EXHIBIT 2.2
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AGREEMENT AND PLAN OF MERGER
BY AND AMONG
WINTRUST FINANCIAL CORPORATION,
WTFC MERGER CO.,
AND
VILLAGE BANCORP, INC.
Dated August 7, 2003
TABLE OF CONTENTS
PAGE
ARTICLE 1 THE MERGER.................................................................................1
1.1 The Merger.................................................................................1
1.2 Effective Time.............................................................................1
1.3 Effect of the Merger.......................................................................1
1.4 Conversion of Shares; Merger Consideration.................................................2
1.5 Company Stock Options......................................................................3
1.6 Cancellation of Treasury Shares............................................................4
1.7 Capital Stock of Merger Co.................................................................4
1.8 Recapitalization...........................................................................4
1.9 Tax Treatment..............................................................................5
1.10 Closing....................................................................................5
ARTICLE 2 EXCHANGE OF CERTIFICATES...................................................................5
2.1 Wintrust to Make Shares and Cash Available.................................................5
2.2 No Fractional Shares.......................................................................5
2.3 Exchange of Certificates; Surrender of Warrants............................................6
ARTICLE 3 REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANY......................................8
3.1 Organization...............................................................................8
3.2 Organizational Documents; Minutes and Stock Records........................................8
3.3 Capitalization.............................................................................9
3.4 Authorization; No Violation................................................................9
3.5 Consents and Approvals....................................................................10
3.6 Financial Statements......................................................................10
3.7 No Undisclosed Liabilities................................................................11
3.8 Loans; Allowance for Loan Losses..........................................................11
3.9 Properties and Assets.....................................................................11
3.10 Material Contracts........................................................................12
3.11 No Defaults...............................................................................14
3.12 Conflict of Interest Transactions.........................................................14
3.13 Investments...............................................................................14
3.14 Compliance with Laws; Legal Proceedings...................................................15
3.15 Insurance.................................................................................15
3.16 Taxes.....................................................................................16
3.17 Environmental Laws and Regulations........................................................16
3.18 Community Reinvestment Act Compliance.....................................................17
3.19 Company Regulatory Reports................................................................17
3.20 Employee Benefit Plans....................................................................18
3.21 Technology and Intellectual Property......................................................19
3.22 No Adverse Change.........................................................................20
3.23 Conduct of Business in Normal Course......................................................20
3.24 Change in Business Relationships..........................................................20
3.25 Brokers' and Finders' Fees................................................................21
3.26 Section 280G..............................................................................21
TABLE OF CONTENTS
(CONTINUED)
PAGE
ARTICLE 4 REPRESENTATIONS AND WARRANTIES CONCERNING WINTRUST AND MERGER CO..........................21
4.1 Organization..............................................................................21
4.2 Capitalization............................................................................21
4.3 Authorization; No Violations..............................................................22
4.4 Consents and Approvals....................................................................22
4.5 Wintrust SEC Documents and Financial Statements...........................................22
4.6 Compliance with Laws; Legal Proceedings...................................................23
4.7 Wintrust Regulatory Reports...............................................................23
4.8 No Adverse Change.........................................................................24
4.9 Brokers' and Finders' Fees................................................................24
4.10 Taxation of the Merger....................................................................24
ARTICLE 5 AGREEMENTS AND COVENANTS..................................................................24
5.1 Conduct of Business.......................................................................24
5.2 Access to Information.....................................................................26
5.3 Meeting of Shareholders of the Company....................................................26
5.4 Registration Statement and Regulatory Filings.............................................26
5.5 Listing of Shares.........................................................................27
5.6 Reasonable and Diligent Efforts...........................................................27
5.7 Business Relations and Publicity..........................................................28
5.8 No Conduct Inconsistent with this Agreement...............................................28
5.9 Pre-Closing Loan Review...................................................................29
5.10 Board of Directors' Notices and Minutes...................................................29
5.11 Untrue Representations and Warranties.....................................................29
5.12 Director and Officer Indemnification and Liability Coverage...............................30
5.13 Monthly Financial Statements..............................................................31
5.14 Dissent Process...........................................................................31
5.15 Section 368(a) Reorganization.............................................................31
5.16 Treatment of Warrants and Options.........................................................31
5.17 Converted Options.........................................................................31
5.18 Premium Finance Lending Issue.............................................................32
ARTICLE 6 EMPLOYEE BENEFIT MATTERS..................................................................32
6.1 Benefit Plans.............................................................................32
6.2 No Rights or Remedies.....................................................................33
ARTICLE 7 CONDITIONS PRECEDENT TO OBLIGATIONS OF WINTRUST AND MERGER CO.............................33
7.1 Representations and Warranties; Performance of Agreements.................................33
7.2 Closing Certificate.......................................................................33
7.3 Regulatory and Other Approvals............................................................34
7.4 Approval of Merger and Delivery of Agreement..............................................34
7.5 Effectiveness of the Registration Statement...............................................34
7.6 No Litigation.............................................................................34
7.7 Environmental Surveys.....................................................................34
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TABLE OF CONTENTS
(CONTINUED)
PAGE
7.8 Opinion of Counsel........................................................................34
7.9 Employment Agreements.....................................................................34
7.10 No Adverse Changes........................................................................35
7.11 Minimum Net Worth and Loan Loss Reserve Requirements......................................35
7.12 Voting Agreements.........................................................................35
7.13 Satisfaction of Premium Finance Lending Issue.............................................35
7.14 Consents; Release of Pledged Shares.......................................................35
7.15 Other Documents...........................................................................35
ARTICLE 8 CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY........................................36
8.1 Representations and Warranties; Performance of Agreements.................................36
8.2 Closing Certificates......................................................................36
8.3 Regulatory and Other Approvals............................................................36
8.4 Delivery of Agreement.....................................................................36
8.5 Effectiveness of the Registration Statement...............................................36
8.6 No Litigation.............................................................................36
8.7 Opinions of Counsel.......................................................................37
8.8 No Adverse Changes........................................................................37
8.9 Nasdaq Listing............................................................................37
8.10 Other Documents...........................................................................37
ARTICLE 9 NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS.................................37
9.1 Non-Survival..............................................................................37
ARTICLE 10 GENERAL...................................................................................38
10.1 Expenses..................................................................................38
10.2 Termination...............................................................................39
10.3 Confidential Information..................................................................40
10.4 Non-Assignment............................................................................40
10.5 Notices...................................................................................40
10.6 Counterparts..............................................................................41
10.7 Knowledge.................................................................................41
10.8 Entire Agreement..........................................................................41
10.9 Governing Law.............................................................................41
10.10 Severability..............................................................................41
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DEFINED TERMS
$X.............................................................................................................2
Acquisition Proposal..........................................................................................28
Agreement......................................................................................................1
Bank...........................................................................................................8
Benefit Plans.................................................................................................18
BHCA...........................................................................................................8
CERCLA........................................................................................................17
Certificate of Merger..........................................................................................1
Closing........................................................................................................5
Closing Date...................................................................................................5
Code...........................................................................................................1
Commission....................................................................................................10
Company........................................................................................................1
Company Board..................................................................................................9
Company Common Stock...........................................................................................2
Company Option Plan............................................................................................3
Company Regulatory Reports....................................................................................18
Company Stock Certificates.....................................................................................5
Conversion Fund................................................................................................5
Converted Option...............................................................................................4
CRA...........................................................................................................17
DGCL...........................................................................................................1
Dissenting Shares..............................................................................................3
Effective Time.................................................................................................1
Employees.....................................................................................................32
Encumbrances..................................................................................................12
Environmental Laws............................................................................................16
ERISA Affiliate...............................................................................................18
ERISA Plans...................................................................................................18
Exchange Act..................................................................................................22
Exchange Agent.................................................................................................5
Exchange Ratio.................................................................................................2
FDIC..........................................................................................................17
Federal Reserve...............................................................................................10
Federal Reserve Application...................................................................................10
Financial Statements..........................................................................................10
GAAP...........................................................................................................8
Governmental Authority........................................................................................10
Hazardous Substance...........................................................................................17
Illinois Act..................................................................................................22
Intellectual Property.........................................................................................20
Interim Financial Statements..................................................................................10
Investment Securities.........................................................................................14
IOBRE.........................................................................................................10
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DEFINED TERMS
IOBRE Application.............................................................................................10
knowledge.....................................................................................................41
Loans.........................................................................................................11
Material Adverse Effect........................................................................................8
Material Contracts............................................................................................12
Maximum Amount................................................................................................30
Merger.........................................................................................................1
Merger Co......................................................................................................1
Option Conversion Agreement....................................................................................4
OREO..........................................................................................................11
Outstanding Company Option.....................................................................................3
Parties........................................................................................................1
Permitted Encumbrances........................................................................................12
Plan Amendment.................................................................................................4
Proxy Statement/Prospectus....................................................................................10
Registration Statement........................................................................................26
Retained Plans................................................................................................32
Returns.......................................................................................................16
Securities Act................................................................................................10
Shareholders Meeting..........................................................................................26
Superior Acquisition Proposal.................................................................................29
Surviving Corporation..........................................................................................1
Valuation Date.................................................................................................2
Warrant Cancellation Agreement.................................................................................3
Warrant Consideration..........................................................................................3
Warrants.......................................................................................................9
Wintrust.......................................................................................................1
Wintrust Common Stock..........................................................................................2
Wintrust Common Stock Price....................................................................................2
Wintrust Regulatory Reports...................................................................................23
Wintrust SEC Documents........................................................................................22
Wintrust Stock Certificates....................................................................................5
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DISCLOSURE SCHEDULES
Schedule of Warrant Holders...............................................3.3(a)
Pledge of Bank Common Stock...............................................3.3(b)
Authorization; No Violation..................................................3.4
Consents and Approvals.......................................................3.5
Financial Statements.........................................................3.6
Undisclosed Liabilities......................................................3.7
Schedule of Real Property.................................................3.9(a)
Schedule of Tangible Personal Property....................................3.9(b)
Schedule of Material Contracts..............................................3.10
Schedule of Interested Transactions.........................................3.12
Investments.................................................................3.13
Legal Proceedings........................................................3.14(b)
Schedule of Insurance.......................................................3.15
Environmental Laws and Regulations..........................................3.17
Schedule of Intellectual Property...........................................3.21
Scheduled Compensation Changes............................................5.1(c)
Permitted Company Distribution............................................5.1(e)
Permitted Expenditures....................................................5.1(l)
Monthly Financial Statements: Exceptions to GAAP............................5.13
Employees....................................................................6.1
Key Management Personnel.....................................................7.9
Voting Agreements...........................................................7.12
EXHIBITS
Exhibit A Form of Warrant Cancellation Agreement
Exhibit B Form of Option Conversion Agreement
Exhibit C Form of Opinion of Company Counsel
Exhibits D-1, D-2 Forms of Key Management Employment Agreement
Exhibit E Form of Voting Agreement
Exhibit F Form of Opinion of Wintrust Counsel
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Agreement"), is entered into
as of the 7th day of August, 2003, by and among WINTRUST FINANCIAL CORPORATION,
an Illinois corporation ("Wintrust"), WTFC MERGER CO., a Delaware corporation
and wholly owned subsidiary of Wintrust ("Merger Co."), and VILLAGE BANCORP,
INC., a Delaware corporation (the "Company"). Wintrust, Merger Co., and the
Company are referred to collectively in this Agreement as the "Parties."
RECITALS
WHEREAS, the boards of directors of each of the Parties have approved
and declared it advisable and in the best interest of the Parties and their
respective shareholders to effect a reorganization, whereby Merger Co. will
merge with and into the Company, in the manner and on the terms and subject to
the conditions set forth in Article I below (the "Merger"), as a result of which
the Company will become a wholly owned subsidiary of Wintrust.
WHEREAS, for federal income tax purposes the Parties desire and intend
that the Merger qualify as a reorganization in accordance with Section 368(a) of
the Internal Revenue Code of 1986, as amended (the "Code").
NOW THEREFORE, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations, warranties and
covenants herein contained, the Parties hereby agree as follows.
ARTICLE 1
THE MERGER
1.1 The Merger. At the Effective Time (as defined in Section 1.2), in
accordance with this Agreement and the Delaware General Corporation Law (the
"DGCL"), Merger Co. shall be merged with and into the Company, and the Company
shall continue as the corporation surviving the Merger (the "Surviving
Corporation"), and shall be a wholly owned subsidiary of Wintrust.
1.2 Effective Time. As of the Closing, the Parties will cause a
certificate of merger (the "Certificate of Merger") with respect to the Merger
to be executed and filed with the Secretary of State of the State of Delaware as
provided in the DGCL. The Merger shall become effective on the date and time at
which the Certificate of Merger is duly filed by the Secretary of State of the
State of Delaware, or at such other date and time as is agreed among the Parties
and specified in the Certificate of Merger (the "Effective Time").
1.3 Effect of the Merger. At and after the Effective Time:
(a) the Merger shall have the effect set forth in Section 259
of the DGCL;
(b) the certificate of incorporation of the Company, as in
effect immediately prior to the Effective Time, shall be the certificate of
incorporation of the Surviving Corporation until thereafter amended as provided
therein or by applicable law;
(c) the by-laws of Merger Co., copies of which have been
previously provided to the Company, as in effect immediately prior to the
Effective Time shall be the by-laws of the Surviving Corporation until
thereafter amended as provided therein or by applicable law; and
(d) the directors and officers of the Company immediately
prior to the Effective Time shall be the directors and officers of the Surviving
Corporation until their successors have been duly elected or appointed and
qualified, or until their earlier death, resignation or removal in accordance
with the articles of incorporation and the by-laws of the Surviving Corporation.
1.4 Conversion of Shares; Merger Consideration.
(a) Wintrust Common Stock. At the Effective Time, each share
of common stock of the Company, par value $0.01 per share ("Company Common
Stock"), issued and outstanding immediately prior to the Effective Time shall by
reason of the Merger and without any action by the holder thereof, be converted
into the right to receive that number of shares, rounded to the nearest one
thousandth of a share, of common stock of Wintrust ("Wintrust Common Stock"),
determined as follows (the "Exchange Ratio"):
(i) "Wintrust Common Stock Price" shall mean the
unweighted average of the high and low sale prices of a share of
Wintrust Common Stock as reported on the Nasdaq National Market for
each of the ten trading days ending on the second trading day preceding
the Closing Date (as defined in Section 1.10).
(ii) "$X" shall mean the price per share of Company
Common Stock as determined using the following formula:
(b) $9,000,000 = [A x $X ] + [B x ( $X - $6.50)] +
[C x ($X - $7.50)],
(c) where "A" is the total shares of Company Common Stock
issued and outstanding as of the Valuation Date, "B" is the total number of
Warrants (as defined in section 3.3) with a per share exercise price of $6.50
outstanding as of the Valuation Date, "C" is the total number of Warrants (as
defined in section 3.3) with a per share exercise price of $7.50 outstanding as
of the Valuation Date, and "Valuation Date" is the date of commencement of the
ten trading-day period during which the Wintrust Common Stock Price is
determined.
(i) If the Wintrust Common Stock Price is at least
$25.00 and no greater than $35.00, the Exchange Ratio shall be equal to
the quotient of $X divided by the Wintrust Common Stock Price.
