--Interests of Certain Persons in the
Combination."
12
FORWARD LOOKING STATEMENTS
This Proxy Statement/Prospectus contains, or may contain, certain
"forward-looking statements," including statements concerning plans, objectives
and future events or performance, and other statements which are other than
statements of historical fact. Factors that may cause actual results to differ
materially from those contemplated by such forward-looking statements include,
but are not limited to, the following: (i) failure to fully realize or to
realize within the expected time frame expected cost savings from the
Combination; (ii) lower than expected income or revenues following the
Combination, or higher than expected operating costs; (iii) a significant
increase in competitive pressure in the banking and financial services industry;
(iv) business disruption related to the Combination (both before and after
completion); (v) greater than expected costs or difficulties related to the
integration of Standard and TCF; (vi) litigation costs and delays caused by
litigation; (vii) higher than anticipated costs in completing the Combination;
(viii) unanticipated regulatory delays or constraints or changes in the proposed
transaction imposed by the Bank Authority; (ix) reduction in interest margins
due to changes in the interest rate environment; (x) poorer than expected
general economic conditions, including acquisition and growth opportunities,
either nationally or in the states in which the Resulting Institution will be
doing business; (xi) legislation or regulatory changes which adversely affect
the businesses in which the Resulting Institution would be engaged; (xii) a
decline in the price of TCF Common Stock which permits Standard to elect not to
proceed with the Combination; and (xiii) other unanticipated occurrences which
may delay the consummation of the Combination, increase the costs related to the
Combination or decrease the expected financial benefits of the Combination.
13
COMPARATIVE MARKET PRICE DATA
TCF Common Stock is listed on the NYSE under the symbol "TCB" and Standard
Common Stock is quoted on the Nasdaq National Market under the symbol "STND."
The following table sets forth the closing market price per share of TCF Common
Stock, the last reported closing market price per share of Standard Common Stock
and the equivalent per-share price of Standard Common Stock giving effect to the
Combination at March 14, 1997, the last trading day preceding public
announcement that TCF and Standard had entered into the Reorganization Agreement
and on July 8, 1997. The price of Standard Common Stock does not include
adjustment for retail mark-ups, mark-downs or commissions. The equivalent
per-share price of Standard Common Stock represents the closing market price of
a share of TCF Common Stock (not the Average TCF Stock Price) on such dates
(March 14 and July 8, 1997) converted into the Consideration Value Per Share and
valuing the TCF Common Stock portion of such Consideration at the closing price
of TCF Common Stock on the dates indicated (not the Average TCF Stock Price).
See "THE COMBINATION--The Consideration Formula."
STANDARD
TCF STANDARD EQUIVALENT
COMMON COMMON PER-SHARE
STOCK STOCK PRICE
--------- --------- -----------
Market Value Per Share at:
March 14, 1997............................................ $ 44.625 $ 21.125 $ 24.937
July 8, 1997.............................................. 50.375 24.750 25.810
Standard stockholders are advised to obtain current market quotations for
TCF Common Stock. No assurance can be given concerning the market price of TCF
Common Stock before or after the Effective Time. The market price for TCF Common
Stock may fluctuate between the date of this Proxy Statement/ Prospectus and the
Effective Time. The Consideration Value Per Share depends on the Average TCF
Stock Price (determined as of the Determination Date). See "THE COMBINATION--The
Consideration Formula." There can be no assurance that holders of Standard
Common Stock will receive a specified value of shares of TCF Common Stock
exchanged for the shares of Standard Common Stock which they own because the
market value of TCF Common Stock at the Effective Time cannot be predicted and
is subject to changes thereafter.
The Reorganization Agreement may be terminated by Standard if the Average
TCF Stock Price on the Determination Date is less than $37.50, subject to the
right of TCF, as provided in the Reorganization Agreement, to increase the value
of cash and/or TCF Common Stock being offered to Standard stockholders such that
the Consideration Value Per Share is equal to $24.69. Even if this condition
occurs, there can be no assurance that Standard will exercise its right to
terminate the Reorganization Agreement, and therefore the Combination may still
occur. Standard has not made any determination whether to terminate the
Reorganization Agreement should this event occur. If the Average TCF Stock Price
is less than $37.50 and TCF elects not to increase the value of the cash and/or
TCF Common Stock being offered to Standard stockholders such that the
Consideration Value Per Share is equal to $24.69, the Standard Board of
Directors will consider resoliciting proxies. For a discussion of the
termination provisions, see "THE COMBINATION--Effective Time of the Combination;
Termination and Amendment."
In connection with the Combination, Standard Common Stock will be cancelled
and, as a result, will no longer be quoted on the Nasdaq National Market after
the Effective Time.
14
COMPARATIVE UNAUDITED PER-SHARE DATA
The following table presents selected comparative unaudited per-share data
for TCF Common Stock on a historical and a pro forma combined basis and for
Standard Common Stock on a historical and a pro forma equivalent basis giving
effect to the Combination using the purchase method of accounting. The
Consideration Formula is structured in such a manner that variances may occur in
both the aggregate amount and form of Consideration that Standard shareholders
will receive. As a result, per-share data may vary under different Average TCF
Stock Prices. These variances in amount and form of Consideration do not result
in significant variances from the per-share data presented below. For a
description of the purchase method of accounting with respect to the Combination
and the related effects on the historical financial statements of TCF, see "THE
COMBINATION--Accounting Treatment of the Combination." The information is
derived from the consolidated financial statements of each of TCF and Standard
and the Unaudited Pro Forma Combined Financial Information. The consolidated
financial statements of each of TCF and Standard are incorporated by reference
into this Proxy Statement/Prospectus. The Unaudited Pro Forma Combined Financial
Information appears elsewhere herein. This information should be read in
conjunction with such historical and pro forma financial statements and the
related notes thereto. See "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE" and
"UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION."
TCF's and Standard's fiscal years end December 31. The per-share data
included within is not necessarily indicative of the results of future
operations of the combined entity or the actual results that would have been
achieved had the Combination been consummated prior to the dates or periods
indicated.
TCF STANDARD
COMMON STOCK COMMON STOCK
------------------------ ------------------------
PRO FORMA PRO FORMA
HISTORICAL COMBINED HISTORICAL EQUIVALENT
----------- ----------- ----------- -----------
Book Value Per Common Share(1):
March 31, 1997........................................................ $ 15.66 $ 19.28 $ 16.74 $ 10.50
March 31, 1996........................................................ 15.10 18.61 16.05 10.14
December 31, 1996..................................................... 15.81 19.31 16.58 10.52
Cash Dividends Declared Per Common Share(2):
Three Months Ended:
March 31, 1997...................................................... .18750 .18750 .10000 .10215
March 31, 1996...................................................... .15625 .15625 .08000 .08513
Year Ended December 31, 1996.......................................... .71875 .71875 .32000 .39159
Income Before Extraordinary Items Per Common Share(3):
Three Months Ended:
March 31, 1997...................................................... .83 .75 .26 .41
March 31, 1996...................................................... .73 .68 .31 .37
Year Ended December 31, 1996.......................................... 2.42(4) 2.09 .76(5) 1.14
15
NOTES TO COMPARATIVE UNAUDITED PER-SHARE DATA
(1) The pro forma combined book values per share of TCF Common Stock represent
the historical common stockholders' equity for TCF combined with the equity
impact resulting from the issuance of 4,516,000 shares of TCF Common Stock
to Standard shareholders, based on the number of shares of Standard Common
Stock outstanding on March 31, 1997 of 16,204,235 shares and using the
Average TCF Stock Price for the 30-day period ending on July 8, 1997 of
$46.97, divided by total pro forma common shares of the combined entity. The
pro forma equivalent book values per share of Standard Common Stock
represent the pro forma combined book value per share amounts multiplied by
.54482, an assumed exchange ratio determined using the Average TCF Stock
Price for the 30-day period ending on July 8, 1997 of $46.97. The exchange
ratio (the "Exchange Ratio") is determined by dividing the Consideration
Value Per Share by the Average TCF Stock Price. See "THE COMBINATION--The
Consideration Formula."
(2) The pro forma combined cash dividends declared per common share assume no
changes in the historical cash dividends declared per share of TCF Common
Stock. The pro forma equivalent cash dividends declared per share of
Standard Common Stock represent the cash dividends declared on one share of
TCF Common Stock multiplied by .54482, an assumed Exchange Ratio determined
using the Average TCF Stock Price for the 30-day period ending on July 8,
1997 of $46.97. See "THE COMBINATION--The Consideration Formula."
(3) The pro forma combined income before extraordinary items per common share
(based on the weighted average number of common and common equivalent shares
outstanding) is based upon the combined historical income before
extraordinary items for TCF and Standard divided by the average pro forma
common shares of the combined entity. The pro forma equivalent income before
extraordinary items per share of Standard Common Stock represents the pro
forma combined income before extraordinary items per share multiplied by
.54482, an assumed Exchange Ratio determined using the Average TCF Stock
Price for the 30-day period ending on July 8, 1997 of $46.97. See "THE
COMBINATION--The Consideration Formula."
(4) Amount reflects an after-tax one-time special assessment of $21.7 million
from the FDIC to recapitalize the SAIF under federal legislation enacted on
September 30, 1996. Excluding the one-time special assessment, income before
extraordinary items per common share would have been $3.04 for the year
ended December 31, 1996.
(5) Amount reflects an after-tax one-time special assesment of $5.8 million from
the FDIC to recapitalize the SAIF under federal legislation enacted on
September 30, 1996. Excluding the one-time special assessment, income before
extraordinary items per common share would have been $1.13 for the year
ended December 31, 1996.
16
SELECTED HISTORICAL AND UNAUDITED PRO FORMA
COMBINED FINANCIAL DATA
The following tables set forth certain selected historical consolidated
financial information for each of TCF and Standard, and certain selected
unaudited pro forma combined financial information giving effect to the
Combination using the purchase method of accounting. For a description of the
purchase method of accounting with respect to the Combination and the related
effects on the historical financial statements of TCF, see "THE
COMBINATION--Accounting Treatment of the Combination."
TCF's and Standard's fiscal years end December 31. The financial data
included in the Selected Historical Financial Data as of or for the five years
ended December 31, 1996 for TCF and Standard is derived from the audited
consolidated financial statements of each of TCF and Standard, including the
related notes thereto. The financial data as of or for the three months ended
March 31, 1997 and 1996 for TCF and Standard is derived from the unaudited
consolidated financial statements of each of TCF and Standard and reflect, in
the respective opinions of management of each of TCF and Standard, all
adjustments (consisting only of normal recurring adjustments) necessary for a
fair presentation of such data. Certain historical information of Standard has
been reclassified to conform to TCF's financial statement presentation. The
respective consolidated financial statements of TCF and Standard are
incorporated by reference into this Proxy Statement/Prospectus. This information
should be read in conjunction with such financial statements and in conjunction
with the Unaudited Pro Forma Combined Financial Information, including the notes
thereto, appearing elsewhere in this Proxy Statement/Prospectus. See
"INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE" and "UNAUDITED PRO FORMA
COMBINED FINANCIAL INFORMATION."
The Unaudited Pro Forma Combined Consolidated Operating Data does not
reflect the direct transaction costs of (i) the Combination, or (ii) the public
offering of 700,000 shares of TCF Common Stock which closed prior to the
effective date of the Winthrop acquisition (TCF received net proceeds of
approximately $29.3 million therefrom). The Unaudited Pro Forma Combined
Consolidated Operating Data and Consolidated Financial Condition Data do not
reflect the effects of the additional offering of 700,000 shares of TCF Common
Stock in order to qualify the Winthrop acquisition as a pooling of interests and
the issuance of approximately 400,000 shares of TCF Common Stock in connection
with the conversion of Great Lakes Michigan's 7 1/4% Convertible Subordinated
Debentures due 2011. See "RECENT DEVELOPMENTS--Supplemental Stock Issuance" and
"RECENT DEVELOPMENTS-- Redemption of Great Lakes Debentures."
The significant accounting and reporting policies of TCF and Standard differ
in minor respects and no effect has been given to such differences in this
Selected Historical and Unaudited Pro Forma Combined Financial Data. The
Selected Unaudited Pro Forma Combined Financial Data included herein is not
necessarily indicative of the results of future operations of the combined
entity or the actual results that would have been achieved had the Combination
been consummated prior to the periods indicated.
17
SELECTED HISTORICAL FINANCIAL DATA
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
(DOLLARS IN THOUSANDS, EXCEPT PER-SHARE DATA)
AT OR FOR THE
THREE MONTHS ENDED AT OR FOR THE
MARCH 31, YEAR ENDED DECEMBER 31,
--------------------- ------------------------------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
---------- ---------- ------------- --------------- ---------- ------------- ----------
CONSOLIDATED OPERATING DATA:
Interest income.............. $ 145,136 $ 148,893 $ 582,861 $ 607,690 $ 552,482 $ 558,645 $ 630,442
Interest expense............. 59,118 64,439 242,721 288,492 273,330 297,449 383,170
---------- ---------- ------------- --------------- ---------- ------------- ----------
Net interest income........ 86,018 84,454 340,140 319,198 279,152 261,196 247,272
Provision for credit
losses..................... 1,090 2,802 19,820 15,212(2) 10,802 35,118(6) 40,663
---------- ---------- ------------- --------------- ---------- ------------- ----------
Net interest income after
provision for credit
losses................... 84,928 81,652 320,320 303,986 268,350 226,078 206,609
Non-interest income.......... 40,381 35,829 157,797 112,776(3) 125,219 139,005 125,524
Non-interest expense......... 77,928 75,806 341,070(1) 317,333(4) 276,984 272,958(7) 264,239
---------- ---------- ------------- --------------- ---------- ------------- ----------
Income before income tax
expense and extraordinary
items.................... 47,381 41,675 137,047 99,429 116,585 92,125 67,894
Income tax expense........... 18,450 15,388 51,384 37,778 46,402 36,797 15,906
---------- ---------- ------------- --------------- ---------- ------------- ----------
Income before extraordinary
items.................... 28,931 26,287 85,663 61,651 70,183 55,328 51,988
Extraordinary items, net..... -- -- -- (963)(5) -- (157) 339
---------- ---------- ------------- --------------- ---------- ------------- ----------
Net income................. 28,931 26,287 85,663 60,688 70,183 55,171 52,327
Dividends on preferred
stock...................... -- -- -- 678 2,710 2,769 2,911
---------- ---------- ------------- --------------- ---------- ------------- ----------
Net income available to
common shareholders...... $ 28,931 $ 26,287 $ 85,663 $ 60,010 $ 67,473 $ 52,402 $ 49,416
---------- ---------- ------------- --------------- ---------- ------------- ----------
---------- ---------- ------------- --------------- ---------- ------------- ----------
Per Common Share(8):
Income before extraordinary
items.................... $ .83 $ .73 $ 2.42(9) $ 1.71(10) $ 1.95 $ 1.53(11) $ 1.51
Extraordinary items........ -- -- -- (.03)(10) -- -- .01
---------- ---------- ------------- --------------- ---------- ------------- ----------
Net income............... $ .83 $ .73 $ 2.42(9) $ 1.68(10) $ 1.95 $ 1.53(11) $ 1.52
---------- ---------- ------------- --------------- ---------- ------------- ----------
---------- ---------- ------------- --------------- ---------- ------------- ----------
Dividends declared......... $ .1875 $ .15625 $ .71875 $ .59375 $ .50 $ .34375 $ .2375
---------- ---------- ------------- --------------- ---------- ------------- ----------
---------- ---------- ------------- --------------- ---------- ------------- ----------
Average common and common
equivalent shares
outstanding (000's)........ 34,797 35,986 35,342 35,686 34,527 34,150 32,571
---------- ---------- ------------- --------------- ---------- ------------- ----------
---------- ---------- ------------- --------------- ---------- ------------- ----------
CONSOLIDATED FINANCIAL
CONDITION DATA:
Total assets................. $6,964,119 $7,039,282 $ 7,090,862 $ 7,239,911 $7,845,588 $ 7,630,654 $7,774,537
Investments (12)............. 56,521 59,202 442,103 64,345 283,104 299,432 356,918
Securities available for
sale....................... 1,242,457 1,117,439 999,554 1,201,490 138,430 10,003 399,006
Loans held for sale.......... 199,154 249,498 203,869 242,413 201,511 444,780 308,651
Mortgage-backed securities
held to maturity........... -- -- -- -- 1,601,200 1,751,916 1,670,164
Loans........................ 5,028,741 5,174,923 4,995,962 5,277,101 5,118,381 4,665,567 4,516,982
Goodwill..................... 25,052 11,227 9,897 11,503 13,355 14,549 16,446
Deposits..................... 5,291,894 5,150,023 4,977,630 5,191,552 5,399,718 5,695,928 5,683,130
Federal Home Loan Bank
advances................... 630,307 831,585 1,141,040 893,587 1,354,663 945,492 1,018,725
Other borrowings............. 411,068 437,302 352,778 547,857 530,332 467,875 599,900
Stockholders' equity......... 541,869 541,019 549,506 527,675 475,469 428,065 375,495
Tangible net worth........... 516,817 529,792 539,609 516,172 462,114 413,516 359,049
Book value per common
share...................... 15.66 15.10 15.81 14.82 13.44 12.10 11.03
Tangible book value per
common share............... 14.94 14.78 15.53 14.50 13.04 11.67 10.51
KEY RATIOS:
Net interest margin.......... 5.31% 5.06% 5.26% 4.61% 3.96% 3.69% 3.43%
Return on average assets..... 1.67 1.48 1.24 .82 .93 .73 .68
Return on average realized
common equity.............. 21.49 19.97 16.13 12.70 15.94 13.95 15.67
Average total equity to
average assets............. 7.78 7.51 7.70 6.59 5.95 5.28 4.39
Common dividend payout
ratio...................... 22.59 21.40 29.70 35.34 25.64 22.47 15.63
18
SELECTED HISTORICAL FINANCIAL DATA
STANDARD FINANCIAL, INC. AND SUBSIDIARIES
(DOLLARS IN THOUSANDS, EXCEPT PER-SHARE DATA)
AT OR FOR THE
THREE MONTHS ENDED AT OR FOR THE
MARCH 31, YEAR ENDED DECEMBER 31,
---------------------- --------------------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
---------- ---------- -------------- ---------- -------------- ---------- ----------
CONSOLIDATED OPERATING DATA:
Interest income.................... $ 42,879 $ 37,388 $ 157,496 $ 131,973 $ 100,932 $ 98,399 $ 109,098
Interest expense................... 26,151 21,393 93,935 71,667 51,361 52,839 65,479
---------- ---------- -------------- ---------- -------------- ---------- ----------
Net interest income.............. 16,728 15,995 63,561 60,306 49,571 45,560 43,619
Provision for credit losses........ 475 800 2,500 1,695 660 3,053 390
---------- ---------- -------------- ---------- -------------- ---------- ----------
Net interest income after
provision for credit losses.... 16,253 15,195 61,061 58,611 48,911 42,507 43,229
Non-interest income................ 1,091 3,000 8,880 5,306 3,750 (1,210) 5,722
Non-interest expense............... 11,059 10,415 51,965 37,692 34,813 34,874 32,126
---------- ---------- -------------- ---------- -------------- ---------- ----------
Income before income tax
expense........................ 6,285 7,780 17,976 26,225 17,848 6,423 16,825
Income tax expense................. 2,201 2,859 6,064 9,508 6,793 2,555 6,818
---------- ---------- -------------- ---------- -------------- ---------- ----------
Net income....................... $ 4,084 $ 4,921 $ 11,912 $ 16,717 $ 11,055 $ 3,868 $ 10,007
---------- ---------- -------------- ---------- -------------- ---------- ----------
---------- ---------- -------------- ---------- -------------- ---------- ----------
Per Common Share:
Net income....................... $ .26 $ .31 $ .76(13) $ .98 $ .37(14) $ N.A. $ N.A.
---------- ---------- -------------- ---------- -------------- ---------- ----------
---------- ---------- -------------- ---------- -------------- ---------- ----------
Dividends declared............... $ .10 $ .08 $ .32 $ -- $ -- $ N.A. $ N.A.
---------- ---------- -------------- ---------- -------------- ---------- ----------
---------- ---------- -------------- ---------- -------------- ---------- ----------
Average common and common
equivalent shares outstanding
(000's).......................... 15,559 16,028 15,635 17,044 17,382 N.A. N.A.
---------- ---------- -------------- ---------- -------------- ---------- ----------
---------- ---------- -------------- ---------- -------------- ---------- ----------
CONSOLIDATED FINANCIAL CONDITION
DATA:
Total assets....................... $2,488,854 $2,186,603 $2,405,221 $2,081,228 $1,739,363 $1,508,840 $1,506,132
Investments (12)................... 47,875 57,095 46,334 59,753 221,268 144,494 122,322
Securities available for sale...... 860,405 932,674 804,944 941,817 76,590 -- --
Loans held for sale................ 29,065 -- 18,918 -- -- -- --
Mortgage-backed securities held to
maturity......................... -- -- -- -- 759,860 754,781 811,023
Loans.............................. 1,490,141 1,136,975 1,473,529 1,015,825 597,550 540,289 507,374
Goodwill........................... 387 90 432 113 203 1,043 2,251
Deposits........................... 1,776,848 1,604,346 1,718,782 1,538,086 1,392,292 1,370,985 1,379,213
Federal Home Loan Bank advances.... 410,000 285,000 385,000 235,000 50,000 25,000 10,000
Other borrowings................... -- -- -- -- -- -- --
Stockholders' equity............... 271,257 269,004 268,078 280,886 276,659 96,069 92,201
Tangible net worth................. 270,870 268,914 267,646 280,773 276,456 95,026 89,950
Book value per common share........ 16.74 16.05 16.58 15.95 14.85 N.A. N.A.
Tangible book value per common
share............................ 16.72 16.04 16.55 15.95 14.84 N.A. N.A.
KEY RATIOS:
Net interest margin................ 2.82% 3.11% 2.90% 3.31% 3.19% 3.17% 3.10%
Return on average assets........... .67 .93 .53 .88 .68 .26 .68
Return on average common equity.... 6.06 7.18 4.45 5.97 6.24 3.88 11.29
Average total equity to average
assets........................... 11.07 12.94 11.88 14.81 10.91 6.64 6.04
Common dividend payout ratio....... 38.46 25.81 42.11 -- -- N.A. N.A.
- ------------------------------
N.A. - Not applicable
19
NOTES TO SELECTED HISTORICAL FINANCIAL DATA
(1) Amount reflects a one-time special assessment of $34.8 million from the FDIC
to recapitalize the SAIF.
(2) Amount reflects $5 million in merger-related provisions associated with
TCF's acquisition of Great Lakes Bancorp, A Federal Savings Bank ("Great
Lakes").
(3) Amount reflects a loss of $21.3 million on merger-related asset sales
associated with TCF's acquisition of Great Lakes.
(4) Amount reflects $21.7 million in merger-related expenses and $4.4 million in
cancellation costs on the early termination of interest-rate exchange
contracts associated with TCF's acquisition of Great Lakes.
(5) Represents the prepayment of Federal Home Loan Bank ("FHLB") advances at a
pretax loss of $1.5 million, net of a $578,000 tax benefit, associated with
TCF's acquisition of Great Lakes.
(6) Amount reflects $7 million in merger-related provisions associated with
TCF's acquisition of Republic Capital Group, Inc. ("RCG").
(7) Amount reflects $700,000 in merger-related provisions for real estate losses
and $5.5 million in merger-related expenses associated with TCF's
acquisition of RCG.
(8) Amounts are after preferred stock dividends.
(9) Amounts reflect an after-tax one-time special assessment of $21.7 million
from the FDIC to recapitalize the SAIF. Excluding the one-time special
assessment, net income per common share would have been $3.04 for the year
ended December 31, 1996.
(10) Amounts reflect after-tax merger-related charges of $32.8 million
associated with TCF's acquisition of Great Lakes. Excluding such charges,
net income per common share would have been $2.60 for the year ended
December 31, 1995.
(11) Amounts reflect after-tax merger-related charges of $7.9 million associated
with TCF's acquisition of RCG. Excluding such charges, net income per common
share would have been $1.77 for the year ended December 31, 1993.
(12) Includes interest-bearing deposits with banks, federal funds sold, U.S.
Government and other marketable securities held to maturity, securities
purchased under resale agreements and FHLB stock.
(13) Amount reflects an after-tax one-time special assessment of $5.8 million
from the FDIC to recapitalize the SAIF. Excluding the one-time special
assessment, net income per common share would have been $1.13 for the year
ended December 31, 1996.
(14) Amount computed based on the weighted average number of common shares
outstanding and net income of $6.5 million from July 28, 1994 (date of
conversion to stock form of ownership) through December 31, 1994.
20
SELECTED UNAUDITED PRO FORMA COMBINED FINANCIAL DATA
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
STANDARD FINANCIAL, INC. AND SUBSIDIARIES
(DOLLARS IN THOUSANDS, EXCEPT PER-SHARE DATA)
AT OR FOR
AT OR FOR THE THREE MONTHS THE YEAR
ENDED MARCH 31, ENDED
-------------------------- DECEMBER 31,
1997 1996 1996
------------ ------------ ------------
CONSOLIDATED OPERATING DATA:
Interest income........................................................ $ 184,587 $ 182,853 $ 726,643
Interest expense....................................................... 84,332 84,895 332,908
------------ ------------ ------------
Net interest income.................................................. 100,255 97,958 393,735
Provision for credit losses............................................ 1,565 3,602 22,320
------------ ------------ ------------
Net interest income after provision for credit losses................ 98,690 94,356 371,415
Non-interest income.................................................... 41,472 38,829 166,677
Non-interest expense................................................... 91,297 88,531 402,277
------------ ------------ ------------
Income before income tax expense and extraordinary items............. 48,865 44,654 135,815
Income tax expense..................................................... 19,410 17,006 52,483
------------ ------------ ------------
Income before extraordinary items.................................... $ 29,455 $ 27,648 $ 83,332
------------ ------------ ------------
------------ ------------ ------------
Per Common Share:
Income before extraordinary items.................................... $ .75 $ .68 $ 2.09
------------ ------------ ------------
------------ ------------ ------------
Dividends declared................................................... $ .1875 $ .15625 $ .71875
------------ ------------ ------------
------------ ------------ ------------
Average common and common equivalent shares outstanding (000's)........ 39,313 40,502 39,858
------------ ------------ ------------
------------ ------------ ------------
CONSOLIDATED FINANCIAL CONDITION DATA:
Total assets........................................................... $ 9,431,777 $ 9,204,689 $9,474,887
Investments (1)........................................................ 104,396 116,297 488,437
Securities available for sale.......................................... 1,902,862 1,850,113 1,604,498
Loans held for sale.................................................... 228,219 249,498 222,787
Loans.................................................................. 6,512,373 6,305,389 6,462,982
Goodwill............................................................... 194,968 180,846 179,858
Deposits............................................................... 7,075,238 6,760,865 6,702,908
Federal Home Loan Bank advances........................................ 1,037,562 1,113,840 1,523,295
Other borrowings....................................................... 426,220 452,454 367,930
Stockholders' equity................................................... 753,984 750,881 758,442
Tangible net worth..................................................... 559,016 570,035 578,584
Book value per common share............................................ 19.28 18.61 19.31
Tangible book value per common share................................... 14.29 14.13 14.73
KEY RATIOS:
Net interest margin.................................................... 4.64% 4.59% 4.66%
Return on average assets............................................... 1.26 1.20 .91
Return on average realized common equity............................... 15.70 14.97 11.21
Average total equity to average assets................................. 8.04 8.10 8.14
Common dividend payout ratio........................................... 25.00 22.98 34.39
NOTE TO SELECTED UNAUDITED PRO FORMA COMBINED FINANCIAL DATA
(1) Includes interest-bearing deposits with banks, federal funds sold, U.S.
Government and other marketable securities held to maturity, securities
purchased under resale agreements and FHLB stock.
21
THE SPECIAL MEETING
This Proxy Statement/Prospectus is being furnished to Standard stockholders
in connection with the solicitation of proxies by the Board of Directors of
Standard for use at the Special Meeting and at any adjournments or postponements
thereof. The Special Meeting will be held on September 4, 1997, commencing at
10:00 a.m. local time, at Marie's Ashton Place, 341 West 75th Street,
Willowbrook, Illinois.
This Proxy Statement/Prospectus and the Notice of Special Meeting of
Stockholders of Standard and the accompanying proxies solicited by the Board of
Directors of Standard are first being mailed to stockholders of Standard on or
about August 6, 1997.
The principal executive offices of Standard are located at 800 Burr Ridge
Parkway, Burr Ridge, Illinois 60521.
PURPOSES OF THE SPECIAL MEETING. The purposes of the Special Meeting are to
consider and vote upon (i) a proposal to approve and adopt the Reorganization
Agreement and the transactions contemplated thereby, and (ii) such other
business as may properly come before the Special Meeting, including any motion
to adjourn the Special Meeting, if necessary, to solicit additional proxies, or
any adjournments or postponements thereof.
SHARES OUTSTANDING AND ENTITLED TO VOTE; RECORD DATE. The Board of
Directors of Standard has fixed the close of business on July 11, 1997 as the
Record Date for the determination of holders of Standard Common Stock entitled
to notice of and to vote at the Special Meeting or any adjournments or
postponements thereof. On the Record Date, there were 16,210,435 shares of
Standard Common Stock outstanding and entitled to vote, held by approximately
3,978 holders of record. Each share of Standard Common Stock entitles the holder
thereof to one vote on each matter to be submitted for stockholder vote at the
Special Meeting.
QUORUM; VOTE REQUIRED. The affirmative vote of a majority of the
outstanding shares of Standard Common Stock is required to approve the
Reorganization Agreement and the transactions contemplated thereby. Assuming a
quorum is present, the affirmative vote of a majority of the Standard Common
Stock voting in person or by proxy is required to adopt a motion to adjourn the
Special Meeting to solicit additional proxies, if necessary. The presence, in
person or by proxy, of a majority of the aggregate number of shares of Standard
Common Stock outstanding and entitled to vote on the Record Date is necessary to
constitute a quorum at the Special Meeting. Proxies marked as abstaining will be
treated as present for purposes of determining a quorum at the Special Meeting,
but will not be counted as voting on any matter as to which "abstain" is
indicated. Proxies returned by brokers as "non-votes" on behalf of shares held
in street name will not be treated as present for purposes of determining a
quorum for the Special Meeting unless they are voted by the broker on at least
one matter. Such non-voted shares will not be counted as voting on any matter as
to which a non-vote is indicated on the broker's proxy. Abstentions and broker
non-votes will have the same effect as votes against approval of the
Reorganization Agreement.
As of the Record Date, the directors and executive officers of Standard and
their affiliates in the aggregate beneficially owned and are entitled to vote
803,164 shares, or 4.95%, of the outstanding Standard Common Stock (exclusive of
shares of Standard Common Stock that may be acquired upon the exercise of
Standard Stock Options and that may be deemed beneficially owned because a
director or officer serves as a fiduciary). Each of the directors and executive
officers of Standard have signed an affiliate letter, which provides that they
will refrain from transferring shares of TCF Common Stock received in the
Combination except in a registration under the Securities Act, in compliance
with Rules 144 and 145 under the Securities Act or pursuant to another exemption
from registration under the Securities Act.
As of the Record Date, neither TCF and its subsidiaries, nor the directors
and executive officers of TCF and their affiliates beneficially owned any
outstanding shares of Standard Common Stock. As of that
22
date, TCF subsidiaries, acting as fiduciaries, custodians or agents, did not
have sole or shared voting power over any shares of Standard Common Stock.
VOTING; SOLICITATION AND REVOCATION OF PROXIES. A proxy for use at the
Special Meeting accompanies this Proxy Statement/Prospectus and is solicited by
the Board of Directors of Standard. Any Standard stockholder executing a proxy
may revoke it at any time before it is voted by (i) filing with the Secretary of
Standard, at the address of Standard set forth on the Notice of Special Meeting,
a written notice of such revocation, (ii) executing a later-dated proxy or (iii)
attending the Special Meeting and giving notice of such revocation in person.
Attendance at the Special Meeting will not, in and of itself, constitute
revocation of a proxy. Each properly executed proxy returned to Standard (and
not revoked) will be voted in accordance with the instructions thereon. IF NO
INSTRUCTIONS ARE INDICATED, THE PROXY WILL BE VOTED: (1) "FOR" APPROVAL OF THE
REORGANIZATION AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY; AND (2)
"FOR" ADJOURNMENT OF THE SPECIAL MEETING TO SOLICIT ADDITIONAL PROXIES, IF
NECESSARY. If a properly executed proxy is returned with a vote against the
Combination, the shares represented by such proxy may not be voted in favor of
an adjournment of the Special Meeting. Because approval of the Reorganization
Agreement by Standard stockholders requires the affirmative vote of a majority
of the shares of Standard Common Stock outstanding as of the Record Date,
failure to submit a proxy, abstentions and broker non-votes will have the effect
of being a vote against the Reorganization Agreement and the transactions
contemplated thereby. While the Board of Directors of Standard knows of no other
matters to be presented at the Special Meeting, if any other matter properly
comes before the meeting or any adjournments or postponements thereof, all
proxies returned to Standard will be voted on any such matter in accordance with
the best judgment of the proxy holders.
BENEFICIAL OWNERSHIP OF STANDARD COMMON STOCK. This information is
incorporated by reference from Standard's Annual Report on Form 10-K for the
year ended December 31, 1996. See "INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE."
23
THE COMBINATION
GENERAL
The Board of Directors of Standard believes that the terms of the
Reorganization Agreement are fair and in the best interests of the holders of
Standard Common Stock and has unanimously approved the Combination. THE BOARD OF
DIRECTORS OF STANDARD UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL AND
ADOPTION OF THE REORGANIZATION AGREEMENT AND THE TRANSACTIONS CONTEMPLATED
THEREBY.
The following description of the material terms of the Reorganization
Agreement does not purport to be complete and is qualified in its entirety by
reference to the Reorganization Agreement, a copy of which is attached to this
Proxy Statement/Prospectus as Appendix A. All holders of Standard Common Stock
are urged to read such document carefully.
BACKGROUND OF AND REASONS FOR THE COMBINATION
BACKGROUND OF THE COMBINATION
TCF. Completion of a public offering of common stock and capital notes in
early 1992 enabled TCF to make a significant capital contribution to its primary
subsidiary, TCF Minnesota, which in turn enabled TCF Minnesota (and the other
TCF Banks) to qualify as "well-capitalized" under OTS regulations. Following the
achievement of this level of capitalization, which facilitates receiving certain
regulatory approvals for acquisitions, TCF formed a committee of senior
executives to determine the location, size, asset quality requirements and other
characteristics of institutions that might be suitable acquisition opportunities
for TCF. Effective April 21, 1993, TCF acquired RCG whose principal assets
consisted of all of the capital stock of Republic Capital Bank, F.S.B. (now TCF
Wisconsin) and Peerless Federal Savings Bank (now TCF Illinois), both
federally-chartered savings institutions, which had 24 branch offices located in
central and eastern Wisconsin and six branch offices located in northeastern
Illinois, respectively. In August 1993, TCF entered the Michigan market with the
acquisition of $220.8 million in deposits and 15 branch offices of First Federal
Savings and Loan Association, Pontiac, Michigan from the Resolution Trust
Corporation. Both acquisitions represented strategic geographic expansions of
TCF's business. Effective February 8, 1995, TCF acquired Great Lakes, with $1.6
billion in deposits and $2.8 billion in assets. Effective January 16, 1997, TCF
acquired the stock of BOC Financial Corporation, a holding company for Bank of
Chicago, s.b., an Illinois state-chartered savings bank with three primary
retail branches in the Chicago area and $168 million in deposits. On June 24,
1997, TCF acquired Winthrop, an equipment leasing company with operations
throughout the United States, for approximately 6,700,000 shares of TCF Common
Stock. See "RECENT DEVELOPMENTS--Winthrop." On May 23, 1997, Great Lakes Ohio
entered into a purchase and sale agreement pursuant to which the eight branches
of Great Lakes Ohio will be sold to The Fifth Third Bank of Cincinnati, Ohio.
See "RECENT DEVELOPMENTS--Ohio Branches."
In December 1996, Gregory J. Pulles, TCF Director of Mergers and
Acquisitions, contacted Standard to express TCF's interest in a possible
transaction in connection with a general program of contacting potential
acquisition candidates in the Chicago area. In January 1997, TCF was one of the
companies contacted by Wasserstein, Standard's financial advisor, to engage in
exploratory discussions concerning a possible combination. On or about February
19, 1997, TCF was again contacted by Wasserstein and asked to submit a
preliminary term sheet to Standard. The possibility of a transaction involving
Standard was reviewed at a meeting of the TCF Shareholder Relations Committee of
the TCF Board of Directors (the "Committee") on February 24, 1997 (the meeting
had been called primarily to review and authorize execution of a definitive
agreement with Winthrop), and the Committee authorized management to proceed
with negotiations. TCF's preliminary term sheet for the acquisition was
submitted to Standard on that same day and TCF representatives commenced a due
diligence review of Standard shortly thereafter.
24
Representatives of Standard and its advisers commenced a due diligence review of
TCF starting February 28, 1997. TCF delivered to Standard, on or about March 10,
1997, a proposed form of purchase agreement and the parties conducted further
negotiations and due diligence review. The transaction was reviewed in detail at
a Committee meeting on March 14, 1997, and at a special meeting of the Board of
Directors of TCF on that same day, at which the Committee and the Board of
Directors authorized management to proceed with finalizing and executing a
definitive agreement and authorized the issuance of shares and the payment of
cash consideration provided for in the Combination. At the meetings on March 14,
1997, Piper Jaffray Inc. ("Piper"), TCF's financial adviser, presented the Board
of Directors with its opinion that the consideration to be provided in the
transaction was fair from a financial point of view to the stockholders of TCF.
After the Standard Board of Directors approved execution of a definitive
agreement at its meeting on March 15, 1997, representatives of TCF and Standard
reached agreement on the final form of the Reorganization Agreement. The
Reorganization Agreement was executed effective March 16, 1997, and the
transaction was publicly announced on that same day.
STANDARD. Standard was organized on March 9, 1994 at the direction of the
Board of Directors of Standard Bank for the purpose of acquiring all of the
capital stock to be issued by Standard Bank pursuant to its conversion from a
federally chartered mutual savings bank to a federally chartered stock savings
bank (the "Conversion"). On July 28, 1994, Standard issued and sold to the
public 18,630,000 shares of Standard Common Stock at an issuance price of $10.00
per share to complete the Conversion. During the period from January 2, 1996 to
October 15, 1996, Standard Common Stock traded at prices ranging from $14.75 to
$17.88. On October 16, 1996, a group identifying itself as LaSalle/Kross
Partners, L.P. ("LaSalle/Kross") filed with the Commission a Schedule 13D with
respect to Standard Common Stock which stated that LaSalle/Kross owned 850,000
shares (or 5.2% of the outstanding shares) of Standard Common Stock. Following
this filing, the price of Standard Common Stock increased to $21.25 on December
10, 1996. In October 1996, in response to corporate governance issues raised by
the stock ownership of LaSalle/Kross, Standard engaged Skadden as outside legal
counsel and Wasserstein as financial advisor.
In recent years, the financial services industry has witnessed substantial
and rapid change characterized by increasing consolidation, intensifying
competition and acquisitive growth of many of the larger domestic banking
organizations. During this period of changing regulatory and market conditions,
Standard has regularly considered possible strategies and transactions to
enhance its profitability, competitive position and strategic focus, and thereby
increase shareholder value. As part of this ongoing process, in November 1996,
the Standard Board of Directors met with Skadden and Wasserstein to review,
among other things, the short- and long-term strategic options available to
Standard. The Standard Board of Directors discussed with its advisors the
advantages and disadvantages of various alternatives including continued growth
as an independent company, implementation of a share repurchase plan, expansion
of its operations through an acquisition, merger of equals or strategic alliance
transaction and pursuit of a transaction involving the sale of Standard.
During December 1996 and January 1997, Standard was contacted by various
banking organizations, including TCF, to determine the level of interest in a
possible business combination. At its January 1997 meeting, after further review
of the strategic options available to Standard and a review of the various
contacts from interested third parties, the Standard Board of Directors
authorized senior management and Wasserstein to conduct exploratory discussions
concerning a possible business combination transaction with a select group of
banking institutions, including TCF, that were deemed likely to be interested in
such a transaction based on earlier contacts or other information obtained by
Standard's senior management and Wasserstein. Over the ensuing months,
Standard's senior management and Wasserstein conducted preliminary discussions
with eight potential merger partners. Where necessary or appropriate, Standard
required such parties to execute customary confidentiality agreements to
preserve the confidential nature of any proprietary information of Standard
disclosed during the course of such preliminary discussions.
On February 19, 1997, Wasserstein presented to Standard's Board of Directors
the results of its preliminary conversations with certain potential merger
partners, including TCF. Through its exploratory
25
discussions with these various banking institutions, Standard received
preliminary indications of interest in a possible business combination from four
institutions, including TCF. The proposed valuations contemplated by these
institutions ranged from $20 to $25 per share of Standard Common Stock, with
TCF's valuation being the highest. These indications of interest involved
different combinations of cash and/or stock as consideration. The Board of
Directors authorized Standard's senior management and Wasserstein to continue
discussions with TCF. The Board based its action on the perceived level of
interest by TCF in pursuing a transaction, the likelihood that a transaction
with TCF would be consummated if mutually acceptable terms could be agreed upon,
TCF's prior record in making acquisitions, TCF's large market capitalization and
excellent financial position, TCF's existing presence in the Chicago area, the
potential synergies resulting from a business combination with TCF and the
expectation that a negotiated transaction with TCF would result in the highest
value per share for Standard's stockholders. On February 24, 1997, TCF submitted
a preliminary term sheet to Standard regarding a potential business combination
of Standard with TCF and, having already executed a confidentiality agreement,
began conducting its due diligence review of Standard and its business
operations.
On February 28, 1997, Standard entered into a customary confidentiality
agreement with TCF, whereupon Standard's senior management, Wasserstein,
Skadden, and Ernst & Young LLP ("Ernst & Young"), Standard's independent
accountants, began conducting Standard's due diligence review of TCF, which
included, among other things, (i) meetings with senior officers of TCF to review
TCF's strategic plans and objectives, (ii) a review of TCF's financial
information, projections and pro forma projections, (iii) a review of credit
reports and other management reports of TCF, (iv) discussions with the
management of TCF regarding underwriting standards and internal financial and
accounting controls, (v) sampling and review of loan files, and (vi) a review of
TCF's litigation files, corporate minutes, employee handbooks and certain
environmental matters.
After this mutual due diligence review, TCF delivered to Standard on March
10, 1997, a preliminary draft of a definitive agreement for the Combination and,
over the course of the following week, the parties negotiated the terms of the
proposed agreement, including the Consideration Formula, and the related
transaction documents.
At a special meeting of the Standard Board of Directors held on March 15,
1997, management presented the TCF proposal to the Standard Board of Directors
and reviewed with the Standard Board of Directors the events leading up to the
TCF proposal, including senior management's negotiations with TCF. Wasserstein
reviewed the TCF proposal for the Standard Board of Directors and provided its
analyses. The Standard Board of Directors invited Mr. William A. Cooper,
Chairman and Chief Executive Officer of TCF, to introduce himself to the
Standard Board of Directors and to discuss the proposed business combination of
TCF and Standard. Skadden reviewed the fiduciary duties owed by the Standard
Board of Directors to Standard's stockholders in connection with the proposed
transaction and reviewed the terms of the Reorganization Agreement and the
proposed resolutions concerning the Combination. Wasserstein then formally
advised the Standard Board of Directors as to its fairness opinion and stated
that, as set forth in its draft fairness opinion and subject to the provisions
and qualifications thereof, Wasserstein concluded that the consideration to be
received in the Combination was fair from a financial point of view to the
holders of Standard Common Stock. (Wasserstein provided its written opinion to
the same effect dated as of March 16, 1997. The fairness opinion of Wasserstein
is attached hereto as Appendix B, and holders of Standard Common Stock are
encouraged to read that opinion carefully in its entirety. See "--Opinion of
Financial Advisor to Standard.")
Following a review and discussion of the definitive terms of the
transaction, the fairness opinion of Wasserstein and numerous other relevant
factors (described below in "--Background of and Reasons for the
Combination--Reasons for the Combination"), the Standard Board of Directors, by
a unanimous vote of all directors, authorized and approved the Reorganization
Agreement and the transactions contemplated thereby. The Board of Directors also
determined that the Reorganization Agreement be submitted to a vote of Standard
stockholders and unanimously recommended that such stockholders approve and
26
adopt the Reorganization Agreement. The parties executed the Reorganization
Agreement as of March 16, 1997.
REASONS FOR THE COMBINATION
TCF. The terms of the Reorganization Agreement, including the consideration
to be paid to Standard's stockholders, were the result of arm's-length
negotiations between the representatives of TCF and Standard. Among the factors
considered by the Board of Directors of TCF in deciding to approve the terms of
the Combination were: (i) the consideration to be paid to Standard's
stockholders in relation to the market value, book value, earnings per share and
dividend rates of the TCF Common Stock and the Standard Common Stock; (ii)
information concerning the financial condition, results of operations, capital
levels, asset quality and prospects of TCF and Standard (including Standard
Bank); (iii) the short-term and long-term impact the Combination is expected to
have on the TCF consolidated results of operations, including any potential for
dilution; (iv) the availability of TCF Illinois' current management team in the
Chicago area and the enhancement of TCF Illinois' existing franchise in Chicago
through operating synergies (consolidation of operations), economies of scale in
advertising and marketing, increased TCF presence in the Chicago area and,
accordingly, greater convenience for TCF customers in the Chicago area; (v) the
potential for generating increased earnings, and thereby enhancing and
maintaining the value of TCF Common Stock to its stockholders, through access to
Standard Bank's low cost deposit base and through enhanced marketing of higher
yield consumer lending products to Standard Bank's customers; (vi) Standard
Bank's deposit base, credit quality, assets, earnings and product mix,
particularly as they compare to that of the current TCF Banks; (vii) the
similarities of Standard Bank to other financial institutions previously
acquired by TCF; (viii) the ability of the combined enterprise to compete in
relevant banking markets; (ix) industry and economic conditions, including
trends in the consolidation of the financial services industry; (x) the impact
of the Combination on the depositors, employees, customers of and communities
served by TCF and Standard through expanded products and services; (xi) the
opinion of Piper, TCF's financial advisor, that the Consideration to be paid in
the Combination is fair, from a financial point of view, to TCF stockholders;
and (xii) the potential sources of funding for the cash portion of the
Consideration. The Board of Directors of TCF also considered the effect of the
pending Winthrop transaction on the proposed Combination, and the effect of the
Combination on the Winthrop transaction. The TCF Board of Directors concluded
that the proposed Combination with Standard is similar to previous acquisitions
of financial institutions by TCF in which management has significantly improved
core earnings by achieving operating efficiencies and changing the mix of loan
products and could be expected to enhance TCF's profitability and to be
beneficial to its stockholders. The TCF Board of Directors also concluded that
the Winthrop transaction and the Combination are complementary to each other and
that TCF should proceed with both transactions. In making its determination to
approve the Reorganization Agreement and authorize the Combination, the Board of
Directors of TCF did not ascribe relative weights to the factors which it
considered.
STANDARD. The Standard Board of Directors has unanimously determined that
the Combination and the Reorganization Agreement, including the Consideration
Formula, are fair to, and in the best interests of, Standard and its
stockholders. In the course of reaching its decision, the Standard Board of
Directors consulted with senior management, Standard's legal counsel with
respect to the legal duties of the Board, regulatory matters, the Reorganization
Agreement and issues related thereto, and with Wasserstein with respect to the
financial aspects and fairness of the Combination and the fairness of the
Consideration to be received by Standard's stockholders.
Prior to approving the Combination, the Standard Board of Directors received
information regarding, and analyzed and considered, among other things, the
following factors: (i) information concerning the businesses, earnings,
operations, financial condition, prospects, capital levels and asset quality of
Standard and TCF, both individually and as a combined entity, and the strategic
fit of the operating philosophies of the two institutions; (ii) the potential
for revenue growth by cross-selling TCF's high-margin financial
27
products to the combined customer base; (iii) the potential for increased fee
generation through the application of TCF's deposit fees, ATM fees and loan
servicing fees to the combined customer base; (iv) the geographic advantages of
a combination, including significant additional market penetration with few
overlapping branches; (v) the current and prospective economic and competitive
environments facing Standard and other financial institutions characterized by
intensifying competition from both banks and nonbank financial services
organizations, the increasing necessity for strong fee-based income-producing
components within a bank holding company, and the growing costs associated with
regulatory compliance in the banking industry; (vi) the belief that the combined
company would be well-positioned to grow through possible future acquisitions or
expansions, while not being so large as to diminish its attractiveness as a
possible acquisition candidate; (vii) the opinion by Wasserstein to the effect
that, as of the date of such opinion, the consideration to be provided in the
Combination is fair, from a financial point of view, to Standard's stockholders
(see "--Opinion of Financial Advisor to Standard"); (viii) a comparison of the
terms and conditions of the Reorganization Agreement and the other documents
relating to the Combination to the terms customarily seen in similar
transactions, which terms and conditions were viewed as providing an equitable
basis for the Combination from the standpoint of Standard; (ix) that the
Reorganization Agreement permits each holder of Standard Common Stock to elect,
subject to certain limitations, the form of consideration to be received in the
Combination; (x) the continuing influence of certain of Standard's directors and
executive management personnel in the Resulting Institution; and (xi) the impact
of the Combination on Standard's employees in terms of working environment and
career opportunities, on Standard's depositors and customers in terms of the
wider range of products and services that will be available from a strong and
sound Resulting Institution, and on the communities which Standard currently
serves in terms of the enhanced strength and accessibility of the combined
franchise.
The Standard Board of Directors' analysis of the foregoing factors included
the following considerations, all of which the Standard Board of Directors
concluded would present the potential for increased stockholder value in the
future and which weighed in favor of a business combination with TCF: (i)
Standard's dependence on earnings from retail banking, which have been subject
to increasing margin pressure, and the countervailing benefits associated with
TCF's significant percentage of fee-based income not subject to such margin
pressure; (ii) the less attractive strategic alternatives available to Standard
in light of the continuing trend of bank consolidations (such as a share
repurchase program, acquisition of one or more other banking institutions or
continued growth as an independent company); and (iii) the belief that the
Combination would enable Standard's stockholders to receive stock in a high
quality combined company that should benefit from enhanced operating
efficiencies and better penetration of commercial and consumer banking markets.
Following consideration of the information and factors described above
(including reliance upon the opinion of Wasserstein, as of the date of such
opinion, that the consideration to be provided in the Combination is fair to the
Standard stockholders from a financial point of view), the Standard Board of
Directors concluded that the Combination is fair to, and in the best interests
of, the Standard stockholders. In reaching this conclusion, the Standard Board
of Directors did not assign relative or specific weights to the above
information and factors or determine that any information or factor was of
particular importance. A determination of various weightings would, in the view
of the Standard Board of Directors, be impractical. Rather, the Standard Board
of Directors viewed its decision and recommendation as being based on the
totality of the information and factors presented to and considered by it. In
addition, individual members of the Standard Board of Directors may have given
different weight to different information and factors.
FOR THE REASONS DESCRIBED ABOVE, THE STANDARD BOARD OF DIRECTORS HAS
DETERMINED THAT THE TERMS OF THE REORGANIZATION AGREEMENT ARE FAIR TO, AND IN
THE BEST INTERESTS OF, STANDARD AND ITS STOCKHOLDERS. ACCORDINGLY, THE STANDARD
BOARD OF DIRECTORS UNANIMOUSLY APPROVED AND ADOPTED THE REORGANIZATION AGREEMENT
AND RECOMMENDS THAT THE STOCKHOLDERS OF STANDARD VOTE
28
"FOR" APPROVAL AND ADOPTION OF THE REORGANIZATION AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED THEREBY.
OPINION OF FINANCIAL ADVISOR TO STANDARD
Pursuant to an engagement letter dated March 3, 1997 (the "Engagement
Letter"), Standard retained Wasserstein as its exclusive financial advisor in
connection with the possible merger or business combination of Standard.
Wasserstein is an internationally recognized investment banking firm and is
continually engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions, negotiated underwritings, competitive
biddings, secondary distributions of listed and unlisted securities, private
placements and valuations for estate, corporate and other purposes. Wasserstein
is familiar with Standard, having provided certain investment banking services
to Standard, including acting as financial advisor to Standard recently in
connection with an analysis of possible strategic alternatives and having acted
as financial advisor in connection with, and having participated in certain of
the negotiations leading to, the Reorganization Agreement. The Standard Board of
Directors selected Wasserstein as Standard's financial advisor based on
Wasserstein's substantial experience with and expertise in mergers and
acquisitions and securities valuation generally, and its reputation in the
banking, savings and loan, and investment communities.
On March 15, 1997, Wasserstein delivered its oral opinion to the Standard
Board of Directors that, on the basis of and subject to the matters to be set
forth in its written opinion, the Consideration to be received by the holders of
Outstanding Standard Shares pursuant to the Reorganization Agreement (treating
the Combination as a unitary transaction) in the Combination is fair to such
holders, from a financial point of view. Wasserstein delivered its written
opinion to the same effect dated as of March 16, 1997 and as affirmed on August
6, 1997. In preparing its opinion, Wasserstein performed a variety of financial
and comparative analyses and made a detailed presentation to the Standard Board
of Directors.
THE FULL TEXT OF THE WASSERSTEIN WRITTEN OPINION DATED AS OF MARCH 16, 1997,
AND AS AFFIRMED ON AUGUST 6, 1997, WHICH SETS FORTH THE ASSUMPTIONS MADE,
MATTERS CONSIDERED AND LIMITS ON ITS REVIEW, IS ATTACHED HERETO AS APPENDIX B.
WASSERSTEIN'S OPINION IS DIRECTED ONLY TO THE CONSIDERATION TO BE RECEIVED IN
THE COMBINATION BY THE HOLDERS OF OUTSTANDING STANDARD SHARES PURSUANT TO THE
REORGANIZATION AGREEMENT (TREATING THE COMBINATION AS A UNITARY TRANSACTION) AND
DOES NOT CONSTITUTE A RECOMMENDATION TO ANY STOCKHOLDER AS TO HOW SUCH
STOCKHOLDER SHOULD VOTE AT THE SPECIAL MEETING. THE SUMMARY OF THE WASSERSTEIN
OPINION SET FORTH IN THIS PROXY STATEMENT/PROSPECTUS IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO THE FULL TEXT OF THE OPINION. HOLDERS OF OUTSTANDING
STANDARD SHARES ARE URGED TO AND SHOULD READ SUCH OPINION IN ITS ENTIRETY.
In connection with its opinion, Wasserstein reviewed, among other things,
(a) the Reorganization Agreement (b) certain publicly available business and
financial information relating to Standard and TCF for recent years and interim
periods to date, and (c) certain internal financial and operating information,
including financial forecasts, analyses and projections prepared by or on behalf
of Standard and TCF and provided for the purpose of Wasserstein's analysis.
Wasserstein also held discussions with members of the senior management of
Standard and TCF regarding such information and, among other things, the
business, operations, assets, financial condition and future prospects of their
respective companies. Wasserstein reviewed historical stock prices and trading
activity for Standard Common Stock and TCF Common Stock, compared certain
financial and stock market information for Standard and TCF with similar
information for certain other depository institutions and holding companies the
securities of which are publicly traded, reviewed the financial terms of certain
recent business combinations in the banking industry specifically and other
industries generally, and performed such other studies, analyses, and
investigations, and reviewed such other information as Wasserstein considered
appropriate.
29
Wasserstein assumed and relied upon, without independent verification, the
accuracy and completeness of all of the financial and other information provided
to or discussed with it for purposes of its opinion. In that regard, Wasserstein
assumed, with the consent of the Standard Board of Directors, that the financial
forecasts, analyses, and projections including, without limitation, projected
cost savings, operating synergies and revenue enhancements resulting from the
Combination, were reasonably prepared in good faith and on bases reflecting the
best currently available judgments and estimates of Standard's and TCF's
respective management, and that such forecasts would be realized in the amounts
and in the time periods contemplated by Standard and TCF. Wasserstein is not an
expert in evaluation of loan portfolios for purposes of assessing the adequacy
of the allowances for losses with respect thereto and has assumed, with the
consent of the Standard Board of Directors, that existing allowances for
Standard and TCF are in the aggregate adequate to cover all such losses.
