AGREEMENT AND PLAN OF MERGER AND REORGANIZATION by and between OLD SECOND BANCORP, INC. and WEST SUBURBAN BANCORP, INC. Dated as of July 25, 2021
Exhibit 2.1
Execution Version
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
by and between
OLD SECOND BANCORP, INC.
and
WEST SUBURBAN BANCORP, INC.
Dated as of July 25, 2021
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AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
THIS AGREEMENT AND PLAN OF MERGER AND REORGANIZATION (this “Agreement”), dated as of July 25, 2021, is by and between Old Second Bancorp, Inc., a Delaware corporation (“Buyer”), and West Suburban Bancorp, Inc., an Illinois corporation (“West Suburban”). Capitalized terms used in this Agreement but not defined elsewhere herein shall have the meanings assigned to them in Section 10.1 hereof.
WHEREAS, the board of directors of West Suburban has unanimously (i) determined that this Agreement and the Merger and the other transactions contemplated hereby are in the best interests of West Suburban and West Suburban’s shareholders, and (ii) approved the execution, delivery and performance by West Suburban of this Agreement and the consummation of the transactions contemplated hereby, including the Merger;
WHEREAS, the board of directors of Buyer has unanimously (i) determined that this Agreement and the Merger and other transactions contemplated hereby are in the best interests of Buyer and Buyer’s stockholders, and declared that this Agreement is advisable, and (ii) approved the execution, delivery and performance by Buyer of this Agreement and the consummation of the transactions contemplated hereby, including the Merger;
WHEREAS, the board of directors of West Suburban, subject to the terms of this Agreement, has agreed to recommend that West Suburban’s shareholders approve this Agreement and the transactions contemplated hereby (the “West Suburban Recommendation”);
WHEREAS, the board of directors of Buyer, subject to the terms of this Agreement, has agreed to recommend that Buyer’s stockholders adopt this Agreement and the transactions contemplated hereby;
WHEREAS, as a material inducement and as additional consideration to Buyer to enter into this Agreement, each of the directors of West Suburban and West Suburban Bank, and certain other officers and shareholders of West Suburban, have entered into a voting and support agreement with Buyer as of the date hereof (each a “Support Agreement” and collectively, the “Support Agreements”), in the form attached hereto as Exhibit B, pursuant to which each such person has agreed, among other things, to vote all shares of West Suburban Common Stock owned by such person in favor of the approval of this Agreement and the transactions contemplated hereby, upon the terms and subject to the conditions set forth in this Agreement;
WHEREAS, the Merger and the transactions contemplated hereby are subject to the approvals of the shareholders of West Suburban, the stockholders of Buyer, certain regulatory agencies, and the satisfaction (or waiver, where legally permissible) of certain other conditions set forth in this Agreement;
WHEREAS, Buyer and West Suburban desire to make certain representations, warranties, covenants and agreements in connection with the Merger and also to prescribe various conditions to the consummation of the Merger; and
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WHEREAS, Buyer and West Suburban intend, (i) for federal income tax purposes, that the Merger qualify as a “reorganization” described in Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”); (ii) that this Agreement constitute a “plan of reorganization” within the meaning of Section 1.368-2(g) of the regulations promulgated under the Code; and (iii) that Buyer and West Suburban will each be a “party to the reorganization” within the meaning of Section 368(a) of the Code.
NOW, THEREFORE, in consideration of the above and the mutual warranties, representations, covenants, and agreements set forth herein, and other good and valuable consideration, the receipt and sufficiency of which are acknowledged, the Parties, intending to be legally bound, agree as follows:
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contemplated by this Agreement by merging a subsidiary of Buyer with and into West Suburban, provided, that no such revision to the structure of the Merger (a) shall result in any changes in the amount or type of consideration which the holders of shares of West Suburban Common Stock are entitled to receive under this Agreement, (b) would impede or delay consummation of the Merger or the delivery of the opinions contemplated in Section 8.1(g), or (c) imposes any less favorable terms or conditions on West Suburban, West Suburban Bank or the shareholders of West Suburban. In such event, Buyer shall provide written notice to West Suburban in the manner provided in Section 10.7, which notice shall be in the form of a proposed amendment to this Agreement or in the form of an Amended and Restated Agreement and Plan of Merger and Reorganization, and the addition of such other exhibits hereto as are reasonably necessary or appropriate to effect such change and West Suburban shall evaluate any such proposal promptly and respond to such proposal within five (5) business days.
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officers of Buyer in office immediately prior to the Effective Time, together with such additional persons that the Buyer has agreed to appoint pursuant to this Agreement and as may thereafter be appointed, shall serve as the officers of the Surviving Corporation from and after the Effective Time in accordance with the Surviving Corporation’s bylaws, until the earlier of their resignation or removal or otherwise ceasing to be an officer.
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holder of shares of West Suburban Common Stock exchanged pursuant to the Merger who would otherwise have been entitled to receive a fraction of a share of Buyer Common Stock (after taking into account all Certificates and West Suburban Book-Entry Shares delivered by such holder), shall receive, in lieu thereof, cash (without interest) in an amount equal to such fractional part of a share of Buyer Common Stock multiplied by the Buyer Stock Price. No such holder will be entitled to dividends, voting rights, or any other rights as a shareholder in respect of any fractional shares.
West Suburban represents and warrants to Buyer, except as set forth on the West Suburban Disclosure Memorandum, as follows:
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and West Suburban Bank has the corporate power and authority to carry on its business as now conducted and to own, lease, and operate its Assets. Each of West Suburban and West Suburban Bank is duly qualified or licensed to transact business as a foreign corporation in good standing in the states of the United States and foreign jurisdictions where the character of its Assets or the nature or conduct of its business requires it to be so qualified or licensed, except for jurisdictions where the failure to be so qualified or licensed is not reasonably likely to have, individually or in the aggregate, a West Suburban Material Adverse Effect. The articles of incorporation, as amended, of West Suburban and the charter, as amended, of West Suburban Bank and the bylaws of West Suburban and West Suburban Bank have been made available to Buyer for its review and are true and complete in all material respects as in effect as of the date of this Agreement and accurately reflect all amendments thereto. West Suburban Bank is an “insured depository institution” as defined in the Federal Deposit Insurance Act, as amended, and applicable regulations thereunder, and the deposits held by West Suburban Bank are insured, up to the applicable limits, by the FDIC’s Deposit Insurance Fund.
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of the equity interests in each of its Subsidiaries. No capital stock (or other equity interest) of any such Subsidiary is or may become required to be issued (other than to another West Suburban Entity) by reason of any Rights, and there are no Contracts by which any such Subsidiary is bound to issue (other than to another West Suburban Entity) additional shares of its capital stock (or other equity interests) or Rights or by which any West Suburban Entity is or may be bound to transfer any shares of the capital stock (or other equity interests) of any such Subsidiary (other than to another West Suburban Entity). There are no Contracts relating to the Rights of any West Suburban Entity to vote or to dispose of any shares of the capital stock (or other equity interests) of any such Subsidiary. All of the shares of capital stock (or other equity interests) of each Subsidiary are fully paid and nonassessable and are owned directly or indirectly by West Suburban free and clear of any Lien except as set forth in Section 4.4 of the West Suburban Disclosure Memorandum. Each Subsidiary is duly qualified or licensed to transact business in good standing in the states of the United States and foreign jurisdictions where the character of its Assets or the nature or conduct of its business requires it to be so qualified or licensed, except for jurisdictions where the failure to be so qualified or licensed is not reasonably likely to have, individually or in the aggregate, a West Suburban Material Adverse Effect. The articles of incorporation, bylaws and other organizational documents for the Subsidiaries have been made available to Buyer for its review, and are true and complete in all material respects as in effect as of the date of this Agreement and accurately reflect in all material respects all amendments thereto.
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sheet arrangement”), where the result, purpose or intended effect of such Contract or arrangement is to avoid disclosure of any material transaction involving, or material liabilities of, West Suburban or any of its Subsidiaries in West Suburban’s or such Subsidiary’s financial statements.
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For purposes of this Section 4.8, any reference to West Suburban or any West Suburban Entity shall be deemed to include any Person that merged with or was liquidated into or otherwise combined with West Suburban or a West Suburban Entity prior to the Effective Time.
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Except where any such failure would not be material to West Suburban and its Subsidiaries, taken as a whole:
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interest, or right of any of them, nor are there any Orders or judgments outstanding against any West Suburban Entity, or (b) seeking to prevent, materially alter, or delay any of the transactions contemplated by this Agreement. To the Knowledge of West Suburban, no event has occurred or circumstance exists that could reasonably be expected to give rise to or serve as a basis for the commencement of any Litigation against any West Suburban Entity except where any such Litigation would not be material to West Suburban and its Subsidiaries, taken as a whole. No claim for indemnity has been made or, to the Knowledge of West Suburban, threatened by any director, officer, employee, independent contractor, or agent to any West Suburban Entity and, to the Knowledge of West Suburban, no basis for any such claim exists.
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any Affiliate thereof, has taken or agreed to take any action or has any Knowledge of any fact or circumstance that is reasonably likely to materially impede or delay receipt of required Consents or result in the imposition of a condition or restriction of the type referred to in the last sentence of Section 8.1(b).
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without limitation all regulations and guidance issued by the Federal Reserve Board, and in accordance with safe and sound banking practices.
Buyer represents and warrants to West Suburban, except as set forth in the Buyer Disclosure Memorandum, as follows:
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partnership or any similar Contract or arrangement (including any Contract or arrangement relating to any transaction or relationship between or among Buyer and any of its Subsidiaries, on the one hand, and any unconsolidated Affiliate, including any structured finance, special purpose or limited purpose entity or Person, on the other hand, or any “off-balance sheet arrangement”), where the result, purpose or intended effect of such Contract or arrangement is to avoid disclosure of any material transaction involving, or material liabilities of, Buyer or any of its Subsidiaries in Buyer’s or such Subsidiary’s financial statements.
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(b) since December 31, 2020, the Buyer Entities have conducted their respective businesses in the ordinary course of business consistent with past practice.
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(a)Each of the Buyer Entities has in effect all Permits and has made all filings, applications, and registrations with Governmental Authorities that are required for it to own, lease, or operate its assets and to carry on its business as now conducted, and, to the Knowledge of Buyer,
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there has occurred no Default under any such Permit applicable to their respective businesses or employees conducting their respective businesses, except in each case where the failure to hold such Permit or make such filing, application, or registration or such Default would not be material to Buyer and its Subsidiaries, taken as a whole.
(b)To the Knowledge of Buyer, none of the Buyer Entities is in material Default under any Laws or Orders applicable to its business or employees conducting its business.
(c)Since December 31, 2018, none of the Buyer Entities has received any written notification or communication from any Governmental Authority (i) asserting that Buyer or any of its Subsidiaries is in Default under any of the Permits, Laws, or Orders which such Governmental Authority enforces, or (ii) threatening to revoke any Permits.
(d)Neither Buyer nor any of its Subsidiaries is subject to any cease-and-desist order or enforcement action issued by, or is a party to any written agreement, consent agreement or memorandum of understanding with, or is a party to any commitment letter or similar undertaking with, or is subject to any capital directive by, or since January 1, 2019 has adopted any board resolutions at the request of, any Governmental Authority (each a “Buyer Regulatory Agreement”), nor has Buyer or any of its Subsidiaries been advised since January 1, 2019 and prior to the date hereof by any Governmental Authority that it is considering issuing, initiating, ordering or requesting any such Buyer Regulatory Agreement.
(e)There (i) is no material unresolved violation of Law with respect to any report or statement relating to any examinations or inspections of Buyer or any of its Subsidiaries, (ii) since January 1, 2018, are no material written notices or correspondence received by Buyer with respect to pending formal or informal inquiries by, or disagreements with, any Governmental Authority with respect to Buyer’s or any of Buyer’s Subsidiaries’ business, operations, policies, or procedures, and (iii) is not any pending or, to the Knowledge of Buyer, threatened, nor has any Governmental Authority indicated an intention to conduct any, investigation, or review of it or any of its Subsidiaries.
(f)None of the Buyer Entities nor, to the Knowledge of Buyer, any of its directors, officers, employees, or Representatives acting on its behalf has offered, paid, or agreed to pay any Person, including any Government Authority, directly or indirectly, anything of value for the purpose of, or with the intent of obtaining or retaining any business in violation of applicable Laws, including (i) using any corporate funds for any unlawful contribution, gift, entertainment, or other unlawful expense relating to political activity, (ii) making any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds, (iii) violating any provision of the Foreign Corrupt Practices Act of 1977, as amended, or (iv) making any bribe, rebate, payoff, influence payment, kickback, or other unlawful payment.
(g)Each Buyer Entity has complied in all material respects with all requirements of Law under the Bank Secrecy Act and the USA Patriot Act.
(h)Each Buyer Entity’s collection and use of IIPI complies in all material respects with applicable privacy or data security requirements of the Fair Credit Reporting Act, and the ▇▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act, including implementing regulations.
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(a)No Buyer Entity is the subject of any Litigation asserting that it or any other Buyer Entity has committed an unfair labor practice (within the meaning of the National Labor Relations Act or comparable state Law) or other violation of state or federal labor Law or seeking to compel it or any other Buyer Entity to bargain with any labor organization, trade union, workers council, or other employee representative as to wages or conditions of employment, nor is any Buyer Entity a party to any collective bargaining agreement or subject to any bargaining order, injunction, legally binding commitment, or other Order relating to any Buyer Entity’s relationship or dealings with its employees, any labor organization, trade union, workers council, or any other employee representative. There is no strike, slowdown, lockout, work stoppage, or other job action or labor dispute involving any Buyer Entity pending or, to the Knowledge of Buyer, threatened, and there have been no such actions or disputes in the past five (5) years. To the Knowledge of Buyer, there has not been any attempt by any Buyer Entity employees or any labor organization or other employee representative to organize or certify a collective bargaining unit or to engage in any other union organization activity with respect to the workforce of any Buyer Entity.
(b)All of the employees employed by any Buyer Entity in the United States are either United States citizens or are, to the Knowledge of Buyer, legally entitled to work in the United States under the Immigration Reform and Control Act of 1986, as amended, other United States immigration Laws and the Laws related to the employment of non-United States citizens applicable in the state in which the employees are employed. Each Buyer Entity has complied with E-Verify and any comparable Law.
(c)No Buyer Entity has effectuated (i) a “plant closing” (as defined in the WARN Act) affecting any site of employment or one or more facilities or operating units within any site of employment or facility of any Buyer Entity; or (ii) a “mass layoff” (as defined in the WARN Act) affecting any site of employment or facility of any Buyer Entity; and no Buyer Entity has been affected by any transaction or engaged in layoffs or employment terminations sufficient in number to trigger application of any similar state or local Law.
(d)Except as disclosed in Section 5.18(d) of the Buyer Disclosure Memorandum, all independent contractors of each Buyer Entity meet the standard for an independent contractor under all Laws (including Treasury Regulations under the Code and federal and state labor and employment Laws), and no such Person is an employee of any Buyer Entity under any applicable Law.
(e)Except as disclosed in section 5.18(e) of the Buyer Disclosure Memorandum, all Buyer Entities are and for the past three (3) years have been in material compliance with all applicable Laws pertaining to employment and employment practices with respect to the employees of Buyer and its Subsidiaries, including but not limited to all Laws relating to wages, hours, overtime, employment discrimination, workplace harassment, retaliation, family and medical leave, disability accommodation, civil rights, safety and health, workers’ compensation, pay equity, I-9 employment eligibility verification and the collection and payment of payroll withholding, unemployment, Medicare and/or social security taxes, and there are no pending, or,
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to the Knowledge of Buyer, threatened, investigations, complaints, charges, claims, lawsuits, or arbitrations with respect to such Laws.
