EXHIBIT 2.1
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AGREEMENT AND PLAN OF MERGER
BY AND AMONG
BANK OF MONTREAL,
BANKMONT FINANCIAL CORP.
AND
FIRST NATIONAL BANCORP, INC.
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TABLE OF CONTENTS
SECTION HEADING PAGE
ARTICLE I THE MERGER . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.1. MERGER AND SURVIVING CORPORATION . . . . . . . . . . 2
ALTERNATE SECTION 1.1. MERGER AND SURVIVING CORPORATION . . . . . 3
SECTION 1.2. CONVERSION OF SHARES . . . . . . . . . . . . . . . . 4
ALTERNATE SECTION 1.2. CONVERSION OF SHARES . . . . . . . . . . . 7
SECTION 1.3. ELECTION PROCEDURES . . . . . . . . . . . . . . . . 9
SECTION 1.4. MANNER OF CONVERSION OF COMPANY COMMON SHARES . . . 10
SECTION 1.5. ADJUSTMENTS FOR DILUTION AND OTHER MATTERS . . . . . 12
SECTION 1.6. CONVERSION OF DISSENTING COMPANY SHARES . . . . . . 12
SECTION 1.7. EXCHANGE PROCEDURE . . . . . . . . . . . . . . . . . 13
SECTION 1.8. DIVIDENDS . . . . . . . . . . . . . . . . . . . . . 14
SECTION 1.9. WITHHOLDING RIGHTS . . . . . . . . . . . . . . . . . 14
SECTION 1.10. TAX AND ACCOUNTING CONSEQUENCE . . . . . . . . . . . 14
ARTICLE II REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE
COMPANY . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 2.1. ORGANIZATION OF THE COMPANY . . . . . . . . . . . . 15
SECTION 2.2. COMPANY SHARES . . . . . . . . . . . . . . . . . . . 15
Section 2.3. Company Subsidiaries . . . . . . . . . . . . . . . . 16
SECTION 2.4. CORPORATE AUTHORIZATION . . . . . . . . . . . . . . 17
SECTION 2.7. DOCUMENTS OTHER THAN FINANCIAL STATEMENTS
PREVIOUSLY DELIVERED . . . . . . . . . . . . . . . . 19
SECTION 2.8. UNDISCLOSED LIABILITIES . . . . . . . . . . . . . . 19
SECTION 2.9. TITLE TO PROPERTIES; LEASES; VIOLATIONS;
ENVIRONMENTAL MATTERS . . . . . . . . . . . . . . . 19
SECTION 2.10. PERMITS AND REGULATION . . . . . . . . . . . . . . . 21
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SECTION 2.11. LITIGATION . . . . . . . . . . . . . . . . . . . . . 23
SECTION 2.12. TAXES . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 2.13. CONTRACTS . . . . . . . . . . . . . . . . . . . . . 23
SECTION 2.14. INSURANCE . . . . . . . . . . . . . . . . . . . . . 24
SECTION 2.15. REORGANIZATION . . . . . . . . . . . . . . . . . . . 25
SECTION 2.16. EMPLOYEE MATTERS . . . . . . . . . . . . . . . . . . 25
SECTION 2.17. CONDUCT OF BUSINESS SINCE DECEMBER 31, 2000 . . . . 27
SECTION 2.18. CONDUCT OF BUSINESS PENDING MERGER . . . . . . . . . 28
SECTION 2.19. LOANS . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 2.20. DERIVATIVE TRANSACTIONS . . . . . . . . . . . . . . 30
SECTION 2.21. NO BROKER'S OR FINDER'S FEE . . . . . . . . . . . . 31
SECTION 2.22. OTHER TAKEOVER PROPOSALS . . . . . . . . . . . . . . 31
SECTION 2.23. INTELLECTUAL PROPERTY . . . . . . . . . . . . . . . 33
SECTION 2.24. TAKEOVER LAWS NOT APPLICABLE . . . . . . . . . . . . 33
SECTION 2.25. MATERIAL INTERESTS OF CERTAIN PERSONS . . . . . . . 34
SECTION 2.26. DISCLOSURE . . . . . . . . . . . . . . . . . . . . . 34
SECTION 2.27. OPINION OF FINANCIAL ADVISOR . . . . . . . . . . . . 34
SECTION 2.28. COMPANY RIGHTS AGREEMENT . . . . . . . . . . . . . . 34
ARTICLE III REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF BMO
AND BFC . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 3.1. ORGANIZATION OF BMO AND BFC . . . . . . . . . . . . 35
SECTION 3.2. BMO SHARES . . . . . . . . . . . . . . . . . . . . . 35
SECTION 3.3. CORPORATE AUTHORIZATION . . . . . . . . . . . . . . 35
SECTION 3.4. GOVERNMENTAL REGULATION . . . . . . . . . . . . . . 36
SECTION 3.5. FINANCIAL STATEMENTS OF BMO . . . . . . . . . . . . 37
SECTION 3.6. DISCLOSURE . . . . . . . . . . . . . . . . . . . . . 37
SECTION 3.7. FINANCING . . . . . . . . . . . . . . . . . . . . . 37
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ARTICLE IV ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . 38
SECTION 4.1. REGULATORY APPROVALS . . . . . . . . . . . . . . . . 38
SECTION 4.2. COMPANY SHAREHOLDER APPROVAL . . . . . . . . . . . . 38
SECTION 4.3. PREPARATION OF COMPANY PROXY MATERIALS AND F4
REGISTRATION STATEMENT . . . . . . . . . . . . . . . 38
SECTION 4.4. ACCESS AND INFORMATION . . . . . . . . . . . . . . . 40
SECTION 4.5. LISTS OF COMPANY SHAREHOLDERS . . . . . . . . . . . 40
SECTION 4.6. CONTINUING EFFECT OF REPRESENTATIONS AND
WARRANTIES . . . . . . . . . . . . . . . . . . . . . 40
SECTION 4.7. CURRENT INFORMATION . . . . . . . . . . . . . . . . 41
SECTION 4.8. TERMINATION PAYMENT . . . . . . . . . . . . . . . . 41
SECTION 4.9. REASONABLE EFFORTS . . . . . . . . . . . . . . . . . 42
SECTION 4.10. AFFILIATES . . . . . . . . . . . . . . . . . . . . . 42
SECTION 4.11. COMPANY ACCRUALS AND RESERVES . . . . . . . . . . . 43
SECTION 4.12. COMPANY SHARE OPTION AGREEMENT . . . . . . . . . . . 43
SECTION 4.13. EMPLOYMENT AND CONSULTING AGREEMENTS . . . . . . . . 43
SECTION 4.14. INDEMNIFICATION . . . . . . . . . . . . . . . . . . 43
SECTION 4.15. TAX TREATMENT AND TAX CERTIFICATES . . . . . . . . . 45
Section 4.16. FIRPTA . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 4.17. CONVERSION TO CASH MERGER CONSIDERATION . . . . . . 45
SECTION 4.18. COMPANY EMPLOYEE BENEFITS . . . . . . . . . . . . . 46
SECTION 4.19. CANADIAN TAX RULING . . . . . . . . . . . . . . . . 46
SECTION 4.20. FORMATION OF NEWCO . . . . . . . . . . . . . . . . . 47
ARTICLE V CONDITIONS PRECEDENT TO OBLIGATIONS OF BMO, BFC
AND THE COMPANY . . . . . . . . . . . . . . . . . . 47
SECTION 5.1. COMPANY SHAREHOLDER APPROVAL . . . . . . . . . . . . 47
SECTION 5.2. REGULATORY APPROVALS AND LEGAL REQUIREMENTS . . . . 47
SECTION 5.3. EFFECTIVENESS OF F4 . . . . . . . . . . . . . . . . 48
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SECTION 5.4. NYSE LISTING . . . . . . . . . . . . . . . . . . . . 48
SECTION 5.5. TAX OPINION . . . . . . . . . . . . . . . . . . . . 48
ARTICLE VI CONDITIONS PRECEDENT TO OBLIGATION OF BMO AND BFC . 48
SECTION 6.1. REPRESENTATIONS, WARRANTIES AND COVENANTS . . . . . 48
SECTION 6.2. ADVERSE CHANGES . . . . . . . . . . . . . . . . . . 49
SECTION 6.3. PERFORMANCE OF OBLIGATIONS OF THE COMPANY . . . . . 49
SECTION 6.4. LITIGATION . . . . . . . . . . . . . . . . . . . . . 49
SECTION 6.5. LEGAL MATTERS . . . . . . . . . . . . . . . . . . . 49
SECTION 6.6. UPDATED DISCLOSURE STATEMENT . . . . . . . . . . . . 49
ARTICLE VII CONDITIONS PRECEDENT TO OBLIGATION OF THE COMPANY . 50
SECTION 7.1. REPRESENTATIONS, WARRANTIES AND COVENANTS . . . . . 50
SECTION 7.2. LEGAL MATTERS . . . . . . . . . . . . . . . . . . . 50
SECTION 7.3. BMO CERTIFICATE . . . . . . . . . . . . . . . . . . 50
SECTION 7.4. OTHER OBLIGATIONS OF BMO . . . . . . . . . . . . . . 51
ARTICLE VIII CLOSING . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 8.1. DATE, TIME AND PLACE OF CLOSING . . . . . . . . . . 51
SECTION 8.2. DELIVERIES OF DOCUMENTS . . . . . . . . . . . . . . 51
SECTION 8.3. MERGER TO BE MADE EFFECTIVE . . . . . . . . . . . . 51
ARTICLE IX AMENDMENT AND TERMINATION . . . . . . . . . . . . . 51
SECTION 9.1. AMENDMENT . . . . . . . . . . . . . . . . . . . . . 51
SECTION 9.2. TERMINATION . . . . . . . . . . . . . . . . . . . . 51
ARTICLE X GENERAL PROVISIONS . . . . . . . . . . . . . . . . . 54
SECTION 10.1. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
AGREEMENTS . . . . . . . . . . . . . . . . . . . . . 54
SECTION 10.2. NOTICES . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 10.3. EXPENSES AND CERTAIN REQUIRED ACCRUALS . . . . . . . 55
SECTION 10.4. FURTHER ASSURANCES . . . . . . . . . . . . . . . . . 56
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SECTION 10.5. PUBLICITY . . . . . . . . . . . . . . . . . . . . . 56
SECTION 10.6. WAIVERS . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 10.7. ADDITIONAL TERMS . . . . . . . . . . . . . . . . . . 56
SECTION 10.8. ENTIRE AGREEMENT AND BINDING EFFECT . . . . . . . . 57
SECTION 10.9. GOVERNING LAW . . . . . . . . . . . . . . . . . . . 57
SECTION 10.10. CONSENT TO JURISDICTION . . . . . . . . . . . . . . 57
SECTION 10.11. COUNTERPARTS . . . . . . . . . . . . . . . . . . . . 57
SECTION 10.12. CAPTIONS . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 10.13. SEVERABILITY . . . . . . . . . . . . . . . . . . . . 57
EXHIBITS
A -- Company Share Option Agreement
B -- Voting Agreement
C -- Regulatory Agencies
APPENDICES
I -- Disclosure Statement
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DEFINITIONS
TERM SECTION
2000 Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . 2.8
Acquisition Event . . . . . . . . . . . . . . . . . . . . . . . 4.8.2
Affiliates Agreement . . . . . . . . . . . . . . . . . . . . . . 4.10
Agreement . . . . . . . . . . . . . . . . . . . . . . . . Introduction
BFC . . . . . . . . . . . . . . . . . . . . . . . . . . . Introduction
BMO . . . . . . . . . . . . . . . . . . . . . . . . . . . Introduction
BMO Class A Preferred Shares . . . . . . . . . . . . . . . . . 3.2.1
BMO Class B Preferred Shares . . . . . . . . . . . . . . . . . 3.2.1
BMO Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.5
BMO Representatives . . . . . . . . . . . . . . . . . . . . . . . 4.4
BMO Share Price . . . . . . . . . . . . . . . . . . . 1.2.3,
Alternate 1.2.3
BMO Shares . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2.1
Canadian Tax Ruling . . . . . . . . . . . . . . . . . . . . . . . 4.19
Cash Election Shares . . . . . . . . . . . . . . . . . . . . . 1.3.2
Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.1
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Combination Election Shares . . . . . . . . . . . . . . . . . . 1.3.2
Commissioner . . . . . . . . . . . . . . . . . . . . . . . . . 2.10.1
Company . . . . . . . . . . . . . . . . . . . . . . . . . Introduction
Company Common Shares . . . . . . . . . . . . . . . . . . . . . 1.2.2,
. . . . . . . . . . . . . . . . . . . . . . Alternate 1.2.2
Company Preferred Shares . . . . . . . . . . . . . . . . . . . 2.2.1
Company Reports . . . . . . . . . . . . . . . . . . . . . . . . 2.10.5
Company Rights . . . . . . . . . . . . . . . . . . . . . . . . 2.2.1
Company Rights Agreement . . . . . . . . . . . . . . . . . . . 2.2.1
Company Share Option Agreement . . . . . . . . . . . . . . . Recitals
Company Subsidiary or Company Subsidiaries . . . . . . . . . . 2.3.1
Constituent Corporations . . . . . . . . . . . . . . . . . . . 1.1.1
. . . . . . . . . . . . . . . . . . . . . . Alternate 1.1.1
Conversion to Cash Merger Consideration . . . . . . . . . . . . . 4.17
DGCL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1.1
. . . . . . . . . . . . . . . . . . . . . . Alternate 1.1.1
Disclosure Statement . . . . . . . . . . . . . . . Article II, Par. 1
Dissenting Company Shares . . . . . . . . . . . . . . . . . . . 1.2.4
. . . . . . . . . . . . . . . . . . . . . . Alternate 1.2.4
Effective Time . . . . . . . . . . . . . . . . . . . . . . . . 1.1.1
. . . . . . . . . . . . . . . . . . . . . . Alternate 1.1.1
Election Deadline . . . . . . . . . . . . . . . . . . . . . . . 1.3.3
Election Form . . . . . . . . . . . . . . . . . . . . . . . . . 1.3.1
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.16.1(a)
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . 2.10.6
Exchange Agent . . . . . . . . . . . . . . . . . . . . . . . . 1.2.7
. . . . . . . . . . . . . . . . . . . . . . Alternate 1.2.7
F-4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3.2
FDI Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.10.3
FDIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.10.1
FRB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.10.1
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Fringe benefit arrangements . . . . . . . . . . . . . . . . 2.16.1(b)
IBCA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1.1
. . . . . . . . . . . . . . . . . . . . . . Alternate 1.1.1
Indemnified Liabilities . . . . . . . . . . . . . . . . . . . . 4.14.1
Indemnified Party or Indemnified Parties . . . . . . . . . . . 4.14.1
Material Adverse Effect . . . . . . . . . . . . . . . . . . . . 10.7.1
Material litigation . . . . . . . . . . . . . . . . . . . . . . . 4.7
Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2
Merger . . . . . . . . . . . . . . . . . . . . . . Article I, Par. 1
Merger Filings . . . . . . . . . . . . . . . . . . . . . . . . 1.1.1
. . . . . . . . . . . . . . . . . . . . . . Alternate 1.1.1
NewCo . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
No Election Shares . . . . . . . . . . . . . . . . . . . . . . 1.3.3
Per Share Cash Consideration . . . . . . . . . . . . . . . . . 1.2.2
. . . . . . . . . . . . . . . . . . . . . . Alternate 1.2.2
Per Share Stock Consideration . . . . . . . . . . . . . . . . . 1.2.3
. . . . . . . . . . . . . . . . . . . . . . Alternate 1.2.2
Plan A Merger . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Plan B Merger . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Plan A Merger Provisions . . . . . . . . . . . . . Article I, Par. 1
Plan B Merger Provisions . . . . . . . . . . . . . Article I, Par. 1
Proxy Mailing Date . . . . . . . . . . . . . . . . . . . . . . 4.3.1
Proxy Materials . . . . . . . . . . . . . . . . . . . . . . . . 4.3.1
Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . . 4.3.1
SEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.10.5
Securities Act . . . . . . . . . . . . . . . . . . . . . . . . 1.7.2
Share Designees . . . . . . . . . . . . . . . . . . . . . . . . 1.4.1
Share Minimum . . . . . . . . . . . . . . . . . . . . . . . . . 1.4.2
Stock Election Shares . . . . . . . . . . . . . . . . . . 1.3.2, 1.4.1
Superior Proposal . . . . . . . . . . . . . . . . . . . . . . . 2.22.2
Surviving Corporation . . . . . . . . . . . . . . . . . . . . . 1.1.1
. . . . . . . . . . . . . . . . . . . . . . Alternate 1.1.1
Takeover Proposal . . . . . . . . . . . . . . . . . . . . . . . 2.22.2
Voting Agreement . . . . . . . . . . . . . . . . . . . . . . Recitals
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and
entered into as of the 1st day of March, 2001, by and among BANK OF
MONTREAL, a chartered bank of Canada (hereinafter referred to as
"BMO"), BANKMONT FINANCIAL CORP., a Delaware corporation (hereinafter
referred to as "BFC"), and FIRST NATIONAL BANCORP, INC., an Illinois
corporation (hereinafter referred to as the "Company").
WITNESSETH:
WHEREAS, the respective boards of directors of BMO, BFC and the
Company have approved this Agreement, providing for the business
combination transaction contemplated herein in which the Company will
merge with and into either (a) BFC (the "Plan A Merger") or (b) a
corporation ("NewCo") to be formed by BMO under the laws of Delaware
(the "Plan B Merger"), in either case, in accordance with the terms
described in Article I hereof and have determined that either the
Plan A Merger or the Plan B Merger is in their best interests and in
the best interests of their respective shareholders and stockholders;
and
WHEREAS, as a condition and inducement to BMO's and BFC's
willingness to enter into this Agreement, BMO and the Company are
entering into immediately after the execution and delivery hereof a
share option agreement dated as of the date hereof in the form which
is attached hereto as Exhibit A (the "Company Share Option
Agreement"), pursuant to which the Company shall grant to BMO
concurrently therewith an option to purchase shares of the Company,
and BMO and certain shareholders of the Company are entering into a
voting agreement dated as of the date hereof in the form which is
attached hereto as Exhibit B (the "Voting Agreement"), pursuant to
which such shareholders shall, among other things and subject to the
conditions set forth therein, agree to vote their shares in favor of
the transactions contemplated by this Agreement; and
WHEREAS, for federal income tax purposes, it is intended that the
Plan A Merger and the Plan B Merger shall qualify as a reorganization
under the provisions of Section 368 of the Internal Revenue Code of
1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the representations,
warranties and agreements herein contained, the parties hereto hereby
agree as follows:
ARTICLE I
THE MERGER
The provisions of Sections 1.1 and 1.2 hereof (collectively, the
"Plan A Merger Provisions") shall apply to this Agreement and the
provisions of Alternate Sections 1.1 and 1.2 (collectively, the
"Plan B Merger Provisions") shall be disregarded; PROVIDED BMO shall
have received the Canadian Tax Ruling (defined in Section 4.19 hereof)
prior to the Effective Time (defined in both Section 1.1.1 and
Alternate Section 1.1.1 hereof). Otherwise, the Plan A Merger
Provisions shall be disregarded and the Plan B Merger Provisions shall
apply to this Agreement. In the event the Plan A Merger Provisions
apply to this Agreement, (a) all references to the term "Merger" shall
mean the merger described in the Plan A Merger Provisions and (b) all
references to or provisions relating to NewCo found herein shall be
disregarded. In the event the Plan B Merger Provisions apply to this
Agreement, (a) all references herein of the term "Merger" shall mean
the merger described in the Plan B Merger Provisions, (b) all
references herein to BFC (except those contained in Article III
hereof) shall be read as references to NewCo, and (c) any reference
herein to any portion of Sections 1.1 or 1.2 shall be read as a
reference to the corresponding portion of Alternate Sections 1.1 or
1.2.