Wasserstein did not review individual credit files or review the securities
inventory of Standard or TCF or any of their subsidiaries, nor did it make or
obtain an independent evaluation or appraisal of properties, assets, or
liabilities of Standard or TCF. Wasserstein assumed that the Combination will
qualify as a tax-free reorganization within the meaning of Section 368(a) of the
Code. Wasserstein assumed that the Combination will be consummated on the terms
described in the Reorganization Agreement without waiver of any material terms
or conditions and that obtaining the necessary regulatory approvals and third
party consents for the Combination will not have an adverse effect on TCF
following the Combination. In the event of a waiver of a material term or
condition, Wasserstein will conduct such further analysis as it deems
appropriate and amend its opinion as necessary in light thereof. Wasserstein did
not contact all potential merger partners for Standard; instead, Wasserstein
contacted a limited number of parties as determined in consultation with
management and the Standard Board of Directors.
Pursuant to the terms of the Engagement Letter, Standard has agreed to pay
Wasserstein (i) a fee of $300,000 upon the execution of the definitive
Reorganization Agreement and (ii) if the Combination is consummated, a
transaction fee equal to (a) the excess of 1.00% of the Aggregate Consideration
(as defined in the Engagement Letter) paid in the Combination over the $300,000
fee noted above, minus (b) a financial advisory fee of $100,000 already paid at
the time of execution of the Engagement Letter. In addition, Standard has agreed
to reimburse Wasserstein for its reasonable out-of-pocket expenses, including
the fees and disbursements of their counsel, and (pursuant to a separate letter
agreement) to indemnify Wasserstein against certain liabilities relating to or
arising out of their engagement, including liabilities under federal securities
laws.
In connection with the financial advisory services that Wasserstein provided
to Standard in late 1996 and early 1997, Standard also paid Wasserstein
aggregate fees of $400,000. Except for such fees and the fees described above
pursuant to the Engagement Letter, Standard has not paid any fees to Wasserstein
during the past two years.
SUMMARY OF FINANCIAL ANALYSES
The following is a summary of the material financial analyses performed by
Wasserstein in connection with its opinion:
DISCOUNT CASH FLOW ANALYSIS OF STANDARD. Based upon forecasts provided by
the management of Standard, Wasserstein prepared a discounted free cash flow
analysis which estimated the net present value of the future cash flows that
Standard might be expected to produce over the five-year period from 1997 to
2001. The analysis used assumptions relating to earnings per share, dividends
and terminal value, if Standard were to operate on a stand-alone basis (without
giving effect to any operating or other efficiencies pursuant to the
Combination). In conducting this analysis, Wasserstein assumed equity discount
rates ranging between 12% and 16% and deposit premiums at Year 2001 ranging
between 5% and 8%. The results of this analysis indicated a range of implied
per-share prices for Standard of between $21.72 and $28.21. The Consideration
Value Per Share of the TCF proposal based on an Average TCF Stock Price, as of
the date the Reorganization Agreement was signed, of $45.75, is $25.25.
30
COMPARABLE COMPANY ANALYSIS OF STANDARD. Wasserstein compared the various
financial ratios of Standard with the individual and group information of the
following selected comparable companies which it deemed to be reasonably similar
to Standard in size, financial character, operating character and historical
performance: Calumet Bancorp, CitFed, Great Financial Corporation, Hinsdale
Financial Corporation ("Alliance Capital" after merger with Liberty), MAF
Bancorp, Mid-America Bancorp, St. Paul Bancorp and Security Capital Corporation
(collectively, the "Standard Comparable Companies").
Among the valuation ratios considered were: (i) the ratio of market price to
latest 12 months' earnings per share, which was 18.8x for Standard and 16.8x for
the median of the Standard Comparable Companies; (ii) the ratio of market price
to estimated fiscal 1997 earnings per share, which was 15.5x for Standard and
16.3x for the median of the Standard Comparable Companies; (iii) the ratio of
market value to December 31, 1996 book value, which was 1.21x for Standard and
1.54x for the median of the Standard Comparable Companies; (iv) the ratio of
market value to December 31, 1996 adjusted book value (calculated assuming that
a premium is paid only for that portion of book value equal to 7% of total
assets), which was 1.33x for Standard and 1.72x for the median of the Standard
Comparable Companies;(v) the ratio of market value to assets, which was .14x for
Standard and .15x for the median of the Standard Comparable Companies; and (vi)
the ratio of market value to deposit premium, which was 3.9% for Standard and
8.0% for the median of the Standard Comparable Companies. Using these and other
valuation ratios, Wasserstein calculated the indicated per-share prices for
Standard that would result by multiplying, respectively, the median of each of
these valuation multiples for the Standard Comparable Companies by the relevant
information for Standard. This calculation yielded implied per-share prices of
Standard ranging from $16.89 to $23.19. The figures used for estimated fiscal
1997 earnings for the Standard Comparable Companies were based on earnings
estimates published by selected research analysts. The estimate of fiscal 1997
earnings for Standard used by Wasserstein was based on estimates provided by
Standard management.
COMPARABLE TRANSACTION ANALYSIS OF STANDARD. Wasserstein reviewed the
consideration paid in selected comparable merger and acquisition transactions
involving thrifts. Transactions were selected on the basis of comparability of
transaction value and the perceived comparability of the markets served by the
acquired institutions to those of Standard, and included the acquisitions of
North Side Savings Bank, Home Financial Corp., Leader Financial, Bell Bancorp
Inc., NS Bancorp Inc., Columbia First Bank, Deerbank Corp., Coral Gables
FedCorp., Great Lakes Bancorp, Fidelity New York, NBB Bancorp, AmeriFed
Financial Corp., First Federal S&L (15 offices), Cragin Financial Corp. and
Republic Capital Group (collectively, the "Standard Comparable Transactions").
For the Standard Comparable Transactions, the multiple of purchase price to
the latest 12 months' earnings per share ranged from 12.9x to 27.8x with a
median of 15.4x. At December 31, 1996, the Standard multiple of latest 12
months' earnings per share to an assumed Consideration Value Per Share of $25.25
was 24.0x. For the Standard Comparable Transactions, the multiple of purchase
price to book value ranged from 1.17x to 2.21x with a median of 1.53x. The
multiple of the assumed Consideration Value Per Share for Standard to its
December 31, 1996 book value was 1.60x. For the Standard Comparable
Transactions, the multiple of purchase price to adjusted book value ranged from
1.20x to 2.34x with a median of 1.92x. The multiple of the assumed Consideration
Value Per Share for Standard to its December 31, 1996 adjusted book value was
1.95x. For the Standard Comparable Transactions, the deposit premium ranged from
2.5% to 18.9% with a median of 7.7%. At December 31, 1996, the assumed
Consideration Value Per Share for Standard represented a deposit premium of
9.3%. Using these transaction multiples, Wasserstein calculated the implied
share prices for Standard that would result by multiplying, respectively, the
median of each of these transaction multiples for the Standard Comparable
Transactions by relevant information for Standard. This calculation yielded
implied per-share prices of Standard Common Stock ranging from $17.10 to $25.43.
DISCOUNTED CASH FLOW ANALYSIS OF TCF. Based upon forecasts provided by the
management of TCF, Wasserstein prepared a discounted free cash flow analysis
which estimated the net present value of the
31
future cash flows that TCF might be expected to produce over the four-year
period from 1997 to 2000, using assumptions relating to earnings per share,
dividends and terminal value if TCF were to operate on a stand-alone basis
(without giving effect to any operating or other efficiencies pursuant to the
Combination). In conducting this analysis, Wasserstein assumed equity discount
rates ranging between 12% and 16% and deposit premiums at Year 2000 ranging
between 20% and 23%. The results of this analysis indicated a range of implied
per-share prices for TCF of between $40.69 and $48.64.
COMPARABLE COMPANY ANALYSIS OF TCF. Wasserstein compared the various
financial ratios of TCF with the individual information and medians of the
following selected comparable companies which it deemed to be reasonably similar
to TCF in size, financial character, operating character and historical
performance: Collective Bancorp, Commerce Bancshares, Commercial Federal
Corporation, First Financial of Wisconsin, First Virginia Banks, Inc., Provident
Bancorp, Inc., Roosevelt Financial Group, Star Banc Corporation and Zions
Bancorporation (collectively, the "TCF Comparable Companies").
Among the valuation ratios considered were: (i) the ratio of market price to
latest 12 months' earnings per share, which was 15.2x for TCF and 15.0x for the
median of the TCF Comparable Companies; (ii) the ratio of market price to
estimated fiscal 1997 earnings per share, which was 13.4x for TCF and 14.1x for
the median of the TCF Comparable Companies; (iii) the ratio of market value to
December 31, 1996 book value, which was 2.92x for TCF and 2.11x for the median
of the TCF Comparable Companies; (iv) the ratio of market value to December 31,
1996 adjusted book value, which was 3.12x for TCF and 2.26x for the median of
the TCF Comparable Companies; (v) the ratio of market value to assets, which was
.23x for TCF and .18x for the median of the TCF Comparable Companies; (vi) the
ratio of market value to deposits, which was .32x for TCF and .24x for the
median of the TCF Comparable Companies; and (vii) the ratio of market value to
deposit premium, which was 21.2% for TCF and 13.0% for the median of the TCF
Comparable Companies. Using these and other valuation ratios, Wasserstein
calculated the implied share prices for TCF that would result by multiplying,
respectively, the median of each of these valuation ratios for the TCF
Comparable Companies by relevant information for TCF. This calculation yielded
implied per-share prices of TCF ranging from $33.35 to $48.75. The figures used
for estimated fiscal 1997 earnings for the TCF Comparable Companies were based
on earnings estimates published by selected research analysts. The estimate of
fiscal 1997 earnings for TCF used by Wasserstein was based on business plan
information provided by TCF management.
COMPARABLE TRANSACTION ANALYSIS OF TCF. Wasserstein reviewed selected
comparable merger and acquisition transactions involving thrifts and bank
holding companies, respectively. Transactions were selected based upon
comparability of transaction value and the perceived comparability of the
markets served by the acquired institutions to those of TCF. With respect to
bank holding companies, Wasserstein reviewed the acquisitions of Liberty
Bancorp, Citizens Bancorp, Boatmen's Bancshares, National Westminister Bancorp,
Meridian Bancorp, Bank South Corp., Fourth Financial Corp., FirsTier Financial,
First Fidelity Bancorporation, West One Bancorp, Worthen Banking Corp., NBB
Bancorp, Continental Bancorp, Independence Bancorp and Liberty National Bancorp
(collectively, the "TCF Comparable Bank Transactions"). With respect to thrifts,
Wasserstein reviewed the acquisitions of American Federal Bank, Roosevelt
Financial Group, Standard Federal Bancorp, Cal Fed Bancorp, Keystone Holdings /
American Savings Bank, Home Financial, Leader Financial Corp., CSF Holdings
Inc., FirstFed Michigan Corp. and Cragin Financial Corp. (collectively, the "TCF
Comparable Thrift Transactions").
For the TCF Comparable Bank Transactions, the multiple of purchase price to
latest 12 months' earnings ranged from 7.8x to 23.6x with a median of 17.6x; the
multiple of purchase price to book value ranged from 1.05x to 2.84x with a
median of 2.10x; the multiple of purchase price to adjusted book value ranged
from 1.07x to 3.25x with a median of 2.37x; the deposit premium ranged from 0.7%
to 21.3% with a median of 11.5%. Using these transaction multiples, Wasserstein
calculated the implied share prices for TCF that would result by multiplying,
respectively, the median of each of these transaction multiples for the TCF
Comparable Bank Transactions by relevant information for TCF. This calculation
yielded implied per-share prices of TCF ranging from $32.23 to $54.16.
32
For the TCF Comparable Thrift Transactions, the multiple of purchase price
to latest 12 months' earnings ranged from 10.00x to 19.68x with a median of
13.60x; the multiple of purchase price to book value ranged from 1.28x to 3.66x
with a median of 1.93x; the multiple of purchase price to adjusted book value
ranged from 1.35x to 3.27x with a median of 1.98x; the deposit premium ranged
form 5.6% to 21.2% with a median of 9.8%. Using these transaction multiples,
Wasserstein calculated the implied share prices for TCF that would result by
multiplying, respectively, the median of each of these transaction multiples for
the TCF Comparable Thrift Transactions by relevant information for TCF. This
calculation yielded implied per-share prices of TCF ranging from $29.76 to
$41.88.
COMBINATION CONSEQUENCES ANALYSIS. Wasserstein analyzed the financial
impact of the Combination on holders of TCF Common Stock, noting that on a pro
forma basis (based on the projections furnished by the management of TCF), the
Combination would result in projected 0.08% earnings per share accretion to TCF
stockholders in fiscal 1997, 1.48% accretion in 1998, 3.02% accretion in 1999,
and 4.41% accretion in 2000. This analysis also reflected potential cost savings
and revenue enhancements resulting from the Combination.
PREMIUM ANALYSIS. Wasserstein performed a premium analysis which compared
the premium presented by the TCF proposal to the median premium paid in the
Standard Comparable Transactions. A premium is defined as the excess, in
percentage terms, of the per share acquisition price relative to the target's
stock price on a given date prior to the announcement of the transaction. Based
upon an assumed Consideration Value Per Share of $25.25, TCF's proposal
represented a premium of 26.3% over the March 10, 1997 closing price of Standard
Common Stock, compared to a median premium of 21.1% for the Standard Comparable
Transactions (based on trading prices one day prior to announcement). Using the
closing price of Standard Common Stock on October 16, 1996 (the day that
LaSalle/Kross filed its initial 13D), Wasserstein calculated that TCF's proposal
represented a premium of 40.3%, compared to a median premium of 36.7% in the
Standard Comparable Transactions (based on trading prices 60 days prior to
announcement).
EXCHANGE RATIO ANALYSIS. Wasserstein reviewed the ratio of the closing
prices per share of the Standard Common Stock to TCF Common Stock over various
time periods since August 1, 1994 (the date of Standard Bank's conversion from a
federally chartered mutual savings bank to a federally chartered stock savings
bank). The exchange ratio ranged from 0.38667x to 0.61039x with a median of
0.47407x over the period from August 1, 1994 to March 6, 1997; from 0.39000x to
0.50760x with a median of 0.44695x over the 12-month period ended March 6, 1997;
from 0.42484x to 0.50760x with a median of 0.45390x over the six-month period
ended March 6, 1997; from 0.43767x to 0.50760x with a median of 0.45658x over
the three-month period ended March 6, 1997; and from 0.43767x to 0.45954x with a
median of 0.44920x over the one-month period ended March 6, 1997.
OPINION OF FINANCIAL ADVISOR TO TCF
TCF retained Piper Jaffray pursuant to an engagement letter dated February
28, 1997 to render its opinion to the TCF Board of Directors regarding the
fairness, from a financial point of view, to TCF stockholders of the
Consideration proposed to be paid by TCF in the Combination and to assist TCF's
management and Board of Directors in analyzing the proposed Combination with
Standard and the proposed Consideration Formula. Piper Jaffray is an investment
banking firm engaged, among other things, in the valuation of businesses and
their securities in connection with mergers and acquisitions, underwriting and
secondary distributions of securities, private placements and valuations for
estate, corporate and other purposes. Piper Jaffray was selected to prepare a
fairness opinion based on its experience and expertise in transactions similar
to the Combination and its reputation in the financial services and investment
banking sectors. Except as set forth above, Piper Jaffray has not otherwise
acted as financial advisor to TCF or the TCF Board of Directors in connection
with the Combination and did not participate in the discussions or negotiations
with respect to the Combination. Piper Jaffray has acted as a
33
manager of underwritings of TCF securities and provided other investment banking
services for TCF in the past and may continue to do so in the future. In the
ordinary course of its business, Piper Jaffray actively trades TCF Common Stock
for its own account and for the accounts of its customers, and, therefore, may
from time to time hold a long or short position in such securities. Piper
Jaffray also provides research coverage for TCF. Luella G. Goldberg, a director
of TCF, is also a director of several closed-end investment companies currently
managed by Piper Capital Management Incorporated, an affiliate of Piper Jaffray.
Piper Jaffray delivered to the TCF Board of Directors on March 14, 1997, its
oral opinion (subsequently confirmed by a written opinion dated as of the same
date) to the effect that, as of the date of the opinion and based on and subject
to the assumptions, factors and limitations as set forth in the opinion and as
described below, the consideration proposed to be paid by TCF pursuant to the
Reorganization Agreement was fair, from a financial point of view, to the
stockholders of TCF. Such opinion is referred to herein as the "Piper Opinion."
A copy of the Piper Opinion has been filed as an exhibit to the Registration
Statement of which this Proxy Statement/Prospectus is a part and is incorporated
herein by reference.
While Piper Jaffray rendered its opinion and provided certain analyses to
the TCF Board of Directors, Piper Jaffray was not requested to and did not make
any recommendation to the TCF Board of Directors as to the form or amount of the
consideration to be exchanged by TCF in the Combination, which was determined
through negotiations between Standard and TCF. The Piper Opinion, which was
delivered for use and considered by the TCF Board of Directors, is directed only
to the fairness, from a financial point of view, of the proposed consideration
to be paid in connection with the Combination, does not address the value of a
share of TCF Common Stock and does not address TCF's underlying business
decision to participate in the Combination. Piper Jaffray does not admit that it
is an expert within the meaning of the term "expert" as used in the Act and the
rules and regulations promulgated thereunder, or that its opinions constitute a
report or valuation within the meaning of Section 11 of the Securities Act and
the rules and regulations promulgated thereunder.
Piper Jaffray was not advised by TCF, Standard or their respective legal
counsel concerning the probable outcome of, or estimated damages which might
arise from, any pending or threatened litigation, possible unasserted claims or
other contingent liabilities, to which TCF or Standard or their affiliates was a
party or may be subject and undertook no analysis independent thereof.
Accordingly, the Piper Opinion made no assumption concerning, and therefore did
not consider, the possible assertion of claims, outcomes or damages arising out
of any such matters.
THE SUMMARY OF THE PIPER OPINION SET FORTH BELOW IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO THE FULL TEXT OF THE PIPER OPINION. THE PIPER OPINION
CONTAINS A COMPLETE DESCRIPTION OF THE ASSUMPTIONS MADE, MATTERS CONSIDERED AND
LIMITS OF THE REVIEW UNDERTAKEN.
In arriving at the Piper Opinion, Piper Jaffray reviewed, analyzed and
relied upon material bearing upon the financial and operating condition and
prospects of TCF and Standard and material prepared in connection with the
Combination, and considered such financial and other factors as it deemed
appropriate under the circumstances, including, among other things, the
following: (i) the Reorganization Agreement, (ii) information relative to the
business, financial condition and operations of TCF and Standard furnished by
management of TCF and Standard, respectively, (iii) certain internal financial
planning information of Standard furnished by management of Standard and certain
pro forma internal financial planning information for Standard and TCF furnished
by management of TCF, (iv) certain financial and securities data of TCF, (v) to
the extent publicly available, the financial terms of certain merger and
acquisition transactions deemed relevant, (vi) publicly available information
relative to TCF and Standard, and (vii) certain financial and securities data of
Standard and companies deemed similar to Standard or representative of the
business sector in which Standard operates. In addition, Piper Jaffray engaged
in discussions with members of management of Standard and TCF concerning the
respective financial condition, current operating results and business outlook
of Standard and TCF, including the prospects for
34
the combined companies and any potential operating efficiencies and synergies
which may arise from the Combination.
For purposes of the Piper Opinion, Piper Jaffray relied upon and assumed the
accuracy, completeness and fairness of the financial and other information made
available to it and did not attempt to independently verify such information.
Piper Jaffray relied upon the assurances of TCF and Standard management that the
information provided by TCF and Standard had a reasonable basis and, with
respect to financial planning data and other business outlook information,
reflected the best available estimates, and that they were not aware of any
information or fact that would make the information provided to Piper Jaffray
incomplete or misleading. Piper Jaffray relied, without independent
verification, on the assessments by management of TCF of the amount and timing
of potential cost savings, nonrecurring acquisition costs and other synergies
realizable as a result of the Combination. In arriving at the Piper Opinion,
Piper Jaffray did not perform, nor was it furnished, any appraisal or valuation
of specific assets or liabilities of TCF or Standard and expressed no opinion
regarding the liquidation value of any entity. No limitations were imposed by
TCF on the scope of Piper Jaffray's investigation or the procedures to be
followed in rendering its opinion. Piper Jaffray expressed no opinion as to the
price at which shares of TCF Common Stock or Standard Common Stock may trade at
any future time. The Piper Opinion is based upon information available to Piper
Jaffray and the facts and circumstances as they existed and were subject to
evaluation on the date of the Piper Opinion. Events occurring after such date
could materially affect the assumptions used in preparing the Piper Opinion.
Piper Jaffray performed certain financial and comparative analyses,
including those summarized below, which it discussed with the TCF Board of
Directors on March 14, 1997. In delivering the Piper Opinion to the TCF Board of
Directors on March 14, 1997, Piper Jaffray prepared and delivered to the TCF
Board of Directors certain written materials containing various analyses and
other information relevant to the Piper Opinion. The analyses referred to below
were made in connection with rendering the Piper Opinion.
SELECTED MARKET INFORMATION. Piper Jaffray reviewed certain stock trading
characteristics of TCF Common Stock and Standard Common Stock, including stock
price and volume comparisons for the periods ending March 13, 1997. Piper
Jaffray also analyzed the per-share purchase price and aggregate transaction
value based on the Consideration Formula and other terms set forth in the
Reorganization Agreement, using the closing price of TCF Common Stock on March
13, 1997.
PRO FORMA ANALYSIS. Piper Jaffray analyzed the hypothetical pro forma
effects of the Combination on TCF's earnings per share for the years ending
December 31, 1997, 1998 and 1999. In this analysis, TCF's projected
pre-Combination earnings per share were compared to the projected
post-Combination earnings per share reflecting the addition of Standard's
earnings and projected synergies as well as certain other pro forma changes.
This analysis was based on projections for Standard provided by Standard's
management and revised by TCF's management. The projected earnings per share for
the combined entities were then compared to TCF's stand alone projected earnings
over the same periods on both GAAP and cash earnings per share bases. This
analysis indicated that, on a GAAP basis, the Combination could be modestly
dilutive to TCF projected earnings per share in 1997, but would have an
accretive effect on TCF projected earnings per share in 1998 and 1999. On a cash
basis, the analysis showed that the Combination would have an accretive effect
on TCF projected earnings per share in 1997, 1998 and 1999.
DISCOUNTED IMPLIED DIVIDEND ANALYSIS. Using a discounted implied dividend
analysis, Piper Jaffray calculated a range of theoretical per share values for
Standard based on the net present value of (i) Standard's implied annual
dividend income, subject to a constraint of maintaining a minimum ratio of
equity to assets of 6%, and (ii) a terminal value for Standard in 2000
calculated based upon a multiple of net income. The projected financial data for
Standard for 1997 through 2000 utilized by Piper Jaffray in this analysis was
prepared by Standard management and reviewed by TCF management. Piper Jaffray
calculated the range of net present values per share for Standard based on a
range of discount rates of 12%
35
to 16% and a range of terminal value multiples of forecasted 2000 earnings of
13.0x to 15.0x. This analysis yielded a range of estimated present values per
share for Standard of approximately $23.50 to $27.92 (taking into account
certain revisions made by TCF management to Standard management's projections
and the expected synergies relating to the Combination) and approximately $24.13
to $29.06 (without such revisions or synergies).
COMPARABLE MERGER AND ACQUISITION ANALYSIS. Piper Jaffray reviewed selected
transactions involving acquired thrift companies in the 7th Federal Reserve
District deemed comparable to Standard that have been completed from January 1,
1994 through March 1, 1997 and whereby the target was 100% acquired in a
transaction with greater than $40 million in transaction value. This analysis
was based on publicly available information obtained from SEC filings, public
company disclosures, press releases, industry and popular press reports,
databases and other sources. This search yielded 15 comparable transactions.
Based on its analysis of the comparable transactions, Piper Jaffray derived the
mean, median and ranges of various operating and valuation ratios for the
comparable transaction group and compared such ratios to Standard's comparable
ratios. The comparable transaction group's mean and median equity value to
latest 12-month net income multiples of 17.7x and 16.8x, and range of 12.5x to
27.9x, were compared with Standard's multiple of 26.3x; the mean and median
equity value to tangible book value ratios of 143.6% and 145.4%, and range of
108.9% to 180.6%, were compared with Standard's ratio of 159.2%; the mean and
median equity value to assets ratios of 14.9% and 15.8%, and range of 5.1% to
24%, were compared with Standard's ratio of 17.7%; the mean and median tangible
equity to assets ratios of 10.8% and 10.1%, and range of 5.1% to 19.4%, were
compared with Standard's ratio of 11.1%; the mean and median return on average
assets ratios of 0.89% and 0.85%, and range of 0.38% to 1.40%, were compared
with Standard's ratio of 0.72%; and the mean and median return on average equity
ratios of 8.6% and 8.2%, and range of 4.1% to 15.1%, were compared with
Standard's ratio of 5.9%.
PREMIUM ANALYSIS. Piper Jaffray reviewed publicly available information for
selected completed transactions from January 1, 1994 through March 1, 1997
involving thrift companies sold in transactions with greater than $40 million in
transaction value. Piper Jaffray selected 14 transactions which were deemed
comparable. Based on its review of the comparable transactions, Piper Jaffray
derived the mean, median and range of premiums paid in the comparable
transactions and compared them to the premium to be paid to Standard's
stockholders. The comparable transaction group's mean and median premiums of
20.7% and 16.9% above the trading price on the day prior to announcement, and
range of 1.6% to 41.2%, were compared to the 21.0% premium to be paid to
Standard's stockholders; the mean and median premiums of 21.7% and 21.6% above
the trading price one month prior to the announcement, and range of (1.5)% to
42.9%, were compared to the 25.6% premium to be paid to Standard's stockholders;
and the mean and median premiums of 26.5% and 27.2% above the trading price
three months prior to the announcement, and range of 6.0% to 60.6%, were
compared to the 39.5% premium to be paid to Standard's stockholders.
COMPARABLE PUBLIC COMPANY ANALYSIS. Piper Jaffray reviewed information
relating to nine publicly traded thrifts in the 7th Federal Reserve District
with assets between $1 billion and $10 billion. Share pricing for the publicly
traded companies in the public market reflects the value of a minority interest
and does not reflect a control premium. Based on its review, Piper Jaffray
derived mean and median price to last 12 months earnings per share multiples of
15.5x and 15.8x, and a range of 12.8x to 18.0x, were compared to a multiple of
26.3x for Standard; the mean and median price to estimated 1997 earnings per
share multiples of 12.8x and 12.3x, and range of 10.9x to 16.1x, were compared
to Standard's multiple of 19.8x; the mean and median price to estimated 1998
earnings per share multiples of 11.8x and 11.6x, and range of 10.9x to 14.0x,
were compared to Standard's multiple of 15.5x; the mean and median price to
tangible book value multiples of 1.81x and 1.78x, and range of 1.43x to 2.48x,
were compared with Standard's multiple of 1.59x; the mean and median return on
average assets ratios of 1.0% and 0.9%, and range of 0.8% to 1.3%, were compared
to Standard's ratio of 0.7%; the mean and median return on average equity ratios
of 12.2% and 11.5%, and range of 7.8% to 17.2%, were compared to Standard's
ratio
36
of 5.9%; the mean and median asset growth ratios of 10.8% and 10.8%, and range
of 4.2% to 19.9%, were compared with Standard's ratio of 15.6%; the mean and
median equity to assets ratios of 8.4% and 7.5%, and range of 5.7% to 15.5%,
were compared with Standard's ratio of 11.1%; the mean and median loans to
deposits ratios of 101.3% and 107.9%, and range of 79.1% to 119.9%, were
compared with Standard's ratio of 84.9%; the mean and median deposits to assets
ratios of 70.0% and 69.3%, and range of 62.4% to 79.1%, were compared with
Standard's ratio of 71.5%; the mean and median ratios of nonperforming assets to
assets of 0.5% and 0.4%, and range of 0.1% to 1.8%, were compared with
Standard's ratio of 0.2%; the mean and median reserves to loans ratios of 1.1%
and 1.1%, and range of 0.7% to 1.6%, were compared with Standard's ratio of
0.5%; the mean and median net charge-offs to net loans ratios of 0.1% and 0.1%,
and range of 0.0% to 0.3%, were compared with Standard's ratio of 0.0%; and the
mean and median efficiency ratios of 58.5% and 59.1%, and range of 48.4% to
69.7%, were compared with Standard's ratio of 60.8%.
In reaching its conclusions as to the fairness to the TCF stockholders of
the Consideration to be paid by TCF in the Combination and in its presentation
to the TCF Board of Directors, Piper Jaffray did not rely on any single analysis
or factor described above, assign relative weights to the analyses or factors
considered by it, or make any conclusions as to how the results of any given
analysis, taken alone, supported its fairness opinion. The preparation of a
fairness opinion is a complex process and not necessarily susceptible to partial
analyses or summary description. Piper Jaffray believes that its analyses must
be considered as a whole and that selecting portions of its analyses and of the
factors considered by it, without considering all factors and analyses, would
create a misleading view of the process underlying the Piper Opinion. The
analyses of Piper Jaffray are not necessarily indicative of actual values or
future results, which may be significantly more or less favorable than suggested
by such analyses. Analyses relating to the value of companies do not purport to
be appraisals or valuations or necessarily reflect the price at which companies
may actually be sold. No company or transaction used in any comparable analysis
as a comparison is identical to TCF, Standard or the Combination. Accordingly,
an analysis of the results is not mathematical, rather it involves complex
considerations and judgments concerning, among other things, differences in
financial and operating characteristics of the comparable companies and other
factors that could affect the public trading value of such companies.
For acting as financial advisor to TCF in connection with the Combination,
TCF paid Piper Jaffray a fee of $300,000. TCF has also agreed to pay the
reasonable out-of-pocket expenses of Piper Jaffray not to exceed $25,000 without
TCF's approval and to indemnify Piper Jaffray against certain liabilities
incurred (including liabilities under the federal securities laws) in connection
with the engagement of Piper Jaffray by TCF. The fees and expenses payable to
Piper Jaffray are not contingent upon consummation of the Combination.
STRUCTURE OF THE COMBINATION
The Reorganization Agreement provides for a strategic combination of TCF and
Standard to be effected pursuant to a series of transactions as a result of
which TCF will own all of the assets of Standard and will have assumed all of
the liabilities of Standard. The Combination will occur in the following
contemporaneous steps: FIRST, Standard will form Interim Bank and Interim Bank
will form New Sub, a Delaware corporation; SECOND, New Sub will merge with and
into Standard, with Standard being the surviving corporation and a wholly-owned
subsidiary of Interim Bank, and with certificates representing Standard Common
Stock being converted into an equivalent number of shares of Interim Bank Common
Stock; THIRD, Standard will dissolve, and, pursuant to the dissolution, will
transfer all of its assets (including the stock of Standard Bank) to Interim
Bank, and Interim Bank will assume all of Standard's liabilities and
obligations; FOURTH, Interim Bank will engage in the Merger with and into TCF
Illinois, with TCF Illinois as the Resulting Institution; and FIFTH, Standard
Bank will engage in the Subsequent Merger with and into TCF Illinois with TCF
Illinois as the Resulting Institution. Certificates representing the Outstanding
Standard Shares, will be converted into and will represent the shares of Interim
Bank Common Stock that will be converted into the right to receive the number of
shares of TCF Common Stock, cash, or a
37
combination thereof, provided for in accordance with the Consideration Formula.
Subject to limitations, stockholders of Standard will be offered an election to
receive cash, TCF Common Stock, or a combination of the two, in exchange for
their shares, as described in this Proxy Statement/Prospectus. See
"--Consideration Election." No fractional shares of TCF Common Stock will be
issued, and cash will be paid in lieu thereof. In this Proxy
Statement/Prospectus, references to Standard Common Stock after or in connection
with the third step of the Combination are deemed to refer to Interim Bank
Common Stock unless the context requires otherwise.
EFFECTS OF THE COMBINATION
EFFECT ON STANDARD'S STOCKHOLDERS. Upon consummation of the Combination,
(i) holders of Standard Common Stock shall be entitled to receive the amount of
cash and/or shares of TCF Common Stock as calculated in accordance with the
Consideration Formula, and (ii) each holder of a Standard Stock Option granted
under either the Standard Financial, Inc. Stock Option Plan or the Standard
Financial, Inc. Stock Option Plan for Outside Directors (together, the "Standard
Stock Option Plans") shall be paid by Standard an amount of cash equal to the
"market value" of the Standard Stock Option on the Effective Date, less the
"exercise price" of the Standard Stock Option (with such market value being
equal to the Consideration Value Per Share).
Standard has a dividend reinvestment plan under which cash dividends on
Standard Common Stock, or optional cash investments, may be invested in Standard
Common Stock. Under the terms of the Reorganization Agreement, no dividends may
be paid on the Standard Common Stock pending consummation of the Combination
except (i) regular quarterly cash dividends of not more than $.10 per share
payable to holders of Standard Common Stock, or (ii) dividends paid in cash by
any Standard Subsidiary to Standard or another Standard Subsidiary. Immediately
prior to the Effective Time the Standard dividend reinvestment plan will be
terminated and persons with accounts in the plan will be entitled to receive the
Consideration Value Per Share and to make the Consideration Election in
connection with consummation of the Combination. Holders of Standard Common
Stock receiving TCF Common Stock in the Combination will be provided with the
opportunity to elect to participate in TCF's dividend reinvestment plan with
respect to those and any other shares of TCF Common Stock they own. Under the
TCF plan, participating holders of TCF Common Stock may make quarterly
investments in TCF Common Stock and may reinvest quarterly cash dividends on TCF
Common Stock in additional shares of TCF Common Stock.
EFFECT ON STANDARD, STANDARD BANK AND INTERIM BANK. Upon completion of the
Combination, the Resulting Institution will be responsible for all the
liabilities and will succeed to all the rights and assets of Interim Bank,
Standard Bank and Standard. Following the Combination, the Board of Directors of
the Resulting Institution will consist of the directors on the Board of
Directors of TCF Illinois prior to the Effective Time and certain directors on
the Board of Directors of Standard immediately prior to the Effective Time,
subject to the right of the stockholders of the Resulting Institution to remove
and elect directors of the Resulting Institution. In addition, TCF shall cause
its Board of Directors to be expanded by one seat as of the Effective Time and
such directorship shall be filled by one director mutually acceptable to TCF and
Standard, it being the intention of Standard and TCF that such director will be
David H. Mackiewich.
EFFECT ON EMPLOYEES OF STANDARD AND STANDARD BANK. The Executive Chairman
of the Resulting Institution will be David H. Mackiewich. The President shall be
designated by TCF, and the other officers shall be the officers of the Resulting
Institution immediately prior to the Effective Time designated by TCF, the
officers of Standard who choose to continue with the Resulting Institution on
the Effective Date and who are approved by the Resulting Institution's Board of
Directors, and such other officers as the Board of Directors of the Resulting
Institution may elect on the Effective Date until their successors are elected
and qualified and subject to the right of the Board of Directors of the
Resulting Institution to remove and elect officers after the Effective Time.
Employees of Standard and Standard Bank will become employees of TCF Illinois
immediately after the Effective Time, as a consequence of the Merger and the
38
Subsequent Merger with and into TCF Illinois. Employees of the Standard
Subsidiaries other than Standard Bank will remain employed by those subsidiaries
immediately after the Effective Time. Any transfer of employment effected in
connection with the Combination, such as from Standard Bank to TCF Illinois,
will not be considered a termination of employment for purposes of any employee
plans of Standard or TCF, including severance plans or arrangements. Except for
certain individuals with employment agreements (see "--Interests of Certain
Persons in the Combination--Change in Control Agreements and Employment
Agreements"), employment after the Effective Date is "at will." TCF intends that
employees of Standard or the Standard Subsidiaries will continue to participate
in the benefit plans of Standard until such time as those plans are merged or
terminated. TCF intends to make its employee benefit plans available to former
employees of Standard and its subsidiaries as soon as practicable after the
Effective Time. As provided in the Reorganization Agreement, TCF intends that at
the time its employee benefit plans are made available to employees of Standard
and its subsidiaries, those employees will receive credit for their service with
Standard prior to the Effective Time for purposes of "vesting" and
"eligibility", but not for purposes of "benefit accrual", as those terms are
defined or reflected in the benefit plans of TCF and as the plans are made
applicable to the employees of Standard and its subsidiaries. In general,
"eligibility" refers to a waiting period before an employee enters the plan,
"vesting" refers to an entitlement to a benefit, and "benefit accrual" refers to
the amount of the benefit, if any, or how that amount is determined. The
Reorganization Agreement reflects the parties' intention that, at such time as
TCF's medical plan coverage is made available to former employees of Standard,
employees of Standard who are participating in the Standard medical coverage at
that time will not be subject to any exclusion or penalty for pre-existing
conditions that were covered under the Standard medical coverage that applied to
them, will receive credit toward the eligibility waiting period under TCF's
medical coverage for their service with Standard prior to the Effective Time,
and will receive credit toward premiums, co-payments and deductibles under TCF's
coverage for their payments made under the Standard medical plans. Employees not
participating in the Standard medical coverage at the time it is replaced by
TCF's medical coverage will receive credit for their pre-Effective Time service
with Standard toward any waiting period or other service requirements generally
applicable under TCF's replacement medical coverage. Pursuant to the
Reorganization Agreement, the Standard Bank Employee Stock Ownership Plan and
Trust ("ESOP") will repay its loan from Standard in full, and, subject to
obtaining a favorable determination from the Internal Revenue Service, TCF
intends to terminate the ESOP and to provide for full vesting and allocation of
shares to eligible Standard employees. In the event such approval cannot be
obtained, however, the Reorganization Agreement provides that the ESOP will not
be terminated and will continue to operate under the rules applicable to
qualified plans until all of the stock of the ESOP is allocated. Although TCF
intends to replace the Standard employee benefit plans with its benefit plans
for former employees of Standard as soon as practicable after the Combination,
the Reorganization Agreement provides that nothing in the Reorganization
Agreement shall be deemed to confer upon any employee or former employee of
Standard or any Standard subsidiary, or any other individual, any rights or
entitlement to any particular benefits, benefit plans, payments or distributions
and further provides that, except as expressly set forth in the Reorganization
Agreement, TCF reserves the right on behalf of the Board of Directors of the
Resulting Institution to amend, modify or terminate the Standard and TCF plans
from time to time.
With respect to certain employees of Standard who have employment agreements
and change in control agreements, TCF has agreed to assume such agreements or to
cause the Resulting Institution to do so, and has agreed that the Combination
constitutes a change in control of Standard for purposes of those agreements.
In addition, certain employees of Standard have special interests in the
Combination. See "--Interests of Certain Persons in the Combination."
39
THE CONSIDERATION FORMULA
CONSIDERATION VALUE PER SHARE. The Reorganization Agreement provides that,
at the Effective Time, all Outstanding Standard Shares will be converted into an
equivalent number of shares of Interim Bank Common Stock, which, in turn, will
be converted into the right to receive an aggregate amount of cash and/or shares
of TCF Common Stock (the "Total Consideration to Standard Stockholders"). The
Total Consideration to Standard Stockholders equals, on a per share basis, the
applicable Consideration Value Per Share set forth in the following table:
TABLE 1
AVERAGE TCF STOCK PRICE CONSIDERATION VALUE PER SHARE
- ------------------------------------------------------------ --------------------------------------------------
GREATER THAN$54.00.......................................... $12.50 + 0.24643 x Average TCF Stock Price
LESS THAN or =$54.00 - GREATER THAN$47.75................... $25.81*
LESS THAN or =$47.75 - GREATER THAN or =$43.75.............. $12.50 + 0.27869 x Average TCF Stock Price
LESS THAN$43.75 - GREATER THAN or =$37.50................... $24.69*
LESS THAN$37.50............................................. $12.50 + 0.32514 x Average TCF Stock Price
- ------------------------
*THE TCF COMMON STOCK PORTION OF THE CONSIDERATION IS VALUED AT THE AVERAGE TCF
STOCK PRICE.
The "Average TCF Stock Price" is the average of the daily closing sales
prices of TCF Common Stock during the 30 consecutive full trading days ending on
the "Determination Date." The "Determination Date" is the third business day
immediately prior to either (i) the date of the Special Meeting of the holders
of Standard Common Stock to which this Proxy Statement/Prospectus relates or
(ii) the date on which the last regulatory approval required to consummate the
Combination has been obtained and all statutory or regulatory waiting periods
have expired, whichever is closer to the Effective Date. The fair market value
of the Consideration actually received by each Standard stockholder may be more
or less on a per share basis than the Consideration Value Per Share because (x)
the Consideration Value Per Share is calculated using an average stock price
(the Average TCF Stock Price) and (y) the fair market value of TCF Common Stock
may fluctuate between the Determination Date and the date upon which each
Standard stockholder receives the Consideration.
FORM OF CONSIDERATION. The Total Consideration to Standard Stockholders
will consist of the aggregate amount of cash and TCF Common Stock which the
holders of the Outstanding Standard Shares are entitled to receive at the
Effective Time under the Reorganization Agreement. If the Average TCF Stock
Price is within a range from and including $43.75 to and including $47.75, the
Total Consideration to Standard Stockholders will consist of (i) cash equal to
the product of $12.50 multiplied by the number of Outstanding Standard Shares
PLUS (ii) a number of shares of TCF Common Stock equal to the product of 0.27869
multiplied by the number of Outstanding Standard Shares. The following table
illustrates the cash and stock portions comprising the Total Consideration to
Standard Stockholders if the Average TCF Stock Price is equal to or less than
$47.75 and equal to or greater than $43.75:
TABLE 2
CASH PORTION OF
TOTAL CONSIDERATION STOCK PORTION OF
TO TOTAL CONSIDERATION TO
STANDARD STOCKHOLDERS STANDARD STOCKHOLDERS
AVERAGE TCF STOCK PRICE (IN DOLLARS)(1) (IN TCF COMMON STOCK)(2)
- ------------------------------------ --------------------- -------------------------
LESS THAN or =$47.75 - GREATER THAN
or =$43.75........................ $ 202,630,438 4,517,686 shares
- ------------------------
(1) The cash portion of the Total Consideration to Standard Stockholders is
$12.50 multiplied by the number of Outstanding Standard Shares at the
Effective Time which, for this illustration, is assumed to be 16,210,435
shares, the number outstanding on the Record Date.
(2) The stock portion of the Total Consideration to Standard Stockholders is the
number of shares of TCF Common Stock equal to the product of 0.27869
multiplied by the Outstanding Standard Shares at the Effective Time which,
for this illustration, is assumed to be 16,210,435 shares, the number
outstanding on the Record Date.
40
If the Average TCF Stock Price is greater than $47.75 or less than $43.75,
the Total Consideration to Standard Stockholders will be equal to the applicable
Consideration Value Per Share from Table 1 above, multiplied by the number of
Outstanding Standard Shares and TCF will determine the proportionate amount of
cash and TCF Common Stock comprising the Total Consideration to Standard
Stockholders, subject to certain limitations on the minimum and maximum
percentage of cash and TCF Common Stock which may be included in the Total
Consideration to Standard Stockholders. The maximum amount of the Total
Consideration to Standard Stockholders that TCF may allocate as cash will be the
highest percentage of cash permissible without preventing the Merger from
qualifying as a reorganization within the meaning of Section 368(a) of the Code
as determined by the tax advisors of TCF and Standard. In order for the Merger
to be a tax-free reorganization, the amount of cash paid by TCF in respect of
cancellation of the Standard Stock Options (the "Standard Stock Option
Payments") plus the cash paid with respect to the Outstanding Standard Shares at
the Effective Time (including Dissenting Shares) cannot exceed a certain
percentage of an amount equal to the Total Consideration to Standard
Stockholders plus the Standard Stock Option Payments (the "Aggregate
Consideration Amount"). Based on advice of the tax counsel for TCF and Standard,
TCF has determined that the maximum amount of cash which it can pay for the
Standard Stock Option Payments and the shares of Standard Common Stock in the
Combination is 58% of the Aggregate Consideration Amount. Additionally, pursuant
to the Reorganization Agreement, the cash portion of the Aggregate Consideration
Amount must be at least 44.5% of the Aggregate Consideration Amount unless the
Average TCF Stock Price is greater than $54.00 in which event the minimum cash
is $10.76 per share multiplied by the Outstanding Standard Shares at the
Effective Time. The following table illustrates the Total Consideration to
Standard Stockholders based on the Average TCF Stock Price at certain price
points above $47.75 and below $43.75 if (a) the maximum amount of cash is
included in the Total Consideration to Standard Stockholders, or (b) the minimum
amount of cash is included in the Total Consideration to Standard Stockholders:
TABLE 3
MAXIMUM CASH MINIMUM CASH
------------------------------------ ---------------
STOCK PORTION
OF TOTAL
CASH PORTION CONSIDERATION TO CASH PORTION
TOTAL OF TOTAL STANDARD OF TOTAL
CONSIDERATION TO STANDARD AGGREGATE CONSIDERATION TO STOCKHOLDERS CONSIDERATION
AVERAGE TCF STANDARD STOCK OPTION CONSIDERATION STANDARD (IN TCF TO STANDARD
STOCK PRICE STOCKHOLDERS(1) PAYMENTS(2) AMOUNT(3) STOCKHOLDERS(4) COMMON STOCK)(5) STOCKHOLDERS(6)
- --------------- ---------------- ------------ -------------- ---------------- ------------------ ---------------
$ 56.00 $426,335,737 $21,573,322 $447,909,060 $238,213,932 3,359,318 shares $ 174,424,281
- ----------------------------------------------------------------------------------------------------------------------
$ 54.00 $418,391,327 $20,811,279 $439,202,606 $233,926,233 3,416,020 shares $ 174,633,881
$ 52.00 $418,391,327 $20,811,279 $439,202,606 $233,926,233 3,547,406 shares $ 174,633,881
$ 50.00 $418,391,327 $20,811,279 $439,202,606 $233,926,233 3,689,302 shares $ 174,633,881
$ 48.00 $418,391,327 $20,811,279 $439,202,606 $233,926,233 3,843,023 shares $ 174,633,881
- ----------------------------------------------------------------------------------------------------------------------
STOCK PORTION
OF TOTAL
CONSIDERATION TO
STANDARD
STOCKHOLDERS
AVERAGE TCF (IN TCF
STOCK PRICE COMMON STOCK)(7)
- --------------- ------------------
$ 56.00 4,498,419 shares
- ---------------
$ 54.00 4,514,027 shares
$ 52.00 4,687,643 shares
$ 50.00 4,875,149 shares
$ 48.00 5,078,280 shares
- ---------------
[If the Average TCF Stock Price is equal to or less than $47.75 and equal to or
greater than $43.75, the cash and stock portions of the Total Consideration to
Standard Stockholders are fixed as described in the immediately preceding
paragraph and Table 2]
- ----------------------------------------------------------------------------------------------------------------------
$ 43.00 $400,235,640 $19,069,749 $419,305,390 $224,127,377 4,095,541 shares $ 167,521,149
$ 41.00 $400,235,640 $19,069,749 $419,305,390 $224,127,377 4,295,324 shares $ 167,521,149
$ 39.00 $400,235,640 $19,069,749 $419,305,390 $224,127,377 4,515,597 shares $ 167,521,149
- ----------------------------------------------------------------------------------------------------------------------
$ 37.00 $397,644,888 $18,821,239 $416,466,128 $222,729,115 4,727,453 shares $ 166,506,187
$ 35.00 $387,103,567 $17,810,095 $404,913,662 $217,039,829 4,858,964 shares $ 162,376,484
- ----------------------------------------------------------------------------------------------------------------------
- ---------------
$ 43.00 5,411,965 shares
$ 41.00 5,675,963 shares
$ 39.00 5,967,038 shares
- ---------------
$ 37.00 6,246,992 shares
$ 35.00 6,420,774 shares
- ---------------
- ----------------------------------
(1) Total Consideration to Standard Stockholders is the Consideration Value Per
Share multiplied by the Outstanding Standard Shares at the Effective Time
which are assumed to be 16,210,435 shares, the number outstanding on the
Record Date. Table 3 assumes no Dissenting Shares.
41
(2) Standard Stock Option Payments are the cash amounts paid to the holders of
Standard Stock Options outstanding at the Effective Time which are assumed
to be 1,544,937 options (the number of options outstanding on the Record
Date), which cash amount is equal to the number of shares of Standard Common
Stock subject to the Standard Stock Options multiplied by the excess of the
Consideration Value Per Share over the exercise price of the Standard Stock
Options.
(3) Aggregate Consideration Amount is the amount equal the Total Consideration
to Standard Stockholders referenced in note (1) above, plus the Standard
Stock Option Payments referenced in note (2) above.
(4) The maximum cash portion of the Total Consideration to Standard Stockholders
is 58% of the Aggregate Consideration Amount referenced to in note (3)
above, minus the Stock Option Payments referenced in note (2) above. For
purposes of this table, it is assumed that there are no Dissenting Shares.
Cash paid to Dissenting Shares will reduce the maximum amount of cash which
can be paid for the balance of the Outstanding Standard Shares.
(5) The stock portion of the Total Consideration to Standard Stockholders under
the maximum cash scenario is the number of shares of TCF Common Stock equal
to (i) the Total Consideration to Standard Stockholders referenced in note
(1) above, minus the cash portion of the Total Consideration to Standard
Stockholders referenced in note (4) above, divided by (ii) the Average TCF
Stock Price.
(6) The minimum cash portion of the Total Consideration to Standard Stockholders
is an amount equal to (i) 44.5% of the Aggregate Consideration Amount
referenced to in note (3) above, unless the Average TCF Stock Price is
greater than $54 in which event the minimum cash is $10.76 per share
multiplied by the number of Outstanding Standard Shares at the Effective
Time, minus (ii) the Stock Option Payments referenced in note (2) above.
(7) The stock portion of the Total Consideration to Standard Stockholders under
the minimum cash scenario is the number of shares of TCF Common Stock equal
to (i) the Total Consideration to Standard Stockholders referenced in note
(1) above, minus the cash portion of the Total Consideration to Standard
Stockholders referenced in note (6) above, divided by (ii) the Average TCF
Stock Price.
The Combination is structured as a cash election merger, in which each
holder of Outstanding Standard Shares will be permitted to elect to receive in
exchange for each Outstanding Standard Share held the Consideration Value Per
Share in the form of all TCF Common Stock, all cash (without interest), or a
combination of the two. Although a Standard stockholder may designate the
relative amounts of TCF Common Stock and cash that such Standard stockholder
desires to receive in the Combination, the proportionate amount of TCF Common
Stock and cash actually received by a Standard stockholder will depend upon the
proportionate amount of TCF Common Stock and cash that Standard stockholders
elect to receive in the aggregate when compared to the proportionate amount of
TCF Common Stock and cash comprising the Total Consideration to Standard
Stockholders as determined by TCF. If the aggregate number of shares of TCF
Common Stock elected by Standard stockholders to be received as Consideration in
the Combination is greater or lesser than the number of shares of TCF Common
Stock comprising a portion of the Total Consideration to Standard Stockholders,
a Standard stockholder may receive Consideration comprised of TCF Common Stock
and cash in a different combination than elected by such stockholder and
Standard stockholders electing to receive all TCF Common Stock or all cash may
receive some combination of TCF Common Stock and cash. See "--Consideration
Election." The transaction is expected to be a tax-free exchange for Standard's
stockholders to the extent they receive shares of TCF Common Stock. See
"--Certain Federal Income Tax Consequences."
There can be no assurance that holders of Standard Common Stock will receive
a stated value in shares of TCF Common Stock for their shares of Standard Common
Stock because the market price of TCF Common Stock at the time of the
Combination may be less than it is currently and is subject to changes
thereafter. Holders of Standard Common Stock are urged to obtain current
quotations for shares of TCF Common Stock. See "COMPARATIVE MARKET PRICE DATA."
In the event the Average TCF Stock Price (on the Determination Date) is less
than $37.50 per share, the Reorganization Agreement provides that Standard may
terminate the Reorganization Agreement unless TCF elects to increase the value
of the Consideration to a Consideration Value Per Share of $24.69. However,
there can be no assurance that in such event Standard will exercise its right to
terminate the Reorganization Agreement or TCF will exercise its right to
increase the Consideration Value Per Share, so the Combination may still occur
irrespective of whether the Average TCF Stock Price is less than $37.50.
Standard has not made any determination whether to terminate the Reorganization
Agreement, and TCF has not made any determination of whether to increase the
value of the Consideration, should this event occur.
Assuming, for purposes of illustration only, that the Combination had
occurred on July 8, 1997, using the number of shares of Standard Common Stock
outstanding on that date of 16,210,435 shares and the
42
Average TCF Stock Price for the 30-day period ending on that date of $46.97, the
Consideration Value Per Share would have been $25.59 and TCF would have paid an
aggregate of approximately $203 million in cash (excluding cash paid for
Standard Stock Option Payments) and issued approximately 4,518,000 shares of TCF
Common Stock (valued at approximately $212 million, as determined by valuing
such TCF Common Stock at the Average TCF Stock Price on that date), for a total
of approximately $415 million in Total Consideration to Standard Stockholders
(cash and TCF Common Stock combined). Under such circumstances, former Standard
stockholders would have held approximately 9.6% of the shares of TCF Common
Stock outstanding after the Combination (using the number of shares of TCF
Common Stock outstanding on July 8, 1997 of 42,450,294 shares and adding to such
amount the approximately 4,518,000 shares of TCF Common Stock assumed to be
issued in the Combination).
If, between the date of the Reorganization Agreement and the Effective Time,
the shares of TCF Common Stock are changed into a different number or class of
shares by reason of any reclassification, recapitalization, split-up,
combination, exchange of shares or readjustment, or a stock dividend thereon is
declared with a record date within said period, the Consideration Formula will
be adjusted accordingly.
NO FRACTIONAL SHARES OF TCF COMMON STOCK TO BE ISSUED. No fractional shares
of TCF Common Stock will be issued in the Combination to holders of shares of
Standard Common Stock. Each holder of shares of Standard Common Stock who
otherwise would have been entitled to a fraction of a share of TCF Common Stock
shall receive in lieu thereof, at the time of surrender of the certificate or
certificates representing such holder's shares of Standard Common Stock, an
amount of cash (without interest) determined by multiplying the fractional share
interest to which such holder would otherwise be entitled by the closing price
of TCF Common Stock on the Effective Date.
MANNER OF EXCHANGING STANDARD COMMON STOCK CERTIFICATES AND MAKING THE
CONSIDERATION ELECTION. As soon as practicable after the Effective Time, each
record holder of Standard Common Stock immediately prior to the Effective Time
will be advised of the consummation of the Combination by a letter accompanied
by a letter of transmittal and instructions advising such holder of the terms of
the exchange and the procedure for surrendering the certificate or certificates
representing shares of Standard Common Stock to an exchange agent duly appointed
by TCF (the "Exchange Agent"). The transmittal letter will also provide the
holders of Standard Common Stock with an election form for such holders to elect
cash, TCF Common Stock, or a combination of both, to the extent permitted by the
Reorganization Agreement. See "--Consideration Election." CERTIFICATES
REPRESENTING SHARES OF STANDARD COMMON STOCK SHOULD NOT BE FORWARDED TO THE
EXCHANGE AGENT UNTIL AFTER RECEIPT OF THE LETTER OF TRANSMITTAL.
Until such surrender for the shares of TCF Common Stock, the certificates
representing Outstanding Standard Shares will represent ownership of the number
of shares of TCF Common Stock into which such shares were converted in the
Combination as allocated pursuant to the Reorganization Agreement, and the
holders will be entitled to all rights and privileges of holders of TCF Common
Stock, except that holders of certificates representing Standard Common Stock
will not be entitled to receive dividends or any other distributions declared by
TCF until such certificates are so surrendered. Following surrender of the
certificates representing Standard Common Stock and in accordance with the terms
of the Reorganization Agreement, the then former holders of Standard Common
Stock will be paid, without interest, any dividends or other distributions with
respect to such shares of TCF Common Stock received in the Combination, but not
previously paid to such holders, and which dividends or distributions had a
record date which is after the Effective Time (less any taxes that may have been
imposed thereon).
After the Effective Time, holders of unsurrendered Standard Common Stock
certificates shall be entitled to vote at any meeting of TCF stockholders at
which holders of TCF Common Stock are eligible to vote, regardless of whether
such holders have exchanged their certificates. Any certificate representing
shares of TCF Common Stock to be issued in a name other than that in which the
certificate surrendered is registered must be properly endorsed and otherwise in
proper form for transfer, and the holder requesting
43
such exchange must pay to the Exchange Agent in advance any transfer or other
taxes in connection therewith.
After the Effective Time, there will be no further registration of transfers
on the records of Standard or Interim Bank of the certificates representing
shares of Interim Bank Common Stock (formerly Standard Common Stock) and, if
such certificates are presented to TCF for transfer, they will be cancelled
against delivery of the Consideration as provided in the Reorganization
Agreement.