(ii) If the Wintrust Common Stock Price is less than
$25.00, the Exchange Ratio shall be equal to the quotient of $X divided
by $25.00.
(iii) If the Wintrust Common Stock Price is greater
than $35.00, the Exchange Ratio shall be equal to the quotient of $X
divided by $35.00.
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(d) Warrant Consideration.
(i) At the Effective Time, each outstanding Warrant
shall be converted into the right to receive an amount (the "Warrant
Consideration") in cash equal to the number of shares of Company Common
Stock subject to such Warrant multiplied by the difference between (i)
$X (as determined using the formula above) and (ii) the per share
exercise price associated with such Warrant.
(ii) The Company shall provide to Wintrust, not less
than five (5) business days prior to the Closing Date, copies of an
agreement in the form of Exhibit A attached hereto (the "Warrant
Cancellation Agreement") executed by each of the holders of outstanding
Warrants acknowledging their agreement and consent to such terms of
conversion.
(e) Effect on Capital Stock; Dissenting Shares.
(i) All of the shares of Company Common Stock
converted into Wintrust Common Stock in accordance with this Article I
shall no longer be outstanding and shall automatically be cancelled and
retired and shall cease to exist as of the Effective Time, and each
certificate previously representing any such shares of Company Common
Stock shall cease to have any rights with respect thereto, except the
right to (1) receive, in accordance with Section 2.3(a), a certificate
representing the number of whole shares of Wintrust Common Stock
determined pursuant to this Section 1.4 and cash in lieu of any
fractional shares thereof determined pursuant to Section 2.2, or (2)
exercise dissenters' rights in accordance with, and subject to the
provisions of, the DGCL, as described below.
(ii) Any holder of Company Common Stock otherwise
entitled to receive Wintrust Common Stock in exchange for his or her
shares shall be entitled to demand payment of the fair cash value of
such shares as specified in Section 262 of the DGCL if the holder
follows the procedures specified therein (such shares hereinafter
referred to as "Dissenting Shares"). Any holder of Dissenting Shares
shall not, after the Effective Time, be entitled to receive shares of
Wintrust Common Stock pursuant to this Agreement, or be entitled to
vote for any purpose or receive any dividends or other distributions
with respect to such Wintrust Common Stock; provided, however, that
shares of Company Common Stock held by a dissenting shareholder who
subsequently withdraws a demand for payment, fails to comply with the
requirements of the DGCL, or otherwise fails to establish the right of
such shareholder to be paid the fair cash value of such shareholder's
shares under the DGCL shall be deemed to be converted into shares of
Wintrust Common Stock pursuant to the terms and conditions specified
herein.
1.5 Company Stock Options.
(a) At the Effective Time, each option granted by the Company
under the terms of the Company's 1998 Omnibus Stock Incentive Plan (the "Company
Option Plan") to purchase shares of Company Common Stock that is outstanding and
unexercised immediately prior to the Effective Time (an "Outstanding Company
Option"), shall be converted into an
3
option to purchase shares of Wintrust Common Stock (a "Converted Option"), in
such number and at such exercise price as set forth herein, and otherwise having
the same terms and conditions as in effect immediately prior to the Effective
Time except to the extent that such Outstanding Company Options shall be altered
in accordance with their terms as a result of the Merger contemplated hereby, as
follows: (i) the number of shares of Wintrust Common Stock to be subject to the
Converted Option shall be equal to the product of (1) the number of shares of
Company Common Stock subject to the original Outstanding Company Option and (2)
the Exchange Ratio; (ii) the exercise price per share of Wintrust Common Stock
under the Converted Option shall be equal to (1) the exercise price per share of
Company Common Stock under the original Outstanding Company Option divided by
(2) the Exchange Ratio; and (iii) upon exercise of each Converted Option by a
holder thereof, the aggregate number of shares of Wintrust Common Stock
deliverable upon such exercise shall be rounded down, if necessary, to the
nearest whole share and the aggregate exercise price shall be rounded up, if
necessary, to the nearest cent.
(b) The adjustments provided herein with respect to any
Outstanding Company Options that are "incentive stock options" (as defined in
Section 422 of the Code) shall be effected in a manner consistent with the
requirements of Section 424(a) of the Code.
(c) The Company Option Plan shall be amended, effective as of
the Effective Time, to provide for the conversion of Outstanding Company Options
in accordance with Section 1.5(a) (the "Plan Amendment"). The Company shall
provide to Wintrust, not less than five (5) business days prior to the Closing
Date, copies of an agreement in the form of Exhibit B attached hereto (the
"Option Conversion Agreement") from each of the holders of Outstanding Company
Options acknowledging their agreement and consent to the Plan Amendment and to
such terms of conversion set forth in this Section 1.5.
1.6 Cancellation of Treasury Shares. At the Effective Time, each share
of Company Common Stock held as treasury stock, if any, immediately prior to the
Effective Time shall automatically be cancelled and retired and cease to exist,
and no shares of Wintrust Common Stock or other consideration shall be exchanged
therefor.
1.7 Capital Stock of Merger Co. Each share of common stock of Merger
Co. issued and outstanding immediately prior to the Effective Time shall be
converted into and become one share of common stock, par value $1.00, of the
Surviving Corporation with the same rights, powers and privileges as the shares
so converted and shall constitute the only outstanding capital stock of the
Surviving Corporation.
1.8 Recapitalization. In the event that Wintrust changes (or
establishes a record date for changing) the number of shares of Wintrust Common
Stock issued and outstanding as a result of a stock dividend, stock split,
recapitalization, reclassification, combination or similar transaction with
respect to the outstanding shares of Wintrust Common Stock, and the record date
therefor shall be after the date of this Agreement and prior to the Effective
Time, then the conversion provisions described in Section 1.4(a) shall be
appropriately and proportionately adjusted.
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1.9 Tax Treatment. It is intended that the 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 Section
368 of the Code.
1.10 Closing. The consummation of the transactions contemplated by this
Agreement shall take place at a closing (the "Closing") to be held on the fifth
business day following the date on which all of the conditions set forth in
Sections 7.3 and 7.4 of this Agreement have been satisfied or on such other date
as Wintrust and the Company may mutually agree (the "Closing Date"). In the
event of the filing of any motion for rehearing or any appeal from the decision
of any regulatory authority approving the transactions contemplated in this
Agreement or any legal proceedings of the type contemplated by Sections 7.6 or
8.6, Wintrust or the Company may postpone the Closing by written notice to the
other parties until such approvals have been obtained or such motion, appeal or
litigation has been resolved, but in no event shall such Closing be postponed
beyond the close of business on January 31, 2004 (except as may be extended
pursuant to Section 10.2(b)) without the consent of the boards of directors of
Wintrust and the Company. To the extent reasonably practicable and so long as
not in contravention of any other term or condition of this Agreement (and
assuming the conditions set forth in Sections 7.3 and 7.4 have been satisfied),
Wintrust shall use its reasonable efforts to coordinate the timing of the
Closing so that the Effective Time and the exchange of certificates described in
Section 2.3 may occur prior to the record date for the then next regularly
scheduled dividend to be paid with respect to Wintrust Common Stock; provided,
however, that the foregoing shall not, and shall not be interpreted to,
supersede any of the requirements set forth in Section 2.3(f). The Closing shall
take place at 10:00 a.m., local time, on the Closing Date at the offices of
Schiff Hardin & Waite, 6600 Sears Tower, Chicago, Illinois, or at such other
place and time upon which the parties may agree.
ARTICLE 2
EXCHANGE OF CERTIFICATES
2.1 Wintrust to Make Shares and Cash Available. At or prior to the
Effective Time, Wintrust shall authorize the issuance of and shall make
available to the Illinois Stock Transfer Company (the "Exchange Agent"), for the
benefit of the holders of certificates of Company Common Stock (the "Company
Stock Certificates") and the Warrants, for exchange in accordance with this
Article II, a sufficient number of certificates for shares of Wintrust Common
Stock (the "Wintrust Stock Certificates") to be issued pursuant to Section
1.4(a), and sufficient cash for payment of (a) the Warrant Consideration in
accordance with Section 1.4(b) and (b) cash in lieu of any fractional shares of
Wintrust Common Stock in accordance with Section 2.2. Such Wintrust Stock
Certificates and cash, together with any dividends or distributions with respect
thereto paid after the Effective Time, are referred to in this Article II as the
"Conversion Fund." Wintrust shall be solely responsible for the payment of any
fees and expenses of the Exchange Agent.
2.2 No Fractional Shares. Notwithstanding anything to the contrary
contained in this Agreement, no fractional shares of Wintrust Common Stock shall
be issued in the Merger. Each holder of shares of Company Common Stock who would
otherwise be entitled to receive a fractional part of a share of Wintrust Common
Stock pursuant to Section 1.4(a) shall instead be entitled to receive an amount
in cash (without interest) rounded to the nearest whole cent,
5
determined by multiplying the Wintrust Common Stock Price (as determined in
accordance with Section 1.4(a)) by the fractional share of Wintrust Common Stock
to which such former holder would otherwise be entitled.
2.3 Exchange of Certificates; Surrender of Warrants.
(a) As soon as practicable after the Effective Time, and in no
event later than five (5) business days thereafter, the Surviving Corporation
shall cause the Exchange Agent, pursuant to documentation reasonably
satisfactory to Wintrust and the Company, to mail to each holder of record of
one or more Company Stock Certificates or Warrants a letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss and title
to Company Stock Certificates and/or Warrants shall pass, only upon delivery of
such certificates and/or Warrants to the Exchange Agent) and instructions for
use in effecting the surrender of the Company Stock Certificates and the
Warrants pursuant to this Agreement.
(i) Upon proper surrender of a Company Stock
Certificate for exchange to the Exchange Agent, together with such
properly completed letter of transmittal, duly executed, the holder of
such Company Stock Certificate shall be entitled to receive in exchange
therefor, as applicable, (1) a Wintrust Stock Certificate representing
that number of whole shares of Wintrust Common Stock to which such
holder of Company Common Stock shall have become entitled pursuant to
Section 1.4(a) (after taking into account all shares of Company Common
Stock then held by such holder), and (2) a check representing the
amount of any cash in lieu of fractional shares that such holder has
the right to receive pursuant to Section 2.2 in respect of such Company
Stock Certificate, and the Company Stock Certificate so surrendered
shall forthwith be canceled. No interest will be paid or accrued on any
cash in lieu of fractional shares payable to holders of Company Stock
Certificates.
(ii) Upon proper surrender of a Warrant for exchange
to the Exchange Agent, together with such properly completed letter of
transmittal, duly executed, the holder of such Warrant shall be
entitled to receive in exchange therefor a check representing the
amount of Warrant Consideration to which such holder shall have become
entitled pursuant to Section 1.4(b) (after taking into account all
Warrants then held by such holder), and the Warrant so surrendered
shall forthwith be canceled. No interest will be paid or accrued on any
Warrant Consideration payable to holders of Warrants.
(b) If any Wintrust Stock Certificate is to be issued in a
name other than that in which the Company Stock Certificate surrendered in
exchange therefor is registered, it shall be a condition of the issuance thereof
that the Company Stock Certificate so surrendered shall be properly endorsed (or
accompanied by an appropriate instrument of transfer) and otherwise in proper
form for transfer, and that the person requesting such exchange shall pay to the
Exchange Agent in advance any transfer or other taxes required by reason of the
issuance of a Wintrust Stock Certificate in any name other than that of the
registered holder of the Company Stock Certificate surrendered, or required for
any other reason, or shall establish to the satisfaction of the Exchange Agent
that such tax has been paid or is not payable.
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(c) After the Effective Time, there shall be no transfers on
the stock transfer books of the Company of the shares of Company Common Stock or
Warrants that were issued and outstanding immediately prior to the Effective
Time.
(d) Any portion of the Conversion Fund that remains unclaimed
by the shareholders of the Company for twelve (12) months after the Effective
Time shall be paid to the Surviving Corporation. Any shareholders of the Company
who have not theretofore complied with this Article II shall thereafter look
only to the Surviving Corporation for the issuance of certificates representing
shares of Wintrust Common Stock and the payment of cash in lieu of any
fractional shares and any unpaid dividends and distributions on Wintrust Common
Stock deliverable in respect of each share of Company Common Stock such
shareholder holds as determined pursuant to this Agreement, in each case,
without any interest thereon, and any holders of Warrants who have not
theretofore complied with this Article II shall thereafter look only to the
Surviving Corporation for the payment of the Warrant Consideration, without any
interest thereon. Notwithstanding the foregoing, none of Wintrust, the Surviving
Corporation, the Company, the Exchange Agent or any other person shall be liable
to any former holder of shares of Company Common Stock or Warrants, for any
amount delivered in good faith to a public official pursuant to applicable
abandoned property, escheat or similar laws.
(e) In the event any Company Stock Certificate or Warrant
shall have been lost, stolen or destroyed, upon the making of an affidavit of
that fact by the person claiming such Company Stock Certificate or Warrant to be
lost, stolen or destroyed and, if reasonably required by the Surviving
Corporation, the posting by such person of a bond in such amount as the Exchange
Agent may determine is reasonably necessary as indemnity against any claim that
may be made against it with respect to such Company Stock Certificate or
Warrant, the Exchange Agent will issue in exchange for (i) such lost, stolen or
destroyed Company Stock Certificate, a Wintrust Stock Certificate representing
the shares of Wintrust Common Stock and cash in lieu of any fractional shares
deliverable in respect thereof pursuant to this Agreement, or (ii) such lost,
stolen or destroyed Warrant, the Warrant Consideration to which such holder
shall have become entitled pursuant to Section 1.4(b).
(f) No dividends or other distributions declared with respect
to Wintrust Common Stock and payable to the holders of record thereof after the
Effective Time shall be paid to the holder of any unsurrendered Company Stock
Certificate until the holder thereof shall surrender such Company Stock
Certificate in accordance with this Article II. Promptly after the surrender of
a Company Stock Certificate in accordance with this Article II, the record
holder thereof shall be entitled to receive any such dividends or other
distributions, without interest thereon, which theretofore had become payable
with respect to shares of Wintrust Common Stock represented by such Company
Stock Certificate. No holder of an unsurrendered Company Stock Certificate shall
be entitled, until the surrender of such Company Stock Certificate, to vote the
shares of Wintrust Common Stock into which Company Common Stock shall have been
converted.
7
ARTICLE 3
REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANY
The Company hereby represents and warrants to Wintrust and Merger Co.
as follows:
3.1 Organization.
(a) The Company is duly registered as a bank holding company
under the Bank Holding Company Act of 1956, as amended (the "BHCA"), is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, and has the corporate power and authority to own its
properties and to carry on its business as presently conducted. The Company is
duly qualified and in good standing as a foreign corporation in each other
jurisdiction where the location and character of its properties and the business
conducted by it require such qualification, except where the failure to be so
qualified would not have a Material Adverse Effect on the Company. As used in
this Agreement, "Material Adverse Effect" shall mean a material adverse effect
on (i) the business, assets, properties, results of operations or financial
condition of a Party and its subsidiaries, taken as a whole, or (ii) the ability
of a Party to consummate the Merger; provided, however, that a Material Adverse
Effect shall not be deemed to result from: (1) changes in banking and similar
laws of general applicability or interpretations thereof by Governmental
Authorities, or other changes affecting depository institutions generally,
including changes in general economic conditions and changes in prevailing
interest and deposit rates; (2) changes in generally accepted accounting
principles ("GAAP") or regulatory accounting requirements applicable to banks
and their holding companies; (3) changes resulting from transaction expenses
incurred in connection with this Agreement and the Merger, including reasonable
legal, accounting and investment bankers' fees; and (4) the payment by the
Company or the Bank of amounts due to, or provision of any other benefits to,
any officers or employees of the Company or the Bank (as defined in Section
3.1(b)) in accordance with the terms of any employment agreements or Benefit
Plans (as defined in Section 3.20(a)).