SECTION 1.1. MERGER AND SURVIVING CORPORATION
Section 1.1.1. Subject to the terms and conditions of this
Agreement, the Company shall be merged with and into BFC (which shall
be the surviving corporation in the Merger) in accordance with the
General Corporation Law of the State of Delaware (hereinafter referred
to as "DGCL") and the Business Corporation Act of 1983 of the State of
Illinois (hereinafter referred to as "IBCA"). The Merger shall become
effective upon the date and time set forth in the articles of merger
to be filed with the Secretary of State of Illinois and the
certificate of merger to be filed with the Secretary of State of
Delaware (collectively, the "Merger Filings"). The time when the
Merger shall become effective is hereinafter referred to as the
"Effective Time." For purposes hereof, the term "Constituent
Corporations" shall mean BFC and the Company and the term "Surviving
Corporation" shall mean BFC as the corporation surviving in the
Merger.
Section 1.1.2. At the Effective Time, by virtue of the Merger,
the separate existence of the Company shall cease to exist and the
Company shall be merged with and into BFC, with BFC being the
Surviving Corporation, and all the rights, privileges, powers and
franchises, whether of a public or private nature, of each of BFC and
the Company, and all property, real, personal and mixed, and all debts
due on whatever account, including things in action, and all and every
other interest of or belonging to or due to each of BFC and the
Company shall be vested in the Surviving Corporation and shall be as
effectually the property of the Surviving Corporation as they were of
BFC and the Company without further act or deed, and the Surviving
Corporation shall thenceforth be responsible and liable for all the
debts, liabilities, obligations and duties of each of BFC and the
Company, all with the full effect provided for in the DGCL and IBCA.
If at any time the Surviving Corporation shall determine or be advised
that any further action is necessary or desirable to vest in the
Surviving Corporation, according to the terms hereof, title to any
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property or any rights of the Constituent Corporations or to carry out
the purpose of this Agreement, the respective last acting officers and
directors of the Company to the extent such persons are available, or
the corresponding officers and directors of the Surviving Corporation,
as the case may be, shall be authorized to take such action.
Section 1.1.3. The certificate of incorporation of BFC in effect
immediately prior to the Effective Time shall be the certificate of
incorporation of the Surviving Corporation at and after the Effective
Time, until amended in accordance with the provisions thereof and the
DGCL. The Surviving Corporation shall be governed by the laws of the
State of Delaware.
Section 1.1.4. The by-laws of BFC in effect immediately prior to
the Effective Time shall be the by-laws of the Surviving Corporation
at and after the Effective Time, until altered, amended or repealed as
provided therein and in the certificate of incorporation of the
Surviving Corporation.
Section 1.1.5. The directors of BFC in office immediately prior
to the Effective Time shall be the directors of the Surviving
Corporation at and after the Effective Time, until their successors
are elected or appointed in accordance with the by-laws of the
Surviving Corporation.
Section 1.1.6. The officers of BFC in office immediately prior to
the Effective Time shall be the officers of the Surviving Corporation
at and after the Effective Time, holding the offices in the Surviving
Corporation which they held in BFC immediately prior thereto, until
their successors are elected or appointed in accordance with the by-
laws of the Surviving Corporation.
ALTERNATE SECTION 1.1. MERGER AND SURVIVING CORPORATION.
Alternate Section 1.1.1. Subject to the terms and conditions of
this Agreement, the Company shall be merged with and into NewCo (which
shall be the surviving corporation in the Merger) in accordance with
the General Corporation Law of the State of Delaware (hereinafter
referred to as "DGCL") and the Business Corporation Act of 1983 of the
State of Illinois (hereinafter referred to as "IBCA"). The Merger
shall become effective upon the date and time set forth in the
articles of merger to be filed with the Secretary of State of Illinois
and the certificate of merger to be filed with the Secretary of State
of Delaware (collectively, the "Merger Filings"). The time when the
Merger shall become effective is hereinafter referred to as the
"Effective Time." For purposes hereof, the term "Constituent
Corporations" shall mean NewCo and the Company and the term "Surviving
Corporation" shall mean NewCo as the corporation surviving in the
Merger.
Alternate Section 1.1.2. At the Effective Time, by virtue of the
Merger, the separate existence of the Company shall cease to exist and
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the Company shall be merged with and into NewCo, with NewCo being the
Surviving Corporation, and all the rights, privileges, powers and
franchises, whether of a public or private nature, of each of NewCo
and the Company, and all property, real, personal and mixed, and all
debts due on whatever account, including things in action, and all and
every other interest of or belonging to or due to each of NewCo and
the Company shall be vested in the Surviving Corporation and shall be
as effectually the property of the Surviving Corporation as they were
of NewCo and the Company without further act or deed, and the
Surviving Corporation shall thenceforth be responsible and liable for
all the debts, liabilities, obligations and duties of each of NewCo
and the Company, all with the full effect provided for in the DGCL and
IBCA. If at any time the Surviving Corporation shall determine or be
advised that any further action is necessary or desirable to vest in
the Surviving Corporation, according to the terms hereof, title to any
property or any rights of the Constituent Corporations or to carry out
the purpose of this Agreement, the respective last acting officers and
directors of the Company to the extent such persons are available, or
the corresponding officers and directors of the Surviving Corporation,
as the case may be, shall be authorized to take such action.
Alternate Section 1.1.3. The certificate of incorporation of
NewCo in effect immediately prior to the Effective Time shall be the
certificate of incorporation of the Surviving Corporation at and after
the Effective Time, until amended in accordance with the provisions
thereof and the DGCL. The Surviving Corporation shall be governed by
the laws of the State of Delaware.
Alternate Section 1.1.4. The by-laws of NewCo in effect
immediately prior to the Effective Time shall be the by-laws of the
Surviving Corporation at and after the Effective Time, until altered,
amended or repealed as provided therein and in the certificate of
incorporation of the Surviving Corporation.
Alternate Section 1.1.5. The directors of NewCo in office
immediately prior to the Effective Time shall be the directors of the
Surviving Corporation at and after the Effective Time, until their
successors are elected or appointed in accordance with the by-laws of
the Surviving Corporation.
Alternate Section 1.1.6. The officers of NewCo in office
immediately prior to the Effective Time shall be the officers of the
Surviving Corporation at and after the Effective Time, holding the
offices in the Surviving Corporation which they held in NewCo
immediately prior thereto, until their successors are elected or
appointed in accordance with the by-laws of the Surviving Corporation.
SECTION 1.2. CONVERSION OF SHARES. Subject to the provisions
of this Article I, at the Effective Time, by virtue of the Merger and
without any action on the part of the holders thereof, the shares of
the Constituent Corporations shall be converted as follows:
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Section 1.2.1. Each common share, $1.00 par value, of BFC which
is issued and outstanding immediately prior to the Effective Time, by
virtue of the Merger, shall remain outstanding as one (1) common
share, $1.00 par value, of the Surviving Corporation.
Section 1.2.2. Subject to the provisions of Section 1.5 hereof,
each common share, $10.00 par value, of the Company (the "Company
Common Shares") issued and outstanding immediately prior to the
Effective Time which under the terms of Section 1.4 hereof is to be
converted into the right to receive cash, other than Dissenting
Company Shares (as hereinafter defined), shall be converted into the
right to receive U.S. $72.50 in cash, without interest (the "Per Share
Cash Consideration").
Section 1.2.3. Subject to the provisions of Section 1.5 hereof,
each share of Company Common Shares issued and outstanding immediately
prior to the Effective Time which under the terms of Section 1.4
hereof is to be converted into BMO Shares (as defined in Section 3.2.1
hereof), other than any Dissenting Company Shares, shall be converted
into the right to receive the whole number of BMO Shares equal to U.S.
$72.50 divided by the "BMO Share Price." As used herein, the "BMO
Share Price" shall mean the average (weighted according to reported
daily trading volume on the New York Stock Exchange and rounded to the
nearest $.01) of the closing prices of the BMO Shares on the ten (10)
trading days immediately prior to the fourth (4th) calendar day
preceding the Closing that BMO Shares are traded on the New York Stock
Exchange (the "Per Share Stock Consideration").
Section 1.2.4. Each outstanding share of Company Common Shares as
to which a written demand for payment is filed in accordance with
Section 11.70 of IBCA at or prior to the Meeting (as such term is
defined in Section 4.2 hereof) and not withdrawn at or prior to the
Meeting and which is not voted in favor of the Merger shall not be
converted into or represent a right to receive BMO Shares or cash
hereunder unless and until the holder thereof shall have failed to
perfect, or shall have effectively withdrawn or lost his or her right
to dissent and obtain payment for his or her Company Common Shares
under said Section 11.70, at which time his or her shares shall either
be converted into BMO Shares or cash as set forth in Sections 1.2.2 or
1.2.3 hereof in accordance with Section 1.4 hereof. All such shares
of Company Common Shares as to which such a written demand for payment
is so filed and not withdrawn at or prior to the Meeting and which are
not voted in favor of the Merger, except any such shares of Company
Common Shares the holder of which, prior to the Effective Time, shall
have effectively withdrawn or lost his or her right to dissent and
obtain payment for his or her shares of Company Common Shares under
said Section 11.70, are hereinafter referred to as "Dissenting Company
Shares." The Company shall give BMO prompt notice upon receipt by the
Company of any written demands for payment, withdrawal of such
demands, and any other written communications delivered to the Company
pursuant to said Section 11.70 and the Company shall give BMO the
opportunity to direct all negotiations and proceedings with respect to
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such demands. The Company shall not voluntarily make any payment with
respect to any demands for payment and shall not, except with the
prior written consent of BMO, settle or offer to settle any such
demands. Each holder of Company Common Shares who becomes entitled,
pursuant to the provisions of said Section 11.70, to payment for his
or her shares of Company Common Shares under the provisions of said
Section 11.70 shall receive payment therefor from the Surviving
Corporation and such shares of Company Common Shares shall be
cancelled.
Section 1.2.5. Each of the shares of the Company held by BMO or
any of its wholly-owned subsidiaries or the Company or any of its
wholly-owned subsidiaries, other than shares held by BMO or any of its
wholly owned subsidiaries or the Company or any of its wholly-owned
subsidiaries in a fiduciary capacity or as a result of debts
previously contracted, shall be cancelled and retired at the Effective
Time and no consideration shall be issued in exchange therefor.
Section 1.2.6. Notwithstanding any other provisions of this
Agreement, each holder of shares of Company Common Shares exchanged
pursuant to the Merger who would otherwise have been entitled to
receive a fraction of a share of BMO Shares (after taking into account
all certificates delivered by such holder) shall receive, in lieu
thereof, cash (without interest) in an amount equal to such fractional
part of a share of BMO Shares multiplied by the BMO Share Price. No
such holder will be entitled to dividends, voting rights or any other
rights as a shareholder in respect of any fractional share.
Section 1.2.7. At the Effective Time, the share transfer books of
the Company shall be closed as to the holders of shares of the Company
immediately prior to the Effective Time and no transfer of shares of
the Company by any such holder shall thereafter be made or recognized.
Any other provision of this Agreement notwithstanding, neither BMO,
the Company, BFC, Surviving Corporation nor the exchange agent
selected by BMO and reasonably acceptable to the Company (the
"Exchange Agent") shall be liable to a holder of Company Common Shares
for any amount paid or property delivered in good faith to a public
official pursuant to any applicable abandoned property, escheat or
similar law.
Section 1.2.8. At the Effective Time, in consideration for the
issuance by BMO of BMO Shares and any payment by BMO of cash to the
holders of Company Common Shares, the Surviving Corporation shall
issue to BMO a number of shares of newly issued, fully-paid and non-
assessable common capital stock, $1.00 par value, of the Surviving
Corporation, which shares shall have a fair market value equal to the
aggregate fair market value of the Company Common Shares outstanding
as of immediately prior to the Effective Time and which shall also
equal the aggregate value of the BMO Shares and cash paid by BMO to
the holders of the Company Common Shares.
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ALTERNATE SECTION 1.2. CONVERSION OF SHARES. Subject to the
provisions of this Article I, at the Effective Time, by virtue of the
Merger and without any action on the part of the holders thereof, the
shares of the Constituent Corporations shall be converted as follows:
Alternate Section 1.2.1. Each share of common stock of NewCo,
$1.00 par value, issued and outstanding immediately prior to the
Effective Time shall be converted into one newly issued, fully-paid
and non-assessable share of preferred stock, $1.00 par value, of the
Surviving Corporation with a redemption amount equal to $1.00.
Alternate Section 1.2.2. Subject to the provisions of Section 1.5
hereof, each common share, $10.00 par value, of the Company (the
"Company Common Shares") issued and outstanding immediately prior to
the Effective Time which under the terms of Section 1.4 hereof is to
be converted into the right to receive cash, other than Dissenting
Company Shares (as hereinafter defined), shall be converted into the
right to receive U.S. $72.50 in cash, without interest (the "Per Share
Cash Consideration").
Alternate Section 1.2.3. Subject to the provisions of Section 1.5
hereof, each share of Company Common Shares issued and outstanding
immediately prior to the Effective Time which under the terms of
Section 1.4 hereof is to be converted into BMO Shares (as defined in
Section 3.2.1 hereof), other than any Dissenting Company Shares, shall
be converted into the right to receive the whole number of BMO Shares
equal to U.S. $72.50 divided by the "BMO Share Price." As used
herein, the "BMO Share Price" shall mean the average (weighted
according to reported daily trading volume on the New York Stock
Exchange and rounded to the nearest $.01) of the closing prices of the
BMO Shares on the ten (10) trading days immediately prior to the
fourth (4th) day preceding the Closing that BMO Shares are traded on
the New York Stock Exchange (the "Per Share Stock Consideration").
Alternate Section 1.2.4. Each outstanding share of Company Common
Shares as to which a written demand for payment is filed in accordance
with Section 11.70 of IBCA at or prior to the Meeting (as such term is
defined in Section 4.2 hereof) and not withdrawn at or prior to the
Meeting and which is not voted in favor of the Merger shall not be
converted into or represent a right to receive BMO Shares or cash
hereunder unless and until the holder thereof shall have failed to
perfect, or shall have effectively withdrawn or lost his or her right
to dissent and obtain payment for his or her Company Common Shares
under said Section 11.70, at which time his or her shares shall either
be converted into BMO Shares or cash as set forth in Alternate
Sections 1.2.2 or 1.2.3 hereof in accordance with Section 1.4 hereof.
All such shares of Company Common Shares as to which such a written
demand for payment is so filed and not withdrawn at or prior to the
Meeting and which are not voted in favor of the Merger, except any
such shares of Company Common Shares the holder of which, prior to the
Effective Time, shall have effectively withdrawn or lost his or her
right to dissent and obtain payment for his or her shares of Company
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Common Shares under said Section 11.70, are hereinafter referred to as
"Dissenting Company Shares." The Company shall give BMO prompt notice
upon receipt by the Company of any written demands for payment,
withdrawal of such demands, and any other written communications
delivered to the Company pursuant to said Section 11.70 and the
Company shall give BMO the opportunity to direct all negotiations and
proceedings with respect to such demands. The Company shall not
voluntarily make any payment with respect to any demands for payment
and shall not, except with the prior written consent of BMO, settle or
offer to settle any such demands. Each holder of Company Common
Shares who becomes entitled, pursuant to the provisions of said
Section 11.70, to payment for his or her shares of Company Common
Shares under the provisions of said Section 11.70 shall receive
payment therefor from the Surviving Corporation and such shares of
Company Common Shares shall be cancelled.
Alternate Section 1.2.5. Each of the shares of the Company held
by BMO or any of its wholly-owned subsidiaries or the Company or any
of its wholly-owned subsidiaries, other than shares held by BMO or any
of its wholly owned subsidiaries or the Company or any of its
wholly-owned subsidiaries in a fiduciary capacity or as a result of
debts previously contracted, shall be cancelled and retired at the
Effective Time and no consideration shall be issued in exchange
therefor.
Alternate Section 1.2.6. Notwithstanding any other provisions of
this Agreement, each holder of shares of Company Common Shares
exchanged pursuant to the Merger who would otherwise have been
entitled to receive a fraction of a share of BMO Shares (after taking
into account all certificates delivered by such holder) shall receive,
in lieu thereof, cash (without interest) in an amount equal to such
fractional part of a share of BMO Shares multiplied by the BMO Share
Price. No such holder will be entitled to dividends, voting rights or
any other rights as a shareholder in respect of any fractional share.
Alternate Section 1.2.7. At the Effective Time, the share
transfer books of the Company shall be closed as to the holders of
shares of the Company immediately prior to the Effective Time and no
transfer of shares of the Company by any such holder shall thereafter
be made or recognized. Any other provision of this Agreement
notwithstanding, neither BMO, the Company, BFC, Surviving Corporation
nor the exchange agent selected by BMO and reasonably acceptable to
the Company (the "Exchange Agent") shall be liable to a holder of
Company Common Shares for any amount paid or property delivered in
good faith to a public official pursuant to any applicable abandoned
property, escheat or similar law.
Alternate Section 1.2.8. At the Effective Time, in consideration
for the issuance by BMO of BMO Shares and any payment by BMO of cash
to the holders of Company Common Shares, the Surviving Corporation
shall issue to BMO a number of shares of newly issued, fully-paid and
non-assessable common capital stock, $1.00 par value, of the Surviving
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Corporation, which shares shall have a fair market value equal to the
aggregate fair market value of the Company Common Shares outstanding
as of immediately prior to the Effective Time and which shall also
equal the aggregate value of the BMO Shares and cash paid by BMO to
the holders of the Company Common Shares.
SECTION 1.3. ELECTION PROCEDURES.
Section 1.3.1. An election form (the "Election Form") and other
appropriate and customary transmittal materials (which shall specify
that delivery shall be effected, and risk of loss and title to the
certificates theretofore representing shares of Company Common Shares
shall pass, only upon proper delivery of such certificates to the
Exchange Agent) in such form as BMO shall reasonably determine shall
be mailed together with the proxy and other materials described herein
at least twenty (20) business days prior to the Meeting or on such
other date as the Company, BMO and BFC shall mutually agree to each
holder of record of Company Common Shares as of the record date for
the Meeting.
Section 1.3.2. Each Election Form shall permit the holder to
elect to receive (i) only BMO Shares with respect to such holder's
Company Common Shares (the "Stock Election Shares"), (ii) only cash
with respect to such holder's Company Common Shares (the "Cash
Election Shares") or (iii) a combination of cash and BMO Shares
comprised of 50% cash and 50% BMO Shares with respect to such holder's
Company Common Shares (the "Combination Election Shares").
Section 1.3.3. Any Company Common Shares with respect to which
the holder shall not have submitted to the Exchange Agent a properly
completed Election Form on or before 5:00 p.m., Chicago time, on the
date of the Meeting (as defined in Section 4.2) (or such other time
and date as BMO, BFC, the Company and the Exchange Agent may mutually
agree) (the "Election Deadline") shall be deemed to be "No Election
Shares."
Section 1.3.4. BMO shall cause the Exchange Agent to make
available one or more Election Forms as may be reasonably requested by
all persons who become holders of Company Common Shares between the
record date for the Meeting and the close of business on the business
day prior to the Election Deadline, and the Company shall provide to
the Exchange Agent all information reasonably necessary for the
Exchange Agent to perform as specified herein.