LOST CERTIFICATES. Any Standard stockholder who has lost, misplaced or
destroyed a certificate representing any of his or her shares of Standard Common
Stock should immediately call Darlene Brookshire at Harris Bank, 311 West
Monroe, 14th Floor, Chicago, Illinois 60606, telephone: 312-765-8321,
telefacsimile: 312-765-8052 for information regarding the procedures to be
followed for replacing the lost certificate. Until a replacement certificate is
obtained, the Standard stockholder will be unable to properly submit the letter
of transmittal.
TREATMENT OF STANDARD STOCK OPTIONS. At the Effective Time, each
outstanding Standard Stock Option granted under the Standard Stock Option Plans
will become immediately exercisable and fully vested. Immediately prior to the
Effective Time, all outstanding Standard Stock Options will be cancelled, and
Standard will pay to each holder an amount in cash equal to the "market value"
of the Standard Stock Option on the Effective Date, less the "exercise price" of
the Standard Stock Option. The market value of the Standard Stock Options will
be equal to the Consideration Value Per Share.
CONSIDERATION ELECTION
CONSIDERATION ELECTION PROCEDURES. The Total Consideration to Standard
Stockholders will consist of a combination of cash and TCF Common Stock. If the
Average TCF Stock Price is within a range from and including $43.75 to and
including $47.75, the Total Consideration to Standard Stockholders will consist
of (i) cash equal to $12.50 multiplied by the number of Outstanding Standard
Shares plus (ii) a number of shares of TCF Common Stock equal to 0.27869
multiplied by the number of Outstanding Standard Shares. If the Average TCF
Stock Price is greater than $47.75 or less than $43.75, TCF will determine the
allocation of the Total Consideration to Standard Stockholders between cash and
TCF Common Stock subject to certain limitations on the maximum and minimum
amount of the Total Consideration to Standard Stockholders constituted by cash.
See "--The Consideration Formula."
The Reorganization Agreement provides that, in connection with the
Combination, holders of Standard Common Stock will be provided with the
opportunity to elect to receive cash consideration in lieu of TCF Common Stock
to the extent cash is available under the allocations made by TCF under the
Reorganization Agreement. An election form (an "Election Form") and other
appropriate and customary transmittal materials will be mailed immediately after
the Effective Time (the "Mailing Date") to each holder of record of Standard
Common Stock as of the Effective Time. Each Election Form will permit a holder
of Standard Common Stock to elect to receive: (i) cash with respect to all such
holder's Standard Common Stock, (ii) TCF Common Stock with respect to all such
holder's Standard Common Stock, or (iii) cash with respect to a specified number
of shares of Standard Common Stock and TCF Common Stock with respect to a
specified number of shares of Standard Common Stock. Shares of Standard Common
Stock for which cash is elected are referred to herein as "Cash Election Shares"
and shares of Standard Common Stock for which TCF Common Stock is elected are
referred to herein as "Stock Election Shares." To be effective, a properly
completed Election Form must be submitted to, and received by, the Exchange
Agent on or before 5:00 p.m. on the 20th day following the Mailing Date or such
other time and date as Standard and TCF may mutually agree (the "Election
Deadline"). An Election Form will be deemed to have been properly completed only
if accompanied by one or more certificates (or customary affidavits and
indemnification regarding the loss or destruction of such certificates or the
guaranteed delivery of such certificates) representing all shares of Standard
Common Stock covered by such Election
44
Form, together with duly executed transmittal materials included with the
Election Form. If a stockholder either (i) does not submit a properly completed
Election Form in a timely fashion, or (ii) revokes the Election Form prior to
the Election Deadline, the shares of Standard Common Stock held by such
stockholder will be designated "No Election Shares." TCF will cause the
certificates representing Standard Common Stock described in (ii) to be promptly
returned without charge to the person who submitted the Election Form. The
Exchange Agent has reasonable discretion to determine whether any election,
revocation or change has been properly or timely made and to disregard
immaterial defects in any Election Form, and any good faith decisions of the
Exchange Agent regarding such matters will be binding and conclusive. In
addition, neither TCF nor the Exchange Agent will be under any obligation to
notify any person of any defect in an Election Form.
ALLOCATION PROCEDURES. Within five business days after the Election
Deadline, TCF will cause the Exchange Agent to allocate to the holders of
Standard Common Stock the right to receive, with respect to each share of
Standard Common Stock, cash or TCF Common Stock. The amount of cash or TCF
Common Stock so allocated will be contingent upon the relative values of (i) the
aggregate amount of cash elected by Standard stockholders to be received in the
Combination which is equal to the product of the Consideration Value Per Share
multiplied by the total number of Cash Election Shares (the "Cash Election
Amount") and (ii) the aggregate amount of cash available to be received by
Standard stockholders in the Combination which is equal to the aggregate amount
of the cash portion of the Consideration Value Per Share (the "Aggregate Cash
Consideration").
If the Aggregate Cash Consideration is greater than the Cash Election
Amount, then (i) all Cash Election Shares will be converted into the right to
receive cash, (ii) the Exchange Agent will select, on a pro rata basis, first
from among the holders of No Election Shares and then, if necessary, from among
the holders of Stock Election Shares, a sufficient number of shares designated
to receive cash ("Cash Designee Shares") such that the sum of Cash Designee
Shares and Cash Election Shares multiplied by the Consideration Value Per Share
equals as closely as practicable the Aggregate Cash Consideration and (iii) any
Stock Election Shares and any No Election Shares, as the case may be, not so
selected as Cash Designee Shares shall be converted into the right to receive
TCF Common Stock at the ratio of the Consideration Value Per Share divided by
the Average TCF Stock Price.
If the Aggregate Cash Consideration is less than the Cash Election Amount,
then (i) all Stock Election Shares and all No Election Shares will be converted
into the right to receive TCF Common Stock, (ii) the Exchange Agent will select,
on a pro rata basis from among the holders of Cash Election Shares, a sufficient
number of such shares designated to receive TCF Common Stock ("Stock Designee
Shares") such that the number of Stock Designee Shares multiplied by the
Consideration Value Per Share equals as closely as practicable the difference
between the Cash Election Amount and the Aggregate Cash Consideration and (iii)
any Cash Election Shares not so selected as Stock Designee Shares shall be
converted into the right to receive cash at the Consideration Value Per Share.
Notwithstanding the foregoing, if any holder of Standard Common Stock either
elects to receive TCF Common Stock or fails to make an election and tax counsel
to either TCF or Standard believes that such election or failure to elect will
jeopardize the characterization of the Merger as a reorganization within the
meaning of Section 368(a) of the Code, then TCF will request that such holder
execute and deliver a shareholder tax certificate in the form reasonably
satisfactory to both such tax counsel and, if such holder fails to execute such
certificate, such holder shall receive the Consideration relating to such shares
entirely in cash without regard to such holder's election or failure to elect.
In addition, the TCF Common Stock that such holder would have received shall be
allocated to other holders of Standard Common Stock (other than holders to which
this paragraph applies) to the extent and in lieu of cash that such other
holders would have received hereunder.
45
CONDITIONS TO THE COMBINATION
The Reorganization Agreement provides that consummation of the transactions
contemplated by the Reorganization Agreement is subject to the satisfaction of
certain conditions, or the waiver of such conditions by the party entitled to do
so, at or before the Effective Time. Each of the parties' obligations under the
Reorganization Agreement is subject to the following conditions: (i) all
necessary regulatory approvals of any governmental authority required to
consummate the transactions contemplated by the Reorganization Agreement shall
have been received and all notice periods and waiting periods with respect
thereto shall have expired without any objections by any applicable Bank
Authority; (ii) no injunction or other order entered by a state or federal court
of competent jurisdiction shall have been issued and remain in effect which
would prohibit or make illegal the consummation of the transactions contemplated
by the Reorganization Agreement; (iii) there shall have been no law, statute,
rule or regulation, domestic or foreign, enacted or promulgated which would
prohibit or make illegal the consummation of the transactions contemplated by
the Reorganization Agreement; (iv) the TCF Registration Statement shall have
been declared effective and shall not be subject to a stop order of the
Commission; and, if the offer and sale of TCF Common Stock in the Combination
pursuant to the Reorganization Agreement is required to be registered under the
securities laws of any state, the TCF Registration Statement shall not be
subject to a stop order of the securities commission in such state; (v) the TCF
Common Stock to be issued to holders of Standard Common Stock shall have been
approved for listing on the NYSE subject to official notice of issuance; (vi) no
action or proceeding before any court by any governmental authority or agency,
domestic or foreign, shall be instituted or pending (A) challenging or seeking
to make illegal, or to delay or otherwise directly or indirectly to restrain or
prohibit, the consummation of the transactions contemplated by the
Reorganization Agreement or seeking to obtain material damages in connection
with the transactions contemplated thereby, (B) seeking to prohibit direct or
indirect ownership or operation by TCF of all or a material portion of the
business or assets of Standard or any of the Standard Subsidiaries, or to compel
TCF or any of its subsidiaries or Standard or any of the Standard Subsidiaries
to dispose of all or a material portion of the business or assets of TCF or any
of its subsidiaries or of Standard or any of the Standard Subsidiaries, as a
result of the transactions contemplated by the Reorganization Agreement, or (C)
seeking to require direct or indirect divestiture by TCF or any of its
subsidiaries of any material portion of its business or assets or of Standard's
or the Standard Subsidiaries' business or assets; (vii) after March 16, 1997,
there shall not be any action taken, or any statute, rule, regulation, judgment,
order or injunction enacted, entered, enforced, promulgated, issued or deemed
applicable to the transactions contemplated by the Reorganization Agreement by
any federal, state or other court, government or governmental authority or
agency, which could reasonably be expected to result, directly or indirectly, in
any of the consequences referred to in the immediately preceding clause.
In addition to the foregoing conditions, TCF's obligations under the
Reorganization Agreement are conditioned upon: (i) the accuracy as of the date
of the Reorganization Agreement and as of the Effective Date of the
representations and warranties of Standard set forth in the Reorganization
Agreement, except where the failure to be true and correct would not have, or
would not reasonably be expected to have, a Material Adverse Effect on Standard
as defined in the Reorganization Agreement (the term "Material Adverse Effect"
specifically excludes changes with respect to, or effects on, an entity
resulting from changes in laws and regulations, generally accepted accounting
principles or regulatory accounting principles, resulting from expenses incurred
in connection with the Reorganization Agreement or the transactions contemplated
thereby or resulting from any other matter affecting depository institutions
generally including, without limitation, changes in general economic conditions
and changes in prevailing interest and deposit rates);(ii) the performance by
Standard in all material respects of each obligation and agreement and
compliance in all material respects by Standard with each covenant to be
performed or complied with or by it under the Reorganization Agreement at or
prior to the Effective Date; (iii) the receipt of certain certificates from
specified officers of Standard with respect to compliance with certain of the
conditions set forth in the Reorganization Agreement; (iv) the receipt of
certain legal opinions from
46
Standard's legal counsel; (v) the receipt by TCF of the letters relating to the
sale of TCF Common Stock after the Effective Time from all executive officers
and directors of Standard and all stockholders who are affiliates of Standard;
(vi) since March 16, 1997, Standard not suffering or experiencing a Material
Adverse Effect; (vii) dissenters' shares in the Combination not exceeding ten
percent of the outstanding shares of Standard Common Stock on the Effective
Date; (viii) TCF having received an opinion dated the Effective Date from Fried,
Frank, Harris, Shriver & Jacobson, counsel to TCF, in form and substance
reasonably satisfactory to TCF, substantially to the effect that, on the basis
of facts, representations, covenants and assumptions set forth in such opinion
(or in certificates of officers of Standard, Standard Bank, TCF, TCF Illinois
and others, upon which such counsel may rely), (A) no gain or loss will be
recognized by TCF or Standard for federal income tax purposes as a result of the
Combination and (B) the Combination will qualify for federal income tax purposes
under Sections 368(a) and 332 of the Code; and (ix) there having been no action
taken, or any statute, rule, regulation or order enacted, entered, enforced or
deemed applicable to the Combination by any federal or state governmental entity
which, in connection with the grant of a requisite governmental approval,
imposes any condition or restriction upon the Resulting Institution, TCF or any
of TCF's subsidiaries, including, without limitation, any requirement to raise
additional capital, which would so materially adversely impact the economic or
business benefits of the Combination as to significantly change the advisability
of the Combination. Any of the foregoing conditions may be waived by TCF.
In addition to the conditions set forth above, Standard's obligations under
the Reorganization Agreement are conditioned upon: (i) the accuracy as of the
date of the Reorganization Agreement and as of the Effective Date of the
representations and warranties of TCF set forth in the Reorganization Agreement,
except where the failure to be true and correct would not have, or would not
reasonably be expected to have, a Material Adverse Effect on TCF; (ii) the
performance by TCF in all material respects of each obligation and agreement and
compliance in all material respects by TCF with each covenant to be performed or
complied with or by it under the Reorganization Agreement at or prior to the
Effective Date; (iii) the receipt of certificates from specified officers of TCF
with respect to compliance with certain of the conditions set forth in the
Reorganization Agreement; (iv) the receipt of certain legal opinions from TCF's
general counsel; (v) the approval of the Reorganization Agreement and the
transactions contemplated thereby by the affirmative vote of the holders of the
percentage of Standard Common Stock required for such approval under the
provisions of Standard's Certificate of Incorporation (the "Standard
Certificate") and Bylaws and the DGCL; (vi) since March 16, 1997, TCF not
suffering or experiencing a Material Adverse Effect; (vii) the receipt by
Standard of an opinion dated the Effective Date from Skadden, in form and
substance reasonably satisfactory to Standard, substantially to the effect that,
on the basis of facts, representations, covenants and assumptions set forth in
such opinion which are consistent with the state of facts existing on the
Effective Date, (A) no gain or loss will be recognized by Standard for federal
income tax purposes as a result of the Combination and (B) the Combination will
qualify for federal income tax purposes under Sections 368(a) and 332 of the
Code. In rendering such opinion, Skadden may require and rely upon (and may
incorporate by reference) representations and covenants, including those
contained in certificates of officers of Standard, Standard Bank, TCF, TCF
Illinois and others. Any of the foregoing conditions may be waived by Standard.
REGULATORY APPROVALS
Consummation of the Combination is subject to, among other things, the prior
receipt of all necessary regulatory approvals. In order to consummate the
Combination, (i) TCF must provide notice to and obtain prior approval from the
OCC for the mergers of Interim Bank and Standard Bank with and into TCF Illinois
pursuant to the Combination, and (ii) Standard must obtain approvals of the OTS
for certain aspects of the Combination. There can be no assurance that the OCC
and the OTS will provide the necessary approvals, or the timing of such
approvals, if obtained. The Combination will not proceed unless all requisite
regulatory approvals are obtained. In addition, the Combination cannot be
consummated prior to the expiration of a 15-30 day waiting period following the
date on which the OCC approves the
47
Combination, during which time the Department of Justice may challenge the
Combination on antitrust grounds. Neither TCF nor Standard believes that the
Combination is likely to raise issues under the antitrust laws.
TCF and Standard are not aware of any other governmental approvals or
actions that are required for consummation of the Combination except as
described above. Should any such approval or action be required, it is presently
contemplated that such approval or action would be sought. There can be no
assurance that any such approval or action, if needed, could be obtained, would
not delay consummation of the Combination and would not be conditioned in a
manner that would cause TCF to abandon the Combination. In the event the
Combination is not consummated on or before October 31, 1997, the Reorganization
Agreement may be terminated by either TCF or Standard. See "--Effective Time of
the Combination; Termination and Amendment."
BUSINESS PENDING THE COMBINATION
Under the terms of the Reorganization Agreement, Standard has agreed (i)
that the business of Standard and the Standard Subsidiaries shall be conducted
only in, and neither Standard nor any of the Standard Subsidiaries shall take
any action except in, the ordinary course, on an arm's-length basis and in
accordance, in all material respects, with all applicable laws, rules and
regulations and with prudent banking practices, (ii) to use reasonable efforts
to cause its current insurance policies not to be canceled or terminated or any
of the coverage thereunder to lapse, unless simultaneously with such
termination, cancellation or lapse, replacement policies providing coverage
substantially equal to the coverage under the canceled, terminated or lapsed
policies are in full force and effect, (iii) to use commercially reasonable
efforts to preserve intact in all material respects the business organization
and the goodwill of Standard and the Standard Subsidiaries and to keep available
the services of its officers and employees as a group and preserve intact
material agreements, and (iv) to establish a committee of senior management
personnel which will confer on a regular and frequent basis with a committee of
senior management personnel of TCF, as reasonably requested by TCF, to report on
operational matters and the general status of ongoing operations and to plan for
the operations of the Resulting Institution upon consummation of the
Combination.
In addition, under the terms of the Reorganization Agreement, Standard has
agreed not to take certain actions, nor permit the Standard Subsidiaries to take
certain actions, prior to consummation of the Combination without the prior
written consent of TCF or as otherwise contemplated by the Reorganization
Agreement, including, among other things, the following: (i) amend or propose to
amend the Standard Certificate or its Bylaws; (ii) issue or sell any of its
equity securities, securities convertible into or exchangeable for its equity
securities, warrants, options or other rights to acquire its equity securities,
or any bonds or other securities, except, in the case of Standard Bank, deposits
and other bank obligations in the ordinary course of business, and except
pursuant to the exercise of the Standard Stock Options disclosed in the
Reorganization Agreement; (iii) redeem, purchase, acquire or offer to acquire,
directly or indirectly, any shares of capital stock of Standard or of any of the
Standard Subsidiaries or other securities of Standard or of any of the Standard
Subsidiaries, except pursuant to the agreements, arrangements or commitments
disclosed in the Reorganization Agreement; (iv) split, combine or reclassify any
outstanding shares of capital stock of Standard or any of the Standard
Subsidiaries, or declare, set aside or pay any dividend or other distribution
payable in cash, stock, property or otherwise with respect to shares of capital
stock of Standard or any of the Standard Subsidiaries except the regular
quarterly cash dividends on Standard Common Stock of not more than $.10 per
share payable to holders of Standard Common Stock or dividends paid in cash by
any Standard Subsidiary to Standard or another Standard Subsidiary; (v) borrow
any amount or incur or become subject to any material liability, except
borrowings and liabilities incurred in the ordinary course of business but in no
event enter into any borrowings with a term of greater than one year, or any
other borrowings (other than intercompany or FHLB borrowings) in excess of
$250,000 without prior consultation with TCF, other than as set forth in the
Reorganization
48
Agreement; (vi) discharge or satisfy any material lien or encumbrance on the
properties or assets of Standard or any of the Standard Subsidiaries or pay any
material liability, except in the ordinary course of business and, in the case
of Standard Bank and the Standard Subsidiaries, except for reverse repurchase
agreements or FHLB borrowings; (vii) sell, assign, transfer, mortgage, pledge or
subject to any lien or other encumbrance any of its assets with an aggregate
market value in excess of $250,000, except (A) in the ordinary course of
business, including REO, (B) liens and encumbrances for current property taxes
not yet due and payable or being contested in good faith and (C) liens and
encumbrances which do not materially affect the value of, or interfere with the
current use or ability to convey, the property subject thereto or affected
thereby; (viii) cancel any material debt or claims or waive any rights of
material value, except in the ordinary course of business or upon payment in
full; (ix) acquire (by merger, exchange, consolidation, acquisition of stock or
assets or otherwise) any corporation, partnership, joint venture or other
business organization or division or material assets thereof, or assets or
deposits that are material to Standard on a consolidated basis, except in
exchange for debt previously contracted, including REO; (x) other than as
disclosed in the Reorganization Agreement, make any single or group of related
capital expenditures or commitments therefor in excess of $250,000 (other than
pursuant to binding commitments existing on March 16, 1997 and other than
expenditures necessary to maintain assets in good repair) or enter into any
lease or group of leases as lessee with the same party which involves aggregate
lease payments payable of more than $250,000 for any individual lease or
involves more than $250,000 for any group of leases with the same party in the
aggregate; (xi) enter into or propose to enter into, or modify or propose to
modify, any agreement, arrangement, or understanding with respect to any of the
matters set forth above except in the ordinary course of business; (xii) without
prior consultation with TCF, purchase or otherwise acquire any investments,
direct or indirect, in any derivative securities other than occasional overnight
investments of excess cash; (xiii) without prior consultation with TCF, enter
into any interest rate swap, floor and option agreements or other similar
interest rate management agreements; (xiv) enter into, modify or terminate any
employment, severance or similar agreements or arrangements with, or grant any
bonuses, wage, salary or compensation increases, or severance or termination pay
to, or promote, any director, officer, employee, group of employees or
consultant or hire any employee with an annual salary over $100,000, other than
(A) in the ordinary course of business and in a manner consistent with past
practices or (B) as described in the Reorganization Agreement, and Standard
shall promptly notify TCF of the termination or resignation of any officer or
key employee of Standard; (xv) adopt or amend any profit sharing, stock option,
pension, retirement, deferred compensation, or other employee benefit plan,
trust, fund, contract or arrangement for the benefit or welfare of any
employees, except as required by law or to consummate any of the transactions
contemplated by the Reorganization Agreement in accordance with applicable law,
provided that any such arrangement or amendment is approved by TCF which
approval shall not be unreasonably withheld by TCF; (xvi) enter into any
settlement or similar agreement with respect to, or take any other significant
action with respect to the conduct of, any action, suit, proceeding, order or
investigation which is required to be disclosed in the Reorganization Agreement
or to which Standard or any of the Standard Subsidiaries becomes a party after
March 16, 1997 which is required to be disclosed under the Reorganization
Agreement, without prior consultation with TCF's General Counsel; (xvii) take
any significant action with respect to investment securities held or controlled
by Standard or the Standard Subsidiaries which is inconsistent with Standard's
past practices or then current prudent practices, materially alter its
investment portfolio duration policy or, without prior consultation with TCF,
voluntarily take any action that will have or can reasonably be expected to have
a material adverse effect on Standard Bank's asset/liability position; (xviii)
without prior consultation with TCF, make any agreements or commitments binding
Standard to extend credit to any person in an amount in excess of $500,000;
(xix) with respect to real properties leased by Standard and any material
personal property leased or licensed by Standard for its use, fail to renew,
exercise an option to extend, cancel or surrender any such lease or license or
allow it to lapse, without prior consultation with TCF; and (xx) agree to any
action prohibited by the foregoing. However, Standard can take an otherwise
prohibited action if it is expressly required to do so by law or by the OTS and
Standard promptly informs TCF of the action.
49
In addition, under the terms of the Reorganization Agreement, TCF has agreed
not to take certain actions, nor permit any subsidiary to take certain actions,
without the prior written consent of Standard, including, among other things,
the following: (i) issue or sell any of its equity securities, securities
convertible into or exchangeable for its equity securities, warrants, options or
other rights to acquire its equity securities, or any bonds or other securities,
except (A) pursuant to the exercise of the options or warrants or the conversion
of convertible securities set forth in the Reorganization Agreement and pursuant
to the exercise of options granted under subclause (C) below, (B) issuances of
TCF Common Stock to satisfy the employer matching obligations under TCF's 401(k)
Plan for the participants in such plan who elect to invest in TCF Common Stock,
(C) grants of options and restricted stock under the 1995 TCF Incentive Stock
Plan in the ordinary course of business, (D) pursuant to TCF's dividend
reinvestment plan or (E) as set forth in the Reorganization Agreement; (ii)
redeem or purchase (or take related actions to do so) any capital stock except
as disclosed in the Reorganization Agreement and except with respect to the
redemption of redeemable debt, including outstanding convertible debentures;
(iii) split, combine or reclassify any outstanding shares of capital stock of
TCF or declare, set aside, make or pay any dividend or distribution (whether in
cash, stock, or property or any combination thereof) in respect of TCF Common
Stock other than regular quarterly cash dividends which are not in excess of
$.32 per share of TCF Common Stock; (iv) borrow any amount or incur or become
subject to any material liability, except borrowings and liabilities incurred in
the ordinary course of business or borrowings to redeem outstanding debentures,
borrowings to effect the transactions contemplated by the Reorganization
Agreement, or as set forth therein; (v) amend the Restated Certificate of
Incorporation of TCF (the "TCF Certificate") or the Bylaws of TCF (the "TCF
Bylaws") (or those of a TCF subsidiary) in a manner which would adversely affect
in any manner the terms of the TCF Common Stock or the ability of TCF to
consummate the transactions contemplated by the Reorganization Agreement in a
timely manner; (vi) sell, assign, transfer, mortgage, pledge or subject to any
lien or other encumbrance any of its assets with an aggregate market value in
excess of $250,000, except (A) in the ordinary course of business, including
REO, (B) liens and encumbrances for current property taxes not yet due and
payable or being contested in good faith, (C) liens and encumbrances which do
not materially affect the value of, or materially interfere with the current use
or ability to convey, the property subject thereto or affected thereby and (D)
sales of bank branches; (vii) acquire (by merger, exchange, consolidation,
acquisition of stock or assets or otherwise) any corporation, partnership, joint
venture or other business organization or division or material assets thereof,
or assets or deposits that are material to TCF on a consolidated basis, except
(A) in exchange for debt previously contracted, including REO, (B) in the
pending merger transaction with Winthrop, or (C) the transactions which occurred
in connection with the conversions of the TCF Banks into national banks, the
chartering of new national banks in Colorado and Ohio, and the registration of
TCF as a bank holding company under the BHCA; or (viii) agree to do any of the
foregoing.
Furthermore, TCF and Standard have agreed to provide the other party and its
representatives with such financial data and other information with respect to
its business and properties as such party shall from time to time reasonably
request. Each party will cause all non-public financial and business information
obtained by it from the other to be treated confidentially. If the Combination
is not consummated, each party will return to the other all non-public financial
statements, documents and other materials previously furnished by such party.
CERTAIN COVENANTS
Pursuant to the Reorganization Agreement, Standard has agreed to take and
refrain from taking certain actions between the date of the Reorganization
Agreement and the Effective Time.
Standard's covenants include that Standard will not, and will use its best
efforts to cause its officers, directors, employees, agents and affiliates not
to, directly or indirectly, solicit, authorize, initiate or encourage submission
of, any proposal, offer, tender offer or exchange offer from any person or
entity relating to any liquidation, dissolution, recapitalization, merger,
consolidation or acquisition or purchase of
50
all or a material portion of the assets or deposits of, or any equity interest
in, Standard or any of the Standard Subsidiaries or other similar transaction or
business combination involving Standard or any of the Standard Subsidiaries.
Unless the Board of Directors of Standard shall have determined, after
consultation with its counsel, that there is a reasonable likelihood that the
Board of Directors has a fiduciary duty to do so, Standard will not (i)
participate in any negotiations in connection with or in furtherance of any of
the foregoing or (ii) permit any person other than TCF and its representatives
to have any access to the facilities of, or furnish to any person other than TCF
and its representatives any non-public information with respect to, Standard or
any of the Standard Subsidiaries in connection with or in furtherance of any
other such transaction involving Standard. Standard is also required to notify
TCF if any such proposal or offer, or any inquiry from or contact with any
person with respect thereto, is made, and to provide TCF with such information
regarding such proposal, offer, inquiry or contact as TCF may request.
Standard's other covenants include, but are not limited to, the obligation to
obtain signed copies from the executive officers, directors and certain
stockholders of Standard of the affiliate letters which provide that they will
refrain from transferring shares of TCF Common Stock received in the Combination
except pursuant to a registration under the Securities Act, in compliance with
Rules 144 and 145 thereunder, or pursuant to another exemption from registration
under the Securities Act.
EFFECTIVE TIME OF THE COMBINATION; TERMINATION AND AMENDMENT
The Effective Time will be at the time the Articles of Merger for the Merger
are filed with the Bank Authority. Such filing will occur only after the receipt
of all requisite regulatory approvals, approval of the Reorganization Agreement
by the requisite vote of Standard's stockholders and the satisfaction or waiver
of all other conditions to the Combination. The Effective Date will be the date
which includes the Effective Time.
A closing (the "Closing") will take place immediately prior to the Effective
Time which shall be no later than ten business days following satisfaction or
waiver (to the extent permitted) of all the conditions to consummation of the
Combination, or on such other date as the parties may mutually agree upon.
The Reorganization Agreement may be terminated prior to the Effective Date,
as follows: (i) by the mutual consent of TCF and Standard approved by a majority
of their respective entire Boards of Directors; (ii) by either TCF or Standard,
if any of the conditions to such party's obligation to consummate the
transactions contemplated in the Reorganization Agreement shall have become
impossible to satisfy (unless such impossibility shall be due to the action or
failure to act in breach of the Reorganization Agreement by the party seeking to
terminate the Reorganization Agreement); (iii) by Standard, if the
Reorganization Agreement is not duly approved by the stockholders of Standard at
a meeting of stockholders (or any adjournment thereof) duly called and held for
such purpose; (iv) by either TCF or Standard, if the Effective Date is not on or
before October 31, 1997 (unless the failure to consummate the Combination by
such date shall be due to the action or failure to act of the party seeking to
terminate the Reorganization Agreement in breach of such party's obligations
under the Reorganization Agreement); (v) by Standard, if the Average TCF Stock
Price on the Determination Date is less than $37.50, provided that TCF has the
opportunity as provided in the Reorganization Agreement to increase the value of
cash and/or stock offered to stockholders of Standard such that the
Consideration Value Per Share is $24.69; (vi) by Standard, if (A) Standard has
complied with Section 5.5 of the Reorganization Agreement, which generally
prohibits, with certain exceptions, Standard or any of its officers, directors,
employees, agents or affiliates from, directly or indirectly, soliciting,
authorizing, initiating or encouraging submission of, any acquisition proposal
(as defined in the Reorganization Agreement), or participating in any
negotiations or providing non-public information in connection therewith (See
"--Certain Covenants"), (B) any corporation, partnership, person, other entity
or group, as defined in the Exchange Act (other than TCF or any affiliate of
TCF) (a "Person"), shall have commenced (as such term is used in Rule 14d-2(b)
under the Exchange Act) a bona fide tender offer for all outstanding shares of
Standard Common Stock or any Person shall have made a bona fide written offer
involving a merger or consolidation of Standard or the
51
acquisition of all or substantially all of its assets or capital stock, (C)
Standard's Board of Directors shall determine, after consultation with
Standard's independent financial advisors, that such offer is more favorable to
Standard's stockholders when compared to the Combination, and (D) Standard's
Board of Directors determines upon the advice of its legal counsel that if they
failed to recommend such offer or accept such proposal then such failure would
be likely to result in a breach of the directors' fiduciary or legal duties;
provided, however, that Standard may not terminate the Reorganization Agreement
in such circumstances until the expiration of five business days after written
notice of any such offer or proposal has been delivered to TCF, together with a
summary of the terms of any such offer or proposal (this entire clause (vi),
Standard's "fiduciary out" right of termination); (vii) by TCF, if, after March
16, 1997, any Person shall have commenced (as such term is used in Rule 14d-2(b)
under the Exchange Act) a bona fide tender offer or exchange offer to acquire at
least 25% of the then outstanding shares of Standard Common Stock, and
thereafter the Board of Directors of Standard shall have withdrawn, or
materially adversely modified or changed its recommendation of the
Reorganization Agreement or the Combination; (viii) by either TCF or Standard,
if the other party hereto commits a willful breach which is not cured within ten
days after receipt by the breaching party of written demand for cure by the
non-breaching party; or (ix) by TCF or Standard, if the other party delivers an
updated disclosure permitted under the Reorganization Agreement and, within 20
days after receipt of such supplement or amendment (or if cure is promptly
commenced by the disclosing party, but is not effected within the cure period
provided under the Reorganization Agreement), the receiving party exercises its
right to terminate the Reorganization Agreement if the information in such
supplement or amendment together with the information in any or all of the
supplements or amendments previously provided by the disclosing party indicate
that the disclosing party has suffered or is reasonably likely to suffer a
Material Adverse Effect.
Assuming the Standard stockholders approve the Combination at the Special
Meeting, the Standard Board of Directors may elect to consummate the Combination
and not to terminate the Reorganization Agreement without resoliciting votes or
proxies from the Standard stockholders if the Average TCF Stock Price is below
$37.50, and TCF does not elect to increase the Consideration Value Per Share to
at least $24.69 per share. In such a situation, in considering whether to
consummate the Combination without resoliciting votes or proxies from
stockholders of Standard, the Standard Board of Directors will take into
account, consistent with its fiduciary duties, all relevant facts and
circumstances that exist at such time, including, without limitation, the amount
by which the Average TCF Stock Price was less than $37.50 per share, recent
developments in the business of TCF and Standard as of such date, the Standard
Board of Directors' review of the impact that a termination of the
Reorganization Agreement would have on the trading price of the Standard Common
Stock, the advice of its financial advisor and legal counsel and such other
factors as the Standard Board of Directors deems relevant at such time. If the
Average TCF Stock Price is known before the Special Meeting and is less than
$37.50, the parties will make prompt announcement of any election by Standard
not to terminate the Reorganization Agreement or, if Standard exercises such
termination right, any election by TCF with respect to increasing the
Consideration Value Per Share.
To the extent permitted under applicable law, the Reorganization Agreement
may be amended or supplemented at any time by written agreement of the parties
whether before or after the Special Meeting, except that, after approval of the
Reorganization Agreement by the requisite vote of stockholders of Standard, no
such amendment may change (i) the amount or kind of Consideration received by
the Standard stockholders (except as provided in the Reorganization Agreement)
or (ii) any of the terms or conditions of the Reorganization Agreement if the
change would adversely affect holders of Standard Common Stock.
TERMINATION FEES
The Reorganization Agreement provides that either Standard or TCF shall pay
the other a termination fee if the Reorganization Agreement is terminated in
certain events. Standard shall pay TCF the sum of
52
$15 million if (i) the Reorganization Agreement is terminated by Standard
pursuant to the exercise of its "fiduciary out" right of termination (see
"--Certain Covenants" and "--Effective Time of Combination; Termination and
Amendment"), or (ii) the Reorganization Agreement is terminated by TCF because,
after March 16, 1997, any Person shall have commenced (as that term is used in
Rule 14d-2(b) under the Exchange Act) a bona fide tender or exchange offer to
acquire at least 25% of the outstanding shares of Standard Common Stock, and
thereafter the Standard Board of Directors has withdrawn or materially adversely
modified or changed its recommendation of the Reorganization Agreement and the
Combination, or (iii) the Reorganization Agreement is terminated by TCF due to
the willful breach of the covenants, agreements or obligations of Standard under
the Reorganization Agreement, which breach is not cured within ten days after
receipt by Standard of written demand for cure by TCF. Standard shall pay TCF
the sum of $1 million (subject to increase as described below) in the event
termination results from any of the following: (i) termination is by Standard as
a result of failure to obtain approval for the Combination by its own
stockholders or (ii) termination is by TCF as a result of (A) the failure of the
representations and warranties of Standard in the Reorganization Agreement to be
true and correct as of March 16, 1997, and of such representations and
warranties to be true and correct as of the Effective Date, except where failure
to be true and correct would not have, or would not be reasonably expected to
have, a Material Adverse Effect on Standard, (B) the failure of Standard to have
in all material respects performed each obligation and agreement and complied
with each covenant to be performed and complied with by it under the
Reorganization Agreement at or prior to the Effective Date, (C) the failure of
Standard to deliver (1) an officers' certificate certifying that the officers of
Standard have no reason to believe that the conditions referred to in clauses
(A) and (B) of this paragraph have not been fulfilled, (2) a secretary's
certificate certifying to TCF that the copies of the text of the resolutions by
which the corporate action on the part of Standard and the Standard Subsidiaries
to approve the Reorganization Agreement are true, correct and complete and were
duly adopted and have not been amended or rescinded, and certifying the
signature and office of each officer who executed the Reorganization Agreement,
(3) the required opinion of counsel of Standard or (4) the required affiliate
letters of Standard. If the Reorganization Agreement is terminated for any of
the reasons set forth in the preceding sentence, Standard will be required to
pay to TCF an additional $14 million if Standard received a third party
acquisition proposal (as defined in the Reorganization Agreement) after March
16, 1997 and before the Reorganization Agreement was terminated and Standard
enters into a definitive acquisition agreement with that third party (or its
affiliate) within twelve months after the Reorganization Agreement is
terminated.
Under the Reorganization Agreement, TCF has agreed to pay Standard a
termination fee of $1 million if the Reorganization Agreement is terminated by
Standard due to (i) the failure of the representations and warranties of TCF in
the Reorganization Agreement to be true and correct as of March 16, 1997, and as
of the Effective Date, except where failure to be true and correct would not
have, or would not be reasonably expected to have, a Material Adverse Effect on
TCF, (ii) the failure of TCF to have in all material respects performed each
obligation and agreement and complied with each covenant to be performed and
complied with by it under the Reorganization Agreement at or prior to the
Effective Date, or (iii) the failure of TCF to deliver (A) an officers'
certificate certifying that the officers of TCF have no reason to believe that
the conditions referred to in clauses (i) and (ii) of this paragraph have not
been fulfilled, (B) a secretary's certificate certifying to Standard that the
copies of the text of the resolutions by which the corporate action on the part
of TCF and TCF subsidiaries to approve the Reorganization Agreement are true,
correct and complete and were duly adopted and have not been amended or
rescinded, and certifying the signature and office of each officer who executed
the Reorganization Agreement or (C) the required opinion of counsel of TCF. TCF
shall pay Standard $15 million if Standard terminates the Reorganization
Agreement due to the willful breach of the covenants, agreements or obligations
of TCF under the Reorganization Agreement, which breach is not cured within ten
days after receipt by TCF of written demand for cure by Standard.
53
The payment of a termination fee as provided for in the Reorganization
Agreement is considered liquidated damages and is in lieu of any and all claims
that the party entitled to such fee has, or might have, and the party entitled
to such termination fee shall not have any other rights or claims against the
other party.
INTERESTS OF CERTAIN PERSONS IN THE COMBINATION
Certain members of the Standard Board of Directors and management may be
deemed to have certain interests in the Combination in addition to their
interests as stockholders of Standard generally.
BOARD MEMBERSHIP. The Reorganization Agreement provides that, as of the
Effective Time, TCF will expand the size of its Board of Directors by one seat,
to be filled by a person mutually acceptable to TCF and Standard, currently
expected to be David H. Mackiewich, who is the President and Chief Executive
Officer of Standard. Mr. Mackiewich, or any Standard director who serves on the
Board of TCF, will not receive any fees for services rendered as a TCF director
at any time that he or such person is also employed by Standard or any TCF
affiliate. Following the Combination, the Board of Directors of the Resulting
Institution will consist of eight directors of TCF Illinois immediately prior to
the Combination and seven directors of Standard. Members of the Boards of
Directors of TCF and of the Resulting Institution will not receive any fees for
services rendered as directors during any time that they are also employees of
the Resulting Institution, of TCF or of any TCF affiliate.
STANDARD STOCK OPTIONS AND RESTRICTED STOCK. In connection with and
subsequent to its conversion from a mutual to a stock form of organization in
1994, Standard has made various awards of Standard Stock Options to executives
and officers of Standard pursuant to the Standard Stock Option Plans and various
restricted stock grants to executives and officers of Standard under the
Standard Financial, Inc. Management Recognition and Retention Plan (the "MRRP").
Pursuant to the terms of those awards, at the Effective Time all Standard Stock
Options will become 100% vested. Immediately prior to the Effective Time, all
Standard Stock Options will be cancelled and Standard will pay to each holder,
for each Standard Stock Option held, an amount equal to the excess of the
"market value" of the Standard Common Stock subject to the Standard Stock Option
over the "exercise price" for the Standard Stock Option. Standard has indicated
in the Reorganization Agreement its intention that the "market value" per share
of Standard Common Stock, for purposes of calculating the cash payment due, will
be equal to the Consideration Value Per Share as provided in the Reorganization
Agreement. In the case of the restricted stock awards under the MRRP, the terms
of the award agreements provide that any such shares which are unvested at the
Effective Time shall become 100% vested. Such shares shall be converted (in the
same manner as the other shares of Standard Common Stock) into the right to to
receive the Consideration Value Per Share and to make the Consideration Election
provided for in the Reorganization Agreement. Assuming, for purposes of
illustration only, a Determination Date as of which the Consideration Value Per
Share is $25.00, the cash payments in lieu of cancelled Standard Stock Options
that become immediately vested because of a change in control to the Chief
Executive Officer of Standard and the four other executives named in Standard's
preliminary proxy statement for the 1997 Standard annual stockholders' meeting,
would be as follows: David H. Mackiewich, $2,818,561; Thomas M. Ryan, $935,519;
Robert R. Harring, III, $676,043; Ruta M. Staniulis, $645,450; and Randall R.
Schwartz, $622,804. Assuming, again, for purposes of illustration only, a
consummation of the Combination in which the Consideration Value Per Share is
$25.00 and the value of TCF Common Stock on the Effective Date is assumed to
equal the Average TCF Stock Price used for the Combination, the value of the
restricted stock vesting for the same individuals in connection with the
Combination would be as follows: David H. Mackiewich, $1,665,000; Thomas M.
Ryan, $552,750; Robert R. Harring, III, $600,000; Ruta M. Staniulis, $382,500;
and Randall R. Schwartz, $367,500.
TCF management has indicated to David H. Mackiewich its intention to award
30,000 shares of TCF Common Stock to Mr. Mackiewich after the Effective Time in
the form of a restricted stock grant. The grant is intended to provide Mr.
Mackiewich with a restricted stock award comparable to those provided to other
TCF executives. Vesting of the shares will be subject to performance-based
requirements that
54
generally apply to restricted stock awards to TCF executives. Such awards in
general provide for vesting only upon the achievement by TCF of specified goals
related to financial performance, as expressed in terms of TCF's annual return
on average equity.
INDEMNIFICATION AND INSURANCE. The Reorganization Agreement also provides
that, from and after the Effective Date, TCF will indemnify Standard's
directors, officers, employees and agents from and against any and all claims
arising out of or in connection with activities in such capacity occurring on or
prior to the Effective Date to the fullest extent permitted under the TCF
Certificate and Bylaws and the DGCL. In addition, TCF has agreed to cause the
Resulting Institution to maintain in effect, for a period of three years after
the Effective Time, directors' and officers' liability insurance comparable to
that maintained by TCF or continue the existing insurance maintained by Standard
as of the date of the Reorganization Agreement for acts or omissions occurring
on or prior to the Effective Date. Certain of Standard's employee benefit plans
provide for indemnification and/or liability insurance coverage for any
individual serving as a fiduciary with respect to such plans. Such
indemnification or liability insurance will be continued by TCF.
CHANGE IN CONTROL AGREEMENTS. Standard and/or the Standard Subsidiaries
have entered into change in control agreements (the "Change in Control
Agreements") with James Chippas, Robert R. Harring, III, David H. Mackiewich,
Kurtis D. Mackiewich, Leonard A. Metheny, Sr., Thomas M. Ryan, Randall R.
Schwartz, and Ruta M. Staniulis (each person, an "Executive"). In the
Reorganization Agreement, TCF acknowledges that the Combination constitutes a
"change in control" (hereinafter, a "Change in Control") of Standard for
purposes of the Change in Control Agreements, and has agreed to assume or to
cause the Resulting Institution to assume all obligations under the Change in
Control Agreements and certain employment agreements of David H. Mackiewich and
Thomas M. Ryan.
The Change in Control Agreements provide that a lump sum payment shall be
paid to the Executive on the thirtieth day following the date of termination if
(i) the Executive terminates employment and "good reason" exists (as that term
is defined below), (ii) the Executive's employment is terminated within two
years of a Change in Control, other than for death, disability or "cause" (as
defined in the Agreements) or (iii) the Executive terminates employment within
one year of a Change in Control. The lump sum payment consists of the following,
discounted to "present value" (as defined in the Agreements): (x) the unpaid
balance of the Executive's full base compensation through the date of
termination at the rate in effect at the time notice of termination is given,
plus (y) an amount equal to the Executive's full base compensation for three
years, at the rate in effect on the date of termination, plus (z) an amount, if
any, equal to three times the Executive's highest bonus compensation paid in
either of the two previous years. In addition, Standard or the Standard
Subsidiaries, as the case may be, must pay all legal fees and expenses incurred
by the Executive resulting from the termination and, to the extent possible
under the general terms and provisions of such plans and programs, must maintain
the Executive's benefit plans in full force and effect for the remaining term of
the agreement, or, in the case of medical coverage, until the earlier of the
date comparable coverage is provided or the Executive is entitled to coverage
under Medicare or another comparable insurance program. If the Executive's
continued participation in such benefit plans is barred, Standard or the
appropriate Standard Subsidiary, as the case may be, must arrange to provide the
Executive with benefits similar to those he or she was entitled to receive or,
if that is not possible, with benefits of equal value. In addition, the
Executive may have any assignable insurance policies owned by Standard or any of
the Standard Subsidiaries assigned to him at the end of the period of coverage.
Under the Change in Control Agreements, "good reason" exists if, within two
years of a Change in Control, (i) the Executive is assigned duties materially
inconsistent with those assigned to him or her prior to the Change in Control,
(ii) the Executive's reporting responsibilities, titles or offices have
materially changed since the Change in Control, (iii) the Executive is removed
or not re-elected to any such position, except in connection with termination
for cause, disability, death or by the Executive for other than good reason (as
defined), (iv) Standard's or Standard Bank's, as the case may be, principal
offices are relocated to a location at least 30 miles from its present location,
(v) the Executive is assigned outside the Chicago,
55
Illinois metropolitan area, (vi) the Executive's base salary or other benefits
are materially reduced, (vii) the Executive's employment is purported to be
terminated without proper written notice, or (viii) Standard or the appropriate
Standard Subsidiary, as the case may be, fails to obtain an assumption of all
obligations under the Change in Control Agreement.
With the exception of Mr. Chippas's Change in Control Agreement, the Change
in Control Agreements include "gross-up" provisions under Section 280G of the
Code. Under these provisions, if the independent accountants acting as auditors
for Standard or the appropriate Standard Subsidiary, as the case may be,
determine, in consultation with legal counsel acceptable to the parties, that
any amount payable to the Executive by Standard or the appropriate Standard
Subsidiary, as the case may be, would constitute an "excess parachute payment"
within the meaning of Section 280G of the Code, and be subject to the "excise
tax" imposed by Section 4999 of the Code, Standard or the appropriate Standard
Subsidiary, as the case may be, shall pay the Executive the amount of such
excise tax and all federal and state income or other taxes with respect to the
payment of the amount of such excise tax, including all such taxes with respect
to any such additional amount, as well as any additional excise tax deficiency
determination which may be issued by the Internal Revenue Service at a later
date. Mr. Chippas's Change in Control Agreement generally provides that, if any
amount payable under the Agreement would constitute an excess parachute payment
under Section 280G of the Code, then the amount of such payment will be reduced
to the amount equal to $1.00 less than the amount which can be properly deducted
under Section 280G of the Code, provided that in no event shall it be reduced to
an amount less than zero.
Assuming for purposes of illustration only that the Combination occurs at a
Consideration Value Per Share of $25.00, the amounts payable to Executives under
their respective Change in Control Agreements upon an immediate, qualifying
termination of employment, exclusive of any unpaid compensation through the date
of termination as well as the amounts paid or value received in connection with
payment for Standard Stock Options and restricted stock grants (see "--Standard
Stock Options and Restricted Stock"), would be as follows: James Chippas,
$65,091; Robert R. Harring, III, $1,354,923; Kurtis D. Mackiewich, $707,450;
Leonard A. Metheny, Sr., $698,519; Randall R. Schwartz, $758,669; Ruta M.
Staniulis, $921,604; David H. Mackiewich, $3,146,754; and Thomas M. Ryan,
$1,401,474.
In order to induce Kurtis D. Mackiewich, the son of David H. Mackiewich and
currently an officer of Standard, to continue with the Resulting Institution
after the Effective Time, TCF has indicated its intention to cause the Resulting
Institution to enter into an employment agreement with him at his current base
salary, with terms substantially similar to those in effect for David H.
Mackiewich and Thomas M. Ryan. TCF has also indicated its intention to renew the
existing employment agreements and Change in Control Agreements with David H.
Mackiewich and Thomas M. Ryan.
RESALE CONSIDERATIONS WITH RESPECT TO THE TCF COMMON STOCK
The shares of TCF Common Stock to be issued in the Combination have been
registered under the Securities Act and will be freely transferable thereunder,
except for shares of TCF Common Stock received by persons, including directors
and executive officers of Standard, who may be deemed to be "affiliates" of
Standard under Rule 145 under the Securities Act as of the date of the Special
Meeting. An "affiliate" of an issuer is defined generally as a person who
"controls" the issuer. Directors, executive officers and 10% stockholders may be
presumed by the Commission to control the issuer. Affiliates may not sell their
shares of TCF Common Stock acquired pursuant to the Combination except pursuant
to an effective registration statement under the Securities Act covering such
shares or in compliance with Rules 144 and 145 or another applicable exemption
from the registration requirements of the Securities Act.
56
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following summary discusses the principal federal income tax
consequences of the Combination. The summary is based upon the Code, applicable
Treasury Regulations thereunder and administrative rulings and judicial
authority as of the date hereof. All of the foregoing are subject to change,
possibly retroactively, and any such change could affect the continuing validity
of the discussion. The discussion assumes that holders of shares of Standard
Common Stock hold such shares as a capital asset, and does not address the tax
consequences that may be relevant to a particular stockholder subject to special
treatment under certain federal income tax laws, such as dealers in securities,
banks, insurance companies, tax-exempt organizations, non-United States persons
and shareholders who acquired shares of Standard Common Stock pursuant to the
exercise of options or otherwise as compensation or through a tax-qualified
retirement plan. The discussion also does not address any consequences arising
under the laws of any state, locality or foreign jurisdiction. No rulings have
been or will be sought from the Internal Revenue Service with respect to any tax
matters relating to the Combination. Each shareholder of Standard Common Stock
is advised to consult his or her own tax advisors as to the federal, state,
local and foreign income and other tax consequences of the Combination.
GENERAL. The consummation of the Combination is conditioned on the receipt
by TCF and Standard of opinions of their respective tax counsel, in each case
substantially to the effect that the Conversion/ Reincorporation and the Merger
will each be treated for federal income tax purposes as a reorganization within
the meaning of Section 368(a) of the Code and opining to the federal income tax
consequences thereof, and that the Subsequent Merger will be treated as a
liquidation under Section 332 of the Code. The foregoing opinions will be based
upon certain assumptions and representations of Standard, Standard Bank, TCF and
TCF Illinois relating to the requirements of a reorganization and liquidation.
In the event that TCF or Standard is unable to obtain its respective opinion
of counsel as set forth above, each of TCF and Standard is permitted, under the
Reorganization Agreement, to waive the receipt of such opinions as a condition
to such party's obligation to consummate the Combination. As of the date of this
Proxy Statement/Prospectus, neither TCF nor Standard intends to waive the
condition as to the receipt of opinions of counsel as set forth herein and
neither party anticipates that the material income tax consequences of the
Combination will be materially different than those described below. In the
event of such a failure to obtain tax opinions as set forth above, a party
desires to waive such condition to the consummation of the Combination and the
tax consequences of the Combination are materially different than as described
herein, Standard will resolicit the votes of its shareholders to approve
consummation of the Combination.
The discussion below summarizes certain federal income tax consequences of
the Combination to a Standard stockholder, assuming that all parties to the
Reorganization Agreement have acted, and will act, in accordance with the terms
of the Reorganization Agreement and that the Reorganization Agreement will be
consummated at the Effective Time pursuant to the terms and conditions set forth
in the Reorganization Agreement without the waiver or modification of any such
terms and conditions.
HOLDERS OF STANDARD COMMON STOCK--GENERAL. As discussed below, the federal
income tax consequences of the Combination to a Standard stockholder depend on
whether such stockholder receives only cash, only shares of TCF Common Stock, or
some combination thereof, in exchange for such stockholder's shares of Standard
Common Stock, as well as for any shares of Standard Common Stock that such
stockholder constructively owns, and may further depend on whether such
stockholder actually or constructively owns any shares of TCF Common Stock. See
"--Additional Considerations."
ONLY CASH RECEIVED. Except as described below (see "--Additional
Considerations"), a Standard stockholder that receives solely cash in the
Combination in exchange for such stockholder's shares of Standard Common Stock,
or that exercises such stockholder's right to seek an appraisal of such
stockholder's shares of Standard Common Stock, generally will recognize capital
gain or loss measured by the difference between the amount of cash received and
the tax basis of the shares of Standard Common Stock exchanged therefor. Gain or
loss must be calculated separately for each block of Standard Common Stock held
by a stockholder. Shares
57
of Standard Common Stock that were acquired at the same time in a single
transaction will be considered a separate "block." Under current law, in the
case of individual taxpayers, capital gains are taxed at the favorable long-term
capital gains rate if the taxpayer's holding period for the investment was more
than one year. Proposed legislation may alter this result (See "--Legislative
Proposal").
ONLY TCF COMMON STOCK RECEIVED. Except as discussed below with respect to
cash received in lieu of a fractional share of TCF Common Stock, a stockholder
of Standard that receives only shares of TCF Common Stock in the exchange of
such stockholder's shares of Standard Common Stock will not recognize gain or
loss. Accordingly, (i) the tax basis of the shares of TCF Common Stock received
in the Combination will be the same as the tax basis of the shares of Standard
Common Stock exchanged therefor in the Combination (adjusted, as discussed
below, with respect to fractional shares) and, (ii) the holding period of TCF
Common Stock received will include the holding period of shares of Standard
Common Stock exchanged therefor.
CASH AND SHARES OF TCF COMMON STOCK RECEIVED. Except as discussed below
(see "--Additional Considerations") and with respect to cash received in lieu of
a fractional share of TCF Common Stock, a Standard stockholder that receives
both cash and TCF Common Stock in the exchange for Standard Common Stock will
recognize capital gain, if any, but not loss in such exchange. The amount of
gain, if any, recognized must be computed separately with respect to each block
of Standard Common Stock surrendered in the Combination. With respect to each
block, gain will be recognized in an amount equal to the lesser of (i) the
amount of gain realized (i.e., the excess of the amount of cash and the fair
market value of TCF Common Stock received that is allocable to such block over
the tax basis of such block) and (ii) the amount of cash received that is
allocable to such block. For purposes of such calculation, the aggregate amount
of cash and TCF Common Stock received by a stockholder generally will be
allocated proportionally among the shares of Standard Common Stock surrendered
in exchange therefor pursuant to the Combination. Such gain will be capital gain
except as discussed below (see "--Additional Considerations"). Under current
law, in the case of individual taxpayers, capital gains are taxed at the
favorable long-term capital gains rate if the taxpayer's holding period for the
investment was more than one year. Proposed legislation may alter this result
(See "--Legislative Proposal").
The tax basis of the shares of TCF Common Stock received will be the same as
the tax basis of the shares of Standard Common Stock exchanged, decreased by the
basis of any fractional share interest for which cash is received in the
Combination, and further decreased by the amount of cash received (other than
the cash received for a fractional share interest), and increased by the amount
of gain recognized on the exchange (including any portion that is treated as a
dividend). The holding period of the shares of TCF Common Stock received will
include the holding period of the shares of Standard Common Stock exchanged
therefor.
ADDITIONAL CONSIDERATIONS. In unusual circumstances, a Standard stockholder
that (i) receives cash in the Combination and (ii) either constructively owns
shares of Standard Common Stock that are exchanged for shares of TCF Common
Stock in the Combination, or actually or constructively owns shares of TCF
Common Stock after the Combination (other than shares of TCF Common Stock
received in the Combination), will be required to treat any gain recognized as
dividend income (rather than capital gain, if any) up to the amount of cash
received in the Combination if the receipt of cash by such stockholder has the
effect of a distribution of a dividend. However, in the case of a Standard
stockholder that receives solely cash in the Combination, the amount of any such
dividend will not be limited to the amount of such stockholder's gain. Whether
the receipt of cash has the effect of the distribution of a dividend will depend
upon the stockholder's particular circumstances. The Internal Revenue Service
has indicated in published rulings that a distribution that results in any
actual reduction in interest of a small minority stockholder in a publicly held
corporation generally will not constitute a dividend if the stockholder
exercises no control with respect to corporate affairs. For these purposes, a
stockholder is treated as owning the stock owned by certain family members,
stock subject to an option to acquire such stock, stock owned by certain estates
and trusts of which the stockholder is a beneficiary and stock owned by certain
affiliated entities. Because of the complexity of these rules, each holder of
Standard Common Stock who receives either solely cash or a combination of cash
and TCF Common Stock in the Combination, and who believes these rules may apply
to him or her, is particularly urged to contact his or her own tax advisor.