(a)Each Employee Benefit Plan currently adopted, maintained by, sponsored in whole or in part by, or contributed or required to be contributed to by any Buyer Entity or any ERISA Affiliate thereof for the benefit of employees, former employees, officers, retirees, dependents, spouses, current or former directors, independent contractors, or other beneficiaries or under which employees, former employees, officers, retirees, dependents, spouses, current or former directors, independent contractors, or other beneficiaries are eligible to participate (each, a “Buyer Benefit Plan,” and collectively, the “Buyer Benefit Plans”) is in material compliance with the terms of such Buyer Benefit Plan and, in material compliance with the requirements of all applicable Laws, including the Code and ERISA. Any of the Buyer Benefit Plans that is an “employee pension benefit plan,” as that term is defined in ERISA Section 3(2), is referred to herein as a “Buyer ERISA Plan.” Each Buyer ERISA Plan that is intended to be qualified under Section 401(a) of the Code has received a favorable determination letter from the IRS or, in the alternative, appropriately relies upon an opinion letter issued to a prototype plan under which the Buyer ERISA Plan has been adopted and, to the Knowledge of Buyer, there exist no circumstances likely to result in revocation of any such favorable determination or opinion letter. Buyer has not received any written communication from any Governmental Authority questioning or challenging the compliance of any Buyer Benefit Plan with applicable Laws. No Buyer Benefit Plan is currently being audited by any Governmental Authority for compliance with applicable Laws or has been audited with a determination by any Governmental Authority that the Buyer Benefit Plan failed to comply with applicable Laws.
(b)To the Knowledge of Buyer, there has been no material oral or written representation or communication made by or on behalf of Buyer with respect to any material aspect of any Buyer Benefit Plan which is not in all material respects in accordance with the written or otherwise preexisting terms and provisions of such plans. Neither Buyer, any Buyer Entity, nor, to the Knowledge of Buyer, any administrator or fiduciary of any Buyer Benefit Plan (or any agent of any of the foregoing) has engaged in any transaction, or acted or failed to act in any manner, which could subject Buyer, any Buyer Entity, or Buyer to any direct or indirect Liability (by indemnity or otherwise) for breach of any fiduciary, co-fiduciary, or other duty under ERISA. There are no unresolved claims or disputes under the terms of, or in connection with, Buyer Benefit Plans other than routine claims for benefits which are payable in the ordinary course of business consistent with the terms of the applicable plan, and no action, proceeding, prosecution, inquiry, hearing, or investigation has been commenced with respect to any Buyer Benefit Plan other than routine claims for benefits.
(c)All Buyer Benefit Plan documents and annual reports or returns, audited or unaudited financial statements, actuarial valuations, summary annual reports, and summary plan descriptions issued with respect to the Buyer Benefit Plans are correct and complete in all material respects; to the extent applicable, have been timely filed with the IRS, the DOL, or the PBGC, and have been distributed to participants of the Buyer Benefit Plans (as required by Law); and there have been no material misstatements or omissions in the information set forth therein.
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(i)Except as disclosed in Section 5.19(i) of the Buyer Disclosure Memorandum, no Buyer Benefit Plan is or has been funded by, associated with, or related to a “voluntary employee’s beneficiary association” within the meaning of Section 501(c)(9) of the Code, a “welfare benefit fund” within the meaning of Section 419 of the Code, a “qualified asset account” within the meaning of Section 419A of the Code or a “multiple employer welfare arrangement” within the meaning of Section 3(40) of ERISA. The actuarial present values of all accrued deferred compensation entitlements (including entitlements under any executive compensation, supplemental retirement, or employment agreement) of employees and former employees of any Buyer Entity and their respective beneficiaries, other than entitlements accrued pursuant to funded retirement plans, whether or not subject to the provisions of Code Section 412 or ERISA Section 302, have been reflected on the Buyer Financial Statements in all material respects to the extent required by and in accordance with GAAP.
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(l)Except as disclosed in section 5.19(l) of the Buyer Disclosure Memorandum, neither Buyer nor any of its ERISA Affiliates has had an “obligation to contribute” (as defined in ERISA Section 4212) to, or other obligations or Liability in connection with, a “multiemployer plan” (as defined in ERISA Sections 4001(a)(3) or 3(37)(A)) or any employee pension benefit plan within the meaning of ERISA Section 3(2) that is subject to Section 412 of the Code or Section 302 of ERISA or a multiple employer plan within the meaning of Section 413(c) of the Code or ERISA Sections 4063, 4064, or 4066.
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From the date of this Agreement until the earlier of the Effective Time or the termination of this Agreement, unless the prior written Consent of Buyer shall have been obtained (which Consent shall not be unreasonably withheld, delayed, or conditioned), and except as otherwise contemplated herein, West Suburban covenants and agrees that it will not do or agree or commit to do, or permit any of its Subsidiaries to do or agree or commit to do, any of the following:
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During the period from the date of this Agreement to the Effective Time, except as contemplated by this Agreement, Buyer shall not, and shall not permit any of its Subsidiaries to, do any of the following, without the prior written Consent of West Suburban (which Consent shall not be unreasonably withheld, delayed, or conditioned):
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ADDITIONAL AGREEMENTS
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keep the other apprised of the status of matters relating to consummation of the transactions contemplated herein. Each Party also shall promptly advise the other upon receiving any communication from any Regulatory Authority or other Person whose Consent is required for consummation of the transactions contemplated by this Agreement which causes such Party to believe that there is a reasonable likelihood that any requisite Consent will not be obtained or that the receipt of any such Consent will be materially delayed.
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The obligations of West Suburban to perform this Agreement and consummate the Merger and the other transactions contemplated hereby are subject to the satisfaction of the following conditions, unless waived by West Suburban pursuant to Section 10.5(b):
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“401(k) Plan” shall have the meaning as set forth in Section 7.10(f).
“Acquisition Proposal” means any proposal (whether communicated to West Suburban or publicly announced to West Suburban’s shareholders) by any Person (other than Buyer or any of its Affiliates) for an Acquisition Transaction.
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“Acquisition Transaction” means any transaction or series of related transactions (other than the transactions contemplated by this Agreement) involving: (i) any acquisition or purchase from West Suburban by any Person or Group (other than Buyer or any of its Affiliates) of fifty percent (50%) or more in interest of the total outstanding voting securities of West Suburban, or any tender offer or exchange offer that if consummated would result in any Person or Group (other than Buyer or any of its Affiliates) beneficially owning fifty percent (50%) or more in interest of the total outstanding voting securities of West Suburban, or any merger, consolidation, business combination or similar transaction involving West Suburban pursuant to which the shareholders of West Suburban immediately preceding such transaction hold less than seventy-five percent (75%) of the equity interests in the surviving or resulting entity (which includes the Buyer corporation of any constituent corporation to any such transaction) of such transaction; (ii) any sale or lease (other than in the ordinary course of business), or exchange, transfer, license (other than in the ordinary course of business), acquisition or disposition of fifty percent (50%) or more of the consolidated Assets of West Suburban and its Subsidiaries, taken as a whole; or (iii) any liquidation or dissolution of West Suburban.
“Adverse Recommendation Change” shall have the meaning as set forth in Section 7.1(b).
“Affiliate” of a Person means: (i) any other Person directly, or indirectly through one or more intermediaries, controlling, controlled by or under common control with such Person; (ii) any officer, director, partner, employer, or direct or indirect beneficial owner of any ten percent (10%) or greater equity or voting interest of such Person; or (iii) any other Person for which a Person described in clause (ii) acts in any such capacity.
“Agency” shall mean the Federal Housing Administration, the Federal Home Loan Mortgage Corporation, the Farmers Home Administration (now known as Rural Housing and Community Development Services), the Federal National Mortgage Association, the United States Department of Veterans’ Affairs, the Rural Housing Service of the U.S. Department of Agriculture or any other federal or state agency with authority to (x) determine any investment, origination, lending or servicing requirements with regard to mortgage loans originated, purchased or serviced by West Suburban or any of its Subsidiaries or Buyer or any of its Subsidiaries or (y) originate, purchase, or service mortgage loans, or otherwise promote mortgage lending, including state and local housing finance authorities.
“Agreement” shall have the meaning as set forth in the Preamble.
“Articles of Merger” shall have the meaning as set forth in Section 1.3.
“Assets” of a Person means all of the assets, properties, businesses and Rights of such Person of every kind, nature, character and description, whether real, personal or mixed, tangible or intangible, accrued or contingent, or otherwise relating to or utilized in such Person’s business, directly or indirectly, in whole or in part, whether or not carried on the books and records of such Person, and whether or not owned in the name of such Person or any Affiliate of such Person and wherever located.
“Bank Merger” shall have the meaning as set forth in Section 1.5.
“Bank Merger Agreement” shall have the meaning as set forth in Section 1.5.
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“BHCA” shall have the meaning as set forth in Section 4.1.
“Buyer” shall have the meaning as set forth in the Preamble.
“Buyer Bank” shall have the meaning as set forth in Section 1.5.
“Buyer Benefit Plan(s)” shall have the meaning as set forth in Section 5.19(a).
“Buyer Common Stock” means the common stock, par value $1.00 per share, of Buyer.
“Buyer Disclosure Memorandum” means the written information entitled “Buyer Disclosure Memorandum” delivered with this Agreement to West Suburban and attached hereto.
“Buyer Entities” means, collectively, Buyer and all Buyer Subsidiaries. Each of Buyer and any Buyer Subsidiary is, individually, a “Buyer Entity.”
“Buyer ERISA Plan” shall have the meaning as set forth in Section 5.19(a).
“Buyer Exchange Act Reports” shall have the meaning as set forth in Section 5.5(a).
“Buyer Financial Advisor” means Citigroup Global Markets Inc.
“Buyer Financial Statements” means (i) the consolidated balance sheets of Buyer as of December 31, 2020 and 2019, and the related statements of income, changes in stockholders’ equity, and cash flows (including related notes and schedules, if any) for the three fiscal years ended December 31, 2020, 2019, and 2018 as filed by Buyer in Exchange Act Documents, and (ii) the consolidated balance sheets of Buyer (including related notes and schedules, if any) and related statements of income, changes in stockholders’ equity, and cash flows (including related notes and schedules, if any) included in Exchange Act Documents, as amended, filed with respect to periods ended subsequent to December 31, 2020.
“Buyer Material Adverse Effect” means an event, change or occurrence which, individually or together with any other event, change or occurrence, has had or is reasonably expected to have a material adverse effect on (i) the financial position, property, business, assets or results of operations of Buyer and its Subsidiaries, taken as a whole, or (ii) the ability of Buyer to consummate the Merger or the other transactions contemplated by this Agreement, provided, that “Buyer Material Adverse Effect” shall not be deemed to include the effects of (A) changes in banking and other Laws (including the Pandemic Measures) of general applicability or interpretations thereof by Governmental Authorities, (B) changes in SEC, GAAP or regulatory accounting principles generally applicable to banks and their holding companies, (C) actions and omissions of Buyer (or any of its Subsidiaries) taken with the prior written Consent of West Suburban in contemplation of the transactions contemplated hereby, (D) changes in economic conditions affecting financial institutions generally, including changes in interest rates, credit availability and liquidity, and price levels or trading volumes in securities markets, except to the extent the Buyer is materially and adversely affected in a disproportionate manner as compared to other comparable participants in the banking industry, (E) changes resulting from hurricanes, earthquakes, tornados, floods or other natural disasters or from any outbreak of any disease or other public health event (including the Pandemic), (F) changes resulting from the public
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disclosure of the execution of this Agreement, public disclosure or contemplated consummation of the transactions contemplated hereby (including any effect on a party’s relationship with its customers or employees) or actions expressly required by this Agreement or the pendency of the transactions contemplated by this Agreement, or (G) the direct effects of compliance with this Agreement on the operating performance of Buyer. “Buyer Material Adverse Effect” shall not be deemed to include any failure to meet analyst projections, in and of itself, or, in and of itself, or the trading price of the Buyer Common Stock (it being understood that the facts or occurrences giving rise or contributing to any such effect, change or development which affects or otherwise relates to the failure to meet analyst financial forecasts or the trading price, as the case may be, may be deemed to constitute, or be taken into account in determining whether there has been, or would reasonably be expected to be, a Buyer Material Adverse Effect).
“Buyer Regulatory Agreement” shall have the meaning as set forth in Section 5.17(d).
“Buyer Subsidiaries” means the Subsidiaries of Buyer, which shall include any corporation, bank, savings association, limited liability company, limited partnership, limited liability partnership or other organization acquired as a Subsidiary of Buyer in the future and held as a Subsidiary by Buyer at the Effective Time.
“Buyer Stock Price” shall mean the average of the closing sale prices of Buyer Common Stock as reported on the Nasdaq Stock Market during the twenty (20) consecutive trading dates ending on and including the fifth (5th) trading day prior to the Closing Date.
“Buyer’s Stockholders’ Meeting” means the meeting of Buyer’s stockholders to be held pursuant to Section 7.2, including any adjournment or adjournments thereof.
“Cash Consideration” shall have the meaning as set forth in 3.1(a).
“CERCLA” shall have the meaning as set forth under the definition of “Environmental Laws” in this Section 10.1(a).
“Certificates” shall have the meaning as set forth in Section 3.1(b).
“Closing” shall have the meaning as set forth in Section 1.2.
“Closing Date” means the date on which the Closing occurs.
“Code” shall have the meaning as set forth in the Recitals.
“Consent” means any consent, approval, authorization, clearance, exemption, waiver, or similar affirmation by any Person pursuant to any Contract, Law, Order, or Permit.
“Continuing Employee” shall have the meaning as set forth in Section 7.10(a).
“Contract” means any written agreement, arrangement, authorization, commitment, contract, indenture, instrument, lease, license, obligation, plan, practice, restriction, understanding, or undertaking of any kind or character, or other document to which any Person is a party that is binding on any Person or its capital stock, Assets or business.
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“Default” means (i) any material breach or violation of or default under any Contract, Law, Order, or Permit, (ii) any occurrence of any event that with the passage of time or the giving of notice or both would constitute a material breach or violation of or default under any Contract, Law, Order, or Permit, or (iii) any occurrence of any event that with or without the passage of time or the giving of notice would constitute material breach or violation of or default under any Contract, Law, Order, or Permit.
“DGCL” shall have the meaning as set forth in Section 1.1.
“Dissenting Share” shall have the meaning as set forth in Section 3.6.
“DOL” shall have the meaning as set forth in Section 4.15(b).
“Effective Time” shall have the meaning as set forth in Section 1.3.
“Employee Benefit Plan” means each pension, retirement, profit-sharing, deferred compensation, stock option, employee stock ownership, share purchase, severance pay, vacation, bonus, retention, change in control or other incentive plan, medical, vision, dental or other health plan, any life insurance plan, flexible spending account, cafeteria plan, vacation, holiday, disability or any other employee benefit plan or fringe benefit plan, including any “employee benefit plan,” as that term is defined in Section 3(3) of ERISA and any other plan, fund, policy, program, practice, custom understanding or arrangement providing compensation or other benefits, whether or not such Employee Benefit Plan is or is intended to be (i) covered or qualified under the Code, ERISA or any other applicable Law, (ii) written or oral, (iii) funded or unfunded, (iv) actual or contingent or (v) arrived at through collective bargaining or otherwise.