Section 1.3.5. Any such election shall have been properly made
only if the Exchange Agent shall have actually received a properly
completed Election Form by the Election Deadline. Any Election Form
may be revoked or changed in writing by the person submitting such
Election Form at or prior to the Election Deadline. In the event an
Election Form is revoked in writing prior to the Election Deadline and
no substitute Election Form is delivered timely to the Exchange Agent,
the shares of Company Common Shares represented by such Election Form
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shall become No Election Shares. Subject to the terms of this
Agreement and of the Election Form, the Exchange Agent shall have
reasonable discretion to determine whether any election, revocation or
change has been properly or timely made and to disregard immaterial
defects in the Election Forms, and any good faith decisions of BMO or
the Exchange Agent regarding such matters shall be binding and
conclusive. None of BMO, BFC, the Company or the Exchange Agent shall
be under any obligation to notify any person of any defect in an
Election Form.
SECTION 1.4. MANNER OF CONVERSION OF COMPANY COMMON SHARES.
Section 1.4.1. Within five (5) business days after the Election
Deadline, unless the Effective Time has not yet occurred, in which
case as soon as thereafter as practicable, BMO shall cause the
Exchange Agent to effect the allocation among the holders of Company
Common Shares of rights to receive BMO Shares and/or cash in the
Merger in accordance with the Election Forms and as follows:
(a) Elections Less Than Share Minimum. If the number of
BMO Shares to be issued in exchange for Stock Election Shares and
Combination Election Shares is less than the Share Minimum (as
defined in Section 1.4.2 hereof), then:
(i) all Stock Election Shares shall be converted into
the right to receive BMO Shares;
(ii) one-half (1/2) of the Combination Election Shares
shall be converted into the right to receive BMO Shares;
with the remainder thereof subject to adjustment as provided
in clause (iv) below;
(iii) the Exchange Agent shall select first from among
the holders of No Election Shares, by random selection, a
sufficient number of such holders (the "Share Designees")
such that the number of BMO Shares to be issued in exchange
for Company Common Shares held by such Share Designees will,
when added to the number of BMO Shares to be issued pursuant
to clauses (i) and (ii) hereof, equal as closely as
practicable (but in no event be less than) the Share
Minimum, and all shares of Company Common Shares held by
such Share Designees shall be converted into the right to
receive BMO Shares; PROVIDED, HOWEVER, that if there are not
a sufficient number of Company Common Shares held by the
Share Designees described in this clause (iii) such that the
BMO Shares to be received pursuant to clauses (i), (ii) and
this clause (iii) do not equal or exceed the Share Minimum,
then all No Election Shares shall be converted into the
right to receive BMO Shares;
(iv) and then (if necessary), the Exchange Agent shall
select from each of the holders of Combination Election
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Shares, proportionately, a sufficient number of shares of
the Company Common Shares held by such holders and not
converted into the right to receive BMO Shares pursuant to
clause (ii) above that will, when added to the number of BMO
Shares to be issued pursuant to clauses (i), (ii) and (iii)
hereof, equal as closely as practicable (but in no event be
less than) the Share Minimum, and all such shares of Company
Common Shares held by such holders shall be converted into
the right to receive BMO Shares; PROVIDED, HOWEVER, that if
there are not a sufficient number of Company Common Shares
held by the holders of Combination Election Shares which
after giving effect to clause (ii) hereof have not been
converted into the right to receive BMO Shares such that the
BMO Shares to be issued pursuant to clauses (i), (ii) and
(iii) and this clause (iv) do not equal or exceed the Share
Minimum, then all Combination Election Shares not yet
converted into the right to receive BMO Shares shall be
converted into the right to receive BMO Shares;
(v) and then (if necessary), the Exchange Agent shall
select from among the holders of Cash Election Shares, by
random selection, a sufficient number of such holders (also
"Share Designees") such that the number of BMO Shares
received in exchange for Company Common Shares held by such
Share Designees will, when added to the number of BMO Shares
to be issued pursuant to clauses (i), (ii), (iii) and (iv)
hereof, equal as closely as practicable (but in no event be
less than) the Share Minimum, and all shares of Company
Common Shares held by such Share Designees shall be
converted into the right to receive BMO Shares; and
(vi) the Cash Election Shares and the No Election
Shares not held by the Share Designees shall be converted
into the right to receive cash and the Combination Election
Shares remaining after the conversion referred to in clauses
(ii) and (iv) hereinabove shall be converted into the right
to receive cash.
(b) Elections Equal to or Greater Than Share Minimum. If
the number of BMO Shares to be issued in exchange for Stock
Election Shares and Combination Election Shares is equal to or
greater than the Share Minimum, then all Stock Election Shares
shall be converted into the right to receive BMO Shares, all Cash
Election Shares and No Election Shares shall be converted into
the right to receive cash and all Combination Election Shares
shall be converted into the right to receive cash and BMO Shares
in the proportion set forth in Section 1.3.2 herein.
Section 1.4.2. For purposes of this Section 1.4, (a) the holders
of any shares of Dissenting Company Shares shall in no event be
classified as Share Designees, (b) the random selection process,
referred to above, to be used by the Exchange Agent shall consist of
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such procedures as shall be mutually determined by BMO, BFC and the
Company, and (c) "Share Minimum" means that number of BMO Shares,
priced by averaging the high and low sales price of a BMO Share on the
day of the Effective Time as reported on the New York Stock Exchange,
required to comprise at least fifty percent (50%) of the aggregate
value of the merger consideration received by shareholders of the
Company for their Company Common Shares. For this purpose, cash and
other property exchanged, or reasonably expected to be exchanged, for
Company Common Shares surrendered by the dissenters, paid, or
reasonably expected to be paid, in lieu of receipt of fractional
shares by shareholders of the Company and otherwise paid, or
reasonably expected to be paid, to shareholders of the Company, in
exchange for Company Common Shares, shall be treated as merger
consideration.
SECTION 1.5. ADJUSTMENTS FOR DILUTION AND OTHER MATTERS. If
prior to the Effective Time, the Company shall declare a share
dividend or distribution upon or subdivide, split up, reclassify or
combine the Company Common Shares, or declare a dividend, or make a
distribution, on the Company Common Shares in any security convertible
into Company Common Shares (provided that no such action may be taken
by the Company without BMO's prior written consent as so provided in
Section 2.18 hereof), appropriate adjustment or adjustments will be
made to the Per Share Cash Consideration, the Per Share Stock
Consideration and the Share Minimum. If at the Effective Time the
Company shall have outstanding more shares of Company Common Shares
than are contemplated to be outstanding by the representation and
warranty contained in Section 2.2 hereof (other than as a result of
the Common Company Share Option Agreement), then, at BMO's election
and notwithstanding other provisions hereof, and without limiting any
of its other rights hereunder, the Per Share Cash Consideration and
the Per Share Stock Consideration shall be appropriately adjusted
downward. If at the Effective Time the Company shall have outstanding
more Company Common Shares than are contemplated to be outstanding by
the representation and warranty contained in Section 2.2 hereof, then,
at BMO's or the Company's election and notwithstanding any other
provisions hereof, and without limiting either party's other rights
hereunder, the Share Minimum shall be appropriately adjusted upward.
SECTION 1.6. CONVERSION OF DISSENTING COMPANY SHARES. If prior
to the Effective Time any holder of the Company Common Shares shall
fail to perfect, or shall effectively withdraw or lose, his or her
right to dissent and obtain payment for his or her shares of
Dissenting Company Shares under Section 11.70 of IBCA, the Dissenting
Company Shares of such holder shall be treated for purposes of this
Article I like any other shares of outstanding Company Common Shares.
If after the Effective Time any holder of Company Common Shares shall
fail to perfect, or shall effectively withdraw or lose, his or her
right to dissent and obtain payment for his or her Company Common
Shares under Section 11.70 of the IBCA each Company Common Share of
such holder shall be treated as a No Election Share and converted into
the right to receive cash or BMO Shares pursuant to the election
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procedures of this Article I and in accordance with the procedures,
and subject to the conditions, set forth in Section 1.7 hereof.
SECTION 1.7. EXCHANGE PROCEDURE.
Section 1.7.1. Upon the latest to occur of the Effective Time and
the completion of the allocation procedure set forth in Section 1.4
hereof, BMO shall issue and pay to the Exchange Agent the number of
shares of BMO Shares issuable pursuant to the Merger and the amount of
cash payable pursuant to the Merger. The Exchange Agent shall not
issue or pay BMO Shares or cash payable with respect to the Company
Common Shares to any shareholder of the Company unless and until share
certificates and required transmittal materials pursuant to this
Article I have been received from such shareholder in proper form by
the Exchange Agent. The Exchange Agent shall not be entitled to vote
or exercise any rights of ownership with respect to BMO Shares held by
it from time to time hereunder, except that it shall receive and hold
all dividends or other distributions paid or distributed with respect
to such shares for the account of the persons entitled thereto.
Section 1.7.2. As soon as reasonably practicable after the
Effective Time, the Exchange Agent shall mail to each holder of record
of a certificate or certificates which immediately prior to the
Effective Time represented shares of Company Common Shares, a
certificate or certificates representing the number of whole shares of
BMO Shares, if any, and/or a check representing the amount of cash, if
any, into which the Company Common Shares held by such holder were
converted to pursuant to the terms of this Article I. In addition,
certificates surrendered for exchange by any person constituting an
"affiliate" of the Company for purposes of Rule 144(c) under the
Securities Act of 1933, as amended (the "Securities Act"), shall not
be exchanged for certificates representing whole shares of BMO Shares
until BMO has received a written agreement from such person as
provided in Section 4.12 hereof. If any certificate for shares of BMO
Shares, or any check representing cash and/or declared but unpaid
dividends, is to be issued in a name other than that in which a
certificate surrendered for exchange is issued, the certificate so
surrendered shall be properly endorsed and otherwise in proper form
for transfer and the person requesting such exchange shall affix any
requisite stock transfer tax stamps to the certificate surrendered or
provide funds for their purchase or establish to the satisfaction of
the Exchange Agent that such taxes are not payable.
Section 1.7.3. All BMO Shares issued and cash paid upon the
surrender for exchange of certificates for Company Common Shares in
accordance with the terms of this Article I shall be deemed to have
been issued and paid in full satisfaction of all rights pertaining to
the Company Common Shares (including, without limitation, the Company
Rights) theretofore represented by such certificates, subject,
however, to the Surviving Corporation's obligation to pay any
dividends or make any other distributions, otherwise permitted under
this Agreement, with a record date prior to the Effective Time which
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may have been declared or made by the Company on such Company Common
Shares which remain unpaid at the Effective Time. If, after the
Effective Time, certificates representing Company Common Shares are
presented to the Surviving Corporation or the Exchange Agent for any
reason, they shall be canceled and exchanged as provided in this
Article I, except as otherwise provided by law.
SECTION 1.8. DIVIDENDS. Subject to the effect of applicable
laws, following surrender of any such certificate of Company Common
Shares, there shall be paid to the holder of the certificates
representing whole shares of BMO Shares issued in exchange therefor,
without interest, (a) the amount of any cash payable with respect to a
fractional share of BMO Shares to which such holder is entitled
pursuant to Section 1.2.6 hereof and the amount of dividends or other
distributions with a record date after the Effective Time theretofore
paid with respect to such whole shares of BMO Shares and (b) at the
appropriate payment date, the amount of dividends or other
distributions with a record date after the Effective Time but prior to
surrender and a payment date subsequent to surrender payable with
respect to such whole shares of BMO Shares.
SECTION 1.9. WITHHOLDING RIGHTS. BMO or the Exchange Agent
shall be entitled to deduct and withhold from the consideration
otherwise payable pursuant to this Agreement to any holder of shares
of Company Common Shares such amounts as BMO or the Exchange Agent is
required to deduct and withhold with respect to the making of such
payment under the Code, or any provision of state, local or foreign
tax law. To the extent that amounts are so withheld by BMO or the
Exchange Agent, such withheld amounts shall be treated for all
purposes of this Agreement as having been paid to the holder of the
shares of Company Common Shares in respect to which such deduction and
withholding was made by BMO or the Exchange Agent.
SECTION 1.10. TAX AND ACCOUNTING CONSEQUENCE. It is intended by
the parties hereto that the Merger shall constitute a reorganization
within the meaning of Section 368 of the Code. The parties hereto
adopted this Agreement as a "plan of reorganization" within the
meaning of Sections 1.368-2(g) and 1.368-3(a) of the United States
Income Tax Regulations.
ARTICLE II
REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY
The Company delivered on the date hereof as an appendix to this
Agreement a disclosure statement (the "Disclosure Statement") setting
forth the items of disclosure required by this Agreement in order to
cause the representations and warranties contained herein to be true
and correct, referencing, in each case, the specific section of this
Agreement requiring such item of disclosure. The Disclosure Statement
attached hereto as Appendix I is incorporated herein and made a part
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of this Agreement. The representations and warranties set forth in
this Article II are subject to the Disclosure Statement. The Company
represents and warrants to and agrees with BMO and BFC as follows:
SECTION 2.1. ORGANIZATION OF THE COMPANY. The Company is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Illinois, with full corporate power and
authority to own its property and conduct its business and to enter
into and perform this Agreement and the Company Share Option
Agreement. The character of the properties owned and leased by the
Company and the nature of the business conducted by it do not require
that the Company be qualified to do business in any other state or
jurisdiction.
SECTION 2.2. COMPANY SHARES.
Section 2.2.1. The authorized shares of the Company consist of
10,000,000, $10 par value, Company Common Shares, and 1,000,000
preferred shares, no par value (the "Company Preferred Shares"), of
which (a) 3,037,955 shares of Company Common Shares are issued and
outstanding and 1,360 shares of Company Common Shares are held in the
Company's treasury, and (b) no shares of Company Preferred Shares are
issued and outstanding or held in the Company's treasury or reserved
for issuance upon exercise of outstanding share options or otherwise,
except for issuance upon exercise of the rights (the "Company Rights")
distributed to holders of Company Common Shares pursuant to a rights
agreement dated November 14, 1996 between the Company and ▇▇▇▇▇▇ Trust
and Savings Bank, as rights agent (the "Company Rights Agreement").
The Company has no other authorized shares of any class, series,
designation or description.
Section 2.2.2. All of the issued and outstanding shares of
Company Common Shares are validly issued, fully paid and non-
assessable, were not issued in violation of the preemptive rights of
any person, and were issued in full compliance with all applicable
laws.
Section 2.2.3. Except for the Company Share Option Agreement and
the Company Rights Agreement, there are no outstanding warrants,
options, subscriptions, contracts, rights or other arrangements or
commitments obligating the Company to issue any additional shares of
Company Common Shares or any other shares of the Company, nor are
there any securities, debts, obligations or rights outstanding which
are convertible into or exchangeable for Company Common Shares or any
other shares of the Company. Except for the Company Rights Agreement,
there are no outstanding contracts, rights or other arrangements or
commitments which would obligate the Company to purchase or redeem or
otherwise acquire any Company Common Shares or any other equity
security.
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Section 2.3. Company Subsidiaries.
Section 2.3.1. Schedule 2.3.1 of the Disclosure Statement
contains a list of each corporation, partnership, limited liability
company, joint venture or other entity in which the Company has a
direct or indirect equity ownership which exceeds five percent (5%) of
any class of voting equity or fifteen percent (15%) of total equity,
together with a description of the amount and type of equity interest
in question. Such schedule separately identifies each corporation,
partnership, limited liability company and other entity which is a
Company Subsidiary and describes the legal nature of each Company
Subsidiary, and the percentage equity ownership of the Company or any
Company Subsidiary in each Company Subsidiary. As used herein,
"Company Subsidiary" shall mean any corporation or other entity of
which more than fifty percent (50%) of the outstanding stock or
comparable equity interests having ordinary voting power for the
election of the board of directors of such corporation or similar
governing body in the case of a non-corporation (irrespective of
whether or not, at the time, stock or other equity interests of any
other class or classes of such corporation or other entity shall have
or might have voting power by reason of the happening of any
contingency which has not occurred) is at the time directly or
indirectly owned by the Company or by one or more of the Company
Subsidiaries. No entity shall be deemed a Company Subsidiary or be
required to be disclosed under the first sentence of this
Section 2.3.1 solely because the Company or a Company Subsidiary holds
a security interest in or upon an equity interest in such entity or if
the equity interest in question is held by the Company or a Company
Subsidiary as trustee, executor or in a similar representative
capacity or as agent or nominee for a third party. Schedule 2.3.1 of
the Disclosure Statement also contains a description of the
capitalization of each of the Company Subsidiaries (including, without
limitation, a listing of the authorized, issued and outstanding shares
of each Company Subsidiary). All of the equity or similar interests
of each Company Subsidiary is owned of record and beneficially by the
Company or another Company Subsidiary free of all liens and
encumbrances.
Section 2.3.2. Each of the Company Subsidiaries which is a bank
is duly organized, validly existing and in good standing as a national
banking association under the laws of the United States. Each of the
Company Subsidiaries which is not a bank is duly organized, validly
existing and in good standing under the laws of its state of
incorporation or organization. All of the Company Subsidiaries have
full corporate or similar power and authority to own or lease their
properties and carry on their businesses as now being conducted. Each
Company Subsidiary is qualified to do business in each state where the
character and location of its properties or the nature of the business
conducted by it requires qualification. All necessary regulatory
approvals for the acquisition and ownership by the Company of the
equity or similar interests of each of the Company Subsidiaries have
been obtained by the Company, all of which are in full force and
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effect and no suspension or cancellation of any of which is
threatened.
Section 2.3.3. All shares of each of the Company Subsidiaries are
validly issued, fully paid and non-assessable, were not issued in
violation of the preemptive rights of any person, and were issued in
full compliance with all applicable laws.
Section 2.3.4. There are no outstanding warrants, options,
subscriptions, contracts, rights or other arrangements or commitments
obligating any Company Subsidiary to issue any additional shares or
other securities, nor are there any securities, debts, obligations or
rights outstanding which are convertible into or exchangeable for its
shares or other securities. There are no outstanding contracts,
rights or other arrangements or commitments which would obligate any
Company Subsidiary to purchase or redeem or otherwise acquire any of
its shares or any other security.
SECTION 2.4. CORPORATE AUTHORIZATION. The execution, delivery
and performance of this Agreement and the Company Share Option
Agreement by the Company have been duly and validly authorized and
approved by the board of directors of the Company and do not and will
not violate or conflict with the articles of incorporation or by-laws
of the Company or any Company Subsidiary and will not create any lien
or encumbrance and do not and will not violate or conflict with or
result in any material default, any acceleration of required
performance or any loss of a material benefit under any note, bond,
mortgage, indenture, lease, franchise, license, permit, approval,
contract, agreement or other instrument or document or any order,
writ, injunction, decree, judgment, statute, rule or regulation to
which the Company or any Company Subsidiary is a party or subject or
by which the Company or any Company Subsidiary is bound. No consent
of any third party (other than the regulatory approvals referred to in
Section 4.1 hereof and the shareholders approval referred to in
Section 4.2 hereof) is necessary to enable the Company to perform its
obligations under this Agreement. The requisite vote of the
shareholders of the Company to approve and adopt this Agreement, as
required by applicable law, is a vote in favor of such approval and
adoption by the holders of not less than sixty-six and two-thirds
percent (66 2/3%) of the outstanding Company Common Shares entitled to
vote thereon, voting as a single class.