58
FRACTIONAL SHARES. If a holder of shares of Standard Common Stock receives
cash in lieu of a fractional share of TCF Common Stock in the Combination, such
cash amount will be treated as received in exchange for a fractional share of
TCF Common Stock. Gain or loss recognized as a result of that exchange will be
equal to the cash amount received for the fractional share of TCF Common Stock
reduced by the proportion of the holder's tax basis in shares of Standard Common
Stock exchanged and allocable to the fractional share of TCF Common Stock.
BACKUP WITHHOLDING. The Exchange Agent will be required to withhold 31% of
any cash payments to which a Standard stockholder or other payee is entitled
pursuant to the Combination unless either (i) the stockholder or other payee
provides its taxpayer identification number (social security number or employer
identification number) and certifies that such number is correct, or (ii) an
exemption from backup withholding applies under the applicable law and
regulations. Each stockholder and, if applicable, each other payee should
complete and sign the substitute Form W-9 included as part of the transmittal
letter that accompanies the Election Form, so as to provide the information and
certification necessary to avoid backup withholding, unless an applicable
exemption exists and is established in a manner satisfactory to the Exchange
Agent.
LEGISLATIVE PROPOSAL. The Revenue Reconciliation Act of 1997 contains
provisions which, if enacted, would, among other things, with respect to sales
after July 28, 1997 of capital assets acquired before January 1, 2001, (i)
reduce the maximum tax rate for net long-term capital gains to 20%, (ii)
increase the required holding period for net long-term capital gains treatment
to 18 months and (iii) create a new class of mid-term gains which would be taxed
at 28% if the investment has been held for more than one year but for eighteen
months or less. While it is generally expected that the proposed legislation
will be enacted, as of the date hereof there can be no assurance that the
legislation will become law. Standard stockholders are particularly encouraged
to consult their own tax advisors with respect to the status of this proposed
legislation.
THE PRECEDING DISCUSSION IS INTENDED ONLY AS A SUMMARY OF CERTAIN FEDERAL
INCOME TAX CONSEQUENCES OF THE COMBINATION AND DOES NOT PURPORT TO BE A COMPLETE
ANALYSIS OR DISCUSSION OF ALL POTENTIAL TAX EFFECTS RELEVANT THERETO. THUS,
STANDARD STOCKHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO THE
SPECIFIC TAX CONSEQUENCES TO THEM OF THE COMBINATION, INCLUDING TAX RETURN
REPORTING REQUIREMENTS, THE APPLICABILITY AND EFFECT OF FEDERAL, STATE, LOCAL
AND OTHER APPLICABLE TAX LAWS AND THE EFFECT OF ANY PROPOSED CHANGES IN THE TAX
LAWS.
ACCOUNTING TREATMENT OF THE COMBINATION
TCF intends to treat the Combination as a "purchase" under generally
accepted accounting principles. Under the purchase method of accounting, the
assets and liabilities of Standard will be, as of the Effective Time, recorded
at their respective fair values and added to those of TCF. The expected excess
of consideration paid by TCF over the fair value of the tangible and
identifiable intangible assets acquired less the liabilities assumed will be
recorded as goodwill.
DISSENTERS' RIGHTS
Standard stockholders who follow the procedures set forth in Section 262 of
the DGCL ("Section 262") may receive, in lieu of the Consideration, a cash
payment equal to the "fair value" of their Dissenting Shares. Such fair value is
to be determined by judicial appraisal and could be more than, the same as, or
less than, the Consideration Value Per Share. The statutory right of appraisal
granted by Section 262 is subject to strict compliance with the procedures set
forth below. Failure to follow any of these procedures may result in a
termination or waiver of dissenters' rights under Section 262.
The following is a summary of all material provisions of the DGCL relating
to dissenters' rights and of the procedures to be followed under Section 262,
the text of which is attached to this Proxy Statement/ Prospectus as Appendix C.
The summary does not purport to be a complete statement of, and is qualified in
its entirety by reference to, Section 262 and any amendments to such section
after the date of this Proxy Statement/Prospectus.
59
To be entitled to receive payment of the fair value of his or her Dissenting
Shares, a Standard stockholder must (i) file a written demand for appraisal of
his or her Dissenting Shares with Standard prior to the voting on the
Reorganization Agreement at the Special Meeting (such demand must reasonably
inform Standard of the identity of the stockholder and that the stockholder
intends thereby to demand an appraisal of his or her Dissenting Shares); (ii)
not vote his or her Dissenting Shares in favor of approval and adoption of the
Reorganization Agreement; and (iii) have his or her Dissenting Shares valued in
an appraisal proceeding, as described below. A proxy or vote against approval
and adoption of the Reorganization Agreement will not satisfy the requirement
that a stockholder file a written demand for appraisal as set forth above. The
requirement of a written demand is separate from, and should not be confused
with, the requirement that a Standard stockholder not vote in favor of approval
and adoption of the Reorganization Agreement. A failure to vote on the
Reorganization Agreement will not be construed as a vote in favor of approval
and adoption of the Reorganization Agreement and will not constitute a waiver of
a Standard stockholder's rights of appraisal. A Standard stockholder who returns
a signed proxy indicating that he or she abstains from voting will similarly not
waive his or her rights of appraisal. However, because a proxy signed and left
blank will, unless properly revoked, be voted in favor of approval and adoption
of the Reorganization Agreement, a stockholder who returns a signed proxy left
blank will waive his or her rights of appraisal. Therefore, a Standard
stockholder electing to exercise dissenters' rights who votes by proxy must not
leave his or her proxy blank, but must either vote against approval and adoption
of the Reorganization Agreement or abstain from voting. At any time within 60
days after the Effective Date, any Standard stockholder may withdraw his or her
demand for appraisal and accept the Consideration. Any Standard stockholder
seeking to exercise his or her dissenters' rights must continuously hold the
Dissenting Shares for which appraisal is sought from the date of making the
demand through the Effective Date, and must otherwise comply with Section 262.
TCF may terminate the Reorganization Agreement if the holders of more than 10%
of the outstanding shares of Standard Common Stock demand and perfect
dissenters' rights. See "--Conditions to the Combination" and "--Effective Time
of the Combination; Termination and Amendment."
Only a holder of record of shares of Standard Common Stock on the Record
Date is entitled to seek appraisal of the fair value of the shares of Standard
Common Stock registered in such holder's name. The demand for appraisal must be
executed by or for the holder of record, fully and correctly, as such holder's
name appears on the holder's certificates representing shares of Standard Common
Stock. If the shares of Standard Common Stock are owned of record in a fiduciary
capacity, such as by a trustee, guardian or custodian, the demand should be made
in that capacity, and if the shares are owned of record by more than one person,
as in a joint tenancy or tenancy in common, the demand should be made by or for
all owners of record. An authorized agent, including one or more joint owners,
may execute the demand for appraisal for a holder of record; however, such agent
must identify the record owner or owners and expressly disclose in such demand
that the agent is acting as agent for the record owner or owners. Beneficial
owners who are not record owners and who intend to exercise dissenters' rights
should instruct the record owner to comply strictly with the statutory
requirements with respect to the exercise of dissenters' rights before the date
of the Special Meeting.
A record holder, such as a broker, who holds Dissenting Shares as nominee
for beneficial owners, some of whom desire to demand appraisal, must exercise
dissenters' rights on behalf of such beneficial owners with respect to the
Dissenting Shares held for such beneficial owners. In such case, the written
demand for appraisal should set forth the number of Dissenting Shares for which
the demand is being made. Unless a demand for appraisal specifies a number of
Dissenting Shares, such demand will be presumed to cover all shares of Standard
Common Stock held in the name of such record owner.
If the Reorganization Agreement is approved and adopted by the Standard
stockholders, TCF Illinois will send a notice, either before the Effective Date
or within ten days thereafter, stating that dissenters' rights are available to
each stockholder who has filed an adequate written demand for appraisal with
Standard and who has not voted in favor of approval and adoption of the
Reorganization Agreement. Within 120 days after the Effective Date, TCF Illinois
or any stockholder seeking dissenters' rights may file a petition in the Court
of Chancery demanding a determination of the value of the Dissenting Shares of
all stockholders seeking dissenters' rights. TCF Illinois does not intend to
file such a petition, and all Standard
60
stockholders seeking to exercise dissenters' rights should initiate all
necessary action with respect to the perfection of their dissenters' rights
within the time periods and in the manner prescribed in Section 262. Within 120
days after the Effective Date, any Standard stockholder who has complied with
the provisions of Section 262, upon written request, shall be entitled to
receive from TCF Illinois a written statement setting forth the aggregate number
of Dissenting Shares and the aggregate number of holders of such shares. Such
written statement will be mailed to any such stockholder within ten days after
his or her written request for such a statement is received by TCF Illinois or
within ten days after expiration of the period for delivery of demands for
appraisal under Section 262(d), whichever is later.
If a petition for appraisal is timely filed, the Court of Chancery will
conduct a hearing on such petition to determine whether the Standard
stockholders seeking dissenters' rights have complied with Section 262 and have
thereby become entitled to dissenters' rights. The Court of Chancery will then
determine the fair value of the Dissenting Shares exclusive of any element of
value arising from the expectation or accomplishment of the Combination, but
including a fair rate of interest, if any, to be paid on the amount determined
to be the fair value. In determining fair value, the Court of Chancery is to
take into account all relevant factors.
Standard stockholders considering appraisal should bear in mind that the
fair market value of each of their Dissenting Shares determined under Section
262 could be more than, the same as, or less than, the Consideration Value Per
Share if they do not seek appraisal of their shares of Standard Common Stock,
and that the written opinion of Wasserstein set forth as Appendix B hereto is
not necessarily an opinion regarding fair value under Section 262.
The costs of the appraisal proceeding may be assessed against one or more
parties to the proceeding as the Court of Chancery may consider equitable. Upon
application by a Standard stockholder, the Court of Chancery may order all or a
portion of the expenses incurred by any Standard stockholder in connection with
the appraisal proceedings (including, without limitation, reasonable attorneys'
fees and the fees and expenses of experts) to be charged pro rata against the
value of all of the Dissenting Shares entitled to an appraisal.
A Standard stockholder will fail to perfect his or her right of appraisal if
he or she (i) does not deliver a written demand for appraisal to Standard prior
to the vote for approval and adoption of the Reorganization Agreement, (ii)
votes his or her shares of Standard Common Stock in favor of approval and
adoption of the Reorganization Agreement or returns a signed proxy which has
been left blank, (iii) does not file a petition for appraisal within 120 days
after the Effective Date, or (iv) delivers to TCF Illinois both a written
withdrawal of his or her demand for appraisal and an acceptance of the terms of
the Reorganization Agreement, except that any such attempt to withdraw such
demand not made within 60 days after the Effective Date requires the written
approval of TCF Illinois.
If an appraisal proceeding is properly instituted, such proceeding may not
be dismissed as to any Standard stockholder who has perfected his or her right
of appraisal without the approval of the Court of Chancery, and any such
approval may be conditioned on such terms as the Court of Chancery deems just.
After the Effective Date, no Standard stockholder who has demanded
dissenters' rights will be entitled to vote his or her Dissenting Shares for any
purpose or to receive dividends on, or other distributions in respect of, such
Dissenting Shares (except dividends or distributions payable to Standard
stockholders on a date prior to the Effective Date).
All written communications from stockholders with respect to the exercise of
dissenters' rights, prior to the Effective Date, should be mailed to Standard
Financial, Inc., 800 Burr Ridge Parkway, Burr Ridge, Illinois 60521, Attention:
Leonard A. Metheny, Sr., Secretary. After the Effective Date, all written
communications from stockholders with respect to the exercise of dissenters'
rights should be mailed to TCF National Bank Illinois c/o TCF Financial
Corporation, 801 Marquette Avenue, Suite 302, Minneapolis, Minnesota 55402,
Attention: Gregory R. Pulles, Secretary.
61
FAILURE BY A STANDARD STOCKHOLDER TO FOLLOW THE STEPS REQUIRED BY THE DGCL
FOR PERFECTING DISSENTERS' RIGHTS MAY RESULT IN THE LOSS OF SUCH RIGHTS. IN VIEW
OF THE COMPLEXITY OF THESE PROVISIONS OF THE DGCL, STANDARD STOCKHOLDERS WHO ARE
CONSIDERING DISSENTING FROM THE APPROVAL AND ADOPTION OF THE REORGANIZATION
AGREEMENT AND EXERCISING THEIR RIGHTS UNDER SECTION 262 SHOULD CONSULT THEIR
LEGAL ADVISORS.
EXPENSES OF THE COMBINATION
The Reorganization Agreement provides that TCF and Standard shall each bear
and pay all costs and expenses incurred by it in connection with the
Reorganization Agreement and the transactions contemplated thereby.
Standard will bear the expenses of printing and mailing this Proxy
Statement/Prospectus, the accompanying proxies and all other expenses incurred
in connection with the solicitation of proxies from Standard stockholders on
behalf of the Standard Board of Directors. Standard has retained Georgeson &
Company Inc. to assist in the solicitation of proxies for the Special Meeting.
Such firm will receive a fee of approximately $5,000, plus reimbursement for
reasonable expenses. In addition to solicitation by mail, directors, officers
and employees of Standard, who will not be specifically compensated for such
services, may solicit proxies from the stockholders of Standard, personally or
by telephone, telegram or other forms of communication. Standard will also pay
the customary charges and expenses of brokerage houses, voting trustees, banks,
associations and other custodians, nominees and fiduciaries, who are record
holders of Standard Common Stock not beneficially owned by them, for forwarding
such materials to and obtaining proxies from the beneficial owners of Standard
Common Stock entitled to vote at the Special Meeting.
DESCRIPTION OF TCF CAPITAL STOCK
GENERAL
TCF is authorized to issue 170,000,000 shares of capital stock, par value
$.01 per share, consisting of 140,000,000 shares of TCF Common Stock and
30,000,000 shares of preferred stock. As of July 8, 1997, there were issued and
outstanding 42,450,294 shares of TCF Common Stock, and 700,000 shares of Series
A Junior Participating Preferred Stock ("Series A Junior Preferred Shares") were
reserved for issuance upon the exercise of certain preferred share purchase
rights (the "Rights") described below.
TCF COMMON STOCK
GENERAL. Holders of TCF Common Stock have no preemptive rights. The
outstanding shares of TCF Common Stock are, and the shares of TCF Common Stock
offered hereby will be, fully paid and nonassessable. Each outstanding share of
TCF Common Stock also includes, and each share offered hereby will include, one
Right.
VOTING. Holders of TCF Common Stock are entitled to one vote for each share
held on each matter submitted to a vote of the holders of TCF Common Stock.
Cumulative voting for the election of directors is not permitted.
DIVIDENDS, DISTRIBUTIONS AND REDEMPTIONS. Subject to the preferential
dividend rights of any issued and outstanding preferred stock, holders of TCF
Common Stock are entitled to receive dividends as and when declared by the Board
of Directors of TCF. Under the DGCL, TCF may declare and pay dividends out of
surplus, or if there is no surplus, out of net profits for the fiscal year in
which the dividend is declared and/or the preceding year. No dividends may be
declared, however, if the capital of TCF has been diminished by depreciation,
losses or otherwise to an amount less than the aggregate amount of capital
represented by any issued and outstanding stock having a preference on
distribution.
62
If TCF were liquidated, the holders of TCF Common Stock would be entitled to
receive, pro rata, all assets available for distribution to them after full
satisfaction of TCF's liabilities and any payment applicable to the preferred
stock then outstanding.
TRANSFER AGENT AND REGISTRAR. The transfer agent and registrar for the TCF
Common Stock is the First National Bank of Boston c/o Boston EquiServe L.P.,
Boston, Massachusetts ("Boston EquiServe").
PREFERRED SHARE PURCHASE RIGHTS. On May 23, 1989, the Board of Directors of
TCF declared a dividend of one Right for each outstanding share of TCF Common
Stock. The dividend was paid on June 9, 1989 to the stockholders of record on
that date. Holders of shares of TCF Common Stock issued subsequent to that date
receive one Right with each such share issued. The Rights are transferred with
and only with the shares of TCF Common Stock until they become exercisable. The
Rights become exercisable only under certain circumstances described below. The
Rights are designed to ensure that holders of TCF Common Stock receive fair and
equal treatment in the event of any proposed takeover of TCF and to discourage
certain abusive takeover techniques. They are also intended to enable holders of
TCF Common Stock to realize the long-term value of their investment in TCF.
While not preventing a takeover, the Rights are designed to encourage any person
seeking to acquire TCF to negotiate with the Board of Directors of TCF. The
Rights may have the effect of discouraging, but are not intended to deter,
takeover proposals.
Until a Right is exercised, the holder thereof, as such, will have no rights
as a stockholder of TCF, including the right to vote or receive dividends. Upon
becoming exercisable, each Right entitles the registered holder to purchase from
TCF one-hundredth of a share of Series A Junior Preferred Shares of TCF at a
price (the "Purchase Price") of $180 per one-hundredth of a Series A Junior
Preferred Share, subject to adjustment. The description and terms of the Rights
are set forth in a rights agreement between TCF and Boston EquiServe as rights
agent (the "Rights Agreement"). The Purchase Price payable, and the number of
Series A Junior Preferred Shares or other securities or property issuable, upon
exercise of the Rights are subject to adjustment from time to time to prevent
dilution upon the occurrence of certain events specified in the Rights
Agreement.
The Rights will become exercisable only if a person or group acquires or
announces an offer to acquire 15% or more of the outstanding shares of TCF
Common Stock. The Rights have certain additional features that will be triggered
upon the occurrence of specified events:
(i) In the event that any person or group becomes the beneficial owner
of 15% or more of the outstanding shares of TCF Common Stock, subject to
certain exceptions for shares owned by TCF, a subsidiary, an employee
benefit plan or shares issued directly by TCF, proper provision shall be
made so that each holder of a Right, other than any person or member of a
group beneficially owning 15% or more of the outstanding TCF Common Stock
(whose Rights will thereafter be void), will thereafter have the right to
receive upon exercise that number of shares of TCF Common Stock having a
market value of two times the exercise price of the Right (or, at the option
of TCF, an equivalent number of one-hundredths of a Series A Junior
Preferred Share).
(ii) In the event that TCF is acquired in a merger or other business
combination transaction or 50% or more of its consolidated assets or
earnings power is sold, proper provision will be made so that each holder of
a Right will thereafter have the right to receive, upon the exercise thereof
at the then-current exercise price of the Right, that number of shares of
common stock of the acquiring company which at the time of such transaction
will have a market value of two times the exercise price of the Right.
(iii) At any time after the acquisition by a person or group of
beneficial ownership of 15% or more of the outstanding shares of TCF Common
Stock and prior to the acquisition by such person or group of 50% or more of
the outstanding TCF Common Stock, the Board of Directors of TCF may exchange
the Rights (other than Rights owned by such person or group which have
become void), in
63
whole or in part, at an exchange ratio of one share of TCF Common Stock, or
one-hundredth of a Series A Junior Preferred Share (or of a share of a class
or series of TCF's preferred stock having equivalent rights, preferences and
privileges), per Right (subject to adjustment).
At any time prior to the acquisition by a person or group of beneficial
ownership of 15% or more of the outstanding TCF Common Stock, a majority of
TCF's directors prior to the time of such an acquisition may vote to redeem the
Rights in whole, but not in part, at a price of $.01 per Right. The redemption
of the Rights may be made effective at such time, on such basis and with such
conditions as such directors in their sole discretion may establish. Immediately
upon any redemption of the Rights, the right to exercise the Rights will
terminate and the only right of the holders of Rights will be to receive the
redemption price.
The terms of the Rights may be amended by the Board of Directors of TCF
without the consent of the holders of the Rights, including an amendment to
lower the 15% triggering thresholds described above to not less than the greater
of: (i) any percentage greater than the largest percentage of the outstanding
TCF Common Stock then known to TCF to be beneficially owned by any person or
group of affiliated or associated persons and (ii) 10%, except that from and
after such time as any person or group acquires 15% or more of the outstanding
TCF Common Stock no such amendment may adversely affect the interests of the
holders of the Rights.
The Rights will expire on June 9, 1999, unless extended or earlier redeemed
by TCF.
TCF PREFERRED STOCK
GENERAL. Pursuant to the TCF Certificate, there are authorized 30,000,000
shares of preferred stock, par value $.01 per share, and the Board of Directors
of TCF has the authority, without further stockholder action, to issue from time
to time one or more series of preferred stock with such terms and for such
consideration as the TCF Board of Directors may determine. The TCF Board of
Directors is authorized to fix the dividend rights and terms, conversion rights,
voting rights, redemption rights and terms, liquidation preferences, sinking
funds and any other rights, preferences, privileges and restrictions applicable
to each such series of preferred stock.
The issuance of preferred stock, while providing flexibility in connection
with possible acquisitions and other corporate purposes, could, among other
things, adversely affect the voting power and other rights of the holders of TCF
Common Stock and under certain circumstances could have the effect of delaying
or preventing a change in control of TCF.
SERIES A JUNIOR PREFERRED SHARES. The Board of Directors of TCF has
established a series of preferred stock, designated Series A Junior
Participating Preferred Stock, issuable upon the exercise of Rights issued to
holders of the TCF Common Stock. There are currently 700,000 Series A Junior
Preferred Shares reserved for issuance upon the exercise of the Rights. See
"--TCF Common Stock--Preferred Share Purchase Rights" and "COMPARISON OF THE
RIGHTS OF STOCKHOLDERS." Series A Junior Preferred Shares will rank junior to
all other series of preferred stock and will not be redeemable. Each Series A
Junior Preferred Share will, subject to the rights of senior securities of TCF,
be entitled to a minimum preferential quarterly dividend payment of $1.00 per
share but will be entitled to an aggregate dividend of 100 times the dividend
declared per share of TCF Common Stock. In the event of liquidation, the holders
of the Series A Junior Preferred Shares will be entitled to a minimum
preferential liquidation payment of $100 per share but will be entitled to an
aggregate payment of 100 times the payment made per share of TCF Common Stock.
Each Series A Junior Preferred Share will have 100 votes, voting together with
the TCF Common Stock. Finally, in the event of any merger, consolidation or
other transaction in which TCF Common Stock is exchanged, each Series A Junior
Preferred Share will be entitled to receive 100 times the amount received per
share of TCF Common Stock. These rights are protected by customary antidilution
provisions.
64
ANTITAKEOVER EFFECTS OF PROVISIONS OF THE TCF CERTIFICATE AND TCF BYLAWS
Certain provisions of the TCF Certificate and the TCF Bylaws could
discourage potential takeover attempts and could delay or prevent a change in
control of TCF. See "COMPARISON OF THE RIGHTS OF STOCKHOLDERS."
COMPARISON OF THE RIGHTS OF STOCKHOLDERS
GENERAL
TCF and Standard are both incorporated under the laws of the State of
Delaware. As a result of the Combination, holders of Standard Common Stock,
whose rights are presently governed by the DGCL, the Standard Certificate of
Incorporation (the "Standard Certificate") and the Bylaws of Standard (the
"Standard Bylaws") will become stockholders of TCF. Accordingly, their rights
will continue to be governed by the DGCL, but after the Combination will be
governed by the TCF Certificate and the TCF Bylaws. The Standard Certificate and
Standard Bylaws and the TCF Certificate and TCF Bylaws are very similar in
provisions affecting the rights of stockholders. The following is a brief
description of those provisions. The discussion herein is not intended to be a
complete statement of such provisions but rather summarizes the more significant
provisions affecting the rights of such stockholders. The following summary is
qualified in its entirety by reference to the DGCL, the Standard Certificate and
Standard Bylaws and the TCF Certificate and TCF Bylaws.
Each Standard stockholder should carefully consider these differences,
including provisions of the TCF Certificate and TCF Bylaws that may have an
anti-takeover effect, in connection with the decision to vote for or against the
adoption and approval of the Reorganization Agreement.
AUTHORIZED CAPITAL STOCK
STANDARD. The Standard Certificate authorizes the issuance of up to
25,000,000 shares of Standard Common Stock, par value $.01 per share, of which
16,210,435 shares were issued and outstanding as of the Record Date, and up to
1,000,000 shares of Standard Preferred Stock, par value $.01 per share, of which
no shares were issued and outstanding as of the Record Date.
TCF. The TCF Certificate authorizes the issuance of up to 140,000,000
shares of TCF Common Stock, par value $.01 per share, of which 42,450,294 shares
were issued and outstanding as of July 8, 1997, and up to 30,000,000 shares of
preferred stock, par value $.01 per share, of which no shares were issued and
outstanding as of July 8, 1997. The TCF preferred stock is issuable in series,
each series having such rights and preferences as TCF's Board of Directors may
fix and determine by resolution. Although TCF does not currently contemplate
taking such action, it is possible that additional shares of TCF Common Stock or
TCF preferred stock would be issued for the purpose of making an acquisition by
an unwanted suitor of a controlling interest in TCF more difficult, time
consuming or costly or to otherwise discourage an attempt to acquire control of
TCF.
AMENDMENT OF GOVERNING INSTRUMENTS
STANDARD. The Standard Certificate provides that, except for certain
provisions relating to (i) actions by written consent, (ii) special meetings of
stockholders, (iii) the Board of Directors, (iv) amendment of the Standard
Bylaws, (v) certain business combinations, (vi) indemnification of directors and
officers and (vii) amendment of the Standard Certificate (amendment of such
provisions requiring the affirmative vote of the holders of at least 80% of the
total votes eligible to be cast), the Standard Certificate may be amended by the
affirmative vote of the holders of a majority of Standard's outstanding voting
shares.
TCF. The TCF Certificate provides that, except for provisions relating to
(i) the Board of Directors, (ii) certain business combinations, (iii) actions by
written consent, (iv) special meetings of stockholders, (v) amendment of the TCF
Bylaws, (vi) limitation of liability of directors and (vii) indemnification of
65
directors and officers (amendment of such provisions requiring the affirmative
vote of the holders of at least 80% of the total votes eligible to be cast), the
TCF Certificate may be amended by the affirmative vote of the holders of a
majority of TCF's outstanding voting shares.
Pursuant to terms thereof, the TCF Certificate and the TCF Bylaws,
respectively, may not be altered, amended or repealed without the affirmative
vote of at least a majority of the Board of Directors of TCF, or the affirmative
vote of at least 80% of the total votes eligible to be cast by stockholders.
This provision does not differ from the amendment provisions of the Standard
Certificate and Standard Bylaws.
CLASSIFIED BOARD AND CUMULATIVE VOTING
STANDARD; TCF. The Standard Certificate and the TCF Certificate contain
similar provisions regarding classification of the Board of Directors: each
Certificate requires that the Board of Directors be divided into three classes
as nearly equal in number as possible and that the members of each class shall
be elected for a term of three years and until their successors are elected and
qualified, with one class being elected annually.
DGCL. Under the DGCL, a corporation may provide in its certificate for
cumulative voting in the election of directors. Cumulative voting entitles each
stockholder to cast a number of votes in the election of directors equal to the
number of such stockholder's shares of stock multiplied by the number of
directors to be elected, and to distribute such votes in favor of one nominee or
among two or more of the nominees to be elected. Neither the Standard
Certificate nor the TCF Certificate permits stockholders to cumulate their votes
in the election of directors.
REMOVAL OF DIRECTORS AND VACANCIES
STANDARD. Under the Standard Certificate, any director may be removed, but
only for cause and only by the affirmative vote of holders of at least 80% of
the outstanding voting shares. Vacancies in Standard's Board of Directors,
including vacancies created by newly created directorships resulting from an
increase in the number of directors, may be filled by Standard's Board of
Directors, acting by a vote of at least a majority of the directors then in
office, even if less than a quorum, and any director so chosen shall serve for
the remainder of the term of the class of directors in which the vacancy
occurred.
TCF. Under the TCF Certificate, any director may be removed for cause by
the holders of at least a majority of the outstanding voting shares. Vacancies
in TCF's Board of Directors, including vacancies created by newly created
directorships resulting from an increase in the number of directors, may be
filled by TCF's Board of Directors, acting by a vote of at least a majority of
the directors then in office, even if less than a quorum, and any director so
chosen shall serve for the remainder of the term of the class of directors in
which the vacancy occurred.
INDEMNIFICATION
STANDARD. The Standard Certificate provides that each person who was or is
made a party or is threatened to be made a party to or is involved in any
proceeding, whether civil, criminal, administrative or investigative, by reason
of the fact that he or she is or was a director or officer of Standard, or is or
was serving at the request of Standard as a director, officer, employee or agent
of another corporation or of a partnership, joint venture, trust or other
enterprise, including service with respect to employee benefit plans, whether
the basis of such proceeding is alleged action in an official capacity as a
director, officer, employee or agent or in any other capacity while serving as a
director, officer, employee or agent, shall be indemnified and held harmless by
Standard to the fullest extent authorized by the DGCL, as the same existed on
the date upon which the Standard Certificate was filed with the Secretary of
State of the State of Delaware or has been thereafter amended (but, in the case
of any such amendment, only to the extent that such amendment permits Standard
to provide broader indemnification rights than such law permitted Standard to
provide prior to such amendment), against all expense, liability, and loss
(including attorneys'
66
fees, judgments, fines, ERISA excise taxes or penalties, and amounts paid in
settlement) reasonably incurred or suffered by such person in connection
therewith; provided, however, that such indemnification does not extend to an
indemnitee in connection with a proceeding (or portion thereof) initiated by
such indemnitee unless such proceeding was authorized by the Standard Board of
Directors.
TCF. The TCF Certificate provides that each person who was or is made a
party or is threatened to be made a party to or is involved in any action, suit
or proceeding (hereinafter, a "proceeding") by reason of the fact that he or
she, or a person of whom he or she is a legal representative, is or was a
director or officer of TCF or any of its subsidiaries, or is or was serving at
the request of TCF as a director, officer, partner, member or trustee or another
corporation or of a partnership, joint venture, trust or other enterprise,
including service with respect to employee benefit plans, shall be indemnified
and held harmless by TCF to the fullest extent provided by the DGCL against all
expense, liability and loss (including attorneys' fees, judgments, fines, ERISA
excise taxes or penalties, and amounts paid in settlement) reasonably incurred
or suffered by such person in connection therewith; provided, however, that such
indemnification does not extend to an indemnitee in connection with a proceeding
(or portion thereof) initiated by such indemnitee unless such proceeding was
authorized by the TCF Board of Directors.
STANDARD; TCF. The Standard Certificate, the TCF Certificate and the TCF
Bylaws provide that the right of such directors and officers to indemnification
includes the right to advancement by the corporation of expenses incurred in
defending any such proceeding in advance of its final disposition upon delivery
to the corporation of an undertaking to repay any amount so advanced if it is
ultimately determined by final judicial decision that the proposed indemnitee is
not entitled to be indemnified for such expenses.
The Standard Certificate and the TCF Certificate further provide that the
corporation may, to the extent authorized from time to time by the corporation's
Board of Directors, grant rights to indemnification, and to the advancement of
expenses, to any person who is or was an employee or agent of the corporation or
a subsidiary thereof or is or was serving at the request of the corporation as
an employee or agent of another corporation or of a partnership, joint venture,
trust or other enterprise, including service with respect to employee benefit
plans.
The Standard Certificate and the TCF Certificate provide that a director of
the corporation, to the maximum extent now or hereafter permitted by the DGCL or
any successor provision or provisions, will have no personal liability to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except (i) for any breach of the director's duty of loyalty
to the corporation or its stockholders, (ii) for acts or omissions not in good
faith or that involve intentional misconduct or a knowing violation of law,
(iii) for the payment of certain unlawful dividends and the making of certain
stock purchases or redemptions, or (iv) for any transaction from which the
director derived an improper personal benefit.
For information concerning TCF's indemnification of directors, officers,
employees and agents of Standard for claims arising out of or in connection with
activities in such capacity prior to the Effective Time, see "THE
COMBINATION--Interests of Certain Persons in the Combination."
DGCL. Under the DGCL as currently in effect, other than in actions brought
by or in the right of the corporation, such indemnification would apply if it
was determined in the specific case that the proposed indemnitee acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation and, with respect to any criminal proceeding, if he
had no reasonable cause to believe that his conduct was unlawful. In actions
brought by or in the right of the corporation, such indemnification would
probably be limited to reasonable expenses (including attorneys' fees), and
would apply if it were determined in the specific case that the proposed
indemnitee acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the corporation, except that no
indemnification may be made with respect to any claim, issue or matter as to
which such person is adjudged liable to the corporation unless, and only to the
extent that, a court
67
determines upon application that, in view of all the circumstances of the case,
the proposed indemnitee is fairly and reasonably entitled to indemnity for such
expenses as the court deems proper. To the extent that any director, officer,
employee or agent of the corporation has been successful on the merits or
otherwise in defense of any proceeding, he must be indemnified against
reasonable expenses incurred by him in connection therewith.
SPECIAL MEETINGS OF STOCKHOLDERS
STANDARD. The Standard Bylaws provide that special meetings of stockholders
of Standard may be called only by the Board of Directors pursuant to a
resolution adopted by a majority of the total number of Directors that Standard
would have if there were no vacancies on the Board of Directors or by the
Chairman of the Board of Directors. As a result, holders of Standard Common
Stock do not have any right to call special meetings of stockholders or to
require Standard's Board of Directors to call such meetings.
TCF. The TCF Bylaws provide that special meetings of stockholders may only
be called by the Board of Directors, by a majority vote of the Board of
Directors. As a result, holders of TCF Common Stock do not have any right to
call special meetings of stockholders or to require TCF's Board of Directors to
call such meetings.
ACTIONS BY STOCKHOLDERS WITHOUT A MEETING
STANDARD. The Standard Certificate provides that any action required or
permitted to be taken by the Standard stockholders must be effected at a duly
called annual or special meeting of stockholders and may not be effected by any
consent in writing of the stockholders.
TCF. The TCF Certificate provides that, except for removal of a director,
any action required to be taken or which may be taken at any annual or special
meeting of stockholders may be taken without a meeting if a consent in writing,
setting forth the action so taken, is given by the holders of all outstanding
shares entitled to vote thereon.
STOCKHOLDER NOMINATIONS AND PROPOSALS
TCF. The TCF Bylaws require advance notice of stockholder nominations for
the election of directors and of business to be brought by stockholders before
any meeting of the stockholders. Such advance notice is to be given as provided
in the TCF Bylaws.
The advance notice requirements of the TCF Bylaws require that all
nominations for election to the TCF Board of Directors, other than those made by
the Board of Directors or a committee thereof, must be made by a TCF stockholder
who has complied with the notice provisions set forth in the TCF Bylaws. Any
nominations made by a TCF stockholder must be delivered to or mailed and
received at the principal executive offices of TCF not less than 60 days nor
more than 90 days prior to the date of the scheduled annual meeting, provided,
however, that if less than 70 days notice of the date of the scheduled annual
meeting is given, notice by the TCF stockholder, to be timely, must be so
delivered or received not later than the close of business on the tenth day
following the day on which such notice of the date of the scheduled annual
meeting was mailed or given. Each such notice shall include, among other things:
(i) as to each person whom the stockholder proposes to nominate for election as
a director (A) the name, age, business address and residence address of such
person, (B) the principal occupation or employment of such person, (C) the class
and number of shares of TCF Common Stock which are beneficially owned by such
person on the date of such stockholder notice, and (D) any other information
relating to such person that would be required to be disclosed pursuant to
Schedule 13D under the Exchange Act in connection with the acquisition of
shares, and pursuant to Regulation 14A under the Exchange Act in connection with
the solicitation of proxies with respect to nominees for election as directors,
including, but not limited to, information required to be disclosed by Items
4(b) and 6 of Schedule 14A under the Exchange Act and information which would be
required to be filed on Schedule 14B under the Exchange Act with the
68
Commission; and (ii) as to the stockholder giving the notice (A) the name and
address, as they appear on the corporation's books, of such stockholder and any
other stockholders known by such stockholder to be supporting such nominees and
(B) the class and number of shares of TCF Common Stock which are beneficially
owned by such stockholder on the date of such stockholder notice and, to the
extent known, by any other stockholders known by such stockholder to be
supporting such nominees on the date of such stockholder notice. The presiding
officer of the meeting may refuse to acknowledge the nomination of any person
not made in compliance with the foregoing procedures.
The TCF Bylaws also provide that only such business as shall have been
properly brought before an annual meeting of stockholders shall be conducted at
the annual meeting. To be properly brought before an annual meeting, business
must be specified in the notice of the meeting (or any supplement thereto) given
by or at the direction of the TCF Board of Directors, otherwise properly brought
before the meeting by or at the direction of the TCF Board of Directors, or
otherwise properly brought before the meeting by a TCF stockholder. For business
to be properly brought before an annual meeting by a TCF stockholder, the TCF
stockholder must give timely notice thereof in writing to the Secretary of TCF.
To be timely, a stockholder's notice must be delivered to or mailed and received
at the principal executive offices of TCF not less than 60 days nor more than 90
days prior to the scheduled annual meeting; provided, however, that if less than
70 days notice of the date of the scheduled annual meeting is given, notice by
the TCF stockholder, to be timely, must be so delivered or received not later
than the close of business on the tenth day following the day on which such
notice of the date of the scheduled annual meeting was mailed or given. The
notice must contain certain information in order to be considered. A
stockholder's notice to the Secretary shall set forth as to each matter the
stockholder proposes to bring before the annual meeting: (i) a brief description
of the business desired to be brought before the annual meeting and the reasons
for conducting such business at the annual meeting; (ii) the name and address,
as they appear on TCF's books, of the stockholder proposing such business and
any other stockholders known by such stockholder to be supporting such proposal;
(iii) the class and number of shares of TCF Common Stock which are beneficially
owned by the stockholder on the date of such stockholder notice and, to the
extent known, by any other stockholders known by such stockholder to be
supporting such proposal on the date of such stockholder notice; and (iv) any
financial or other interest of the stockholder in such proposal. The presiding
officer of the meeting shall, if the facts warrant, determine and declare to the
meeting that business was not properly brought before the meeting in accordance
with the TCF Bylaws, and if he should so determine, he shall so declare to the
meeting and any such business not properly brought before the meeting shall not
be transacted.
STANDARD. The Standard Certificate requires advance notice of stockholder
nominations for the election of directors and of business to be brought by
stockholders before any meeting of the stockholders. Such advance notice is to
be given as provided in the Standard Bylaws.
The advance notice requirements of the Standard Bylaws provide that no
business may be transacted at an annual meeting of stockholders of Standard
other than business that is (i) specified in the notice of meeting given by the
Board of Directors of Standard, (ii) otherwise properly brought before the
annual meeting by the Board of Directors of Standard or (iii) otherwise properly
brought before the annual meeting by any stockholder of Standard (A) who is a
stockholder of record on the date notice to Standard of the business to be
transacted was given by such stockholder (as provided in clause (B) of this
sentence) and on the record date for the determination of stockholders entitled
to vote at the annual meeting and (B) who submits to Standard the stockholder
proposal entitled to be considered, in proper written form (as provided below),
not less than 120 days nor more than 150 days prior to the anniversary date of
the immediately preceding annual meeting or, if the annual meeting is called for
a date that is not within 30 days before or after such anniversary date, not
later than the close of business on the tenth day following the day on which
such notice of the date of the annual meeting was mailed or such public
announcement of the date of the annual meeting was made, whichever first occurs.
To be in proper written form, a stockholder's advance notice to propose business
must set forth as to each matter such stockholder
69
proposes to bring before the annual meeting (v) a brief description of the
business desired to be brought before the annual meeting and the reasons for
conducting such business at the annual meeting, (w) the name and record address
of such stockholder, (x) the class or series and number of shares of capital
stock of Standard which are owned beneficially or of record by such stockholder,
(y) a description of all arrangements or understandings between such stockholder
and any other person or persons (including their names) in connection with the
proposal of such business by such stockholder and any material interest of such
stockholder in such business and (z) a representation that such stockholder
intends to appear in person or by proxy at the annual meeting to bring such
business before the meeting. If the presiding officer of an annual meeting
determines that business was not properly brought before the annual meeting in
accordance with the foregoing procedures, the presiding officer shall declare to
the meeting that the business was not properly brought before the meeting and
such business shall not be transacted.
The advance notice requirements of the Standard Bylaws also provide that
persons may be nominated to stand for election as a director of Standard only
(i) by or at the direction of the Board of Directors of Standard or (ii) by any
stockholder of Standard (A) who is a stockholder of record on the date notice to
Standard of the person to be nominated to stand for election as a director was
given by such stockholder (as provided in clause (B) of this sentence) and on
the record date for the determination of stockholders entitled to vote at the
annual meeting and (B) who submits to Standard the notice of the person to be
nominated to stand for election as a director, in proper written form as
provided in the Standard Bylaws, not less than 120 days nor more than 150 days
prior to the anniversary date of the immediately preceding annual meeting or, if
the annual meeting is called for a date that is not within 30 days before or
after such anniversary date, not later than the close of business on the tenth
day following the day on which such notice of the date of the annual meeting was
mailed or such public announcement of the date of the annual meeting was made,
whichever first occurs. To be in proper written form, a stockholder's notice to
propose a nominee for election as director must set forth (x) as to each person
whom the stockholder proposes to nominate for election as a director (A) the
name, age, business address and residence address of the person, (B) the
principal occupation or employment of the person, (C) the class or series and
number of shares of capital stock of Standard which are owned beneficially or of
record by the person and (D) any other information relating to the person that
would be required to be disclosed in a proxy statement or other filings required
to be made in connection with solicitations of proxies for election of directors
pursuant to Section 14 of the Exchange Act, and the rules and regulations
promulgated thereunder; and (y) as to the stockholder giving the notice (A) the
name and record address of such stockholder, (B) the class or series and number
of shares of capital stock of Standard which are owned beneficially or of record
by such stockholder, (C) a description of all arrangements or understandings
between such stockholder and each proposed nominee and any other person or
persons (including their names) pursuant to which the nomination(s) are to be
made by such stockholder, (D) a representation that such stockholder intends to
appear in person or by proxy at the meeting to nominate the persons named in its
notice and (E) any other information relating to such stockholder that would be
required to be disclosed in a proxy statement or other filings required to be
made in connection with solicitations of proxies for election of directors
pursuant to Section 14 of the Exchange Act and the rules and regulations
promulgated thereunder. Such notice must be accompanied by a written consent of
each proposed nominee to being named as a nominee and to serve as a director if
elected.
The Standard Bylaws further provide that, if the number of directors to be
elected to the Board of Directors of Standard is increased and there is no
"public announcement" (as defined below) by Standard naming all of the nominees
for director or specifying the size of the increased Board of Directors at least
130 days prior to the first anniversary of the preceding year's annual meeting,
a stockholder's notice shall also be considered timely, but only with respect to
nominees for any new positions created by such increase, if it is delivered to
the Secretary at the principal executive offices of Standard not later than the
close of business on the tenth day following the day on which such public
announcement is first made by Standard. The Standard Bylaws define a "public
announcement" as an announcement in a press release
70
reported by the Dow Jones News Service, Associated Press or comparable national
news service or in a document publicly filed by Standard with the Commission
pursuant to Section 13, 14 or 15(d) of the Exchange Act.
COMBINATIONS, SHARE EXCHANGES, SALES OF ASSETS, BUSINESS COMBINATIONS WITH
CERTAIN PERSONS AND ACQUISITIONS OF SHARES
DGCL. The DGCL, applicable to both Standard and TCF, requires the approval
of the Board of Directors and the holders of a majority of the corporation's
outstanding common stock entitled to vote thereon for mergers or consolidations,
and for sales, leases or exchanges of substantially all of Standard's or TCF's
property and assets. The DGCL does not provide explicitly for share exchanges.
The DGCL permits a corporation to merge with another corporation without
obtaining the approval of the corporation's stockholders if: (i) the corporation
is the surviving corporation of the merger; (ii) the merger agreement does not
amend the corporation's certificate; (iii) each share of the corporation's
common stock outstanding immediately prior to the effective date of the merger
is to be an identical outstanding or treasury share of the corporation's common
stock after the merger; and (iv) any authorized but unissued shares or treasury
shares of the corporation's common stock to be issued or delivered under the
plan of merger plus those initially issuable upon conversion of any other
securities or obligations to be issued or delivered under such plan do not
exceed 20% of the shares of the corporation's common stock outstanding
immediately prior to the effective date of the merger. Pursuant to the DGCL, the
Combination does not require approval by TCF stockholders.
Standard and TCF are subject to the provisions of Section 203 of the DGCL
("Section 203") which prohibits a "business combination" (defined in Section 203
as generally including mergers, sales and leases of assets, issuances of
securities, and similar transactions) by the corporation or a subsidiary with an
"interested stockholder" (defined in Section 203 as generally the beneficial
owner of 15% or more of a corporation's outstanding voting stock) within three
years after the person or entity becomes an interested stockholder, unless (i)
prior to the person or entity becoming an interested stockholder, the business
combination or the transaction pursuant to which such person or entity became an
interested stockholder shall have been approved by the corporation's Board of
Directors, (ii) upon consummation of the transaction in which he became an
interested stockholder, the interested stockholder holds at least 85% of the
corporation's common stock outstanding at the time the transaction commenced
(excluding shares held by persons who are both officers and directors and shares
held by certain employee benefit plans), or (iii) following the transaction in
which such person became an interested stockholder, the business combination is
approved by the corporation's Board of Directors and by the holders of at least
two-thirds of the corporation's outstanding common stock, excluding shares owned
by the interested stockholder. The restrictions imposed on interested
stockholders under Section 203 do not apply under certain limited circumstances
set forth therein, including certain business combinations proposed by an
interested stockholder following the announcement or notification of certain
extraordinary transactions involving the corporation and a person who had not
been an interested stockholder during the previous three years or who became an
interested stockholder with the approval of a majority of the corporation's
directors.
Section 203 provides that during such three-year period, the corporation may
not merge or consolidate with an interested stockholder or any affiliate or
associate thereof, and also may not engage in certain other transactions with an
interested stockholder or any affiliate or associate thereof, including, without
limitation, (i) any merger or consolidation of the corporation or a direct or
indirect majority-owned subsidiary of the corporation with (A) the interested
stockholder, or (B) with any other corporation, partnership, unincorporated
association or other entity if the merger or consolidation is caused by the
interested stockholder and as a result of such merger or consolidation the above
limitations of Section 203 are not applicable to the surviving corporation; (ii)
any sale, lease, exchange, mortgage, pledge, transfer or other disposition
(except proportionately as a stockholder of the corporation) to or with the
interested stockholder of assets having an aggregate market value equal to 10%
or more of the aggregate market value of all assets of the corporation
determined on a consolidated basis or the aggregate market value of
71
all the outstanding stock of a corporation; (iii) any transaction which results
in the issuance or transfer by the corporation or by any majority-owned
subsidiary thereof of any stock of the corporation of such subsidiary to the
interested stockholder, except, among other things, pursuant to a transaction
which effects a pro rata distribution to all stockholders of the corporation;
(iv) any transaction involving the corporation or any majority-owned subsidiary
thereof which has the effect of increasing the proportionate share of the stock
of any class or series, or securities convertible into the stock of any class or
series, of the corporation or any such subsidiary which is owned by the
interested stockholder (except, among other things, as a result of immaterial
changes due to fractional share adjustments); or (v) any receipt by the
interested stockholder of the benefit (except proportionately as a stockholder
of such corporation) of any loans, advances, guarantees, pledges or other
financial benefits provided by or through the corporation.
STANDARD. The Standard Certificate contains a "fair price" provision which
requires an 80% super-majority vote for approval of certain "business
combinations" with "interested shareholders" (as those terms are defined below),
except (i) in cases where the proposed business combination has been approved in
advance by a majority of those members of Standard's Board of Directors who are
unaffiliated with the interested shareholder and were directors prior to the
time when the interested shareholder became an interested shareholder and (ii)
if the proposed business combination meets certain conditions set forth therein
which are designed to afford Standard's stockholders a fair price in
consideration for their shares in which case, if a stockholder vote is required,
approval of only a majority of outstanding shares of the voting stock would be
sufficient. The term "interested shareholder" is defined to include any
individual, corporation, partnership or other entity which owns beneficially or
controls, directly or indirectly, 10% or more of the outstanding shares of
voting stock of Standard. The term "business combination" is defined to include
(i) any merger, reorganization or consolidation of Standard or any of the
Standard Subsidiaries with or into any interested shareholder as defined therein
or affiliate thereof, (ii) any sale, lease, exchange, mortgage, pledge,
transfer, or other disposition to or with an interested shareholder or affiliate
thereof of 25% or more of the combined assets of Standard and Standard Bank,
(iii) the issuance or transfer to any interested shareholder or its affiliate by
Standard (or any subsidiary) of any securities of Standard or Standard Bank in
exchange for any assets, cash or securities the value of which equals or exceeds
25% of the combined assets of Standard, (iv) the adoption of any plan for the
liquidation or dissolution of Standard proposed by or on behalf of any
interested shareholder or affiliate thereof or (v) any reclassification,
recapitalization, merger or consolidation of Standard which has the effect of
increasing the proportionate share of Standard Common Stock or any class of
equity or convertible securities of Standard owned by an interested shareholder
or affiliate thereof.
TCF. The TCF Certificate also contains a "fair price" provision which
provides that, subject to certain exceptions, a "business combination" (which is
defined to include a merger, reorganization, sale or transfer of all or
substantially all of TCF's assets or a liquidation or dissolution of TCF)
involving TCF and a "related person" (defined as a person who, together with any
affiliate or associate, beneficially owns more than 10% of the outstanding TCF
Common Stock) must be approved by holders of at least 80% of the outstanding
shares entitled to vote thereon, excluding all shares of the TCF Common Stock
beneficially owned or controlled by a related person, unless (i) a majority of
the continuing directors approves the transaction, (ii) the business combination
is solely between TCF and a direct or indirect subsidiary of TCF, or (iii)
certain price and other procedural conditions are satisfied.
The Combination is not a "business combination" as defined in Section 203 or
the fair price provisions of the Standard Certificate and TCF Certificate and,
therefore, neither the provision of Section 203 nor the "fair price" provisions
are applicable to the transaction contemplated by the Reorganization Agreement.
STOCKHOLDER RIGHTS PLAN
On May 23, 1989, the Board of Directors of TCF declared a dividend
distribution of one Right for each outstanding share of TCF Common Stock. For
discussion of the Rights, see "DESCRIPTION OF
72
TCF CAPITAL STOCK--TCF Common Stock--Preferred Share Purchase Rights" and
"DESCRIPTION OF TCF CAPITAL STOCK-- TCF Preferred Stock--Series A Junior
Preferred Shares." Standard has not adopted a stockholder rights plan.
DISSENTERS' RIGHTS OF APPRAISAL
TCF. The rights of appraisal of dissenting stockholders of TCF are governed
by the DGCL. Pursuant thereto, any stockholder has the right to dissent from any
merger or consolidation, except as described below, of which the corporation is
a constituent corporation. No such appraisal rights are available, however, to
stockholders of a corporation (i) if as of the record date fixed to determine
the stockholders entitled to receive notice of and to vote at the meeting of
stockholders to act upon the agreement of merger or consolidation, such shares
were either listed on a national securities exchange or designated as a national
market system security on an interdealer quotation system by the Nasdaq National
Market, or held of record by more than 2,000 stockholders, and the holders of
such stock are permitted by the terms of merger or consolidation to accept in
exchange for their shares: (A) shares of stock of the corporation surviving or
resulting from the merger or consolidation; (B) shares of stock of any other
corporation that, at the effective date of the merger, will be either listed on
a national securities exchange or designated as a national market system
security on an interdealer quotation system by the National Association of
Securities Dealers or held of record by more than 2,000 stockholders; (C) cash
in lieu of fractional shares of such stock; or (D) any combination thereof; or
(ii) in a merger if such corporation is the surviving corporation and no vote of
its stockholders is required.
STANDARD. The dissenters' rights of Standard stockholders are also governed
by the DGCL. For a discussion of rights of Standard stockholders to dissent from
the Combination, see "THE COMBINATION--Dissenters' Rights."
STOCKHOLDER'S RIGHT TO EXAMINE BOOKS AND RECORDS
The rights of Standard stockholders and of TCF stockholders to examine the
books and records of Standard and TCF, respectively, are governed by the DGCL.
The DGCL provides that a stockholder of a Delaware corporation such as Standard
or TCF may inspect books and records of the corporation upon written demand
under oath stating the purpose of the inspection, if such purpose is reasonably
related to such person's interest as a stockholder.
PAYMENT OF DIVIDENDS
STANDARD. As discussed below, Standard is subject to the restrictions upon
the payment of dividends which are imposed by the DGCL. In addition, the OTS
possesses enforcement powers over savings and loan holding companies to prevent
or remedy actions that represent unsafe or unsound practices or violations of
applicable statutes and regulations. Among these powers is the ability to
proscribe the payment of dividends by savings and loan holding companies.
Dividends from Standard Bank to Standard are also subject to certain
restrictions. OTS regulations impose limitations upon all capital distributions
by savings institutions, including cash dividends. The rules establish three
tiers of institutions. An institution that exceeds all fully phased-in capital
requirements before and after the proposed capital distribution (a "Tier 1
Institution") could, after prior notice to, but without the approval of, the
OTS, make capital distributions during a calendar year of up to the higher of
(i) 100% of its net income to date during the calendar year plus the amount
which would reduce by one-half its "surplus capital ratio" (i.e., the excess
capital over its fully phased-in capital requirements) at the beginning of the
calendar year, or (ii) 75% of its net income over the most recent preceding four
quarter period. Any additional capital distributions would require prior
regulatory approval. As of December 31, 1996, Standard Bank was a Tier 1
Institution. The payment of dividends by any financial institution or its
holding company is affected by the requirement to maintain adequate capital
pursuant to applicable capital adequacy guidelines and regulations, and a
financial institution generally is prohibited from paying any
73
dividends if, following payment thereof, the institution would be
undercapitalized. Further, under applicable regulations of OTS, Standard Bank
may not pay dividends in an amount which would reduce its capital below the
amount required for the liquidation account established in connection with
Standard Bank's conversion from the mutual to stock form of ownership in 1994.
As of December 31, 1996, approximately $66.8 million was available to be paid as
dividends to Standard by Standard Bank. Notwithstanding the availability of
funds for dividends, however, the OTS may prohibit the payment of any dividends
if the OTS determines such payment would constitute unsafe or unsound practice.
TCF. TCF is subject to the DGCL restrictions on the payment of dividends,
described below, but is not subject to advance notice requirements or regulatory
limitations relating to the payment of dividends or making other forms of
capital distributions. Dividends from the TCF Banks to TCF, however, are subject
to restrictions administered by the OCC. In general, the OCC notified Great
Lakes Michigan and TCF Minnesota in connection with their conversion to national
banks in April 1997 that they may pay dividends without advance approval in an
amount up to 100% of each Bank's net income for the current year. In general,
OCC regulations permit the payment of dividends, without advance approval, of up
to 100% of current year's (year-to-date) net income plus retained net income for
the prior two years.
DGCL. The DGCL provides that, subject to any restrictions in the
corporation's certificate of incorporation, dividends may be declared from the
corporation's surplus or, if there is no surplus, from its net profits for the
fiscal year in which the dividend is declared and/or the preceding fiscal year.
However, if the corporation's capital (generally defined in the DGCL as the sum
of the aggregate par value of all shares of the corporation's capital stock,
where all such shares have a par value and the board of directors has not
established a higher level of capital) has been diminished to an amount less
than the aggregate amount of the capital represented by the issued and
outstanding stock of all classes having a preference upon the distribution of
assets, dividends may not be declared and paid out of such net profits until the
deficiency in such capital has been repaired.
DISSOLUTION
DGCL. Standard and TCF are subject to the DGCL's provisions on dissolution.
Under the DGCL, voluntary dissolution of a corporation requires the adoption of
a resolution by a majority of the members of the board of directors and the
affirmative vote of the holders of a majority of the outstanding shares entitled
to vote thereon.
RECENT DEVELOPMENTS
BOC. On January 16, 1997, TCF Illinois completed the acquisition of BOC
Financial Corporation, Chicago, a savings bank holding company owning the Bank
of Chicago, s.b. ("Bank of Chicago"). TCF signed a purchase agreement on June
25, 1996, to acquire BOC Financial Corporation for cash, and received regulatory
approval from the OTS on December 27, 1996. Bank of Chicago had approximately
$183.1 million in assets at December 31, 1996 and locations in Garfield Ridge,
Lakeshore and Little Village, Illinois. Effective upon the conversion of TCF
Illinois to a national bank in April 1997, the Bank of Chicago was merged with
and into TCF Illinois.
WINTHROP. On June 24, 1997, TCF acquired Winthrop though a merger of a TCF
subsidiary with and into Winthrop in a tax-free stock-for-stock exchange.