(b) Other than Village Bank and Trust, Arlington Heights (the
"Bank"), the Company does not own, whether directly or indirectly, any voting
stock, equity securities or membership, partnership, joint venture or similar
ownership interest in any corporation, association, partnership, limited
liability company or other entity.
(c) The Bank is a state bank duly chartered and organized,
validly existing and authorized to transact the business of banking under the
laws of the State of Illinois, and has the requisite power and authority to own
its properties and to carry on its business as presently conducted.
3.2 Organizational Documents; Minutes and Stock Records. The Company
has furnished Wintrust with copies of the certificate of incorporation and
by-laws of the Company and the charter and by-laws of the Bank, in each case as
amended to the date hereof, and with such other documents as requested by
Wintrust relating to the authority of the Company and the Bank to conduct their
respective businesses. All such documents are complete and correct. The stock
registers and minute books of the Company and the Bank are each complete,
correct and accurately reflect, in each case in all material respects, all
meetings, consents, and other actions of the organizers, incorporators,
shareholders, board of directors, and committees of the board of
8
directors of the Company and the Bank, respectively, and all transactions
reported to the Company or the Bank, as the case may be, by its respective
shareholders, in such entity's capital stock occurring since the initial
organization of the Company and the Bank, respectively.
3.3 Capitalization.
(a) The Company. The authorized capital stock of the Company
consists of (i) 5,000,000 shares of common stock, par value $0.01 per share, of
which 1,052,054 shares are issued and outstanding as of the date of this
Agreement and 523,414 shares are held in treasury, and (ii) 500,000 shares of
preferred stock, par value $0.01 per share, of which no shares are issued and
outstanding. The issued and outstanding shares of Company Common Stock have been
duly and validly authorized and issued and are fully paid and nonassessable. The
Company has issued and has outstanding warrants for the purchase of 300,000
shares of Company Common Stock (the "Warrants"); set forth on schedule 3.3(a)
are the beneficial and record holders of the Warrants, each such holder's number
of Warrants, and the corresponding exercise prices of such Warrants. The
Warrants have been duly authorized by all necessary corporate action (including
shareholder approval if necessary), have been validly executed, issued and
delivered by the Company, constitute the legal, valid and binding obligations of
the Company, and are enforceable as to the Company in accordance with their
terms. The shares of Company Common Stock to be issued upon exercise of the
Warrants are validly authorized and, upon such exercise of the Warrants in
accordance with their terms, will be validly issued, fully paid, and
nonassessable. The Company Common Stock is subject to no preferences,
qualifications, limitations, restrictions or special or relative rights under
the Company's certificate of incorporation. Except for the Warrants and the
Outstanding Company Options under the Company Option Plan, there are no options,
agreements, contracts, or other rights in existence to purchase or acquire from
the Company any shares of capital stock of the Company, whether now or hereafter
authorized or issued.
(b) The Bank. The authorized capital stock of the Bank
consists of 100,000 shares of common stock, par value $10.00 per share, all of
which are issued and outstanding and are owned of record and beneficially by the
Company. The issued and outstanding shares of common stock of the Bank have been
duly and validly authorized and issued and are fully paid and nonassessable, and
are free of preemptive rights. Except as set forth on Schedule 3.3(b), there are
no options, agreements, contracts, or other rights in existence to purchase or
acquire from the Bank any shares of capital stock of the Bank, whether now or
hereafter authorized or issued. The Bank does not own, whether directly or
indirectly, any voting stock, equity securities or membership, partnership,
joint venture or similar ownership interest in any corporation, association,
partnership, limited liability company or other entity.
3.4 Authorization; No Violation. The execution and delivery of this
Agreement and the performance of the Company's obligations hereunder have been
duly and validly authorized by the Board of Directors of the Company (the
"Company Board"), and do not violate or conflict with the Company's certificate
of incorporation, by-laws, the DGCL, or any applicable law, court order or
decree to which the Company or the Bank is a party or subject, or by which the
Company, the Bank or their respective properties are bound, subject to the
approval of this Agreement and the Merger by the shareholders of the Company.
Except as set forth on Schedule 3.4, the execution and delivery of this
Agreement and the performance of the
9
Company's obligations hereunder do not and will not result in any default or
give rise to any right of termination, cancellation or acceleration under any
material note, bond, mortgage, indenture or other agreement by which the
Company, the Bank or their respective properties are bound. This Agreement, when
executed and delivered, and subject to the approval of the Company's
shareholders and the regulatory approvals described in Section 7.3, will be a
valid, binding and enforceable obligation of the Company, subject to applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors generally and to general principles of equity.
3.5 Consents and Approvals. No consents or approvals of, or filings or
registrations with, any court, administrative agency or commission or other
governmental authority or instrumentality (each, a "Governmental Authority") or
with any third party are necessary in connection with the execution and delivery
by the Company of this Agreement and the consummation by the Company of the
Merger except for (a) those agreements, plans, policies, etc. set forth on
Schedule 3.5, (b) the filing by Wintrust of an application (the "Federal Reserve
Application") with the Board of Governors of the Federal Reserve System (the
"Federal Reserve") under the BHCA, (c) the filing by Wintrust of an application
(the "IOBRE Application") with the Illinois Office of Banks and Real Estate (the
"IOBRE") under the Illinois Bank Holding Company Act of 1957, (d) the filing
with the Securities and Exchange Commission (the "Commission") of a proxy
statement in definitive form and a registration statement on an appropriate form
under the Securities Act of 1933, as amended (the "Securities Act"), relating to
the meeting of the Company's shareholders to be held in connection with this
Agreement and the Merger and the registration of the shares of Wintrust Common
Stock (the "Proxy Statement/Prospectus"), (e) the filing of the Certificate of
Merger with the Secretary of State of the State of Delaware under the DGCL, and
(f) the approval of this Agreement and the Merger by the requisite vote of the
shareholders of the Company.
3.6 Financial Statements. Schedule 3.6 sets forth true and complete
copies of the following financial statements (collectively, the "Financial
Statements"): (a) the audited consolidated balance sheets of the Company as of
December 31, 2002 and 2001 and the related statements of income, changes in
stockholders' equity and cash flows for the fiscal years then ended, and (b) the
quarterly FFEIC reports filed by the Bank since January 1, 2003 (the "Interim
Financial Statements"). The Financial Statements (i) are complete, (ii) are true
and correct in all material respects as of their respective dates and (iii) have
been prepared in conformity with GAAP applied on a consistent basis throughout
the periods involved (except as may be indicated in any notes thereto). Each
balance sheet (including any related notes) included in the Financial Statements
presents fairly the financial position of the Company as of the date thereof,
and each income statement (including any related notes) and statement of cash
flow included in the Financial Statements presents fairly the results of
operations and cash flow, respectively, of the Company for the period set forth
therein; provided, however, that the Interim Financial Statements contain all
adjustments necessary for a fair presentation, subject to normal, recurring
year-end adjustments (which adjustments will not be, individually or in the
aggregate, material), and lack footnotes. Each of the audited Financial
Statements has been audited by Crowe Chizek & Company, LLP, who have expressed
an unqualified opinion on such Financial Statements. The books, records and
accounts of the Company accurately and fairly reflect, in reasonable detail, all
transactions and all items of income and expense, assets and liabilities and
accruals relating to the Company.
10
3.7 No Undisclosed Liabilities. Except as set forth on Schedule 3.7,
the Company has no liabilities, whether accrued, absolute, contingent, or
otherwise, existing or arising out of any transaction or state of facts existing
on or prior to the date hereof, except (a) as and to the extent disclosed,
reflected or reserved against in the Financial Statements, (b) as and to the
extent arising under contracts, commitments, transactions, or circumstances
identified in the Schedules provided for herein, excluding any liabilities for
Company breaches thereunder, and (c) liabilities, not material in the aggregate
and incurred in the ordinary course of business, which, under GAAP, would not be
required to be reflected on a balance sheet prepared as of the date hereof. For
purposes of the preceding subsection (c), any liabilities incurred in connection
with litigation or judicial, administrative or arbitration proceedings or claims
against the Company shall not be deemed to be incurred in the ordinary course of
business.
3.8 Loans; Allowance for Loan Losses.
(a) Each outstanding loan, loan agreement, note, lease or
other borrowing agreement, any participation therein and any guaranty, renewal
or extension thereof (collectively, "Loans") reflected on the books and records
of the Bank is evidenced by appropriate and sufficient documentation in all
material respects and constitutes the legal, valid and binding obligation of the
obligor named therein, enforceable in accordance with its terms, except to the
extent such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights and remedies generally from time to time in effect and by
applicable laws which may effect the availability of equitable remedies. No
obligor named in any Loan has provided notice (whether written or, to the
knowledge of the Company, oral) to the Company or the Bank that such obligor
intends to attempt to avoid the enforceability of any term of any Loan under any
such laws or equitable remedies, and no Loan is subject to any valid defense,
set-off, or counterclaim that has been asserted with respect to such Loan. All
Loans that are secured, as evidenced by the appropriate and sufficient ancillary
security documents, are so secured by valid and enforceable liens. Neither the
Bank nor the Company has entered into any loan repurchase agreements.
(b) The allowance for loan losses shown on each of the balance
sheets contained in the Financial Statements are adequate in the reasonable
judgment of the Company and are consistent with the standards of the FDIC and
GAAP to provide for losses, net of recoveries relating to loans previously
charged off on loans outstanding (including accrued interest receivable) as of
the applicable date of such balance sheet. The aggregate loan balances of the
Bank as of May 31, 2003 in excess of such reserves as shown on the Interim
Balance Sheet are, to the knowledge of the Company, collectible in accordance
with their respective terms.
3.9 Properties and Assets.
(a) Real Property. Attached as Schedule 3.9(a) is a Schedule
of Real Property, which sets forth a complete and correct description of all
real property owned or leased by the Company or the Bank or in which either the
Company or the Bank has an interest (other than as a mortgagee), including all
real property carried by the Bank as Other Real Estate Owned ("OREO"). The
Company and the Bank own, or have a valid right to use or a leasehold interest
in, all real property used by them in the conduct of their respective businesses
as such businesses
11
are presently conducted. Except as otherwise set forth on Schedule 3.9(a), the
ownership or leasehold interest of the Company or the Bank in such real property
(excluding OREO) is not subject to any mortgage, pledge, lien, option,
conditional sale agreement, encumbrance, security interest, title exceptions or
restrictions or claims or charges of any kind (collectively, "Encumbrances"),
except for Permitted Encumbrances. As used in this Agreement, "Permitted
Encumbrances" shall mean (i) Encumbrances arising under conditional sales
contracts and equipment leases with third parties under which the Company or the
Bank is not delinquent or in default, (ii) carriers', workers', repairers',
materialmen's, warehousemen liens' and similar Encumbrances incurred in the
ordinary course of business, (iii) Encumbrances for taxes not yet due and
payable, or that are being contested in good faith and for which proper reserves
have been established and reflected on the Interim Balance Sheet, and (iv)
zoning and similar restrictions on the use of real property. All material
certificates, licenses and permits required for the lawful use and occupancy of
any real property by the Company or the Bank, as the case may be, have been
obtained and are in full force and effect. Except as otherwise set forth on
Schedule 3.9(a), all OREO is the subject of a recent appraisal that complies
with applicable regulatory requirements and is carried on the Bank's books at an
amount which does not exceed its current appraised value.
(b) Personal Property. Attached as Schedule 3.9(b)(i) is a
Schedule of Tangible Personal Property which sets forth a complete and correct
description of each item of tangible personal property owned by the Company or
the Bank or used by the Company or the Bank in the conduct of their businesses
that is reflected as a capital asset on the Interim Balance Sheet. Except as
otherwise set forth on Schedule 3.9(b)(ii), all such personal property is owned
by the Company or the Bank, all such property is owned free and clear of any
Encumbrances except for Permitted Encumbrances, and all such property is in good
working condition, normal wear and tear excepted.
(c) Assets. The assets reflected on the Interim Balance Sheet
or identified in this Agreement or on the Schedules provided for herein include
all of the assets (i) owned by the Company or the Bank, except for those
subsequently disposed of by the Company or the Bank for fair value in the
ordinary course of business, and (2) used or intended for use by the Company or
the Bank in the conduct of their respective businesses.
3.10 Material Contracts. Attached as Schedule 3.10 is a Schedule of
Material Contracts. The Company has previously delivered to Wintrust true and
complete copies of all Material Contracts. "Material Contracts" include every
contract, commitment, or arrangement, whether written or oral (and the Company
has delivered to Wintrust written descriptions of the terms and conditions of
all oral Material Contracts), of a material nature under which the Company or
the Bank is obligated on the date hereof, including the following:
(a) all consulting arrangements, and contracts for
professional, advisory, and other services, including contracts under which the
Company or the Bank performs services for others;
(b) all leases of real estate and personal property;
12
(c) all contracts, commitments and agreements for the
acquisition, development or disposition of real or personal property other than
conditional sales contracts and security agreements whereunder total future
payments are, in each instance, less than $25,000;
(d) all contracts relating to the employment, engagement,
compensation or termination of directors, officers, employees, consultants or
agents of the Company or the Bank, and all pension, retirement, profit sharing,
stock option, stock purchase, stock appreciation, insurance or similar plans or
arrangements for the benefit of any employees, officers or directors of the
Company, including all Benefit Plans as defined in Section 3.20;
(e) all loans, loan commitments, promissory notes, letters of
credit or other financial accommodations or arrangements or evidences of
indebtedness, including modifications, waivers or amendments thereof, extended
to or for the benefit of the Company or the Bank;
(f) all loans, loan commitments, promissory notes, letters of
credit or other financial accommodations or arrangements or evidences of
indebtedness, including modifications, waivers or amendments thereof, extended
to or for the benefit of any single borrower or related group of borrowers if
the aggregate amount of all such loans, loan commitments, promissory notes,
letters of credit or other financial accommodations or arrangements or evidences
of indebtedness extended to such borrower or related group of borrowers exceeds
$350,000;
(g) all union and other labor contracts;
(h) all agreements, contracts, mortgages, loans, deeds of
trust, leases, commitments, indentures, notes, instruments and other
arrangements which are with officers or directors of the Company or the Bank,
any "affiliates" of the Company or the Bank within the meaning of Section 23A of
the Federal Reserve Act or any record or beneficial owner of 5% or more of
Company Common Stock, or any member of the immediate family or a related
interest (as such terms are defined in 12 C.F.R. ss.215.2(m)) of any such
person, excepting any ordinary and customary loans and deposits that comply with
applicable banking regulations;
(i) any contract involving total future payments by the
Company or the Bank of more than $25,000 or which requires performance by the
Company or the Bank beyond the second anniversary of the Closing Date, that by
its terms does not terminate or is not terminable by the Company or the Bank
without penalty within 30 days after the date of this Agreement;
(j) except for provisions of the certificate of incorporation
and by-laws of the Company and the charter and by-laws of the Bank, all
contracts under which the Company or the Bank has any obligation, direct,
indirect, contingent or otherwise, to assume or guarantee any liability or to
indemnify any person (other than in a fiduciary capacity);
(k) all joint venture or marketing agreements with any other
person or entity; and
13
(l) all other material contracts, made other than in the usual
or ordinary course of business of the Company or the Bank, to which the Company
or the Bank is a party or under which the Company or the Bank is obligated.