“Environmental Laws” shall mean all Laws relating to pollution or protection of human health or the environment (including ambient air, surface water, ground water, land surface or subsurface strata) and which are administered, interpreted or enforced by the United States Environmental Protection Agency or state or local Governmental Authorities with jurisdiction over, and including common law in respect of, pollution or protection of the environment, including: (i) the Comprehensive Environmental Response Compensation and Liability Act, 42 U.S.C. §§9601 et seq. (“CERCLA”); (ii) the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act, 42 U.S.C. §§6901 et seq. (“RCRA”); (iii) the Emergency Planning and Community Right to Know Act (42 U.S.C. §§11001 et seq.); (iv) the Clean Air Act (42 U.S.C. §§7401 et seq.); (v) the Clean Water Act (33 U.S.C. §§1251 et seq.); (vi) the Toxic Substances Control Act (15 U.S.C. §§2601 et seq.); (vii) any state, county, municipal or local statues, laws or ordinances similar or analogous to the federal statutes listed in parts (i)–(vi) of this subparagraph; (viii) any amendments to the statutes, laws or ordinances listed in parts (i)–(vi) of this subparagraph, in existence on the date hereof, (ix) any rules, regulations, guidelines, directives, orders or the like adopted pursuant to or implementing the statutes, laws, ordinances and amendments listed in parts (i)–(vii) of this subparagraph; and (x) any other Law, statute, ordinance, amendment, rule, regulation, guideline, directive, Order or the like in effect now or in the future relating to environmental, health or safety matters and other Laws relating to emissions, discharges, releases, or threatened releases of any Hazardous Material, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport, or handling of any Hazardous Material.
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“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
“ERISA Affiliate” means any trade or business, whether or not incorporated, which together with a West Suburban Entity or Buyer Entity, as the context requires, would be treated as a single employer under Code Section 414(b), (c), (m), or (o).
“ESOP Trustee” shall have the meaning set forth in Section 7.10(g).
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Exchange Act Documents” means all forms, proxy statements, reports, schedules, and other documents, including all certifications and statements required by the Exchange Act or Section 906 of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act with respect to any report that is an Exchange Act Document, filed, or required to be filed, by a Party or any of its Subsidiaries with any Regulatory Authority pursuant to the Securities Laws.
“Exchange Agent” shall have the meaning as set forth in Section 3.2(a).
“Exchange Agent Agreement” shall have the meaning as set forth in Section 3.2(c).
“Exchange Fund” shall have the meaning as set forth in Section 3.2(a).
“Exchange Ratio” shall have the meaning as set forth in Section 3.1(a).
“Executive Officer” or “Executive Officers” shall have the meaning as set forth in Section 7.10(e).
“Extinguished Shares” shall have the meaning as set forth in Section 3.1(d).
“FDIC” shall mean the Federal Deposit Insurance Corporation.
“Federal Reserve” shall mean the Board of Governors of the Federal Reserve System, the Federal Reserve Bank of Chicago.
“GAAP” shall mean generally accepted accounting principles in the United States, consistently applied during the periods involved.
“Governmental Authority” shall mean any federal, state, local, foreign, or other court, board, body, commission, agency, authority or instrumentality, arbitral authority, self-regulatory authority, mediator, tribunal, including Regulatory Authorities and Taxing Authorities.
“Group” shall have the meaning as set forth in Section 13(d) of the Exchange Act.
“Hazardous Material” shall mean any chemical, substance, waste, material, pollutant, or contaminant defined as or deemed hazardous or toxic or otherwise regulated under any Environmental Law, including RCRA hazardous wastes, CERCLA hazardous substances, and HSRA regulated substances, pesticides and other agricultural chemicals, oil and petroleum products or byproducts and any constituents thereof, urea formaldehyde insulation, lead in paint
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or drinking water, mold, asbestos, and polychlorinated biphenyls (PCBs): (i) any hazardous substance, hazardous material, hazardous waste, regulated substance, or toxic substance (as those terms are defined by any applicable Environmental Laws) and (ii) any chemicals, pollutants, contaminants, petroleum, petroleum products, or oil (and specifically shall include asbestos requiring abatement, removal, or encapsulation pursuant to the requirements of Environmental Law), provided, notwithstanding the foregoing or any other provision in this Agreement to the contrary, the words “Hazardous Material” shall not mean or include any such Hazardous Material used, generated, manufactured, stored, disposed of or otherwise handled in normal quantities in the ordinary course of business in compliance with all applicable Environmental Laws, or such that may be naturally occurring in any ambient air, surface water, ground water, land surface or subsurface strata.
“IBCA” shall have the meaning as set forth in Section 1.1.
“IIPI” shall have the meaning as set forth in Section 4.13(h).
“Indemnified Party” shall have the meaning as set forth in Section 7.11(a).
“Insurer” shall mean a Person who insures or guarantees for the benefit of the mortgagee all or any portion of the risk of loss upon borrower default on any of the mortgage loans originated, purchased or serviced by West Suburban or any of its Subsidiaries, including the Federal Housing Administration, the United States Department of Veterans’ Affairs, the Rural Housing Service of the U.S. Department of Agriculture and any private mortgage insurer, and providers of hazard, title or other insurance with respect to such mortgage loans or the related collateral.
“Intellectual Property” means copyrights, patents, trademarks, service marks, service names, trade names, domain names, together with all goodwill associated therewith, registrations and applications therefor, technology rights and licenses, computer software (including any source or object codes therefor or documentation relating thereto), trade secrets, franchises, know-how, inventions, and other intellectual property rights.
“IRS” shall have the meaning as set forth in Section 4.15(b).
“Joint Proxy Statement/Prospectus” shall have the meaning as set forth in Section 4.2(c).
“Knowledge” as used with respect to a Person (including references to such Person being aware of a particular matter) means those facts that are actually known or would have actually been known after reasonable inquiry of such Person by the chairman, president, chief financial officer, chief credit officer, or any senior or executive vice president of such Person without any further investigation.
“Law” means any code, law (including common law), ordinance, regulation, reporting or licensing requirement, rule, statute, regulation or Order applicable to a Person or its Assets, Liabilities or business, including those promulgated, interpreted or enforced by any Regulatory Authority.
“Liability” means any direct or indirect, primary or secondary, liability, indebtedness, obligation, penalty, cost or expense (including reasonable attorneys’ fees, costs of investigation,
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collection and defense), claim, deficiency, guaranty or endorsement of or by any Person (other than endorsements of notes, bills, checks, and drafts presented for collection or deposit in the ordinary course of business) of any type, whether accrued, absolute or contingent, liquidated or unliquidated, matured or unmatured, or otherwise.
“Lien” means any conditional sale agreement, default of title, easement, encroachment, encumbrance, hypothecation, infringement, lien, mortgage, pledge, reservation, restriction, security interest, title retention or other security arrangement, or any adverse right or interest, charge, or claim of any nature whatsoever of, on, or with respect to any property or any property interest, other than (i) Liens for current property Taxes not yet due and payable, and (ii) for any depository institution, pledges to secure public deposits and other Liens incurred in the ordinary course of the banking business.
“Litigation” means any action, arbitration, cause of action, lawsuit, claim, complaint, criminal prosecution, governmental or other examination or investigation, audit (other than regular audits of financial statements by outside auditors), compliance review, inspection, hearing, administrative or other proceeding relating to or affecting a Party, its business, its Assets or Liabilities (including Contracts related to Assets or Liabilities), or the transactions contemplated by this Agreement, but shall not include regular, periodic examinations of depository institutions and their Affiliates by Regulatory Authorities.
“Loan Investor” shall mean any Person (including an Agency) having a beneficial interest in any mortgage loan originated, purchased or serviced by West Suburban or any of its Subsidiaries, or a security backed by or representing an interest in any such mortgage loan.
“Material” or “material” for purposes of this Agreement shall be determined in light of the facts and circumstances of the matter in question; provided, that any specific monetary amount stated in this Agreement shall determine materiality in that instance.
“Maximum Amount” shall have the meaning as set forth in Section 7.11(b).
“Merger” shall have the meaning as set forth in Section 1.1.
“Merger Consideration” shall have the meaning as set forth in Section 3.1(a).
“Notice of Recommendation Change” shall have the meaning as set forth in Section 7.1(b).
“Officer Agreements” shall have the meaning as set forth in Section 7.10(e).
“Operating Properties” means all real property (including, without limitation, all buildings, fixtures, or other improvements located thereon) now, hereafter or heretofore owned, leased, operated, or used by West Suburban or any of the West Suburban Subsidiaries.
“Order” means any administrative decision or award, decree, injunction, judgment, order, quasi-judicial decision or award, directive, ruling, or writ of any Governmental Authority.
“Outside Date” shall have the meaning as set forth in Section 9.1(d).
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“Pandemic” means any outbreaks, epidemics or pandemics relating to SARS-CoV-2 or COVID-19, or any evolutions or mutations thereof, and the governmental and other responses thereto.
“Pandemic Measures” means any quarantine, “shelter in place”, “stay at home”, workforce reduction, social distancing, shut down, closure, sequester or other directives, guidelines, orders, or recommendations promulgated by any Governmental Authority, including the Centers for Disease Control and Prevention and the World Health Organization, in each case, in connection with or in response to the Pandemic.
“Party” means West Suburban or Buyer, and “Parties” means both such Persons.
“PBGC” shall have the meaning as set forth in Section 4.15(b).
“Per Share Purchase Price” shall have the meaning as set forth in Section 3.1(a).
“Permit” means any federal, state, local, and foreign Governmental Authority approval, authorization, certificate, easement, filing, franchise, license, notice, permit, or right to which any Person is a party or that is or may be binding upon or inure to the benefit of any Person or its securities, Assets, or business, the absence of which or a Default under would constitute a Buyer or West Suburban Material Adverse Effect, as the case may be.
“Person” means a natural person or any legal, commercial or Governmental Authority, such as, but not limited to, a corporation, general partnership, joint venture, limited partnership, limited liability company, limited liability partnership, trust, business association, group acting in concert, or any person acting in a representative capacity.
“PPP” shall have the meaning as set forth in Section 4.28.
“Qualified Group” shall have the meaning as set forth in Section 7.13(c).
“RCRA” shall have the meaning as set forth under the definition of “Environmental Laws” in this Section 10.1(a).
“Registration Statement” shall have the meaning as set forth in Section 4.2(c).
“Regulatory Authorities” means, collectively, the SEC, the Nasdaq Stock Market, FINRA, the Illinois Department of Financial and Professional Regulation, Division of Banking, the FDIC, the Department of Justice, the Federal Reserve, the Office of the Comptroller of the Currency, and all other federal, state, county, local, other Governmental Authorities, and self-regulatory authorities having jurisdiction over a Party or its Subsidiaries.
“Representative” means any investment banker, financial advisor, attorney, accountant, consultant, or other representative or agent of a Person.
“Requisite Buyer Stockholder Approval” shall have the meaning as set forth in Section 5.2(a).
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“Requisite West Suburban Shareholder Approval” shall have the meaning as set forth in Section 4.2(a).
“Rights” shall mean all arrangements, calls, commitments, Contracts, options, rights to subscribe to, scrip, warrants, or other binding obligations of any character whatsoever by which a Person is or may be bound to issue additional shares of its capital stock or other securities, securities or rights convertible into or exchangeable for, shares of the capital stock or other securities of a Person or by which a Person is or may be bound to issue additional shares of its capital stock or other Rights.
“▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act” means the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002, as amended, and the rules and regulations promulgated thereunder.
“SBA” means the Small Business Administration.
“SEC” means the United States Securities and Exchange Commission.
“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Securities Laws” means the Securities Act, the Exchange Act, the Investment Company Act of 1940, as amended, the Investment Advisors Act of 1940, as amended, the Trust Indenture Act of 1939, as amended, and the rules and regulations of any Regulatory Authority promulgated thereunder.
“Stock Consideration” shall have the meaning set forth in Section 3.1(a).
“Subsidiaries” means all those corporations, banks, associations, or other entities of which the entity in question either (i) owns or controls 50% or more of the outstanding equity securities either directly or through an unbroken chain of entities as to each of which 50% or more of the outstanding equity securities is owned directly or indirectly by its buyer (provided, there shall not be included any such entity the equity securities of which are owned or controlled in a fiduciary capacity), (ii) in the case of partnerships, serves as a general partner, (iii) in the case of a limited liability company, serves as a managing member, or (iv) otherwise has the ability to elect a majority of the directors, trustees or managing members thereof; provided, the term Subsidiary shall not include any entity that was organized solely to facilitate the resolution of debt previously contracted.
“Superior Proposal” means any Acquisition Proposal (on its most recently amended or modified terms, if amended or modified) (i) involving the acquisition of at least a majority of the outstanding equity interest in, or all or substantially all of the assets and liabilities of, West Suburban Entities and (ii) with respect to which the board of directors of West Suburban (A) determines in good faith that such Acquisition Proposal, if accepted, is reasonably likely to be consummated on a timely basis, taking into account all legal, financial, regulatory and other aspects of the Acquisition Proposal and the Person or Group making the Acquisition Proposal, and (B) determines in its good faith judgment (after consultation with outside counsel and the West Suburban Financial Advisor or such other advisor as West Suburban may use) to be more favorable to West Suburban’s shareholders than the Merger taking into account all relevant factors (including
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whether, in the good faith judgment of the board of directors of West Suburban, after obtaining the advice of the West Suburban Financial Advisor or such other advisor as West Suburban may use, the Person or Group making such Acquisition Proposal is reasonably able to finance the transaction and close it timely, and any proposed changes to this Agreement that may be proposed by Buyer in response to such Acquisition Proposal).
“Support Agreements” shall have the meaning as set forth in the Recitals.
“Surviving Corporation” means Buyer as the surviving corporation resulting from the Merger.
“Takeover Laws” shall have the meaning as set forth in Section 4.25.
“Tax” or “Taxes” means all taxes, charges, fees, levies, imposts, duties, or assessments, including income, gross receipts, excise, employment, sales, use, transfer, recording license, payroll, franchise, severance, documentary, stamp, occupation, windfall profits, environmental, federal highway use, commercial rent, customs duties, capital stock, paid-up capital, profits, withholding, Social Security, single business and unemployment, disability, real property, personal property, registration, ad valorem, value added, alternative or add-on minimum, estimated, or other taxes, fees, assessments or charges of any kind whatsoever, imposed or required to be withheld by any Governmental Authority (domestic or foreign), including any interest, penalties, and additions imposed thereon or with respect thereto.
“Tax Return” means any report, return, information return, or other information supplied or required to be supplied to a Governmental Authority in connection with Taxes, including any return of an affiliated or combined or unitary group that includes a Party or its Subsidiaries, including any attachment or schedule thereto or amendment thereof.
“Taxing Authority” means the Internal Revenue Service and any other Governmental Authority responsible for the administration of any Tax.
“Termination Fee” shall have the meaning as set forth in Section 9.3(a).
“WARN Act” shall have the meaning as set forth in Section 4.14(d).
“West Suburban” shall have the meaning as set forth in the Preamble.
“West Suburban Bank” shall have the meaning as set forth in Section 1.5.
“West Suburban Benefit Plan(s)” shall have the meaning as set forth in Section 4.15(a).
“West Suburban Book-Entry Shares” shall have the meaning as set forth in Section 3.1(b).
“West Suburban Common Stock” means the common stock, no par value per share, of West Suburban.
“West Suburban Contracts” shall have the meaning as set forth in Section 4.16(a).