Winthrop, with total assets of $370 million as of March 31, 1997, specializes in
leasing high-tech and business equipment. TCF issued approximately 6,700,000
shares of TCF Common Stock in the transaction, which was treated as a pooling of
interests for accounting purposes.
NATIONAL BANK CONVERSION/FORMATION. TCF converted to a bank holding
company, converted its federal savings bank subsidiaries into national banks in
April 1997 and formed two new national banks in Ohio and Colorado.
74
REDEMPTION OF GREAT LAKES DEBENTURES. On May 12, 1997, TCF called for
redemption of the 7 1/4% Convertible Subordinated Debentures due 2011 of Great
Lakes Michigan (the "Great Lakes Debentures") which TCF assumed in connection
with its acquisition of Great Lakes Michigan in February 1995. The Great Lakes
Debentures were convertible into TCF Common Stock at a conversion price of
$17.04 per share. The redemption date was June 16, 1997. Approximately 400,000
shares of TCF Common Stock were issued in connection with the redemption of the
Great Lakes Debentures.
SUPPLEMENTAL STOCK ISSUANCE. The Winthrop Merger Agreement contemplated
that TCF would make a supplemental offering of up to 800,000 shares of TCF
Common Stock in order to qualify the merger with Winthrop as a pooling of
interests. TCF filed a separate registration statement on Form S-3 with respect
to these shares. The Form S-3 registration statement was declared effective on
June 3, 1997, and on that date TCF sold 700,000 shares of TCF Common Stock and
received net proceeds of approximately $29.3 million from such offering.
OHIO BRANCHES. On May 23, 1997, Great Lakes Ohio entered into a purchase
and sale agreement pursuant to which the eight branches of Great Lakes Ohio,
representing $130 million in deposits, will be sold to The Fifth Third Bank
headquartered in Cincinnati, Ohio.
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
The Reorganization Agreement provides that at the Effective Time, all of the
issued and outstanding shares of Standard Common Stock (other than Dissenting
Shares, treasury shares or shares held by TCF or any subsidiary thereof, except
for shares held in a fiduciary capacity or in satisfaction of debt) will be
converted into and will represent the shares of Interim Bank Common Stock that
will be converted into the right to receive the Consideration. See "THE
COMBINATION--The Consideration Formula."
The following Unaudited Pro Forma Combined Financial Information reflects
the Combination, including the issuance of 4,516,000 shares of TCF Common Stock
to Standard shareholders, based on the number of shares of Standard Common Stock
outstanding on March 31, 1997 of 16,204,235 shares and using the Average TCF
Stock Price for the 30-day period ending on July 8, 1997 of $46.97. The
following Unaudited Pro Forma Combined Financial Information also reflects the
acquisition of Winthrop. Pursuant to the Winthrop Merger Agreement, each
outstanding share of common stock of Winthrop (other than dissenters' shares and
shares held by TCF or any subsidiary thereof, other than shares held in a
fiduciary capacity or in satisfaction of debt) shall be automatically converted
into and exchangeable for 0.7766 of a share of TCF Common Stock ("Winthrop
Exchange Ratio"). See "RECENT DEVELOPMENTS."
The following Unaudited Pro Forma Combined Statement of Financial Condition
as of March 31, 1997 combines the historical consolidated statements of
financial condition of TCF, Standard and Winthrop as if the Combination and the
acquisition of Winthrop had been effective on March 31, 1997, after giving
effect to certain pro forma adjustments described in the accompanying notes.
The following Unaudited Pro Forma Combined Statements of Operations for the
year ended December 31, 1996 and for the three months ended March 31, 1997 and
1996 are presented as if the Combination had been effective January 1, 1996 and
the acquisition of Winthrop had been effective January 1, 1994, after giving
effect to certain pro forma adjustments described in the accompanying notes.
TCF's, Standard's and Winthrop's fiscal years end December 31. The following
Unaudited Pro Forma Combined Statements of Operations for the two years ended
December 31, 1995 and 1994 are presented as if the acquisition of Winthrop had
been effective January 1, 1994.
The Unaudited Pro Forma Combined Financial Information and notes thereto
reflect the application of the purchase method of accounting for the
Combination. Under this method of accounting, the assets acquired and
liabilities assumed from Standard are recorded at their fair market values. The
amount of the purchase price in excess of the fair market value of the tangible
and identifiable intangible assets acquired
75
less the liabilities assumed is recorded as goodwill. Certain historical
information of Standard has been reclassified to conform to TCF's financial
statement presentation.
The Unaudited Pro Forma Combined Financial Information and notes thereto
reflect the application of the pooling-of-interests method of accounting for the
acquisition of Winthrop. Under this method of accounting, the recorded assets,
liabilities, income and expenses of TCF and Winthrop are combined and recorded
at their historical cost-based amounts, except as noted below and in the notes
thereto. Certain historical information of Winthrop has been reclassified to
conform to TCF's financial statement presentation.
The Unaudited Pro Forma Combined Financial Information does not reflect the
effects of the additional offering of 700,000 shares of TCF Common Stock in
order to qualify the acquisition of Winthrop as a pooling of interests (TCF
received net proceeds of approximately $29.3 million therefrom) and the issuance
of approximately 400,000 shares of TCF Common Stock in connection with the
conversion of Great Lakes Michigan's 7 1/4% Convertible Subordinated Debentures
due 2011. See "RECENT DEVELOPMENTS--Supplemental Stock Issuance" and "RECENT
DEVELOPMENTS-- Redemption of Great Lakes Debentures."
The significant accounting and reporting policies of TCF, Standard and
Winthrop differ in minor respects and no effect has been given to such
differences in this Unaudited Pro Forma Combined Financial Information. The
Unaudited Pro Forma Combined Financial Information included herein is not
necessarily indicative of the consolidated financial position or results of
future operations of the combined entity or the actual results that would have
been achieved had the acquisitions of Standard and Winthrop been consummated
prior to the periods indicated. The Unaudited Pro Forma Combined Financial
Information should be read in conjunction with and are qualified in their
entirety by the separate historical consolidated financial statements and notes
thereto of TCF, Standard and Winthrop, which are incorporated by reference
herein. See "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE."
76
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
STANDARD FINANCIAL, INC. AND SUBSIDIARIES
WINTHROP RESOURCES CORPORATION
UNAUDITED PRO FORMA COMBINED STATEMENT OF FINANCIAL CONDITION
AT MARCH 31, 1997
(IN THOUSANDS)
PRO FORMA PRO FORMA
-------------------------- ------------------------------
TCF STANDARD ADJUSTMENTS COMBINED WINTHROP ADJUSTMENTS COMBINED
---------- ---------- ------------- ---------- -------- ----------- -----------
ASSETS
Cash and due from banks......... $ 187,103 $ 17,929 $ -- $ 205,032 $ 5,592 $-- $ 210,624
Interest-bearing deposits with
banks......................... 1,793 27,375 -- 29,168 3,937 -- 33,105
U.S. Government and other
marketable securities held to
maturity...................... 3,918 -- -- 3,918 -- -- 3,918
Federal Home Loan Bank stock, at
cost.......................... 50,810 20,500 -- 71,310 -- -- 71,310
Securities available for sale... 1,242,457 860,405 (200,000)(1) 1,902,862 -- -- 1,902,862
Loans held for sale............. 199,154 29,065 -- 228,219 -- -- 228,219
Loans and lease financings:
Total loans................... 5,028,741 1,490,141 (6,509)(2) 6,512,373 -- -- 6,512,373
Total lease financings........ -- -- -- -- 326,200 -- 326,200
---------- ---------- ------------- ---------- -------- ----- -----------
Total loans and lease
financings................ 5,028,741 1,490,141 (6,509) 6,512,373 326,200 -- 6,838,573
Allowance for loan and lease
losses.................... (71,475) (7,401) -- (78,876) (1,398) -- (80,274)
---------- ---------- ------------- ---------- -------- ----- -----------
Net loans and lease
financings.............. 4,957,266 1,482,740 (6,509) 6,433,497 324,802 -- 6,758,299
Premises and equipment.......... 137,559 27,187 (1,630)(3) 163,116 1,080 -- 164,196
Real estate..................... 15,559 160 -- 15,719 -- -- 15,719
Accrued interest receivable..... 44,050 14,943 -- 58,993 -- -- 58,993
Goodwill........................ 25,052 387 169,529(2)(4) 194,968 5,436 -- 200,404
Deposit base intangibles........ 13,501 -- 17,333(5) 30,834 -- -- 30,834
Mortgage servicing rights....... 16,561 764 81(2) 17,406 -- -- 17,406
Other assets.................... 69,336 7,399 -- 76,735 29,132 -- 105,867
---------- ---------- ------------- ---------- -------- ----- -----------
$6,964,119 $2,488,854 $ (21,196) $9,431,777 $369,979 $-- $ 9,801,756
---------- ---------- ------------- ---------- -------- ----- -----------
---------- ---------- ------------- ---------- -------- ----- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Total deposits.................. $5,291,894 $1,776,848 $ 6,496(2) $7,075,238 $ -- $-- $ 7,075,238
---------- ---------- ------------- ---------- -------- ----- -----------
Securities sold under repurchase
agreements.................... 328,977 -- -- 328,977 -- -- 328,977
Federal Home Loan Bank
advances...................... 630,307 410,000 (2,745)(2) 1,037,562 -- -- 1,037,562
Discounted lease rentals........ -- -- -- -- 203,286 -- 203,286
Subordinated debt............... 13,392 -- -- 13,392 28,750 -- 42,142
Collateralized obligations...... 40,374 -- -- 40,374 -- -- 40,374
Other borrowings................ 28,325 -- 15,152(6) 43,477 -- -- 43,477
---------- ---------- ------------- ---------- -------- ----- -----------
Total borrowings............ 1,041,375 410,000 12,407 1,463,782 232,036 -- 1,695,818
Accrued expenses and other
liabilities................... 88,981 30,749 19,043(7) 138,773 53,096 -- 191,869
---------- ---------- ------------- ---------- -------- ----- -----------
Total liabilities........... 6,422,250 2,217,597 37,946 8,677,793 285,132 -- 8,962,925
---------- ---------- ------------- ---------- -------- ----- -----------
Stockholders' equity:
Preferred stock............... -- -- -- -- -- -- --
Common stock.................. 359 191 (146)(8) 404 86 (19)(10) 471
Additional paid-in capital.... 253,186 190,266 21,804(8) 465,256 23,191 19(10) 488,466
Unamortized deferred
compensation................ (22,128) (3,475) 3,475(8) (22,128) -- -- (22,128)
Retained earnings, subject to
certain restrictions........ 366,655 132,902 (132,902)(8) 366,655 61,570 -- 428,225
Loan to Executive Deferred
Compensation Plan........... (52) -- -- (52) -- -- (52)
Unrealized gain (loss) on
securities available for
sale........................ (4,515) 1,750 (1,750)(8) (4,515) -- -- (4,515)
Employee Stock Ownership Plan
shares...................... -- (9,292) 9,292(9) -- -- -- --
Treasury stock, at cost....... (51,636) (41,085) 41,085(8) (51,636) -- -- (51,636)
---------- ---------- ------------- ---------- -------- ----- -----------
Total stockholders'
equity.................... 541,869 271,257 (59,142) 753,984 84,847 -- 838,831
---------- ---------- ------------- ---------- -------- ----- -----------
$6,964,119 $2,488,854 $ (21,196) $9,431,777 $369,979 $-- $ 9,801,756
---------- ---------- ------------- ---------- -------- ----- -----------
---------- ---------- ------------- ---------- -------- ----- -----------
77
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
STANDARD FINANCIAL, INC. AND SUBSIDIARIES
WINTHROP RESOURCES CORPORATION
NOTES TO UNAUDITED PRO FORMA COMBINED STATEMENT OF FINANCIAL CONDITION
Pursuant to the Reorganization Agreement and the Winthrop Merger Agreement,
and consistent with generally accepted accounting principles ("GAAP"), TCF
expects that certain purchase and pooling-of-interest accounting adjustments
relating to Standard and Winthrop, respectively, will be recorded. The purchase
accounting adjustments are preliminary estimates and are subject to revision as
economic conditions change or as more information becomes available. The
estimated purchase price of $435.2 million is based on 16,204,235 shares of
Standard Common Stock outstanding, the Average TCF Stock Price for the 30-day
period ending on July 8, 1997 of $46.97, and the fair value of the Standard
Stock Options. Based on the above, TCF would pay an aggregate of $223.1 million
in cash, including payments to holders of the Standard Stock Options totaling
$20.6 million, and would issue approximately 4,516,000 shares of TCF Common
Stock. The following notes further explain the adjustments.
(1) Represents the planned sale of $200 million of securities available for
sale in connection with the acquisition of Standard.
(2) Represent the mark-to-market adjustments to reflect the fair market value
of the Standard assets acquired and liabilities assumed under the purchase
method of accounting, including the elimination of Standard's existing
goodwill of $387,000.
(3) Represents the write-off of certain Standard fixed assets and duplicative
data processing hardware and software.
(4) Represents the excess of the purchase price paid for Standard over the
fair market value of the tangible and identifiable intangible assets
acquired and liabilities assumed under the purchase method of accounting.
Goodwill is assumed to amortize on a straight-line basis over 25 years.
The purchase price of $435.2 million was allocated as follows (in
thousands):
Net assets at fair value (note 2)................................. $ 260,691
Write-off of certain fixed assets and duplicative data processing
hardware and software (note 3).................................. (1,630)
Deposit base intangibles (note 5)................................. 17,333
Severance and other change of control payments (note 7)........... (11,263)
Professional fees related to the acquisition (note 7)............. (6,000)
Data processing contract termination costs (note 7)............... (1,370)
Net deferred tax liability (note 7)............................... (410)
Employee Stock Ownership Plan (note 6)............................ 7,951
Goodwill (note 4)................................................. 169,916
---------
Purchase Price.................................................. $ 435,218
---------
---------
(5) Represents identifiable deposit base intangibles ("DBI") relating to
Standard's deposits. The DBI will be amortized using an accelerated
method.
(6) Represents the $223.1 million increase in TCF's short-term borrowings to
fund the acquisition of Standard, net of proceeds from the planned sale of
$200 million of securities available for sale (note 1), the repayment of
the remaining $7.1 million loan to the ESOP, and the $894,000 tax benefit
related to the expected $2.2 million reduction of the ESOP loan.
(7) Represents accruals for other merger related costs such as data processing
contract termination costs ($1.4 million), professional fees including
investment banking, attorneys and accountants fees
78
($6 million), severance and other change of control payments ($11.3
million) and net deferred taxes ($410,000).
(8) Represents the elimination of Standard's stockholders' equity under the
purchase method of accounting and the issuance of approximately 4.5
million shares of TCF Common Stock.
(9) Represents the expected $2.2 million reduction of the ESOP loan and the
repayment of the remaining $7.1 million ESOP loan by the ESOP.
(10) Represents the adjustment to reflect the par value of TCF Common Stock to
be issued in connection with the acquistion of Winthrop, with a related
adjustment to additional paid-in capital.
79
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
STANDARD FINANCIAL, INC. AND SUBSIDIARIES
WINTHROP RESOURCES CORPORATION
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1997
(DOLLARS IN THOUSANDS, EXCEPT PER-SHARE DATA)
PRO FORMA PRO FORMA
------------------------ ----------------------
TCF STANDARD ADJUSTMENTS COMBINED WINTHROP ADJUSTMENTS COMBINED
-------- -------- ------------- -------- -------- ----------- --------
Interest income:
Loans...................................... $119,077 $27,239 $ 322(1) $146,638 $-- $-- $146,638
Lease financings........................... -- -- -- -- 8,205 -- 8,205
Loans held for sale........................ 3,513 646 -- 4,159 -- -- 4,159
Securities available for sale.............. 21,383 14,278 (3,750)(2) 31,911 -- -- 31,911
Investments................................ 1,163 716 -- 1,879 153 -- 2,032
-------- -------- ------------- -------- -------- ----------- --------
Total interest income.................... 145,136 42,879 (3,428) 184,587 8,358 -- 192,945
-------- -------- ------------- -------- -------- ----------- --------
Interest expense:
Deposits................................... 42,158 20,003 (1,299)(1) 60,862 -- -- 60,862
Borrowings................................. 16,960 6,148 362(3) 23,470 4,171 -- 27,641
-------- -------- ------------- -------- -------- ----------- --------
Total interest expense................... 59,118 26,151 (937) 84,332 4,171 -- 88,503
-------- -------- ------------- -------- -------- ----------- --------
Net interest income.................... 86,018 16,728 (2,491) 100,255 4,187 -- 104,442
Provision for credit losses.................. 1,090 475 -- 1,565 408 -- 1,973
-------- -------- ------------- -------- -------- ----------- --------
Net interest income after provision for
credit losses............................ 84,928 16,253 (2,491) 98,690 3,779 -- 102,469
-------- -------- ------------- -------- -------- ----------- --------
Non-interest income:
Fee and service charge revenues............ 25,638 691 -- 26,329 -- -- 26,329
ATM network revenues....................... 3,536 128 -- 3,664 -- -- 3,664
Title insurance revenues................... 2,749 -- -- 2,749 -- -- 2,749
Commissions on sales of annuities.......... 1,934 66 -- 2,000 -- -- 2,000
Leasing revenues........................... -- -- -- -- 6,358 -- 6,358
Gain on sale of loans held for sale........ 877 192 -- 1,069 -- -- 1,069
Gain (loss) on sale of securities available
for sale................................. 1,369 (146) -- 1,223 16 -- 1,239
Gain on sale of loan servicing............. 1,622 -- -- 1,622 -- -- 1,622
Other...................................... 2,656 160 -- 2,816 -- -- 2,816
-------- -------- ------------- -------- -------- ----------- --------
Total non-interest income................ 40,381 1,091 -- 41,472 6,374 -- 47,846
-------- -------- ------------- -------- -------- ----------- --------
Non-interest expense:
Compensation and employee benefits......... 39,716 5,133 -- 44,849 1,745 -- 46,594
Occupancy and equipment.................... 13,578 2,058 (169)(4) 15,467 244 -- 15,711
Advertising and promotions................. 4,929 516 -- 5,445 64 -- 5,509
Federal deposit insurance premiums and
assessments.............................. 1,071 148 -- 1,219 -- -- 1,219
Amortization of goodwill and other
intangibles.............................. 1,095 45 2,479(5) 3,619 98 -- 3,717
Provision for real estate losses........... 98 -- -- 98 -- -- 98
Other...................................... 17,441 3,159 -- 20,600 1,175 -- 21,775
-------- -------- ------------- -------- -------- ----------- --------
Total non-interest expense............... 77,928 11,059 2,310 91,297 3,326 -- 94,623
-------- -------- ------------- -------- -------- ----------- --------
Income before income tax expense and
extraordinary item................... 47,381 6,285 (4,801) 48,865 6,827 -- 55,692
Income tax expense........................... 18,450 2,201 (1,241) 19,410 2,731 -- 22,141
-------- -------- ------------- -------- -------- ----------- --------
Income before extraordinary item........... $ 28,931 $ 4,084 $ (3,560) $29,455 $4,096 $-- $33,551
-------- -------- ------------- -------- -------- ----------- --------
-------- -------- ------------- -------- -------- ----------- --------
Per common share(6)(7):
Income before extraordinary item:
Primary.................................. $ .83 $ .26 $ .75 $ .46 $ .73
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Fully diluted............................ $ .82 $ .26 $ .74 $ .46 $ .72
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Weighted average shares outstanding (000's):
Primary.................................. 34,797 15,559 39,313 8,901 46,226
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Fully diluted............................ 35,216 15,659 39,732 8,901 46,645
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
80
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
STANDARD FINANCIAL, INC. AND SUBSIDIARIES
WINTHROP RESOURCES CORPORATION
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1996
(DOLLARS IN THOUSANDS, EXCEPT PER-SHARE DATA)
PRO FORMA PRO FORMA
---------------------- ----------------------
TCF STANDARD ADJUSTMENTS COMBINED WINTHROP ADJUSTMENTS COMBINED
-------- -------- ----------- -------- -------- ----------- --------
Interest income:
Loans...................................... $122,850 $ 20,303 $ 322(1) $143,475 $-- $-- $143,475
Lease financings........................... -- -- -- -- 6,838 -- 6,838
Loans held for sale........................ 4,574 -- -- 4,574 -- -- 4,574
Securities available for sale.............. 20,351 16,459 (3,750)(2) 33,060 -- -- 33,060
Investments................................ 1,118 626 -- 1,744 41 -- 1,785
-------- -------- ----------- -------- -------- ----------- --------
Total interest income.................... 148,893 37,388 (3,428) 182,853 6,879 -- 189,732
-------- -------- ----------- -------- -------- ----------- --------
Interest expense:
Deposits................................... 44,696 17,423 (1,299)(1) 60,820 -- -- 60,820
Borrowings................................. 19,743 3,970 362(3) 24,075 3,619 -- 27,694
-------- -------- ----------- -------- -------- ----------- --------
Total interest expense................... 64,439 21,393 (937) 84,895 3,619 -- 88,514
-------- -------- ----------- -------- -------- ----------- --------
Net interest income.................... 84,454 15,995 (2,491) 97,958 3,260 -- 101,218
Provision for credit losses.................. 2,802 800 -- 3,602 100 -- 3,702
-------- -------- ----------- -------- -------- ----------- --------
Net interest income after provision for
credit losses............................ 81,652 15,195 (2,491) 94,356 3,160 -- 97,516
-------- -------- ----------- -------- -------- ----------- --------
Non-interest income:
Fee and service charge revenues............ 22,600 928 -- 23,528 -- -- 23,528
ATM network revenues....................... 2,512 126 -- 2,638 -- -- 2,638
Title insurance revenues................... 3,587 -- -- 3,587 -- -- 3,587
Commissions on sales of annuities.......... 2,169 31 -- 2,200 -- -- 2,200
Leasing revenues........................... -- -- -- -- 5,399 -- 5,399
Gain on sale of loans held for sale........ 1,483 28 -- 1,511 -- -- 1,511
Gain on sale of securities available for
sale..................................... 85 1,569 -- 1,654 -- -- 1,654
Gain on sale of branches................... 1,245 -- -- 1,245 -- -- 1,245
Other...................................... 2,148 318 -- 2,466 -- -- 2,466
-------- -------- ----------- -------- -------- ----------- --------
Total non-interest income................ 35,829 3,000 -- 38,829 5,399 -- 44,228
-------- -------- ----------- -------- -------- ----------- --------
Non-interest expense:
Compensation and employee benefits......... 36,434 5,036 -- 41,470 1,512 -- 42,982
Occupancy and equipment.................... 12,837 2,079 (169)(4) 14,747 196 -- 14,943
Advertising and promotions................. 4,732 457 -- 5,189 63 -- 5,252
Federal deposit insurance premiums and
assessments.............................. 3,161 948 -- 4,109 -- -- 4,109
Amortization of goodwill and other
intangibles.............................. 795 23 2,479(5) 3,297 78 -- 3,375
Provision for real estate losses........... 448 -- -- 448 -- -- 448
Other...................................... 17,399 1,872 -- 19,271 1,397 -- 20,668
-------- -------- ----------- -------- -------- ----------- --------
Total non-interest expense............... 75,806 10,415 2,310 88,531 3,246 -- 91,777
-------- -------- ----------- -------- -------- ----------- --------
Income before income tax expense and
extraordinary item................... 41,675 7,780 (4,801) 44,654 5,313 -- 49,967
Income tax expense........................... 15,388 2,859 (1,241) 17,006 2,178 -- 19,184
-------- -------- ----------- -------- -------- ----------- --------
Income before extraordinary item........... $ 26,287 $ 4,921 $(3,560) $ 27,648 $3,135 $-- $ 30,783
-------- -------- ----------- -------- -------- ----------- --------
-------- -------- ----------- -------- -------- ----------- --------
Per common share(6)(7):
Income before extraordinary item:
Primary.................................. $ .73 $ .31 $ .68 $ .40 $ .66
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Fully diluted............................ $ .72 $ .31 $ .68 $ .40 $ .65
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Weighted average shares outstanding (000's):
Primary.................................. 35,986 16,028 40,502 7,872 46,769
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Fully diluted............................ 36,417 16,036 40,933 7,872 47,211
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
81
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
STANDARD FINANCIAL, INC. AND SUBSIDIARIES
WINTHROP RESOURCES CORPORATION
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(DOLLARS IN THOUSANDS, EXCEPT PER-SHARE DATA)
PRO FORMA PRO FORMA
---------------------------- -------------------------
TCF STANDARD ADJUSTMENTS COMBINED WINTHROP ADJUSTMENTS COMBINED
-------- --------- ---------------- --------- -------- ------------- ---------
Interest income:
Loans................................. $486,140 $93,554 $ 1,286(1) $580,980 $ -- $ -- $580,980
Lease financings...................... -- -- -- -- 29,914 -- 29,914
Loans held for sale................... 17,080 469 -- 17,549 -- -- 17,549
Securities available for sale......... 75,303 61,265 (15,000)(2) 121,568 1 -- 121,569
Investments........................... 4,338 2,208 -- 6,546 109 -- 6,655
-------- --------- -------- --------- -------- ------------- ---------
Total interest income............... 582,861 157,496 (13,714) 726,643 30,024 -- 756,667
-------- --------- -------- --------- -------- ------------- ---------
Interest expense:
Deposits.............................. 171,375 73,955 (5,197)(1) 240,133 -- -- 240,133
Borrowings............................ 71,346 19,980 1,449(3) 92,775 15,595 -- 108,370
-------- --------- -------- --------- -------- ------------- ---------
Total interest expense.............. 242,721 93,935 (3,748) 332,908 15,595 -- 348,503
-------- --------- -------- --------- -------- ------------- ---------
Net interest income............... 340,140 63,561 (9,966) 393,735 14,429 -- 408,164
Provision for credit losses............. 19,820 2,500 -- 22,320 1,426 -- 23,746
-------- --------- -------- --------- -------- ------------- ---------
Net interest income after provision
for credit losses................... 320,320 61,061 (9,966) 371,415 13,003 -- 384,418
-------- --------- -------- --------- -------- ------------- ---------
Non-interest income:
Fee and service charge revenues....... 100,422 3,825 -- 104,247 -- -- 104,247
ATM network revenues.................. 11,480 535 -- 12,015 -- -- 12,015
Title insurance revenues.............. 13,492 -- -- 13,492 -- -- 13,492
Commissions on sales of annuities..... 9,134 271 -- 9,405 -- -- 9,405
Leasing revenues...................... -- -- -- -- 23,814 -- 23,814
Gain on sale of loans held for sale... 5,038 1,386 -- 6,424 -- -- 6,424
Gain on sale of securities available
for sale............................ 85 1,578 -- 1,663 1 -- 1,664
Gain on sale of loans................. 5,443 -- -- 5,443 -- -- 5,443
Gain on sale of branches.............. 2,747 -- -- 2,747 -- -- 2,747
Other................................. 9,956 1,285 -- 11,241 -- -- 11,241
-------- --------- -------- --------- -------- ------------- ---------
Total non-interest income........... 157,797 8,880 -- 166,677 23,815 -- 190,492
-------- --------- -------- --------- -------- ------------- ---------
Non-interest expense:
Compensation and employee benefits.... 151,745 20,629 -- 172,374 5,809 -- 178,183
Occupancy and equipment............... 51,136 8,728 (675)(4) 59,189 822 -- 60,011
Advertising and promotions............ 16,711 1,745 -- 18,456 303 -- 18,759
Federal deposit insurance premiums and
assessments......................... 12,019 3,992 -- 16,011 -- -- 16,011
Amortization of goodwill and other
intangibles......................... 3,167 135 9,917(5) 13,219 564 -- 13,783
Provision for real estate losses...... 433 -- -- 433 -- -- 433
FDIC special assessment............... 34,803 9,577 -- 44,380 -- -- 44,380
Other................................. 71,056 7,159 -- 78,215 4,959 -- 83,174
-------- --------- -------- --------- -------- ------------- ---------
Total non-interest expense.......... 341,070 51,965 9,242 402,277 12,457 -- 414,734
-------- --------- -------- --------- -------- ------------- ---------
Income before income tax expense
and extraordinary item.......... 137,047 17,976 (19,208) 135,815 24,361 -- 160,176
Income tax expense...................... 51,384 6,064 (4,965) 52,483 9,647 -- 62,130
-------- --------- -------- --------- -------- ------------- ---------
Income before extraordinary item...... $ 85,663 $11,912 $(14,243) $ 83,332 $14,714 $ -- $ 98,046
-------- --------- -------- --------- -------- ------------- ---------
-------- --------- -------- --------- -------- ------------- ---------
Per common share(6)(7):
Income before extraordinary item:
Primary............................. $ 2.42 $ .76 $ 2.09 $ 1.76 $ 2.11
-------- --------- --------- -------- ---------
-------- --------- --------- -------- ---------
Fully diluted....................... $ 2.40 $ .75 $ 2.08 $ 1.76 $ 2.10
-------- --------- --------- -------- ---------
-------- --------- --------- -------- ---------
Weighted average shares outstanding
(000's):
Primary............................. 35,342 15,635 39,858 8,369 46,442
-------- --------- --------- -------- ---------
-------- --------- --------- -------- ---------
Fully diluted....................... 35,773 15,882 40,289 8,375 46,880
-------- --------- --------- -------- ---------
-------- --------- --------- -------- ---------
82
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
WINTHROP RESOURCES CORPORATION
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
(DOLLARS IN THOUSANDS, EXCEPT PER-SHARE DATA)
PRO FORMA
--------------------------
TCF WINTHROP ADJUSTMENTS COMBINED
--------- ----------- ------------- -----------
Interest income:
Loans........................................................................ $ 488,433 $ -- $ -- $ 488,433
Lease financings............................................................. -- 23,330 -- 23,330
Loans held for sale.......................................................... 18,253 -- -- 18,253
Securities available for sale................................................ 4,021 34 -- 4,055
Investments.................................................................. 5,946 144 -- 6,090
Mortgage-backed securities held to maturity.................................. 91,037 -- -- 91,037
--------- ----------- ------------- -----------
Total interest income...................................................... 607,690 23,508 -- 631,198
--------- ----------- ------------- -----------
Interest expense:
Deposits..................................................................... 193,244 -- -- 193,244
Borrowings................................................................... 95,248 13,614 -- 108,862
--------- ----------- ------------- -----------
Total interest expense..................................................... 288,492 13,614 -- 302,106
--------- ----------- ------------- -----------
Net interest income...................................................... 319,198 9,894 -- 329,092
Provision for credit losses.................................................... 15,212 842 -- 16,054
--------- ----------- ------------- -----------
Net interest income after provision for credit losses........................ 303,986 9,052 -- 313,038
--------- ----------- ------------- -----------
Non-interest income:
Fee and service charge revenues.............................................. 89,712 -- -- 89,712
ATM network revenues......................................................... 10,568 -- -- 10,568
Title insurance revenues..................................................... 11,509 -- -- 11,509
Commissions on sales of annuities............................................ 8,557 -- -- 8,557
Leasing revenues............................................................. -- 19,739 -- 19,739
Gain on sale of loans held for sale.......................................... 3,735 -- -- 3,735
Gain (loss) on sale of securities available for sale......................... (190) 38 -- (152)
Loss on sale of mortgage-backed securities................................... (21,037) -- -- (21,037)
Gain on sale of loan servicing............................................... 1,535 -- -- 1,535
Gain on sale of branches..................................................... 1,103 -- -- 1,103
Other........................................................................ 7,284 -- -- 7,284
--------- ----------- ------------- -----------
Total non-interest income.................................................. 112,776 19,777 -- 132,553
--------- ----------- ------------- -----------
Non-interest expense:
Compensation and employee benefits........................................... 139,548 4,274 -- 143,822
Occupancy and equipment...................................................... 50,554 399 -- 50,953
Advertising and promotions................................................... 16,651 156 -- 16,807
Federal deposit insurance premiums and assessments........................... 13,540 -- -- 13,540
Amortization of goodwill and other intangibles............................... 3,163 -- -- 3,163
Provision for real estate losses............................................. 1,804 -- -- 1,804
Merger-related expenses...................................................... 21,733 -- -- 21,733
Cancellation cost on early termination of interest-rate exchange contracts... 4,423 -- -- 4,423
Other........................................................................ 65,917 4,740 -- 70,657
--------- ----------- ------------- -----------
Total non-interest expense................................................. 317,333 9,569 -- 326,902
--------- ----------- ------------- -----------
Income before income tax expense and extraordinary item.................. 99,429 19,260 -- 118,689
Income tax expense............................................................. 37,778 7,704 -- 45,482
--------- ----------- ------------- -----------
Income before extraordinary item............................................. $ 61,651 $ 11,556 $ -- $ 73,207
--------- ----------- ------------- -----------
--------- ----------- ------------- -----------
Per common share(8)(9):
Income before extraordinary item:
Primary.................................................................... $ 1.71 $ 1.46 $ 1.73
--------- ----------- -----------
--------- ----------- -----------
Fully diluted.............................................................. $ 1.70 $ 1.46 $ 1.71
--------- ----------- -----------
--------- ----------- -----------
Weighted average shares outstanding (000's):
Primary.................................................................... 35,686 7,912 41,965
--------- ----------- -----------
--------- ----------- -----------
Fully diluted.............................................................. 36,260 7,912 42,545
--------- ----------- -----------
--------- ----------- -----------
83
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
WINTHROP RESOURCES CORPORATION
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1994
(DOLLARS IN THOUSANDS, EXCEPT PER-SHARE DATA)
PRO FORMA
------------------------
TCF WINTHROP ADJUSTMENTS COMBINED
--------- ----------- ----------- -----------
Interest income:
Loans....................................................................... $ 403,095 $ -- $ -- $ 403,095
Lease financings............................................................ -- 16,201 -- 16,201
Loans held for sale......................................................... 16,917 -- -- 16,917
Securities available for sale............................................... 13,325 18 -- 13,343
Investments................................................................. 10,476 163 -- 10,639
Mortgage-backed securities held to maturity................................. 108,669 -- -- 108,669
--------- ----------- ----------- -----------
Total interest income..................................................... 552,482 16,382 -- 568,864
--------- ----------- ----------- -----------
Interest expense:
Deposits.................................................................... 183,179 -- -- 183,179
Borrowings.................................................................. 90,151 10,091 -- 100,242
--------- ----------- ----------- -----------
Total interest expense.................................................... 273,330 10,091 -- 283,421
--------- ----------- ----------- -----------
Net interest income..................................................... 279,152 6,291 -- 285,443
Provision for credit losses................................................... 10,802 109 -- 10,911
--------- ----------- ----------- -----------
Net interest income after provision for credit losses....................... 268,350 6,182 -- 274,532
--------- ----------- ----------- -----------
Non-interest income:
Fee and service charge revenues............................................. 83,744 -- -- 83,744
ATM network revenues........................................................ 8,988 -- -- 8,988
Title insurance revenues.................................................... 10,274 -- -- 10,274
Commissions on sales of annuities........................................... 11,310 -- -- 11,310
Leasing revenues............................................................ -- 18,096 -- 18,096
Gain on sale of loans held for sale......................................... 2,124 -- -- 2,124
Gain on sale of securities available for sale............................... 981 -- -- 981
Gain on sale of loan servicing.............................................. 2,353 -- -- 2,353
Other....................................................................... 5,445 -- -- 5,445
--------- ----------- ----------- -----------
Total non-interest income................................................. 125,219 18,096 -- 143,315
--------- ----------- ----------- -----------
Non-interest expense:
Compensation and employee benefits.......................................... 129,794 4,646 -- 134,440
Occupancy and equipment..................................................... 48,217 324 -- 48,541
Advertising and promotions.................................................. 14,119 183 -- 14,302
Federal deposit insurance premiums and assessments.......................... 14,779 -- -- 14,779
Amortization of goodwill and other intangibles.............................. 3,282 -- -- 3,282
Provision for real estate losses............................................ 4,022 -- -- 4,022
Other....................................................................... 62,771 3,523 -- 66,294
--------- ----------- ----------- -----------
Total non-interest expense................................................ 276,984 8,676 -- 285,660
--------- ----------- ----------- -----------
Income before income tax expense and extraordinary item................. 116,585 15,602 -- 132,187
Income tax expense............................................................ 46,402 6,241 -- 52,643
--------- ----------- ----------- -----------
Income before extraordinary item............................................ $ 70,183 $ 9,361 $ -- $ 79,544
--------- ----------- ----------- -----------
--------- ----------- ----------- -----------
Per common share (8)(9):
Income before extraordinary item:
Primary................................................................... $ 1.95 $ 1.16 $ 1.88
--------- ----------- -----------
--------- ----------- -----------
Fully diluted............................................................. $ 1.92 $ 1.16 $ 1.85
--------- ----------- -----------
--------- ----------- -----------
Weighted average shares outstanding (000's):
Primary..................................................................... 34,527 8,047 40,891
--------- ----------- -----------
--------- ----------- -----------
Fully diluted............................................................... 35,347 8,047 41,716
--------- ----------- -----------
--------- ----------- -----------
84
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
STANDARD FINANCIAL, INC. AND SUBSIDIARIES
WINTHROP RESOURCES CORPORATION
NOTES TO UNAUDITED PRO FORMA COMBINED STATEMENTS OF OPERATIONS
Pursuant to the Reorganization Agreement and the Winthrop Merger Agreement,
and consistent with GAAP, TCF expects that certain adjustments will be recorded,
primarily to accrue for specific, identified costs related to the acquisition of
Standard. The amounts of the merger-related costs are preliminary estimates and
are subject to revision as economic conditions change or as more information
becomes available. TCF does not expect to record any merger-related charges
relating to the acquisition of Winthrop.
TCF expects to achieve operating cost savings primarily through reductions
in staff and the consolidation of certain functions such as data processing,
investments and other back office operations at Standard. The operating cost
savings are expected to be achieved in various amounts at various times during
the years subsequent to the acquisition of Standard and not ratably over, or at
the beginning or end of, such periods. No adjustment has been reflected in the
Unaudited Pro Forma Combined Statements of Operations for the year ended
December 31, 1996 or for the three months ended March 31, 1997 and 1996 for the
anticipated cost savings.
(1) Represents amortization of the Standard mark-to-market adjustments under the
purchase method of accounting.
(2) Represents foregone interest income resulting from the planned sale of $200
million of securities available for sale.
(3) Represents amortization of the Standard mark-to-market adjustments, and the
net interest cost of funding the acquisition of Standard.
(4) Represents the reduction in occupancy and equipment expenses resulting from
the write-off of certain Standard fixed assets and duplicative data
processing hardware and software.
(5) Represents amortization of the Standard goodwill and deposit base
intangibles balances.
(6) The pro forma combined per common share data for TCF and Standard has been
computed based on the pro forma combined historical income before
extraordinary item and on the historical weighted average common and common
equivalent shares outstanding of TCF combined with the assumed issuance of
an additional 4.5 million shares of TCF Common Stock with respect to the
acquisition of Standard.
(7) The pro forma combined per common share data for TCF, Standard and Winthrop
has been computed based on the pro forma combined historical income before
extraordinary item and on the combined historical weighted average common
and common equivalent shares outstanding for TCF and Winthrop, and the
assumed issuance of an additional 4.5 million shares of TCF Common Stock
with respect to the acquisition of Standard. For purposes of this
calculation, Winthrop's weighted average common and common equivalent shares
outstanding were multiplied by the Winthrop Exchange Ratio of 0.7766.
(8) The pro forma combined per common share data for TCF and Winthrop has been
computed based on the pro forma combined historical income before
extraordinary item and on the combined historical weighted average common
and common equivalent shares outstanding. For purposes of this calculation,
Winthrop's weighted average common and common equivalent shares outstanding
were multiplied by the Winthrop Exchange Ratio of 0.7766.
(9) Amounts are after preferred stock dividends.
85
ADJOURNMENT OF SPECIAL MEETING
The proxy solicited hereby by Standard requests authority to vote for an
adjournment of the Special Meeting if an adjournment of such meeting is deemed
to be necessary. Standard may seek an adjournment of the Special Meeting in
order to solicit additional votes in favor of the Reorganization Agreement and
the transactions contemplated thereby (the "Combination Proposal") in the event
that the Combination Proposal has not received the requisite vote of
stockholders at the Special Meeting. If Standard desires to adjourn its Special
Meeting with respect to the Combination Proposal, Standard will request a motion
that the meeting be adjourned with respect to such proposal (and solely with
respect to the Combination Proposal, provided that a quorum is present at such
meeting), and no vote will be taken on the Combination Proposal at the
originally scheduled meeting. Each proxy solicited hereby, if properly signed
and returned to Standard and not revoked prior to its use, will be voted on any
motion for adjournment in accordance with the instructions contained therein. If
no contrary instructions are given, each proxy received will be voted in favor
of any motion to adjourn the Special Meeting. Unless revoked prior to its use,
any proxy solicited for the Special Meeting will continue to be valid for any
adjournment of such meeting, and will be voted in accordance with instructions
contained therein, and if no contrary instructions are given, for the
Combination Proposal.
Any adjournment will permit Standard to solicit additional proxies and will
permit a greater expression of the stockholders' views with respect to the
Combination Proposal. Such an adjournment would be disadvantageous to
stockholders who are against the Combination Proposal, because an adjournment
will give Standard additional time to solicit favorable votes and thus increase
the chances of approving the Combination Proposal.
If a quorum is not present at the Special Meeting, no proposal will be acted
upon and the Board of Directors of Standard will adjourn its meeting to a later
date in order to solicit additional proxies on each of the proposals being
submitted to stockholders.
An adjournment for up to 30 days will not require either the setting of a
new record date or notice of the adjourned meeting as in the case of an original
meeting. Standard does not have any reason to believe that an adjournment of the
Special Meeting will be necessary at this time.
BECAUSE THE BOARD OF DIRECTORS OF STANDARD RECOMMENDS THAT STOCKHOLDERS VOTE
FOR THE COMBINATION PROPOSAL, AS DISCUSSED ABOVE, THE BOARD OF DIRECTORS OF
STANDARD RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE POSSIBLE ADJOURNMENT OF THE
SPECIAL MEETING ON THE COMBINATION PROPOSAL. THE AFFIRMATIVE VOTE OF THE HOLDERS
OF A MAJORITY OF THE STANDARD COMMON STOCK REPRESENTED IN PERSON OR BY PROXY AT
THE SPECIAL MEETING WILL BE REQUIRED TO APPROVE A MOTION TO ADJOURN THE SPECIAL
MEETING ON THE COMBINATION PROPOSAL.
LEGAL MATTERS
The validity of the TCF Common Stock offered hereby and certain other
matters will be passed upon for TCF by Kaplan, Strangis and Kaplan, P.A.,
Minneapolis, Minnesota. Mr. Ralph Strangis, a director of TCF, is a member of
Kaplan, Strangis and Kaplan, P.A. Certain legal matters in connection with the
Combination will be passed upon for Standard by Barack Ferrazzano Kirschbaum
Perlman & Nagelberg, Chicago, Illinois.
TAX OPINIONS
The opinions described under "THE COMBINATION--Certain Federal Income Tax
Consequences" will be rendered by Fried, Frank, Harris, Shriver & Jacobson, to
TCF, and by Skadden, to Standard.
86
EXPERTS
The consolidated financial statements of TCF as of December 31, 1996 and
1995, and for each of the years in the three-year period ended December 31,
1996, have been incorporated by reference in this Proxy Statement/Prospectus in
reliance upon the report of KPMG Peat Marwick LLP, independent certified public
accountants, incorporated by reference herein, and upon the authority of said
firm as experts in accounting and auditing.
The consolidated financial statements of Standard incorporated by reference
in Standard's Annual Report on Form 10-K for the year ended December 31, 1996
and incorporated by reference in this Proxy Statement/Prospectus, which is
referred to and made a part of this Proxy Statement/Prospectus, have been
audited by Ernst & Young LLP, independent auditors, as set forth in their report
thereon incorporated by reference therein and incorporated by reference herein.
Such consolidated financial statements are incorporated by reference herein in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
The consolidated financial statements of Winthrop as of December 31, 1996
and 1995, and for each of the years in the three-year period ended December 31,
1996, have been incorporated by reference in this Proxy Statement/Prospectus, in
reliance upon the report of KPMG Peat Marwick LLP, independent certified public
accountants, incorporated by reference herein, and upon the authority of said
firm as experts in accounting and auditing.
OTHER MATTERS
The Board of Directors of Standard is not aware of any business to come
before the Special Meeting other than those matters described in this Proxy
Statement/Prospectus. However, if any other matter should properly come before
the Special Meeting, it is intended that holders of the proxies solicited hereby
will act in accordance with their best judgment.
87
APPENDIX A
AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
STANDARD FINANCIAL, INC.,
TCF FINANCIAL CORPORATION
AND
TCF NATIONAL BANK ILLINOIS
------------------------
MARCH 16, 1997, AS AMENDED
------------------------
A-1
TABLE OF CONTENTS
PAGE
---------
ARTICLE 1--THE MERGER.................................................................................. A-5
1.1 The Merger................................................................................. A-6
1.2 Effects of the Merger...................................................................... A-6
1.3 Effect on Outstanding Shares of New Bank Common Stock and Stock Plans...................... A-6
1.4 Merger Consideration Election.............................................................. A-8
1.5 No Fractional Shares....................................................................... A-10
1.6 Procedure for Exchange of New Bank Common Stock............................................ A-10
1.7 Dissenting Shares.......................................................................... A-11
1.8 Effect on Common Stock of Merger Sub....................................................... A-12
1.9 Corporate Matters.......................................................................... A-12
1.10 Tax Consequences........................................................................... A-12
1.11 Alternative Structure...................................................................... A-12
ARTICLE 2--REPRESENTATIONS AND WARRANTIES OF TCF....................................................... A-13
2.1 Organization and Qualification............................................................. A-13
2.2 Authority Relative to this Agreement; Non-Contravention.................................... A-13
2.3 Capitalization............................................................................. A-14
2.4 1934 Act Reports........................................................................... A-14
2.5 Financial Statements....................................................................... A-15
2.6 Subsidiaries............................................................................... A-15
2.7 Absence of Undisclosed Liabilities......................................................... A-16
2.8 No Material Adverse Changes................................................................ A-16
2.9 Absence of Certain Developments............................................................ A-16
2.10 Litigation................................................................................. A-17
2.11 No Brokers or Finders...................................................................... A-17
2.12 Compliance with Laws; Permits.............................................................. A-17
2.13 Prospectus/Proxy Statement................................................................. A-18
2.14 Validity of TCF Common Stock............................................................... A-18
2.15 Reports and Filings........................................................................ A-18
2.16 Employee Benefit Plans..................................................................... A-18
2.17 Properties................................................................................. A-18
2.18 Interest Rate Risk Management Instruments.................................................. A-19
2.19 Fairness Opinion........................................................................... A-19
ARTICLE 3--REPRESENTATIONS AND WARRANTIES OF STANDARD.................................................. A-19
3.1 Organization and Qualification............................................................. A-19
3.2 Authority Relative to this Agreement; Non-Contravention.................................... A-19
3.3 Capitalization............................................................................. A-20
3.4 1934 Act Reports and Regulatory Reports.................................................... A-20
3.5 Financial Statements....................................................................... A-21
3.6 Loans...................................................................................... A-22
3.7 Subsidiaries............................................................................... A-22
3.8 Absence of Undisclosed Liabilities......................................................... A-22
3.9 No Material Adverse Changes................................................................ A-22
3.10 Absence of Certain Developments............................................................ A-22
3.11 Properties................................................................................. A-24
3.12 Tax Matters................................................................................ A-25
3.13 Contracts and Commitments.................................................................. A-25
3.14 Litigation................................................................................. A-26
A-2
PAGE
---------
3.15 No Brokers or Finders...................................................................... A-26
3.16 Employee Benefit Plans..................................................................... A-26
3.17 Insurance.................................................................................. A-28
3.18 Affiliate Transactions..................................................................... A-28
3.19 Compliance with Laws; Permits.............................................................. A-28
3.20 Administration of Fiduciary Accounts....................................................... A-29
3.21 Prospectus/Proxy Statement................................................................. A-29
3.22 Interest Rate Risk Management Instruments.................................................. A-29
3.23 State Takeover Laws; Shareholder Rights Plan............................................... A-29
3.24 Fairness Opinion........................................................................... A-29
ARTICLE 4--CONDUCT OF BUSINESS PENDING THE MERGER...................................................... A-30
4.1 Conduct of Business by Standard and the Standard Subsidiaries.............................. A-30
4.2 Conduct of Business by TCF................................................................. A-32
ARTICLE 5--ADDITIONAL COVENANTS AND AGREEMENTS......................................................... A-33
5.1 Filings and Approvals...................................................................... A-33
5.2 Certain Loans and Related Matters.......................................................... A-33
5.3 Monthly Financial Statements............................................................... A-33
5.4 Expenses................................................................................... A-34
5.5 No Negotiations, etc....................................................................... A-34
5.6 Notification of Certain Matters............................................................ A-34
5.7 Access to Information; Confidentiality..................................................... A-35
5.8 Filing of Tax Returns and Adjustments...................................................... A-35
5.9 Registration Statement..................................................................... A-36
5.10 Affiliate Letters.......................................................................... A-37
5.11 Establishment of Accruals.................................................................. A-37
5.12 Employee Benefit Plans..................................................................... A-38
5.13 Tax Treatment.............................................................................. A-38
5.14 Press Releases............................................................................. A-38
5.15 Indemnification and Insurance.............................................................. A-39
5.16 TCF SEC Reports............................................................................ A-40
5.17 Securities Reports......................................................................... A-40
5.18 Stock Exchange Listing..................................................................... A-40
5.19 Shareholder Approval....................................................................... A-40
5.20 Failure to Fulfill Conditions.............................................................. A-40
5.21 Standard Severance/Change in Control....................................................... A-40
5.22 Headquarters of Resulting Institution...................................................... A-40
5.23 Conversion/Reincorporation................................................................. A-40
5.24 Private Letter Ruling...................................................................... A-40
ARTICLE 6--CONDITIONS.................................................................................. A-41
6.1 Conditions to Obligations of Each Party.................................................... A-41
6.2 Additional Conditions to Obligation of Standard............................................ A-41
6.3 Additional Conditions to Obligation of TCF................................................. A-43
ARTICLE 7--TERMINATION, AMENDMENT AND WAIVER........................................................... A-45
7.1 Termination................................................................................ A-45
7.2 Effect of Termination...................................................................... A-46
7.3 Amendment.................................................................................. A-47
7.4 Waiver..................................................................................... A-47
A-3
PAGE
---------
ARTICLE 8--GENERAL PROVISIONS.......................................................................... A-47
8.1 Public Statements.......................................................................... A-47
8.2 Notices.................................................................................... A-47
8.3 Interpretation............................................................................. A-48
8.4 Severability............................................................................... A-48
8.5 Miscellaneous.............................................................................. A-48
8.6 Survival of Representations, Warranties and Covenants...................................... A-49
8.7 Schedules.................................................................................. A-49
8.8 Descriptive Headings....................................................................... A-49
8.9 Parties in Interest........................................................................ A-49
8.10 Counterparts............................................................................... A-49
A-4
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is made and
entered into as of March 16, 1997, by and between TCF FINANCIAL CORPORATION, a
Delaware corporation ("TCF"), and STANDARD FINANCIAL, INC., a Delaware
corporation ("Standard"); as amended by Amendment No. 1 to Agreement and Plan of
Reorganization, dated as of June 2, 1997, by and among TCF, Standard and TCF
National Bank Illinois, a wholly-owned bank subsidiary of TCF ("TCF Bank
Illinois").
W I T N E S S E T H:
WHEREAS, Standard Federal Bank for savings, a federal savings bank (the
"Bank"), is a wholly-owned first tier subsidiary of Standard;
WHEREAS, the Boards of Directors of TCF and Standard have determined that it
is in the best interests of TCF and Standard and their respective shareholders
to consummate a strategic combination of the companies;
WHEREAS, the strategic combination contemplated by this Agreement will occur
in the following contemporaneous steps: first, Standard will form a new
wholly-owned interim savings association as its first-tier subsidiary ("New
Bank"), and New Bank will form a new wholly-owned subsidiary ("New Sub") under
Delaware law; second, New Sub will merge (the "Parent/Sub Merger") with and into
Standard with Standard being the surviving corporation and a wholly-owned
subsidiary of New Bank, with certificates representing the shares of common
stock, par value $.01 per share, of Standard ("Standard Common Stock") being
converted into an equivalent number of shares of common stock, par value $.01
per share, of New Bank ("New Bank Common Stock"); third, Standard will dissolve
under Delaware law and, pursuant to the dissolution, will distribute all of its
assets and liabilities to New Bank and New Bank will assume all of Standard's
liabilities and obligations (the transactions referred to in clauses first
through third hereof are herein referred to as the "Conversion/Reincorporation"
and, after the Conversion/Reincorporation, the term "Standard" as used in this
Agreement shall also mean New Bank); fourth, New Bank will be merged (the
"Merger") with and into TCF National Bank Illinois, a wholly-owned subsidiary of
TCF ("Merger Sub") as provided in this Agreement, with Merger Sub as the
resulting institution; and fifth, Bank will, immediately after the Merger, be
merged (the "Subsequent Merger") with and into Merger Sub, with Merger Sub as
the resulting institution (the "Resulting Institution");
WHEREAS, TCF and Standard desire that the Conversion/Reincorporation, the
Merger and Subsequent Merger be made on the terms and subject to the conditions
set forth in this Agreement and qualify as a reorganization within the meaning
of Section 368(a) of the Internal Revenue Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the representations, warranties and
covenants contained herein, the parties hereto agree as follows:
ARTICLE 1
THE MERGER
1.1 THE MERGER.
(a) Subject to the terms and conditions of this Agreement, New Bank shall,
at the Effective Time (as defined herein), merge with and into Merger Sub, and
the separate existence of New Bank shall cease. Merger Sub shall be the
resulting institution in the Merger and shall continue its corporate existence.
Immediately after the Merger, Bank shall be merged into Merger Sub, and Merger
Sub will be the Resulting Institution of the Subsequent Merger.
A-5
(b) The Merger and the Subsequent Merger will be effected pursuant to the
provisions of, and with the effect provided in, the applicable provisions of the
rules and regulations of the offices of the Comptroller of the Currency (the
"OCC"), the Office of Thrift Supervision ("OTS") and any other applicable
authority, as may be applicable (such applicable regulatory authority is
hereinafter referred to as the "Bank Authority"), including the execution by
Merger Sub and New Bank of articles of merger in the form required by the Bank
Authority setting forth the terms of this Agreement (the "Articles of Merger")
and the filing thereof with the Bank Authority.
(c) Subject to the provisions of Articles 6 and 7 hereof, the closing of the
transactions contemplated hereby shall take place at such location, on such
date, and at such time as TCF and Standard mutually agree, at the earliest
practicable time after the expiration of all applicable waiting periods, in
connection with approvals of governmental authorities and the satisfaction or
waiver of all conditions to the Merger, but in no event later than ten business
days after all such waiting periods have expired and all such conditions have
been satisfied or waived, or on such other date as the parties hereto may
mutually agree upon. The term "Effective Date" shall mean the day as of which
the OCC declares the Merger to be effective. The "Effective Time" shall be as of
the close of business on the Effective Date.
1.2 EFFECTS OF THE MERGER. At the Effective Time, the Resulting
Institution shall thereupon and thereafter (a) be responsible and liable for all
the liabilities, debts, penalties and obligations of each of Merger Sub and New
Bank, and (b) possess all the rights, privileges, immunities and franchises, of
a public as well as of a private nature, of each of Merger Sub and New Bank; all
property, real, personal and mixed, and all debts due on any account, including
subscriptions to shares and all causes in action, and all and every other
interest, of or belonging to or due to each of Merger Sub and New Bank shall be
taken and deemed to be transferred to and vested in the Resulting Institution
without further act or deed; and the title to any real estate or any interest
therein, vested in Merger Sub and New Bank shall not revert or be in any way
impaired by reason of the Merger.