SECTION 2.5. FINANCIAL STATEMENTS PREVIOUSLY DELIVERED.
Section 2.5.1. The Company has furnished BMO with copies of the
following financial statements:
(a) Audited consolidated balance sheets of the Company and
the Company Subsidiaries as of December 31, 1998, 1999 and 2000,
and the related audited consolidated statements of income,
changes in shareholders' equity and cash flows for each of the
calendar years ended December 31, 1998, 1999 and 2000, together
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with the notes thereto, accompanied by the unqualified reports
thereon of ▇▇▇▇▇, ▇▇▇▇▇▇ and Company LLP, certified public
accountants;
(b) Reports of condition of each Company Subsidiary which
is a bank as of December 31, 1998, 1999 and 2000, together with
the related reports of income for the periods then ended, as
included in the call reports of each Company Subsidiary as of
said dates filed with any bank regulatory authority.
Section 2.5.2. Each of the financial statements referred to in
Section 2.5.1(a) has been prepared in accordance with generally
accepted accounting principles and practices consistently applied.
Each of the financial statements referred to in Section 2.5.1(b) has
been prepared in accordance with the applicable regulations and
standards of the bank regulatory authority with which said financial
statement was filed. Each of the financial statements referred to in
Section 2.5.1 is true, correct and complete in all material respects
and presents fairly the financial condition of the Company and the
Company Subsidiaries on a consolidated basis, or, as the case may be,
the financial condition of a Company Subsidiary, as of the date
thereof or, as the case may be, the results of operations (on a
consolidated basis, if applicable) for the period covered thereby.
SECTION 2.6. FINANCIAL STATEMENTS TO BE DELIVERED.
Section 2.6.1. As soon as available, the Company will furnish BMO
with copies of the following financial statements:
(a) All financial statements of the Company or any Company
Subsidiary as of any date, or for any period ending, after
December 31, 2000, which shall be issued or distributed to
shareholders, directors or management of the Company or any
Company Subsidiary prior to the Effective Time; and
(b) Each call report of each Company Subsidiary which is a
bank filed prior to the Effective Time with any bank regulatory
authority for any period ending after December 31, 2000.
Section 2.6.2. With respect to the financial statements furnished
pursuant to Section 2.6.1(a), each of them will have been prepared in
accordance with the Company's customary past practices consistently
applied. With respect to the financial statements contained in the
call reports furnished pursuant to Section 2.6.1(b), each of them will
have been prepared in accordance with the applicable regulations and
standards of the bank regulatory authority with which said financial
statements were filed. With respect to quarterly financial statements
as filed on Form 10-Q with the SEC, each of them will be true, correct
and complete in all material respects and will fairly present the
financial condition of the Company and the Company Subsidiaries on a
consolidated basis, or, as the case may be, the financial condition of
a Company Subsidiary, as of the date thereof or, as the case may be,
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the results of operations (on a consolidated basis, if applicable) for
the period covered thereby.
SECTION 2.7. DOCUMENTS OTHER THAN FINANCIAL STATEMENTS
PREVIOUSLY DELIVERED. The Company has delivered to BMO true, correct
and complete copies of the following documents:
(a) The articles of incorporation and by-laws of the
Company;
(b) The certificate of incorporation, articles of
incorporation, charter or articles of association, as the case
may be, and by-laws, operating agreement, partnership agreement,
or joint venture agreement of each Company Subsidiary; and
(c) All contracts, agreements, instruments, leases,
licenses, plans, arrangements and other documents to which the
Company or any Company Subsidiary is a party or subject and which
are described or referred to in the Disclosure Statement.
SECTION 2.8. UNDISCLOSED LIABILITIES. Except for the
liabilities reflected on the audited consolidated balance sheet of the
Company as of December 31, 2000 referred to in Section 2.5.1(a) hereof
(the "2000 Balance Sheet") or routinely incurred in customary amounts
in the ordinary course of business since December 31, 2000, and except
for obligations of continued performance under any contracts,
agreements, instruments, leases and other arrangements disclosed in
Schedule 2.13 of the Disclosure Statement, or entered into in the
ordinary course of business, neither the Company nor any Company
Subsidiary has any liabilities of any nature, whether accrued,
absolute, contingent or otherwise of a character required to be
disclosed (whether in such financial statements or by footnote) in
audited financial statements prepared in accordance with generally
accepted accounting principles.
SECTION 2.9. TITLE TO PROPERTIES; LEASES; VIOLATIONS;
ENVIRONMENTAL MATTERS.
Section 2.9.1. All real property used or owned by the Company or
any Company Subsidiary is described in Schedule 2.9.1 of the
Disclosure Statement. Without limiting any other provision of this
Agreement, each of the Company and the Company Subsidiaries is the
owner of good and marketable title to all real property and good title
to all other property and assets, tangible and intangible, which it
claims or otherwise purports to own (including, without limitation,
all of its assets reflected on the 2000 Balance Sheet or purported to
have been acquired by it since the date thereof), free and clear of
any mortgages, liens, pledges, security interests, licenses, charges,
restrictions on use or transfer or other encumbrances, except for
(a) in the case of the Company Subsidiaries which are banks, pledges
and liens given to secure deposits and other banking liabilities
arising in the ordinary course of business, (b) liens for current
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taxes not yet due and payable, (c) properties, interests and assets
sold or otherwise disposed of after December 31, 2000, in the ordinary
course of business, (d) as to real estate, imperfections of title and
easements and encumbrances, if any, that do not materially detract
from the value of the respective assets subject thereto or interfere
with the current use thereof and that do not materially impair the
operations of the Company or any of the Company Subsidiaries as
currently conducted, and (e) as to property acquired by Company
Subsidiaries which are banks in satisfaction of debts previously
contracted, liens (including tax liens whether or not past due) and
matters described in clause (d) hereof whether or not they would
materially detract from the value of the property in question.
Section 2.9.2. Each lease under which the Company or any Company
Subsidiary is the lessee of any real or personal property is in full
force and effect, and the lessee under each such lease has been in
peaceable possession of the property covered thereby since the
commencement of the original term of such lease. No currently
effective waiver, indulgence or postponement of the lessee's
obligations under any such lease has been granted by the lessor
thereunder, or of such lessor's obligations thereunder by such lessee.
Neither the lessee nor, to the Company's knowledge, the lessor under
each such lease has violated in any material respect any of the terms
or conditions thereof, and all of the covenants to be performed by the
lessee and, to the Company's knowledge, the lessor under each such
lease have been fully performed in all material respects.
Section 2.9.3. Neither the Company nor any Company Subsidiary has
received notice of any violation of any applicable zoning regulation,
ordinance or other law, order, regulation or requirement relating to
its operations or property; to the Company's knowledge, no such
violation presently exists; and, with the exception of any property
acquired in satisfaction of debts previously contracted and having a
book value of $250,000 or less, all buildings and other structures
owned, leased, occupied, operated or used by the Company and the
Company Subsidiaries, and the use thereof, materially conform to all
applicable ordinances, codes and regulations.
Section 2.9.4. All real property owned or occupied by the Company
or any Company Subsidiary is in compliance with all applicable
environmental, health and safety laws and regulations, except for such
non-compliance as would not have a Material Adverse Effect with
respect to the Company, provided that as to property acquired in
satisfaction of debts previously contracted the foregoing
representation is limited to the Company's knowledge. There are no
outstanding citations, notices of violation, or orders of
noncompliance issued to the Company or any Company Subsidiary, nor has
the Company or any Company Subsidiary been advised that any such
citation, notice of violation or order of noncompliance is
contemplated, pursuant to any environmental, health or safety law or
regulation relating to any such real property owned or occupied by the
Company or any Company Subsidiary or relating to any real property no
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longer owned or occupied by the Company or any Company Subsidiary
where the failure to cure the subject of such citation, notice of
violation or order of noncompliance could reasonably be expected to
have a Material Adverse Effect on the Company. There are no liens
against any real property owned or occupied by the Company or any
Company Subsidiary imposed pursuant to any environmental, health or
safety law or regulation which would have a Material Adverse Effect
with respect to the Company.
SECTION 2.10. PERMITS AND REGULATION.
Section 2.10.1 Each of the Company and the Company Subsidiaries
holds all material consents, licenses, certificates, permits,
authorizations, approvals, franchises and rights required in
connection with the ownership and operation of its properties and the
carrying on of its business as now being conducted, all of which are
now in full force and effect and, to the Company's knowledge, no
suspension or cancellation of which is threatened. From the date
hereof and until the Effective Time, the Company will, and will cause
each Company Subsidiary to, maintain all such consents, licenses,
certificates, permits, authorizations, approvals, franchises and
rights in full force and effect. Neither the Company nor any Company
Subsidiary which is a bank is a party or subject to any agreement
with, or directive or order issued by, the Board of Governors of the
Federal Reserve System (hereinafter referred to as the "FRB"), the
Federal Deposit Insurance Corporation (hereinafter referred to as the
"FDIC"), the Comptroller of the Currency, the Office of Banks and Real
Estate of the State of Illinois (the "Commissioner") or any other bank
regulatory authority, which imposes any restrictions or requirements
not applicable generally to bank holding companies (in the case of the
Company) or commercial banks (in the case of the Company Subsidiaries
which are banks), with respect to the conduct of its business. Each
of the Company and the Company Subsidiaries has conducted its business
so as to comply in all material respects with all applicable statutes,
regulations, ordinances and rules, including (without limitation)
applicable banking laws, federal and state securities laws, and laws
and regulations concerning minimum capital requirements, truth-in-
lending, usury, fair credit reporting, fair lending and equal credit
opportunity, currency reporting, community reinvestment, Internal
Revenue Service information reporting and back-up withholding,
consumer protection, occupational safety, employee benefit plans,
environmental matters, fair employment practices and fair labor
standards. Since December 31, 1999, neither the Company nor any of
the Company Subsidiaries has received from any governmental or
regulatory authority any written requirement, recommendation or
suggestion of a material nature concerning their capital structure,
loan policies or portfolio, or other banking or business practices or
procedures that has not been resolved to the reasonable satisfaction
of such regulatory authority.
Section 2.10.2. The Company is duly registered as a bank
holding company pursuant to the BHC Act.
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Section 2.10.3. The Company and each Company Subsidiary which
is a bank are in full compliance with applicable minimum capital
requirements prescribed by the FRB and any other bank regulatory
authority having regulatory jurisdiction over the Company or such
Company Subsidiary, as the case may be, and each such Company
Subsidiary is "well capitalized" within the meaning of such terms as
used in Section 38(b) of the Federal Deposit Insurance Act, as amended
(the "FDI Act"), and the applicable regulations promulgated
thereunder.
Section 2.10.4. The deposits of each Company Subsidiary which
is a bank are insured by the FDIC in accordance with the FDI Act and
the rules and regulations of the FDIC adopted thereunder.
Section 2.10.5. The Company has delivered to BMO to the
extent not filed with the United States Securities and Exchange
Commission (hereinafter referred to as the "SEC"), (a) the annual
reports to the Company's shareholders and quarterly reports to the
Company's shareholders after December 31, 1997, (b) the Company's
annual reports on Form Y-6 and quarterly reports on Form Y-9 after
December 31, 1997, each as filed with the FRB, (c) each call report of
condition and income filed by the Company and each Company Subsidiary
which is a bank with any bank supervisory authority after December 31,
1997, (d) all other reports or registration statements filed by the
Company or any Company Subsidiary with the SEC or the FRB after
December 31, 1997 and (e) all other documents incorporated by
reference in whole or in part in the foregoing (the documents referred
to in (a) through (e), including all amendments and supplements
thereto and all financial statements and notes contained therein
together with all Reports filed on Forms 10-K and 10-Q and all proxy
statements (collectively, the "Company Reports"). The Company
Reports, as of the respective times of filing thereof with the SEC,
the FRB or any other regulatory authority, as the case may be,
complied as to form and substance with all material requirements of
the laws, rules and regulations applicable thereto and did not include
any untrue or misleading statement of or with respect to a material
fact or omit to state any material fact necessary in order to make the
statements made therein, in the light of the circumstances under which
they were made, not misleading. Since December 31, 1997, the Company
and each of the Company Subsidiaries have filed all Company Reports,
registration statements and other documents required to be filed by
each of them with the SEC, the FRB or any other regulatory authority
in accordance with all material requirements of the laws, rules and
regulations applicable thereto except where the failure to so file
such reports and registration statements will not have a Material
Adverse Effect. From and after the date hereof until the Effective
Time, concurrently with the filing thereof with any regulatory agency
or the mailing thereof to the shareholders of the Company, as the case
may be, the Company will deliver to BMO copies of any of the Company
Reports not previously filed or mailed as aforesaid prior to the date
hereof.
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Section 2.10.6. The Company Common Shares are duly registered
under Section 12(g) of the Securities Exchange Act of 1934, as amended
(hereinafter referred to as the "Exchange Act"). The Company will
promptly furnish upon receipt to BMO copies of any Statements on
Schedule 13D, 13G, 14B or 14D-1 under the Exchange Act and any
amendments to any such statements or forms received by the Company or
known by it to have been filed with the SEC on and after the date
hereof with respect to the ownership of, or solicitation of proxies in
connection with, any of the Company Common Shares.
SECTION 2.11. LITIGATION. There are no legal, arbitration,
quasi-judicial or administrative proceedings of any kind or nature
pending or, to the Company's knowledge, threatened against or
involving the Company or any of the Company Subsidiaries or any of
their respective properties or, to the Company's knowledge, any of the
shares of the Company or the equity or similar interests of any of the
Company Subsidiaries, which may have a Material Adverse Effect on the
Company or the Surviving Corporation, and there has been no material
default on the part of the Company or any of the Company Subsidiaries
with respect to any judgment, order, writ, injunction, decree, award,
rule or regulation issued in any legal, quasi-judicial or
administrative proceeding. Schedule 2.11 of the Disclosure Statement
sets forth a description of all material litigation, arbitration or
quasi-judicial or administrative proceedings to which the Company or
any Company Subsidiary was a party at any time since December 31,
1998.
SECTION 2.12. TAXES. The Company and each of the Company
Subsidiaries have duly and timely filed all tax reports and returns
required to be filed with any jurisdiction, except for any failure to
file as would not have a Material Adverse Effect on the Company. All
such reports and returns filed by the Company and the Company
Subsidiaries are true, correct, complete and accurate in all material
respects and no tax audits or other tax disputes are pending or, to
the knowledge of the Company, threatened to occur. The Company and
the Company Subsidiaries have duly and timely paid, or established
adequate reserves for the payment of, all taxes required to be paid in
respect of the periods covered by such returns. The Company and each
of the Company Subsidiaries are neither delinquent nor disputing the
payment of any corporate income or franchise tax, have not requested
any extension of time within which to file any corporate or franchise
income tax returns, have not waived or agreed to waive any applicable
statute of limitations, and have included on the 2000 Balance Sheet
adequate accruals or reserves for the payment of all taxes of the
Company and the Company Subsidiaries not yet due. Neither the Company
nor any Company Subsidiary is, and has not been at any time, a "United
States real property holding corporation" within the meaning of
Section 897(c)(2) of the Code.
SECTION 2.13. CONTRACTS. Except as otherwise set forth on
Schedule 2.13 of the Disclosure Statement, neither the Company nor any
of the Company Subsidiaries is a party to, subject to or bound by any
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oral or written (a) employment contract (including, without
limitation, any collective bargaining contract or union agreement)
which is not terminable by it without penalty or other liability upon
thirty (30) or fewer days' notice; (b) employee share option, bonus,
deferred compensation, savings, profit sharing, severance pay,
pension, retirement or group insurance plan or arrangement or other
similar agreement, plan or arrangement; (c) lease or license with
respect to any property, real or personal, whether as landlord,
tenant, licensor or licensee; (d) agreement, contract, instrument or
indenture relating to the borrowing of money by the Company or any of
the Company Subsidiaries other than short term borrowings by Company
Subsidiaries which are banks made in the ordinary course of business;
(e) guaranty of any obligation for borrowed money or otherwise,
excluding (in the case of the Company Subsidiaries which are banks)
endorsements made for collection and guarantees made in the ordinary
course of business; (f) management or consulting agreement or other
similar agreement or arrangement; (g) agreement with any present or
former officer, director or shareholder of the Company or any Company
Subsidiary, other than agreements entered into with such persons in
the ordinary course of business in their capacity as customers of a
Company Subsidiary which is a bank; or (h) other contract, agreement
or commitment, other than this Agreement and the Company Share Option
Agreement, which is material to its business, operations, property,
prospects or assets or to its condition, financial or otherwise, or
which involves payments by or to it of more than a total of $100,000
in any one (1) year period, except (in the case of the Company
Subsidiaries which are banks) for loan agreements between such Company
Subsidiary and third parties involving commitments on the part of such
Company Subsidiary to lend money in customary amounts in the ordinary
course of such Company Subsidiary's business and letters of credit in
customary amounts issued by a Company Subsidiary which is a bank to
third parties in the ordinary course of such Company Subsidiary's
business. Each of the Company and the Company Subsidiaries has
performed all material obligations heretofore required to be performed
by it and is not in material default under, nor has it received notice
of a material default under, any outstanding indenture, mortgage, deed
of trust, contract, agreement, lease, license, instrument or other
arrangement to which it is a party or subject or by which it is bound
or under any provision of its certificate of incorporation, articles
of incorporation, charter or articles of association, as the case may
be, or by-laws.
SECTION 2.14. INSURANCE. Each of the Company and the Company
Subsidiaries has in effect the insurance coverage described in
Schedule 2.14 of the Disclosure Statement, which description contains
the name of the insurer, the amount and types of coverage and the
risks insured, and such coverage insures against all risks normally
insured against by bank holding companies and commercial banks, and is
adequate (in amounts, types and risks insured) for the business
conducted by it. All of the insurance policies referred to in the
Disclosure Statement are in full force and effect, neither the Company
nor any of the Company Subsidiaries is in material default under any
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of such policies, and all material claims in excess of $250,000 under
such policies arising during the twelve (12) month period prior to the
date of this Agreement have been filed in due and timely fashion,
except where the failure to file any such claim in a due and timely
fashion would not have a material effect on the viability of such
claim.
SECTION 2.15. REORGANIZATION. Neither the Company nor any of
the Company Subsidiaries has taken any action or failed to take any
action which action or failure to take action would jeopardize the
qualification of the Merger as a reorganization within the meaning of
Section 368(a) of the Code.
SECTION 2.16. EMPLOYEE MATTERS.
Section 2.16.1. Neither the Company nor any Company Subsidiary
is a party to or participates in or has any material liability or
contingent liability with respect to:
(a) Any "employee welfare benefit plan" or "employee
pension benefit plan" (as those terms are defined in
Sections 3(1) and 3(2) of the Employee Retirement Income Security
Act of 1974, as amended (hereinafter referred to as "ERISA")),
including any "multiemployer plan" as defined in Section 3(37) of
ERISA); or
(b) Any retirement or deferred compensation plan, incentive
compensation plan, share option plan, share plan, share
appreciation rights plan, phantom share plan, unemployment
compensation plan, vacation pay, severance pay, bonus or benefit
arrangement, insurance or hospitalization program or any other
fringe benefit arrangements (hereinafter referred to collectively
as "fringe benefit arrangements") for any employee, officer,
director, consultant or agent, whether pursuant to contract,
arrangement, custom or informal understanding, which does not
constitute an "employee benefit plan" (as defined in Section 3(3)
of ERISA).