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“West Suburban Deferred Loan” and “West Suburban Deferred Loans” shall have the meaning as set forth in Section 4.9(b).
“West Suburban Director” shall have the meaning as set forth in Section 7.14.
“West Suburban Disclosure Memorandum” means the written information entitled “West Suburban Disclosure Memorandum” delivered with this Agreement to Buyer and attached hereto.
“West Suburban Entities” means, collectively, West Suburban and all West Suburban Subsidiaries. Each of West Suburban and any West Suburban Subsidiary is, individually, a “West Suburban Entity.”
“West Suburban ERISA Plan” shall have the meaning as set forth in Section 4.15(a).
“West Suburban ESOP” means the West Suburban Bank Employee Stock Ownership Plan (as amended and restated effective January 17, 2008), if and as amended.
“West Suburban Financial Advisor” means ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc.
“West Suburban Financial Statements” means (i) the consolidated balance sheets of West Suburban as of December 31, 2020 and 2019, and the related statements of income, comprehensive income, changes in shareholders’ equity, and cash flows (including related notes and schedules, if any) for each of the three fiscal years ended December 31, 2020, 2019, and 2018, and (ii) the consolidated balance sheets of West Suburban (including related notes and schedules, if any) and related statements of income changes in shareholders’ equity, and cash flows (including related notes and schedules, if any) with respect to calendar quarterly periods ended subsequent to December 31, 2020.
“West Suburban Leased Real Properties” shall have the meaning as set forth in Section 4.10(f).
“West Suburban Leases” shall have the meaning as set forth in Section 4.10(c).
“West Suburban Material Adverse Effect” means an event, change or occurrence which, individually or together with any other event, change or occurrence, has had or is reasonably expected to have a material adverse effect on (i) the financial position, business, property, assets or results of operations of West Suburban and its Subsidiaries, taken as a whole, or (ii) the ability of West Suburban to consummate the Merger or the other transactions contemplated by this Agreement, provided, that “West Suburban Material Adverse Effect” shall not be deemed to include the effects of (A) changes in banking and other Laws (including the Pandemic Measures) of general applicability or interpretations thereof by Governmental Authorities, (B) changes in SEC, GAAP or regulatory accounting principles generally applicable to banks and their holding companies, (C) actions and omissions of West Suburban (or any of its Subsidiaries) taken with the prior written Consent of Buyer in contemplation of the transactions contemplated hereby, (D) changes in economic conditions affecting financial institutions generally, including changes in interest rates, credit availability and liquidity, and price levels or trading volumes in securities markets, except to the extent the West Suburban is materially and adversely affected in a disproportionate manner as compared to other comparable participants in the banking industry, (E)
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changes resulting from hurricanes, earthquakes, tornados, floods or other natural disasters or from any outbreak of any disease or other public health event (including the Pandemic), (F) changes resulting from the public disclosure of the execution of this Agreement, public disclosure or contemplated consummation of the transactions contemplated hereby (including any effect on a party's relationships with its customers or employees) or actions expressly required by this Agreement or the pendency of the transactions contemplated by this Agreement, or (G) the direct effects of compliance with this Agreement on the operating performance of West Suburban.
“West Suburban Realty” shall have the meaning as set forth in Section 4.10(d).
“West Suburban Recommendation” shall have the meaning as set forth in the Recitals.
“West Suburban Subsidiaries” means the Subsidiaries of West Suburban.
“West Suburban’s Shareholders’ Meeting” means the meeting of West Suburban’s shareholders to be held pursuant to Section 7.1(a), including any adjournment or adjournments thereof.
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Agreement has been obtained; provided, that after any such approval by the holders of West Suburban Common Stock, there shall be made no amendment that reduces or modifies in any respect the consideration to be received by holders of West Suburban Common Stock.
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Buyer:Old Second Bancorp, Inc.
or Buyer Bank:37 ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Email: ▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇.▇▇▇
Copy to Counsel:▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Scarborough LLP
▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: J. ▇▇▇▇▇▇▇ ▇▇▇▇
Email: ▇▇▇▇▇▇▇.▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
West Suburban:West Suburban Bancorp, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇, President
▇▇▇▇▇ ▇. ▇▇▇▇▇, Chairman
▇▇▇▇▇ ▇▇▇▇▇▇, Director
Email: ▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
Copy to Counsel:▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. del Hierro
Email: ▇▇.▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇.▇▇▇
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[Signatures appear on next page]
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IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be executed on its behalf by its duly authorized officers as of the day and year first above written.
OLD SECOND BANCORP, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President and Chief Executive Officer
Signature Page to Agreement and Plan of Merger and Reorganization
WEST SUBURBAN BANCORP, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Chairman
Signature Page to Agreement and Plan of Merger and Reorganization
FORM OF BANK MERGER AGREEMENT
AGREEMENT TO MERGE
among
WEST SUBURBAN BANK
and
OLD SECOND NATIONAL BANK
under the charter of
OLD SECOND NATIONAL BANK
This AGREEMENT TO MERGE (this “Agreement”) is made as of [●], 2021 by and among WEST SUBURBAN BANK (“West Suburban Bank”), an Illinois-chartered banking corporation, being headquartered at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ of DuPage, in the State of Illinois, and OLD SECOND NATIONAL BANK (hereinafter referred to as “Old Second Bank”), a national banking association organized under the laws of the United States, being headquartered at ▇▇-▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ of ▇▇▇▇, in the State of Illinois.
WHEREAS, Old Second Bancorp, Inc., the parent company of Old Second Bank (“Old Second”), and West Suburban Bancorp, Inc., the parent company of West Suburban Bank (“West Suburban”), have entered into that certain Agreement and Plan of Merger and Reorganization, dated as of July 25, 2021 (as such agreement may be subsequently amended or modified, the “Merger Agreement”), pursuant to which, subject to the terms and conditions of the Merger Agreement, West Suburban shall merge with and into Old Second (the “Merger”);
WHEREAS, the Merger Agreement contemplates that following the consummation of the Merger and pursuant to this Agreement, West Suburban Bank will merge with and into Old Second Bank (the “Bank Merger”); and
WHEREAS, the boards of directors of each of West Suburban Bank and Old Second Bank have approved this Agreement and the transactions contemplated hereby, including the Bank Merger.
NOW, THEREFORE, the parties hereto hereby agree as follows:
At the Effective Time (as defined below) West Suburban Bank shall be merged into Old Second Bank under the charter of the latter. Old Second Bank shall be the surviving entity of the Bank Merger and shall continue its existence as a national banking association following the consummation of the Bank Merger (the “Surviving Association”), and the separate existence of West Suburban Bank shall cease. The closing of the Bank Merger shall become effective at the time specified in the certificate of merger issued by the Office of the Comptroller of the Currency in connection with the Bank Merger (such time, the “Effective Time”).
A-3
The name of the Surviving Association shall be Old Second National Bank.
The business of the Surviving Association shall be that of a national banking association. This business shall be conducted by the Surviving Association at its main office to be located at ▇▇-▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ and at its legally established branches. The established offices of West Suburban Bank immediately prior to the Bank Merger shall become branch facilities of the Surviving Association.
The amount of the capital stock that the Surviving Association shall be authorized to issue shall be [⚫] shares of common stock, $[⚫] par value per share, and at the Effective Time, the Surviving Association shall have [⚫] shares outstanding.
All assets of West Suburban Bank, and Old Second Bank as they exist at the Effective Time shall pass to and vest in the Surviving Association without any conveyance or other transfer. The Surviving Association shall be responsible for all of the liabilities of every kind and description, including liabilities arising from the operation of a trust department, of West Suburban Bank and Old Second Bank existing as of the Effective Time.
Each share of capital stock of Old Second Bank, par value $[⚫] per share, which is issued and outstanding immediately prior to the Bank Merger shall be unchanged and shall remain issued and outstanding and the holders of it shall retain their present rights.
Each share of capital stock of West Suburban Bank, par value $[⚫] per share, which is issued and outstanding immediately prior to the Bank Merger shall cease to exist and the certificates for such shares shall, as promptly as practicable thereafter, be cancelled and no payments made in consideration therefor.
Upon consummation of the Bank Merger, the directors and officers of the Surviving Association shall be the persons serving as directors and officers of Old Second Bank immediately prior to the Effective Time. Directors of the Surviving Association shall serve for such terms in accordance with the Articles of Association and Bylaws of the Surviving Association.
A-4
From and after the Effective Time, the Articles of Association and Bylaws of the Surviving Association shall be the Articles of Association and Bylaws of Old Second Bank, each as in effect immediately prior to the Bank Merger, until the same shall be amended or changed as provided by law.
This Agreement shall terminate immediately and automatically without any further action on the part of West Suburban Bank or Old Second Bank, or any other person, upon the termination of the Merger Agreement.
The respective obligations of West Suburban Bank and Old Second Bank under this Agreement shall be conditioned upon (i) the prior consummation of the Mergers in accordance with the Merger Agreement and (ii) this Agreement having been ratified and confirmed by the written consent of Old Second as the sole shareholder of Old Second Bank, by the written consent of West Suburban as the sole shareholder of West Suburban Bank, in each case as required by applicable law.
This Agreement may be executed in one or more counterparts, each of which shall be considered one and the same agreement and each of which shall be deemed an original.
[Signatures on Following Page]
A-5
WITNESS, the signatures and seals of the merging banks as of the date first written above, each set by its president and/or chief executive officer attested to by its secretary, pursuant to a resolution of its board of directors.
WEST SUBURBAN BANK
By:
Name: _______________
Title: ________________
Attest:
Name:
Title: Secretary
OLD SECOND NATIONAL BANK
By:
Name: ________________
Title: _________________
Attest:
Name:
Title: Secretary
FORM OF VOTING AND SUPPORT AGREEMENT
THIS VOTING AND SUPPORT AGREEMENT (this “Agreement”) is made and entered into as of July 25, 2021, by and among Old Second Bancorp, Inc., a Delaware corporation (“Old Second”), West Suburban Bancorp, Inc., an Illinois corporation (“West Suburban”), and [⚫], a [⚫] (“Shareholder”).
RECITALS
WHEREAS, Shareholder, solely in Shareholder’s capacity as a shareholder of West Suburban, desires to support the transactions contemplated by that certain Agreement and Plan of Merger and Reorganization, dated as of even date herewith, by and between Old Second and West Suburban (the “Merger Agreement”), that provides for, among other things, the merger of West Suburban with and into Old Second pursuant to the terms set forth in the Merger Agreement (the “Merger”); and
WHEREAS, Shareholder, West Suburban and Old Second are executing this Agreement as a material inducement and condition to Old Second entering into, executing and performing the Merger Agreement and the transactions contemplated therein (the “Transactions”), including, without limitation, the Merger;
NOW, THEREFORE, in consideration of, and as a material inducement to the execution and delivery of the Merger Agreement by Old Second and the mutual covenants, conditions and agreements contained herein and therein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties, intending to be legally bound, hereby agree as follows:
[Signatures on the following page(s)]
IN WITNESS WHEREOF, the undersigned parties have executed and delivered this Voting and Support Agreement as of the day and year first above written.
OLD SECOND BANCORP, INC.
By:
Name:
Title:
WEST SUBURBAN BANCORP, INC.
By:
Name:
Title:
SHAREHOLDER
By:
Name:
Address:
EXHIBIT C
FORM OF OFFICER AGREEMENTS
EXHIBIT C-1
FORM OF OFFICER AGREEMENT – ▇▇▇▇▇ ▇. ▇▇▇▇▇
EXECUTIVE EMPLOYMENT AGREEMENT
This Employment Agreement (the “Agreement”) is entered into as of July 25, 2021 (“Effective Date”), by and between Old Second Bancorp, Inc. (the “Company” or “Bank”) and ▇▇▇▇▇ ▇. ▇▇▇▇▇ (the “Executive”).
RECITALS
WHEREAS, the Bank is presently engaged in the general business of providing community banking and trust business services. The Bank’s services include, but are not limited to demand, savings, time deposit, individual retirement, and ▇▇▇▇▇ deposit accounts; commercial, industrial, consumer, and real estate lending, including installment loans, farm loans, lines of credit, and overdraft checking; safe deposit operations; and trust services. The Bank is also in the business of providing services such as the sale of traveler’s checks, money orders, cashier’s checks and foreign currency, direct deposit, discount brokerage, debit cards, credit cards, and other special services; and
WHEREAS, the Executive is currently employed by West Suburban Bancorp, Inc. (“WSBI”) pursuant to that certain Restated Employment Agreement dated May 12, 2016 (the “Prior Agreement”); and
WHEREAS, WSBI is merging (the “Merger”) with and into the Bank pursuant to that certain Agreement and Plan of Merger and Reorganization dated July 25, 2021 (the “Merger Agreement”), upon the Effective Time (as defined in the Merger Agreement) (the “Effective Time”) as of which the Executive’s Prior Agreement is being terminated and all benefits accrued thereunder paid in full; and
WHEREAS, the Bank wishes to retain the Executive and the Executive wishes to continue employment with the Bank under the terms and provisions set forth below; and
WHEREAS, the Bank and the Executive desire to enter into this Agreement providing certain benefit to the Executive and certain protection for the Bank, subject to and in accordance with this Agreement;
WHEREAS, the Executive understands and agrees that the Bank has developed and continues to develop goodwill through the use of various trade names that the Bank is authorized to use, and through the effort and expense of the Bank in attracting and retaining its customers or clients; and
WHEREAS, in the course of employment, the Executive has had and will continue to have knowledge or access to important trade secrets, customer or client lists, and other confidential information including information about customers or clients of the Bank and the particular needs of such customers or clients; and
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WHEREAS, Executive acknowledges that the restrictions contained herein are necessary and reasonable in scope and duration and are a material inducement for the Bank to enter into this Agreement and continue a relationship with the Executive.
NOW, THEREFORE, in consideration of the foregoing recitals and the provisions hereafter set forth, and for other good and valuable consideration, the receipt and sufficiency of which are mutually acknowledged, the parties hereto agree as follows:
1.Employment. The Bank hereby agrees to continue to employ the Executive from and after the Effective Date as Executive Vice President and the Executive hereby agrees to serve in such role and continue in such employment, on a full-time basis, for the Term (hereinafter defined) of and in accordance with this Agreement acting at all times in good faith and in the Bank’s best interests.
2.Compensation. The Bank shall pay the Executive an annualized base salary of $417,484.76. This annual salary shall be subject to increase, but not decrease, from time to time by the Bank at the Bank’s sole discretion. All compensation shall be payable in accordance with the payment policy and payroll process established by the Bank from time to time.
3.Benefits.
a.Retirement, Welfare and Fringe Benefits. The Executive shall receive the same or similar benefits and/or fringe benefits as the Bank may provide and/or modify from time to time, in the Bank’s sole discretion, to similarly situated executives. Such benefits may include, but are not limited to, participation in Health and Dental Insurance, Life Insurance, Long Term Disability coverage, and 401(k) and Profit Sharing Savings Plans. Participation in any such benefits shall be governed and interpreted by the applicable plan documents or written policies. Nothing in this Agreement guarantees the Executive the right to participate in any of the Bank’s currently sponsored benefit plans or prevents the Bank from exercising its right to terminate those plans or offerings in the future.
b.Expense Reimbursement. During the Term, the Executive shall be authorized to incur reasonable client-related expenses in carrying out the Executive’s duties for the Bank under this Agreement and shall be eligible for reimbursement of such expenses pursuant to the Bank’s expense reimbursement policies as in effect from time to time. In addition, the Bank will promptly (not to exceed thirty (30) days) reimburse the Executive for the monthly amount of his club dues for his current membership level at Medinah Country Club, following the Executive’s submission of reasonable substantiation for each such expense, which shall be submitted to the Bank within thirty (30) days after such expense is paid.