1.3 EFFECT ON OUTSTANDING SHARES OF NEW BANK COMMON STOCK AND STOCK
PLANS. To effectuate the Merger, and subject to the terms and conditions of
this Agreement, at the Effective Time:
(a) NEW BANK COMMON STOCK. Each issued and outstanding share of New Bank
Common Stock on the Effective Date (other than the following shares of New Bank
Common Stock which shall be cancelled, retired and cease to exist, and no
exchange or payment shall be made with respect thereto: (i) Dissenting Shares
(as defined in Section 1.7), if any, (ii) shares of New Bank Common Stock held
as treasury stock of New Bank, and (iii) shares of New Bank Common Stock held
directly or indirectly by TCF except for such shares held in a fiduciary
capacity or in satisfaction of a debt previously contracted), shall be converted
into and exchangeable for the Merger Consideration. The aggregate number of
shares of New Bank Common Stock entitled to receive the Merger Consideration is
referred to as the "Outstanding New Bank Shares." The "Merger Consideration"
shall consist of the amount of cash and/or shares of TCF Common Stock (valued at
the Average TCF Stock Price (as defined below)) which, when combined, equals the
value per share set forth in the chart below opposite the appropriate Average
TCF Stock Price, as may be determined not later than the Effective Time pursuant
to the provisions of this Section 1.3(a). Such amount shall be allocated among
the holders of New Bank Common Stock in accordance with Section 1.4. The amount
of Merger Consideration payable with respect to each share of New Bank Common
Stock
A-6
entitled to Merger Consideration is referred to as the "Merger Consideration
Value Per Share." The "Merger Consideration Value Per Share" shall be determined
as follows:
AVERAGE TCF STOCK PRICE MERGER CONSIDERATION VALUE PER SHARE
- --------------------------------------- ---------------------------------------
Greater than $54.00 $12.50 + 0.24643 X Average TCF Stock
Price
Greater than $47.75 and less than or $25.81
equal to $54.00
Greater than or equal to $43.75 and $12.50 + 0.27869 X Average TCF Stock
less than or equal to $47.75 Price
Greater than or equal to $37.50 and $24.69
less than $43.75
Less than $37.50 $12.50 + 0.32514 X Average TCF Stock
Price
The term "Aggregate Cash" shall mean the sum of: (i) the number of
Dissenting Shares multiplied by the Merger Consideration Value Per Share (the
"Dissenting Shares Cash"), (ii) the amount payable with respect to the Stock
Options outstanding at the Effective Time pursuant to Section 1.3(b) ("Option
Cash") and (iii) the aggregate amount of the cash portion of the Merger
Consideration for the Outstanding New Bank Shares (the "Aggregate Cash Merger
Consideration").
If the Average TCF Stock Price is equal to or less than $47.75 and equal to
or greater than $43.75, then the aggregate Merger Consideration shall consist of
(i) cash equal to the number of Outstanding New Bank Shares multiplied by
$12.50, and (ii) a number of shares of TCF Common Stock equal to 0.27869
multiplied by the number of Outstanding New Bank Shares.
If the Average TCF Stock Price is less than $43.75 or greater than $47.75,
TCF shall notify Standard and the Exchange Agent not later than the Effective
Time as to the amount of the Aggregate Cash Merger Consideration which shall be
part of the Merger Consideration and the balance of the Merger Consideration
shall be paid in shares of TCF Common Stock based on the value of such shares at
the Average TCF Stock Price; provided, however, the Aggregate Cash shall not be
less than 44.5% of the Aggregate Merger Transaction Amount (as defined below)
unless the Average TCF Stock Price is greater than $54.00 in which case the
Aggregate Cash Merger Consideration shall not be less than $10.76 multiplied by
the Outstanding New Bank Shares and, provided further, in no event will the
Aggregate Cash less Option Cash exceed the maximum amount permitted without
preventing the Merger and the Conversion/Reincorporation from qualifying as a
reorganization with the meaning of Section 368(a) of the Code as determined by
the tax advisors of TCF and Standard.
The "Average TCF Stock Price" shall be the average of the daily closing
sales prices of TCF Common Stock as reported on the New York Stock Exchange
Composite Transactions reporting system (as reported by The Wall Street Journal
or, if not reported thereby, another authoritative source as mutually agreed by
TCF and Standard) for the 30 consecutive full trading days ending on the
Determination Date. The "Determination Date" shall be the third business day
immediately prior to either (x) the date (as originally scheduled in the notice
mailed to the shareholders and without giving effect to any adjournments or
postponements) of the special meeting of the Standard stockholders to obtain the
approvals referred to in Section 5.19 hereof or (y) the date on which the last
regulatory approval required to consummate the Merger has been obtained and all
statutory or regulatory waiting periods in respect thereof have expired,
whichever date is closest to the Effective Date. The "Aggregate Merger
Transaction Amount" is an amount equal to (i) the Aggregate Cash, plus (ii) the
aggregate number of shares of TCF Common Stock included as part of the Merger
Consideration multiplied by the Average TCF Stock Price.
A-7
All of the shares of New Bank Common Stock converted into and exchangeable
for the Merger Consideration pursuant to this Article 1 shall no longer be
outstanding and shall automatically be cancelled and cease to exist as of the
Effective Time. Each certificate previously representing any such shares of New
Bank Common Stock shall thereafter represent the right to receive the Merger
Consideration pursuant to this Section 1.3(a), as allocated among the holders of
Outstanding New Bank Shares in accordance with Section 1.4. On and after the
Effective Date and until surrendered for exchange, each stock certificate which
immediately prior to the Effective Date represented Outstanding New Bank Shares
shall be deemed for all purposes, except as provided in Section 1.6(b) hereof,
to evidence ownership of and to represent the number of whole shares of TCF
Common Stock, if any, into which such Outstanding New Bank Shares shall have
been converted pursuant to this Section 1.3(a) as allocated among the holders of
Outstanding New Bank Shares in accordance with Section 1.4. The record holder of
such outstanding certificate shall, after the Effective Date, be entitled to
vote the shares of TCF Common Stock into which the shares of Outstanding New
Bank Shares evidenced by such certificate shall have been so converted on any
matters on which the holders of record of TCF Common Stock, as of any date
subsequent to the Effective Date, shall be entitled to vote. In any matters
relating to such certificates of New Bank Common Stock, TCF may rely
conclusively upon the record of stockholders maintained by New Bank or New
Bank's stock transfer agent containing the names and addresses of the holders of
record of New Bank Common Stock on the Effective Date.
(b) STOCK OPTIONS. At the Effective Time, each outstanding stock option to
purchase shares of Standard Common Stock (a "Stock Option") granted under either
the Standard Financial, Inc. Stock Option Plan or the Standard Financial, Inc.
Stock Option Plan for Outside Directors (together, the "Standard Stock Option
Plans") shall, pursuant to the terms of such plans, become immediately
exercisable and fully vested. Immediately prior to the Effective Time, all
outstanding Stock Options shall be cancelled, and Standard shall pay to each
holder, for each Stock Option held, an amount in cash equal to the Market Value
of the Stock Option on the Effective Date, less the Exercise Price of the option
(as those terms are defined in the Standard Stock Option Plans). Standard
confirms that it is the intent of the Standard Stock Option Plans to provide
that the "Market Value of the Common Stock" (as used in the Standard Stock
Option Plans) per share for the purposes of computing the amount payable to the
holders of the Stock Options pursuant to this Section 1.3(b) shall be the Merger
Consideration Value Per Share.
(c) MANAGEMENT RECOGNITION AND RETENTION PLAN. At the Effective Time,
pursuant to the Standard Financial, Inc. Management Recognition and Retention
Plan (the "MRRP"), the Plan Shares subject to Plan Share Awards held by
Participants in the MRRP (as such terms are defined in the MRRP) shall become
100% vested, such shares shall be Outstanding New Bank Shares, and holders of
such shares shall be entitled to receive Merger Consideration and to make cash
elections as provided in Sections 1.3 and 1.4. Pursuant to the representations
in Section 3.3, all of such Plan Shares subject to Plan Share Awards are
included in the number of outstanding shares of Standard Common Stock stated in
Schedule 3.3.
1.4 MERGER CONSIDERATION ELECTION.
(a) Subject to the limitations set forth in this Section 1.4, holders of
Outstanding New Bank Shares shall be provided with an opportunity to elect to
receive cash consideration in lieu of TCF Common Stock in the Merger for any or
all such shares of New Bank Common Stock, in accordance with the election
procedures set forth in this Section 1.4. An election form (an "Election Form")
and other appropriate and customary transmittal materials (which shall specify
that delivery shall be effected, and risk of loss and title to the certificates
theretofore representing New Bank Common Stock ("Old Certificates") shall pass,
only upon proper delivery of such Old Certificates to an exchange agent
designated by TCF (the "Exchange Agent") in such form as Standard and TCF shall
mutually agree) shall be mailed immediately after the Effective Time ("Mailing
Date") to each holder of record of Standard Common Stock as of the Effective
Time.
Each Election Form shall permit a holder (or the beneficial owner through
appropriate and customary documentation and instructions) of Outstanding New
Bank Shares to elect, subject to provisions of this
A-8
Section 1.4, to receive, on a per share basis, with respect to such holder's New
Bank Common Stock (i) cash (shares as to which such election is made, the "Cash
Election Shares") or (ii) TCF Common Stock (shares as to which such election is
made, the "Stock Election Shares"). To be effective, a properly completed
Election Form shall be submitted to the Exchange Agent on or before 5:00 p.m. on
the 20th day following the Mailing Date (or such other time and date as Standard
and TCF may mutually agree) (the "Election Deadline").
Standard shall provide to the Exchange Agent all information reasonably
necessary for it to perform as specified herein. An election shall have been
properly made only if the Exchange Agent shall have actually received a properly
completed Election Form by the Election Deadline. An Election Form shall be
deemed properly completed only if accompanied by one or more certificates (or
customary affidavits and indemnification regarding the loss or destruction of
such certificates or the guaranteed delivery of such certificates) representing
all shares of New Bank Common Stock covered by such Election Form, together with
duly executed transmittal materials included with the Election Form. If a
stockholder either (i) does not submit a properly completed Election Form in a
timely fashion, or (ii) revokes its Election Form prior to the Election
Deadline, the shares of New Bank Common Stock held by such stockholder shall be
designated "No Election Shares." TCF shall cause the certificates representing
New Bank Common Stock described in (ii) to be promptly returned without charge
to the person submitting the Election Form upon written request to that effect
from the person who submitted the Election Form. Subject to the terms of this
Agreement and of the Election Form, the Exchange Agent shall have reasonable
discretion to determine whether any election, revocation or change has been
properly or timely made and to disregard immaterial defects in any Election
Form, and any good faith decisions of the Exchange Agent regarding such matters
shall be binding and conclusive. Neither TCF nor the Exchange Agent shall be
under any obligation to notify any person of any defect in an Election Form.
(b) The "Cash Election Amount" shall be equal to the product of the Merger
Consideration Value Per Share multiplied by the total number of Cash Election
Shares. Based on the Cash Election Amount and subject to the last paragraph of
this Section 1.4(b), TCF shall cause the Exchange Agent to allocate, within five
business days after the Election Deadline, to the holders of Outstanding New
Bank Shares, the right to receive, with respect to each Outstanding New Bank
Share, cash or TCF Common Stock in the Merger as follows:
(i) If the Aggregate Cash Merger Consideration is greater than the Cash
Election Amount, then
(A) all Cash Election Shares shall be converted into the right to
receive cash,
(B) the Exchange Agent will select, on a pro rata basis, first from
among the holders of No Election Shares and then, if necessary, from
among the holders of Stock Election Shares, a sufficient number of such
shares ("Cash Designee Shares") such that the sum of Cash Designee Shares
and Cash Election Shares multiplied by the Merger Consideration Value
equals as closely as practicable the Aggregate Cash Merger Consideration,
and
(C) any Stock Election Shares and any No Election Shares, in each
case, not so selected as Cash Designee Shares shall be converted into the
right to receive TCF Common Stock at the conversion ratio (expressed as a
decimal to the fifth place and then rounded to the nearest whole number
at such fifth place) of the Merger Consideration Value Per Share divided
by the Average TCF Stock Price.
(ii) If the Aggregate Cash Merger Consideration is less than the Cash
Election Amount, then
(A) all Stock Election Shares and all No Election Shares shall be
converted into the right to receive TCF Common Stock,
(B) the Exchange Agent will select, on a pro rata basis from among
the holders of Cash Election Shares, a sufficient number of such shares
("Stock Designee Shares") such that the
A-9
number of Stock Designee Shares multiplied by the Merger Consideration
Value Per Share equals as closely as practicable the difference between
the Cash Election Amount and the Aggregate Cash Merger Consideration. The
Stock Designee Shares shall be converted into the right to receive TCF
Common Stock at the conversion ratio (expressed as a decimal to the fifth
place and then rounded to the nearest whole number at such fifth place)
of the Merger Consideration Value Per Share divided by the Average TCF
Stock Price, and
(C) any Cash Election Shares not so selected as Stock Designee Shares
shall be converted into the right to receive cash at the Merger
Consideration Value Per Share.
Notwithstanding the foregoing, if any holder of Outstanding New Bank Shares
shall either elect to receive TCF Common Stock or fail to make an election
pursuant to this Section 1.4 and tax counsel to either TCF or Standard believes
that such election or failure to elect will jeopardize the characterization of
Conversion/Reincorporation, the Merger or Subsequent Merger as a reorganization
within the meaning of Section 368 of the Code, then TCF will request that such
holder execute and deliver a shareholder tax certificate in the form reasonably
satisfactory to both such tax counsel and, if such holder fails to execute such
certificate, such holder shall receive the Merger Consideration relating to such
shares entirely in cash without regard to the holder's election or failure to
elect, and the TCF Common Stock that such holder would have received shall be
allocated to other holders of Outstanding New Bank Shares (other than holders to
which this paragraph applies) to the extent and in lieu of cash that such other
holders would have received hereunder.
1.5 NO FRACTIONAL SHARES. No fractional shares of TCF Common Stock, and no
certificates representing such fractional shares, shall be issued upon the
surrender for exchange of certificates representing New Bank Common Stock. In
lieu of any fractional share, TCF shall pay to each holder of New Bank Common
Stock who otherwise would be entitled to receive a fractional share of TCF
Common Stock an amount of cash (without interest) equal to (a) the Average TCF
Stock Price multiplied by (b) the fractional share interest to which such holder
would otherwise be entitled.
1.6 PROCEDURE FOR EXCHANGE OF NEW BANK COMMON STOCK.
(a) On the Effective Date, TCF shall deposit, or shall cause to be
deposited, with the Exchange Agent, for exchange in accordance with this Section
1.6, certificates representing the aggregate number of shares of TCF Common
Stock into which the Outstanding New Bank Shares shall be converted pursuant to
Section 1.3, and TCF shall cause the Resulting Institution to deposit with the
Exchange Agent cash in the amount of the Aggregate Cash Merger Consideration
(such cash and certificates are hereinafter referred to as the "Exchange Fund").
After the Effective Date, TCF shall, on the payment or distribution date, tender
to the Exchange Agent as an addition to the Exchange Fund all dividends and
other distributions applicable to shares of TCF Common Stock held in the
Exchange Fund.
(b) Until outstanding certificates formerly representing Standard Common
Stock or New Bank Common Stock are surrendered as provided in Section 1.4
hereof, no dividend or distribution payable to holders of record of TCF Common
Stock shall be paid to any holder of such outstanding certificates, but upon
surrender of such outstanding certificates by such holder there shall be paid to
such holder the amount of any dividends or distributions (without interest)
theretofore paid with respect to such whole shares of TCF Common Stock, but not
paid to such holder, and which dividends or distributions had a record date
occurring subsequent to the Effective Date.
(c) After the Effective Date, there shall be no further registration of
transfers on the records of New Bank of outstanding certificates formerly
representing shares of Standard Common Stock or New Bank Common Stock and, if a
certificate formerly representing such shares is presented to New Bank, Standard
or TCF, it shall be forwarded to the Exchange Agent for cancellation and
exchange for Merger Consideration as herein provided.
A-10
(d) Any portion of the Exchange Fund consisting of shares of TCF Common
Stock or the cash dividends paid on TCF Common Stock deposited by TCF into the
Exchange Fund pursuant to Section 1.6(a) (including the proceeds of any
investments thereof) that remains unclaimed by the holders of New Bank Common
Stock for six months after the Effective Date shall be returned to TCF. Any
portion of the Exchange Fund consisting of cash deposited by the Resulting
Institution into the Exchange Fund pursuant to Section 1.6(a) (including the
proceeds of any investments thereof) that remains unclaimed by the holders of
New Bank Common Stock for six months after the Effective Date shall be returned
to the Resulting Institution. Any holders of New Bank Common Stock who have not
theretofore complied with Sections 1.4 and 1.6 shall thereafter look only to (i)
TCF for delivery and payment of the portions of the Merger Consideration that
includes shares of TCF Common Stock, the cash in lieu of fractional shares of
TCF Common Stock as provided in Section 1.5, and any unpaid dividends and
distributions on the TCF Common Stock deliverable in respect of such shares of
New Bank Common Stock that such holder holds as determined pursuant to this
Agreement, in each case, without any interest thereon, and (ii) to Resulting
Institution for payment of the cash portion of the Merger Consideration in
respect of each share of New Bank Common Stock that such holder holds as
determined pursuant to this Agreement without any interest thereon. If
outstanding certificates for shares of New Bank Common Stock are not surrendered
or the payment for them not claimed immediately prior to the date on which such
payments would otherwise escheat to or become the property of any governmental
unit or agency, the unclaimed items shall, to the extent not prohibited by
abandoned property law and any other applicable law, become the property of TCF
or the Resulting Institution, as the case may be, (and to the extent not in such
respective party's possession shall be paid over to it), free and clear of all
claims or interest of any person previously entitled to such claims.
Notwithstanding the foregoing, none of TCF, the Resulting Institution, the
Exchange Agent or any other person shall be liable to any former holder of New
Bank Common Stock for any amount delivered to a public official pursuant to
applicable abandoned property, escheat or similar laws.
(e) In the event any certificate for New Bank Common Stock shall have been
lost, stolen or destroyed, the Exchange Agent shall issue and pay in exchange
for such lost, stolen or destroyed certificate, upon the making of an affidavit
of that fact by the holder thereof, the Merger Consideration required pursuant
to this Agreement, provided, however, that TCF, in its discretion and as a
condition precedent to the issuance and payment thereof, may require the owner
of such lost, stolen or destroyed certificate to deliver a bond in such sum as
it may direct as indemnity against any claim that may be made against TCF, the
Resulting Institution, the Exchange Agent or any other party with respect to the
certificate alleged to have been lost, stolen or destroyed.
1.7 DISSENTING SHARES.
(a) Notwithstanding any provision of this Agreement to the contrary, the
holder (a "Dissenting Shareholder") of any shares of Standard Common Stock who
has demanded and perfected such holder's demand for appraisal of said shares
(the "Dissenting Shares") in accordance with the provisions of applicable law
(if applicable law provides such rights) and at the time of the Parent/Sub
Merger (the "Dissolution Time") has neither effectively withdrawn nor lost his
or her right to such appraisal shall not have a right to receive the Merger
Consideration for such Dissenting Shares pursuant to Section 1.3 above and shall
only be entitled to such rights as are granted by applicable law. The Resulting
Institution shall make any and all payments due to holders of Dissenting Shares.
(b) Notwithstanding the provisions of Section 1.7(a) above, if any
Dissenting Shareholder demanding appraisal of such Dissenting Shareholder's
Dissenting Shares under applicable law shall effectively withdraw or lose
(through failure to perfect or otherwise) his or her right to appraisal, then as
of the Dissolution Time or the occurrence of such event, whichever later occurs,
such Dissenting Shares shall automatically be converted into and represent only
the right to receive the Merger Consideration as provided in Section 1.3 and as
allocated pursuant to Section 1.4 upon surrender of the certificate or
certificates representing such Dissenting Shares.
A-11
(c) Standard shall give TCF prompt notice of any demands by a Dissenting
Shareholder for payment, or notices of intent to demand payment received by
Standard, and TCF shall have the right to participate in all negotiations and
proceedings with respect to such demands. Standard shall not, except with the
prior written consent of TCF (which will not be unreasonably withheld or
delayed) or as otherwise required by law, make any payment with respect to, or
settle, or offer to settle, any such demands.
1.8 EFFECT ON COMMON STOCK OF MERGER SUB. To effectuate the Merger, and
subject to the terms and conditions of this Agreement, at the Effective Time all
issued and outstanding shares of Merger Sub held by TCF will remain issued and
outstanding and shall constitute all of the issued and outstanding shares of the
Resulting Institution.
1.9 CORPORATE MATTERS. At the Effective Time:
(a) CHARTER. The Charter (as defined in Section 2.1) of Merger Sub, as in
effect at the Effective Time, shall be the Charter of the Resulting Institution
until thereafter amended in accordance with applicable law.
(b) BYLAWS. The Bylaws of Merger Sub as in effect immediately prior to the
Effective Time, shall be the Bylaws of the Resulting Institution until
thereafter amended in accordance with applicable law.
(c) BOARD OF DIRECTORS. Subject to obtaining any requisite approval of the
Bank Authority, the number of directors on the Board of Directors of the
Resulting Institution shall be increased to the number of directors of Merger
Sub immediately prior to the Effective Time (not to exceed eight) plus the
number of directors of Standard immediately prior to the Effective Time (not to
exceed seven). Upon consummation of the Merger and subject to receipt of any
requisite approvals of the Bank Authority, the directors on the Board of
Directors of the Resulting Institution shall consist of the directors on the
Boards of Directors of Merger Sub and Standard immediately prior to the
Dissolution Time and the Effective Time, subject to the right of the
shareholders of the Resulting Institution to remove and elect directors of the
Resulting Institution. On the Effective Date, Standard shall cause to be
delivered to TCF the resignations of the directors of Standard, Bank, and New
Bank and the other Standard Subsidiaries (as defined in Section 3.7) who are not
to continue as a director on the Board of Directors of the Resulting
Institution. In addition, TCF shall cause its Board of Directors to be expanded
by one (1) seat as of the Effective Time and such directorship shall, as of such
time, be filled by one director of Standard mutually acceptable to TCF and
Standard; it being the intention of the parties that such director will be David
H. Mackiewich.
(d) OFFICERS. The officers of the Resulting Institution immediately after
the Effective Time will be as follows: (i) the Executive Chairman shall be David
H. Mackiewich; (ii) the President shall be designated by TCF; and (iii) the
other officers shall be the officers of the Resulting Institution immediately
prior to the Effective Time designated by TCF, the officers of Standard who
choose to continue with the Resulting Institution on the Effective Date as
approved by TCF, and such other officers as the Board of Directors of the
Resulting Institution may elect on the Effective Date until their successors are
elected and qualified and subject to the right of the Board of Directors of the
Resulting Institution to remove and elect officers after the Effective Date.
1.10 TAX CONSEQUENCES. It is intended that the Conversion/Reincorporation,
the Merger and Subsequent Merger shall constitute a reorganization within the
meaning of Section 368(a) of the Code, and that this Agreement shall constitute
a "plan of reorganization" for purposes of the Code.
1.11 ALTERNATIVE STRUCTURE. TCF may structure the acquisition of Standard
contemplated by this Agreement in any other form of reorganization or
combination as TCF may direct; provided that (i) there are no material adverse
federal income tax consequences to Standard, TCF, Merger Sub or any other
relevant entities or to the shareholders of Standard, TCF, Merger Sub or the
Resulting Institution as a result of such modification and counsel to each party
delivers an opinion to such effect, (ii) the
A-12
consideration to be received by the shareholders of Standard is not changed or
altered and (iii) such modification will not materially delay or jeopardize
receipt of any required regulatory approvals.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF TCF
TCF hereby represents and warrants to Standard as follows:
2.1 ORGANIZATION AND QUALIFICATION. TCF is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
and has the requisite corporate power to carry on its business as now conducted.
TCF is registered as a savings and loan holding company with the Office of
Thrift Supervision ("OTS") under the Home Owners' Loan Act (the "HOLA") and is
authorized under the HOLA to carry on its business as now conducted. Each of the
Material TCF Subsidiaries (as defined in Section 2.6 and identified on Schedule
2.6) is a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation. TCF has filed an
application with the Federal Reserve Board to become a bank holding company
under the Bank Holding Company Act (the "BHCA"), and the foregoing
representation is subject to modification upon approval of such application and
consummation of the conversion of TCF's savings bank subsidiaries to national
banks to the effect that TCF will then be a bank holding company under the BHCA.
The copies of the Charter (as defined below) and Bylaws of TCF and each Material
TCF Subsidiary which have been made available to Standard prior to the date of
this Agreement are correct and complete copies of such documents as in effect as
of the date of this Agreement. As used in this Agreement, the term "Charter"
with respect to any corporation or depository institution shall mean those
instruments that at that time constitute its charter as filed or recorded under
the general corporation or other applicable law of the jurisdiction of its
incorporation or organization, including the articles or certificate of
incorporation or association and any and all amendments thereto. TCF and each of
the TCF Subsidiaries is licensed or qualified to do business in every
jurisdiction in which the nature of its business or its ownership of property
requires it to be licensed or qualified, except where the failure to be so
licensed or qualified would not have a Material Adverse Effect on TCF. As used
in this Agreement, the term "Material Adverse Effect" with respect to an entity
means any condition, event, change or occurrence that has or may reasonably be
expected to have a material adverse effect on the business, operations, results
of operations or financial condition of such entity on a consolidated basis, it
being understood that a Material Adverse Effect shall not include a change with
respect to, or effect on, such entity resulting from a change in law, rule,
regulation, generally accepted accounting principles ("GAAP") or regulatory
accounting principles, as such would apply to the financial statements of such
entity, a change with respect to, or effect on, such entity resulting from
expenses incurred in connection with this Agreement or the transactions
contemplated by this Agreement, or a change with respect to, or effect on, such
entity resulting from any other matter affecting depository institutions
generally (including without limitation, savings and loan holding companies and
thrifts), including, without limitation, changes in general economic conditions
and changes in prevailing interest and deposit rates. At the Effective Time,
Merger Sub will be duly organized and validly existing and will have the
requisite corporate power and authority to carry on its business. The Charter
and Bylaws of Merger Sub as in effect on the date hereof are included in
Schedule 2.1; provided that such Charter and Bylaws will be modified as TCF may
determine in connection with its conversion to a national bank.
2.2 AUTHORITY RELATIVE TO THIS AGREEMENT; NON-CONTRAVENTION. TCF has the
requisite corporate power and authority to enter into this Agreement and to
carry out its obligations hereunder. The execution and delivery of this
Agreement by TCF and the Articles of Merger by Merger Sub and the consummation
by TCF and Merger Sub of the transactions contemplated hereby have been duly
authorized by the Board of Directors of TCF and, in the case of Merger Sub, will
be duly authorized by the Board of Directors of Merger Sub and by the Board of
Directors of TCF, acting on behalf of TCF as the sole shareholder of Merger Sub,
and no other corporate proceedings on the part of TCF are necessary to authorize
this Agreement and the consummation of the transactions contemplated hereby.
This Agreement has been
A-13
duly executed and delivered by TCF and, assuming it is a valid and binding
obligation of Standard, constitutes the valid and binding obligation of TCF
enforceable in accordance with its terms, except as enforcement may be limited
by general principles of equity, whether applied in a court of law or a court of
equity and by bankruptcy, insolvency and similar laws affecting creditors'
rights and remedies generally. Except as set forth in Schedule 2.2, none of TCF
or the TCF Subsidiaries is subject to, or obligated under, any provision of (a)
its Charter or Bylaws, (b) any agreement, arrangement or understanding, (c) any
license, franchise or permit or (d) subject to obtaining the approvals referred
to in the next sentence, any law, regulation, order, judgment or decree, which
would be breached or violated, or in respect of which a right of termination or
acceleration or any encumbrance on any of its assets would be created, by the
execution, delivery or performance of this Agreement, the Articles of Merger or
the consummation of the transactions contemplated hereby, other than any such
breaches, violations, rights of termination or acceleration or encumbrances
which will not, in the aggregate, have a Material Adverse Effect on the TCF.
Except for (a) the filing of applications and notices with the OCC under the
Bank Merger Act, the Federal Reserve Board under the BHCA, the OTS under the
HOLA and the Federal Deposit Insurance Act ("FDIA"), and approval of such
applications and notices, (b) the filings required under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 ("HSR"), (c) the filing and
effectiveness with the Securities and Exchange Commission (the "SEC") of a
Registration Statement on Form S-4 relating to the TCF Common Stock to be issued
in connection with this Agreement and the transactions contemplated hereby, and
effectiveness of such Registration Statement, (d) requisite approvals under
applicable blue sky laws, (e) the filing of the Articles of Merger with the Bank
Authority, and (f) such filings, authorizations or approvals as may be set forth
in Schedule 2.2, no authorization, consent or approval of, or filing with, any
public body, court or authority is necessary on the part of TCF, any of the TCF
Subsidiaries or Merger Sub for the consummation by TCF and Merger Sub of the
transactions contemplated by this Agreement, except for such authorizations,
consents, approvals and filings as to which the failure to obtain or make the
same will not, in the aggregate, have a Material Adverse Effect on TCF or
materially adversely affect the consummation of the transactions contemplated
hereby.
2.3 CAPITALIZATION. The authorized, issued and outstanding shares of
capital stock of TCF as of the date hereof is correctly set forth on Schedule
2.3. The issued and outstanding shares of capital stock of each of TCF and the
Material TCF Subsidiaries are duly authorized, validly issued, fully paid and
nonassessable and have not been issued in violation of any preemptive rights.
Except as disclosed on Schedule 2.3, there are as of the date hereof, no
options, warrants, conversion privileges or other rights, agreements,
arrangements or commitments obligating TCF or any Material TCF Subsidiary to
issue, sell, purchase or redeem any shares of its capital stock or securities or
obligations of any kind convertible into or exchangeable for any shares of its
capital stock or of any of its affiliates, nor are there any stock appreciation,
phantom or similar rights outstanding based upon the book value or any other
attribute of any of the capital stock of TCF or any Material TCF Subsidiary or
the earnings or other attributes of TCF or any Material TCF Subsidiary. TCF has
made available to Standard true and correct copies of all such agreements,
arrangements (including all stock plans, but excluding individual stock option
or restricted stock agreements) or commitments. No bonds, debentures, notes or
other indebtedness having the right to vote (or convertible into or exercisable
for securities having the right to vote) on any matters on which shareholders of
TCF or any TCF Subsidiary may vote are issued or outstanding except as set forth
in Schedule 2.3.
2.4 1934 ACT REPORTS. Prior to the execution of this Agreement, TCF has
delivered or made available to Standard complete and accurate copies of (a)
TCF's Annual Reports on Form 10-K for the years ended December 31, 1993, 1994
and 1995 (the "TCF 10-K Reports") as filed with the SEC, (b) all TCF proxy
statements and annual reports to shareholders used in connection with meetings
of TCF shareholders held since January 1, 1994 and (c) TCF's Quarterly Reports
on Form 10-Q for the quarters ended March 31, 1996, June 30, 1996 and September
30, 1996 (the "TCF 10-Q Reports," and together with the TCF 10-K Reports, the
"TCF SEC Reports") as filed with the SEC. As of their respective dates or as
subsequently amended prior to the date hereof, such documents (i) did not
contain any untrue statement
A-14
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and (ii) complied as
to form in all material respects with the applicable rules and regulations of
the SEC. Since January 1, 1994, TCF has filed in a timely manner all reports
that it was required to file with the SEC pursuant to the Securities and
Exchange Act of 1934, as amended, and the rules and regulations promulgated
thereunder (the "1934 Act").
2.5 FINANCIAL STATEMENTS.
(a) Attached hereto as Schedule 2.5(a) is a copy of TCF's audited financial
statements for the year ended December 31, 1996 (the "1996 TCF Financial
Statements"). The TCF financial statements (including any footnotes thereto)
contained in the TCF SEC Reports and the 1996 TCF Financial Statements have been
prepared in accordance with GAAP applied on a consistent basis during the
periods involved, except as indicated in the notes thereto or, in the case of
unaudited statements, as permitted by Form 10-Q, and fairly present the
consolidated financial position of TCF and the TCF Subsidiaries as of
the dates thereof and the consolidated results of operations, changes in
stockholders' equity and cash flows for the periods then ended (subject, in the
case of the unaudited statements, to recurring year end adjustments normal in
nature and amount and the absence of footnotes).
(b) In TCF's reasonable judgment, the allowance for loan losses reflected in
TCF's financial statements (including footnotes thereto) contained in the TCF
SEC Reports and the 1996 TCF Financial Statements is and will be, in the case of
the financial statements delivered by TCF to Standard pursuant to Section 5.16
hereof, adequate in all material respects as of their respective dates under
GAAP consistently applied except for the adoption of SFAS No. 114 for periods
prior to January 1, 1995. The real estate acquired through foreclosure or deed
in lieu of foreclosure ("REO") reflected in TCF's financial statements
(including footnotes thereto) contained in the TCF SEC Reports and the 1996 TCF
Financial Statements is and will be, in the case of the financial statements
delivered by TCF to Standard pursuant to Section 5.16 hereof, carried at the
lower of cost or fair value, or the lower of cost or net realizable value, in
accordance with GAAP consistently applied.
(c) TCF has furnished Standard with copies of the balance sheets of each
Material TCF Subsidiary as of December 31, 1993, 1994 and 1995 and as of March
31, 1996, June 30, 1996 and September 30, 1996 and the related statements of
income, changes in stockholders' equity and cash flows for the years and periods
then ended (collectively, together with footnotes thereof, if any, the "TCF
Subsidiaries Financial Statements"). The TCF Subsidiaries Financial Statements
have been prepared in accordance with GAAP applied on a consistent basis during
the periods involved and fairly present the financial position of the respective
Material TCF Subsidiary (subject, in the case of unaudited statements, to
recurring year-end adjustments normal in nature and amount and the absence of
footnotes).
(d) The books and records of TCF and the Material TCF Subsidiaries have
been, and are being, maintained in material compliance with applicable legal and
accounting requirements, and such books and records accurately reflect in all
material respects all material transactions customarily reflected in such books
and records in respect of the business, assets, liabilities and affairs of TCF
on a consolidated basis.
2.6 SUBSIDIARIES. Schedule 2.6 correctly sets forth the name and
jurisdiction of incorporation of each corporation, fifty percent or more of the
voting securities of which is owned directly or indirectly by TCF (each a "TCF
Subsidiary" and collectively the "TCF Subsidiaries") and identifies the Material
TCF Subsidiaries. All of the issued and outstanding shares of capital stock of
each TCF Subsidiary are owned directly or indirectly by TCF free and clear of
any lien, pledge, security interest, encumbrance or charge of any kind. Except
for the stock of the TCF Subsidiaries directly or indirectly owned by TCF or as
otherwise disclosed on Schedule 2.6, neither TCF nor any TCF Subsidiary owns any
stock, partnership interest, joint venture interest or any other security issued
by any other corporation, organization or entity which is material to the
operations, assets or liabilities of TCF on a consolidated basis, except Federal
Home Loan
A-15
Bank stock and readily marketable securities owned by TCF or a TCF Subsidiary in
the ordinary course of business.
2.7 ABSENCE OF UNDISCLOSED LIABILITIES. All of the obligations or
liabilities (whether accrued, absolute, contingent, unliquidated or otherwise,
whether due or to become due, and regardless of when asserted) arising out of
transactions or events heretofore entered into, or any action or inaction,
including Taxes (as defined in Section 3.12) with respect to or based upon
transactions or events heretofore occurring that are required to be reflected,
disclosed or reserved against in audited consolidated financial statements in
accordance with GAAP ("Liabilities") have, in the case of TCF and the TCF
Subsidiaries, been so reflected, disclosed or reserved against in the audited
balance sheet as of December 31, 1996 (the "Latest TCF Balance Sheet Date")
included in the 1996 TCF Financial Statements, and TCF and the TCF Subsidiaries
have no other Liabilities except (a) Liabilities incurred since the Latest TCF
Balance Sheet Date in the ordinary course of business, (b) as otherwise
disclosed on Schedule 2.7, (c) Liabilities incurred pursuant to this Agreement
or in connection with the transactions contemplated hereunder, (d) other
Liabilities which, in aggregate, are not material or (e) matters disclosed in
any Form 8-K filings by TCF after December 31, 1996. As of December 31, 1996,
there were no agreements or commitments binding TCF or any TCF Subsidiary to
extend credit to any person in the amount of $1,000,000 or more, except (A) as
set forth on Schedule 2.7, and (B) one to four family residential mortgages.
2.8 NO MATERIAL ADVERSE CHANGES. Since December 31, 1996, there has been
no event, occurrence or development in the business of TCF or the TCF
Subsidiaries that, taken together with other events, occurrences and
developments with respect to such business, has had or would reasonably be
expected to have a Material Adverse Effect on TCF or materially adversely affect
the ability of TCF to consummate the transactions contemplated hereby.
2.9 ABSENCE OF CERTAIN DEVELOPMENTS. Except as disclosed in any Current
Reports of TCF on Form 8-K filed prior to the date of this Agreement, or on
Schedule 2.9 unless otherwise expressly contemplated or permitted by this
Agreement, since December 31, 1996 to the date hereof, TCF has not:
(a) issued or sold any of its equity securities, securities convertible into
or exchangeable for its equity securities, warrants, options or other rights to
acquire its equity securities, except (i) deposit and other bank obligations in
the ordinary course of business, (ii) pursuant to the exercise of stock options
and warrants issued under, or otherwise pursuant to, the agreements,
arrangements or commitments identified on Schedule 2.3, or (iii) the grant to
employees and directors of stock options and restricted stock under TCF's 1995
Incentive Stock Program and Director Stock Program (the "TCF Stock Plans") in
the ordinary course of business;
(b) redeemed, purchased, acquired or offered to acquire, directly or
indirectly, any shares of capital stock of TCF or any of the TCF Subsidiaries or
other securities of TCF or any of the TCF Subsidiaries, except pursuant to the
exercise of stock options and warrants issued under, or otherwise pursuant to,
the agreements, arrangements or commitments identified on Schedule 2.3, or stock
options issued in the ordinary course of business after the date hereof;
(c) split, combined or reclassified any of its outstanding shares of capital
stock or declared, set aside or paid any dividends or other distribution payable
in cash, property or otherwise with respect to any shares of its capital stock
or other securities, except (i) dividends paid in cash by the TCF Subsidiaries
which are wholly owned by TCF to TCF or to another wholly owned TCF Subsidiary
and (ii) the regular quarterly cash dividend of $.1875 for each share of TCF
Common Stock;
(d) borrowed any amount or incurred or became subject to any material
liability in excess of $1,000,000 except borrowings or liabilities incurred in
the ordinary course of business;
(e) sold, assigned or transferred any assets with an aggregate market value
in excess of $150,000 for less than fair consideration, except (i) in the
ordinary course of business, (ii) liens and encumbrances for current property
taxes not yet due and payable or being contested in good faith, and (iii) liens
and
A-16
encumbrances which do not materially affect the value of, or materially
interfere with, the current use or ability to convey, the property subject
thereof or affected thereby;
(f) cancelled any material debts or claims or waived any rights of material
value, except in the ordinary course of business or upon payment in full;
(g) suffered any theft, damage, destruction or loss of or to any property or
properties owned or used by it, whether or not covered by insurance, which
would, individually or in the aggregate, have a Material Adverse Effect on TCF;
(h) acquired (by merger, exchange, consolidation, acquisition of stock or
assets or otherwise) any corporation, partnership, joint venture or other
business organization or division or material assets thereof, or assets or
deposits that are material to TCF on a consolidated basis, except in exchange
for debt previously contracted, including REO;
(i) taken any other material action or entered into any material transaction
other than in the ordinary course of business; or
(j) agreed to do any of the foregoing.
2.10 LITIGATION. Except as set forth on Schedule 2.10 as of the date
hereof, there are no actions, suits, proceedings, orders, audits or
investigations pending or, to the Knowledge of TCF, threatened against TCF or
any of the TCF Subsidiaries, at law or in equity, or before or by any federal,
state or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign in which the adverse party or parties seeks
or could be reasonably expected to receive recovery from TCF or any TCF
Subsidiary, or their respective properties or assets, of an amount or value in
excess of $350,000 or injunctive or other equitable relief. As used in this
Agreement, the terms "Knowledge" or "Known" with respect to an entity means the
knowledge of management officials of such entity having responsibility for the
matter in question.
2.11 NO BROKERS OR FINDERS. Except as disclosed on Schedule 2.11, there
are no claims for brokerage commissions, finders' fees, investment advisory fees
or similar compensation in connection with the transactions contemplated by this
Agreement based on any arrangement, understanding, commitment or agreement made
by or on behalf of TCF or any of the TCF Subsidiaries.
2.12 COMPLIANCE WITH LAWS; PERMITS. Each of TCF and the TCF Subsidiaries
has complied with all applicable laws and regulations of foreign, federal, state
and local governments and all agencies thereof which affect the business or any
owned or leased properties or employee benefit plans of TCF or any of the TCF
Subsidiaries and to which TCF or any of the TCF Subsidiaries may be subject
(including, without limitation, the Occupational Safety and Health Act of 1970,
the Employee Retirement Income Security Act of 1974 ("ERISA"), the HOLA (if
applicable), the BHCA (if applicable), the National Bank Act (if applicable),
the Federal Deposit Insurance Act (the "FDIA"), the Real Estate Settlement
Procedures Act, the Home Mortgage Disclosure Act of 1975, the Fair Housing Act
and the Equal Credit Opportunity Act, each as amended, and any other state or
federal acts (including rules and regulations thereunder) regulating or
otherwise affecting employee health and safety or the environment), except where
failure to so comply would not, individually or in the aggregate, have a
Material Adverse Effect on TCF or adversely affect TCF's ability to consummate
the transactions contemplated hereby; and, to the Knowledge of TCF, no claims
have been filed by any such governments or agencies against TCF or any of the
TCF Subsidiaries alleging such a violation of any such law or regulation which
have not been resolved to the satisfaction of such governments or agencies which
would, individually or in the aggregate, have a Material Adverse Effect on TCF
or adversely affect TCF's ability to consummate the transactions contemplated
hereby. Each of TCF and the TCF Subsidiaries holds all of the permits, licenses,
certificates and other authorizations of foreign, federal, state and local
governmental agencies required for the conduct of its business as currently
conducted, except where failure to obtain such authorizations would not,
individually or in the aggregate, have a Material Adverse Effect on TCF or
adversely affect the ability of TCF to consummate
A-17
the transactions contemplated hereby. Neither TCF nor any of the TCF
Subsidiaries is subject to any cease and desist order, written agreement or
memorandum of understanding with, or is a party to any commitment letter or
similar undertaking to, or is subject to any order or directive by, or is a
recipient of any supervisory agreement letter from, or has adopted any board
resolutions at the request of, any Bank Regulator (as defined herein) which
would have a Material Adverse Effect on TCF nor have any of TCF or any of the
TCF Subsidiaries been advised by any Bank Regulator that it is contemplating
issuing or requesting (or is considering the appropriateness of issuing or
requesting) any such order, directive, written agreement, memorandum of
understanding, supervisory letter, commitment letter, board resolutions or
similar undertaking. A "Bank Regulator" means any federal or state governmental
authorities charged with the supervision or regulation of the person or persons
with respect to which such term is used (individually, a "Bank Regulator" and
collectively, the "Bank Regulators").
2.13 PROSPECTUS/PROXY STATEMENT. At the time the Registration Statement
(as defined in Section 5.9(a) hereof) becomes effective and at the time the
Prospectus/Proxy Statement (as defined in Section 5.9(a) hereof) is mailed to
the shareholders of Standard in order to obtain approvals referred to in Section
5.19 and at all times subsequent to such mailing up to and including the times
of such approval, the Registration Statement and the Prospectus/Proxy Statement
(including any amendments or supplements thereto), with respect to all
information set forth therein relating to TCF (including the TCF Subsidiaries)
and its shareholders, TCF Common Stock, this Agreement, the Articles of Merger,
the Merger and all other transactions contemplated hereby, will (a) comply in
all material respects with applicable provisions of the Securities Act of 1933,
as amended, and the rules and regulations promulgated thereunder ("1933 Act")
and the 1934 Act, and (b) not contain any untrue statement of material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements contained therein, in light of the circumstances under which they
are made, not misleading, except that, in each case, no such representations
shall apply to any written information or representations under this Agreement,
including financial statements, of or provided by Standard for such
Prospectus/Proxy Statement.
2.14 VALIDITY OF TCF COMMON STOCK. The shares of TCF Common Stock to be
issued pursuant to this Agreement and the transactions contemplated hereby will
be, when issued, duly authorized, validly issued, fully paid and nonassessable.
2.15 REPORTS AND FILINGS. Since January 1, 1994, each of the TCF and the
TCF Subsidiaries have filed each report or other filing it was required to file
with any Banking Regulator having jurisdiction over it (together with all
exhibits thereto, the "TCF Regulatory Reports"), except for such reports and
filings which the failure to so file would not have a Material Adverse Effect on
TCF or adversely affect the ability of the TCF to consummate the transactions
contemplated hereby. As of their respective dates or as subsequently amended
prior to the date hereof, each of the TCF Regulatory Reports was true and
correct in all material respects and complied in all material respects with
applicable laws, rules and regulations.
2.16 EMPLOYEE BENEFIT PLANS. TCF is not aware of any facts or
circumstances with respect to any TCF Employee Benefit Plan, as defined herein,
that could reasonably be expected to have a Material Adverse Effect on TCF. For
purposes of this Section 2.16, a "TCF Employee Benefit Plan" is any plan,
policy, practice, arrangement or agreement providing for benefits, compensation
(other than current cash compensation) or perquisites to any current or former
employee or independent contractor, or the dependents or family members of any
such current or former employee or independent contractor, with respect to which
TCF, any TCF Subsidiary or any other person who under applicable law would,
together with TCF, be deemed to be a single employer, could have any liability.
2.17 PROPERTIES. Neither TCF nor any TCF Subsidiary nor any of the real
property owned by TCF or any TCF Subsidiary is in violation of any applicable
zoning ordinance or other law, regulation or requirement relating to the
operation of any properties used in the operation of its business, including
applicable environmental protection laws and regulations, which violation would,
individually or in the aggregate, have a Material Adverse Effect on TCF, and
neither TCF nor any TCF Subsidiary has received
A-18
any notice of any such violation which has not been remedied or cured, or of the
existence of any condemnation proceeding with respect to any material real
properties owned or leased by TCF or any TCF Subsidiary. To the Knowledge of
TCF, no hazardous substances, hazardous wastes, pollutants or contaminants have
been deposited or disposed of in, on or under any real properties currently
owned, managed or controlled by TCF or any TCF Subsidiary, except in compliance
with applicable law or where such deposit or disposal is not reasonably likely
to result in a Material Adverse Effect on TCF.
2.18 INTEREST RATE RISK MANAGEMENT INSTRUMENTS.
(a) Schedule 2.18 contains true, correct and complete copies of all interest
rate swaps, caps and floors agreements, and any similar interest rate risk
management agreements to which TCF or any TCF Subsidiary is a party or by which
any of their properties or assets may be bound.
(b) All interest rate swaps, floors, and option agreements and other
interest rate risk management arrangements to which TCF or any TCF Subsidiary is
a party or by which any of their properties or assets may be bound, were entered
into in the ordinary course of business, and, to TCF's Knowledge, in accordance
with prudent banking practice and applicable rules, regulations, and policies of
any Bank Regulator in all material respects and with financially responsible
counterparties and are legal, valid and binding obligations enforceable in
accordance with their terms (except as may be limited by bankruptcy, insolvency,
moratorium, reorganization or similar laws affecting the rights of creditors
generally and the availability of equitable remedies), and are in full force and
effect. TCF and each TCF Subsidiary has duly performed in all material respects
all of its obligations thereunder to the extent that such obligations to perform
have accrued. To TCF's Knowledge, there are no material breaches, violations, or
defaults or allegations or assertions of such by any party thereunder.
2.19 FAIRNESS OPINION. TCF has received a written opinion in a form
reasonably acceptable to TCF from Piper Jaffray, Inc. to the effect that the
Merger is fair from a financial point of view to holders of TCF Common Stock.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF STANDARD
Standard hereby represents and warrants to TCF as follows:
3.1 ORGANIZATION AND QUALIFICATION. Standard is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and has the requisite corporate power to carry on its business as now
conducted. Bank is a federally chartered savings bank duly organized, validly
existing and in good standing under the laws of the United States and has the
requisite corporate power to carry on its business as now conducted. Each of
Standard Subsidiaries (as defined in Section 3.7 hereof) is a corporation duly
organized, validly existing and in good standing under the laws of the state of
its incorporation. The copies of the Charter and Bylaws of Standard and each
Standard Subsidiary which have been made available to TCF prior to the date of
this Agreement are correct and complete copies of such documents as in effect as
of the date of this Agreement. Each of Standard and each Standard Subsidiary is
licensed or qualified to do business in every jurisdiction in which the nature
of its business or its ownership of property requires it to be licensed or
qualified, except where the failure to be so licensed or qualified would not
have a Material Adverse Effect on Standard.
3.2 AUTHORITY RELATIVE TO THIS AGREEMENT; NON-CONTRAVENTION. Standard has
the requisite corporate power and authority to enter into this Agreement and to
carry out its obligations hereunder. New Bank will have the requisite corporate
power and authority to enter into the Articles of Merger and to carry out its
obligations thereunder. The execution and delivery of (i) this Agreement by
Standard and the consummation by Standard of the transactions contemplated
hereby have been duly authorized by the Board of Directors of Standard and (ii)
the Articles of Merger by New Bank and the transactions contemplated thereby
will, as of the Effective Date, be duly authorized by the Board of Directors of
New Bank, and
A-19
except for approval of this Agreement, the Conversion/Reincorporation and the
Merger by the requisite vote of Standard's shareholders, no other corporate
proceedings on the part of Standard or any Standard Subsidiaries are necessary
to authorize this Agreement and the consummation of the transactions
contemplated hereby. This Agreement has been duly executed and delivered by
Standard and, assuming it is a valid and binding obligation of TCF, constitutes
a valid and binding obligation of Standard enforceable in accordance with its
terms except as enforcement may be limited by general principles of equity
whether applied in a court of law or a court of equity and by bankruptcy,
insolvency and similar laws affecting creditors' rights and remedies generally.
Except as set forth in Schedule 3.2, none of Standard or any of the Standard
Subsidiaries is subject to, or obligated under, any provision of (a) its Charter
or Bylaws, (b) any agreement, arrangement or understanding, (c) any license,
franchise or permit or (d) subject to obtaining the approvals referred to in the
next sentence, any law, regulation, order, judgment or decree, which would be
breached or violated, or in respect of which a right of termination or
acceleration or any encumbrance on any of its assets would be created, by the
execution, delivery or performance of this Agreement, the Articles of Merger or
the Conversion/Reincorporation or the consummation of the transactions
contemplated hereby or thereby, other than any such breaches, violations, rights
of termination or acceleration or encumbrances which will not, in the aggregate,
have a Material Adverse Effect on Standard. Except for (a) the filings, notices,
consents and approvals described in Section 2.2 hereof and (b) such filings,
authorizations or approvals as may be set forth in Schedule 3.2, no
authorization, consent or approval of, or filing with, any public body, court or
authority is necessary on the part of Standard or any of the Standard
Subsidiaries for the consummation by Standard or any of the Standard
Subsidiaries of the transactions contemplated by this Agreement, except for such
authorizations, consents, approvals and filings as to which the failure to
obtain or make the same will not, in the aggregate, have a Material Adverse
Effect on Standard or materially adversely affect the consummation of the
transactions contemplated hereby.
3.3 CAPITALIZATION. The authorized, issued and outstanding shares of
capital stock of each of Standard and the Standard Subsidiaries as of the date
hereof is correctly set forth on Schedule 3.3. The number of outstanding shares
of Standard Common Stock identified in Schedule 3.3 includes (i) the aggregate
number of shares of Standard Common Stock under the MRRP which have been granted
(as set forth on Schedule 3.3) and which vest upon consummation of the Merger as
provided in Section 1.3(c), and (ii) all allocated and unallocated shares of
Standard Common Stock held by the ESOP (as defined in Section 5.12 below). The
issued and outstanding shares of capital stock of each of Standard and the
Standard Subsidiaries are duly authorized, validly issued, fully paid and
nonassessable and have not been issued in violation of any preemptive rights.
Except as disclosed on Schedule 3.3, there are no options, warrants, conversion
privileges or other rights, agreements, arrangements or commitments obligating
Standard or any Standard Subsidiary to issue, sell, purchase or redeem any
shares of its capital stock or securities or obligations of any kind convertible
into or exchangeable for any shares of its capital stock or of any of its
subsidiaries or affiliates, nor are there any stock appreciation, phantom or
similar rights outstanding based upon the book value or any other attribute of
any of the capital stock of Standard or any of the Standard Subsidiaries, or the
earnings or other attributes of Standard or any of the Standard Subsidiaries.
Schedule 3.3 contains true and correct copies of all such agreements,
arrangements (including all stock plans, but excluding individual stock option
or restricted stock agreements) or commitments. No bonds, debentures, notes or
other indebtedness having the right to vote (or convertible into or exercisable
for securities having the right to vote) on any matters on which shareholders of
Standard or any Standard Subsidiary may vote are issued or outstanding except as
set forth in Schedule 3.3.
3.4 1934 ACT REPORTS AND REGULATORY REPORTS. Prior to the execution of
this Agreement, Standard has delivered or made available to TCF complete and
accurate copies of (a) Standard's Annual Reports on Form 10-K for the years
ended December 31, 1994 and 1995 (the "Standard 10-K Reports") as filed with the
SEC, (b) all Standard proxy statements and annual reports to shareholders used
in connection with meetings of Standard shareholders held since January 1, 1994
and (c) Standard's Quarterly Reports on Form 10-Q for the quarters ended March
31, 1996, June 30, 1996 and September 30, 1996 (the "Standard
A-20
10-Q Reports," and together with the Standard 10-K Reports, the "Standard SEC
Reports") as filed with the SEC. As of their respective dates or as subsequently
amended prior to the date hereof, such documents (i) did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statement therein, in light of the
circumstances under which they were made, not misleading and (ii) complied as to
form in all material respects with the applicable rules and regulations of the
SEC. Prior to the execution of this Agreement, Standard has delivered or made
available to TCF complete and accurate copies of all reports that Bank was
required to file with the OTS (the "Bank Regulatory Reports") since January 1,
1994. Since January 1, 1994, Bank has filed in a timely manner all Bank
Regulatory Reports that it was required to file with the OTS. As of their
respective dates or as subsequently amended prior to the date hereof, each of
the Bank Regulatory Reports (i) was true and correct in all material respects,
and (ii) complied as to form in all material respects with applicable rules and
regulations of the OTS.
3.5 FINANCIAL STATEMENTS.
(a) Attached hereto as Schedule 3.5(a) is a copy of Standard's audited
financial statements for the year ended December 31, 1996 (the "Standard 1996
Financial Statements"). The financial statements (including any footnotes
thereto) contained in the Standard SEC Reports, the Standard 1996 Financial
Statements and the Bank Regulatory Reports have been prepared in accordance with
GAAP or, in the case of the Bank Regulatory Statements, the rules and
regulations of the OTS, applied on a consistent basis during the periods
involved, except as indicated in the notes thereto or, in the case of unaudited
statements, as permitted by Form 10-Q, and fairly present the financial position
of Standard or Bank, as the case may be, as of the dates thereof and the results
of operations, changes in stockholders' equity and cash flows for the periods
then ended (subject, in the case of the unaudited statements, to recurring year
end adjustments normal in nature and amount and the absence of footnotes).
(b) In Standard's reasonable judgment, the allowance for loan losses
reflected in the financial statements (including footnotes thereto) contained in
the Standard SEC Reports, the Standard 1996 Financial Statements and the Bank
Regulatory Reports is and will be, in the case of the financial statements
delivered by Standard or Bank to TCF pursuant to Section 5.3 hereof, adequate in
all material respects as of their respective dates under GAAP consistently
applied except for the adoption of SFAS No. 114 for periods prior to January 1,
1995. The REO reflected in the financial statements (including footnotes
thereto) contained in the Standard SEC Reports, the Standard 1996 Financial
Statements and the Bank Regulatory Reports is and will be, in the case of the
financial statements delivered by Standard or Bank to TCF pursuant to Section
5.3 hereof, carried at the lower of cost or fair value, or the lower of cost or
net realizable value, in accordance with GAAP consistently applied.
(c) Standard has furnished TCF with copies of the balance sheets of Bank as
of December 31, 1994, 1995 and 1996, and the related statements of income,
changes in shareholder's equity and cash flows for the years and periods then
ended (collectively, together with any footnotes thereto, the "Bank Financial
Statements"). The Bank Financial Statements have been prepared in accordance
with GAAP applied on a consistent basis during the periods involved and fairly
present the financial position of Bank (subject, in the case of interim
statements, to recurring year end adjustments normal in nature and amount and
the absence of footnotes).
(d) The books and records of Standard and the Standard Subsidiaries have
been, and are being, maintained in material compliance with applicable legal and
accounting requirements, and such books and records accurately reflect in all
material respects all material transactions customarily reflected in such books
and records in respect of the business, assets, liabilities and affairs of
Standard on a consolidated basis.