Section 2.16.2. A true and correct copy of each of the plans,
arrangements and agreements listed in the Disclosure Statement, and
all contracts relating thereto, or to the funding thereof, including,
without limitation, all trust agreements, insurance contracts,
investment management agreements, subscription and participation
agreements and record keeping agreements, each as in effect on the
date hereof, has been delivered to BMO by the Company as part of
Schedule 2.16.2 of the Disclosure Statement. In the case of any plan,
arrangement or agreement which is not in written form, the Company has
provided BMO with an accurate written description of such plan,
arrangement or agreement as in effect on the date hereof. A true and
correct copy of the most recent annual report, actuarial report,
summary plan description and Internal Revenue Service determination
letter with respect to each such plan or arrangement, to the extent
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applicable, and a current schedule of assets (and the fair market
value thereof assuming liquidation of any asset which is not readily
tradable) held with respect to any funded plan arrangement or
agreement has been provided to BMO by the Company, and there have been
no material adverse changes in the financial condition of the
respective plans from that stated in the annual reports and actuarial
reports supplied.
Section 2.16.3. As to all plans, arrangements and agreements
listed in the Disclosure Statement:
(a) All employee benefit plans and fringe benefit
arrangements comply with, and to the Company's knowledge have
been administered in form and in operation, in all material
respects, in compliance with, all requirements of law and
regulation applicable thereto, and neither the Company nor any
Company Subsidiary has received any notice questioning or
challenging such compliance.
(b) All employee pension benefit plans comply in form and
in operation with all applicable requirements of Sections 401(a)
and 501(a) of the Code, except where such non-compliance would
not result in material liability to such plans, the Company, the
Surviving Corporation or any Company Subsidiary; there have been
no amendments to such plans which are not the subject of a
determination letter issued with respect thereto by the Internal
Revenue Service and which would adversely affect the tax
qualified status of any such plan; and no event has occurred
which will or could give rise to disqualification of any such
plan under such Sections or to a material tax liability under
Section 511 of the Code.
(c) None of the assets of any employee benefit plan are
invested in employer securities or employer real property.
(d) There have been no "prohibited transactions" (as
described in Section 406 of ERISA or Section 4975 of the Code)
with respect to any employee benefit plan maintained by either
the Company or any Company Subsidiary and for which the Company,
the Surviving Corporation or any Company Subsidiary could be
liable and neither the Company nor any Company Subsidiary has
engaged in any prohibited transaction with respect to any
employee benefit plan maintained by the Company or any Company
Subsidiary.
(e) As to any employee pension benefit plan which is
subject to Title IV of ERISA, there have been no "reportable
events" for which reporting is not waived (as described in
Section 4043 of ERISA), and no steps have been taken to terminate
any such plan.
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(f) There have been no acts or omissions by the Company or
any Company Subsidiary which have given rise to or may give rise
to any material fines, penalties, taxes or related charges under
Sections 502(c), 502(i) or 4071 of ERISA or Chapter 43 of the
Code, for which the Company, the Surviving Corporation or any
Company Subsidiary may be liable.
(g) None of the payments contemplated by such plans,
arrangements and agreements would, in the aggregate, constitute
excess parachute payments as defined in Section 280G of the Code.
(h) All group health plans of the Company and the Company
Subsidiaries (including any plans of current and former
affiliates of the Company or any Company Subsidiary which must be
taken into account under Section 4980B of the Code or Section 601
of ERISA) have been operated in material compliance with the
group health plan continuation coverage requirements of
Section 4980B of the Code and Section 601 of ERISA to the extent
such requirements are applicable.
Section 2.16.4. No employees of the Company or any of the
Company Subsidiaries are members of a collective bargaining unit of
the Company or any of the Company Subsidiaries, and there have not
been any, and to the Company's knowledge there are no threatened or
contemplated, attempts to organize for collective bargaining purposes
any of the employees of the Company or any of the Company
Subsidiaries.
SECTION 2.17. CONDUCT OF BUSINESS SINCE DECEMBER 31, 2000. As
of the date hereof, since December 31, 2000, neither the Company nor
any Company Subsidiary has: (a) experienced any change in financial
condition, assets, liabilities or business, except for changes in the
ordinary course of business which, taken as a whole, have not created
a Material Adverse Effect on the Company; (b) except (in the case of
the Company) as contemplated by this Agreement and the Company Share
Option Agreement, conducted its business or entered into any
transaction otherwise than in the ordinary course of business, or
incurred or become subject to any liabilities or obligations except
liabilities routinely incurred in the ordinary course of business in
customary amounts (indebtedness, other than deposits accepted by
Company Subsidiaries which are banks in the ordinary course of their
business, maturing more than one (1) year after its creation is not
for purposes of this Agreement considered as being in the "ordinary
course"); (c) sold or otherwise disposed of any of its investment
securities which has not been accurately reflected in the financial
statements of the Company or otherwise been in the ordinary course of
business consistent with past practice; (d) mortgaged, pledged, or
subjected to lien, charge or other encumbrance any of its assets, or
sold or transferred any of such assets (other than its investment
securities), except in the ordinary course of business; (e) issued,
agreed to issue or sold any of its shares (whether authorized and
unissued or held in the treasury) or debt obligations (other than
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deposits accepted by a Company Subsidiary which is a bank in the
ordinary course of its business); (f) except (in the case of the
Company) as contemplated by the Company Share Option Agreement,
granted any options, warrants or other rights for the purchase or sale
of its shares; (g) directly or indirectly purchased, redeemed or
otherwise acquired or agreed to purchase, redeem or otherwise acquire
any of its shares; (h) suffered the filing, or became aware of any
basis for the institution of, any action, suit, proceeding or
investigation, which might have a Material Adverse Effect on the
Company; (i) declared, agreed to declare, set apart for payment or
paid any dividend or made any other distribution in respect of any of
its shares, except in the ordinary course of business in accordance
with practices; or (j) except (in the case of the Company) as
contemplated by this Agreement and the Company Share Option Agreement,
entered into any other transaction other than in the ordinary course
of business.
SECTION 2.18. CONDUCT OF BUSINESS PENDING MERGER. From and
after the date hereof and until the Effective Time, except with the
prior written consent of BMO and as contemplated by this Agreement or
the Company Share Option Agreement, each of the Company and the
Company Subsidiaries will: (a) maintain its property and assets in
their present state of repair, order and condition, reasonable wear
and tear and damage by fire or other casualty fully covered by
insurance excepted; (b) maintain its books, accounts and records in
accordance with generally accepted accounting principles and practices
applied on a basis consistent with the audited financial statements of
the Company and the Company Subsidiaries referred to in Section 2.5.1
hereof; (c) comply in all material respects with all laws applicable
to the conduct of its business; (d) conduct its business only in the
usual, regular and ordinary course and in substantially the same
manner as heretofore conducted and in all cases consistent with
prudent banking practices, and not make any purchase or sale, except
in a manner consistent with prior practice other than pursuant to
existing agreements heretofore disclosed to BMO; (e) make no change in
its certificate of incorporation, articles of incorporation, charter
or articles of association, as the case may be, or by-laws, except as
required or otherwise permitted hereunder; (f) maintain and keep in
full force and effect in all material respects all fire and other
insurance on property and assets, all liability insurance, and all
bonds on personnel, presently carried by it; (g) except as is
consistent with past practices, not sell or otherwise dispose of any
of its investment securities; (h) not sell, mortgage, subject to lien,
pledge or encumber or otherwise dispose of any of its property and
assets otherwise than in the ordinary course of business; (i) not
redeem or otherwise acquire or agree to redeem or otherwise acquire
any of its shares; (j) except, in the case of the Company, as
contemplated by the Company Share Option Agreement, make no change in
the number of its shares issued and outstanding, and grant no option,
warrant or similar right relating to any of its shares; (k) use all
reasonable efforts to preserve its business organization intact, to
keep available the services of its present officers and employees and
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to preserve the goodwill of its customers and others having business
relations with it; (l) not enter into any employment contract which is
not terminable without penalty or other liability upon thirty (30) or
fewer days' notice, except as otherwise required or permitted
hereunder; (m) not declare or pay any dividend nor make any other
distribution in respect of any of its shares, except regular quarterly
dividends in amounts determined in accordance with past practice and
dividends for any stub quarter, determined substantially in accordance
with past practice for regular quarterly dividends, concerning any
quarter in which the Closing occurs; (n) not make any borrowings,
except in the ordinary course of business (indebtedness, other than
deposits accepted by a Company Subsidiary which is a bank in the
ordinary course of its business, maturing more than one (1) year after
its creation is not for purposes of this Agreement considered as being
in the "ordinary course"); (o) not purchase or invest in securities or
obligations having a maturity of more than three (3) years from the
date of purchase if such investment would materially increase the
weighted average of the maturities of all investments taken as a
whole; (p) not increase the hourly rates of pay of its employees or
increase the fixed compensation payable to any of its officers or
employees, except pursuant to existing agreements or heretofore
disclosed to BMO for such increases which are consistent with past
salary review practices; (q) not pay any bonus or commission, except
pursuant to existing agreements or heretofore disclosed to BMO in
accordance with past practices; (r) not establish or amend any
"employee welfare benefit plan," "employee pension benefit plan," or
"fringe benefit arrangements," referred to in Section 2.16 hereof, or
any other plan or arrangement of a similar nature, except as required
by law; (s) not extend credit or make advances in excess of $50,000 as
to any customer of a Company Subsidiary which is a bank who is listed
on such Company Subsidiary's problem or watch list or who has any
outstanding loan, advance or other credit which is in default of
payment of principal or interest or otherwise in material default, has
been placed on non-accrual status or has been classified by such
Company Subsidiary's examiners (regulatory or internal) as among
"Other Loans Specifically Mentioned," or as "Substandard," "Doubtful"
or "Loss;" except pursuant to commitments in place prior to the time
the customer's loans first attained one of the foregoing statuses or
otherwise to the extent believed in good faith to be reasonably
necessary to prevent or mitigate a loss (t) not make any tax election
or take any other action which could affect the federal, state, county
or local tax liability of the Company or any Company Subsidiary; and
(u) not take any action in anticipation of the Merger which may have a
Material Adverse Effect on BMO, BFC or the Surviving Corporation.
SECTION 2.19. LOANS.
Section 2.19.1. The allowance for loan losses reflected on the
2000 Balance Sheet was, and such allowance reflected on each
consolidated balance sheet of the Company and the Company Subsidiaries
as of any date subsequent to the date hereof, which is required to be
furnished by the Company to BMO pursuant to Section 2.6.1 hereof will
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be, in each case as of the date thereof, adequate to provide for
losses relating to or inherent in the loan and lease portfolios
(including accrued interest receivables) of the Company and the
Company Subsidiaries and other extensions of credit (including letters
of credit and commitments to make loans or extend credit) by the
Company and the Company Subsidiaries.
Section 2.19.2. (a) Each outstanding loan, lease or other
extension of credit made by the Company or any of the Company
Subsidiaries is a legal, valid and binding obligation, is in full
force and effect and is enforceable in accordance with its terms,
except as may be limited by bankruptcy, insolvency, moratorium,
reorganization or similar laws affecting the rights of creditors
generally or equitable principles limiting the right to obtain
specific performance or other similar relief except as would not
result in a Material Adverse Effect on the Company; (b) each of the
Company and the Company Subsidiaries has duly performed in all
material respects all of its obligations thereunder to the extent that
such obligations to perform have accrued; (c) all documents and
agreements necessary for the Company or any of the Company
Subsidiaries that is a party thereto to enforce such loan, lease or
other extension of credit are in existence; (d) no claims,
counterclaims, set-off rights or other rights exist, nor do the
grounds for any such claim, counterclaim or set off rights exist,
which, to the knowledge of Company, would be material in the
aggregate, with respect to any such loans, leases or other extensions
of credit which could impair the collectibility thereof; and (e) each
such loan, lease and extension of credit has been, in all material
respects, originated and serviced in accordance with the Company's or
any Company Subsidiary's then applicable underwriting guidelines, the
terms of the relevant credit documents and agreements and applicable
laws and regulations.
Section 2.19.3. Schedule 2.19.3 of the Disclosure Statement
lists all loan commitments of the Company and the Company Subsidiaries
outstanding as of the date hereof and exceeding $5,000,000 as to any
customer and its affiliates. (a) There are no loans, leases, other
extensions of credit or commitments to extend credit of the Company or
any of the Company Subsidiaries that have been or, to the Company's
knowledge, should have been classified by the Company and the Company
Subsidiaries as "Other Assets Especially Mentioned," "Substandard,"
"Doubtful," "Loss" or any comparable classification and (b) there are
no loans due to the Company or any of the Company Subsidiaries as to
which any payment of principal, interest or any other amount is thirty
(30) days or more past due.
SECTION 2.20. DERIVATIVE TRANSACTIONS. Neither the Company nor
any of the Company Subsidiaries has engaged in transactions in or
involving forwards, futures, options on futures, swaps or other
derivative instruments.
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SECTION 2.21. NO BROKER'S OR FINDER'S FEE. Except for the fees
of ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Company previously disclosed to BMO, no agent,
broker, financial advisor or other firm or person is or will be
entitled to any broker's or finder's fee or similar payment by the
Company or any of the Company Subsidiaries in connection with this
Agreement or the Merger.
SECTION 2.22. OTHER TAKEOVER PROPOSALS.
Section 2.22.1. From and after the date hereof and until the
Effective Time, the Company and the Company Subsidiaries shall not,
and each of them shall not authorize any of its officers, directors,
or agents to directly or indirectly solicit, initiate or encourage any
inquiries relating to, or the making of any proposal which
constitutes, a Takeover Proposal (as defined below) or participate in
any discussions or negotiations, or provide third parties with any
nonpublic information, relating to any such inquiry or proposal or
otherwise facilitate any effort or attempt to make or implement a
Takeover Proposal (as defined below); PROVIDED, HOWEVER, that nothing
contained in this Section 2.22 shall prohibit the Company at any time
within forty-five (45) days of the date hereof from furnishing
information to, or entering into discussions or negotiations with any
person or entity that makes an unsolicited Takeover Proposal that
constitutes a Superior Proposal (as defined below) in each case if,
and only to the extent that (a) such actions occur at a time prior to
approval of the Merger Agreement by the Company's shareholders,
(b) the board of directors of the Company concludes in good faith,
after consultation with outside counsel, that it is required to do so
in order to act in a manner consistent with its fiduciary duties to
the Company's shareholders under applicable law, and (c) after
receiving an unsolicited inquiry of proposal and prior to taking such
action, the Company negotiates with and receives from such person or
entity an executed confidentiality agreement and an executed
standstill agreement, each in reasonably customary form (as determined
by the Company in consultation with its outside counsel) (provided
that such agreements shall contain terms that are no less restrictive
than the terms of any such agreement between BMO and the Company).
Section 2.22.2. As used in this Agreement, "Takeover Proposal"
shall mean any inquiry, proposal or offer from any person relating to
any (w) direct or indirect acquisition or purchase of a business that
constitutes twenty percent (20%) or more of the net revenues, net
income or the assets of the Company and the Company Subsidiaries,
taken as a whole, (x) direct or indirect acquisition or purchase of
twenty percent (20%) or more of any class of equity securities of the
Company or of twenty percent (20%) or more of any class of equity
securities of any of the Company Subsidiaries whose business
constitutes twenty percent (20%) or more of the net revenues, net
income or assets of the Company and the Company Subsidiaries, taken as
a whole, (y) tender offer or exchange offer that if consummated would
result in any person beneficially owning twenty percent (20%) or more
of any class of equity securities of the Company or any of the Company
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Subsidiaries whose business constitutes twenty percent (20%) or more
of the net revenues, net income or assets of the Company and the
Company Subsidiaries, taken as a whole, or (z) merger, consolidation,
business combination, recapitalization, liquidation, dissolution or
similar transaction involving the Company or any of the Company
Subsidiaries whose business constitutes twenty percent (20%) or more
of the net revenues, net income or assets of the Company and the
Company Subsidiaries, taken as a whole, other than the transactions
contemplated or permitted by this Agreement and the Company Share
Option Agreement. For purposes of this Agreement, "Superior Proposal"
means any written Takeover Proposal for or in respect of more than
fifty percent (50%) of the combined voting power of the Company Common
Shares then outstanding or all or substantially all the assets of the
Company and the Company Subsidiaries, taken as a whole, (i) on terms
that the board of directors of the Company determines in its good
faith judgment (after consultation with its financial advisors, which
shall be an investment banking firm of national reputation, and taking
into account all the terms and conditions of the Takeover Proposal
deemed relevant by such board of directors, including the
consideration to be paid pursuant thereto, any break-up fees, expense
reimbursement provisions, conditions to consummation, and the ability
of the party making such proposal to obtain financing therefor) are
more favorable to the Company's shareholders than the Merger, and
(ii) that constitutes a transaction that, in such board of directors'
good faith judgment, after consultation with its legal advisors and
its financial advisors, which shall be an investment banking firm of
national reputation, is reasonably likely to be consummated on the
terms set forth, taking into account all legal, financial, regulatory
and other aspects of such proposal. As of the date hereof, the
Company will immediately cease and cause to be terminated any existing
activities, discussions or negotiations previously conducted with any
parties other than BMO with respect to any of the foregoing. The
Company will notify BMO immediately if any inquiries or Takeover
Proposals are received by, any information is requested from, or any
negotiations or discussions are sought to be initiated or continued
with, the Company.
Section 2.22.3. Nothing contained in this Section 2.22 shall
prohibit the Company from at any time taking and disclosing to its
shareholders a position contemplated by Rule 14d-9 or 14e-2
promulgated under the Exchange Act or from making any disclosure to
the Company's shareholders if, in the good faith judgment of the board
of directors of the Company, after consultation with outside counsel,
failure so to disclose would be inconsistent with its obligations
under applicable law; PROVIDED, HOWEVER, that, except as expressly
permitted by Section 2.22.4 in connection with a Superior Proposal,
neither the Company nor its board of directors nor any committee
thereof shall withdraw or modify, or propose publicly to withdraw or
modify, its position with respect to this Agreement or the Merger or
approve or recommend, or propose publicly to approve or recommend, a
Takeover Proposal.
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Section 2.22.4. Except as expressly permitted by this
Section 2.22, neither the board of directors of the Company nor any
committee thereof shall (i) withdraw or modify, or propose publicly to
withdraw or modify, in a manner adverse to BMO, the approval or
recommendation by such board of directors or such committee of this
Agreement or the Merger, (ii) approve or recommend, or propose
publicly to approve or recommend, any Takeover Proposal or (iii) cause
the Company to enter into any letter of intent, agreement in
principle, acquisition agreement or other similar agreement related to
any Takeover Proposal. Notwithstanding the foregoing, the board of
directors of the Company, or any committee thereof, may (subject to
the terms of this sentence) (a) withdraw or modify, or propose
publicly to withdraw or modify, its approval or recommendation of this
Agreement or the Merger or (b) approve or recommend, or propose
publicly to approve or recommend, a Superior Proposal, or
(c) terminate this Agreement in order to enter into an agreement with
respect to a Superior Proposal, as provided in Section 9.2.1, if the
board of directors of the Company determines in good faith, after
consultation with outside counsel, that in light of a Superior
Proposal made within forty-five (45) days of the date hereof, it is
necessary to do so in order to act in a manner consistent with its
fiduciary duties to the Company's shareholders under applicable law;
PROVIDED, HOWEVER, that the Company may not terminate this Agreement
pursuant to this Section 2.22.4 or Section 9.2.1(f) unless and until
(A) five (5) days have elapsed following the delivery to BMO and BFC
of a written notice of the determination by the board of directors of
the Company to terminate this Agreement and enter into an agreement
with respect to a Superior Proposal, which notice shall set forth the
material terms and conditions of such Superior Proposal and (B) by
5:00 p.m., Chicago time, on the last day of such five (5) day period,
BMO has not submitted an irrevocable written offer to the Company to
modify the terms of the transactions contemplated hereby so that the
other proposal being considered by the Company no longer constitutes a
"Superior Proposal" and the transactions contemplated hereby may be
effected on such modified terms, and in such event, any action taken
by the board of directors of the Company pursuant to clause (b) of
this Section 2.22.4 shall be withdrawn.