4.Consideration for Restrictive Covenants. In connection with this Agreement, Executive is agreeing to certain restrictions on Executive’s post-employment activities, as set forth herein. In exchange for the restrictive covenants contained herein, Executive is being offered and accepts the valuable consideration described herein, including the Bank’s agreeing to continue to employ Executive in an at-will employment relationship while granting Executive access or continuing access to the Bank’s proprietary and confidential business information, including customer relationships, as its employee acting in good faith and in the Bank’s best interests.
5.Position and Responsibilities. The Executive agrees to serve on behalf of the Bank or any of its subsidiaries or affiliates in the position of Executive Vice President. The Executive shall have such duties and responsibilities as may be assigned to the Executive from time to time by the [⚫] of the Bank which duties and responsibilities shall be commensurate with the Executive’s position. The Executive shall perform all duties assigned to the Executive faithfully and efficiently, subject to the direction of the [⚫] of the Bank and shall have such authorities and powers as are inherent to the undertakings applicable to the
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Executive’s position and necessary to carry out the responsibilities and duties required of the Executive hereunder. While employed under this Agreement, the Executive shall at all times devote his full time, attention, and best efforts on behalf of the Bank, and shall perform all services, acts, and duties connected with his position in such manner as the Bank from time to time shall direct. During the Term, in addition to any duties connected to his position, the Executive shall provide reasonable assistance with the transition the business, customers, and employees of WSBI over to the Bank.
6.Term of Employment. The Bank agrees to employ the Executive and the Executive agrees to continue employment with the Bank on the terms set forth in this Agreement until the first (1st) anniversary of the Effective Time (the “Term”); provided that either the Bank or the Executive shall have the right to earlier terminate this Agreement and their employment relationship at any time, with or without cause or notice (the date such termination takes effect, the “Termination Date”), subject to the following:
a.Resignation with Good Reason; Termination Other Than for Cause. If, prior to the end of the Term, the Executive terminates his employment with Good Reason or the Bank terminates his employment other than for Cause, then the Executive shall be entitled to (i) his earned but unpaid base salary through the Termination Date, his eligible business expenses incurred on or before the Termination Date (provided that all required submissions for expense reimbursement are made in accordance with the Bank’s expense reimbursement policy within fifteen (15) days following the Termination Date) and any benefits due or payable under the Bank’s qualified retirement and health and welfare benefit plans, including but not limited to rights to continue coverage under the Bank’s group health plans pursuant to COBRA (collectively, the “Accrued Obligations”); and (ii) continued payments of base salary in accordance with Section 2 for the remainder of the Term. For purposes of this Agreement,
“Good Reason” means, without the Executive’s express written consent, the occurrence of any one of the following within the Term:
(A) a material reduction or alteration in the nature or status of the Executive’s authority, duties or responsibilities from those set forth in Sections 1 and 5;
(B) the requirement that the Executive be based at a location in excess of twenty-five (25) miles from the location of the Executive’s principal job location or office as of the Effective Date of this Agreement;
I a material reduction of the Executive’s compensation and/or other benefits or perquisites in effect on the Effective Date, or as the same shall be increased from time to time; provided, however, that a change to, or replacement of, an existing benefit will not give rise to a “Good Reason” if such change or replacement is implemented with respect to all employees generally; or
(C) the Bank, or any successor company, commits a material breach of any provision of this Agreement including, but not limited to the Bank failing to obtain the assumption of, or the successor company refusing to assume the obligations of this Agreement within the Term.
Notwithstanding the foregoing, none of the conditions described in Paragraphs (A) through (C) of this Paragraph (d) shall constitute Good Reason unless the Executive first provides written notice of the occurrence of one of the foregoing conditions to the Company within ninety (90) days of the initial occurrence of the condition, and such Good Reason remains uncured thirty (30) days of receiving such notice. The Executive’s right to terminate employment for Good Reason shall not be affected by the Executive’s incapacity due to physical or mental illness. The Executive’s continued employment shall not constitute consent to, or a waiver of rights with respect to, any circumstance constituting Good Reason herein.
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“Cause” means the occurrence of any one or more of the following:
(a)A demonstrably willful and deliberate act or failure to act by the Executive (other than as a result of incapacity due to physical or mental illness) which is committed in bad faith, without reasonable belief that such action or inaction is in the best interests of the Company, which causes actual material financial injury to the Company, or any of its subsidiaries, and which act or inaction is not remedied within fifteen (15) business days of written notice from the Company or the subsidiary for which the Executive works; or
(b)The Executive’s conviction for committing an act of fraud, embezzlement, theft, or any other act constituting a felony involving moral turpitude which causes material harm, financial or otherwise, to the Company or any of its subsidiaries.
b.Termination for Cause; Resignation without Good Reason. If, prior to the end of the Term, the Executive’s employment is terminated by the Executive or the Bank for any reason other than those stated in paragraph (a) above (including for Cause), then the Executive (or his estate, if applicable) shall be entitled only to the Accrued Obligations hereunder and shall have no right to further payments or benefits under this Agreement.
COVENANTS OF THE EXECUTIVE
The Executive acknowledges that the Executive has been and will continue to be provided intimate knowledge of the business practices, trade secrets, and other confidential and proprietary information of the Company and its subsidiaries (including the Confidential Information), which, if exploited by the Executive, would seriously, adversely, and irreparably affect the interests of the Company and its subsidiaries and the ability of each to continue its business and, therefore, the Executive hereby agrees to be bound by the restrictions contained in Sections 7 through 12 below (the “Restrictive Covenants”).
7.Use and Maintenance of Confidential Information
(a)Confidentiality and Loyalty.
(i)The Executive acknowledges that heretofore or hereafter during the course of his employment he has produced and may hereafter produce and have access to material, records, data, trade secrets and information not generally available to the public (collectively, "Confidential Information") regarding the Company and its subsidiaries and affiliates. Accordingly, during and subsequent to termination of this Agreement, the Executive shall hold in confidence and not directly or indirectly disclose, use, copy or make lists of any such Confidential Information, except to the extent that such information is or thereafter becomes lawfully available from public sources, or such disclosure is authorized in writing by the Company, required by a law or any competent administrative agency or judicial authority, or otherwise as reasonably necessary or appropriate in connection with performance by the Executive of his duties hereunder. All records, files, documents and other materials or copies thereof relating to the Company's business which the Executive shall prepare or use, shall be and remain the sole property of the Company, shall not be removed from the Company's premises without its written consent, and shall be promptly returned to the Company upon termination of the Executive's employment.
(ii)Notwithstanding the foregoing, an individual shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that—(A) is made—(i) in confidence to a Federal, State, or local government official, either directly or
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indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. Accordingly, the Executive has the right to disclose in confidence trade secrets to Federal, State, and local government officials, or to an attorney, for the sole purpose of reporting or investigating a suspected violation of law. The Executive also has the right to disclose trade secrets in a document filed in a lawsuit or other proceeding, but only if the filing is made under seal and protected from public disclosure. Nothing in this Agreement is intended to conflict with 18 U.S.C. §1833(b) or create liability for disclosures of trade secrets that are expressly allowed by 18 U.S.C. §1833(b). Nothing in this Agreement shall be construed to authorize, or limit liability for, an act that is otherwise prohibited by law, such as the unlawful access of material by an unauthorized user.
(iii)Nothing contained in this Section 7 shall limit the Executive's right to report to proper governmental authorities, including a court or legislative body, alleged unlawful employment practices or alleged criminal conduct, to make truthful statements in any reporting or subsequent investigation relating to such report, to seek legal advice relating to such report, or from responding to a lawful subpoena or other compulsory legal process. Nothing shall limit the Executive from filing a charge or complaint with any governmental, administrative or judicial agency (each, an "Agency”) pursuant to any applicable whistleblower statute or program (each, a "Whistleblower Program”). The Executive acknowledges that this Section 7 does not limit (i) the Executive's ability communicate, in connection with a charge or complaint pursuant to any Whistleblower Program with any Agency or otherwise participate in any investigation or proceeding that may be conducted by such Agency, including providing documents or other information, without notice to the Employer, or (ii) the Executive's right to receive an award for information provided to such Agency pursuant to any Whistleblower Program.
8.Return of Property. Upon termination of the Executive’s employment with the Bank, for any reason and for any cause, or at any time thereafter upon request of the Bank, the Executive shall deliver to the Bank all materials of any nature which are in the Executive’s possession or control and which are, or which contain, Confidential Information or which are otherwise the property of the Bank or of any of the Bank’s customers, including but not limited to writings, customer lists, price lists, designs, documents, records, data, memoranda, tapes and disks containing software, computer source code listings, routines, file layouts, record layouts, system design information, models, manuals, documentation and notes; provided, however, that Executive shall not be required to return the cell phone, cell phone number, or laptop computer in his possession as of the Effective Date. The Executive agrees that the Executive shall not reproduce copies of any such Confidential Information at any time without specific written authorization from the Bank.
9.Non-Competition and Non-Solicitation. The parties have agreed that the primary service area of the Bank’s operations, including lending and deposit taking functions in which the Executive actively participates extends to an area that encompasses a thirty-five (35)-mile radius from each banking or other office location of the Bank and any of its subsidiaries or affiliates where the Executive has provided services on behalf of the Bank (or its predecessors) during the twelve (12)-month period immediately preceding the termination of the Executives’ employment for any reason (the “Restrictive Area”). Therefore, as an essential ingredient of and in consideration of this Agreement the Executive’s employment with the Bank, including the benefits set forth in this Agreement, the Executive, during the Executive’s employment with the Bank and for a period of eighteen (18) months immediately following the termination of the Executives’ employment for any reason (the “Restrictive Period”), whether such termination occurs during the Term of this Agreement or thereafter, shall not directly or indirectly do any of the following:
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(a)Engage or invest in, own, manage, operate, finance, control, participate in the ownership, management, operation or control of, be employed by, associated with or in any manner connected with, serve as a director, officer or consultant to, lend the Executive’s name or any similar name to, lend the Executive’s credit to or render services or advice to, in each case in the capacity that the Executive provided services to the Bank or any subsidiary or affiliate thereof, any Financial Institution; provided, however, that the ownership by the Executive of shares of the capital stock of any Financial Institution, which shares are listed on a securities exchange or quoted on the National Association of Securities Dealers Automated Quotation System and which do not represent more than five percent (5%) of the institution’s outstanding capital stock, shall not violate any terms of this Agreement;
(b)Either for the Executive or any Financial Institution: (i) induce or attempt to induce any employee of the Bank or any of its subsidiaries or affiliates with whom the Executive had significant contact to leave the employ of the Bank or any of its Subsidiaries or affiliates; (ii) in any way interfere with the relationship between the Bank or any of its subsidiaries or affiliates and any employee of the Bank or any of its subsidiaries or affiliates with whom the Executive had significant contact; or (iii) induce or attempt to induce any customer, supplier, licensee or business relation of the Bank or any of its subsidiaries or affiliates with whom the Executive had significant contact to cease doing business with the Bank or its subsidiaries or affiliates or in any way interfere with the relationship between the Bank or any of its subsidiaries or affiliates and their respective customers, suppliers, licensees or business relations with whom the Executive had significant contact;
(c)Either for the Executive or any Financial Institution, solicit the business of any person or entity known to the Executive to be a customer of the Bank or any of its subsidiaries or affiliates, where the Executive had significant contact with such person or entity, with respect to products, activities or services that compete in whole or in part with the products, activities or services of the Bank or any of its subsidiaries or affiliates.
(d)For the purposes of this Agreement, “Financial Institution” means any person, firm, partnership, corporation or trust that owns, operates or is in the process of forming a bank, savings bank, savings and loan association, credit union or similar financial institution, or any unit, division or subsidiary of any of the foregoing, with an office located, or to be located, at an address identified in a filing with any regulatory agency, within the Restrictive Area.
10.Remedies for Breach of Restrictive Covenants. The Executive has reviewed the provisions of this Agreement with legal counsel, or has been given adequate opportunity to seek such counsel, and the Executive acknowledges that the covenants contains in Sections 7-9 of this Agreement are reasonable with respect to their duration, geographical area and scope. The Executive further acknowledges that the restrictions contained in Sections 7-9 of this Agreement are reasonable and necessary for the protection of legitimate business interests of the Bank, that they create no undue hardships, that any violation of these restrictions would cause substantial injury to the Bank and such interests, and that such restrictions were a material inducement to the Bank to enter into this Agreement. In the event of any violation or threatened violation of these restrictions, the Bank, in addition to and not in limitation of, any other rights, remedies or damages available to the Bank under this Agreement or otherwise at law or in equity, shall be entitled to preliminary and permanent injunctive relief to prevent or restrain any such violation by the Executive and any and all person directly or indirectly acting for or with the Executive, as the case may be.
▇▇.▇▇ Indirect Action. The Executive agrees to not take any action indirectly or in concert with others that would violate this Agreement if the action were taken directly. This prohibition applies regardless of whether the Executive initiates the improper contact. The Executive also agrees not to aid or assist any competing financial organization or any other person, firm, corporation, or other business entity to do any of the aforesaid acts. This applies to actions the Executive may take in any capacity, i.e., as
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proprietor, partner, joint venturer, stockholder, director, officer, trustee, principal, agent, servant, employee, or in any other capacity.
▇▇.▇▇ Prior Conflicting Agreements. The Executive certifies that the Executive has no outstanding agreement or obligation that is in conflict with any of the provisions of this Agreement or that would preclude the Executive from complying with the provisions of this Agreement or prevent the Executive from providing any services for the Bank, including without limitation, any conflicting noncompetition or confidentiality agreements with prior employers. The Executive acknowledges that he has disclosed any and all agreements addressing restrictive covenants or obligations to prior employers and that he will comply with all enforceable provisions of such agreements.
ENFORCEMENT
13.Governing Law and Submission to Jurisdiction/Venue. This Agreement shall be governed in all respects by the laws of the State of Illinois. Any disputes arising under this Agreement shall be tried in the courts sitting within the State of Illinois, and the Executive hereby consents and submits his or her person to the jurisdiction of any such court for such purpose. Should this Agreement come before any court for interpretation or enforcement, it is the intent of the parties that the terms and provisions of this Agreement be given their fair and literal meaning, and that this Agreement is not to be strictly construed against any party, including the drafter of this Agreement. The Parties hereto acknowledge that ▇▇▇▇ County, Illinois is a convenient forum, agree that any controversy or claim relating to this Agreement shall be brought in State or Federal Court in and for ▇▇▇▇ County, Illinois and therefore submit to the personal jurisdiction of such courts.
14.Rights and Remedies Upon Breach of Agreement. If the Executive should breach, or threaten to commit a breach, of any of the provisions of this Agreement, the Bank shall have the right and remedy to have the restrictive covenants contained herein be enforced by any court of competent jurisdiction, without the necessity of posting a bond, it being agreed that any breach or threatened breach of restrictive covenants would cause irreparable injury to the Bank and that money damages would not alone provide an adequate remedy to the Bank. The Bank shall also have any other right or remedy available to it under law or in equity including the right to seek and recover monetary damages for lost profits and other compensable damages.
15.Notice to Future Employers. For the period of twelve (12) months immediately following the end of employment by the Bank, the Executive will inform each new employer, prior to accepting employment, of the existence of this Agreement and provide that employer with a copy of this Agreement. The Executive further agrees that Bank may, if it so desires, send a copy of this Agreement to, or otherwise make the provisions hereof known to, any such employer or prospective employer.