A-21
3.6 LOANS.
(a) The documentation relating to each loan made and owned by Bank and the
other Standard Subsidiaries (i) with an outstanding principal balance of
$500,000 or more and relating to all security interests, mortgages and other
liens with respect to all collateral for each such loan, taken as a whole, are
adequate for the enforcement of the material terms of each such loan and of the
related security interests, mortgages and other liens and (ii) with respect to
all other loans and relating to the security interests, mortgages, and other
liens with respect to such loans are adequate for the enforcement of the
material terms of such loans and of the related security interests, mortgages
and other liens except where the lack of enforceability would not, individually
or in the aggregate, have a Material Adverse Effect on Standard. The terms of
each such loan and of the related security interests, mortgages and other liens
comply in all material respects with all applicable laws, rules and regulations
(including, without limitation, laws, rules and regulations relating to the
extension of credit).
(b) Except as set forth in Schedule 3.6, as of December 31, 1996, there are
no loans, leases, other extensions of credit or commitments to extend credit of
Bank or any other Standard Subsidiary that have been or, to Standard's
Knowledge, should have been classified as non-accrual, as restructured, as 90
days past due, as still accruing and doubtful of collection or any comparable
classification.
3.7 SUBSIDIARIES. Schedule 3.7 correctly sets forth the name and
jurisdiction of incorporation of each corporation, fifty percent or more of the
voting securities of which is owned directly or indirectly by Standard,
including Bank, (each a "Standard Subsidiary" and collectively the "Standard
Subsidiaries"). All of the issued and outstanding shares of capital stock of
each Standard Subsidiary are owned directly or indirectly by Standard free and
clear of any lien, pledge, security interest, encumbrance or charge of any kind.
Except for the stock of the Standard Subsidiaries directly or indirectly owned
by Standard or as otherwise disclosed on Schedule 3.7, neither Standard nor any
of the Standard Subsidiaries owns any stock, partnership interest, joint venture
interest or any other security issued by any other corporation, organization or
entity, except Federal Home Loan Bank stock and readily marketable securities
owned by Standard or a Standard Subsidiary in the ordinary course of its
business.
3.8 ABSENCE OF UNDISCLOSED LIABILITIES. All of the Liabilities of Standard
and the Standard Subsidiaries are reflected, disclosed or reserved against in
the audited consolidated balance sheet (the "Standard Latest Balance Sheet") of
Standard as at December 31, 1996 (the "Latest Standard Balance Sheet Date")
included in the 1996 Standard Financial Statements or in the notes thereto,
except (a) Liabilities incurred since December 31, 1996 in the ordinary course
of business, (b) as otherwise disclosed on Schedule 3.8, (c) Liabilities
incurred pursuant to this Agreement or in connection with the transactions
contemplated hereunder, or (d) other Liabilities which, in the aggregate, are
not material. As of the date hereof, there are no agreements or commitments
binding Standard or any Standard Subsidiary to extend credit to any person in
the amount of $500,000 or more, except (i) as set forth on Schedule 3.8 or (ii)
one to four family residential mortgages.
3.9 NO MATERIAL ADVERSE CHANGES. Since December 31, 1996 to the date
hereof, there has been no event, occurrence or development in the business of
Standard or the Standard Subsidiaries that, taken together with other events,
occurrences and developments with respect to such business, has had or would
reasonably be expected to have a Material Adverse Effect on Standard or that
materially adversely affects the ability of Standard or any of the Standard
Subsidiaries to consummate the transactions contemplated hereby.
3.10 ABSENCE OF CERTAIN DEVELOPMENTS. Except as disclosed in the Standard
SEC Reports or in any Current Reports of Standard on Form 8-K filed prior to the
date of this Agreement, or on Schedule 3.10 unless otherwise expressly
contemplated or permitted by this Agreement, since December 31, 1996 to the date
hereof, neither Standard nor any of the Standard Subsidiaries has:
(a) issued or sold any of its equity securities, securities convertible into
or exchangeable for its equity securities, warrants, options or other rights to
acquire its equity securities, except (i) in the case of Bank,
A-22
deposit and other bank obligations in the ordinary course of business or (ii)
pursuant to the exercise of stock options and warrants issued under, or
otherwise pursuant to, the agreements, arrangements or commitments identified on
Schedule 3.3;
(b) redeemed, purchased, acquired or offered to acquire, directly or
indirectly, any shares of capital stock of Standard or any of the Standard
Subsidiaries or other securities of Standard or any of the Standard
Subsidiaries, except pursuant to the exercise of stock options and warrants
issued under, or otherwise pursuant to, the agreements, arrangements or
commitments identified on Schedule 3.3;
(c) split, combined or reclassified any of its outstanding shares of capital
stock or declared, set aside or paid any dividends or other distribution payable
in cash, property or otherwise with respect to any shares of its capital stock
or other securities, except (i) dividends paid in cash by the Standard
Subsidiaries to Standard or any other Standard Subsidiary, and (ii) the regular
quarterly cash dividend of $.10 per share, payable to holders of Standard Common
Stock of record in January, 1997 and paid in April, 1997;
(d) borrowed any amount or incurred or became subject to any material
liability, except borrowing or liabilities (x) incurred in the ordinary course
of business or (y) incurred under the contracts and commitments disclosed in
Schedule 3.13, but in no event has Standard or any Standard Subsidiary entered
into any borrowings with terms greater than one year except as set forth in
Schedule 3.10;
(e) discharged or satisfied any material lien or encumbrance on the
properties or assets of Standard or any of the Standard Subsidiaries or paid any
material liability other than in the ordinary course of business, other than
reverse repurchase agreements or Federal Home Loan Bank borrowings by Standard
or any of the Standard Subsidiaries;
(f) sold, assigned, transferred, mortgaged, pledged or subjected to any lien
or other encumbrance any of its assets with an aggregate market value in excess
of $250,000 except (i) in the ordinary course of business, including REO, (ii)
liens and encumbrances for current property taxes not yet due and payable or
being contested in good faith and (iii) liens and encumbrances which do not
materially affect the value of, or materially interfere with, the current use or
ability to convey, the property subject thereto or affected thereby;
(g) canceled any material debts or claims or waived any rights of material
value, except in the ordinary course of business or upon payment in full;
(h) suffered any theft, damage, destruction or loss of or to any property or
properties owned or used by it, whether or not covered by insurance, which
would, individually or in the aggregate, have a Material Adverse Effect on
Standard;
(i) made or granted any bonus or any wage, salary or compensation increase
or severance or termination payment to, or promoted, any director, officer,
employee, group of employees or consultant, or entered into any employment
contract or hired any employee with an annual salary in excess of $100,000 other
than bonuses, compensation increases, promotions or new hires in the ordinary
course and in a manner consistent with past practices as previously disclosed to
TCF;
(j) made or granted any increase in the benefits payable under any employee
benefit plan or arrangement, amended or terminated any existing employee benefit
plan or arrangement or adopted any new employee benefit plan or arrangement;
(k) made any single or group of related capital expenditures or commitment
therefor in excess of $250,000 or entered into any lease or group of related
leases with the same party which involves aggregate lease payments payable of
more than $250,000 for any group of related leases in the aggregate;
(l) acquired (by merger, exchange, consolidation, acquisition of stock or
assets or otherwise) any corporation, partnership, joint venture or other
business organization or division or material assets thereof, or assets or
deposits that are material to Standard on a consolidated basis, except in
exchange for debt previously contracted, including REO;
A-23
(m) taken any other material action or entered into any material transaction
other than in the ordinary course of business; or
(n) agreed to do any of the foregoing.
3.11 PROPERTIES.
(a) Each of Standard and the Standard Subsidiaries owns good and marketable
title to all of the real property and all of the personal property, fixtures,
furniture and equipment reflected on the consolidated balance sheet as of
December 31, 1996 of Standard included in the Standard 1996 Financial Statements
or acquired since the date thereof, free and clear of all liens and
encumbrances, except for (i) mortgages on real property set forth on Schedule
3.11(a), (ii) utility and other easements, encumbrances and restrictions that do
not materially interfere with the present use of the property for the business
being conducted thereon, (iii) liens for current taxes and special assessments
not delinquent or being contested in good faith, (iv) leasehold estates with
respect to multi-tenant buildings owned by Standard or any of the Standard
Subsidiaries, which leases are identified on Schedule 3.11(a), (v) landlords'
and statutory liens, and (vi) property disposed of since the Latest Standard
Balance Sheet Date in the ordinary course of business.
(b) Schedule 3.11(b) contains complete and correct copies of (i) all leases
relating to real property leased by Standard and the Standard Subsidiaries, and
(ii) each lease or license for personal property to which Standard or any
Standard Subsidiary is a party as lessee or licensee and which (A) has a
remaining term of one year or more and which involves annual payments of more
than $250,000, has a term of less than one year and which involves remaining
payments in excess of $250,000 or any group of leases or licenses with the same
party which have remaining terms of one year or more and which involve annual
payments of more than $250,000 in the aggregate or which have remaining terms of
less than one year and which involve remaining payments in excess of $250,000 in
the aggregate, (B) is a "material contract" within the meaning of Item
601(b)(10) of Regulation S-K promulgated by the SEC, or (C) was not entered into
in the ordinary course of business. The leases and licenses contained in
Schedule 3.11(b) are in full force and effect. Standard or a Standard Subsidiary
(if a lessee under such lease or licensee under such license) has a valid and
existing interest under each such lease or license for the term set forth
therein. With respect to such leases and licenses, neither Standard nor any of
the Standard Subsidiaries is in default, nor, to the Knowledge of Standard, are
any of the other parties to any of such leases and licenses in default, except
for defaults which, individually or in the aggregate, would not have a Material
Adverse Effect on Standard.
(c) Except as set forth in Schedule 3.11(c), neither Standard nor any of the
Standard Subsidiaries nor any of the real property owned by Standard or any of
the Standard Subsidiaries is in violation of any applicable zoning ordinance or
other law, regulation or requirement relating to the operation of any properties
used in the operation of its business, including applicable environmental
protection laws and regulations, except for violations which would, individually
or in the aggregate, not have a Material Adverse Effect on Standard; and neither
Standard nor any of the Standard Subsidiaries has received any written notice of
any such violation which has not been remedied or cured, or of the existence of
any condemnation proceeding with respect to any material real properties owned
or leased by Standard, Bank or any of the Standard Subsidiaries. Except as set
forth in Schedule 3.11(c), to the Knowledge of Standard, no hazardous
substances, hazardous wastes, pollutants or contaminants have been deposited or
disposed of in, on or under any real properties currently owned, managed or
controlled by Standard or any of the Standard Subsidiaries, except in compliance
with applicable law or where such deposit or disposal is not reasonably likely
to result in a Material Adverse Effect on Standard. Except as set forth in
Schedule 3.11(c), to the Knowledge of Standard: (i) there are no aboveground or
underground tanks (excluding hot water storage or propane tanks) located under
or in any properties currently owned by Standard or any of the Standard
Subsidiaries, and (ii) no prior owners, occupants or operators of any real
property currently
A-24
owned by Standard or any Standard Subsidiary used such properties as a garbage
dump or gasoline service station.
3.12 TAX MATTERS. Standard, each of the Standard Subsidiaries and all
members of any consolidated, affiliated, combined or unitary group of which
Standard or any of the Standard Subsidiaries is a member have filed or will file
all Tax and Tax information returns or reports required to be filed (taking into
account permissible extensions) by them on or prior to the Effective Date,
except for such returns or reports where the failure to file would not have a
Material Adverse Effect on Standard, and have paid (or have accrued or reserved
or will accrue or reserve, prior to the Effective Date, amounts for the payment
of) all material Taxes shown to be due on such returns and reports relating to
the time periods covered thereby. The accrued taxes payable accounts for Taxes
and provision for deferred income taxes, specifically identified as such, on the
Standard Latest Balance Sheet are sufficient in all material respects for the
payment of all unpaid Taxes of Standard and the Standard Subsidiaries accrued
for all periods ended on or prior to the date of the Standard Latest Balance
Sheet. Except as disclosed on Schedule 3.12, neither Standard nor any of the
Standard Subsidiaries has waived any statute of limitations with respect to
Taxes or agreed to any extension of time with respect to an assessment or
deficiency for Taxes. All material Taxes which will be due and payable, whether
now or hereafter, for any period ending on, prior to or including the Effective
Date shall have been paid by or on behalf of Standard and the Standard
Subsidiaries or shall be reflected on the books of Standard and the Standard
Subsidiaries as an accrued Tax liability determined in a manner which is
consistent with past practices. No Tax returns of Standard or any of the
Standard Subsidiaries have, during the past five (5) years, been audited by any
governmental authority other than as disclosed on Schedule 3.12; and, except as
set forth on Schedule 3.12, there are no unresolved questions, claims or
disputes asserted in writing by any relevant taxing authority concerning the
liability for material Taxes of Standard or any of the Standard Subsidiaries.
None of Standard or any Standard Subsidiary (i) has been a member of an
affiliated group filing a consolidated federal income tax return (other than a
group, the common parent of which was Standard), or (ii) has liability for Taxes
of any person under Section 1.1502-6 of the Treasury Regulations. For purposes
of this Agreement, the term "Tax" shall mean any federal, state, local or
foreign income, gross receipts, license, payroll, employment, excise, severance,
stamp, occupation, premium, property or windfall profits tax, environmental tax,
customs duty, capital stock, franchise, employees' income withholding, foreign
or domestic withholding, social security, unemployment, disability, workers'
compensation, employment-related insurance, real property, personal property,
sales, use, transfer, value added, alternative or add-on minimum or other tax,
fee or assessment imposed by a taxing jurisdiction, including any interest,
penalties or additions to, or additional amounts in respect of the foregoing,
for each party hereto and its commonly controlled entities and all members of
any consolidated, affiliated, combined or unitary group of which any of them is
a member.
3.13 CONTRACTS AND COMMITMENTS. Except as set forth on Schedule 3.13 or in
Standard SEC Reports, neither Standard nor any of the Standard Subsidiaries (i)
is a party to any collective bargaining agreement or contract with any labor
union, (ii) is a party to any written or oral contract for the employment of any
officer, individual employee or other person on a full-time or consulting basis,
or relating to severance pay for any such person, (iii) is a party to any
written or oral agreement or understanding to repurchase assets previously sold
(or to indemnify or otherwise compensate the purchaser in respect of such
assets), except for securities sold under a repurchase agreement, (iv) is a
party as of the date hereof to any (A) contract with a remaining term in excess
of one year which is not terminable, without penalty, on 60 or fewer days notice
at any time before or after the expiration of such one-year period for the
purchase or sale of assets, products or services, under which the undelivered
balance of such assets, products and services has a purchase price in excess of
$250,000 for any individual contract or $250,000 in the aggregate for any group
of contracts with the same party, (B) other contract which is a "material
contract" within the meaning of Item 601(b)(10) of Regulation S-K, to be
performed after the date of this Agreement, or (C) other material agreement or
contract which was not entered into in the ordinary course of business and which
is not disclosed on Schedules 3.11(a) or 3.11(b), or (v) has any commitment for
a capital expenditures in excess of $250,000.
A-25
3.14 LITIGATION. Except as set forth on Schedule 3.14 as of the date
hereof, there are no actions, suits, claims, proceedings, orders or
investigations pending or, to the Knowledge of Standard, threatened against
Standard or any of the Standard Subsidiaries, at law or in equity, or before or
by any federal, state or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign in which the adverse
party or parties seeks recovery from Standard or any Standard Subsidiary, or
their respective properties or assets, of an unspecified amount, an amount or
value in excess of $100,000 or injunctive or other equitable relief.
3.15 NO BROKERS OR FINDERS. Except as disclosed on Schedule 3.15, there
are no claims for brokerage commissions, finders' fees, investment advisory fees
or similar compensation in connection with the transactions contemplated by this
Agreement based on any arrangement, understanding, commitment or agreement made
by or on behalf of Standard or any of the Standard Subsidiaries.
3.16 EMPLOYEE BENEFIT PLANS.
(a) DEFINITIONS. For the purposes of this Agreement, unless the context
clearly requires otherwise, the term "Plan" or "Plans" includes all material
employee benefit plans as defined in Section 3(3) of ERISA, and all other
benefit arrangements (including, without limitation, any employment agreement or
any program, agreement, policy or commitment providing for severance payments,
insurance coverage of employees, workers' compensation, disability benefits,
supplemental unemployment benefits, vacation benefits, retirement benefits,
life, health, disability or accident benefits) applicable to the employees of
Standard or any of the Standard Subsidiaries, to which Standard or any of the
Standard Subsidiaries contribute, or which Standard or any of the Standard
Subsidiaries have committed to implement for their employees prior to the date
of this Agreement. Unless the context clearly requires otherwise, "Plan" or
"Plans" shall also include any similar program or arrangement maintained by any
organization affiliated by ownership with Standard or any of the Standard
Subsidiaries for which Standard or any of the Standard Subsidiaries are or would
be completely or partially liable for the funding or the administration either
as a matter of law or by agreement but excluding customers of the trust
departments of affiliates of Bank where there is no ownership affiliation
between such customers and Bank. For the purposes of this Section 3.16, a Plan
is material if the liability, payments or commitments under such Plan by or for
Standard or any Standard Subsidiaries exceeds $100,000 annually. Schedule 3.16
lists the Plans of Standard and each Standard Subsidiary.
(b) Except as disclosed on Schedule 3.16:
(i) FULL DISCLOSURE OF ALL PLANS. With respect to all employees and
former employees of Standard and the Standard Subsidiaries (and all
dependents and beneficiaries of such employees and former employees):
(A) Neither Standard nor any of the Standard Subsidiaries maintains
or contributes to any nonqualified deferred compensation or retirement
plans, contracts or arrangements;
(B) Neither Standard nor any of the Standard Subsidiaries maintains
or contributes to any qualified defined contribution plans (as defined in
Section 3(34) of ERISA or Section 414(i) of the Code);
(C) Neither Standard nor any of the Standard Subsidiaries maintains
or contributes to any qualified defined benefit plans (as defined in
Section 3(35) of ERISA or Section 414(j) of the Code) ("Defined Benefit
Plans");
(D) Neither Standard nor any of the Standard Subsidiaries maintains
or contributes to any employee welfare benefit plans (as defined in
Section 3(1) of ERISA);
(E) Neither Standard nor any of the Standard Subsidiaries maintains
or contributes to any retiree medical program; and
A-26
(F) Neither Standard nor any of the Standard Subsidiaries maintains
or is obligated under any severance policy or other severance arrangement
for employees.
(ii) FUNDING. With respect to the Plans, (A) all required contributions
which are due have either been made or properly accrued and (B) neither
Standard nor any of the Standard Subsidiaries is liable for any accumulated
funding deficiency as that term is defined in Section 412 of the Code.
(iii) PLAN DOCUMENTS. With respect to all Plans sponsored, maintained or
administered by Standard or any Standard Subsidiary and all Plans to which
Standard or any Standard Subsidiary is or may be obligated to contribute,
Standard has provided true and complete copies of (A) the most recent
determination letter, if any, received by Standard or any of the Standard
Subsidiaries from the Internal Revenue Service regarding each qualified
Plan, (B) the Form 5500 and all schedules and accompanying financial
statements, if any, for each Plan for which such form is required to be
filed for the three most recent fiscal Plan years, (C) the most recently
prepared actuarial valuation report, if any, for each Plan, and (D) copies
of the current Plan documents, trust agreements, insurance contracts and all
related contracts and documents (including summary plan descriptions and any
other material employee communications) with respect to each Plan.
(iv) DEFINED BENEFIT PLANS. As of the Effective Date, no unfunded
liability under Title IV of ERISA has been incurred by Standard or any of
the Standard Subsidiaries, or any affiliate of Standard or any of the
Standard Subsidiaries, that has not been satisfied in full and, to the
Knowledge of Standard, no condition exists that presents a material risk to
Standard or any of the Standard Subsidiaries or TCF of incurring any such
liability. There are no unfunded vested liabilities (determined using the
assumptions used by the Plan for funding and without regard to future salary
increases) with respect to Defined Benefit Plans sponsored by Standard or
any Standard Subsidiary. There have been no reportable events under Section
4043 of ERISA (with respect to which the 30-day notice requirement has not
been waived by regulation) with respect to any Defined Benefit Plan
maintained by Standard or any of the Standard Subsidiaries. No Defined
Benefit Plan has been terminated that will result in a material liability by
Standard or any of the Standard Subsidiaries to the Pension Benefit Guaranty
Corporation.
(v) MULTIEMPLOYER PLANS. As of the Effective Date, neither Standard nor
any of the Standard Subsidiaries has any actual or potential liabilities
under Sections 4201 or 4205 of ERISA for any complete or partial withdrawal
from any multiemployer plan and, to the Knowledge of Standard, no condition
exists that presents a material risk to Standard or any of the Standard
Subsidiaries of incurring any such liability.
(vi) FIDUCIARY BREACH; CLAIMS. Neither Standard nor any of the Standard
Subsidiaries nor any of their respective directors, officers, employees or
other fiduciaries has committed any breach of fiduciary duty imposed by
ERISA or any other applicable law with respect to the Plans which would
subject Standard or any of the Standard Subsidiaries, directly or
indirectly, to any material liability under ERISA or any applicable law.
There are no actions, suits or claims pending against Standard or any
Standard Subsidiary relating to benefits other than routine claims for
benefits.
(vii) PROHIBITED TRANSACTIONS. Neither Standard nor any of the Standard
Subsidiaries nor any of their respective officers, directors, employees, or
any other fiduciaries of any Plan has incurred any material liability for
any civil penalty imposed by Section 4975 of the Code or Section 502(i) of
ERISA.
(viii) MATERIAL COMPLIANCE WITH LAW. All Plans have been administered in
accordance with their terms in all material respects. To the extent required
either as a matter of law or to obtain the intended tax treatment and tax
benefits, all Plans comply in all material respects with the requirements of
ERISA and the Code. All material Tax information returns or reports and all
other material required filings, disclosures and contributions have been
made with respect to all Plans. To the
A-27
Knowledge of Standard, no condition exists that limits the right of Standard
or any of the Standard Subsidiaries to amend or terminate any such Plan
(except as provided in such Plans or limited under ERISA or the Code).
(ix) VEBA FUNDING. No Plan is funded in whole or in part through a
voluntary employees' beneficiary association exempt from tax under Section
501(c)(9) of the Code. To the extent applicable, the limitations under
Sections 419 and 419A of the Code have been computed, all unrelated business
income tax returns have been filed and appropriate adjustments have been
made on all other Tax returns.
(x) RETIREMENT AND COBRA BENEFITS. Neither Standard nor any of the
Standard Subsidiaries has incurred a material liability under current law
for benefits after separation from employment other than (i) benefits under
Plans listed on Schedule 3.16 or described in Section 3.16(b)(i) hereof, and
(ii) health care continuation benefits described in Section 4980B of the
Code or Part G of Subtitle B of Title I of ERISA or any comparable
provisions under the laws of any state.
(xi) COLLECTIVE BARGAINING. No Plan is maintained in whole or in part
pursuant to collective bargaining.
(xii) EMPLOYEE STATUS. Except as otherwise disclosed in other Sections
of this Agreement or the Schedules thereto, all employees of Standard or any
of the Standard Subsidiaries are "at will" employees.
(c) EMPLOYEES. Except as set forth on Schedule 3.16, Standard and the
Standard Subsidiaries have complied with all laws relating to the employment of
labor, including provisions thereof relating to wages, hours, equal opportunity,
collective bargaining, non-discrimination and the payment of social security and
other taxes, except where failure to comply would not, individually or in the
aggregate, have a Material Adverse Effect on Standard.
3.17 INSURANCE. Schedule 3.17 lists the material insurance policies
maintained by Standard or any of the Standard Subsidiaries with respect to its
business, operations, properties and assets. All such insurance policies are in
full force and effect, and neither Standard nor any of the Standard Subsidiaries
is in default with respect to its obligations under any of such insurance
policies, except where such default would not result in the loss of any material
coverage.
3.18 AFFILIATE TRANSACTIONS. Except as set forth on Schedule 3.18, or in
the Standard SEC Reports, neither Standard nor any of the Standard Subsidiaries,
nor any executive officer or director of Standard or any of the Standard
Subsidiaries, nor any member of the immediate family of any such officer or
director (which for the purposes hereof shall mean a spouse, minor child or
adult child living at the home of any such officer or director), nor any entity
which any of such persons "controls" (within the meaning of Regulation O of the
Federal Reserve Board ("FRB")), has any loan agreement, note or borrowing
arrangement or any other agreement with Standard or any of the Standard
Subsidiaries (other than normal employment arrangements), any interest in any
material property, real, personal or mixed, tangible or intangible, used in or
pertaining to the business of Standard or any of the Standard Subsidiaries or
any other interest or transaction that would be required to be disclosed under
Regulation S-K of the SEC.
3.19 COMPLIANCE WITH LAWS; PERMITS. Each of Standard and the Standard
Subsidiaries has complied with all applicable laws and regulations of foreign,
federal, state and local governments and all agencies thereof which affect the
business or any of the Standard Subsidiaries or to which Standard or any of the
Standard Subsidiaries may be subject (including, without limitation, the
Occupational Safety and Health Act of 1970, the HOLA, the FDIA, the Real Estate
Settlement Procedures Act, the Home Mortgage Disclosure Act of 1975, the Fair
Housing Act and the Equal Credit Opportunity Act, each as amended, and any other
state or federal acts (including rules and regulations thereunder) regulating or
otherwise affecting employee health and safety or the environment), except where
failure to so comply would not, individually or in the aggregate, have a
Material Adverse Effect on Standard or materially adversely affect
A-28
Standard's ability to consummate the transactions contemplated hereby. Each of
Standard and the Standard Subsidiaries holds all of the permits, licenses,
certificates and other authorizations of foreign, federal, state and local
governmental agencies required for the conduct of its business as currently
conducted, except where failure to obtain such permits, licenses, certificates
or authorizations would not, individually or in the aggregate, have an Material
Adverse Effect on Standard or materially adversely affect the ability of
Standard to consummate the transactions contemplated hereby. Except as disclosed
in Schedule 3.19, neither Standard nor any of the Standard Subsidiaries is
subject to any cease and desist order, written agreement or memorandum of
understanding with, or is a party to any commitment letter or similar
undertaking to, or is subject to any order or directive by, or is a recipient of
any supervisory agreement letter from, or has adopted any board resolutions at
the request of any Bank Regulator, which would have a Material Adverse Effect on
Standard, nor has Standard or any of the Standard Subsidiaries been advised by
any Bank Regulator that it is contemplating issuing or requesting (or is
considering the appropriateness of issuing or requesting) any such order,
directive, written agreement, memorandum of understanding, supervisory letter,
commitment letter, board resolutions or similar undertaking.
3.20 ADMINISTRATION OF FIDUCIARY ACCOUNTS. Bank has properly administered
all accounts for which it acts as a fiduciary, including but not limited to
accounts for which it serves as a trustee, agent, custodian, personal
representative, guardian, conservator or investment advisor, in accordance with
the terms of the government documents and applicable state and federal law and
regulation and common law except where failure to so administer such accounts,
individually or in the aggregate, would not have a Material Adverse Effect on
Standard. Neither Standard nor any director, officer or employee of Standard or
any Standard Subsidiary has committed any breach of trust with respect to any
such fiduciary account which, individually or in the aggregate, would have a
Material Adverse Effect on Standard 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 in all material respects.
3.21 PROSPECTUS/PROXY STATEMENT. At the time the Prospectus/Proxy
Statement is mailed to the shareholders of Standard in order to obtain approvals
referred to in Section 5.19 hereof and at the time of such meeting of Standard's
shareholders, such Prospectus/Proxy Statement (including any supplements
thereto), with respect to all information furnished by Standard (as provided in
Section 5.9(c) hereof) for inclusion in the Prospectus/Proxy Statement will (a)
comply in all material respects with applicable provisions of the 1933 Act and
the 1934 Act, and (b) not contain any untrue statement of material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements contained therein, in light of the circumstances under which they are
made, not misleading.
3.22 INTEREST RATE RISK MANAGEMENT INSTRUMENTS. There are no interest rate
swaps, caps, floors, option agreements or any similar interest rate risk
management agreements to which Standard or any of the Standard Subsidiaries is a
party or by which any of their properties or assets may be bound.
3.23 STATE TAKEOVER LAWS; SHAREHOLDER RIGHTS PLAN. The Board of Directors
of Standard approved the execution of this Agreement and authorized and approved
the Conversion/Reincorporation and Merger prior to the execution by Standard of
this Agreement in accordance with Section 203 of the Delaware General
Corporation Law so that such section will not apply to this Agreement or the
transactions contemplated hereby. The Board of Directors of Standard has taken
all such action required to be taken by it to provide that this Agreement and
the transactions contemplated hereby shall be exempt from (i) the requirements
of any "business combination", "moratorium", "control share," "fair price" or
other antitakeover laws or regulations of any state or the United States and
(ii) any shareholder rights plan or similar plan of Standard or any Standard
Subsidiary.
3.24 FAIRNESS OPINION. Standard has received a written opinion in a form
reasonably acceptable to Standard from Wasserstein Perella & Co., Inc. to the
effect that the Merger is fair from a financial point of view to the holders of
Standard Common Stock.
A-29
ARTICLE 4
CONDUCT OF BUSINESS PENDING THE MERGER
4.1 CONDUCT OF BUSINESS BY STANDARD AND THE STANDARD SUBSIDIARIES. From
the date of this Agreement to the Effective Date, unless TCF shall otherwise
agree in writing or as otherwise expressly contemplated or permitted by other
provisions of this Agreement, including but not limited to, this Section 4.1:
(a) the business of Standard and the Standard Subsidiaries shall be
conducted only in, and neither Standard nor any Standard Subsidiary shall take
any action except in, the ordinary course, on an arms-length basis and in
accordance, in all material respects, with all applicable laws, rules and
regulations and with prudent banking practices;
(b) neither Standard nor any Standard Subsidiary shall directly or
indirectly:
(i) amend or propose to amend its Charter or Bylaws;
(ii) issue or sell any of its equity securities, securities convertible
into or exchangeable for its equity securities, warrants, options or other
rights to acquire its equity securities, or any bonds or other securities,
except (A) in the case of Bank, deposits and other bank obligations in the
ordinary course of business and (B) pursuant to the exercise of the options
set forth on Schedule 3.3 on the date of this Agreement;
(iii) redeem, purchase, acquire or offer to acquire, directly or
indirectly, any shares of capital stock of Standard or any Standard
Subsidiary or other securities of Standard, or any Standard Subsidiary,
except pursuant to the agreements, arrangements or commitments identified on
Schedule 3.3;
(iv) split, combine or reclassify any outstanding shares of capital
stock of Standard or any Standard Subsidiary, or declare, set aside or pay
any dividend or other distribution payable in cash, stock, property or
otherwise with respect to shares of capital stock of Standard or any
Standard Subsidiary except (A) regular quarterly cash dividends of not more
than $.10 per share payable to holders of Standard Common Stock or (B)
dividends paid in cash by any Standard Subsidiary to Standard or another
Standard Subsidiary;
(v) borrow any amount or incur or become subject to any material
liability, except borrowings and liabilities incurred in the ordinary course
of business, but in no event will Standard or any Standard Subsidiary enter
into any borrowings with a term of greater than one (1) year or any other
borrowings (other than intercompany or Federal Home Loan Bank borrowings) in
excess of $250,000 without prior consultation with TCF, other than as set
forth on Schedule 4.1(b);
(vi) discharge or satisfy any material lien or encumbrance on the
properties or assets of Standard or any Standard Subsidiary or pay any
material liability, except (A) in the ordinary course of business and (B) in
the case of Bank and Standard Subsidiaries, reverse repurchase agreements
for Federal Home Loan Bank borrowings;
(vii) sell, assign, transfer, mortgage, pledge or subject to any lien or
other encumbrance any of its assets with an aggregate market value in excess
of $250,000, except (A) in the ordinary course of business, including REO;
(B) liens and encumbrances for current property taxes not yet due and
payable or being contested in good faith and (C) liens and encumbrances
which do not materially affect the value of, or materially interfere with
the current use or ability to convey, the property subject thereto or
affected thereby;
(viii) cancel any material debt or claims or waive any rights of material
value, except in the ordinary course of business or upon payment in full;
A-30
(ix) acquire (by merger, exchange, consolidation, acquisition of stock
or assets or otherwise) any corporation, partnership, joint venture or other
business organization or division or material assets thereof, or assets or
deposits that are material to Standard on a consolidated basis, except in
exchange for debt previously contracted, including REO;
(x) other than as set forth on Schedule 3.10 on the date of this
Agreement, make any single or group of related capital expenditures or
commitments therefor in excess of $250,000 (other than pursuant to binding
commitments existing on the date hereof and other than expenditures
necessary to maintain assets in good repair) or enter into any lease or
group of leases as lessee with the same party which involves aggregate lease
payments payable of more than $250,000 for any individual lease or involves
more than $250,000 for any group of leases with the same party in the
aggregate;
(xi) enter into or propose to enter into, or modify or propose to
modify, any agreement, arrangement, or understanding with respect to any of
the matters set forth in this Section 4.1(b) except in the ordinary course
of business;
(xii) without prior consultation with TCF, purchase or otherwise acquire
any investments, direct or indirect, in any derivative securities other than
occasional overnight investments of excess cash; or
(xiii) without prior consultation with TCF, enter into any interest rate
swap, floors and option agreements or other similar interest rate management
agreements;
(c) neither Standard nor any Standard Subsidiary shall directly or
indirectly enter into, modify or terminate any employment, severance or similar
agreements or arrangements with, or grant any bonuses, wage, salary or
compensation increases, or severance or termination pay to, or promote, any
director, officer, employee, group of employees or consultant or hire any
employee with an annual salary over $100,000 other than (i) in the ordinary
course and in a manner consistent with past practices or (ii) as contemplated by
this Agreement, and shall promptly notify TCF of any termination or resignation
of any officer or key employee;
(d) neither Standard nor any Standard Subsidiary shall adopt or amend any
profit sharing, stock option, pension, retirement, deferred compensation, or
other employee benefit plan, trust, fund, contract or arrangement for the
benefit or welfare of any employees, except as required by law or to consummate
any of the transactions contemplated hereby in accordance with applicable law,
provided that any such arrangement or amendment is approved by TCF which
approval shall not be unreasonably withheld by TCF;
(e) each of Standard and the Standard Subsidiaries shall use reasonable
efforts to cause its current insurance policies not to be canceled or terminated
or any of the coverage thereunder to lapse, unless simultaneously with such
termination, cancellation or lapse, replacement policies providing coverage
substantially equal to the coverage under the canceled, terminated or lapsed
policies are in full force and effect;
(f) neither Standard nor any Standard Subsidiary shall enter into any
settlement or similar agreement with respect to, or take any other significant
action with respect to the conduct of, any action, suit, proceeding, order or
investigation which is required to be set forth on Schedule 3.14 or to which
Standard or any Standard Subsidiary becomes a party after the date of this
Agreement which is required to be disclosed in an updated Schedule 3.14, without
prior consultation with TCF's General Counsel;
(g) each of Standard and the Standard Subsidiaries shall use commercially
reasonable efforts to preserve intact in all material respects the business
organization and the goodwill of Standard and the Standard Subsidiaries and to
keep available the services of its officers and employees as a group and
preserve intact material agreements, and Standard shall establish a committee of
senior management personnel which will confer on a regular and frequent basis
with a committee of senior management personnel of TCF, as reasonably requested
by TCF, to report on operational matters and the general status
A-31
of ongoing operations and to plan for the operations of the Resulting
Institution upon consummation of the Merger;
(h) neither Standard nor any Standard Subsidiary shall take any significant
action with respect to investment securities held or controlled by them
inconsistent with past practices or then current prudent practices, materially
alter its investment portfolio duration policy or, without prior consultation
with TCF, voluntarily take any action that will have or can reasonably be
expected to have a material adverse effect on Bank's asset/liability position;
(i) without prior consultation with TCF, Standard and the Standard
Subsidiaries shall not make any agreements or commitments binding it to extend
credit to any person in an amount in excess of $500,000;
(j) with respect to real properties leased by Standard and any material
personal property leased or licensed by Standard or any Standard Subsidiary for
its use, neither Standard nor any Standard Subsidiary shall fail to renew,
exercise an option to extend, cancel or surrender any such lease or license nor
allow any such lease or license to lapse without prior consultation with TCF;
and
(k) neither Standard nor any Standard Subsidiary shall agree to any action
prohibited by any of the foregoing;
provided, however, that in the event Standard would be prohibited from taking
any action by reason of this Section 4.1 without the prior written consent of
TCF, such action may nevertheless be taken if Standard is expressly required to
do so by law or by the OTS and Standard, as the case may be, promptly informs
TCF of such action. For purposes of this Agreement, the words "prior
consultation" with respect to any action means advance notice of such proposed
action and a reasonable opportunity to discuss such action in good faith prior
to taking such action.
4.2 CONDUCT OF BUSINESS BY TCF. From the date of this Agreement to the
Effective Date, unless Standard shall otherwise agree in writing or as otherwise
expressly contemplated or permitted by other provisions of this Agreement,
including but not limited to, this Section 4.2:
(a) TCF shall not issue or sell any of its equity securities, securities
convertible into or exchangeable for its equity securities, warrants, options or
other rights to acquire its equity securities, or any bonds or other securities,
except (i) pursuant to the exercise of the options or warrants or the conversion
of convertible securities set forth on Schedule 2.3 and pursuant to the exercise
of options granted under clause (iii) below, (ii) issuances of TCF Common Stock
to satisfy the employer matching obligations under the TCF's 401(k) Plan for the
participants in such plan who elect to invest in TCF Common Stock, (iii) grants
of options and restricted stock under the TCF Stock Plans in the ordinary course
of business, (iv) pursuant to TCF's dividend reinvestment plan, or (v) as set
forth in Schedule 4.2.
(b) TCF shall not redeem, purchase, acquire or offer to acquire, directly or
indirectly, any shares of capital stock of TCF or other securities of TCF,
except pursuant to the agreements, arrangements or commitments identified on
Schedule 2.3 and any redemption of redeemable debt, including but not limited to
TCF's outstanding convertible debentures;
(c) TCF shall not split, combine or reclassify any outstanding shares of
capital stock of TCF or declare, set aside or pay any dividend or other
distribution payable in cash, stock, property or otherwise with respect to
shares of capital stock of TCF except the regular quarterly cash dividends of
not more than $.32 per share;
(d) TCF shall not borrow any amount or incur or become subject to any
material liability, except borrowings and liabilities incurred in the ordinary
course of business or borrowings to redeem outstanding debentures, borrowings to
effect the transactions contemplated by this Agreement, or as set forth in
Schedule 4.2;
A-32
(e) neither TCF nor any TCF Subsidiary shall amend its Charter or Bylaws in
a manner which would adversely affect in any manner the terms of the TCF Common
Stock, or materially adversely affect the ability of TCF to consummate the
transactions contemplated hereby in a timely manner;
(f) neither TCF or any TCF Subsidiary shall sell, assign, transfer,
mortgage, pledge or subject to any lien or other encumbrance any of its assets
with an aggregate market value in excess of $250,000, except (A) in the ordinary
course of business, including REO; (B) liens and encumbrances for current
property taxes not yet due and payable or being contested in good faith; (C)
liens and encumbrances which do not materially affect the value of, or
materially interfere with the current use or ability to convey, the property
subject thereto or affected thereby; and (D) sales of bank branches;
(g) neither TCF nor any TCF Subsidiary shall acquire (by merger, exchange,
consolidation, acquisition of stock or assets or otherwise) any corporation,
partnership, joint venture or other business organization or division or
material assets thereof, or assets or deposits that are material to TCF on a
consolidated basis, except (A) in exchange for debt previously contracted,
including REO, (B) the pending merger transaction with Winthrop Resources
Corporation, or (C) the transactions contemplated by the conversions of the TCF
Subsidiaries which are banks into national banks, the chartering of new national
banks in Colorado and Ohio, and the registration of TCF as a bank holding
company under BHCA; or
(h) TCF shall not agree to do any of the foregoing.
ARTICLE
ADDITIONAL COVENANTS AND AGREEMENTS
5.1 FILINGS AND APPROVALS. Each party will use all reasonable efforts and
will cooperate with the other party in the preparation and filing, as soon as
practicable, of all applications or other documents required to comply with
applicable laws and regulatory requirements in connection with the Conversion/
Reincorporation, the Merger and the Subsequent Merger contemplated by this
Agreement, and provide copies of such applications, filings and related
correspondence to the other party, including causing any of its subsidiaries to
execute and deliver such agreements and documents as may be necessary to effect
the transactions contemplated hereby. Prior to filing each application,
registration statement or other document with the applicable regulatory
authority, each party will provide the other party with an opportunity to review
and comment on each such application, registration statement or other document.
Each party will use all reasonable efforts and will cooperate with the other
party in making such filings and taking any other actions necessary to obtain
such regulatory or other approvals and consents at the earliest practicable
time, including participating in any required hearings or proceedings. Subject
to the terms and conditions herein provided, each party will use all reasonable
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary, proper or advisable to consummate and make effective
as promptly as practicable the transactions contemplated by this Agreement.
5.2 CERTAIN LOANS AND RELATED MATTERS. Standard will furnish to TCF a
complete and accurate list within 10 days of the date hereof as of the most
recent date the reports referred to below have been prepared and, within 15
business days after the end of its reporting cycle (which shall be no less
frequently than quarterly), of (a) all of Bank's periodic internal credit
quality reports prepared during such reporting period (which reports will be
prepared in a manner consistent with past practice), (b) all loans of Bank
classified as non-accrual, as restructured, as 90 days past due, and still
accruing and doubtful of collection or any comparable classification, (c) all
non-residential REO, including in-substance foreclosures and real estate in
judgment, (d) any current repurchase obligations of Bank with respect to any
loans, loan participation or state or municipal obligations or revenue bonds and
(e) any standby letters of credit issued by Bank.
5.3 MONTHLY FINANCIAL STATEMENTS. Standard shall furnish TCF with
Standard's (and if prepared in the ordinary course of business, each Standard
Subsidiary's) balance sheet as of the end of each calendar
A-33
month after January, 1997 and the related statements of income, within fifteen
(15) business days after the end of each such calendar month. Such financial
statements shall be prepared on a basis consistent with current practice and
shall fairly present the financial positions of Standard or the Standard
Subsidiary as of the dates thereof and the results of operations of Standard or
the Standard Subsidiary for the periods then ended.
5.4 EXPENSES. Except as otherwise provided in this Agreement, all costs
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such costs and
expenses.
5.5 NO NEGOTIATIONS, ETC. Standard will not and will use its best efforts
to cause the Standard Subsidiaries and officers, directors, employees, agents
and affiliates of Standard and each Standard Subsidiary not to, directly or
indirectly, solicit, authorize, initiate or encourage submission of, any
proposal, offer, tender offer or exchange offer from any person or entity
(including any of its or their officers or employees) relating to any
liquidation, dissolution, recapitalization, merger, consolidation or acquisition
or purchase of all or a material portion of the assets or deposits of, or any
equity interest in, Standard or any of the Standard Subsidiaries or other
similar transaction or business combination involving Standard or any of the
Standard Subsidiaries (the "Acquisition Proposal") or, unless the Board of
Directors of Standard shall have determined, after consultation with Standard's
counsel, that there is a reasonable likelihood that the Board of Directors of
Standard has a fiduciary duty to do so, (a) participate in any negotiations in
connection with or in furtherance of any of the foregoing or (b) permit any
person other than TCF and its representatives to have any access to the
facilities of, or furnish to any person other than TCF and its representa-tives
any non-public information with respect to, Standard or any of the Standard
Subsidiaries in connection with or in furtherance of any of the foregoing.
Standard shall promptly notify TCF if any such proposal or offer, or any inquiry
from or contact with any person with respect thereto, is made, and shall
promptly provide TCF with such information regarding such proposal, offer,
inquiry or contact as TCF may request.
5.6 NOTIFICATION OF CERTAIN MATTERS.
(a) Each party shall give prompt notice to the other party of (i) the
occurrence or failure to occur of any event or the discovery of any information,
which occurrence, failure or discovery would be likely to cause any
representation or warranty on its part contained in this Agreement to be untrue,
inaccurate or incomplete after the date hereof or, in case of any representation
or warranty given as of a specific date, would be likely to cause any such
representation on its part contained in this Agreement to be untrue, inaccurate
or incomplete in any material respect as of such specific date and (ii) any
material failure of such party to comply with or satisfy any covenant or
agreement to be complied with or satisfied by it hereunder.
(b) From time to time prior to the Effective Time, each party shall promptly
supplement or amend any of its representations and warranties which apply to the
period after the date hereof by delivering an updated Schedule to the other
party pursuant hereto with respect to any matter hereafter arising which would
render any such representation or warranty after the date of this Agreement
materially inaccurate or incomplete as a result of such matter arising. Such
supplement or amendment to a party's representations and warranties contained in
an updated Schedule shall be deemed to have modified the representations and
warranties of the disclosing party, and no such supplement or amendment, or the
information contained in an updated Schedule, shall constitute a breach of a
representation or warranty of the disclosing party; provided that no such
supplement or amendment may cure any breach of a covenant or agreement of any
party under Articles 4 or 5. Within 20 days after receipt of such supplement or
amendment (or if cure is promptly commenced by the disclosing party, but is not
effected within the Cure Period (as defined below)), the receiving party may
exercise its right to terminate this Agreement pursuant to Section 7.1(i) hereof
if the information in such supplement or amendment together with the information
in any or all of the supplements or amendments previously provided by the
disclosing party indicate that
A-34
the disclosing party has suffered or is reasonably likely to suffer a Material
Adverse Effect which either has not or cannot be cured within 30 days after
disclosure to the receiving party (the "Cure Period").
5.7 ACCESS TO INFORMATION; CONFIDENTIALITY.
(a) Standard shall and shall cause each of the Standard Subsidiaries to
permit TCF full access on reasonable notice and at reasonable hours to its
properties and shall disclose and make available (together with the right to
copy) to TCF and to the internal auditors, loan review officers, employees,
attorneys, accountants and other representatives of TCF all books, papers and
records relating to the assets, stock, properties, operations, obligations and
liabilities of Standard and the Standard Subsidiaries, including, without
limitation, all books of account (including, without limitation, the general
ledger), tax records, minute books of directors' and shareholders' meetings,
organizational documents, Bylaws, contracts and agreements, filings with any
regulatory authority, accountants' work papers, litigation files (including,
without limitation, legal research memoranda), documents relating to assets and
title thereto (including, without limitation, abstracts, title insurance
policies, surveys, environmental reports, opinions of title and other
information relating to real or personal property), plans affecting employees,
securities transfer records and shareholder lists, and any books, papers and
records relating to other assets or business activities in which TCF may have a
reasonable interest, including, without limitation, its interest in planning for
integration and transition with respect to the business of Standard and the
Standard Subsidiaries; provided, however, that the foregoing rights granted to
TCF shall, whether or not and regardless of the extent to which the same are
exercised, in no way affect the nature or scope of the representations,
warranties and covenants of Standard set forth herein. In addition, Standard
shall instruct its officers, employees, counsel and accountants to be available
for, and respond to any questions of, such TCF representatives, as arranged
through the committee described in Section 4.1(g) hereof, at reasonable hours
and with reasonable notice by TCF to such individuals, and to cooperate fully
with TCF in planning for the integration of the business of Standard and the
Standard Subsidiaries with the business of TCF and the TCF Subsidiaries.
(b) TCF shall, and shall cause each of the TCF Subsidiaries to, provide to
Standard and its officers, employees and representatives the same rights being
granted by Standard and to TCF pursuant to Section 5.7(a); provided, however,
that the foregoing rights granted to Standard shall, whether or not and
regardless of the extent to which the same are exercised, in no way affect the
nature or scope of the representations, warranties and covenants of TCF set
forth herein. In addition, TCF shall instruct its officers, employees, counsel
and accountants to be available for, and respond to reasonable questions of,
representatives of Standard at reasonable hours and with reasonable notice by
Standard to such individuals.
(c) All information furnished by Standard or TCF pursuant hereto shall be
treated as the sole property of the party furnishing the information until the
Effective Date, and, if the Effective Date shall not occur, the receiving party
shall return to the party which furnished such information, or destroy, all
documents or other materials (including copies thereof) containing, reflecting
or referring to such information. In addition, the receiving party shall keep
confidential all such information and shall not directly or indirectly use such
information for any competitive or other commercial purpose. The obligation to
keep such information confidential shall not apply to (i) any information which
(A) was already in the receiving party's possession prior to the disclosure
thereof to the receiving party by the party furnishing the information, (B) was
then generally known to the public, (C) became known to the public through no
fault of the receiving party or its representatives or (D) was disclosed to the
receiving party by a third party not bound by an obligation of confidentiality
or (ii) disclosures required by law or by governmental or regulatory authority.
5.8 FILING OF TAX RETURNS AND ADJUSTMENTS.
(a) Standard, on its behalf and on behalf of each of the Standard
Subsidiaries, shall file (or cause to be filed) at its own expense, on or prior
to the due date, all Tax returns, including all Plan returns and
A-35
reports, for all Tax periods ending on or before the Effective Date where the
due date for such returns or reports (taking into account valid extensions of
the respective due dates) falls on or before the Effective Date; provided,
however, that neither Standard nor any of the Standard Subsidiaries shall amend
any Tax returns, or other returns, elections or information statements which
reflects an additional liability for Taxes, or consent to any material
adjustment or otherwise compromise or settle any material matters with respect
to Taxes, without prior consultation with TCF; provided, further, that neither
Standard nor any of the Standard Subsidiaries shall make any election or take
any other discretionary position with respect to any material amount of Taxes in
a manner inconsistent with past practices, without the prior written approval of
TCF, which approval shall not be unreasonably withheld. In the event the
granting or withholding of such approval by TCF results in additional Taxes
owing for any Tax period ending on or before the Effective Date, the liability
for such additional Taxes shall not constitute or be deemed to be a breach,
violation of or failure to satisfy any representation, warranty, covenant,
condition or other provision of this Agreement or otherwise be considered in
determining whether any such breach, violation or failure to satisfy shall have
occurred. Standard shall provide TCF with a copy of appropriate workpapers,
schedules, drafts and final copies of each material federal and state income Tax
return or election of Standard and each of the Standard Subsidiaries (including
returns of all Plans) as soon as practicable before filing such return or
election and the parties shall reasonably cooperate with each other in
connection therewith.
(b) TCF, in its sole and absolute discretion, will file (or cause to be
filed) all Tax returns of Bank due after the Effective Date. After the Effective
Date, TCF, in its sole and absolute discretion and to the extent permitted by
law, shall have the right to amend, modify or otherwise change all Tax returns
of Standard and each Standard Subsidiary for all Tax periods.
5.9 REGISTRATION STATEMENT.
(a) For the purpose (i) of holding meetings of shareholders of Standard to
approve this Agreement and the transactions contemplated hereby, including the
Conversion/Reincorporation, the Merger and the Subsequent Merger, and (ii) of
registering with the SEC and with applicable state securities authorities the
TCF Common Stock to be issued as contemplated by this Agreement, the parties
hereto shall cooperate in the preparation of an appropriate registration
statement (such registration statement, together with all and any amendments and
supplements thereto, being herein referred to as the "Registration Statement"),
which shall include a prospectus/proxy statement satisfying all applicable
requirements of the 1933 Act, the 1934 Act, applicable state securities laws and
the rules and regulations thereunder (such prospectus/proxy statement, together
with any and all amendments or supplements thereto, being herein referred to as
the "Prospectus/Proxy Statement").
(b) TCF shall furnish such information concerning TCF and the TCF
Subsidiaries as is necessary in order to cause the Prospectus/Proxy Statement,
insofar as it relates to TCF, the TCF Subsidiaries and TCF Common Stock, to be
prepared in accordance with Section 5.9(a). TCF agrees promptly to advise
Standard if at any time prior to the meeting of Standard's shareholders any
information provided by TCF in the Prospectus/Proxy Statement becomes incorrect
or incomplete in any material respect, and to share with Standard the
information needed to correct such inaccuracy or omission.
(c) Standard shall furnish TCF with such information concerning Standard and
the Standard Subsidiaries as is necessary in order to cause the Prospectus/Proxy
Statement, insofar as it relates to Standard or the Standard Subsidiaries to be
prepared in accordance with Section 5.9(a). TCF agrees to provide Standard with
reasonable opportunity to review and comment on the Prospectus/Proxy Statement.
Standard agrees promptly to advise TCF if at any time prior to the meeting of
Standard's shareholders any information provided by Standard in the
Prospectus/Proxy Statement becomes incorrect or incomplete in any material
respect, and to provide TCF with the information needed to correct such
inaccuracy or omission.
A-36
(d) TCF shall promptly file the Registration Statement with the SEC and
applicable state securities agencies. TCF shall use reasonable efforts to cause
the Registration Statement to become effective under the 1933 Act and applicable
state securities laws at the earliest practicable date. Standard authorizes TCF
to utilize in the Registration Statement the information concerning Standard and
the Standard Subsidiaries provided to TCF for the purpose of inclusion in the
Prospectus/Proxy Statement. TCF shall advise Standard promptly when the
Registration Statement has become effective and of any supplements or amendments
thereto, and TCF shall furnish Standard with copies of all such documents. Prior
to the Effective Date or the termination of this Agreement, each party shall
consult with the other with respect to any material (other than the
Prospectus/Proxy Statement) that might constitute a "prospectus" relating to the
Merger within the meaning of the 1933 Act prior to using or disseminating such
prospectus.
(e) TCF shall use reasonable efforts to cause to be delivered to Standard a
letter relating to the Registration Statement from KPMG Peat Marwick LLP, TCF's
independent auditors, dated a date within two business days before the date on
which the Registration Statement shall become effective and addressed to
Standard, in form and substance reasonably satisfactory to Standard and
customary in scope and substance for letters delivered by independent public
accountants in connection with registration statements similar to the
Registration Statement.
(f) Standard shall use reasonable efforts to cause to be delivered to TCF a
letter relating to the Registration Statement from Ernst & Young LLP, Standard's
independent auditors, dated a date within two business days before the date on
which the Registration Statement shall become effective and addressed to TCF, in
form and substance reasonably satisfactory to TCF and customary in scope and
substance for letters delivered by independent public accountants in connection
with registration statements similar to the Registration Statement.
(g) TCF shall bear the costs of all SEC filing fees with respect to the
Registration Statement and the costs of qualifying the TCF Common Stock to be
issued in connection with the transactions contemplated by this Agreement under
state blue sky laws to the extent necessary. Standard shall bear all printing
and mailing costs in connection with the preparation and mailing of the
Prospectus/Proxy Statement to Standard's shareholders. TCF and Standard shall
each bear their own legal and accounting expenses in connection with the
Registration Statement.
5.10 AFFILIATE LETTERS. Standard shall obtain and deliver to TCF as
promptly as practicable after (and shall use its reasonable best efforts to
obtain and deliver within five days after) the date hereof a signed
representation letter substantially in the form of Exhibit A hereto from each
executive officer and director of Standard and each shareholder of Standard who
may reasonably be deemed an "affiliate" of Standard within the meaning of such
term as used in Rule 145 under the 1933 Act, and shall obtain and deliver to TCF
a signed representation letter substantially in the form of Exhibit A from any
person who becomes an executive officer or director of Standard or any
shareholder who becomes such an "affiliate" after the date hereof as promptly as
practicable after (and shall use its reasonable best efforts to obtain and
deliver within five days after) such person achieves such status. TCF may place
appropriate legends on the stock certificates of affiliates of Standard.
5.11 ESTABLISHMENT OF ACCRUALS. If requested by TCF immediately prior to
the Effective Date, Standard shall establish, or shall cause the Bank to
establish, consistent with GAAP, such additional accruals and reserves as may be
necessary to conform Bank's accounting and credit loss reserve practices and
methods to those of TCF (as such practices and methods are to be applied to Bank
from and after the Effective Date) and reflect TCF's plans with respect to the
conduct of Bank's business following the Merger and to provide for the costs and
expenses relating to the consummation by Bank of the transactions contemplated
by this Agreement; provided, however, that Bank shall not be required to take
such action unless (i) TCF certifies in writing that it has no reason to believe
that all conditions to TCF's obligation to consummate the transactions
contemplated by this Agreement will not be satisfied, and (ii) Bank shall have
no reasonable basis for believing that all the conditions to Bank's obligation
to
A-37
consummate the transactions contemplated by this Agreement will not be
satisfied. Notwithstanding anything to the contrary contained in this Agreement,
no accrual or reserve made by Bank pursuant to this Section 5.11, or any
litigation or regulatory proceeding arising out of any such accrual or reserve,
or any other effect on Bank resulting from Bank's compliance with this Section
5.11, shall constitute or be deemed to be a breach, violation of or failure to
satisfy any representation, warranty, covenant, condition or other provision of
this Agreement or otherwise be considered in determining whether any such
breach, violation or failure to satisfy shall have occurred.