SECTION 2.23. INTELLECTUAL PROPERTY. The Company and the
Company Subsidiaries have the unrestricted right and authority, and
the Surviving Corporation and the Company Subsidiaries will have the
unrestricted right and authority from and after the Effective Time, to
use all patents, trademarks, servicemarks, software, licenses, know-
how, and other proprietary rights as is necessary to enable them to
conduct and to continue to conduct all phases of the business of the
Company and the Company Subsidiaries in the manner presently conducted
by them, and such use, to the Company's knowledge, does not, and will
not, conflict with, infringe on or violate any patent, copyright,
trademark, service ▇▇▇▇, trade name or any other rights of others.
SECTION 2.24. TAKEOVER LAWS NOT APPLICABLE. The provisions of
any state takeover or similar law will not apply to this Agreement,
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the Company Share Option Agreement, the Voting Agreement, the Merger
or the transactions contemplated hereby and thereby. The Company has
taken all steps necessary to exempt the transactions contemplated by
this Agreement, by the Company Share Option Agreement and by the
Voting Agreement, from any applicable charter or contractual provision
containing change of control or anti-takeover provisions.
SECTION 2.25. MATERIAL INTERESTS OF CERTAIN PERSONS. No officer
or director of the Company, or to the Company's knowledge any
"associate" (as such term is defined in Rule 14a-1 under the Exchange
Act) of any such officer or director, has any material interest in any
material contract or property (real or personal), tangible or
intangible, used in or pertaining to the business of the Company or
any of the Company Subsidiaries.
SECTION 2.26. DISCLOSURE. No representation or warranty made
herein by the Company and no written statement or certificate given or
to be given by the Company or any of the Company Subsidiaries to BMO
or BFC pursuant to this Agreement or with respect to the Company or
any of the Company Subsidiaries or the transactions contemplated
hereunder contains or will contain any untrue statement of a material
fact, or omits or will omit to state a material fact necessary to make
the statements contained herein or therein, under the circumstances
under which they were made, not misleading.
SECTION 2.27. OPINION OF FINANCIAL ADVISOR. The Company has
received the opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Company dated within ten (10)
days of the date of this Agreement to the effect that, as of the date
thereof or of this Agreement, the consideration to be received in the
Merger by the Company's shareholders is fair to the Company's
shareholders from a financial point of view, and the Company will
promptly deliver a copy of such written opinion to BMO.
SECTION 2.28. COMPANY RIGHTS AGREEMENT. The Company has taken
all action necessary or appropriate, in each case so that the
execution of this Agreement, the Company Share Option Agreement, and
the Voting Agreement and the consummation of the transactions
contemplated hereby and thereby (including, without limitation, the
Merger) do not and will not result in the ability of any person to
exercise any rights under the Company Rights Agreement or enable or
require the Company Rights to separate from the shares of Company
Common Shares to which they are attached or to be triggered or become
exercisable.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF BMO AND BFC
BMO and BFC jointly and severally represent and warrant and agree
with the Company as follows:
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SECTION 3.1. ORGANIZATION OF BMO AND BFC. BMO is duly
organized and validly existing as a bank under the laws of Canada,
with full corporate power and authority to own its property and
conduct its business and to enter into and perform this Agreement and
the Company Share Option Agreement. BFC is duly organized, validly
existing and in good standing under the laws of the State of Delaware,
with full corporate power and authority to own its property and
conduct its business and to enter into and perform this Agreement and
the Company Share Option Agreement. If NewCo is formed pursuant to
the terms hereof, as of the Effective Time, NewCo will be duly
organized, validly existing and in good standing under the laws of the
State of Delaware, with full corporate power and authority to own its
property and conduct its business and enter into and perform this
Agreement.
SECTION 3.2. BMO SHARES.
Section 3.2.1. The authorized shares of BMO consist of an
unlimited number of common shares, without par value ("BMO Shares"),
an unlimited number of class A preferred shares, without par value
("BMO Class A Preferred Shares") and an unlimited number of class B
preferred shares, without par value ("BMO Class B Preferred Shares")
of which (i) as of January 25, 2001, 263,185,190 shares of BMO Shares
were issued and outstanding, (ii) as of October 31, 2000, no shares of
BMO Class A Preferred Shares were issued and outstanding, and (iii) as
of October 31, 2000, 62,000,000 shares of BMO Class B Preferred Shares
were issued and outstanding. The Company has no other authorized
shares of any class, series, designation or description.
Section 3.2.2. BMO Shares issued pursuant to this Agreement
will, when issued, be duly authorized, validly issued, fully paid and
non-assessable and not subject to pre-emptive rights.
SECTION 3.3. CORPORATE AUTHORIZATION.
Section 3.3.1. The execution, delivery and performance of this
Agreement by BMO and BFC, and the execution, delivery and performance
of the Company Stock Option Agreement and the Voting Agreement by BMO,
have been duly and validly authorized and approved by the board of
directors of BMO and BFC respectively and by the sole stockholder of
BFC; and will not violate or conflict with the constating documents of
BMO or, in the case of BFC, the certificate of incorporation or by-
laws of BFC, and do not and will not violate or conflict with or
result in any material default, any acceleration of required
performance or any loss of a material benefit under any note, bond,
mortgage, indenture, lease, franchise, license, permit, approval,
contract, agreement or other instrument or document or any order,
writ, injunction, decree, judgment, statute, rule or regulation to
which BMO or BFC is a party or subject or by which BMO or BFC is
bound. No consent of any third party (other than the regulatory
approvals referred to in Section 4.1 hereof) is necessary to enable
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BMO or BFC to perform its obligations under this Agreement and the
Company Share Option Agreement.
Section 3.3.2. If NewCo is formed pursuant to the terms hereof,
as of the Effective Time, the execution, delivery and performance of
this Agreement by NewCo has been duly and validly authorized and
approved by the board of directors of NewCo and by the sole
stockholder of NewCo and will not violate or conflict with the
certificate of incorporation or by-laws of NewCo and will not violate
or conflict with or result in any material default, any acceleration
of required performance or any loss of a material benefit under any
note, bond, mortgage, indenture, lease, franchise, license, permit,
approval, contract, agreement or other instrument or document or any
order, writ, injunction, decree, judgment, statute, rule or regulation
to which NewCo is a party or subject or by which NewCo is bound. No
consent of any third party (other than the regulatory approvals
referred to in Section 4.1 hereof) will be necessary to enable NewCo
to perform its obligations under this Agreement.
SECTION 3.4. GOVERNMENTAL REGULATION.
Section 3.4.1. Each of BMO and BFC and its respective
subsidiaries holds all consents, licenses, certificates, permits,
authorizations, approvals, franchises and rights of federal, state,
local and other public authorities and other persons and entities
required in connection with the ownership and operation of its
properties and the carrying on of its business as now being conducted,
all of which are now in full force and effect, and between the date
hereof and the Effective Time BMO and BFC will, and will cause each of
its respective subsidiaries to, maintain all such consents, licenses,
certificates, permits, authorizations, approvals, franchises and
rights in full force and effect. Each of BMO and BFC and its
respective subsidiaries has conducted its business so as to comply in
all material respects with all applicable statutes, regulations,
ordinances and rules, including (without limitation) applicable
banking laws, federal and state securities laws, and laws and
regulations concerning minimum capital requirements, truth-in-lending,
usury, fair credit reporting, fair lending and equal credit
opportunity, currency reporting, community reinvestment, Internal
Revenue Service information reporting and back-up withholding,
consumer protection, occupational safety, employee benefit plans,
environmental matters, fair employment practices and fair labor
standards.
Section 3.4.2. BMO is a Schedule I Bank chartered under the Bank
Act (Canada).
Section 3.4.3. BMO has filed (a) BMO's annual reports on
Form 4-F and quarterly financial information as filed under Form 6-K
since December 31, 1997, each as filed with the SEC, (b) the Company's
annual reports on Form Y-6 and quarterly reports on Form Y-9 since
December 31, 1997, each as filed with the FRB, and (c) all other
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documents incorporated by reference in whole or in part in the
foregoing (the documents referred to in (a) through (c), including all
amendments and supplements thereto and all financial statements and
notes contained therein (collectively, the "BMO Reports"). The BMO
Reports, as of the respective times of filing thereof with the SEC or
the FRB, as the case may be, complied as to form and substance with
all material requirements of the laws, rules and regulations
applicable thereto and did not include any untrue or misleading
statement of or with respect to a material fact or omit to state any
material fact necessary in order to make the statements made therein,
in the light of the circumstances under which they were made, not
misleading. Since December 31, 1997, BMO and each of its subsidiaries
have filed all BMO Reports, registration statements and other
documents required to be filed by each of them with the SEC, the FRB
or any other regulatory authority in accordance with all material
requirements of the laws, rules and regulations applicable thereto
except where the failure to so file such reports and registration
statements will not have a Material Adverse Effect.
SECTION 3.5. FINANCIAL STATEMENTS OF BMO. BMO has furnished
the Company with copies of the audited consolidated balance sheets of
BMO as of October 31, 1998, 1999 and 2000, and the related audited
consolidated statements of income, changes in shareholders' equity and
cash flows for each of its fiscal years ended October 31, 1998, 1999
and 2000 together with the notes thereto, accompanied by the
unqualified reports thereon of Price Waterhouse Coopers LLP and KPMG
Peat Marwick LLP. Each of the financial statements referred to in
this Section has been prepared in accordance with generally accepted
accounting principles as applicable to them and practices consistently
applied. Each of the financial statements referred to in this
Section is true, correct and complete in all material respects and
presents fairly the financial condition and the results of operations
of the BMO and its subsidiaries on a consolidated basis, as of the
date thereof or for the periods covered thereby.
SECTION 3.6. DISCLOSURE. No representation or warranty made
herein by BMO or BFC and no written statement or certificate given or
to be given by BMO or BFC to the Company pursuant to this Agreement or
with respect to BMO or BFC or the transactions contemplated hereunder
contains or will contain any untrue statement of a material fact, or
omits or will omit to state a material fact necessary to make the
statements contained herein or therein, under the circumstances under
which they were made, not misleading.
SECTION 3.7. FINANCING. BMO will have at the Effective Time
the ability to fund its obligations hereunder.
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ARTICLE IV
ADDITIONAL AGREEMENTS
SECTION 4.1. REGULATORY APPROVALS. As promptly as practicable,
but in no event prior to preparation and filing of the materials
described in Section 4.3 with the SEC, BMO and BFC shall prepare and
file, or cause to be prepared and filed, applications for approvals in
connection with the Merger with those agencies listed in Exhibit C
which BMO, BFC and the Company believe to be all persons from whom
approval of the Merger is required. The Company will, and will cause
each Company Subsidiary to, cooperate fully in the preparation and
submission of such applications, and without limiting the foregoing,
the Company will promptly furnish BMO with any information relating to
the Company or any of the Company Subsidiaries which is required under
any applicable law or regulation, or by any regulatory or governmental
authority, for inclusion in any such application. In the event of an
adverse or unfavorable determination by any regulatory authority, or
should the Merger be challenged or opposed by any administrative or
legal proceeding, the determination of whether and to what extent to
defend any such action, or to seek appeal or review, administrative or
otherwise, or other appropriate remedies shall be made by BMO or BFC.
SECTION 4.2. COMPANY SHAREHOLDER APPROVAL. As promptly as
practicable but in no event prior to the forty-sixth (46th) day after
the date of this Agreement, the Company shall, at a meeting of its
shareholders duly called by its board of directors (hereinafter
referred to as the "Meeting"), present this Agreement for the approval
of, and adoption by, its shareholders. The Company will use
commercially reasonable efforts to obtain the necessary approval of
this Agreement and the transactions contemplated hereby by the
shareholders of the Company.
SECTION 4.3. PREPARATION OF COMPANY PROXY MATERIALS AND F-4
REGISTRATION STATEMENT.
Section 4.3.1. As promptly as practicable, the Company will
prepare and file with the SEC, and as soon as permitted under
applicable regulations of the SEC and provided the F-4 (as such term
is hereinafter defined) has become effective, will mail to the
shareholders of the Company appropriate proxy materials (hereinafter
referred to as the "Proxy Materials"), including a notice of the
Meeting, proxy statement (hereinafter referred to as the "Proxy
Statement") and form of proxy which comply with the Exchange Act and
the applicable regulations of the SEC thereunder. BMO and BFC
respectively will furnish to the Company all information concerning
BMO and BFC as the Company or its counsel may reasonably request and
which is required or customary for inclusion in the Proxy Materials.
The Company shall file the Proxy Materials in preliminary form with
the SEC as promptly as practicable and respond as promptly as
practicable to all comments thereon of the SEC with a view toward
mailing definitive Proxy Materials at the earliest practicable date
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(the date of such mailing herein referred to as the "Proxy Mailing
Date"). In the Proxy Materials, the Company shall present this
Agreement and the transactions contemplated hereby for approval by the
shareholders of the Company at the Meeting. The Company shall include
in the Proxy Materials a recommendation by its board of directors to
the shareholders of the Company that this Agreement and the Merger be
approved and adopted, subject to its rights pursuant to Section 2.22.
Prior to submitting the Proxy Materials and any amendment, supplement
or revision thereof to the SEC or the shareholders of the Company, and
once a reasonably final draft of the Proxy Materials or any such
amendment, supplement or revision has been prepared, the Company shall
distribute such draft and successive drafts of such materials to BMO
and its counsel at the same time as such drafts are distributed to
persons within the Company or the Company Subsidiaries and shall
provide BMO and its counsel with the same opportunity to review and
comment upon such drafts as the other persons to whom the drafts are
distributed. Prior to responding to any comments of the SEC or any
other regulatory or supervisory authority relating to the Proxy
Materials, the Company shall review any proposed responses with BMO
and BFC and its counsel. The Company represents to BMO and BFC that
the Proxy Materials (a) will comply in all material respects with the
provisions of the Exchange Act and the rules and regulations of the
SEC thereunder and (b) will not contain any untrue statement of a
material fact, or omit to state any material fact necessary in order
to make the statements therein not false or misleading; PROVIDED,
HOWEVER, that in no event, shall the Company be liable for any untrue
statement of a material fact or omission to state a material fact in
the Proxy Materials made in reliance upon, and in conformity with,
written information concerning BMO or BFC which was furnished by BMO
or BFC to the Company.
Section 4.3.2. As promptly as practicable, BMO will prepare and
file with the SEC a registration statement on Form F-4 under the
Securities Act, in which the Proxy Statement will be included as a
prospectus, with respect to the BMO Shares to be issued in connection
with the Merger (hereinafter referred to as the "F-4"). Each of BMO,
BFC and the Company shall use all reasonable efforts to have the F-4
declared effective under the Securities Act as promptly as practicable
after its filing with the SEC. BMO and BFC shall also take any action
(other than qualifying to do business in any jurisdiction in which it
is now not so qualified) reasonably required to be taken under any
applicable state securities laws in connection with the issuance of
the BMO Shares in the Merger and the Company shall furnish all
information concerning the Company, the Company Subsidiaries and the
holders of Company Common Shares as may be reasonably requested in
connection with any such action. BMO represents to the Company that
the F-4 (a) will comply in all material respects with the provisions
of the Securities Act and the rules and regulations of the SEC
thereunder and (b) will not contain any untrue statement of a material
fact, or omit to state any material fact necessary in order to make
the statements therein not false or misleading; PROVIDED, HOWEVER,
that in no event, shall BMO or BFC be liable for any untrue statement
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of a material fact or omission to state a material fact in the F-4
made in reliance upon, and in conformity with, written information
concerning the Company which was furnished by the Company to BMO or
BFC.
Section 4.3.3. BMO shall take such actions as are required to
cause the BMO Shares to be issued in the Merger pursuant to this
Agreement to be approved for listing on the New York Stock Exchange,
subject to official notice of issuance, prior to the Closing.
SECTION 4.4. ACCESS AND INFORMATION. The Company shall, and
shall cause each Company Subsidiary to, afford to BMO and BFC, and
their respective directors, officers, employees, accountants, counsel
and other representatives (collectively, the "BMO Representatives")
access, during the period from the date hereof to the Effective Time,
to the properties, assets, books, contracts, returns, reports and
records of the Company and the Company Subsidiaries, and the Company
shall, and shall cause the Company Subsidiaries to, furnish to BMO and
BFC such other information concerning the respective businesses,
properties and personnel of the Company and each Company Subsidiary as
BMO or BFC may reasonably request. BMO and BFC shall keep
confidential, and shall cause the BMO Representatives to keep
confidential, any such information so obtained from the Company and
the Company Subsidiaries, including lists of the Company's
shareholders furnished to BMO or BFC in accordance with the terms of
Section 4.5 hereof; PROVIDED, HOWEVER, that the foregoing restriction
shall not apply to any such information which is or comes into the
public domain otherwise than as a result of a breach of the provisions
of this Section, was in the possession of BMO, BFC or any BMO
Representative prior to the negotiations with the Company relating to
this Agreement or at any time comes into the possession of BMO, BFC or
any BMO Representative from third parties who have the right to
disclose such information otherwise than in connection with this
Agreement. In the event that this Agreement is terminated without the
Merger having been consummated, BMO and BFC shall, and shall cause the
BMO Representatives to, return promptly to the Company all such
information, which was obtained by BMO or BFC in written form, in
their possession. The confidentiality provisions of any agreement
between BMO or its affiliates and the Company shall remain in effect,
to the extent still relevant in light of the transactions contemplated
hereby.
SECTION 4.5. LISTS OF COMPANY SHAREHOLDERS. Upon BMO's or
BFC's request from time to time, for the purpose of giving effect to
the Merger as provided for herein, the Company shall deliver to BMO
and BFC such lists of the shareholders of record of the outstanding
share of the Company as of the respective dates which BMO or BFC shall
designate, and the accuracy of each such list shall be certified by an
authorized officer of the Company or its transfer agent.
SECTION 4.6. CONTINUING EFFECT OF REPRESENTATIONS AND
WARRANTIES. Except as contemplated by this Agreement or the Company
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Share Option Agreement, each of the parties agrees not to enter into,
or agree to enter into, any transaction or perform, or agree to
perform, any act which would result in any of the representations or
warranties on the part of such party not being true and correct in all
material respects at and as of the time immediately after the
occurrence of any such transaction or event or immediately before the
Effective Time or that would be likely to cause any condition set
forth in this Agreement not to be satisfied or otherwise jeopardize
the consummation of the transactions contemplated hereby.