16.Indemnification.
In addition to any rights to indemnification available to the Executive pursuant to the terms of the Merger Agreement:
▇.▇▇ the maximum extent provided to other executive officers of the Bank, the Bank shall indemnify and hold the Executive harmless (including advances of attorneys’ fees and other litigation expenses) for losses or damages incurred by the Executive as a result of all causes of action arising from the Executive’s performance of duties for the benefit of the Bank, whether or not the claim is asserted during the Term. The Executive shall be covered under any directors’ and officers’ insurance that the Bank
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maintains for executive officers of the Bank in the same manner and on the same basis as such executive officers of the Bank.
▇.▇▇ the event the Executive becomes a party, or is threatened to be made a party, to any action, suit, or proceeding for which the Bank has agreed to provide insurance coverage or indemnification under this Section 16, the Bank shall, to the full extent permitted by law and consistent with policies for executive officers of the Bank, advance all expenses (including reasonable attorneys’ fees), judgments, fines, and amounts paid in settlement (“Expenses”) incurred by the Executive in connection with the investigation, defense, settlement, or appeal of any threatened, pending, or completed action, suit, or proceeding; provided, however, that the Executive must provide the Bank with a written undertaking from the Executive (i) to reimburse the Bank for all Expenses actually paid by the Bank to or on behalf of the Executive in the event it be determined that the Executive is not entitled to indemnification by the Bank for such Expenses, and (ii) to assign the Bank all rights of the Executive to indemnification, under any policy of directors’ and officers’ liability insurance or otherwise, to the extent of the amount of Expenses actually paid by the Bank to or on behalf of the Executive.
17.Tolling/Autoextender.Any period of restriction contained herein shall be extended and tolled for any period of breach, such that the Bank receives the full benefit of the bargain with respect to the agreed upon period of restriction.
18.Internal Revenue Code Section 409A. It is intended that the Agreement shall comply with the provisions of Section 409A of the Code and the related U.S. Treasury Department regulations and guidance promulgated thereunder (“Code Section 409A”) so as not to subject the Executive to the payment of additional taxes and interest under Code Section 409A, and shall be interpreted, operated and administered in a manner consistent with those intentions. To the extent that any payment hereunder constitutes “nonqualified deferred compensation” within the meaning of Code Section 409A, then the following shall apply:
a.For purposes of determining the timing of any such payment, all references in this Agreement to Termination Date shall mean a “separation from service” as defined in Code Section 409A.
b.For purposes of Code Section 409A, all installment payments of deferred compensation made hereunder, or pursuant to another plan or arrangement, shall be deemed to be separate payments.
c.If the Executive is a Specified Employee (as defined in Code Section 409A) as of his separation from service with the Bank, then, only to the extent required pursuant to Code Section 409A(a)(2)(B)(i), payments due under this Agreement shall be subject to a six (6) month delay following the Executive’s separation from service. All delayed payments shall be accumulated and paid in lump-sum catch-up payment as of first day of the seventh-month following separation from service (or, if earlier, the date of death of the Executive) with all such delayed payments being credited with interest (compounded monthly) for this period of delay equal to the prime rate in effect of the first day of such six-month period. Any portion of the benefits hereunder that were not otherwise due to be paid during the six-month period following the termination shall be paid to the Executive in accordance with the payment schedule established herein.
Notwithstanding the foregoing, the Bank makes no representations or promises as to the tax effect of any payments under this Agreement or their compliance with Code Section 409A.
19.Amendment. This Agreement may be amended only in writing and only if such writing is signed by the Executive and by the President of the Bank.
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20.Notices. Notices under this Agreement shall be effective upon actual delivery and can be made by hand delivery, electronic mail, overnight delivery service, or by certified or registered mail, postage prepaid with return receipt requested. Notices shall be addressed as follows (or to such other or additional address as either party may designate by written notice to the other):
If to Bank:
Old Second Bancorp, Inc.
c/o ▇▇▇▇▇ ▇▇▇▇▇, Senior Vice President, Human Resources
▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇
Email: ▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇.▇▇▇
If to the Executive:
Personal or company email address
21.Survival of Provisions. Any provision of this Agreement, which by terms or reasonable implication is to be or may be performed or effective after the termination of the Agreement, shall be deemed to survive such termination.
22.Severability and Modification. If any provision of this Agreement shall be in part, or as applied to any circumstance, under the laws of any jurisdiction which may govern for such purpose, then such provision shall be deemed to be modified or restricted to the extent and in the manner necessary to render the same valid and enforceable, either generally or as applied to such circumstance, or shall be deemed excised from this Agreement as the case may require, and this Agreement shall be construed and enforced to the maximum extent permitted by law, as if such provision had been originally incorporated herein as so modified or restricted, or as if such provision had not been originally incorporated herein, as the case may be. The Bank and the Executive hereby agree that the restrictive covenants as set forth herein are separate and distinct restrictive covenants, designed to operate under different factual circumstances, and that the invalidity of one of said covenants shall not affect the validity and/or enforceability of the other covenants.
23.Assignability; Binding Nature. This Agreement will be binding upon the Bank, and upon the Executive and the Executive’s respective successors, heirs, and assigns. This Agreement may not be assigned by the Executive except that the Executive’s rights to compensation and benefits hereunder, subject to the limitations of this Agreement, may be transferred by will or operation of law. The rights and obligations of the Bank under this Agreement may be assigned to a subsidiary or affiliate of the Bank, or to a corporation or any entity which becomes the successor to the Bank as the result of a purchase of assets or stock, merger or other corporate reorganization, and which continues the business of the Bank.
▇▇.▇▇ Waiver. No failure on the part of any party to this Agreement to exercise, and no delay on their part in exercising any right, power or remedy hereunder shall operate as a waiver thereof.
25.Miscellaneous. Nothing in this Agreement shall be construed to limit or negate any common law torts or any statutory protections, including, but not limited to, an action under the Illinois Trade Secrets Act or the federal Defend Trade Secrets Act, available to the Bank, where it provides the Bank with broader protection than that provided herein.
26.Counterparts. This Agreement may be executed in any number of identical counterparts, each of which shall be deemed a duplicate original, and all of which together shall constitute but one and the same agreement.
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27.Headings and Interpretation. The headings or titles of the sections of this agreement are intended for ease of reference only and shall have no effect whatsoever on the construction or interpretation of any provision of this Agreement. The use in this Agreement of the words “including,” “such as,” and words of similar import following any general statement, term, or matter shall not be construed to limit such statement, term, or matter in any manner, whether or not language of non-limitation (such as “without limitation” or “but not limited to”) is used in connection therewith, but rather shall be deemed to refer to all other terms or matters that could reasonably fall within the scope of the general statement, term or matter. All provisions of this Agreement have been negotiated at arm’s length, and this Agreement shall not be construed for or against any party by reason of the authorship or alleged authorship of any provision hereof.
28.At-Will Employment Status. The Executive acknowledges and understands that the Executive is to be at all times an employee-at-will. This employee-at-will status may only be modified in writing by the President of the Bank.
29.Entire Agreement. The provisions of this Agreement constitute the entire agreement of the parties with respect to the subject matter hereof and supersede any prior agreements or understandings pertaining to said subject matter. This Agreement supersedes and replaces the Prior Agreement in full. Further, the parties acknowledge that there are no prior or contemporaneous oral or written representations, promises or agreements not expressed or referred to herein.
30.Conditioned Upon Merger. This Agreement shall not take effect unless and until the Effective Time of the Merger. If the Merger does not take effect, this Agreement shall be null and void.
(Signature Page Follows)
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THE EXECUTIVE AND THE BANK, BY ITS DESIGNATED REPRESENTATIVE, HEREBY ACKNOWLEDGE THAT THEY HAVE READ AND UNDERSTAND EACH OF THE PROVISIONS OF THIS AGREEMENT, THAT THEY HAVE EXECUTED THIS AGREEMENT VOLUNTARILY AND WITH FULL KNOWLEDGE OF ITS SIGNIFICANCE AND THAT THEY INTEND TO BE FULLY BOUND BY THE SAME.
Accepted on: ___________________
Signature:__________________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇
Bank: Old Second Bancorp, Inc.
By:▇▇▇▇▇ ▇▇▇▇▇, SVP Human Resources
Signature:_________________________________
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EXHIBIT C-2
FORM OF OFFICER AGREEMENT – ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
EXECUTIVE EMPLOYMENT AGREEMENT
This Employment Agreement (the “Agreement”) is entered into as of [⚫] (“Effective Date”), by and between Old Second Bancorp, Inc. (the “Company” or “Bank”) and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ (the “Executive”).
RECITALS
WHEREAS, the Bank is presently engaged in the general business of providing community banking and trust business services. The Bank’s services include, but are not limited to demand, savings, time deposit, individual retirement, and ▇▇▇▇▇ deposit accounts; commercial, industrial, consumer, and real estate lending, including installment loans, farm loans, lines of credit, and overdraft checking; safe deposit operations; and trust services. The Bank is also in the business of providing services such as the sale of traveler’s checks, money orders, cashier’s checks and foreign currency, direct deposit, discount brokerage, debit cards, credit cards, and other special services; and
WHEREAS, the Executive is currently employed by West Suburban Bancorp, Inc. (“WSBI”) pursuant to that certain Restated Employment Agreement dated January 4, 2021 (the “Prior Agreement”); and
WHEREAS, WSBI is merging (the “Merger”) with and into the Bank pursuant to that certain Agreement and Plan of Merger and Reorganization dated July 25, 2021 (the “Merger Agreement”), upon the Effective Time (as defined in the Merger Agreement) (the “Effective Time”) as of which the Executive’s Prior Agreement is being terminated and all benefits accrued thereunder paid in full; and
WHEREAS, the Bank wishes to retain the Executive and the Executive wishes to continue employment with the Bank under the terms and provisions set forth below; and
WHEREAS, the Bank and the Executive desire to enter into this Agreement providing certain benefit to the Executive and certain protection for the Bank, subject to and in accordance with this Agreement;
WHEREAS, the Executive understands and agrees that the Bank has developed and continues to develop goodwill through the use of various trade names that the Bank is authorized to use, and through the effort and expense of the Bank in attracting and retaining its customers or clients; and
WHEREAS, in the course of employment, the Executive has had and will continue to have knowledge or access to important trade secrets, customer or client lists, and other confidential information including information about customers or clients of the Bank and the particular needs of such customers or clients; and
WHEREAS, Executive acknowledges that the restrictions contained herein are necessary and reasonable in scope and duration and are a material inducement for the Bank to enter into this Agreement and continue a relationship with the Executive.
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NOW, THEREFORE, in consideration of the foregoing recitals and the provisions hereafter set forth, and for other good and valuable consideration, the receipt and sufficiency of which are mutually acknowledged, the parties hereto agree as follows:
1.Employment. The Bank hereby agrees to continue to employ the Executive from and after the Effective Date as Senior Vice President and the Executive hereby agrees to serve in such role and continue in such employment, on a full-time basis, for the Term (hereinafter defined) of and in accordance with this Agreement acting at all times in good faith and in the Bank’s best interests.
2.Compensation.
a.Base Salary. The Bank shall pay the Executive an annualized base salary of $245,104.14. This annual salary shall be subject to increase, but not decrease, from time to time by the Bank at the Bank’s sole discretion; provided that, for 2023, the base salary shall increase by no less than three percent (3%) of the amount in effect as of the Effective Date. All compensation shall be payable in accordance with the payment policy and payroll process established by the Bank from time to time. In addition Executive will be eligible, and may receive, up to 20% of base salary in an annual bonus, payable in accordance with the Bank’s annual incentive plan.
b.Bonus. In addition to the Base Salary, the Executive shall be eligible to earn two performance incentive bonuses in the target amounts, and with the performance objectives, performance period and other key terms as set forth in Exhibit A to this Agreement (“Incentive Bonuses”). Achievement of performance objectives shall be determined in good faith by the Board of Directors of the Bank (the “Company Board”). The actual Incentive Bonus earned for a performance period shall be paid in a single cash lump sum payment within thirty (30) days following the close of such performance period, subject to the Executive’s continued employment by the Bank through the end of the performance period; provided, however, if the Executive is not employed at the end of the performance period solely by reason of termination of Executive's employment by the Company without Cause, resignation by the Executive with Good Reason, or a Qualifying Termination in Connection with a Change in Control as described in Sections 6(a) and (b) below, or the Executive's death, during the applicable performance period, the Executive will be entitled to full target bonus payment as if he continued to be actively employed as of the end of the applicable performance period.
3.Benefits.
a.Retirement, Welfare and Fringe Benefits. The Executive shall receive the same or similar benefits and/or fringe benefits as the Bank may provide and/or modify from time to time, in the Bank’s sole discretion, to similarly situated executives. Such benefits may include, but are not limited to, participation in Health and Dental Insurance, Life Insurance, Long Term Disability coverage, and 401(k) and Profit Sharing Savings Plans. Participation in any such benefits shall be governed and interpreted by the applicable plan documents or written policies. Nothing in this Agreement guarantees the Executive the right to participate in any of the Bank’s currently sponsored benefit plans or prevents the Bank from exercising its right to terminate those plans or offerings in the future.
b.Reimbursement of Club Dues. The Bank will promptly (not to exceed thirty (30) days) reimburse the Executive for the monthly amount of his golf club membership dues (not to exceed $500 per month), following the Executive’s submission of reasonable substantiation for each such expense, which shall be submitted to the Bank within thirty (30) days after such expense is paid.
4.Consideration for Restrictive Covenants. In connection with this Agreement, Executive is agreeing to certain restrictions on Executive’s post-employment activities, as set forth herein. In exchange
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for the restrictive covenants contained herein, Executive is being offered and accepts the valuable consideration described herein, including the Bank’s agreeing to continue to employ Executive in an at-will employment relationship while granting Executive access or continuing access to the Bank’s proprietary and confidential business information, including customer relationships, as its employee acting in good faith and in the Bank’s best interests.
5.Position and Responsibilities. The Executive agrees to serve on behalf of the Bank or any of its subsidiaries or affiliates in the position of Senior Vice President with his principal office in Aurora or Lombard, Illinois. The Executive shall have such duties and responsibilities as may be assigned to the Executive from time to time by the Executive Vice President/Chief Financial Officer of the Bank which duties and responsibilities shall be commensurate with the Executive’s position. The Executive shall perform all duties assigned to the Executive faithfully and efficiently, subject to the direction of the Executive Vice President/Chief Financial Officer of the Bank and shall have such authorities and powers as are inherent to the undertakings applicable to the Executive’s position and necessary to carry out the responsibilities and duties required of the Executive hereunder. While employed under this Agreement, the Executive shall at all times devote his full time, attention, and best efforts on behalf of the Bank, and shall perform all services, acts, and duties connected with his position in such manner as the Bank from time to time shall direct. During the Term, in addition to any duties connected to his position, the Executive shall provide reasonable assistance with the transition the business, customers, and employees of WSBI over to the Bank.