3.11 No Defaults. Each of the Company and the Bank has fulfilled and
taken all action reasonably necessary to date to enable it to fulfill, when due,
all of its material obligations under all Material Contracts to which it is a
party. There are no defaults by the Company or the Bank under any Material
Contract, and no events have occurred that, with the lapse of time or the
election of any other party, will become defaults by the Company or the Bank. To
the Company's knowledge, no breach or default by any other party under any
Material Contract has occurred or is threatened that will or could impair the
ability of the Company or the Bank to enforce any of its rights under such
Material Contract in any material respect.
3.12 Conflict of Interest Transactions. Except as set forth on the
Schedule of Interested Transactions, attached hereto as Schedule 3.12, no
principal officer or director of the Company or the Bank, or holder of 10% or
more of the Company Common Stock or any member of the immediate family or a
related interest (as such terms are defined in 12 C.F.R. ss.215.2(m)) of such
person: (a) has any direct or indirect interest in (i) any entity which does
business with the Company or the Bank or (ii) any property or asset which is
owned or used by the Company or the Bank in the conduct of its business; or (b)
has any financial, business or contractual relationship or arrangement with the
Company or the Bank, excluding any agreements and commitments entered into in
respect of the Bank's acceptance of deposits and investments or the making of
any loans, in each case in the Bank's ordinary course of business.
3.13 Investments.
(a) Set forth on Schedule 3.13(a) is a complete and correct
list and description as of June 30, 2003, of all investment and debt securities,
mortgage-backed and related securities, marketable equity securities and
securities purchased under agreements to resell that are owned by the Company or
the Bank, other than in a fiduciary or agency capacity (the "Investment
Securities"). The Company and the Bank each has good and marketable title to all
Investment Securities held by it, free and clear of all Encumbrances, except for
Permitted Encumbrances, and except to the extent such Investment Securities are
pledged in the ordinary course of business consistent with prudent banking
practices to secure the obligations of the Company or the Bank. The Investment
Securities are valued on the books of the Company and the Bank in accordance
with GAAP.
(b) Except as set forth on Schedule 3.13(b) and as may be
imposed by applicable securities laws, none of the Investment Securities is
subject to any restriction, whether contractual or statutory, that materially
impairs the ability of the Company or the Bank freely to dispose of such
investment at any time. With respect to all material repurchase agreements to
which the Company or the Bank is a party, the Company or the Bank, as the case
may be, has a valid, perfected first lien or security interest in the securities
or other collateral securing each such repurchase agreement, and the value of
the collateral securing each such repurchase agreement equals or exceeds the
amount of the debt secured by such collateral under such agreement.
14
(c) Except as set forth on Schedule 3.13(c), neither the
Company nor the Bank has sold or otherwise disposed of any Investment Securities
in a transaction in which the acquiror of such Investment Securities or other
person has the right, either conditionally or absolutely, to require the Company
or the Bank to repurchase or otherwise reacquire any such Investment Securities.
(d) There are no interest rate swaps, caps, floors, option
agreements or other interest rate risk management arrangements to which the
Company or the Bank is bound.
3.14 Compliance with Laws; Legal Proceedings.
(a) The Company and the Bank are in compliance in all material
respects with all applicable federal, state, county and municipal laws and
regulations (i) that regulate or are concerned in any way with the ownership and
operation of banks or the business of banking or of acting as a fiduciary,
including those laws and regulations relating to the investment of funds, the
taking of deposits, the lending of money, the collection of interest, the
extension of credit and the location and operation of banking facilities, or
(ii) that otherwise relate to or affect the business or assets of the Company or
the Bank or the assets owned, used, occupied or managed by either of them,
except for violations which either individually or in the aggregate do not have
a Material Adverse Effect on the Company. The Company and the Bank hold all
material licenses, certificates, permits, franchises and rights from all
appropriate federal, state or other Governmental Authorities necessary for the
conduct of their businesses and the ownership of their assets.
(b) Except as set forth on Schedule 3.14(b), there are no
claims, actions, suits or proceedings pending or, to the knowledge of the
Company, threatened or contemplated against or affecting the Company or the
Bank, at law or in equity, or before any federal, state or other Governmental
Authority or any arbitrator or arbitration panel, whether by contract or
otherwise, and there is no decree, judgment or order or supervisory agreement of
any kind in existence against or restraining the Company or the Bank from taking
any action of any kind in connection with the business of the Company or the
Bank. Since November 19, 2002, except as set forth on Schedule 3.14(b), neither
the Company nor the Bank has received from any federal, state or other
Governmental Authority any notice or threat (whether written or, to the
knowledge of the Company or the Bank, oral) of enforcement actions, or any
criticism, recommendation or suggestion of a material nature, and neither the
Company nor the Bank has any reasonable basis for believing that any such notice
or threat, criticism, recommendation or suggestion not otherwise disclosed
herein is contemplated.
3.15 Insurance. Attached as Schedule 3.15 is a Schedule of Insurance,
which sets forth a complete and correct list of all policies of insurance (a) in
which the Company or the Bank is named as an insured party or (b) pursuant to
which the business, assets or properties of the Company or the Bank are insured
and which are owned or carried by the Company or the Bank. The Company and the
Bank has in full force and effect policies of insurance issued by reputable
insurance companies against loss or damage of the kinds and in the amounts
identified in the policy summaries, and all premiums and costs with respect
thereto are set forth on Schedule 3.15. Neither the Company nor the Bank has
received notice (whether written or, to the knowledge of the Company, oral) from
any party of interest in or to any such policies
15
claiming any breach or violation of any provisions thereof, disclaiming or
denying coverage thereof or canceling or threatening cancellation of any such
insurance contracts.
3.16 Taxes. The Company and the Bank have each duly and timely filed
(a) all federal, state and local income, real and personal property and
employment tax returns, (b) all material franchise, excise and value-added tax
returns, and (c) all other material returns required to be filed or delivered by
the Company or the Bank (respectively) in connection with the Company's or the
Bank's business and operations (collectively, "Returns"), all information
included in such Returns is accurate in all material respects, and all taxes
required to be shown on such Returns as payable by the Company or the Bank with
respect to the income of the Company or the Bank have been paid when due. No
application for an extension of time for filing any Return or consent to any
extension of the period of limitations applicable to the assessment or
collection of any tax is in effect with respect to the Company or the Bank.
Neither the Company nor the Bank is delinquent in the payment of any taxes
claimed to be due from the Company or the Bank by any taxing authority, and
adequate provisions for taxes (including any penalties and interest) payable by
the Company have been made on the books of the Company and on the most recent of
the Financial Statements. The Company has not received any notice (whether
written or, to the knowledge of the Company, oral) of any proposed audit or
proposed deficiency for any duty, tax, assessment or governmental charge due
from the Company with respect to the business and operations of the Company, and
there are no pending audits or claims with respect thereto.
3.17 Environmental Laws and Regulations.
(a) Except as set forth on Schedule 3.17, the Company and the
Bank have been and are in compliance in all material respects with all
applicable federal, state, county and municipal laws, regulations,
authorizations, licenses, approvals, permits and orders relating to air, water,
soil, solid waste management, hazardous or toxic substances, or the protection
of health or the environment (collectively, "Environmental Laws"), including
compliance in all material respects with all such Environmental Laws as they may
relate to the conduct of the businesses of the Company and the Bank and the
ownership of their respective properties and assets.
(b) Except as set forth on Schedule 3.17:
(i) there are no claims, actions, suits or proceedings
pending or, to the knowledge of the Company, threatened or contemplated
against, or involving, the Company or the Bank or any assets of the
Company or the Bank, under any of the Environmental Laws (whether by
reason of any failure to comply with any of the Environmental Laws or
otherwise);
(ii) no decree, judgment or order of any kind under
any of the Environmental Laws has been entered against the Company or
the Bank;
(iii) neither the Company nor the Bank:
(i) is or was a generator or transporter of
hazardous waste, or the owner, operator, lessor, sublessor,
lessee or, to its knowledge, mortgagee of a
16
treatment, storage, or disposal facility or underground
storage tank as those terms are defined under the Resource
Conservation and Recovery Act, as amended, or regulations
promulgated thereunder, or of real property on which such a
treatment, storage or disposal facility or underground storage
tank is or was located;
(ii) owns, operates, leases, subleases or to its
knowledge, holds a security interest in, or owned, operated,
leased or subleased (A) any facility at which any Hazardous
Substances (as defined below) were treated, stored, recycled,
disposed or are or were installed or incorporated or (B) any
real property on which such a facility is or was located;
(iii) arranged for the disposal or treatment,
arranged with a transporter for transport for disposal or
treatment of Hazardous Substances at any facility from which
there is a release or threat of release, or accepts or
accepted Hazardous Substances for transport for disposal or
treatment at any facility, as those terms are defined under
the Comprehensive Environmental Response, Compensation and
Liability Act, as amended ("CERCLA"); or
(iv) is or was the holder of a security interest
where the party giving the security is or was the owner or
operator of a treatment, storage or disposal facility,
underground storage tank or any facility at which any
Hazardous Substances are or were treated, stored, recycled or
disposed and where either the Company or the Bank participates
or participated in management decisions concerning the
facility's waste disposal activities.
(c) To the Company's knowledge, there are no other facts,
conditions or situations, whether now or heretofore existing, that could form
the basis for any claim against, or result in any liability of, the Company or
the Bank under any of the Environmental Laws.
(d) For purposes of this Section 3.18, "Hazardous Substance"
shall mean a hazardous substance (as defined in CERCLA) and petroleum, including
crude oil or any fraction thereof, but excluding underground crude oil in its
natural unrefined state, prior to its initial extraction.
3.18 Community Reinvestment Act Compliance. Neither the Company nor the
Bank has received any notice of non-compliance with the applicable provisions of
the Community Reinvestment Act ("CRA") and the regulations promulgated
thereunder, and the Bank has received a CRA rating of satisfactory or better
from the Federal Deposit Insurance Corporation (the "FDIC") or other applicable
Governmental Authority. The Company knows of no facts or circumstances which
would cause the Bank to fail to comply with such provisions or cause the CRA
rating of the Bank to fall below satisfactory.
3.19 Company Regulatory Reports. Since January 1, 2001, the Company and
the Bank have timely filed all reports, registrations and statements, together
with any amendments required to be made with respect thereto, required to be
filed with the Federal Reserve, the FDIC and the IOBRE, and any other
Governmental Authority or self-regulatory organization (except
17
filings which individually or in the aggregate are not material to the business
of the Company or the Bank) with jurisdiction over any of the activities of the
Company or the Bank (the "Company Regulatory Reports"), and have paid all fees
and assessments due and payable in connection therewith. As of their respective
dates, the Company Regulatory Reports complied in all material respects with the
statutes, rules and regulations enforced or promulgated by the applicable
regulatory authority with which they were filed and 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.
3.20 Employee Benefit Plans.
(a) The Schedule of Material Contracts, attached as Schedule
3.10, includes a complete and correct list of each employee benefit plan within
the meaning of Section 3(3) of ERISA (the "ERISA Plans"), each compensation,
consulting, employment or collective bargaining agreement, and each stock
option, stock purchase, stock appreciation right, life, health, disability or
other insurance or benefit, bonus, deferred or incentive compensation, severance
or separation, profit sharing, retirement, or other employee benefit plan,
practice, policy or arrangement of any kind, oral or written, covering employees
or former employees of the Company or the Bank which the Company or the Bank
maintains or contributes to (or, with respect to any employee pension benefit
plan (as defined in Section 3(2) of ERISA) has maintained or contributed to
since the date of its incorporation) or to which the Company or the Bank is a
party or by which it is otherwise bound (collectively, together with the ERISA
Plans, the "Benefit Plans"). None of the Benefit Plans is a "defined benefit
plan" (as defined in Section 414(j) of the Code). Neither the Company nor the
Bank has, and has ever had, an affiliate that would be treated as a single
employer together with the Company or the Bank (an "ERISA Affiliate") under
Section 414 of the Code.
(b) Other than the Company Stock Option Plan and except as set
forth on Schedule 3.20(b), neither the Company nor the Bank has entered into or
maintained any Benefit Plan which includes any change of control provisions
which would cause an increase or acceleration of benefits or benefit
entitlements to employees or former employees of the Company or the Bank or any
other increase in the liabilities of the Company or the Bank under such Benefit
Plan as a result of the transactions contemplated by this Agreement.
(c) Neither the Company nor the Bank maintains or
participates, and has ever maintained or participated, in a multiemployer plan
within the meaning of Section 3(37) of ERISA. None of the Company, the Bank, any
director or employee of the Company or the Bank, or any fiduciary of any ERISA
Plan has engaged in any transaction in violation of Section 406 or 407 of ERISA
or any "prohibited transaction" (as defined in Section 4975(c)(1) of the Code)
for which no exemption exists under Section 408(b) of ERISA or Section 4975(d)
of the Code in connection with such ERISA Plan. Neither the Company nor the Bank
provides nor has ever provided medical benefits to former employees, except as
required by Section 601 of ERISA.
(d) Each ERISA Plan that is intended to qualify under Section
401 and related provisions of the Code is the subject of a determination letter
from the Internal Revenue Service, or satisfies the provisions of Internal
Revenue Service Announcement 2001-77, Section II, if
18
applicable, to the effect that it is so qualified under the Code and that its
related funding instrument is tax exempt under Section 501 of the Code.
(e) Each Benefit Plan is, and since its inception, has been
administered in material compliance with its terms and with all applicable laws,
rules and regulations governing such Benefit Plan, including the rules and
regulations promulgated by the Department of Labor, the Pension Benefit Guaranty
Corporation and the Internal Revenue Service under ERISA, the Code or any other
applicable law. Neither the Company nor any affiliate of the Company that is a
fiduciary with respect to any Benefit Plan, has breached any of the
responsibilities, obligations or duties imposed on it by ERISA.
(f) There is no litigation, claim or assessment pending or, to
the Company's knowledge, threatened by, on behalf of, or against any of the
Benefit Plans or against the administrators or trustees or other fiduciaries of
any of the Benefit Plans that alleges a violation of applicable state or federal
law. To the Company's knowledge, there is no reasonable basis for any such
litigation, claim or assessment.