5.12 EMPLOYEE BENEFIT PLANS.
(a) GENERAL. Any transfer of employment from Standard or any of Standard
Subsidiaries to TCF or any of the TCF Subsidiaries effected by or in connection
with the Merger or the Subsequent Merger shall not be considered a termination
of employment for purposes of any of the employee benefit plans of Standard or
TCF, including any severance plans or arrangements. It is the parties' intention
that the employee plans of Standard or any of the Standard Subsidiaries will be
merged with applicable TCF plans or discontinued as soon as practicable after
the Merger and the employee plans of TCF will be made available to employees of
Standard as soon as practicable after the Merger, with employees of Standard of
any of the Standard Subsidiaries receiving credit for their pre-Effective Time
service with Standard under the TCF benefit plans for eligibility and vesting
purposes, but not for purposes of benefit accrual.
(b) MEDICAL PLANS. TCF intends that employees of Standard and the Standard
Subsidiaries who are participating in medical plans of Standard or any Standard
Subsidiary at the time of any replacement of such medical plans with the TCF
medical plans will not be subject to any exclusion or penalty for pre-existing
conditions that were covered under the applicable plans of Standard or any
Standard Subsidiary and will receive full credit for prior service with Standard
or any Standard Subsidiary toward any waiting periods under the TCF plans and
full credit for payment of current and past premiums, co-payments and
deductibles under the medical plans of Standard or any Standard Subsidiary
toward such items under the TCF medical coverage, and that employees of Standard
or any Standard Subsidiary not participating in such plans at the time of their
replacement by TCF's medical plans will receive full credit for their pre-
Effective Time service with Standard or any Standard Subsidiary toward any
waiting period or other service requirements generally applicable under TCF's
medical plans.
(c) ESOP. The Bank has established an employee stock ownership plan (the
"ESOP") for the benefit of its employees which is a tax-qualified plan. As of
December 31, 1996, the ESOP had purchased an aggregate of 961,070 shares of
Standard Common Stock from Standard which had not been allocated to participant
accounts or earned by participants and owed Standard an aggregate of $9,610,700
with respect to such shares. The parties intend that, as soon as practicable, to
take the actions set forth on Schedule 5.12.
(d) NO THIRD PARTY BENEFICIARIES; RESERVATION OF RIGHTS. Notwithstanding
the foregoing provisions of this Section 5.12, nothing in this Section 5.12 or
in this Agreement shall be deemed to confer upon any employee or former employee
of Standard or any Standard Subsidiary, or any other individual, any rights or
entitlement to any particular benefits, benefit plans, payments or
distributions. Except as expressly provided herein, TCF reserves, on behalf of
itself and the boards of directors of any and all of TCF Subsidiaries (including
Standard and any Standard Subsidiary after the Effective Date), full authority
to amend, terminate, discontinue or otherwise revise their respective employee
plans and/or to adopt new plans from time to time subject solely to the
discretion of the boards of directors of the entities involved.
5.13 TAX TREATMENT. Each of TCF and Standard shall not take or fail to
take, and shall cause their respective affiliates not to take or fail to take,
any action which action or failure to act would prevent, or be likely to
prevent, the Conversion/Reincorporation or the Merger from qualifying as a
"reorganization" within the meaning of Section 368(a) of the Code.
5.14 PRESS RELEASES. TCF and Standard shall agree with each other as to
the form and substance of any press release related to this Agreement or the
transactions contemplated hereby, and shall consult with
A-38
each other as to the form and substance of other public disclosures which may
relate to the transactions contemplated by this Agreement, provided, however,
that nothing contained herein shall prohibit either party, following
notification to the other party, from making any disclosure which is required by
law or regulation.
5.15 INDEMNIFICATION AND INSURANCE.
(a) From and after the Effective Date, TCF shall indemnify, defend and hold
harmless each person who is now, or has been at any time prior to the date
hereof or who becomes prior to the Effective Date, an officer, director,
employee or agent of Standard or any Standard Subsidiary (the "Indemnified
Parties") against all losses, claims, damages, costs, expenses (including
attorney's fees), liabilities or judgments or amounts that are paid in
settlement (which settlement shall require the prior written consent of TCF,
which consent shall not be unreasonably withheld) of or in connection with any
claim, action, suit, proceeding or investigation (a "Claim") in which an
Indemnified Party is, or is threatened to be made, a party or a witness based in
whole or in part on or arising in whole or in part out of the fact that such
person is or was a director, officer, employee or agent of Standard or any
Standard Subsidiary if such Claim pertains to any matter or fact arising,
existing or occurring on or prior to the Effective Date (including, without
limitation, the Conversion/Reincorporation, the Merger and other transactions
contemplated by this Agreement), regardless of whether such Claim is asserted or
claimed prior to, at or after the Effective Date (the "Indemnified Liabilities")
to the fullest extent permitted by TCF's Charter and Bylaws and applicable
Delaware law. Any Indemnified Party wishing to claim indemnification under this
Section 5.15(a), upon learning of any Claim, shall notify TCF (but the failure
so to notify TCF shall not relieve it from any liability which TCF may have
under this Section 5.15(a) except to the extent such failure prejudices TCF) and
shall deliver to TCF any undertaking required by Delaware law. The obligations
of TCF described in this Section 5.15(a) shall continue in full force and
effect, without any amendment thereto, for a period of not less than six years
from the Effective Date; provided, however, that all rights to indemnification
in respect of any Claim asserted or made within such period shall continue until
the final disposition of such Claim; and provided further that nothing in this
Section 5.15(a) shall be deemed to modify applicable Delaware law regarding
indemnification of former officers and directors. The foregoing indemnification
shall not apply to any actions, suits proceedings, orders or investigations
which at the date hereof are pending or, to the Knowledge of Standard or its
directors, threatened unless disclosed on Schedule 5.15(a).
(b) From and after the Effective Date, the directors, officers and employees
of Standard or any Standard Subsidiary who become directors, officers or
employees of TCF, the Resulting Institution or any other of the TCF
Subsidiaries, shall also have indemnification rights with prospective
application. The prospective indemnification rights shall consist of such rights
to which directors, officers and employees of TCF are entitled under the
provisions of the Charter, Bylaws or similar governing documents of TCF, the
Resulting Institution and the other TCF Subsidiaries, as in effect from time to
time after the Effective Date, as applicable, and provisions of applicable law
as in effect from time to time after the Effective Date.
(c) TCF shall cause the Resulting Institution and any successor thereto to
maintain directors and officers liability insurance comparable to that being
maintained by TCF on the date hereof, or continue the existing insurance being
maintained by Standard, for the benefit of the current and former directors and
officers of Standard or any Standard Subsidiary for a period of three years
after the Effective Time, which insurance shall provide coverage for acts and
omissions occurring on or prior to the Effective Date; provided, further, that
officers and directors of Standard or any Standard Subsidiary may be required to
make application and provide customary representations and warranties to TCF's
or the Resulting Institution's insurance carrier for the purpose of obtaining
such insurance; and provided, further, that such coverage will be in an amount
not less than the annual aggregate of such coverage currently provided by
Standard.
A-39
(d) The contractual obligations of TCF provided under Sections 5.15(a)
through 5.15(c) hereof are intended to benefit, and be enforceable against TCF
directly by, the Indemnified Parties, and shall be binding on all respective
successors of TCF.
5.16 TCF SEC REPORTS. TCF shall continue to file all reports with the SEC
necessary to permit the shareholders of Standard who are "affiliates" of
Standard (within the meaning of such term as used in Rule 145 under the 1933
Act) to sell the TCF Common Stock received by them in connection with the Merger
pursuant to Rules 144 and 145(d) under the 1933 Act if they would otherwise be
so permitted. After the Effective Date, TCF will file with the SEC such reports
and other materials required to be filed by TCF under the federal securities
laws on a timely basis.
5.17 SECURITIES REPORTS. Each of TCF and Standard agree to provide to the
other party copies of all reports and other documents filed under the 1933 Act
or 1934 Act with the SEC by it between the date hereof and the Effective Date
within five days after the date such reports or other documents are filed with
the SEC.
5.18 STOCK EXCHANGE LISTING. TCF shall use its best efforts to list on the
NYSE, subject to official notice of issuance, the shares of TCF Common Stock to
be issued in the Merger.
5.19 SHAREHOLDER APPROVAL. Standard shall call a meeting of its
shareholders for the purpose of voting upon this Agreement, the
Conversion/Reincorporation and the Merger and shall schedule the date of such
meeting after consultation with TCF. The Board of Directors of Standard shall
recommend approval of this Agreement, the Conversion/Reincorporation and the
Merger, and use its best efforts (including, without limitation, soliciting
proxies for such approvals) to obtain approvals from its shareholders; provided,
however, that the Board of Directors of Standard may fail to make the
recommendation, and/or to seek to obtain the shareholder approval, referred to
above, or withdraw, modify or change any such recommendation, if such Board of
Directors determines, after consultation with counsel to Standard, that the
making of such recommendation, the seeking to obtain such shareholder approval,
or the failure to so withdraw, modify or change its recommendation, is
reasonably likely to constitute a breach of the fiduciary or legal obligations
of Standard's Board of Directors.
5.20 FAILURE TO FULFILL CONDITIONS. In the event that either of the
parties hereto determines that a condition to its respective obligations to
consummate the transactions contemplated hereby cannot be fulfilled on or prior
to the termination of this Agreement, it will promptly notify the other party.
Each party will promptly inform the other party of any facts applicable to it
that would be likely to prevent or materially delay approval of the Merger by
any governmental or regulatory authority or third party or which would otherwise
prevent or materially delay completion of the Merger.
5.21 STANDARD SEVERANCE/CHANGE IN CONTROL ARRANGEMENTS. TCF agrees to
perform, or, as applicable, cause the Resulting Institution or any of its
controlled subsidiaries to perform, the terms of any contractual arrangements,
including severance and change of control arrangements, as disclosed in Schedule
3.13 as in effect on the date hereof. TCF agrees that the transactions
contemplated by this Agreement constitute a change of control of Standard for
purposes of any severance arrangements referred to above.
5.22 HEADQUARTERS OF RESULTING INSTITUTION. It is TCF's current intention
to maintain the headquarters of the Resulting Institution in the current
location of Bank's headquarters.
5.23 CONVERSION/REINCORPORATION. Standard shall use its best efforts to
effect the Conversion/ Reincorporation in a manner reasonably acceptable to TCF
immediately prior to the Effective Time.
5.24 PRIVATE LETTER RULING. If TCF and Standard mutually agree to apply
for an Internal Revenue Service private letter ruling to the effect that the
Conversion/Reincorporation, the Merger and the Subsequent Merger constitute a
reorganization within the meaning of Section 368(a) of the Code, the parties
will reasonably cooperate with each other in connection with such ruling
request, including TCF providing Standard's tax counsel a reasonable opportunity
to review and comment on submissions to the
A-40
IRS and to participate in conferences with the IRS. In event a favorable ruling
is received from the IRS prior to the Effective Date, the conditions to closing
in Sections 6.2(g) and 6.3(h) shall be deemed satisfied.
ARTICLE 6
CONDITIONS
6.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY. The respective obligations of
each party to effect the transactions contemplated hereby shall be subject to
the fulfillment at or prior to the Effective Date of the following conditions:
(a) REGULATORY APPROVAL. Regulatory approval for the consummation of the
transactions contemplated hereby, including the Conversion/Reincorporation, the
Merger and the Subsequent Merger, shall have been obtained from the applicable
Bank Authority or Bank Authorities and all applicable statutory or regulatory
waiting periods shall have lapsed.
(b) NO INJUNCTION. No injunction or other order entered by a state or
federal court of competent jurisdiction shall have been issued and remain in
effect which would prohibit or make illegal the consummation of the transactions
contemplated hereby.
(c) NO PROHIBITIVE CHANGE OF LAW. There shall have been no law, statute,
Rule or regulation, domestic or foreign, enacted or promulgated which would
prohibit or make illegal the consummation of the transactions contemplated
hereby.
(d) REGISTRATION STATEMENT. The Registration Statement shall have been
declared effective and shall not be subject to a stop order of the SEC, and, if
the offer and sale of TCF Common Stock in the Merger pursuant to this Agreement
is required to be registered under the securities laws of any state, the
Registration Statement shall not be subject to a stop order of the securities
commission in such state.
(e) LISTING. The TCF Common Stock to be issued to holders of Standard
Common Stock shall have been approved for listing on the NYSE subject to
official notice of issuance.
(f) ADVERSE PROCEEDINGS. There shall not be instituted or pending any
action or proceeding before any court by any governmental authority or agency,
domestic or foreign, (i) challenging or seeking to make illegal, or to delay or
otherwise directly or indirectly to restrain or prohibit, the consummation of
the transactions contemplated hereby or seeking to obtain material damages in
connection with the transactions contemplated hereby, (ii) seeking to prohibit
direct or indirect ownership or operation by TCF of all or a material portion of
the business or assets of Standard and the Standard Subsidiaries, or to compel
TCF or any of the TCF Subsidiaries or Standard or any of the Standard
Subsidiaries to dispose of all or a material portion of the business or assets
of TCF or Standard and the Standard Subsidiaries, as a result of the
transactions contemplated hereby, or (iii) seeking to require direct or indirect
divestiture by TCF of any material portion of its business or assets or of the
business or assets of Standard and the Standard Subsidiaries.
(g) GOVERNMENTAL ACTION. After the date hereof, there shall not be any
action taken, or any statute, rule, regulation, judgment, order or injunction
enacted, entered, enforced, promulgated, issued or deemed applicable to the
transactions contemplated by this Agreement by any federal, state or other
court, government or governmental authority or agency, which could reasonably be
expected to result, directly or indirectly, in any of the consequences referred
to in Section 6.1(f).
6.2 ADDITIONAL CONDITIONS TO OBLIGATION OF STANDARD. The obligation of
Standard to consummate the transactions contemplated hereby in accordance with
the terms of this Agreement is also subject to the following conditions:
A-41
(a) Representations and Compliance.The representations and warranties of
TCF set forth in Article 2 shall have been true and correct as of the date
hereof, and shall be true and correct as of the Effective Date as updated
pursuant to Section 5.6(b) if made at and as of the Effective Date, except where
the failure to be true and correct would not have, or would not reasonably be
expected to have, a Material Adverse Effect on TCF. TCF shall in all material
respects have performed each obligation and agreement and complied with each
covenant to be performed and complied with by it hereunder at or prior to the
Effective Date.
(b) OFFICERS' CERTIFICATE OF TCF. TCF shall have furnished to Standard a
certificate of the Chief Executive Officer or the President and the Chief
Financial Officer of TCF, dated as of the Effective Date, in which such officers
shall certify to their best Knowledge that they have no reason to believe that
the conditions set forth in Section 6.2(a) have not been fulfilled.
(c) TCF'S SECRETARY'S CERTIFICATE. TCF shall have furnished to Standard
(i) copies of the text of the resolutions by which the corporate action on the
part of TCF and Merger Sub necessary to approve this Agreement, the Articles of
Merger and the transactions contemplated hereby and thereby were taken, (ii) a
certificate dated as of the Effective Date executed on behalf of TCF by its
corporate secretary or one of its assistant corporate secretaries certifying to
Standard that such copies are true, correct and complete copies of such
resolutions and that such resolutions were duly adopted and have not been
amended or rescinded and (iii) an incumbency certificate dated as of the
Effective Date executed on behalf of each of TCF and Merger Sub by its corporate
secretary or one of its assistant corporate secretaries certifying the signature
and office of each officer of TCF or Merger Sub executing this Agreement, the
Articles of Merger or any other agreement, certificate or other instrument
executed pursuant hereto by TCF or Merger Sub, as the case may be.
(d) OPINION OF COUNSEL TO TCF. Standard shall have received an opinion
letter dated as of the Effective Date addressed to Bank from Gregory J. Pulles,
Esq., General Counsel and Secretary of TCF, based on customary reliance and
subject to customary qualifications to the effect that:
(i) TCF is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware. Merger Sub is a validly
existing and in good standing under the laws of the United States of
America.
(ii) TCF has the corporate power to consummate the transactions on its
part contemplated by this Agreement. TCF has taken all requisite corporate
action to authorize this Agreement and the Merger, and Merger Sub has taken
all requisite corporate action to authorize the Merger and the Articles of
Merger. This Agreement has been duly executed and delivered by TCF and the
Articles of Merger have been duly executed by Merger Sub and, assuming they
are the valid and binding obligation of Standard, constitute the valid and
binding obligations of TCF and Merger Sub to which it is a party enforceable
in accordance with their terms, subject as to the enforcement of remedies to
applicable bankruptcy, insolvency, moratorium and other laws affecting the
rights of creditors generally and to judicial limitations on the enforcement
of the remedy of specific performance.
(iii) The execution and delivery of this Agreement by TCF and the
Articles of Merger by Merger Sub and the consummation of the transactions
contemplated hereby and thereby will not constitute a breach, default or
violation under their respective Charter or Bylaws or, to his Knowledge, (A)
any material agreement, arrangement or understanding to which TCF or Merger
Sub is a party, (B) any material license, franchise or permit affecting TCF
or Merger Sub, or (C) any law, regulation, order, judgment or decree
applicable to TCF or Merger Sub.
(iv) No authorization, consent or approval of, or filing with, any
public body, court or authority is necessary for the consummation by TCF or
Merger Sub of the transactions contemplated hereby which has not been
obtained or made.
A-42
(v) The authorized capital of TCF consists of (A) shares of TCF
Common Stock of which shares are duly issued and outstanding and
shares are reserved for issuance upon exercise of the TCF Stock
Plans, and (B) shares of preferred stock, of which shares are
outstanding.
(vi) The shares of TCF Common Stock to be issued pursuant to this
Agreement will be, when issued, duly authorized, validly issued, fully paid
and nonassessable.
(e) STANDARD SHAREHOLDER APPROVAL. This Agreement, the
Conversion/Reincorporation and the Merger shall have been approved by the
affirmative vote of the holders of the percentage of Standard capital stock
required for such approval under Delaware law and the provisions of Standard's
Charter and bylaws.
(f) MATERIAL ADVERSE EFFECT. Since the date of this Agreement, TCF has not
suffered or experienced a Material Adverse Effect, except this subsection shall
not apply to matters properly disclosed to Standard by TCF in any Schedule to
this Agreement delivered by TCF upon the execution of this Agreement or in any
supplement or amendment delivered by TCF pursuant to Section 5.6(b) for which
Standard has a specific right of termination under Section 7.1(i) hereof.
(g) TAX OPINION. Standard shall have received an opinion dated the
Effective Date from Skadden, Arps, Slate, Meagher & Flom (Illinois), counsel to
Standard, in form and substance reasonably satisfactory to Standard,
substantially to the effect that, on the basis of facts, representations and
assumptions set forth in such opinion which are consistent with the state of
facts existing on the Effective Date, (i) no gain or loss will be recognized for
federal income tax purposes as a result of the Conversion/Reincorporation and
(ii) the Conversion/Reincorporation, the Merger and the Subsequent Merger will
be treated for federal income tax purposes as a reorganization within the
meaning of Section 368(a) of the Code. In rendering such opinion, Skadden, Arps,
Slate, Meagher & Flom (Illinois) may require and rely upon (and may incorporate
by reference) representations and covenants, including those contained in
certificates of officers of Standard, Bank, TCF, Merger Sub and others.
6.3 ADDITIONAL CONDITIONS TO OBLIGATION OF TCF. The obligation of TCF to
consummate the transactions contemplated hereby in accordance with the terms of
this Agreement is also subject to the following conditions:
(a) REPRESENTATIONS AND COMPLIANCE. The representations and warranties of
Standard in this Agreement shall have been true and correct as of the date
hereof, and such representations and warranties shall be true and correct as of
the Effective Date as updated pursuant to Section 5.6(b) as if made at and as of
the Effective Date, except where the failure to be true and correct would not
have, or would not reasonably be expected to have, a Material Adverse Effect on
Standard; and Standard shall in all material respects have performed each
obligation and agreement and complied with each covenant to be performed and
complied with by it hereunder at or prior to the Effective Date.
(b) OFFICERS' CERTIFICATE OF STANDARD. Standard shall have furnished to
TCF certificates of the Chief Executive Officer and the Chief Financial Officer
of Standard, dated as of the Effective Date, in which such officers shall
certify to their best Knowledge that they have no reason to believe that the
conditions set forth in Section 6.3(a) have not been fulfilled.
(c) SECRETARIES' CERTIFICATE. Standard shall have furnished to TCF (i)
copies of the text of the resolutions by which the corporate action on the part
of Standard and the Standard Subsidiaries necessary to approve this Agreement,
the Articles of Merger and the transactions contemplated hereby and thereby were
taken, (ii) certificates dated as of the Effective Date executed on behalf of
Standard by its corporate secretary or one of its assistant corporate
secretaries certifying to TCF that such copies are true, correct and complete
copies of such resolutions and that such resolutions were duly adopted and have
not been amended or rescinded and (iii) an incumbency certificate dated as of
the Effective Date executed on behalf of Standard by its corporate secretary or
one of its assistant corporate secretaries certifying the signature
A-43
and office of each officer executing this Agreement, the Articles of Merger or
any other agreement, certificate or other instrument executed pursuant hereto or
thereto.
(d) OPINION OF COUNSEL TO STANDARD AND BANK. TCF shall have received an
opinion letter dated as of the Effective Date addressed to TCF from Randall R.
Schwartz, Vice President and General Counsel of Standard, based on customary
reliance (including reliance on in-house and/or local counsel as to matters
other than federal law) and subject to customary qualifications, to the effect
that:
(i) Standard is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Delaware. New Bank and Bank are
each a federally chartered savings bank duly organized and validly existing
under the laws of the United States.
(ii) Each of [specified principal Standard Subsidiaries] is a
corporation duly organized, validly existing and in good standing under the
laws of its state of incorporation.
(iii) The execution and delivery of this Agreement and the Articles of
Merger by Standard and New Bank to which each is a party and the
consummation of the transactions contemplated hereby and thereby will not
constitute a breach, default or violation under the respective Charter or
Bylaws of Standard or New Bank or any of [specified principal Standard
Subsidiaries] or, to the best of such counsel's Knowledge, (A) any material
agreement, arrangement or understanding to which Standard, New Bank or any
of [specified principal Standard Subsidiaries] is a party, (B) any material
license, franchise or permit affecting Standard, New Bank or any of
[specified principal Standard Subsidiaries] or (C) any material law,
regulation, order, judgment or decree applicable to Standard, New Bank or
any of [specified principal Standard Subsidiaries].
(iv) The authorized capital of New Bank consists of shares of common
stock of which shares are duly issued and outstanding.
(v) No holder of the capital stock of New Bank is entitled to any
preemptive or other similar rights with respect to the capital stock of New
Bank.
(vi) All of the issued and outstanding shares of each the Standard
Subsidiaries are duly authorized, validly issued, fully paid and
nonassessable.
(vii) Each of Standard and the Standard Subsidiaries has the corporate
power to consummate the transactions on its respective part contemplated by
this Agreement and the Articles of Merger. Standard and New Bank have duly
taken all requisite corporate action to authorize this Agreement and the
Articles of Merger and this Agreement and the Articles of Merger have been
duly executed and delivered by Standard or New Bank, as the case may be,
and, assuming they are the valid and binding obligations of TCF and Merger
Sub under this Agreement, constitute the valid and binding obligations of
Standard or New Bank enforceable in accordance with their terms, subject as
to the enforcement of remedies to applicable bankruptcy, insolvency,
moratorium and other laws affecting the rights of creditors generally and to
judicial limitations on the enforcement of the remedy of specific
performance.
(viii) No authorization, consent or approval of, or filing with any public
body, court or public authority by Standard, is necessary for the
consummation by Standard of the transactions contemplated by this Agreement,
the Articles of Merger or the Conversion/Reincorporation which has not been
obtained or made.
(e) AFFILIATE LETTERS. TCF shall have received the letters referred to in
Section 5.10 from all executive officers and directors of Standard and all
shareholders who are affiliates of Standard.
(f) MATERIAL ADVERSE EFFECT. Since the date of this Agreement, Standard
shall not have suffered or experienced a Material Adverse Effect, except this
subSection shall not apply to matters properly disclosed to TCF by Standard in
the Schedules delivered upon execution of this Agreement or a supplement or
A-44
amendment delivered by Standard pursuant to Section 5.6(b) for which TCF has a
specific right of termination under Section 7.1(i) hereof.
(g) DISSENTING SHARES. The aggregate number of Dissenting Shares shall not
exceed ten percent (10%) of the outstanding shares of Standard Common Stock on
the Effective Date.
(h) TAX OPINION. TCF shall have received an opinion dated the Effective
Date from Fried, Frank, Harris, Shriver & Jacobson, counsel to TCF, or KPMG Peat
Marwick LLP, TCF's independent auditors, in form and substance reasonably
satisfactory to TCF, substantially to the effect that, on the basis of facts,
representations and assumptions set forth in such opinion which are consistent
with the state of facts existing on the Effective Date, (i) no gain or loss will
be recognized for federal income tax purposes as a result of the
Conversion/Reincorporation and (ii) the Conversion/Reincorporation, the Merger
and the Subsequent Merger will be treated for federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code. In rendering
such opinion, Fried, Frank, Harris, Shriver & Jacobson or KPMG Peat Marwick LLP,
may require and rely upon (and may incorporate by reference) representations and
covenants, including those contained in certificates of officers of Standard,
Bank, TCF, Merger Sub and others.
(i) BURDENSOME CONDITION. After the date hereof, there shall not be any
action taken, or any statute, rule, regulation or order enacted, entered,
enforced or deemed applicable to the Conversion/ Reincorporation, the Merger or
the Subsequent Merger by any federal or state governmental entity which, in
connection with the grant of a requisite regulatory approval, imposes any
condition or restriction upon the Resulting Institution, TCF or any other TCF
Subsidiaries, including, without limitation, any requirement to raise additional
capital, which would so materially adversely impact the economic or business
benefits of the transactions contemplated by this Agreement as to significantly
change the advisability of the consummation of the Merger.
(j) CONVERSION/REINCORPORATION. Standard shall have consummated the
Conversion/Reincorporation.
ARTICLE 7
TERMINATION, AMENDMENT AND WAIVER
7.1 TERMINATION. This Agreement may be terminated prior to the Effective
Date:
(a) by mutual consent of TCF and Standard, if the board of directors of each
so determines by vote of a majority of the members of its entire board;
(b) by either TCF or Standard, if any of the conditions to such party's
obligation to consummate the transactions contemplated in this Agreement shall
have become impossible to satisfy (unless such impossibility shall be due to the
action or failure to act in breach of this Agreement by the party seeking to
terminate this Agreement);
(c) by Standard, if this Agreement is not duly approved by the shareholders
of Standard at a meeting of shareholders (or any adjournment thereof) duly
called and held for such purpose;
(d) by either TCF or Standard, if the Effective Date is not on or before
October 31, 1997 (unless the failure to consummate the Merger by such date shall
be due to the action or failure to act in breach of this Agreement by the party
seeking to terminate this Agreement);
(e) by Standard, if the Average TCF Stock Price is less than $37.50 subject,
however, to the following three sentences. If Standard makes an election to
terminate this Agreement under this Section 7.1(e), Standard shall give ten (10)
days written notice thereof to TCF (provided that such notice of election may be
withdrawn at any time within the aforementioned ten-day period). During the
seven-day period commencing with its receipt of such notice, TCF shall have the
option to increase the value of the cash, the TCF Common Stock or a combination
thereof being offered to shareholders of New Bank such that the per share value
of the Merger Consideration (valued at the Average TCF Stock Price in the case
of the
A-45
stock portion of the Merger Consideration) is equal to $24.69 per share
(provided that the Merger shall qualify as a reorganization within the meaning
of Section 368 of the Code). If TCF so elects within such seven-day period, it
shall give prompt written notice to Standard of such election and the increase
in the Merger Consideration whereupon no termination shall have occurred and
this Agreement shall remain in effect in accordance with its terms (except as
the amount of the Merger Consideration shall have been so modified);
(f) by Standard, if (i) Standard has complied with the provisions of Section
5.5, (ii) any corporation, partnership, person, other entity or group, as
defined in the 1934 Act (other than TCF or any affiliate of TCF) (a "Person"),
shall have commenced (as such term is used in Rule 14d-2(b) under the 1934 Act)
a bona fide tender offer for all outstanding shares of Standard Common Stock or
any Person shall have made a bona fide written offer involving a merger or
consolidation of Standard or the acquisition of all or substantially all of its
assets or capital stock, (iii) Standard's Board of Directors shall determine, in
its good faith judgment, after consultation with its independent financial
advisors, that such offer is more favorable to Standard's shareholders when
compared to the transactions contemplated hereby, and (iv) Standard's Board of
Directors determines upon the advice of its legal counsel that if they failed to
recommend such offer or accept such proposal then such failure would be likely
to result in a breach of the directors' fiduciary or legal duties; provided,
however, that Standard may not terminate this Agreement pursuant to this Section
7.1(f) until the expiration of five business days after written notice of any
such offer or proposal referenced in this Section 7.1(f) has been delivered to
TCF, together with a summary of the terms of any such offer or proposal;
(g) by TCF, if, after the date hereof, any Person shall have commenced (as
such term is used in Rule 14d-2(b) under the 1934 Act) a bona fide tender offer
or exchange offer to acquire at least 25% of the then outstanding shares of
Standard Common Stock, and thereafter the Board of Directors of Standard shall
have withdrawn, or materially adversely modified or changed its recommendation
of this Agreement and the Merger;
(h) by (i) TCF if Standard commits a willful breach of its obligations under
this Agreement or (ii) Standard if TCF commits a willful breach of its
obligations under this Agreement; and in each instance such willful breach is
not cured within ten days after receipt by the breaching party of written demand
for cure by the non-breaching party. For purposes of this Agreement, a "willful
breach" means a knowing and intentional violation by a party of any of its
covenants, agreements or obligations under this Agreement;
(i) by TCF or Standard pursuant to Section 5.6(b).
Any party desiring to terminate this Agreement shall give written notice of
such termination and the reasons therefor to the other party.
7.2 EFFECT OF TERMINATION.
(a) In the event this Agreement is terminated (i) by Standard as provided in
Section 7.1(f); or (ii) by TCF as provided in either Sections 7.1(g) or 7.1(h),
then Standard shall pay to TCF, in immediately available funds, an amount equal
to $15,000,000 within ten (10) business days after demand for payment by TCF
following such termination.
(b) If this Agreement is terminated (i) by Standard as provided in Section
7.1(b) due to the failure to satisfy the conditions of 6.2(e), or (ii) by TCF
pursuant to Section 7.1(b) due to the failure of any condition under Section
6.3(a), (b), (c), (d) or (e), Standard shall pay to TCF in immediately available
funds, an amount equal to $1,000,000 within ten (10) business days after demand
for payment by TCF following such termination. In the event this Agreement is
terminated under the circumstances set forth in the first sentence of this
Section 7.2(b) and both of the following conditions are satisfied:
(i) Standard has received an Acquisition Proposal (as defined in Section
5.5) from a third party after the date hereof and prior to the termination
of this Agreement; and
A-46
(ii) Standard and such third party or an affiliate of such third party
enter into a definitive agreement for any Acquisition Proposal (the "Signing
Event") within twelve months following the termination of this Agreement,
then Standard shall pay to TCF, in immediately available funds, an amount equal
to $14,000,000 within ten (10) business days after demand for payment by TCF
following the Signing Event.
(c) In the event this Agreement is terminated by Standard pursuant to
Section 7.1(b) due to the failure of a condition under Section 6.2(a), (b), (c)
or (d), TCF shall pay to Standard, in immediately available funds, an amount
equal to $1,000,000 within ten (10) business days after demand for payment by
Standard following such termination.
(d) In the event this Agreement is terminated by Standard pursuant to
Section 7.1(h), then TCF shall pay to Standard, in immediately available funds,
an amount equal to $15,000,000 within ten (10) business days after demand for
payment by Standard following such termination.
Notwithstanding anything contained in this Agreement to the contrary, the
payment of the termination fee pursuant to the provision of this Section 7.2
shall be liquidated damages and in lieu of any and all claims that the party
entitled to such fee has, or might have, and the party entitled to such
termination fee shall not have any other rights or claims against the other
party.
7.3 AMENDMENT. This Agreement may not be amended except by an instrument
in writing approved by the parties to this Agreement and signed on behalf of
each of the parties hereto; provided, however, that after approval of this
Agreement and the Merger by the shareholders of Standard, no such amendment
shall alter or change (i) the amount or kind of consideration to be received in
exchange for shares of New Bank Common Stock except as provided herein, or (ii)
any of the terms or conditions of this Agreement if such alteration or change
would adversely affect the holders of shares of Standard Common Stock or New
Bank Common Stock.
7.4 WAIVER. At any time prior to the Effective Date, any party hereto may
(a) extend the time for the performance of any of the obligations or other acts
of the other party hereto or (b) waive compliance with any of the agreements of
the other party or with any conditions to its own obligations, in each case only
to the extent such obligations, agreements and conditions are intended for its
benefit.
ARTICLE 8
GENERAL PROVISIONS
8.1 PUBLIC STATEMENTS. Neither Standard nor TCF shall make any public
announcement or statement with respect to the Merger, this Agreement or any
related transactions without the approval of the other party; provided, however,
that either TCF or Standard may, upon reasonable notice to the other party, make
any public announcement or statement that it believes is required by federal
securities law. To the extent practicable, Standard and TCF will consult with
the other with respect to any such public announcement or statement.
8.2 NOTICES. All notices and other communications hereunder shall be in
writing and shall be sufficiently given if made by hand delivery, by fax, by
telecopier, by overnight delivery service, or by registered or certified mail
(postage prepaid and return receipt requested) to the parties at the following
addresses (or at such other address for a party as shall be specified by it by
like notice):
If to TCF:
TCF Financial Corporation
801 Marquette Avenue
Minneapolis, MN 55401
Attn: Chairman and Chief Executive Officer
A-47
with copies to:
TCF Financial Corporation
801 Marquette Avenue
Minneapolis, MN 55401
Attn: Gregory J. Pulles, Vice Chairman and General Counsel
and
Kaplan, Strangis and Kaplan, P.A.
90 South Seventh Street
5500 Norwest Center
Minneapolis, MN 55402
Attn: Bruce J. Parker
If to Standard:
Standard Financial, Inc.
800 Burr Ridge Parkway
Burr Ridge, IL 60521
Attn: Chairman, President and Chief Executive Officer
with copies to:
Skadden, Arps, Slate, Meagher & Flom (Illinois)
333 W. Wacker Drive
Suite 2100
Chicago, IL 60606
Attn: Wayne W. Whalen
All such notices and other communications shall be deemed to have been duly
given as follows: when delivered by hand, if personally delivered; when
received, if delivered by registered or certified mail (postage prepaid and
return receipt requested); when receipt acknowledged, if faxed or telecopied;
and the next day delivery after being timely delivered to a recognized overnight
delivery service.
8.3 INTERPRETATION. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. References to Sections and Articles refer to
Sections and Articles of this Agreement unless otherwise stated. Words such as
"herein," "hereinafter," "hereof," "hereto," "hereby" and "hereunder," and word
of like import, unless the context requires otherwise, refer to this Agreement
(including the Exhibits and Schedules hereto). As used in this Agreement, the
masculine, feminine and neuter genders shall be deemed to include the others if
the context requires.
8.4 SEVERABILITY. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
8.5 MISCELLANEOUS. This Agreement (together with all other documents and
instruments referred to herein): (a) constitutes the entire agreement, and
supersedes all other prior agreements and undertakings, both written and oral,
among the parties, with respect to the subject matter hereof; (b) shall be
governed in all respects, including validity, interpretation and effect, by the
internal laws of the State of Delaware, without giving effect to the principles
of conflict of laws thereof; and (c) shall not be assigned by operation of law
or otherwise.
A-48
8.6 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. The
representations and warranties of the parties set forth herein shall not survive
the consummation of the Merger, but covenants that specifically relate to
periods, activities or obligations subsequent to the Merger shall survive the
Merger. In addition, if this Agreement is terminated pursuant to Section 7.1,
the covenants contained in Section 5.4, 5.7(c) and 7.2 shall survive such
termination.
8.7 SCHEDULES. The Schedules and other disclosure referred to in this
Agreement shall be delivered as of the date hereof under cover of a letter from
the Chief Executive Officer, Vice Chairman, the President or the Chief Financial
Officer of Standard, Bank or TCF, as the case may be.
8.8 DESCRIPTIVE HEADINGS. The descriptive headings herein are inserted for
convenience of reference only and are not intended to be part of or to affect
the meaning or interpretation of this Agreement.
8.9 PARTIES IN INTEREST. Except as expressly provided in Section 5.15,
this Agreement shall be binding upon and inure solely to the benefit of each
party hereto and their respective successors, and nothing in this Agreement,
express or implied, is intended to confer upon any other person, including but
not limited to employees of Standard or any Standard Subsidiary, any rights or
remedies of any nature whatsoever under or by reason of this Agreement.
8.10 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
IN WITNESS WHEREOF, TCF and Standard have caused this Agreement to be
executed on the date first written above by their respective officers.
TCF FINANCIAL CORPORATION
By: /s/ GREGORY J. PULLES
-------------------------------------
Gregory J. Pulles
VICE CHAIRMAN AND GENERAL COUNSEL
STANDARD FINANCIAL, INC.
By: /s/ DAVID H. MACKIEWICH
-------------------------------------
David H. Mackiewich
CHAIRMAN AND PRESIDENT
TCF NATIONAL BANK ILLINOIS
By: /s/ MICHAEL B. JOHNSTONE
-------------------------------------
Michael B. Johnstone
PRESIDENT AND CEO
A-49
APPENDIX B
August 6, 1997
Board of Directors
Standard Financial, Inc.
800 Burr Ridge Parkway
Burr Ridge, IL 60521
Members of the Board:
You have asked us to advise you with respect to the fairness, from a
financial point of view, to the holders of the common stock, par value $0.01 per
share (the "Shares"), of Standard Financial, Inc. (the "Company") of the
consideration to be received by such holders pursuant to the terms of the
Agreement and Plan of Reorganization, dated as of March 16, 1997 and as amended
(the "Agreement"), by and between the Company and TCF Financial Corporation
("TCF"). The Agreement provides for, among other things, a strategic combination
of the Company and TCF to be effected pursuant to a series of transactions as a
result of which TCF will own all of the assets and have assumed all of the
liabilities of the Company. Such transactions have been treated for purposes of
the opinion expressed herein as a unitary transaction, and are collectively
referred to herein as the "Combination". We express no separate opinion with
respect to either the Conversion/Reincorporation or the Merger as such terms are
defined in the Agreement. Our opinion addresses only the fairness, from a
financial point of view, of the consideration to be received by the stockholders
of the Company upon completion of the Combination.
Pursuant to the Agreement, each Share, except as otherwise provided in the
Agreement, as a result of the Combination will be converted into the right to
receive and be exchangeable for a number of shares of common stock, par value
$0.01 per share, of TCF (the "TCF Common Stock") and/or cash determined as set
forth in the Agreement. Holders of Shares may elect to receive either TCF Common
Stock or cash, subject to certain procedures contained in the Agreement, as to
which procedures we express no opinion.
In connection with rendering our opinion, we have reviewed and analyzed the
financial terms and conditions of the Agreement. We also have reviewed, among
other things, certain publicly available business and financial information
relating to the Company and TCF for recent years and interim periods to date, as
well as certain internal financial and operating information, including
financial forecasts, analyses and projections prepared by or on behalf of the
Company and TCF and provided to us for purposes of our analysis. We have met
with senior management of the Company and certain members of the management of
TCF to review and discuss such information and, among other matters, the
Company's and TCF's business, operations, assets, financial condition and future
prospects.
We have reviewed and considered certain financial and stock market data
including, among other things, historical stock prices and trading volumes
relating to the Company and TCF, and we have compared that data with similar
data for certain other depository institutions and holding companies the
securities of which are publicly traded that we believe may be relevant or
comparable in certain respects to the Company or TCF. We have reviewed and
considered the financial terms of certain recent acquisitions and business
combination transactions of depository institutions and holding companies which
we believe to be reasonably comparable to the Combination or otherwise relevant
to our inquiry. We have also performed such other studies, analyses, and
investigations and reviewed such other information as we considered appropriate.
In our review and analysis and in formulating our opinion, we have assumed
and relied upon the accuracy and completeness of all the financial and other
information provided to or discussed with us or publicly available, and we have
not assumed any responsibility for independent verification of any of such
information. We also have relied upon the reasonableness and accuracy of the
financial forecasts, analyses and projections provided to us and we have
assumed, with your consent, that the financial forecasts, analyses and
projections provided to us were reasonably prepared in good faith and on bases
reflecting the
B-1
best currently available judgements and estimates of the Company's and TCF's
managements, and that such forecasts and projections, including the assumed cost
savings, operating efficiencies and revenue enhancements contained therein, will
be realized in the amounts and in the time periods currently estimated by the
Company and TCF. We express no opinion with respect to such forecasts, analyses
and projections or the assumptions upon which they are based.
In addition, we have not assumed any responsibility for conducting a
physical inspection of the properties or facilities of the Company of TCF, or
for making or obtaining an independent valuation or appraisal of the assets or
liabilities of the Company or TCF, and no such independent valuation or
appraisal was provided to us. We are not experts in the evaluation of loan
portfolios or the allowances for loan losses with respect thereto and have
assumed with your consent that existing allowances for the Company and TCF are
in the aggregate adequate to cover such losses. In addition, we have not
reviewed individual credit files of the Company or TCF or any of their
subsidiaries, nor have we performed a review of the securities inventories of
the Company or TCF or any of their subsidiaries. Our opinion is necessarily
based on economic and market conditions and other circumstances as they exist
and can be evaluated by us as of the date hereof.
We note that the Combination is intended to qualify as a tax-free
reorganization within the meaning of Section 368(a) of the Internal Revenue Code
of 1986, as amended, and we have assumed that the Combination will so qualify.
In rendering our opinion, we have assumed that the Combination will be
consummated on the terms described in the Agreement, without any waiver of any
material terms or conditions, and that obtaining the necessary regulatory
approvals and third party consents for the Combination will not have an adverse
effect on TCF following the Combination.
We have not contacted all potential merger partners for the Company.
Instead, we contacted a limited number of parties as determined in consultation
with management and the Company's Board of Directors.
We are acting as financial advisor to the Company in connection with the
Combination and will receive a fee for our services, a major portion of which is
contingent upon the consummation of the Combination. WP&Co. has performed
advisory services for the Company in the past and has received customary fees
for those services.
Our opinion addresses only the fairness from a financial point of view to
the stockholders of the Company of the consideration to be received pursuant to
the Agreement and does not address the Company's underlying business decision to
effect the Combination.
It is understood that this letter is for the benefit and use of the Board of
Directors of the Company in its consideration of the Combination and, except for
inclusion in its entirety in a registration statement or proxy statement or both
relating to the Combination, may not be used for any other purpose or
reproduced, disseminated, quoted or referred to at any time, in any manner or
for any purpose without our prior written consent. This opinion does not
constitute a recommendation to the Board of Directors or any stockholder with
respect to approval of the Combination, and we are expressing no opinion herein
as to the prices at which the securities of the Company or TCF may trade
following the announcement or the completion of the Combination.
Based upon and subject to the foregoing, including the various assumptions
and limitations set forth herein, it is our opinion that, as of the date hereof,
the consideration to be received by the stockholders of the Company in the
Combination is fair to the stockholders of the Company from a financial point of
view.
Very truly yours,
WASSERSTEIN PERELLA & CO., INC.
B-2
APPENDIX C
DELAWARE GENERAL CORPORATION LAW
SECTION 262 APPRAISAL RIGHTS.--(a) Any stockholder of a corporation of
this State who holds shares of stock on the date of the making of a demand
pursuant to subsection (d) of this section with respect to such shares, who
continuously holds such shares through the effective date of the merger or
consolidation, who has otherwise complied with subsection (d) of this section
and who has neither voted in favor of the merger or consolidation nor consented
thereto in writing pursuant to Section228 of this title shall be entitled to an
appraisal by the Court of Chancery of the fair value of his shares of stock
under the circumstances described in subsections (b) and (c) of this section. As
used in this section, the word "stockholder" means a holder of record of stock
in a stock corporation and also a member of record of a nonstock corporation;
the words "stock" and "share" mean and include what is ordinarily meant by those
words and also membership or membership interest of a member of a nonstock
corporation; and the words "depository receipt" mean a receipt or other
instrument issued by a depository representing an interest in one or more
shares, or fractions thereof, solely of stock of a corporation, which stock is
deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to Section251 (other than a merger effected pursuant to
subsection (g) of Section 251), 252, 254, 257, 258, 263 or 264 of this title:
(1) Provided, however, that no appraisal rights under this section shall
be available for the shares of any class or series of stock, which stock, or
depository receipts in respect thereof, at the record date fixed to
determine the stockholders entitled to receive notice of and to vote at the
meeting of stockholders to act upon the agreement of merger or
consolidation, were either (i) listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or (ii) held
of record by more than 2,000 holders; and further provided that no appraisal
rights shall be available for any shares of stock of the constituent
corporation surviving a merger if the merger did not require for its
approval the vote of the holders of the surviving corporation as provided in
subsection (f) of Section251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights
under this section shall be available for the shares of any class or series
of stock of a constituent corporation if the holders thereof are required by
the terms of an agreement of merger or consolidation pursuant to
SectionSection251, 252, 254, 257, 258, 263 and 264 of this title to accept
for such stock anything except:
a. Shares of stock of the corporation surviving or resulting from
such merger or consolidation, or depository receipts in respect thereof;
b. Shares of stock of any other corporation, or depository receipts
in respect thereof, which shares of stock or depository receipts at the
effective date of the merger or consolidation will be either listed on a
national securities exchange or designated as a national market system
security on an interdealer quotation system by the National Association
of Securities Dealers, Inc. or held of record by more than 2,000 holders;
c. Cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a. and b. of this
paragraph; or
d. Any combination of the shares of stock, depository receipts and
cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a., b. and c. of this paragraph.
C-1
(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected under Section253 of this title is not owned by
the parent corporation immediately prior to the merger, appraisal rights
shall be available for the shares of the subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets of
the corporation. If the certificate of incorporation contains such a provision,
the procedures of this section, including those set forth in subsections (d) and
(e) of this section, shall apply as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights are
provided under this section is to be submitted for approval at a meeting of
stockholders, the corporation, not less than 20 days prior to the meeting,
shall notify each of its stockholders who was such on the record date for
such meeting with respect to shares for which appraisal rights are available
pursuant to subsections (b) or (c) hereof that appraisal rights are
available for any or all of the shares of the constituent corporations, and
shall include in such notice a copy of this section. Each stockholder
electing to demand the appraisal of his shares shall deliver to the
corporation, before the taking of the vote on the merger or consolidation, a
written demand for appraisal of his shares. Such demand will be sufficient
if it reasonably informs the corporation of the identity of the stockholder
and that the stockholder intends thereby to demand the appraisal of his
shares. A proxy or vote against the merger or consolidation shall not
constitute such a demand. A stockholder electing to take such action must do
so by a separate written demand as herein provided. Within 10 days after the
effective date of such merger or consolidation, the surviving or resulting
corporation shall notify each stockholder of each constituent corporation
who has complied with this subsection and has not voted in favor of or
consented to the merger or consolidation of the date that the merger or
consolidation has become effective; or
(2) If the merger or consolidation was approved pursuant to Section228
or Section253 of this title, each constituent corporation, either before the
effective date of the merger or consolidation or within ten days thereafter,
shall notify each of the holders of any class or series of stock of such
constituent corporation who are entitled to appraisal rights of the approval
of the merger or consolidation and that appraisal rights are available for
any or all shares of such class or series of stock of such constituent
corporation, and shall include in such notice a copy of this section;
provided that, if the notice is given on or after the effective date of the
merger or consolidation, such notice shall be given by the surviving or
resulting corporation to all such holders of any class or series of stock of
a constituent corporation that are entitled to appraisal rights. Such notice
may, and, if given on or after the effective date of the merger or
consolidation, shall, also notify such stockholders of the effective date of
the merger or consolidation. Any stockholder entitled to appraisal rights
may, within twenty days after the date of mailing of such notice, demand in
writing from the surviving or resulting corporation the appraisal of such
holder's shares. Such demand will be sufficient if it reasonably informs the
corporation of the identify of the stockholder and that the stockholder
intends thereby to demand the appraisal of such holder's shares. If such
notice did not notify stockholders of the effective date of the merger or
consolidation, either (i) each such constituent corporation shall send a
second notice before the effective date of the merger or consolidation
notifying each of the holders of any class or series of stock of such
constituent corporation that are entitled to appraisal rights of the
effective date of the merger or consolidation or (ii) the surviving or
resulting corporation shall send such a second notice to all such holders on
or within 10 days after such effective date; provided, however, that if such
second notice is sent more than 20 days following the sending of the first
notice, such second notice need only be sent to each stockholder who is
entitled to appraisal rights and who has demanded appraisal of such holders'
shares in accordance with this subsection. An affidavit of the
C-2
secretary or assistant secretary or of the transfer agent of the corporation
that is required to give either notice that such notice has been given
shall, in the absence of fraud, be prima facie evidence of the facts stated
therein. For purposes of determining the stockholders entitled to receive
either notice, each constituent corporation may fix, in advance, a record
date that shall be not more than 10 days prior to the date the notice is
given; provided that, if the notice is given on or after the effective date
of the merger or consolidation, the record date shall be such effective
date. If no record date is fixed and the notice is given prior to the
effective date, the record date shall be the close of business on the day
next preceding the day on which the notice is given.
(e) Within 120 days after the effective date of the merger or consolidation,
the surviving or resulting corporation or any stockholder who has complied with
subsections (a) and (d) hereof and who is otherwise entitled to appraisal
rights, may file a petition in the Court of Chancery demanding a determination
of the value of the stock of all such stockholders. Notwithstanding the
foregoing, at any time within 60 days after the effective date of the merger or
consolidation, any stockholder shall have the right to withdraw his demand for
appraisal and to accept the terms offered upon the merger or consolidation.
Within 120 days after the effective date of the merger or consolidation, any
stockholder who has complied with the requirements of subsections (a) and (d)
hereof, upon written request, shall be entitled to receive from the corporation
surviving the merger or resulting from the consolidation a statement setting
forth the aggregate number of shares not voted in favor of the merger or
consolidation and with respect to which demands for appraisal have been received
and the aggregate number of holders of such shares. Such written statement shall
be mailed to the stockholder within 10 days after his written request for such a
statement is received by the surviving or resulting corporation or within 10
days after expiration of the period for delivery of demands for appraisal under
subsection (d) hereof, whichever is later.
(f) Upon the filing of any such petition by a stockholder, service of a copy
thereof shall be made upon the surviving or resulting corporation, which shall
within 20 days after such service file in the office of the Register in Chancery
in which the petition was filed a duly verified list containing the names and
addresses of all stockholders who have demanded payment for their shares and
with whom agreements as to the value of their shares have not been reached by
the surviving or resulting corporation. If the petition shall be filed by the
surviving or resulting corporation, the petition shall be accompanied by such a
duly verified list. The Register in Chancery, if so ordered by the Court, shall
give notice of the time and place fixed for the hearing of such petition by
registered or certified mail to the surviving or resulting corporation and to
the stockholders shown on the list at the addresses therein stated. Such notice
shall also be given by 1 or more publications at least 1 week before the day of
the hearing, in a newspaper of general circulation published in the City of
Wilmington, Delaware or such publication as the Court deems advisable. The forms
of the notices by mail and by publication shall be approved by the Court, and
the costs thereof shall be borne by the surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled to
appraisal rights. The Court may require the stockholders who have demanded an
appraisal for their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as to
such stockholder.
(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any element
of value arising from the accomplishment or expectation of the merger or
consolidation, together with a fair rate of interest, if any, to be paid upon
the amount determined to be the fair value. In determining such fair value, the
Court shall take into account all relevant factors. In determining the fair rate
of interest, the Court may consider all relevant factors, including the rate of
interest which the surviving or resulting corporation would have had to pay to
borrow money during the pendency of the proceeding. Upon application by the
surviving or resulting corporation or by any stockholder entitled to participate
in the appraisal proceeding, the Court may, in its discretion,
C-3
permit discovery or other pretrial proceedings and may proceed to trial upon the
appraisal prior to the final determination of the stockholder entitled to an
appraisal. Any stockholder whose name appears on the list filed by the surviving
or resulting corporation pursuant to subsection (f) of this section and who has
submitted his certificates of stock to the Register in Chancery, if such is
required, may participate fully in all proceedings until it is finally
determined that he is not entitled to appraisal rights under this section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to the
stockholders entitled thereto. Interest may be simple or compound, as the Court
may direct. Payment shall be so made to each such stockholder, in the case of
holders of uncertificated stock forthwith, and the case of holders of shares
represented by certificates upon the surrender to the corporation of the
certificates representing such stock. The Court's decree may be enforced as
other decrees in the Court of Chancery may be enforced, whether such surviving
or resulting corporation be a corporation of this State or of any state.
(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded his appraisal rights as provided in subsection (d)
of this section shall be entitled to vote such stock for any purpose or to
receive payment of dividends or other distributions on the stock (except
dividends or other distributions payable to stockholders of record at a date
which is prior to the effective date of the merger or consolidation); provided,
however, that if no petition for an appraisal shall be filed within the time
provided in subsection (e) of this section, or if such stockholder shall deliver
to the surviving or resulting corporation a written withdrawal of his demand for
an appraisal and an acceptance of the merger or consolidation, either within 60
days after the effective date of the merger or consolidation as provided in
subsection (e) of this section or thereafter with the written approval of the
corporation, then the right of such stockholder to an appraisal shall cease.
Notwithstanding the foregoing, no appraisal proceeding in the Court of Chancery
shall be dismissed as to any stockholder without the approval of the Court, and
such approval may be conditioned upon such terms as the Court deems just.
(l) The shares of the surviving or resulting corporation to which the shares
of such objecting stockholders would have been converted had they assented to
the merger or consolidation shall have the status of authorized and unissued
shares of the surviving or resulting corporation.
C-4
PROXY PROXY
STANDARD FINANCIAL, INC.
PROXY SOLICITED BY BOARD OF DIRECTORS
The undersigned hereby appoints David H. Mackiewich and Leonard A. Metheny,
Sr., or either of them, as proxies with full power of substitution, to vote
all shares of stock of Standard Financial, Inc. held of record in the name of
the undersigned at the close of business on July 11, 1997 at a Special
Meeting of Stockholders to be held on September 4, 1997, or at any
adjournments thereof, hereby revoking all former proxies, on the items set
forth on the reverse side hereof, as described in the accompanying Proxy
Statement/Prospectus and upon such other business as may properly come before
the Special Meeting including any matters which the Board of Directors did
not know, a reasonable time before mailing this solicitation, would be
presented at the Special Meeting, and matters incident to the conduct of the
Special Meeting.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED,
THIS PROXY WILL BE VOTED "FOR" APPROVAL OF THE AGREEMENT AND PLAN OF
REORGANIZATION, DATED AS OF MARCH 16, 1997, AND AS AMENDED, BY AND AMONG
STANDARD FINANCIAL, INC., TCF FINANCIAL CORPORATION AND TCF NATIONAL BANK
ILLINOIS. IF ANY OTHER BUSINESS IS PRESENTED AT SUCH MEETING, THIS PROXY WILL
BE VOTED BY THE PROXY HOLDERS IN THEIR BEST JUDGMENT. AT PRESENT, THE BOARD
OF DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE MEETING.
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
STANDARD FINANCIAL, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY /X/
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
THE FOLLOWING PROPOSALS:
1. A proposal to approve and adopt the Agreement and Plan of Reorganization,
dated as of March 16, 1997, and as amended, by and among Standard
Financial, Inc., TCF Financial Corporation and TCF National Bank
Illinois, and each of the transactions contemplated thereby.
For Against Abstain
/ / / / / /
2. Any proposal to adjourn the Special Meeting to a later date to permit
further solicitation of proxies if an insufficient number of shares is
present in person or by proxy at the Special Meeting to approve and adopt
the Reorganization Agreement and the transactions contemplated thereby.
For Against Abstain
/ / / / / /
Date:_____________________________________________
__________________________________________________
__________________________________________________
Signature(s)
NOTE: Please sign name exactly as it appears on
this proxy card. When signing as attorney,
executor, administrator, trustee or guardian,
please give full title as such.