6.Term of Employment. The Bank agrees to employ the Executive and the Executive agrees to continue employment with the Bank on the terms set forth in this Agreement until the second (2nd) anniversary of the Effective Time (the “Term”). Either the Bank or the Executive shall have the right to earlier terminate this Agreement and their employment relationship at any time, with or without cause or notice (the date such termination takes effect, the “Termination Date”), subject to the following:
a.Resignation with Good Reason; Termination Other Than for Cause. If, prior to the end of the Term the Executive terminates his employment with Good Reason or the Bank terminates his employment other than for Cause (a “Qualifying Termination”), then the Executive shall be entitled to
(i) his earned but unpaid base salary through the Termination Date, any unpaid annual bonus earned for a prior year (payable at its normal time), his eligible business expenses incurred on or before the Termination Date (provided that all required submissions for expense reimbursement are made in accordance with the Bank’s expense reimbursement policy within fifteen (15) days following the Termination Date) and any benefits due or payable under the Bank’s qualified retirement and health and welfare benefit plans, including but not limited to rights to continue coverage under the Bank’s group health plans pursuant to COBRA (collectively, the “Accrued Obligations”);
(ii) a lump sum cash amount equal to the Executive’s continued payments of base salary for the greater of (A) twelve (12) months or (B) the remainder of the Term. Such payment shall be paid to the Executive within thirty (30) days of the Executive’s termination of employment. Section For clarification, a termination of the Executive’s employment by reason of death or disability shall not constitute a Qualifying Termination; and
(iii) payment of the target amount of the Incentive Bonuses as described in Section 2(b) above.
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b. Qualifying Termination in Connection with a Change in Control. In the event of a Qualifying Termination within six (6) months before or following a Change in Control and during the Term, the Executive will be entitled to the following benefits:
(i) the Accrued Obligations;
(ii) a lump-sum cash amount equal to two (2) times the sum of (A) the greater of the Executive’s annual rate of base salary in effect upon the date of the Qualifying Termination or the Executive’s annual rate of base salary in effect immediately prior to the occurrence of the Change in Control, plus (B) the average of the annual cash bonuses paid to the Executive for the three (3) calendar years immediately preceding the year in which the Qualifying Termination occurs. Such payment shall be paid to the Executive within thirty (30) days of the Executive’s termination of employment (or the later Change in Control, where applicable); and
(iii) immediate 100% vesting of all stock options, stock awards, and any other awards which had been granted to the Executive by the Bank or any of its affiliates under any incentive compensation plan;
(iv) the Health Continuation Benefit;
(v) standard outplacement services from a nationally recognized outplacement firm of the Executive’s selection, for a period of up to one (1) year from the Executive’s date of Qualifying Termination; provided that such service shall be at the Bank’s expense to a maximum amount not to exceed twenty thousand dollars ($20,000); and
(vi) his Incentive Bonuses as described in Section 2(b) above.
c.Termination for Cause; Resignation without Good Reason. If, prior to the end of the Term, the Executive’s employment is terminated by the Executive or the Bank for any reason other than those stated in paragraphs (a) and (b) above (including for Cause), then the Executive (or his estate, if applicable) shall be entitled only to the Accrued Obligations hereunder and shall have no right to further payments or benefits under this Agreement.
d.Definitions. For purposes of this Agreement:
“Good Reason” means, without the Executive’s express written consent, the occurrence of any one of the following within the Term:
(A) a material reduction or alteration in the nature or status of the Executive’s authority, duties or responsibilities from those set forth in Sections 1 and 5;
(B) the requirement that the Executive be based at a location in excess of twenty-five (25) miles from both locations of the Executive’s principal office as of the Effective Date of this Agreement, as specified in Section 5;
(C) a material reduction of the Executive’s compensation and/or other benefits or perquisites in effect on the Effective Date, or as the same shall be increased from time to time; provided, however, that a change to, or replacement of, an existing benefit will not give rise to a “Good Reason” if such change or replacement is implemented with respect to all employees generally; or
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(D) the Bank, or any successor company, commits a material breach of any provision of this Agreement including, but not limited to the Bank failing to obtain the assumption of, or the successor company refusing to assume the obligations of this Agreement within the Term.
Notwithstanding the foregoing, none of the conditions described in Paragraphs (A) through (D) of this Paragraph (d) shall constitute Good Reason unless the Executive first provides written notice of the occurrence of one of the foregoing conditions to the Company within ninety (90) days of the initial occurrence of the condition, and such Good Reason remains uncured thirty (30) days of receiving such notice. The Executive’s right to terminate employment for Good Reason shall not be affected by the Executive’s incapacity due to physical or mental illness. The Executive’s continued employment shall not constitute consent to, or a waiver of rights with respect to, any circumstance constituting Good Reason herein.
“Cause” means the occurrence of any one or more of the following:
(a)A demonstrably willful and deliberate act or failure to act by the Executive (other than as a result of incapacity due to physical or mental illness) which is committed in bad faith, without reasonable belief that such action or inaction is in the best interests of the Company, which causes actual material financial injury to the Company, or any of its subsidiaries, and which act or inaction is not remedied within fifteen (15) business days of written notice from the Company or the subsidiary for which the Executive works; or
(b)The Executive’s conviction for committing an act of fraud, embezzlement, theft, or any other act constituting a felony involving moral turpitude which causes material harm, financial or otherwise, to the Company or any of its subsidiaries.
“Change in Control” means, and shall be deemed to have occurred upon, the first to occur of any of the following events:
(1) any person (as defined in Section 3(a)(9) of the Securities Exchange Act of 1934, as amended from time to time, or any successor act thereto (the “Exchange Act”), and as used in Sections 13(d) and 14(d) thereof, including a “group” as defined in Section 13(d) thereof) (a “Person”) other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company or a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company, is or becomes the beneficial owner (within the meaning of Rule 13d-3 of the Exchange Act), directly or indirectly, of securities of the Company representing thirty‑three percent (33%) or more of the total voting power represented by the Company’s then outstanding voting securities; or
(2) during any period of two (2) consecutive years, individuals who at the beginning of such period constitute the Board and any new director whose election by the Company Board or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof; or
(3) consummation of: (i) a merger or consolidation to which the Company is a party if the stockholders before such merger or consolidation do not, as a result of such merger or consolidation, own, directly or indirectly, more than sixty‑seven percent (67%) of the combined voting power of the then outstanding voting securities of the entity resulting from such merger or consolidation in substantially the same proportion as their ownership of the combined voting power
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of the Company’s voting securities outstanding immediately before such merger or consolidation; or (ii) a complete liquidation or dissolution or an agreement for the sale or other disposition of all or substantially all of the Company’s assets.
However, in no event shall a Change in Control be deemed to have occurred, with respect to the Executive if the Executive is part of a purchasing group which consummates the Change-in-Control transaction. The Executive shall be deemed “part of a purchasing group” for purposes of the preceding sentence if the Executive is an equity participant in the purchasing company or group (except for (i) passive ownership of less than two percent (2%) of the stock of the purchasing company, or (ii) ownership of equity participation in the purchasing company or group which is otherwise not significant, as determined prior to the Change in Control by a majority of the non-employee continuing directors).
“Health Continuation Benefit” means, at the exact same cost to the Executive, and at the same coverage level as in effect as of the Executive’s date of Qualifying Termination (subject to changes in coverage levels applicable to all employees generally), a continuation of the Executive’s (and the Executive’s eligible dependents’) health insurance coverage for a period of time following the Qualifying Termination equal to the shorter of (i) twenty-four (24) months or (ii) the maximum period allowed pursuant to any one or more of the provisions of Treas. Reg. Section 1.409A-1(b)(9)(v) which would be exempt from the definition of “deferred compensation” thereunder (the “benefit continuation period”); provided, however, that such continuation of health insurance coverage shall be provided only to the extent that it does not result in any additional tax or other penalty being imposed on the Bank by reason of the provision of such continuation coverage causing a violation of Section 2716 of the Public Health Service Act during a period of time Section 2716 is enforced by the Internal Revenue Service through Section 4980D of the Internal Revenue Code of 1986, as amended (the “Code”). The applicable COBRA health insurance benefit continuation period shall begin at the end of this benefit continuation period. The providing of health insurance benefits by the Company shall be discontinued prior to the end of the benefit continuation period in the event that the Executive subsequently becomes covered under the health insurance coverage of a subsequent employer which does not contain any exclusion or limitation with respect to any preexisting condition of the Executive or the Executive’s eligible dependents. For purposes of enforcing this offset provision, the Executive shall have the duty to inform the Company as to the terms and conditions of any subsequent employment and the corresponding benefits earned from such employment. The Executive shall provide, or cause to provide, to the Company in writing correct, complete, and timely information concerning the same.
The Executive acknowledges that the Executive has been and will continue to be provided intimate knowledge of the business practices, trade secrets, and other confidential and proprietary information of the Company and its subsidiaries (including the Confidential Information), which, if exploited by the Executive, would seriously, adversely, and irreparably affect the interests of the Company and its subsidiaries and the ability of each to continue its business and, therefore, the Executive hereby agrees to be bound by the restrictions contained in this Sections 7 through 12 below (the “Restrictive Covenants”).
7.Use and Maintenance of Confidential Information
(a)Confidentiality and Loyalty.
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(i)The Executive acknowledges that heretofore or hereafter during the course of his employment he has produced and may hereafter produce and have access to material, records, data, trade secrets and information not generally available to the public (collectively, “Confidential Information”) regarding the Company and its subsidiaries and affiliates. Accordingly, during and subsequent to termination of this Agreement, the Executive shall hold in confidence and not directly or indirectly disclose, use, copy or make lists of any such Confidential Information, except to the extent that such information is or thereafter becomes lawfully available from public sources, or such disclosure is authorized in writing by the Company, required by a law or any competent administrative agency or judicial authority, or otherwise as reasonably necessary or appropriate in connection with performance by the Executive of his duties hereunder. All records, files, documents and other materials or copies thereof relating to the Company's business which the Executive shall prepare or use, shall be and remain the sole property of the Company, shall not be removed from the Company's premises without its written consent, and shall be promptly returned to the Company upon termination of the Executive's employment.
(ii)Notwithstanding the foregoing, an individual shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that—(A) is made—(i) in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. Accordingly, the Executive has the right to disclose in confidence trade secrets to Federal, State, and local government officials, or to an attorney, for the sole purpose of reporting or investigating a suspected violation of law. The Executive also has the right to disclose trade secrets in a document filed in a lawsuit or other proceeding, but only if the filing is made under seal and protected from public disclosure. Nothing in this Agreement is intended to conflict with 18 U.S.C. §1833(b) or create liability for disclosures of trade secrets that are expressly allowed by 18 U.S.C. §1833(b). Nothing in this Agreement shall be construed to authorize, or limit liability for, an act that is otherwise prohibited by law, such as the unlawful access of material by an unauthorized user.
(iii)Nothing contained in this Section 7 shall limit the Executive's right to report to proper governmental authorities, including a court or legislative body, alleged unlawful employment practices or alleged criminal conduct, to make truthful statements in any reporting or subsequent investigation relating to such report, to seek legal advice relating to such report, or from responding to a lawful subpoena or other compulsory legal process. Nothing shall limit the Executive from filing a charge or complaint with any governmental, administrative or judicial agency (each, an “Agency”) pursuant to any applicable whistleblower statute or program (each, a “Whistleblower Program”). The Executive acknowledges that this Section 7 does not limit (i) the Executive's ability communicate, in connection with a charge or complaint pursuant to any Whistleblower Program with any Agency or otherwise participate in any investigation or proceeding that may be conducted by such Agency, including providing documents or other information, without notice to the Employer, or (ii) the Executive's right to receive an award for information provided to such Agency pursuant to any Whistleblower Program.
8.Return of Property. Upon termination of the Executive’s employment with the Bank, for any reason and for any cause, or at any time thereafter upon request of the Bank, the Executive shall deliver to the Bank all materials of any nature which are in the Executive’s possession or control and which are, or which contain, Confidential Information or which are otherwise the property of the Bank or of any of the Bank’s customers, including but not limited to writings, customer lists, price lists, designs, documents, records, data, memoranda, tapes and disks containing software, computer source code listings, routines, file layouts, record layouts, system design information, models, manuals, documentation and notes; provided,
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however, that Executive shall not be required to return the cell phone, cell phone number, or laptop computer in his possession as of the Effective Date. The Executive agrees that the Executive shall not reproduce copies of any such Confidential Information at any time without specific written authorization from the Bank.
9.Non-Competition and Non-Solicitation. The parties have agreed that the primary service area of the Bank’s operations, including lending and deposit taking functions in which the Executive actively participates extends to an area that encompasses a thirty-five (35)-mile radius from each banking or other office location of the Bank and any of its subsidiaries or affiliates where the Executive has provided services on behalf of the Bank (or its predecessors) during the twelve (12)-month period immediately preceding the termination of the Executives’ employment for any reason (the “Restrictive Area”). Therefore, as an essential ingredient of and in consideration of this Agreement the Executive’s employment with the Bank, including the benefits set forth in this Agreement, the Executive, during the Executive’s employment with the Bank and for a period of eighteen (18) months immediately following the termination of the Executives’ employment for any reason (the “Restrictive Period”), whether such termination occurs during the Term of this Agreement or thereafter, shall not directly or indirectly do any of the following:
(a)Engage or invest in, own, manage, operate, finance, control, participate in the ownership, management, operation or control of, be employed by, associated with or in any manner connected with, serve as a director, officer or consultant to, lend the Executive’s name or any similar name to, lend the Executive’s credit to or render services or advice to, in each case in the capacity that the Executive provided services to the Bank or any subsidiary or affiliate thereof, any Financial Institution; provided, however, that the ownership by the Executive of shares of the capital stock of any Financial Institution, which shares are listed on a securities exchange or quoted on the National Association of Securities Dealers Automated Quotation System and which do not represent more than five percent (5%) of the institution’s outstanding capital stock, shall not violate any terms of this Agreement;
(b)Either for the Executive or any Financial Institution: (i) induce or attempt to induce any employee of the Bank or any of its subsidiaries or affiliates with whom the Executive had significant contact to leave the employ of the Bank or any of its Subsidiaries or affiliates; (ii) in any way interfere with the relationship between the Bank or any of its subsidiaries or affiliates and any employee of the Bank or any of its subsidiaries or affiliates with whom the Executive had significant contact; or (iii) induce or attempt to induce any customer, supplier, licensee or business relation of the Bank or any of its subsidiaries or affiliates with whom the Executive had significant contact to cease doing business with the Bank or its subsidiaries or affiliates or in any way interfere with the relationship between the Bank or any of its subsidiaries or affiliates and their respective customers, suppliers, licensees or business relations with whom the Executive had significant contact;
(c)Either for the Executive or any Financial Institution, solicit the business of any person or entity known to the Executive to be a customer of the Bank or any of its subsidiaries or affiliates, where the Executive had significant contact with such person or entity, with respect to products, activities or services that compete in whole or in part with the products, activities or services of the Bank or any of its subsidiaries or affiliates.
(d)For the purposes of this Agreement, “Financial Institution” means any person, firm, partnership, corporation or trust that owns, operates or is in the process of forming a bank, savings bank, savings and loan association, credit union or similar financial institution, or any unit, division or subsidiary of any of the foregoing, with an office located, or to be located, at an address identified in a filing with any regulatory agency, within the Restrictive Area.
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10.Remedies for Breach of Restrictive Covenants. The Executive has reviewed the provisions of this Agreement with legal counsel, or has been given adequate opportunity to seek such counsel, and the Executive acknowledges that the covenants contains in Sections 7-9 of this Agreement are reasonable with respect to their duration, geographical area and scope. The Executive further acknowledges that the restrictions contained in Sections 7-9 of this Agreement are reasonable and necessary for the protection of legitimate business interests of the Bank, that they create no undue hardships, that any violation of these restrictions would cause substantial injury to the Bank and such interests, and that such restrictions were a material inducement to the Bank to enter into this Agreement. In the event of any violation or threatened violation of these restrictions, the Bank, in addition to and not in limitation of, any other rights, remedies or damages available to the Bank under this Agreement or otherwise at law or in equity, shall be entitled to preliminary and permanent injunctive relief to prevent or restrain any such violation by the Executive and any and all person directly or indirectly acting for or with the Executive, as the case may be.