SECTION 4.7. CURRENT INFORMATION. During the period from the
date hereof to the Effective Time, the Company will cause one or more
of its representatives to confer on a regular and frequent basis with
representatives of BMO and BFC and to report the general status of the
ongoing operations of the Company and the Company Subsidiaries. The
Company will promptly notify BMO and BFC of (a) any material change in
the normal course of its business or the business of any of the
Company Subsidiaries or in the operation of its properties or the
properties of any of the Company Subsidiaries; (b) any complaints,
investigations or hearings (or communications indicating that the same
may be contemplated) of any governmental entity; (c) the institution
or the threat of material litigation involving the Company or any of
the Company Subsidiaries; (d) the occurrence of a Material Adverse
Effect relating to the Company; or (e) any event or condition that
might reasonably be expected to cause a Material Adverse Effect on the
Company or the Surviving Corporation. As used in the preceding
sentence, "material litigation" shall mean any case, arbitration or
other adversary proceeding or other matter which would have been
required to be disclosed on the Disclosure Statement pursuant to
Section 2.11 hereof if in existence on the date hereof or in respect
of which the legal fees and other costs of the Company or any of the
Company Subsidiaries might reasonably be expected to exceed $100,000
over the entire life of such matter. The Company shall also promptly
notify BMO and BFC of any adverse development involving any matter
disclosed on the Disclosure Statement in response to Section 2.11
hereof which shall occur after the date hereof and which might
reasonably be expected to increase the financial exposure of the
Company or any of the Company Subsidiaries thereof in an amount
exceeding $250,000 and in any event the Company shall regularly advise
BMO and BFC of significant changes in the status of any such matters.
SECTION 4.8. TERMINATION PAYMENT.
Section 4.8.1. If this Agreement is terminated pursuant to its
terms, other than (a) by the parties pursuant to Section 9.2.1(a)
hereof, (b) by BMO or BFC pursuant to clause (ii), (iv), (v) or (vii)
of Section 9.2.1(c) hereof, (c) by the Company pursuant to
Section 9.2.1(d) hereof or (d) by either party pursuant to
Section 9.2.1(e) hereof, and either prior to such termination or
within twelve (12) months thereafter, an Acquisition Event (defined
below) occurs, the Company shall pay to BMO within two (2) business
days after the occurrence of such Acquisition Event, by wire transfer
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of immediately available federal funds to such account as BMO shall
designate, an amount equal to five percent (5%) of the product of the
number of Company Common Shares issued and outstanding as of the date
hereof multiplied by $72.50.
Section 4.8.2. For purposes of this Section 4.8, the term
"Acquisition Event" shall mean any of the following: (a) any person
or group of persons acting in concert or entity (other than BMO or BFC
or a parent corporation or subsidiary thereof) shall have acquired
pursuant to a tender offer or otherwise, beneficial ownership of
shares of the Company Common Shares representing fifty and one-tenth
of one percent (50.1%) or more of the outstanding shares of the
Company Common Shares; or (b) the Company shall have entered into an
agreement with any person or entity (other than BMO or BFC or a parent
corporation or subsidiary thereof) to (i) effect a merger,
consolidation or similar transaction involving the Company or any of
the Company Subsidiaries representing twenty percent (20%) or more of
the consolidated assets of the Company and the Company Subsidiaries,
(ii) sell, lease or otherwise dispose of assets of the Company or any
Company Subsidiary representing twenty percent (20%) or more of the
consolidated assets of the Company and the Company Subsidiaries, or
(iii) issue, sell or otherwise dispose of (including by way of merger,
consolidation, share exchange or any similar transaction) securities
representing twenty percent (20%) or more of the voting power of the
Company or any of the Company Subsidiaries whose business constitutes
twenty percent (20%) or more of the net revenues, net income or assets
of the Company and the Company Subsidiaries, taken as a whole. The
term "Acquisition Event" shall not include a distribution of assets or
stock (other than the capital stock of the Company or of First
National Bank of Joliet) of the Company or any Company Subsidiary to
shareholders of the Company; but for purposes of this Section 4.8 such
distributed assets or stock shall thereafter be treated as though such
assets or stock are held by, or constitute an entity which is a
Company Subsidiary.
SECTION 4.9. REASONABLE EFFORTS. Each of the parties hereto
agrees to use all reasonable efforts to take, or cause to be taken,
all action, and to do, or cause to be done, all things necessary,
proper or advisable under and in compliance with applicable laws and
regulations to consummate and make effective the transactions
contemplated by this Agreement as expeditiously as reasonably
practicable.
SECTION 4.10. AFFILIATES. At least twenty (20) days prior to
the day of the Effective Time, the Company shall deliver to BMO a
letter identifying all persons who are or will be, at the time this
Agreement is submitted for approval to the shareholders of the
Company, "affiliates" of the Company for purposes of Rule 145 under
the Securities Act. The Company shall request each person named in
the letter delivered by it to deliver to BMO prior to the Closing Date
a written "Affiliates Agreement," in customary form, providing that
such person shall dispose of the BMO Shares to be received by such
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person in the Merger only in accordance with applicable law and that
such person has no present plan or intention to dispose of any such
shares of BMO Shares.
SECTION 4.11. COMPANY ACCRUALS AND RESERVES. Prior to the day
on which the Effective Time occurs, the Company shall, consistent with
generally accepted accounting principles and the accounting rules,
regulations and interpretations of the SEC and its staff, modify and
change its loan, accrual and reserve policies and practices (including
loan classifications, levels of reserves and accruals and asset
disposition strategies to (a) reflect BMO's and BFC's plans with
respect to the conduct of the Company's business following the Merger
and (b) make adequate provision for the costs and expenses relating
thereto) so as to be applied consistently on a mutually satisfactory
basis with those of BMO and BFC; PROVIDED, HOWEVER, that the Company
shall not be obligated to take in any respect any such action pursuant
to this Section 4.11 unless and until BMO and BFC acknowledge that all
conditions to its obligation to consummate the Merger have been
satisfied.
SECTION 4.12. COMPANY SHARE OPTION AGREEMENT. BMO and the
Company agree that the Company Share Option Agreement shall be
executed and delivered immediately following the execution and
delivery of this Agreement.
SECTION 4.13. EMPLOYMENT AND CONSULTING AGREEMENTS. The Company
shall use all reasonable efforts to cause the employees of the Company
and Company Subsidiaries who have been heretofore designated by BMO or
BFC to enter into employment agreements, with non-competition
provisions, satisfactory to BMO and BFC, simultaneous with the
execution and delivery of this Agreement.
SECTION 4.14. INDEMNIFICATION.
Section 4.14.1. From and after the Effective Time, BMO shall, to
the fullest extent not prohibited by applicable law and, without
limiting the foregoing, to the extent provided in the Company's
by-laws and articles of incorporation as in effect as of the date
hereof (true and correct copies of which have been provided to BMO),
indemnify, defend and hold harmless each person who is now, or has
been at any time prior to the date hereof, or who becomes prior to the
Effective Time, an officer, director or employee of the Company or any
of the Company Subsidiaries (each, an "Indemnified Party" and
collectively, the "Indemnified Parties") against (i) all losses,
expenses (including reasonable attorneys' fees and expenses), claims,
damages or liabilities or, subject to the proviso of the next
succeeding sentence, amounts paid in settlement, arising out of
actions or omissions occurring at or prior to the Effective Time (and
whether asserted or claimed prior to, at or after the Effective Time)
that are, in whole or in part, based on or arising out of the fact
that such person is or was a director, officer or employee of the
Company or any of the Company Subsidiaries or served as a fiduciary
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under or with respect to any employee benefit plan (within the meaning
of Section 3(3) of ERISA) at any time maintained by or contributed to
by the Company or any of the Company Subsidiaries ("Indemnified
Liabilities"), and (ii) all Indemnified Liabilities to the extent they
are based on or arise out of or pertain to the transactions
contemplated by this Agreement. In the event of any such loss,
expense, claim, damage or liability (whether or not arising before the
Effective Time), (i) BMO shall pay the reasonable fees and expenses of
counsel selected by the Indemnified Parties, which counsel shall be
reasonably satisfactory to BMO, promptly after statements therefor are
received and otherwise advance to such Indemnified Party upon request
reimbursement of documented expenses reasonably incurred, (ii) BMO and
the Company will cooperate in the defense of such matter and (iii) any
determination required to be made with respect to whether an
Indemnified Party's conduct complies with the standards set forth
under applicable law and the certificate of incorporation or by-laws
shall be made by independent counsel mutually acceptable to BMO and
the Indemnified Party; PROVIDED, HOWEVER, that BMO shall not be liable
for any settlement effected without its written consent (which consent
shall not be unreasonably withheld or delayed). In the event that any
Indemnified Party is required to bring any action to enforce rights or
to collect moneys due under this Agreement and is successful in such
action, BMO shall reimburse such Indemnified Party for all of its
expenses in bringing and pursuing such action. Each Indemnified Party
shall be entitled to the advancement of expenses to the full extent
contemplated in this Section 4.14.1 in connection with any such
action.
Section 4.14.2. In the event that BMO or any of its successors
or assigns (i) consolidates with or merges into any other person and
is not the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers or conveys all or
substantially all of its properties and assets to any person, then,
and in each such case, proper provision will be made so that the
successors and assigns of BMO assume the obligations set forth in this
Section 4.14.
Section 4.14.3. For six (6) years after the Effective Time, BMO
shall maintain in effect the Company's current directors' and
officers' liability insurance covering acts or omissions occurring
prior to the Effective Time with respect to those persons who are
currently covered by the Company's directors' and officers' liability
insurance policy on terms with respect to such coverage and amount no
less favorable than those of such policy in effect on the date hereof;
provided that BMO may substitute therefor policies of BMO or its
subsidiaries containing terms with respect to coverage and amount no
less favorable to such directors or officers; PROVIDED, FURTHER, that
in no event shall BMO be required to pay aggregate premiums for
insurance under this Section 4.14.3 in excess of two hundred percent
(200%) of the aggregate premiums paid by the Company in 2000 for such
purpose; PROVIDED, FURTHER, that if the annual premiums of such
insurance coverage exceed such amount, BMO shall be obligated to
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obtain a policy with the best coverage available, in the reasonable
judgment of BMO, for a cost up to but not exceeding such amount.
Section 4.14.4. The provisions of this Section 4.14 (i) are
intended to be for the benefit of, and will be enforceable by, each
Indemnified Party, his or her heirs and his or her representatives and
(ii) are in addition to, and not in substitution for, any other rights
to indemnification or contribution that any such person may have by
contract or otherwise.
SECTION 4.15. TAX TREATMENT AND TAX CERTIFICATES.
Section 4.15.1. Each of BMO and the Company shall use reasonable
best efforts to cause the Merger to qualify as a reorganization under
the provisions of Section 368(a) of the Code and to obtain the
opinions of counsel referred to in Section 5.6, including, without
limitation, forbearing from taking any action that would cause the
Merger not to qualify as a reorganization under the provisions of
Section 368(a) of the Code.
Section 4.15.2. Each of BMO and the Company shall cooperate with
each other in obtaining opinions of ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇, counsel to
BMO, and ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇, counsel to the Company, dated as of
the Closing, to the effect that the Merger will constitute a
reorganization within the meaning of Section 368(a) of the Code. In
connection therewith, each of BMO and the Company shall deliver to
▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇ customary representation
letters in form and substance reasonably satisfactory to such counsel
and the Company shall obtain any representation letters from
appropriate shareholders and shall deliver any such letters obtained
to ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇.
Section 4.16. FIRPTA. At or prior to the Closing, the Company,
if requested by BMO, shall deliver to the IRS a notice that the
Company Shares are not a "U.S. Real Property Interest" as defined in
accordance with the requirements of Treasury Regulation Section 1.897-
2(h)(2).
SECTION 4.17. CONVERSION TO CASH MERGER CONSIDERATION. At any
time within thirty (30) days from the date of this Agreement, the
Company may elect to have this Agreement amended to provide (a) that
for federal income tax purposes the Merger shall no longer qualify as
a reorganization under the provision of Section 368 of the Code and
(b) that all Company Common Shares shall be converted into the right
to receive Per Share Cash Consideration (the "Conversion to Cash
Merger Consideration") by providing written notice of such election to
BMO. In such event, BMO, BFC and the Company shall promptly amend
this Agreement, and any and all documents collateral hereto, for the
sole purpose of effectuating the Conversion to Cash Merger
Consideration.
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SECTION 4.18. COMPANY EMPLOYEE BENEFITS.
Section 4.18.1. At the Effective Time, BMO shall, or shall cause
the Surviving Corporation to, provide employees of the Company
Subsidiary with compensation and benefits (including all compensation,
bonuses, fringe benefits, welfare benefits, medical, dental and other
health plans, disability pay, vacation pay, severance or termination
pay, retirement and pension benefits) that are substantially similar
to those provided to similarly situated employees of subsidiaries of
BFC.
Section 4.18.2. At the Effective Time, BMO shall, or shall cause
the Surviving Corporation to, provide to employees of the Company
Subsidiary credit for purposes of eligibility to participate or vest
in any benefit plan (including vacation) based on length of service
(but not for determining accruals under a defined benefit pension plan
as defined in Section 3(2) of ERISA or any retiree medical plan or
program) under the BMO/▇▇▇▇▇▇ U.S. Employee Benefit Plans for service
with the Company Subsidiary performed at any time prior to the
Effective Time, to the extent such service was recognized for such
purposes under plans of like kind maintained by the Company or Company
Subsidiary immediately prior to the Effective Time. However, with
respect to retiree medical, service at the Company or the Company
Subsidiary prior to the Effective Time and service at BMO (or a
subsidiary) after the Effective Time will be added to determine
eligibility under the existing eligibility requirements for the
retiree medical program of the Company or the Company Subsidiary and
individuals meeting such eligibility requirements will be able to
obtain retiree medical coverage on a 100% employee-paid basis, without
limiting their ability to become eligible for BMO retiree medical
benefits.
Section 4.18.3. BMO shall waive all limitations as to
preexisting condition exclusions, waiting periods, actively at-work
requirements and physical examination requirements with respect to
participation and coverage requirements applicable to the employees
(and spouses and dependents) of the Company Subsidiary under any of
BMO's or BFC's employee benefits plans that are welfare plans, funds
or programs (within the meaning of Section 3(1) of ERISA) in which
such employees may be eligible to participate after the Effective
Time, other than preexisting condition exclusions, requirements or
waiting periods that are already in effect with respect to such
employees and that have not been satisfied as of the Effective Time.
BMO or BFC shall credit each employee (or spouse or dependent) of the
Company Subsidiary with the amount paid during the plan year or
calendar year, as applicable, in which the Effective Time occurs by
such employee (or spouse or dependent) toward applicable deductible,
co-payment, out-of-pocket maximum or similar provision of BMO's or
BFC's employee benefit plans.
SECTION 4.19. CANADIAN TAX RULING. As promptly as practicable,
BMO shall apply to the Canada Customs and Revenue Agency for an
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advance income tax ruling regarding certain Canadian income tax
matters (the "Canadian Tax Ruling") including, for greater certainty,
rulings that:
(a) the proposed forward merger of the Company with and
into BFC will not result in a disposition for Canadian tax
purposes of the shares of BFC held by BMO immediately before the
Effective Time; and
(b) the adjusted cost base for Canadian tax purposes of the
Surviving Corporation's shares received by BMO in consideration
for BMO's issuing BMO Shares and paying cash to the Company
shareholders will include an amount equal to the aggregate of the
fair market value, at the Effective Time, of the BMO shares
issued and the amount of cash paid to the shareholders of the
Company as a result of the Merger.
SECTION 4.20. FORMATION OF NEWCO. In the event that the Merger
is in the form of the Plan B Merger, BMO, prior to the Effective Time,
shall organize NewCo as a Delaware corporation, become and remain the
sole stockholder of NewCo, cause NewCo to become a party to this
Agreement or execute a related merger agreement providing for the
Plan B Merger, execute a written consent as the sole stockholder of
NewCo adopting and approving this Agreement and the Plan B Merger and
obtain all regulatory and other approvals required in connection with
enactment of the provisions of this Section 4.20. Furthermore, BMO
will not transfer or cause to be transferred any stock of NewCo or
assets of the Company to a person unless in each instance either
(a) the transferee is a corporation and the transferor corporation
controls the transferee corporation or (b) BMO has received an opinion
of tax counsel to BMO or a ruling from the Internal Revenue Service to
the effect that such transfer will not preclude the Plan B Merger from
qualifying as a reorganization under Section 368 of the Code. For
purposes of this Section, "control" shall have the meaning set forth
in Section 368(c) of the Code.
ARTICLE V
CONDITIONS PRECEDENT TO OBLIGATIONS
OF BMO, BFC AND THE COMPANY
The obligations of BMO, BFC and the Company to effect the Merger
are subject to the satisfaction of the following conditions precedent:
SECTION 5.1. COMPANY SHAREHOLDER APPROVAL. This Agreement and
the Merger shall have been duly approved and adopted by the requisite
vote of the shareholders of the Company under applicable law.
SECTION 5.2. REGULATORY APPROVALS AND LEGAL REQUIREMENTS. All
approvals and consents required by law to be received in connection
with the Merger, including (without limitation) the approvals of the
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FRB, the Commissioner, and agencies referred to in Section 4.1
hereof), shall have been received, shall be reasonably satisfactory in
all respects to BMO (including, without limitation, any conditions or
requirements prescribed by any such approval or consent) and shall be
in effect, and all conditions or requirements prescribed by any such
approval or consent (or by law in connection therewith) shall have
been satisfied to consummate this transaction.
SECTION 5.3. EFFECTIVENESS OF F-4. The F-4 shall have been
declared effective and shall not be subject to a stop order or any
threatened stop order.
SECTION 5.4. NYSE LISTING. The BMO Shares to be issued in the
Merger pursuant to this Agreement will have been accepted for listing
on the New York Stock Exchange, subject to official notice of
issuance, and freely tradable in the United States.
SECTION 5.5. TAX OPINION. BMO and the Company shall have
received the opinion of their respective tax counsel, ▇▇▇▇▇▇▇ and
▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇, in form and substance reasonably
satisfactory to BMO and the Company, dated as of the Closing,
substantially to the effect that on the basis of the facts,
representations and assumptions set forth in each such opinion which
are consistent with the state of facts existing at the Effective Time,
the Merger will be treated as a reorganization within the meaning of
Section 368(a) of the Code. In rendering such opinions, counsel may
require and rely upon representations contained in certificates of
officers of the Company, BMO, BFC and others, reasonably satisfactory
in form and substance to such counsel.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATION OF BMO AND BFC
The obligation of BMO and BFC to effect the Merger is subject to
the satisfaction of the following further conditions precedent, unless
waived in writing by BMO and BFC:
SECTION 6.1. REPRESENTATIONS, WARRANTIES AND COVENANTS. The
representations and warranties of the Company contained in Section
2.2.1, 2.2.2, and 2.2.3 and 2.28 of this Agreement shall be true and
accurate in all material respects as of the date hereof and, except as
otherwise contemplated by this Agreement, as of the time immediately
prior to the Effective Time as though made on and as of such time
without regard to any additions, deletions or other modifications to
the Disclosure Statement delivered on the date hereof that may be
included in the updated Disclosure Statement to be delivered pursuant
to Section 6.6 hereof. All other representations and warranties of
the Company set forth in this Agreement shall be true and correct as
of the date of this Agreement and, except as otherwise contemplated by
this Agreement, as of the time immediately prior to the Effective Time
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as though made on and as of such time without regard to any additions,
deletions or other modifications to the Disclosure Statement delivered
on the date hereof that may be included in the updated Disclosure
Statement to be delivered pursuant to Section 6.6 hereof; PROVIDED,
HOWEVER, that for all purposes of this Section, such other
representations and other warranties shall be deemed to be so true and
correct unless the failure or failures of all representations and
warranties to be so true and correct, either individually or in the
aggregate, and without giving effect to any qualification as to
materiality or Material Adverse Effect set forth in such other
representations or warranties, will have or are reasonably likely to
have a Material Adverse Effect on the Company or Surviving
Corporation. The Company shall have delivered to BMO and BFC a
certificate dated the day of the Effective Time and signed by the
Chairman or Chief Executive Officer of the Company to the effect set
forth in the first two sentences of this Section.