(g) No Benefit Plan fiduciary or any other person has, or has
had, to his, her or its knowledge, any liability to any Benefit Plan
participant, beneficiary or any other person under any provisions of ERISA or
any other applicable law by reason of any action or failure to act in connection
with any Benefit Plan, including, but not limited to, any liability by any
reason of any payment of, or failure to pay, benefits or any other amounts or by
reason of any credit or failure to give credit for any benefits or rights.
(h) All accrued contributions and other payments to be made by
the Company or the Bank to any Benefit Plan through the date hereof have been
made or reserves adequate for such purposes have been set aside therefor and
reflected in the Financial Statements. Neither the Company nor the Bank is in
default in performing any of its contractual obligations under any of the
Benefit Plans or any related trust agreement or insurance contract. There are no
outstanding liabilities with respect to any Benefit Plan other than liabilities
for benefits to be paid to participants in such Benefit Plan and their
beneficiaries in accordance with the terms of such Benefit Plan.
(i) No Benefit Plan provides for payment of any amount which,
considered in the aggregate with amounts payable pursuant to all other Benefit
Plans, would exceed the amount deductible for federal income tax purposes by
virtue of Section 280G or 162(m) of the Code.
(j) There are no obligations or liabilities, whether
outstanding or subject to future vesting, for any post-retirement benefits to be
paid to participants under any of the Benefit Plans.
3.21 Technology and Intellectual Property.
(a) Attached as Schedule 3.21 is a Schedule of Intellectual
Property, which sets forth a complete and correct list of all (i) registered
trademarks, service marks, copyrights and patents; (ii) applications for
registration or grant of any of the foregoing; (iii) unregistered trademarks,
service marks, trade names, logos and assumed names; and (iv) licenses for any
of
19
the foregoing, in each case, owned by the Company or the Bank or used in or
necessary to conduct the Company's or the Bank's business as presently
conducted. The items on Schedule 3.21, together with all other trademarks,
service marks, trade names, logos, assumed names, patents, copyrights, trade
secrets, computer software, licenses, formulae, customer lists or other
databases, business application designs and inventions currently used in or
necessary to conduct the business of the Company as presently conducted
constitute the "Intellectual Property."
(b) Except as set forth on Schedule 3.21, the Company or the
Bank has ownership of, or such other rights by license, lease or other agreement
in and to, the Intellectual Property as is necessary to permit the Company and
the Bank to use the Intellectual Property in the conduct of their respective
businesses as presently conducted. Neither the Company nor the Bank has received
notice (whether written or, to the knowledge of the Company or the Bank, oral)
alleging that the Company or the Bank has infringed or violated any trademark,
trade name, copyright, patent, trade secret right or other proprietary right of
others, and to the Company's knowledge, it has not committed any such violation
or infringement. Other than as set forth on Schedule 3.21, to the Company's
knowledge, there is no reason to believe that, upon consummation of the
transactions contemplated hereby, the Company or the Bank will be in any way
more restricted in its use of any of the Intellectual Property than it was on
the date hereof under any contract to which the Company or the Bank is a party
or by which it is bound, or that use of such Intellectual Property by the
Company or the Bank will, as a result of such consummation, violate or infringe
the rights of any person, or subject Wintrust, the Company or the Bank to
liability of any kind, under any such contract.
3.22 No Adverse Change. Other than as specifically disclosed in this
Agreement, the Financial Statements, or the Schedules delivered pursuant to this
Agreement, there has not occurred (a) since December 31, 2002 any Material
Adverse Effect on the Company, or (b) any change or condition, event,
circumstance, fact or other occurrence, whether occurring before or since
December 31, 2002, that may reasonably be expected to have or result in a
Material Adverse Effect on the Company. No fact or condition exists with respect
to the Company or the Bank which the Company has reason to believe may cause the
Federal Reserve Application or any of the other regulatory approvals referenced
in Section 7.3 to be denied or unduly delayed.
3.23 Conduct of Business in Normal Course. Except for actions taken in
connection with entering into this Agreement, since December 31, 2002, the
businesses of the Company and the Bank have been conducted only in the ordinary
and usual course consistent with past practice.
3.24 Change in Business Relationships. As of the date of this
Agreement, neither the Company nor the Bank has received notice (whether written
or, to the knowledge of the Company or the Bank, oral), whether on account of
the transactions contemplated by this Agreement or otherwise, (a) that any
customer, agent, representative, supplier, vendor or business referral source of
the Company or the Bank intends to discontinue, diminish or change its
relationship with the Company or the Bank, the effect of which would be material
to the Company or the Bank, or (b) that any executive officer of the Company or
the Bank intends to terminate or substantially alter the terms of his or her
employment. There have been no complaints or disputes (in each case set forth in
writing) with any customer, employee, agent,
20
representative, supplier or vendor of the Bank or the Company that have not been
resolved which are reasonably likely to be material to the Company.
3.25 Brokers' and Finders' Fees. Neither the Company nor the Bank has
incurred any liability for brokerage commissions, finders' fees, or like
compensation with respect to the transactions contemplated by this Agreement.
3.26 Section 280G. Neither the execution of this agreement nor the
consummation of the transactions contemplated hereby (including, without
limitation, such transactions as are embodied in ancillary agreements the forms
of which are attached as exhibits hereto, or as are described in Schedules 3.7
and 5.1(e) of the Disclosure Schedules) will result in any payment that would be
deemed an "excess parachute payment" under Section 280G of the Code.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
CONCERNING WINTRUST AND MERGER CO.
Wintrust and Merger Co. hereby jointly and severally represent to the
Company as follows:
4.1 Organization. Each of Wintrust and Merger Co. is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Illinois, has the corporate power and authority to own its own properties and to
carry on its business as it is now being conducted, and is duly qualified and in
good standing as a foreign corporation in each jurisdiction where the location
and character of its properties and the business conducted by it require such
qualification, except where the failure to be so qualified would not have a
Material Adverse Effect on Wintrust. Merger Co. is a direct wholly-owned
subsidiary of Wintrust, formed for the purpose of engaging in the Merger, and
has not engaged, and will not engage prior to the Effective Time, in any
activities other than those necessary to effectuate the transactions
contemplated by this Agreement.
4.2 Capitalization. The authorized capital stock of Wintrust consists
of (i) 30,000,000 shares of common stock, no par value per share, of which
17,436,423 shares were issued and outstanding as of July 21, 2003, (ii)
20,000,000 shares of preferred stock, no par value per share, of which 100,000
shares are designated Junior Serial Preferred Stock A, no par value per share,
and no shares of preferred stock are issued and outstanding, and (iii) no shares
are held in treasury. As of July 21, 2003 there were (i) outstanding options in
respect of 2,905,525 shares of Wintrust Common Stock, (ii) outstanding warrants
for the purchase of 263,886 shares of Wintrust Common Stock, and (iii) preferred
share purchase rights outstanding pursuant to the Rights Agreement between
Wintrust and Illinois Stock Transfer Company, as Rights Agent, dated July 28,
1998. Such options, warrants and rights have been duly authorized by all
necessary corporate action (including shareholder approval, if necessary). Such
options and warrants have been validly executed, issued and delivered by
Wintrust, and constitute the legal, valid and binding obligations of Wintrust,
and are enforceable as to Wintrust in accordance with their terms. The shares of
Wintrust Common Stock to be issued upon exercise of such options and warrants
are validly authorized and, upon such exercise in accordance with their terms,
will be validly issued, fully paid, and nonassessable. The Wintrust Common Stock
is subject to
21
certain preferences, qualifications, limitations, restrictions or special or
relative rights under Wintrust's articles of incorporation, a true and complete
copy of which has been previously provided to the Company. Except for such
options and warrants and preferred share purchase rights, there are no options,
agreements, contracts or other rights in existence to purchase or acquire from
Wintrust any shares of capital stock of Wintrust, whether now or hereafter
authorized or issued, other than shares issuable pursuant to employee benefit or
compensation plans referred to in the Wintrust SEC Document. Wintrust has
reserved, and at the Effective Time will have, a number of authorized but
unissued shares of Wintrust Common Stock sufficient for that amount required for
the Conversion Fund under Section 2.1.
4.3 Authorization; No Violations. The execution and delivery of this
Agreement and the performance of Wintrust's and Merger Co.'s obligations
hereunder have been duly and validly authorized by each of the Boards of
Directors of Wintrust and Merger Co., do not violate or conflict with their
respective articles of incorporation or by-laws, the Illinois Business
Corporation Act (the "Illinois Act"), the DGCL, or any applicable law, court
order or decree to which Wintrust or Merger Co. is a party or subject, or by
which Wintrust or Merger Co. or any of their respective properties is bound, and
require no further corporate or shareholder approval on the part of Wintrust and
Merger Co. The execution and delivery of this Agreement and the performance of
Wintrust's and Merger Co.'s obligations hereunder do not and will not result in
any default or give rise to any right of termination, cancellation or
acceleration under any material note, bond, mortgage, indenture or other
agreement by which Wintrust or Merger Co. is bound. This Agreement, when
executed and delivered, will be a valid, binding and enforceable obligation of
each of Wintrust and Merger Co., subject to applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors generally and to
general principles of equity.
4.4 Consents and Approvals. No consents or approvals of, or filings or
registrations with, any Governmental Authority or with any third party are
necessary in connection with the execution and delivery by Wintrust or Merger
Co. of this Agreement and the consummation by Wintrust and Merger Co. of the
Merger except for (a) the filing by Wintrust of the Federal Reserve Application
with the Federal Reserve under the BHCA, (b) the filing by Wintrust of the IOBRE
Application with the IOBRE, (c) the filing with the Commission of the
Registration Statement (as defined in Section 5.4(a)), and (d) the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware under
the DGCL.
4.5 Wintrust SEC Documents and Financial Statements.
(a) Since January 1, 2000, Wintrust has timely filed all
reports, registration statements and other documents (including any amendments
thereto) required to be filed with the Commission under the Securities Exchange
Act of 1934, as amended (the "Exchange Act") and the rules and regulations of
the Commission (the "Wintrust SEC Documents"), and all such Wintrust SEC
Documents have complied in all material respects, as of their respective filing
dates and effective dates, as the case may be, with all applicable requirements
of the Exchange Act. As of their respective filing and effective dates, none of
the Wintrust SEC Documents contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading.
22
(b) The audited consolidated financial statements contained or
incorporated by reference in Wintrust's Annual Report on Form 10-K for the years
ended December 31, 2000, 2001 and 2002 and the unaudited interim financial
statements included in Wintrust's most recent Quarterly Report on Form 10-Q have
been prepared in conformity with GAAP applied on a consistent basis, and,
together with the notes thereto, present fairly the consolidated financial
position of Wintrust and its subsidiaries at the dates shown and the
consolidated results of their operations, changes in stockholders' equity and
cash flows for the periods then ended. The interim financial statements as of,
and for, the periods ending after December 31, 2002 included in Wintrust's
Quarterly Reports on Form 10-Q, as filed with the Commission, include all
adjustments necessary for a fair presentation of the financial position of
Wintrust and its subsidiaries and the results of their operations for the
interim periods presented, subject to normal, recurring year-end adjustments and
the omission of footnote disclosure.
4.6 Compliance with Laws; Legal Proceedings.
(a) Wintrust and its subsidiaries are each in compliance in
all material respects with all applicable federal, state, county and municipal
laws and regulations (i) that regulate or are concerned in any way with the
ownership and operation of banks or the business of banking or of acting as a
fiduciary, including those laws and regulations relating to the investment of
funds, the taking of deposits, the lending of money, the collection of interest,
the extension of credit and the location and operation of banking facilities, or
(ii) that otherwise relate to or affect the business or assets of Wintrust or
any of its subsidiaries or the assets owned, used, occupied or managed by
Wintrust or any of its subsidiaries, except for such noncompliance which
individually or in the aggregate would not have a Material Adverse Effect on
Wintrust. Wintrust and its subsidiaries hold all material licenses,
certificates, permits, franchises and rights from all appropriate federal, state
or other Governmental Authorities necessary for the conduct of its business and
the ownership of its assets.
(b) Except as may be disclosed in the Wintrust SEC Documents,
there are no material claims, actions, suits or proceedings pending or, to the
knowledge of Wintrust, threatened or contemplated against or affecting Wintrust,
its subsidiaries or any of their respective institution-affiliated parties, at
law or in equity, or before any federal, state or other Governmental Authority
or any arbitrator or arbitration panel, whether by contract or otherwise, and
there is no decree, judgment or order or supervisory agreement of any kind in
existence against or restraining Wintrust, its subsidiaries or their respective
institution-affiliated parties from taking any action of any kind in connection
with their respective businesses.
4.7 Wintrust Regulatory Reports. Since January 1, 2001, Wintrust and
its subsidiaries have filed all reports, registrations and statements, together
with any amendments required to be made with respect thereto, required to be
filed with the Federal Reserve, the Office of the Comptroller of the Currency
and any other Governmental Authority or self-regulatory organization with
jurisdiction over any of the activities of Wintrust or its subsidiaries (the
"Wintrust Regulatory Reports"), and have paid all fees and assessments due and
payable in connection therewith. As of their respective dates, the Wintrust
Regulatory Reports complied in all material respects with the statutes, rules
and regulations enforced or promulgated by the applicable regulatory authority
with which they were filed and did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
23
necessary to make the statement therein, in light of the circumstances under
which they were made, not misleading.
4.8 No Adverse Change. Except as disclosed in the Wintrust SEC
Documents, this Agreement, or the Schedules delivered pursuant to this
Agreement, there has not occurred (a) since December 31, 2002, any Material
Adverse Effect on Wintrust or (b) any change or condition, event, circumstance,
fact or other occurrence, whether occurring before or since December 31, 2002,
that may reasonably be expected to have or result in a Material Adverse Effect
on Wintrust. No fact or condition exists with respect to Wintrust or Merger Co.
which Wintrust has reason to believe may cause the Federal Reserve Application
or any of the other regulatory approvals referenced in Section 7.3 or 8.3 to be
denied or unduly delayed.
4.9 Brokers' and Finders' Fees. Neither Wintrust nor Merger Co. has
incurred any liability for brokerage commissions, finders' fees, or like
compensation with respect to the transactions contemplated by this Agreement.
4.10 Taxation of the Merger. Neither Wintrust nor any subsidiary of
Wintrust has engaged in any act that would preclude or adversely affect the
Merger from qualifying as a tax-free reorganization under Section 368(a) of the
Code.