▇▇.▇▇ Indirect Action. The Executive agrees to not take any action indirectly or in concert with others that would violate this Agreement if the action were taken directly. This prohibition applies regardless of whether the Executive initiates the improper contact. The Executive also agrees not to aid or assist any competing financial organization or any other person, firm, corporation, or other business entity to do any of the aforesaid acts. This applies to actions the Executive may take in any capacity, i.e., as proprietor, partner, joint venturer, stockholder, director, officer, trustee, principal, agent, servant, employee, or in any other capacity.
▇▇.▇▇ Prior Conflicting Agreements. The Executive certifies that the Executive has no outstanding agreement or obligation that is in conflict with any of the provisions of this Agreement or that would preclude the Executive from complying with the provisions of this Agreement or prevent the Executive from providing any services for the Bank, including without limitation, any conflicting noncompetition or confidentiality agreements with prior employers. The Executive acknowledges that he has disclosed any and all agreements addressing restrictive covenants or obligations to prior employers and that he will comply with all enforceable provisions of such agreements.
ENFORCEMENT
13.Governing Law and Submission to Jurisdiction/Venue. This Agreement shall be governed in all respects by the laws of the State of Illinois. Any disputes arising under this Agreement shall be tried in the courts sitting within the State of Illinois, and the Executive hereby consents and submits his or her person to the jurisdiction of any such court for such purpose. Should this Agreement come before any court for interpretation or enforcement, it is the intent of the parties that the terms and provisions of this Agreement be given their fair and literal meaning, and that this Agreement is not to be strictly construed against any party, including the drafter of this Agreement. The Parties hereto acknowledge that ▇▇▇▇ County, Illinois is a convenient forum, agree that any controversy or claim relating to this Agreement shall be brought in State or Federal Court in and for ▇▇▇▇ County, Illinois and therefore submit to the personal jurisdiction of such courts.
14.Rights and Remedies Upon Breach of Agreement. If the Executive should breach, or threaten to commit a breach, of any of the provisions of this Agreement, the Bank shall have the right and remedy to have the restrictive covenants contained herein be enforced by any court of competent jurisdiction, without the necessity of posting a bond, it being agreed that any breach or threatened breach of restrictive covenants would cause irreparable injury to the Bank and that money damages would not alone provide an adequate remedy to the Bank. The Bank shall also have any other right or remedy available to it under law or in equity including the right to seek and recover monetary damages for lost profits and other compensable damages.
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15.Notice to Future Employers. For the period of twelve (12) months immediately following the end of employment by the Bank, the Executive will inform each new employer, prior to accepting employment, of the existence of this Agreement and provide that employer with a copy of this Agreement. The Executive further agrees that Bank may, if it so desires, send a copy of this Agreement to, or otherwise make the provisions hereof known to, any such employer or prospective employer.
16.Indemnification.
In addition to any rights to indemnification available to the Executive pursuant to the terms of the Merger Agreement:
▇.▇▇ the maximum extent provided to other executive officers of the Bank, the Bank shall indemnify and hold the Executive harmless (including advances of attorneys’ fees and other litigation expenses) for losses or damages incurred by the Executive as a result of all causes of action arising from the Executive’s performance of duties for the benefit of the Bank, whether or not the claim is asserted during the Term. The Executive shall be covered under any directors’ and officers’ insurance that the Bank maintains for executive officers of the Bank in the same manner and on the same basis as such executive officers.
▇.▇▇ the event the Executive becomes a party, or is threatened to be made a party, to any action, suit, or proceeding for which the Bank has agreed to provide insurance coverage or indemnification under this Section 16, the Bank shall, to the full extent permitted by law and consistent with policies for executive officers of the Bank, advance all expenses (including reasonable attorneys’ fees), judgments, fines, and amounts paid in settlement (“Expenses”) incurred by the Executive in connection with the investigation, defense, settlement, or appeal of any threatened, pending, or completed action, suit, or proceeding; provided, however, that the Executive must provide the Bank with a written undertaking from the Executive (i) to reimburse the Bank for all Expenses actually paid by the Bank to or on behalf of the Executive in the event it be determined that the Executive is not entitled to indemnification by the Bank for such Expenses, and (ii) to assign the Bank all rights of the Executive to indemnification, under any policy of directors’ and officers’ liability insurance or otherwise, to the extent of the amount of Expenses actually paid by the Bank to or on behalf of the Executive.
17.Tolling/Autoextender.Any period of restriction contained herein shall be extended and tolled for any period of breach, such that the Bank receives the full benefit of the bargain with respect to the agreed upon period of restriction.
18.Internal Revenue Code Section 409A. It is intended that the Agreement shall comply with the provisions of Section 409A of the Code and the related U.S. Treasury Department regulations and guidance promulgated thereunder (“Code Section 409A”) so as not to subject the Executive to the payment of additional taxes and interest under Code Section 409A, and shall be interpreted, operated and administered in a manner consistent with those intentions. To the extent that any payment hereunder constitutes “nonqualified deferred compensation” within the meaning of Code Section 409A, then the following shall apply:
a.For purposes of determining the timing of any such payment, all references in this Agreement to Termination Date shall mean a “separation from service” as defined in Code Section 409A.
b.For purposes of Code Section 409A, all installment payments of deferred compensation made hereunder, or pursuant to another plan or arrangement, shall be deemed to be separate payments.
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c.If the Executive is a Specified Employee (as defined in Code Section 409A) as of his separation from service with the Bank, then, only to the extent required pursuant to Code Section 409A(a)(2)(B)(i), payments due under this Agreement shall be subject to a six (6) month delay following the Executive’s separation from service. All delayed payments shall be accumulated and paid in lump-sum catch-up payment as of first day of the seventh-month following separation from service (or, if earlier, the date of death of the Executive) with all such delayed payments being credited with interest (compounded monthly) for this period of delay equal to the prime rate in effect of the first day of such six-month period. Any portion of the benefits hereunder that were not otherwise due to be paid during the six-month period following the termination shall be paid to the Executive in accordance with the payment schedule established herein.
Notwithstanding the foregoing, the Bank makes no representations or promises as to the tax effect of any payments under this Agreement or their compliance with Code Section 409A.
19.Amendment. This Agreement may be amended only in writing and only if such writing is signed by the Executive and by the President of the Bank.
20.Notices. Notices under this Agreement shall be effective upon actual delivery and can be made by hand delivery, electronic mail, overnight delivery service, or by certified or registered mail, postage prepaid with return receipt requested. Notices shall be addressed as follows (or to such other or additional address as either party may designate by written notice to the other):
If to Bank:
Old Second Bancorp, Inc.
c/o ▇▇▇▇▇ ▇▇▇▇▇, Senior Vice President, Human Resources
▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇
Email: ▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇.▇▇▇
If to the Executive:
Personal or Company email address
21.Survival of Provisions. Any provision of this Agreement, which by terms or reasonable implication is to be or may be performed or effective after the termination of the Agreement, shall be deemed to survive such termination.
22.Severability and Modification. If any provision of this Agreement shall be in part, or as applied to any circumstance, under the laws of any jurisdiction which may govern for such purpose, then such provision shall be deemed to be modified or restricted to the extent and in the manner necessary to render the same valid and enforceable, either generally or as applied to such circumstance, or shall be deemed excised from this Agreement as the case may require, and this Agreement shall be construed and enforced to the maximum extent permitted by law, as if such provision had been originally incorporated herein as so modified or restricted, or as if such provision had not been originally incorporated herein, as the case may be. The Bank and the Executive hereby agree that the restrictive covenants as set forth herein are separate and distinct restrictive covenants, designed to operate under different factual circumstances, and that the invalidity of one of said covenants shall not affect the validity and/or enforceability of the other covenants.
23.Assignability; Binding Nature. This Agreement will be binding upon the Bank, and upon the Executive and the Executive’s respective successors, heirs, and assigns. This Agreement may not be assigned by the Executive except that the Executive’s rights to compensation and benefits hereunder, subject to the limitations of this Agreement, may be transferred by will or operation of law. The rights and
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obligations of the Bank under this Agreement may be assigned to a subsidiary or affiliate of the Bank, or to a corporation or any entity which becomes the successor to the Bank as the result of a purchase of assets or stock, merger or other corporate reorganization, and which continues the business of the Bank.
▇▇.▇▇ Waiver. No failure on the part of any party to this Agreement to exercise, and no delay on their part in exercising any right, power or remedy hereunder shall operate as a waiver thereof.
25.Miscellaneous. Nothing in this Agreement shall be construed to limit or negate any common law torts or any statutory protections, including, but not limited to, an action under the Illinois Trade Secrets Act or the federal Defend Trade Secrets Act, available to the Bank, where it provides the Bank with broader protection than that provided herein.
26.Counterparts. This Agreement may be executed in any number of identical counterparts, each of which shall be deemed a duplicate original, and all of which together shall constitute but one and the same agreement.
27.Headings and Interpretation. The headings or titles of the sections of this Agreement are intended for ease of reference only and shall have no effect whatsoever on the construction or interpretation of any provision of this Agreement. The use in this Agreement of the words “including,” “such as,” and words of similar import following any general statement, term, or matter shall not be construed to limit such statement, term, or matter in any manner, whether or not language of non-limitation (such as “without limitation” or “but not limited to”) is used in connection therewith, but rather shall be deemed to refer to all other terms or matters that could reasonably fall within the scope of the general statement, term or matter. All provisions of this Agreement have been negotiated at arm’s length, and this Agreement shall not be construed for or against any party by reason of the authorship or alleged authorship of any provision hereof.
28.At-Will Employment Status. The Executive acknowledges and understands that the Executive is to be at all times an employee-at-will. This employee-at-will status may only be modified in writing by the President of the Bank.
29.Entire Agreement. The provisions of this Agreement constitute the entire agreement of the parties with respect to the subject matter hereof and supersede any prior agreements or understandings pertaining to said subject matter. This Agreement supersedes and replaces the Prior Agreement in full. Further, the parties acknowledge that there are no prior or contemporaneous oral or written representations, promises or agreements not expressed or referred to herein.
30.Golden Parachute Payment Adjustment.
a.If and to the extent that the value of any payments or other benefits payable to the Executive under this Agreement (the “Benefit”) are combined with payments and benefits payable to the Executive in connection with the Merger for purposes of determining if an excise tax under Code Section 4999 (the “Excise Tax”) would apply to the Executive, and but for this sentence, would be subject to the Excise Tax, then the Benefit shall be reduced to the Reduced Amount. The “Reduced Amount” shall be either (1) the largest portion of the Benefit that would result in no portion of the payments or benefits payable in connection with the Merger being subject to the Excise Tax or (2) the largest portion, up to and including the total, of the Benefit, whichever amount, after taking into account all applicable federal, state, and local employment taxes, income taxes, and the Excise Tax (all computed at the highest applicable marginal rate), results in the Executive’s receipt, on an after-tax basis, of the greater amount of the payments and benefits payable in connection with the Merger, notwithstanding that all or some portion of such payments or benefits payable in connection with the Merger may be subject to the Excise Tax. If a reduction in Benefits is necessary so that the Benefit equals the Reduced Amount, reduction shall occur in the following order
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unless the Executive elects in writing a different order (provided, however, that such election shall be subject to the Company’s approval if made on or after the date on which the event that triggers the Benefit occurs and, provided, further, that such election does not violate Code Section 409A): reduction of cash payments; then reduction of employee benefits.
b.The accounting firm engaged by the Company for general audit purposes as of the day prior to the effective date of the change in ownership or control shall perform any calculations necessary in connection with this Section 30. If the accounting firm so engaged by the Company is serving as accountant or auditor for the individual, entity, or group effecting the change in ownership or control, the Company shall appoint a nationally recognized accounting firm to make the determinations required hereunder. The Company shall bear all expenses with respect to the determinations by such accounting firm required to be made hereunder.
c.The accounting firm engaged to make the determinations under this Section 30 shall provide its calculations, together with detailed supporting documentation, to the Executive and the Company within 15 calendar days after the date on which the Executive’s right to a Benefit is triggered (if requested at that time by the Executive or the Company) or such other time as requested by the Executive or the Company. If the accounting firm determines that no Excise Tax is payable with respect to a Benefit, it shall furnish the Executive and the Company with an opinion reasonably acceptable to the Executive that no Excise Tax will be imposed with respect to such Benefit. Any good faith determinations of the accounting firm made hereunder shall be final, binding, and conclusive upon the Executive and the Company, except as set forth below.
d.If, notwithstanding any reduction described in this Section 30, the IRS determines that the Executive is liable for the Excise Tax as a result of the receipt of the Benefits as described above, then the Executive shall be obligated to pay back to the Company, within 30 days after a final IRS determination, or, in the event the Executive challenges the final IRS determination, within 30 days after a final adjudication, a portion of the Benefits equal to the Repayment Amount. The “Repayment Amount” with respect to the repayment of Benefits shall be the smallest amount, if any, required to be paid to the Company so that the Executive’s net after-tax proceeds with respect all payments and benefits payable in connection with the Merger (after taking into account the payment of the Excise Tax and all other applicable taxes imposed on such Benefits) are maximized. The Repayment Amount with respect to the Benefits shall be $0 if a Repayment Amount of more than $0 would not result in the Executive’s net after-tax proceeds with respect to such Benefits being maximized. If the Excise Tax is not eliminated pursuant to this Section 30, the Executive shall pay the Excise Tax.
e.Notwithstanding any other provision of this Section 30, if (i) there is a reduction in the Benefits as described in this Section 30, (B) the IRS later determines that the Executive is liable for the Excise Tax, the payment of which would result in the maximization of the Executive’s net after-tax proceeds (calculated as if the Benefits had not previously been reduced), and (C) the Executive pays the Excise Tax, then the Company shall provide to the Executive those Benefits that were reduced pursuant to this Section 30 contemporaneously or as soon as administratively possible after the Executive pays the Excise Tax so that the Executive’s net after-tax proceeds with respect to the Benefits is maximized.
31.Conditioned Upon Merger. This Agreement shall not take effect unless and until the Effective Time of the Merger. If the Merger does not take effect, this Agreement shall be null and void.
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THE EXECUTIVE AND THE BANK, BY ITS DESIGNATED REPRESENTATIVE, HEREBY ACKNOWLEDGE THAT THEY HAVE READ AND UNDERSTAND EACH OF THE PROVISIONS OF THIS AGREEMENT, THAT THEY HAVE EXECUTED THIS AGREEMENT VOLUNTARILY AND WITH FULL KNOWLEDGE OF ITS SIGNIFICANCE AND THAT THEY INTEND TO BE FULLY BOUND BY THE SAME.
Accepted on: ___________________
Signature:__________________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Bank: Old Second Bancorp, Inc.
By:▇▇▇▇▇ ▇▇▇▇▇, SVP Human Resources
Signature:_____________________________________
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Exhibit A
Key Terms of Incentive Bonuses
Incentive Bonus | Target Amount | Performance Objectives | Performance Period |
Deposit Levels | $90,000 | Maintaining deposit levels at or above 90% of the level reflected at Closing; | Effective Time through August 30, 2022 |
Systems Integration | $90,000 | Successful systems integration | Effective Time through May 31, 2022 |
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