SECTION 6.2. ADVERSE CHANGES. There shall have been no
Material Adverse Effect on the Company after the date of the last
audited balance sheet. The Company shall have delivered to BMO and
BFC a certificate dated the day of the Effective Time and signed by
the Chairman or Chief Executive Officer of the Company to the effect
set forth in the first sentence of this Section.
SECTION 6.3. PERFORMANCE OF OBLIGATIONS OF THE COMPANY. The
Company shall have performed all obligations required to be performed
by it under this Agreement at or prior to the Closing except where the
failure to perform such obligation would not have a Material Adverse
Effect. The Company shall have delivered to BMO and BFC a certificate
dated the day of the Effective Time and signed by the Chairman or
Chief Executive Officer of the Company to the effect set forth in the
first sentence of this Section.
SECTION 6.4. LITIGATION. No court or regulatory order or
ruling shall be in effect which prohibits the consummation of the
Merger. No litigation or proceeding shall be pending which seeks to
restrain or prohibit or obtain damages or other relief in connection
with or in any way relating to the consummation of the Merger that
involves a reasonable likelihood of an adverse outcome which would
have a Material Adverse Effect on the Company (determined as though
the claims at issue were made against the Company).
SECTION 6.5. LEGAL MATTERS. All legal matters in connection
with this Agreement and the Merger shall have been approved by counsel
for BMO and BFC, and there shall have been furnished to such counsel
by the Company certified copies of such corporate records of the
Company and each of the Company Subsidiaries and copies of such other
documents as such counsel may reasonably have requested for such
purpose.
SECTION 6.6. UPDATED DISCLOSURE STATEMENT. The Company shall
have delivered to BMO and BFC immediately prior to the Effective Time
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an updated Disclosure Statement which clearly indicates all changes in
the information that was originally contained therein and which
contains such information as shall be necessary to make all of the
representations and warranties of the Company true and accurate as of
the time immediately prior to the Effective Time, and such updated
Disclosure Statement shall not disclose any new information which
would prevent the Company from delivering the certificate described in
Section 6.1 hereof.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATION OF THE COMPANY
The obligation of the Company to effect the Merger is subject to
the satisfaction of the following further conditions precedent, unless
waived in writing by the Company:
SECTION 7.1. REPRESENTATIONS, WARRANTIES AND COVENANTS. The
representations and warranties of BMO and BFC contained in Section 3.7
of this Agreement shall be true and accurate in all respects as of the
date hereof and, except as otherwise contemplated by this Agreement,
as of the time immediately prior to the Effective Time as though made
on and as of such time. All other representations and warranties of
BMO and BFC set forth in this Agreement shall be true and correct as
of the date of this Agreement and, except as otherwise contemplated by
this Agreement, as of the time immediately prior to the Effective Time
as though made on and as of such time; PROVIDED, HOWEVER, that for all
purposes of this Section, such other representations and other
warranties shall be deemed to be so true and correct unless the
failure or failures of all representations and warranties to be so
true and correct, either individually or in the aggregate, and without
giving effect to any qualification as to materiality or Material
Adverse Effect set forth in such other representations or warranties,
will have or are reasonably likely to have a Material Adverse Effect
on BMO, BFC or the Surviving Corporation. BMO and BFC each shall have
delivered to the Company a certificate dated the day of the Effective
Time and signed by the U.S. General Counsel or other executive
officers of BMO or BFC to the effect set forth in the first two
sentences of this Section.
SECTION 7.2. LEGAL MATTERS. All legal matters in connection
with this Agreement and the Merger shall have been approved by counsel
for the Company, and there shall have been furnished to such counsel
by BMO and BFC certified copies of such corporate records of BMO and
BFC and copies of such other documents as such counsel may reasonably
have requested for such purpose.
SECTION 7.3. BMO CERTIFICATE. The Company shall have received
a certificate signed by an officer of BMO and dated as of the
Effective Time to the effect that no circumstance has arisen or
occurred between the date which is ten (10) days prior to the date
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that the Election Form is mailed pursuant to Section 1.3.1 hereof and
the date of such certificate which constitutes a Material Adverse
Effect on BMO.
SECTION 7.4. OTHER OBLIGATIONS OF BMO. BMO shall have
fulfilled its obligations, if any, under Section 4.20 hereof.
ARTICLE VIII
CLOSING
SECTION 8.1. DATE, TIME AND PLACE OF CLOSING. The closing in
respect of the Merger (herein referred to as the "Closing") shall be
held at the offices of ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ within ten (10) calendar
days following the date on which the last of the closing conditions
(as set forth in Articles 5, 6 and 7 herein) is satisfied, which date
(unless otherwise mutually agreed by BMO, BFC and the Company) shall
be the day of the Effective Time.
SECTION 8.2. DELIVERIES OF DOCUMENTS. At the Closing, the
certificates and other documents required to be delivered by this
Agreement shall be delivered.
SECTION 8.3. MERGER TO BE MADE EFFECTIVE. At the Closing,
subject to the terms and conditions of this Agreement, BMO, BFC and
the Company shall instruct their respective representatives to make or
confirm such filings (including, without limitation, the filing with
the Secretary of State of the State of Illinois of the properly
executed Articles of Merger and the filing with the Secretary of State
of the State of Delaware of the properly executed Certificate of
Merger), and to take all such other actions, as shall be required to
give effect to the Merger.
ARTICLE IX
AMENDMENT AND TERMINATION
SECTION 9.1. AMENDMENT. This Agreement may be amended by the
parties hereto with the approval of their respective boards of
directors at any time before or after the Meeting; PROVIDED, HOWEVER,
that after the Meeting, there shall not be made any amendment that by
law requires further approval by the shareholders of the Company
without the further approval of such shareholders. Notwithstanding
the foregoing, no consent or other action on the part of the Company
or its shareholders shall be required or obtained in order to permit
BMO to fulfill its obligations, if any, under Section 4.20 hereof.
SECTION 9.2. TERMINATION.
Section 9.2.1. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after approval of this
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Agreement by the stockholder of BFC or the shareholders of the
Company:
(a) by mutual consent in writing of BMO, BFC and the
Company (with the approval of the Company's board of directors);
or
(b) by BMO, BFC or by the Company (with the approval of its
board of directors), by giving written notice of such termination
to the other party if, upon the taking of the vote of the
shareholders of the Company contemplated by Section 4.2 hereof,
the required approval of such shareholders shall not be obtained;
or
(c) by BMO or BFC, by giving written notice of such
termination to the Company, (i) if there has been a breach or
breaches of any agreement herein on the part of the Company such
that the Company would not be able to deliver the certificate
described in Section 6.1 hereof, which has not been cured or
adequate assurance of cure given, in either case within thirty
(30) business days following notice of such breach from BMO or
BFC, (ii) if BMO or BFC reasonably determines at any time that
any regulatory approval or consent required by law to be received
in connection with the Merger is unlikely to be received or is
unlikely to be received in time to permit the lawful consummation
of the Merger by the date specified in Section 9.2.1(e) hereof,
(iii) if (x) a Takeover Proposal that is publicly disclosed shall
have been commenced, publicly proposed or communicated to the
Company which contains a proposal as to price and the Company
shall not have rejected such proposal in writing within the
earlier of (1) ten (10) business days of its receipt and (2) the
date its existence first becomes publicly disclosed or (y) the
board of directors of the Company, or any committee thereof,
shall have recommended any proposal other than BMO in respect of
a Takeover Proposal, or (iv) if there shall have occurred, after
the date of this Agreement, any change in any law, rule or
regulation, or after the date of this Agreement there shall have
been any decision or action by any court, government or
governmental agency (including, without limitation, any bank
regulatory authority) that could reasonably be expected to
prevent or materially delay consummation of the Merger or that
could reasonably be expected to have a Material Adverse Effect on
the Company, BMO, BFC or the Surviving Corporation; or (v) if
during the period from March 1, 2001 through March 2, 2001, there
are material facts or circumstances of which BMO became aware
involving the Company or a Company Subsidiary that is a bank that
had not previously been publicly disclosed or disclosed to BMO or
its representative which when taken in the aggregate in the
context of all of the due diligence conducted by or on behalf of
BMO in connection with the transactions contemplated hereby,
would have a material and adverse impact on the value of the
transaction to BMO, PROVIDED, HOWEVER, that all such facts shall
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be deemed waived, and BMO's and BFC's right to terminate this
Agreement pursuant to this Section 9.2.1(c)(v) shall terminate at
5:00 p.m., Chicago time, on March 3, 2001, unless prior to such
time, BMO so notifies the Company that BMO is terminating this
Agreement pursuant to this clause (v) and the notice sets forth
the facts which constitute the basis for its termination and is
signed by the Chairman and CEO of BFC, the Executive Vice
President, Retail Banking of ▇▇▇▇▇▇ Bank and the Senior Vice
President and U.S. General Counsel for BMO (it being understood
that the Company shall provide access (including after hours
access) to its books, records, facilities and personnel during
such period; or (vi) if the board of directors of the Company
fails to recommend or withdraws its recommendation to the
shareholders of the Company of the approval and adoption by the
shareholders of the Company of this Agreement; or (vii) if the
Distribution Date (as defined in the Company Rights Agreement)
occurs; or
(d) by the Company (with the approval of its board of
directors), by giving written notice of such termination to BMO
and BFC, if there has been a breach or breaches of any agreement
herein on the part of BMO or BFC, such that BMO and BFC could not
deliver the certificates described in Section 7.1 hereof, which
has not been cured or adequate assurance of cure given, in either
case within thirty (30) business days following notice of such
breach from the Company; or
(e) by BMO or BFC or by the Company (with the approval of
its board of directors), by giving written notice of such
termination to the other party, if the Merger shall not have been
consummated on or before October 31, 2001; provided that if the
Merger has not been consummated primarily due to a failure to
satisfy a condition set forth in Section 5.2 hereof, in that
event the forgoing date shall be extended to December 31, 2001
unless the party requesting such consent or approval has been
advised that the same has been or will be denied or conditioned
in a material manner unacceptable to the party requiring such
consent or will not be forthcoming; or
(f) by the Company (with the approval of its board of
directors), by giving written notice of such termination to BMO
and BFC, to allow the Company to enter into an agreement with
respect to a Superior Proposal in accordance with Section 2.22.4.
Any notice of termination hereunder shall specify the
paragraph of this Section 9.2 pursuant to which such termination
is being effected (and, in the event of a termination pursuant to
Section 9.2.1 (c), the clause thereof), and such termination
shall be deemed effected only pursuant to the paragraph and/or
clause so specified notwithstanding that a termination could have
been effected pursuant to any other paragraph or clause.
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Section 9.2.2. If this Agreement is properly terminated for any
reason set forth in Section 9.2.1 hereof, no party to this Agreement
shall have any further liability hereunder of any nature whatsoever to
the other party hereto; PROVIDED, HOWEVER, that, notwithstanding the
foregoing, (a) this Section 9.2.2 shall not preclude liability from
attaching to BMO for a purported termination hereof under
Section 9.2.1(c)(v) if such termination is determined not to have been
permitted by the terms of such section, and (b) termination of this
Agreement shall not terminate or affect the agreements of the parties
contained in this Section 9.2.2, in Section 4.4 hereof (with respect
to confidentiality), in Section 4.8 (with respect to a termination
payment), in Section 10.2 (with respect to notices), in Section 10.3
(with respect to the payment of certain expenses), in Section 10.4
(regarding further assurances), in Section 10.6 (with respect to
waivers), and in Sections 10.9 and 10.10 (with respect to choice of
law and jurisdiction), provisions of all of which Sections shall
survive any termination of this Agreement.
ARTICLE X
GENERAL PROVISIONS
SECTION 10.1. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
AGREEMENTS. The agreements contained in Article I, Sections 4.14,
4.18, 4.20, 10.4, 10.8, 10.9, 10.10 and 10.13 hereof shall survive the
Merger. All other representations, warranties and agreements
contained in this Agreement and in any certificate or other document
delivered pursuant to this Agreement (other than the Merger Filings)
shall not survive the Merger.
SECTION 10.2. NOTICES. Each notice, request, demand, approval
or other communication which may be or is required to be given under
this Agreement shall be in writing and shall be deemed to have been
properly given when delivered personally at the address set forth
below for the intended party during normal business hours at such
address, when sent by facsimile or other electronic transmission to
the respective facsimile transmission numbers of the parties set forth
below with telephone confirmation of receipt, or when sent by
recognized overnight courier or by the United States registered or
certified mail, return receipt requested, postage prepaid, addressed
as follows:
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(a) if to BMO and/or BFC, at:
Bank of Montreal and/or
Bankmont Financial Corp.
c/o Harris Trust and Savings Bank
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Senior Vice President and
U.S. General Counsel
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to the Company, at:
First National Bancorp, Inc.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Chief Executive Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Notices shall be given to such other addressee or address, or both, or
by way of such other facsimile transmission number, as a particular
party may from time to time designate by written notice to the other
party hereto. Each notice, request, demand, approval or other
communication which is sent in accordance with this Section shall be
deemed given and received for all purposes of this Agreement as of two
(2) business days after the date of deposit thereof for mailing in a
duly constituted United States post office or branch thereof, one (1)
business day after deposit with a recognized overnight courier service
or upon confirmation of receipt of any facsimile transmission. Notice
given to a party hereto by any other method shall only be deemed to be
given and received when actually received in writing by such party.
SECTION 10.3. EXPENSES AND CERTAIN REQUIRED ACCRUALS. Whether
or not the Merger is consummated, each of BMO, BFC and the Company
shall, and the Company shall cause each of the Company Subsidiaries
to, bear its own legal, accounting and other expenses incurred in
connection with this Agreement and the Merger. Notwithstanding the
foregoing, BMO and the Company shall share equally in the costs of
printing and mailing of the proxy materials and F-4 described in
Section 4.3 hereof.
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SECTION 10.4. FURTHER ASSURANCES. From time to time after the
Effective Time, as and when requested by the Surviving Corporation and
to the extent permitted by law, the officers and directors of BMO and
each of the officers and directors of BFC and the Company last in
office shall execute and deliver such assignments, deeds and other
instruments and shall take or cause to be taken such further or other
actions as shall be necessary in order to vest or perfect in or to
confirm of record or otherwise to the Surviving Corporation title to
and possession of, all of the assets, rights, franchises and interests
of each of BFC and the Company in and to every type of property (real,
personal and mixed) and things in action, and otherwise to carry out
the intent and purposes of this Agreement, and the proper officers and
directors of the Surviving Corporation are fully authorized to take
any and all such actions in the name of BMO, BFC or the Company or
otherwise.
SECTION 10.5. PUBLICITY. Neither BMO, BFC nor the Company
shall, nor shall either of them permit its directors, officers,
employees or agents to, issue or cause the publication of any press
release or other announcement with respect to this Agreement or the
Merger or otherwise make any disclosures relating thereto to the press
or any third party without the prior consent of the other party, which
consent shall not be unreasonably withheld; PROVIDED, HOWEVER, that
such consent shall not be required where such release, announcement or
disclosure is required by applicable law or the rules or regulations
of a securities exchange, other self-regulatory authority or
governmental agency (including, without limitation, the rules and
regulations of bank regulatory authorities with respect to the
publication of notice of the Merger in connection with the
applications for required approvals thereof).
SECTION 10.6. WAIVERS. No waiver by any of the parties to this
Agreement of any condition, term or provision hereof shall be valid
unless set forth in an instrument in writing signed on behalf of such
party, and no such waiver shall be deemed a waiver of any preceding or
subsequent breach of the same or any other condition, term or
provision of this Agreement.
SECTION 10.7. ADDITIONAL TERMS.
Section 10.7.1. When used in connection with the Company, BMO,
BFC or the Surviving Corporation, the phrase "Material Adverse Effect"
means, for purposes of this Agreement, any change, event or effect,
that is materially adverse to (a) the business, assets (including
intangible assets), financial condition or results of operations of
(i) the Company and the Company Subsidiaries taken as a whole or
(ii) BMO or BFC or (iii) the Surviving Corporation, as the case may be
(except for those changes, events and effects (x) resulting from the
condition of the economy or the securities markets of the United
States, or (y) relating to conditions affecting the banking and
financial industry as a whole or (z) resulting from the execution of
this Agreement or the announcement of the transactions contemplated
-56-
herein) or (b) the ability of such party and its subsidiaries to
consummate the transactions contemplated hereby.
Section 10.7.2. When used in connection with the Company, BMO
and BFC the phrase "to the Company's knowledge," "to the BMO's
knowledge" or "to BFC's knowledge" means, for purposes of this
Agreement, the actual knowledge of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (in the case of the
Company) or of any executive officer (in the case of BMO or BFC), as
the case may be.
SECTION 10.8. ENTIRE AGREEMENT AND BINDING EFFECT. This
Agreement (a) constitutes the entire agreement and supersedes all
other prior agreements and understandings, both written and oral,
between the parties hereto with respect to the subject matter hereof;
(b) shall be binding upon and inure for the benefit of BMO, BFC and
the Company and their respective successors and, except for
Section 4.14 and Section 4.18, is not intended to confer upon any
other person any rights or remedies hereunder; and (c) shall not be
assigned or transferred by operation of law or otherwise.
SECTION 10.9. GOVERNING LAW. This Agreement shall in all
respects be governed by and construed in accordance with the laws of
the State of Illinois.
SECTION 10.10. CONSENT TO JURISDICTION. Each of the parties
hereby submits to the exclusive jurisdiction of the courts of the
State of Illinois sitting in the City of Chicago in respect of the
transactions contemplated by this Agreement and the Company Share
Option Agreement, and hereby waives, and agrees not to assert, as a
defense in any action, suit or proceeding involving any of the
transactions contemplated by this Agreement or the Company Share
Option Agreement, that it is not subject thereto or that such action,
suit or proceeding may not be brought or is not maintainable in said
courts or that this Agreement and the Company Share Option Agreement
may not be enforced in or by said courts or that its property is
exempt or immune from execution, that the suit, action or proceeding
is brought in an inconvenient forum, or that the venue of the suit,
action or proceeding is improper.
SECTION 10.11. COUNTERPARTS. This Agreement may be executed in
two or more counterparts, each of which shall be deemed to constitute
an original, but all of which together shall constitute one and the
same instrument.
SECTION 10.12. CAPTIONS. The captions contained in this
Agreement are for reference purposes only and are not part of this
Agreement.
SECTION 10.13. SEVERABILITY. If any provision contained in this
Agreement is held to be invalid, illegal or unenforceable to any
extent by a court of competent jurisdiction, such provisions will be
-57-
severed herefrom and such invalidity, illegality or unenforceability
will not affect any other provision of this Agreement, the balance of
which will remain in and have its intended full force and effect.
[SIGNATURE PAGE FOLLOWS]
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In Witness Whereof, BMO, BFC and the Company have caused this
Agreement to be signed by their respective officers thereunto duly
authorized, all as of the date first written above.
Bank of Montreal, a chartered First National Bancorp, Inc.,
bank of corporation an Illinois Canada
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇▇▇
-------------------------- -------------------------
Its: Senior Vice President Its: President and Chief
and U.S. General Operating Officer
Counsel
Bankmont Financial Corp., a
Delaware corporation
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------
Its: General Counsel
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