ARTICLE 5
AGREEMENTS AND COVENANTS
5.1 Conduct of Business. During the period commencing on the date
hereof and continuing until the Effective Time, the Company shall conduct the
Company's business and shall cause the Bank to conduct its business in the usual
and ordinary course consistent with prudent banking practice. Without limiting
the foregoing, without the prior written consent of Wintrust, which consent
shall not be unreasonably withheld:
(a) no change shall be made in the certificate of
incorporation or by-laws of the Company or the charter or by-laws of the Bank;
(b) except with respect to the exercise of any Outstanding
Company Option or Warrant, no change shall be made in the capitalization of the
Company or the Bank or in the number of issued and outstanding shares of Company
Common Stock or Warrants, except as expressly contemplated by Section 5.16;
(c) the compensation of officers or key employees of the
Company or the Bank shall not be increased, nor any bonuses paid, except as set
forth on Schedule 5.1(c);
(d) no Loans, or renewals or restructurings of Loans, in the
amount of $650,000 or more (including Loans to any one borrower or related group
of borrowers which, in the aggregate, equal or exceed $650,000) shall be made by
the Bank except in the ordinary course of business and consistent with prudent
banking practices and the Bank's current loan policies and applicable rules and
regulations of applicable Governmental Authorities with respect to amount, term,
security and quality of such borrower's or borrowers' credit;
24
(e) no dividends or other distributions shall be declared or
paid by the Company to the extent it would cause the minimum net worth of the
Company to fall below $4,600,000 (except solely after giving effect to the
payment described on Schedule 5.1(e) shall the minimum net worth of the Company
be permitted to fall to $4,413,000), or as would not be permitted under
applicable law;
(f) no dividends or other distributions shall be declared or
paid by the Bank to the extent it would cause the minimum net worth of the Bank
to fall below $4,800,000 or as would not be permitted under applicable law;
(g) the Company and the Bank shall each use their commercially
reasonable efforts to maintain their present insurance coverage in respect to
its properties and business;
(h) no significant changes shall be made in the general nature
of the business conducted by the Company or the Bank;
(i) no employment, consulting or similar agreements shall be
entered into by the Company or the Bank that are not terminable by the Company
or the Bank on 30 days' or fewer notice without penalty or obligation;
(j) neither the Company nor the Bank shall take any action
that would result in a termination, partial termination, curtailment,
discontinuance of a Benefit Plan or merger of any Benefit Plan into another plan
or trust;
(k) the Company and the Bank shall file all Returns in a
timely manner and shall not make any application for or consent to any extension
of time for filing any Return or any extension of the period of limitations
applicable thereto;
(l) except as disclosed on Schedule 5.1(l), neither the
Company nor the Bank shall make any expenditure for fixed assets in excess of
$25,000 for any single item, or $100,000 in the aggregate, or shall enter into
leases of fixed assets having an annual rental in excess of $25,000;
(m) neither the Company nor the Bank shall incur any
liabilities or obligations, make any commitments or disbursements, acquire or
dispose of any property or asset, make any contract or agreement, or engage in
any transaction except in the ordinary course consistent with prudent banking
practices and the Bank's current policies;
(n) neither the Company nor the Bank shall do or fail to do
anything that will cause a breach by the Company or the Bank of, or default by
the Company or the Bank under, any Material Contract;
(o) the Bank shall not engage or agree to engage in any
"covered transaction" within the meaning of Sections 23A or 23B of the Federal
Reserve Act (without regard to the applicability of any exemptions contained in
Section 23A) or any transaction of the kind referred to in Section 3.12, unless
the Bank has complied with all requirements of Sections 23A or 23B of the
Federal Reserve Act;
25
(p) the Bank shall only purchase or invest in obligations of
the government of the United States or agencies of the United States or state or
local governments having maturities of not more than five years and which
municipal obligations have been assigned a rating of A or better by Moody's
Investors Service or by Standard & Poor's;
(q) no changes of a material nature shall be made in either
the Company's or the Bank's accounting procedures, methods, policies or
practices or the manner in which the Company or the Bank maintain their records;
and
(r) the Bank shall not accept or renew any brokered deposits.
5.2 Access to Information.
(a) To the extent permissible under applicable law, pending
the Closing, representatives of Wintrust shall, during normal business hours and
on reasonable advance notice to the Company, be given full access to the
Company's and the Bank's records and business activities and be afforded the
opportunity to observe their business activities and consult with their officers
and employees regarding the same on an ongoing basis (without limiting the
foregoing, to verify compliance by the Company with all terms of this
Agreement); provided, however, that the foregoing actions do not interfere with
the business operations of the Company and the Bank.
(b) Wintrust will use such information as is provided to it by
the Company or the Bank or the representatives of either solely for the purpose
of conducting business, legal and financial reviews of the Company and the Bank
and for such other purposes as may be related to this Agreement, and Wintrust
will, and will direct all of its agents, employees and advisors to, maintain the
confidentiality of all such information in accordance with the terms of the
letter agreement regarding confidentiality entered into by and between the
Company and Wintrust dated May 6, 2003 (the "Confidentiality Agreement").
5.3 Meeting of Shareholders of the Company. As soon as practicable
after the date of this Agreement and the effectiveness of the Registration
Statement pursuant to Section 5.4, the Company shall call and hold a meeting of
its shareholders for the purpose of voting upon this Agreement, the Merger and
the transactions herein contemplated in accordance with the Company's
certificate of incorporation, its by-laws and the DGCL (the "Shareholders
Meeting"). The Company shall, through the Company Board, recommend to its
shareholders, subject to its fiduciary duties, approval of this Agreement and
the Merger.
5.4 Registration Statement and Regulatory Filings. As soon as
practicable after the execution of this Agreement:
(a) Wintrust shall file with the Commission a registration
statement on an appropriate form under the Securities Act covering Wintrust
Common Stock to be issued pursuant to this Agreement and shall use its
reasonable and diligent efforts to cause the same to become effective as soon as
practicable and thereafter, until the Effective Time or termination of this
Agreement, to keep the same effective and, if necessary, amend and supplement
the same. Such registration statement and any amendments and supplements thereto
are referred to herein as the "Registration Statement." The Registration
Statement shall include a Proxy
26
Statement/Prospectus thereto reasonably acceptable to Wintrust and the Company,
prepared by Wintrust and the Company for use in connection with the meeting of
shareholders of the Company referred to in Section 5.3, all in accordance with
the rules and regulations of the Commission. Wintrust shall, as soon as
practicable after the execution of this Agreement, make all filings, if any,
required to obtain all blue sky permits, authorizations, consents or approvals
required for the issuance of Wintrust Common Stock. In advance of filing the
Registration Statement, Wintrust shall provide the Company and its counsel with
a copy of the Registration Statement and provide an opportunity to comment
thereon, and thereafter shall promptly advise the Company and its counsel of any
material communication received by Wintrust or its counsel from the Commission
with respect to the Registration Statement. None of the information furnished by
Wintrust or the Company for inclusion in the Registration Statement, the Proxy
Statement/Prospectus or any other document filed with the Commission or any
state securities commission, at the respective times at which such documents are
filed with the Commission or such state securities commission, or, in the case
of the Registration Statement, when it becomes effective, or in the case of the
Proxy Statement/Prospectus, when mailed or at the time of the Shareholders
Meeting, shall be false or misleading with respect to any material fact or shall
omit to state any material fact necessary in order to make the statements
therein, in light of the circumstances in which they were made, not misleading.
(b) Wintrust shall file with the Federal Reserve the Federal
Reserve Application, and take all other appropriate actions necessary to obtain
the regulatory approvals referred to in Section 7.3 hereof, and the Company will
use all reasonable and diligent efforts to assist in obtaining all such
approvals. Notwithstanding the preceding sentence, Wintrust shall have no
obligation to accept any nonstandard condition or restriction imposed or
requested by the Federal Reserve in connection with the Federal Reserve
Application unless (i) such condition or restriction was imposed in an approval
order issued by the Federal Reserve within two (2) years of the date hereof in a
similar transaction involving similarly situated parties and such order was
publicly available as of the date hereof, or (ii) such condition or restriction,
individually or in the aggregate with any other restrictions and conditions, is
not substantially detrimental to the business, prospects or financial condition
of Wintrust or its subsidiaries, on the one hand, or of the Company or the Bank,
on the other. In advance of filing any applications for such regulatory
approvals, Wintrust shall provide the Company and its counsel with a copy of
such applications (but excluding any information contained therein regarding
Wintrust and its business or operations for which confidential treatment has
been requested) and provide an opportunity to comment thereon, and thereafter
shall promptly advise the Company and its counsel of any material communication
received by Wintrust or its counsel from any regulatory authorities with respect
to such applications.
5.5 Listing of Shares. Wintrust shall use all reasonable and diligent
efforts to cause the shares of Wintrust Common Stock issuable in the Merger to
be approved for listing on the Nasdaq National Market.
5.6 Reasonable and Diligent Efforts. The Parties shall use reasonable
and diligent efforts in good faith to satisfy the various conditions to Closing
and to consummate the Merger as soon as practicable. None of the Parties will
intentionally take or intentionally permit to be taken any action that would be
in breach of the terms or provisions of this Agreement (including any action
that would impair or impede the timely obtainment of the regulatory approvals
27
referenced in Sections 7.3 and 8.3) or that would cause any of the
representations contained herein to be or become untrue.
5.7 Business Relations and Publicity. The Company shall use reasonable
and diligent efforts to preserve the reputation and relationship of the Company
and the Bank with suppliers, clients, customers, employees, and others having
business relations with the Company or the Bank. Wintrust and the Company shall
coordinate all publicity relating to the transactions contemplated by this
Agreement and, except as otherwise required by applicable law or the rules of
the Nasdaq National Market, or with respect to employee meetings, neither Party
shall issue any press release, publicity statement or other public notice
relating to this Agreement or any of the transactions contemplated hereby
without obtaining the prior consent of the other, which consent shall not be
unreasonably withheld, conditioned or delayed. The Company shall obtain the
prior consent (which shall not be unreasonably withheld, conditioned or delayed)
of Wintrust to the content of any communication to its shareholders. In
furtherance of the foregoing the Parties acknowledge that immediately after
execution of this Agreement Wintrust shall issue a news release (after
consultation with the Company as to its content) and file the same with the
Commission on Form 8-K.
5.8 No Conduct Inconsistent with this Agreement.
(a) The Company shall not, and shall cause the Bank to not,
during the term of this Agreement, directly or indirectly, solicit, encourage or
facilitate inquiries or proposals or enter into any agreement with respect to,
or initiate or participate in any negotiations or discussions with any person or
entity concerning, any proposed transaction or series of transactions involving
or affecting the Company or the Bank (or the securities or assets of either)
that, if effected, would constitute an acquisition of control of either the
Company or the Bank within the meaning of 12 U.S.C.A. ss.1817(j) (disregarding
the exceptions set forth in 12 U.S.C.A. ss.1817(j)(17)) and the regulations of
the Federal Reserve thereunder (each, an "Acquisition Proposal"), or furnish any
information to any person or entity proposing or seeking an Acquisition
Proposal.
(b) Notwithstanding the foregoing, in the event that the
Company Board determines in good faith and after consultation with outside
counsel, that in light of a Superior Acquisition Proposal (as defined herein) it
is necessary to pursue such Superior Acquisition Proposal in order to act in a
manner consistent with such Board's fiduciary duties, the Company Board may, in
response to an Acquisition Proposal which was not solicited by or on behalf of
the Company or the Bank or which did not otherwise result from a breach of
Section 5.8(a), subject to its compliance with Section 5.8(c), (i) furnish
information with respect to the Company or the Bank to such person or entity
making such Superior Acquisition Proposal pursuant to a customary
confidentiality agreement that is no less restrictive than the confidentiality
agreement entered into between the Company and Wintrust, (ii) participate in
discussions or negotiations regarding such Superior Acquisition Proposal, (iii)
withdraw, modify or otherwise change in a manner adverse to Wintrust, the
Company's recommendation to its shareholders with respect to this Agreement and
the Merger and/or (iv) terminate this Agreement in order to concurrently enter
into an agreement with respect to such Superior Acquisition Proposal; provided,
however, that the Company Board may not terminate this Agreement pursuant to
this Section 5.8(b) unless and until (x) five (5) business days have elapsed
following the delivery to Wintrust of a written
28
notice of such determination by the Company Board and during such five (5)
business day period, the Company and the Bank otherwise cooperate with Wintrust
with the intent of enabling the Parties to engage in good faith negotiations so
that the Merger and other transactions contemplated hereby may be effected and
(y) at the end of such five business day period the Company Board continue
reasonably to believe the Acquisition Proposal at issue constitutes a Superior
Acquisition Proposal. A "Superior Acquisition Proposal" means any Acquisition
Proposal containing terms which the Company Board determines in its good faith
judgment (based on the advice of a financial advisor of nationally recognized
reputation) to be more favorable to the Company's shareholders than the Merger
and for which financing, to the extent required, is then committed or which, in
the good faith judgment of the Company Board, is reasonably capable of being
obtained by such third party.
(c) In addition to the obligations of the Company set forth in
Section 5.8(a) and (b), the Company shall immediately advise Wintrust orally and
in writing of any request for information or of any Acquisition Proposal, the
material terms and conditions of such request or Acquisition Proposal and the
identity of the person or entity making such request or Acquisition Proposal.
The Company shall keep Wintrust reasonably informed of the status and details
(including amendments or proposed amendments) of any such request or Acquisition
Proposal, including the status of any discussions or negotiations with respect
to any Superior Acquisition Proposal.
5.9 Pre-Closing Loan Review.
(a) The Company shall cause the Bank, prior to the Closing
Date, to write off all Loans of the Bank that are required to be written off by
the Bank's regulators or that, in conformity with past practices and policies of
the Bank and GAAP, should be written off as Loan losses.
(b) The Company shall make available to Wintrust full
information regarding the status of each Loan contained in the Loan portfolio of
the Bank, as of a date not more than 15 days prior to the Closing Date.
5.10 Board of Directors' Notices and Minutes. The Company shall give
reasonable notice to Wintrust of all meetings of the Company Board and any of
its committees, and the board of directors of the Bank and any of its
committees, and if known, the agenda for or business to be discussed at such
meeting. To the extent permissible under law, the Company shall promptly
transmit to Wintrust copies of all notices, minutes, consents and other
materials that the Company or the Bank provides to their directors, other than
materials relating to any proposed acquisition of the Company or the Bank or
this Agreement or the Merger, subject to the Company's compliance with Section
5.8. Wintrust agrees to hold in confidence and trust all such information
pursuant to the Confidentiality Agreement.
5.11 Untrue Representations and Warranties. During the term of this
Agreement, if any Party becomes aware of any facts, circumstances or of the
occurrence or impending occurrence of any event that would cause one or more of
such Party's representations and warranties contained in this Agreement to be or
to become untrue as of the Closing Date, then:
29
(a) such Party shall promptly give detailed written notice
thereof to the other Parties; and
(b) such Party shall use reasonable and diligent efforts to
change such facts or events to make such representations and warranties true,
unless the same shall have been waived in writing by the other Parties.
5.12 Director and Officer Indemnification and Liability Coverage.
(a) Wintrust agrees to provide each of the directors and
officers of the Company and the Bank after the Effective Time substantially the
same coverage against personal liability for actions taken after the Effective
Time as is provided to directors and officers of Wintrust. Wintrust further
agrees to cause the Surviving Corporation, or its successor in interest, for a
period of five (5) years after the Effective Time to indemnify the current and
past directors and officers of the Company and the Bank for all actions taken by
them prior to the Effective Time in their respective capacities as directors and
officers of the Company and the Bank to the same extent as the indemnification
provided by the Company and the Bank to such directors and officers immediately
prior to the Effective Time.
(b) Wintrust agrees that for a period of five (5) years after
the Effective Time, Wintrust shall cause to be maintained in effect the
Company's and the Bank's current policy (as in effect on the Closing Date) of
directors' and officers' liability insurance maintained by the Company with
respect to actions and omissions occurring on or prior to the Effective Time,
subject to the following conditions:
(i) The Company's and the Bank's current directors' and
officers' liability insurer shall agree to maintain such coverage from
and after the Effective Time. In the event such insurer terminates or
declines to continue such coverage after the Effective Time, Wintrust
shall use its commercially reasonable efforts, with the cooperation of
the former directors and officers of the Company, to identify and
obtain similar coverage from another insurance carrier of substantially
similar size and reputation to that of such former insurer, if such
coverage is reasonably obtainable from the marketplace. If after such
reasonable efforts another such insurance carrier is unable or
unwilling to provide such similar coverage, Wintrust shall obtain the
best coverage available, in the reasonable judgment of Wintrust, for a
cost up to but not exceeding the Maximum Amount (as defined below).
(ii) Wintrust may substitute therefor policies of at
least the same coverage and amount containing terms and conditions
which are substantially no less advantageous.
(iii) In no event shall Wintrust be obligated to expend,
in order to maintain or provide insurance coverage pursuant to this
Section 5.12(b), any amount, in aggregate, in excess of $30,000 per
annum (the "Maximum Amount").
(iv) Prior to the Effective Time, the Company shall
notify the appropriate directors' and officers' liability insurers of
the Merger and of all pending or threatened claims, actions, suits,
proceedings or investigations asserted or claimed against
30
any officer or director of the Company or the Bank, or circumstances
likely to give rise thereto to the extent known by the Company, in
accordance with the terms and conditions of the applicable policies.
(v) If the amount of the annual premiums necessary to
maintain or procure such insurance coverage exceeds the Maximum Amount,
Wintrust shall use reasonable efforts to maintain the most advantageous
policies of directors' and officers' insurance obtainable for an annual
premium equal to the Maximum Amount.
(vi) The Company and its directors and officers shall use
reasonable and diligent efforts to cooperate with Wintrust in obtaining
the above-described insurance coverages.
5.13 Monthly Financial Statements. Prior to the Closing Date, the
Company shall deliver to Wintrust a monthly balance sheet, income statement and
statement of stockholders' equity of the Company and the Bank as of the end of
each month as promptly as practicable after they become available. Such monthly
financial statements shall be prepared consistent with past practice and, except
as described on Schedule 5.13, in conformity in all material respects with GAAP
(excluding footnote disclosure) applied on a basis consistent with the Financial
Statements.
5.14 Dissent Process. The Company shall give to Wintrust prompt written
notice of any written demands for appraisal for any shares of Company Common
Stock, any attempted withdrawals of any such demands, and any other notice given
or instrument served relating to the exercise of dissenters' rights granted
under the DGCL, including the name of each dissenting shareholder and the number
of shares of Company Common Stock to which the dissent relates. Wintrust will
have the right to participate in all negotiations and proceedings relating
thereto, and exceptions required by law. The Company will not make any payment
with respect to, or settle or offer to settle, any appraisal demands without
Wintrust's prior written consent.
5.15 Section 368(a) Reorganization. Either prior to or after the
Closing Date, none of the Parties shall take or cause to be taken any action, or
omit to take any action or cause any omission, which would cause the Merger not
to qualify as a reorganization under Section 368(a) of the Code.
5.16 Treatment of Warrants and Options.
(a) Notwithstanding anything contained in this Agreement to
the contrary, Wintrust and the Company each acknowledge and agree that the
holder of any Warrant or Outstanding Company Option may, at any time prior to
the Valuation Date, exercise such Warrant or Outstanding Company Option in
accordance with its terms and conditions.
(b) The Company shall cause the termination or cancellation of
all Warrants that have an exercise price greater than $7.50, and such
termination or cancellation shall be effective prior to the Closing Date.
5.17 Converted Options. Wintrust agrees to assume and honor each of the
Converted Options in accordance with their terms. As soon as reasonably
practicable following the Closing
31
Date, Wintrust shall file a registration statement with the Commission with
respect to the shares of Wintrust Common Stock to be covered by such Converted
Options. Such shares of Wintrust Common Stock shall be duly authorized and, upon
exercise of such Converted Options, shall be validly issued, fully paid and
nonassessable, and not in violation of or subject to any preemptive rights
except as set forth in Wintrust's articles of incorporation. Wintrust shall
after the Effective Time have reserved sufficient shares of Wintrust Common
Stock for issuance with respect to such options.
5.18 Premium Finance Lending Issue.
(a) Within 45 days of the date of this Agreement, the Company
shall certify in writing and demonstrate to the reasonable satisfaction of
Wintrust that:
(i) the Bank has confirmed with each ultimate
borrower under the Bank's premium financing program the existence and
terms of all debt obligations related to insurance premium financing
loans extended by the Bank for the benefit of such borrower; provided,
however, that in the event any borrowers fail to return to the Bank
their written acknowledgment of such debt obligations within 45 days of
the date of this Agreement, the Bank shall confirm in writing to the
applicable insurance carrier (1) the identity of such borrowers, (2)
the existence of the insurance policies securing such debt obligations,
and (3) its notification that the Bank has a financial interest in such
policies which is secured by the unearned premiums of such policies;
(ii) the Bank has used reasonable and diligent
efforts to verify the payment as of the Closing Date of all required
amounts from such ultimate borrowers under such premium financing loans
through a review of the insurance premium financing agent's deposit
receipts; and
(iii) the Bank shall have confirmed for at least
thirty percent (30%) of the insurance premium financing loans as
selected by Wintrust, that sufficient insurance policies are in place
providing the collateral for each such loan.
(b) From the date of this Agreement through the Closing Date,
for all new insurance premium financing loans extended by the Bank, the Bank
shall have obtained written acknowledgment from each ultimate borrower under
such loans of the existence of such loan and debt obligations of such borrower
with the Bank.
ARTICLE 6
EMPLOYEE BENEFIT MATTERS
6.1 Benefit Plans. Schedule 6.1 lists all of the employees of the
Company and the Bank (the "Employees"). Wintrust and the Company Board shall
together review the Benefit Plans and the coverages provided thereunder.
Effective as of the Closing Date, (i) the Company Board shall cause the Company
to terminate all Benefit Plans other than the Company's 401(k) plan, health,
life and disability insurance plans, and long-term care plan (the "Retained
Plans"), and to pay prior to the Closing or accrue fully any liabilities under
the Benefit Plans (including the Retained Plans) or arising out of such
termination of Benefit Plans, and (ii) each full-time Employee shall become
eligible for and entitled to participate in Wintrust's benefit plans (other
32
than those benefit plans for which such Employee is covered under the Retained
Plans) on the same terms and subject to the same conditions as all other U.S.
employees of Wintrust and its subsidiaries. From and after the Closing Date,
Wintrust shall continue coverage for the Employees under the Company's Retained
Plans in effect prior to the Closing Date, to the extent not in violation of any
statute, law (including common law), ordinance, rule or regulation applicable to
such plans or the qualifications or requirements of such plans, until such time
as Wintrust determines such plans are to be terminated or merged with existing
Wintrust plans, at which time all Employees previously covered under such
Retained Plans shall become eligible for and entitled to participate in
Wintrust's similar plans on the same terms and subject to the same conditions as
all other U.S. employees of Wintrust and its subsidiaries. To the extent
permitted by applicable law the Company shall notify Wintrust on the Closing
Date of the existence or absence of any significant pre-existing conditions of
any insureds under the Benefit Plans. Wintrust shall use its reasonable and
diligent efforts to cause any pre-existing condition limitations under
Wintrust's medical benefit plans to be waived to the extent such conditions have
been waived prior to the Effective Time. For purposes of determining eligibility
to participate and, where applicable, vesting under Wintrust's applicable
retirement savings plan and employee stock purchase plan, Wintrust's short-term
disability plans and vacation policy, each Employee shall receive past service
credit for his or her prior employment with the Company as if such Employee had
then been employed by Wintrust. Wintrust reserves the right to change or
terminate its employee benefit plans at any time.
6.2 No Rights or Remedies. Nothing in this Article shall confer upon
any Employee or his or her legal representative, any rights or remedies,
including any right to employment, or continued employment, for any specified
period, or any nature or kind whatsoever under or by reason of this Agreement.
ARTICLE 7
CONDITIONS PRECEDENT TO OBLIGATIONS OF WINTRUST AND MERGER CO.
Unless the conditions are waived by Wintrust, all obligations of
Wintrust and Merger Co. under this Agreement are subject to the fulfillment, on
or before the Closing, of each of the following conditions:
7.1 Representations and Warranties; Performance of Agreements. Each of
the representations and warranties contained in Article III of this Agreement
that are qualified by materiality shall be true and correct in all respects as
of the Closing Date, and each of the representations and warranties contained in
Article III that are not qualified by materiality shall be true and correct in
all material respects, except to the extent such representations and warranties
speak as of an earlier date, they shall be tested as of such earlier date. The
Company shall have performed in all material respects all agreements herein
required to be performed by the Company on or before the Closing.
7.2 Closing Certificate. Wintrust shall have received a certificate of
the Company signed by a senior executive officer of the Company, dated as of the
Closing Date, certifying in such detail as Wintrust may reasonably request, as
to the fulfillment of the conditions to the obligations of Wintrust set forth in
this Agreement that are required to be fulfilled by the Company on or before the
Closing.
33
7.3 Regulatory and Other Approvals. Wintrust shall have obtained the
approval of all appropriate regulatory entities of the transactions contemplated
by this Agreement and the Merger, all required regulatory waiting periods shall
have expired, and there shall be pending on the Closing Date no motion for
rehearing or appeal from such approval or any suit or action seeking to enjoin
the Merger or to obtain substantial damages in respect of such transaction.
7.4 Approval of Merger and Delivery of Agreement. This Agreement and
the Merger shall have been approved by the shareholders of the Company in
accordance with the Company's certificate of incorporation, by-laws and the
DGCL, and the proper officers of the Company shall have executed and delivered
to Wintrust copies of this Agreement and the Certificate of Merger, in form
suitable for filing with the Secretary of State of the State of Delaware, and
shall have executed and delivered all such other certificates, statements or
instruments as may be necessary or appropriate to effect such a filing. The
holders, in the aggregate, of not more than 10% of the shares of Company Common
Stock shall have given written demand for dissenter's rights in accordance with
the DGCL.
7.5 Effectiveness of the Registration Statement. The Registration
Statement shall have become effective with respect to the shares of Wintrust
Common Stock to be issued in the Merger, no stop order suspending the
effectiveness of such Registration Statement shall have been issued, no material
proceeding for that purpose shall have been instituted or threatened, and all
requests for additional information on the part of the Commission shall have
been complied with to Wintrust's satisfaction.
7.6 No Litigation. No suit or other action shall have been instituted
or threatened seeking to enjoin the consummation of the Merger or to obtain
other relief in connection with this Agreement or the transactions contemplated
herein that Wintrust believes, in good faith and with the written advice of
outside counsel, makes it inadvisable to consummate the Merger by reason of the
probability that the proceeding would result in the issuance of an order
enjoining the Merger or in a determination that the Company or the Bank has
failed to comply with applicable legal requirements of a material nature in
connection with the Merger or actions preparatory thereto or would have a
Material Adverse Effect on the Company or the Bank.
7.7 Environmental Surveys. Wintrust shall have the right, at its
option, to obtain Phase I environmental audits of all real property or
facilities used by either the Company or the Bank in the conduct of its
business, conducted by an independent environmental consultant selected by
Wintrust. Wintrust shall pay the costs of obtaining such Phase I environmental
audits. No such environmental audit shall have identified any violation of the
Environmental Laws or condition relating to the environment, human health or
safety which could reasonably be expected to have a Material Adverse Effect on
the Company.
7.8 Opinion of Counsel. Wintrust shall have received the opinion of
Vedder, Price, Kaufman & Kammholz, P.C., counsel for the Company, dated as of
the Closing Date, and in form substantially similar to Exhibit C and reasonably
satisfactory to Wintrust and its counsel.
7.9 Employment Agreements. Those person identified on Schedule 7.9
shall each have entered into an employment agreement with Wintrust and the
Surviving Corporation, dated the Closing Date, in substantially the forms
attached hereto as Exhibits D-1 and D-2.
34
7.10 No Adverse Changes. Between the date of this Agreement and the
Closing Date, the business of the Company and the Bank, taken as a whole, shall
have been conducted in the ordinary course, in all respects consistent with
prudent banking practices, and there shall not have occurred any change or any
condition, event, circumstance, fact or occurrence, other than as provided in
this Agreement, that would have a Material Adverse Effect on the Company.
7.11 Minimum Net Worth and Loan Loss Reserve Requirements.
(a) As of the last day of the month preceding the Closing
Date, as determined in conformity with GAAP applied on a basis consistent with
the preparation of the Financial Statements, (i) the Bank shall have a minimum
net worth of not less than $4,800,000 and (ii) the shareholders' equity in the
Company shall be at not less than $4,600,000, provided that the Company shall
have no more than $480,000 in debt, and provided further that for purposes of
Section 7.11(a)(ii) only, the Company's shareholders' equity shall (1) be
increased by (A) any fees for attorneys, accountants and financial advisors
actually incurred by the Company in connection with this Agreement and the
transactions contemplated herein, up to a maximum of $100,000, and (B) the
after-tax portion of the payment made by the Company pursuant to Section 5.1(e),
and (2) decreased by any cash receipts from the exercise of Outstanding Company
Options.
(b) As of the last day of the month preceding the Closing
Date, as determined in conformity with past practices and policies of the Bank
and GAAP applied on a basis consistent with the preparation of the Financial
Statements, the Bank's reserve for loan losses, determined as described in
Section 3.8, shall be not less than 1.20% of the Bank's net Loans (gross Loans
less unearned discounts).
7.12 Voting Agreements. On or before August 14, 2003, Wintrust shall
have received a Voting Agreement, in the form attached hereto as Exhibit E,
executed by each of those shareholders of the Company identified on Schedule
7.12, each of whom is a director of the Company or the Bank.
7.13 Satisfaction of Premium Finance Lending Issue. The Company and the
Bank shall have fully complied with the provisions of Section 5.18.
7.14 Consents; Release of Pledged Shares. The Company shall have
obtained or caused to be obtained (a) all required written consents requested by
Wintrust before September 15, 2003 under each of the agreements, plans,
policies, etc. listed on Schedule 3.5, to the extent applicable (b) a release,
from any lender to whom common stock of the Bank may be pledged by the Company
as collateral as of the Closing, of such pledged shares and (c) all other
written consents, permissions and approvals as required under any other
agreements, contracts, appointments, indentures, plans, trusts or other
arrangements with third parties required to effect the transactions contemplated
by this Agreement where the failure to obtain such consents, permissions and
approvals would have a Material Adverse Effect on the Company or Wintrust.
7.15 Other Documents. Wintrust shall have received at the Closing such
other customary documents, certificates, or instruments as they may have
reasonably requested evidencing compliance by the Company with the terms and
conditions of this Agreement.
35
ARTICLE 8
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY
Unless the conditions are waived by the Company, all obligations of the
Company under this Agreement are subject to the fulfillment, on or before the
Closing, of each of the following conditions:
8.1 Representations and Warranties; Performance of Agreements. Each of
the representations and warranties contained in Article IV of this Agreement
that are qualified by materiality shall be true and correct in all respects as
of the Closing Date, and each of the representations and warranties contained in
Article IV that are not qualified by materiality shall be true and correct in
all material respects, except to the extent such representations and warranties
speak as of an earlier date, they shall be tested as of such earlier date.
Wintrust and Merger Co. shall have performed in all material respects all
agreements herein required to be performed by Wintrust and Merger Co. on or
before the Closing.
8.2 Closing Certificates. The Company shall have received certificates
signed by the Chief Executive Officer, a Senior Executive Vice President, an
Executive Vice President, or a Senior Vice President of each of Wintrust and
Merger Co. dated as of the Closing Date, certifying in such detail as the
Company may reasonably request, as to the fulfillment of the conditions to the
obligations of the Company as set forth in this Agreement.
8.3 Regulatory and Other Approvals. Wintrust shall have obtained the
approval of all appropriate regulatory entities of the transactions contemplated
by this Agreement and the Merger, all required regulatory waiting periods shall
have expired, and there shall be pending on the Closing Date no motion for
rehearing or appeal from such approval or any suit or action seeking to enjoin
the Merger or to obtain substantial damages in respect of such transaction.
8.4 Delivery of Agreement. The proper officers of Wintrust and Merger
Co. shall have executed and delivered to the Company copies of this Agreement
and the Certificate of Merger, in form suitable for filing with the Secretary of
State of the State of Delaware, and shall have executed and delivered all such
other certificates, statements or instruments as may be necessary or appropriate
to effect such a filing.
8.5 Effectiveness of the Registration Statement. The Registration
Statement shall have become effective with respect to the shares of Wintrust
Common Stock to be issued in the Merger, no stop order suspending the
effectiveness of such Registration Statement shall have been issued, no
proceeding for that purpose shall have been instituted or threatened, and all
requests for additional information on the part of the Commission shall have
been complied with to the Company's satisfaction.
8.6 No Litigation. No suit or other action shall have been instituted
or threatened seeking to enjoin the consummation of the Merger or to obtain
other relief in connection with this Agreement or the transactions contemplated
herein that the Company believes, in good faith and with the written advice of
outside counsel, makes it inadvisable to consummate the Merger by reason of the
probability that the proceeding would result in the issuance of an order
enjoining the Merger or in a determination that Wintrust or Merger Co. has
failed to comply with
36
applicable legal requirements of a material nature in connection with the Merger
or actions preparatory thereto or would have a Material Adverse Effect on
Wintrust.
8.7 Opinions of Counsel.
(a) The Company shall have received the opinion of Schiff
Hardin & Waite, counsel for Wintrust and Merger Co., dated as of the Closing
Date, and in form substantially similar to Exhibit F and reasonably satisfactory
to the Company and its counsel.
(b) The Company shall have received the opinion of Vedder,
Price, Kaufman & Kammholz, P.C., counsel to the Company, dated as of the Closing
Date, to the effect that the Merger will constitute a "reorganization" within
the meaning of Section 368(a) of the Code, that the Company and Wintrust will
each be a party to such reorganization within the meaning of Section 368(a) of
the Code, and that no gain or loss will be recognized by the holders of Company
Common Stock upon the receipt of Wintrust Common Stock in exchange for their
shares of Company Common Stock, except to the extent of any cash received in
lieu of fractional share of Wintrust Common Stock. The tax opinion shall be
supported by one or more fact certificates or affidavits from Wintrust or Merger
Co., in such form and content as may reasonably be requested by counsel to the
Company.
8.8 No Adverse Changes. Between the date of this Agreement and the
Closing Date, there shall not have occurred any change or any condition, event,
circumstance, fact or occurrence, other than as provided in this Agreement, that
would have a Material Adverse Effect on Wintrust.
8.9 Nasdaq Listing. The Wintrust Common Stock to be issued to holders
of Company Common Stock pursuant to the Merger shall have been approved for
listing on the Nasdaq National Market subject to official notice of issuance if
required.
8.10 Other Documents. The Company shall have received at the Closing
all such other customary documents, certificates, or instruments as they may
have reasonably requested evidencing compliance by Wintrust and Merger Co. with
the terms and conditions of this Agreement.
ARTICLE 9
NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS
9.1 Non-Survival. None of the representations, warranties, covenants
and agreements in this Agreement shall survive the Effective Time, except for
those covenants or agreements contained herein which by their terms apply in
whole or in part after the Effective Time. Without limiting the foregoing, none
of the directors or officers of the Parties shall have any liability for any of
the representations, warranties, covenants and agreements contained herein.
37
ARTICLE 10
GENERAL
10.1 Expenses. Except as otherwise provided in this Section 10.1, all
costs and expenses incurred in the consummation of this transaction, including
any brokers' or finders' fees, shall be paid by the Party incurring such cost or
expense.
(a) Each of Wintrust and the Company shall bear and pay
one-half of the costs and expenses incurred in connection with the printing and
mailing of the Registration Statement, excluding legal and accounting fees and
expenses related thereto which shall be paid by the Party incurring such fees
and expenses. Registration Statement filing fees to be paid to the Commission
shall be borne and paid by Wintrust.
(b) In the event that this Agreement is terminated by Wintrust
because the Company or the Bank committed a material breach of its material
obligations under this Agreement, unless such breach is a result of the failure
by Wintrust to perform and comply in all material respects with any of its
material obligations under this Agreement which are to be performed or complied
with by it prior to or on the date of such termination, then, provided Wintrust
is in material compliance with all of its material obligations under this
Agreement, the Company shall reimburse Wintrust in an amount, not to exceed
$150,000, for the out-of-pocket expenses and costs, subject to verification
thereof, that Wintrust (i) has incurred in furtherance of this Agreement and the
transactions contemplated herein and (ii) is reasonably expected to incur as a
result of the Company's breach of this Agreement, including, but not limited to,
reasonable fees of professionals engaged for such purpose by or on behalf of
Wintrust; provided, however, that except as provided in Section 10.1(c), such
sums shall constitute liquidated damages and the receipt thereof shall be
Wintrust's sole and exclusive remedy under this Agreement. Notwithstanding the
foregoing, if this Agreement is terminated by Wintrust as a result of the
Company's willful breach of this Agreement, then in addition to recovery of its
out-of-pocket expenses and costs, Wintrust shall be entitled to recover such
other amounts as it may be entitled to receive at law or in equity.
(c) In the event that this Agreement is terminated (i) by
Wintrust as a result of a breach by the Company of its covenant in Section
5.8(a), (ii) by the Company pursuant to Section 10.2(e), or (iii) pursuant to
Sections 10.2(a) or 10.2(b) and within six months after the date of such
termination the Company or the Bank has either consummated or entered into a
definitive agreement relating to an Acquisition Proposal which was made known to
any member of the Company Board and not disclosed to Wintrust prior to the date
of such termination, then the Company shall pay to Wintrust a termination fee
equal to $500,000.
(d) In the event that this Agreement is terminated by the
Company because Wintrust committed a material breach of its material obligations
under this Agreement, unless such breach is a result of the failure by the
Company or the Bank to perform and comply in all material respects with any of
its material obligations under this Agreement which are to be performed or
complied with by it prior to or on the date of such termination, then, provided
the Company and the Bank are each in material compliance with all of its
material obligations under this Agreement, Wintrust shall reimburse the Company
in an amount, not to exceed $150,000, for the out-of-pocket expenses, subject to
verification thereof, that the Company (i) has incurred
38
in furtherance of this Agreement and the transactions contemplated herein and
(ii) is reasonably expected to incur as a result of Wintrust's breach of this
Agreement, including, but not limited to, reasonable fees of professionals
engaged for such purpose by or on behalf of the Company; provided, however, that
such sums shall constitute liquidated damages and the receipt thereof shall be
the Company's sole and exclusive remedy under this Agreement. Notwithstanding
the foregoing, if this Agreement is terminated by the Company as a result of
Wintrust's willful breach of this Agreement, then in addition to recovery of its
out-of-pocket expenses and costs, the Company shall be entitled to recover such
other amounts as it may be entitled to receive at law or in equity.
(e) In the event this Agreement is terminated pursuant to
Section 10.2(b) because Wintrust fails to obtain all of the necessary regulatory
approvals described in Sections 7.3 and 8.3 for any reason other than regulatory
matters relating solely to the Company or the Bank, Wintrust shall pay to the
Company $150,000, provided, however, that such sums shall constitute liquidated
damages and the receipt thereof shall be the Company's sole and exclusive remedy
under this Agreement.
(f) In the event this Agreement is terminated pursuant to
Section 10.2(b) because Wintrust fails to obtain all of the necessary regulatory
approvals described in Sections 7.3 and 8.3 because of regulatory matters
relating solely to the Company or the Bank, the Company shall pay to Wintrust
$150,000, provided, however, that except as provided in Section 10.1(c), such
sums shall constitute liquidated damages and the receipt thereof shall be
Wintrust's sole and exclusive remedy under this Agreement.
(g) At the Effective Time, Wintrust shall (i) reimburse the
Company for its attorneys', accountants' and financial advisors' fees and
expenses actually incurred, subject to verification thereof, up to a maximum of
$100,000, and (ii) provide a capital contribution of $300,000 to the Company.
(h) All costs and expenses reasonably estimated to have been
incurred by the Company shall be either paid or accrued for on or prior to the
Closing Date; provided, however, that nothing in this Section 10.1 shall be
deemed to relieve the Company of its liability to pay any expenses incurred in
connection with this Agreement following the Closing.
10.2 Termination. This Agreement may be terminated:
(a) at any time by written agreement between Wintrust and the
Company;
(b) by either Wintrust or the Company if the Closing has not
occurred (other than through the failure of any Party seeking to terminate this
Agreement to comply fully with its material obligations under this Agreement) by
January 31, 2004, or such later date agreed to by the Parties, provided,
however, that such termination date shall automatically be extended until April
30, 2004, if the sole impediment to Closing is a delay in either (i) the
determination of the effectiveness of the Registration Statement or (ii) the
Federal Reserve's approval of the Federal Reserve Application;
(c) by Wintrust by written notice to the Company, if (i) any
of the conditions in Article VII has not been satisfied as of the Closing Date
or if satisfaction of such a condition is
39
or becomes impossible (other than through the failure of Wintrust to comply with
its obligations under this Agreement); and (ii) Wintrust has not waived such
condition on or before the Closing Date;
(d) by the Company by written notice to Wintrust, if (i) any
of the conditions in Article VIII has not been satisfied as of the Closing Date
or if satisfaction of such a condition is or becomes impossible (other than
through the failure of the Company or the Bank to comply with its obligations
under this Agreement); and (ii) the Company has not waived such condition on or
before the Closing Date; or
(e) by the Company, if pursuant to Section 5.8(b) the Company
Board determines that its fiduciary duties require it to accept an unsolicited
Acquisition Proposal from a third party, or by Wintrust if an Acquisition
Proposal from a third party is accepted by the Company or consummated, in each
case by written notice to the other party.
(f) Any termination of this Agreement shall not affect any
rights accrued prior to such termination.
10.3 Confidential Information. Wintrust, Merger Co. and the Company
each covenant that, in the event the transactions contemplated by this Agreement
are not consummated, each such Party will keep in strict confidence and return
all documents containing any information concerning the properties, business,
and assets of the other Parties that may have been obtained in the course of
negotiations or examination of the affairs of each other Party either prior or
subsequent to the execution of this Agreement (other than such information as
shall be in the public domain or otherwise ascertainable from public or outside
sources), except to the extent that disclosure is required by judicial process
or governmental or regulatory authorities.
10.4 Non-Assignment. Neither this Agreement nor any of the rights,
interests or obligations of the Parties under this Agreement shall be assigned
by any Party (whether by operation of law or otherwise) without the prior
written consent of the other Party. Notwithstanding the foregoing, Wintrust and
Merger Co. may assign their respective rights hereunder to another wholly owned
subsidiary of Wintrust. Subject to the foregoing, this Agreement shall be
binding upon and inure to the benefit of the respective successors and assigns
of the Parties.
10.5 Notices. All notices, requests, demands, and other communications
provided for in this Agreement shall be in writing and shall be deemed to have
been given (a) when delivered in person, (b) the third business day after being
deposited in the United States mail, registered or certified mail (return
receipt requested), or (c) the first business day after being deposited with
Federal Express or any other recognized national overnight courier service, in
each case addressed as follows:
(i) If to the Company, addressed to:
Village Bancorp Inc.
311 South Arlington Heights Road
Arlington Heights, Illinois 60005-1999
Attention: Thomas H. Roth, Chairman
40
with a copy to:
Vedder, Price, Kaufman & Kammholz, P.C.
222 North LaSalle Street, Suite 2600
Chicago, Illinois 60601-1003
Attention: Daniel O'Rourke
(ii) If to Wintrust or Merger Co., addressed to:
Wintrust Financial Corporation
727 North Bank Lane
Lake Forest, Illinois 60045
Attention: David A. Dykstra
Senior Executive Vice President and
Chief Operating Officer
with a copy to:
Schiff Hardin & Waite
6600 Sears Tower
Chicago, IL 60606-6473
Attention: Matthew G. Galo
10.6 Counterparts. This Agreement may be executed in any number of
counterparts with the same effect as if the signatures to each counterpart were
upon the same instrument.
10.7 Knowledge. References in this Agreement to the "knowledge" of a
party shall mean, with respect to a natural person, the actual knowledge of such
person after reasonable investigation and with respect to an entity, the actual
knowledge of its executive officers and directors after reasonable
investigation.
10.8 Entire Agreement. This Agreement, including the Schedules and
agreements delivered pursuant hereto, and the Confidentiality Agreement sets
forth the entire understanding of the parties and supersedes all prior
agreements, arrangements, and communications, whether oral or written. This
Agreement shall not be modified or amended other than by written agreement of
the parties hereto. Captions appearing in this Agreement are for convenience
only and shall not be deemed to explain, limit, or amplify the provisions
hereof.
10.9 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware, without giving effect to
the conflicts of laws principles thereof.
10.10 Severability. In the event that a court of competent jurisdiction
shall finally determine that any provision of this Agreement or any portion
thereof is unlawful or unenforceable, such provision or portion thereof shall be
deemed to be severed from this Agreement, and every other provision and portion
thereof that is not invalidated by such determination shall remain in full force
and effect. To the extent that a provision is deemed unenforceable by virtue of
its scope but may be made enforceable by limitation thereof, such
41
provision shall be enforceable to the fullest extent permitted under the laws
and public policies of the state whose laws are deemed to govern enforceability.
** Signature Page Follows **
42
IN WITNESS WHEREOF, Wintrust Financial Corporation, WTFC Merger Co.,
and Village Bancorp, Inc. have each executed this Agreement as of the day and
year first written above.
WINTRUST FINANCIAL CORPORATION
By: /s/ David A. Dykstra
-------------------------------
Name: David A. Dykstra
Title: Senior Executive Vice President
and Chief Operating Officer
WTFC MERGER CO.
By: /s/ David A. Dykstra
-------------------------------
Name: David A. Dykstra
Title: Vice President
VILLAGE BANCORP, INC.
By: /s/ Thomas H. Roth
-------------------------------
Name: Thomas H. Roth
Title: President and Chief Executive
Officer