Exhibit 99.2
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AGREEMENT AND PLAN OF MERGER
dated as of September 11, 2003
by and between
ROUND LAKE BANKCORP, INC.
and
NORTHERN STATES FINANCIAL CORPORATION
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Page
ARTICLE I CERTAIN DEFINITIONS......................................1
1.01 Certain Definitions..........................................1
ARTICLE II THE MERGER...............................................6
2.01 The Merger...................................................6
2.02 Effective Date and Effective Time............................7
ARTICLE III CONSIDERATION; EXCHANGE PROCEDURES.......................7
3.01 Effect on Capital Stock......................................7
3.02 Rights as Shareholders; Stock Transfers......................8
3.03 Exchange Procedures..........................................8
3.04 Anti-Dilution Provisions.....................................9
3.05 Dissenters' Rights...........................................9
ARTICLE IV ACTIONS PENDING ACQUISITION.............................10
4.01 Forbearances of RLBI........................................10
4.02 Forbearances of the Company.................................13
ARTICLE V REPRESENTATIONS AND WARRANTIES..........................13
5.01 Disclosure Schedules........................................13
5.02 Representations and Warranties of RLBI......................13
5.03 Representations and Warranties of the Company...............24
ARTICLE VI COVENANTS...............................................26
6.01 Best Efforts................................................26
6.02 Shareholder Approval........................................26
6.03 Proxy Statement.............................................27
6.04 Press Releases..............................................27
6.05 Access; Information.........................................27
6.06 Acquisition Proposals.......................................29
6.07 Certain Policies............................................30
6.08 Regulatory Applications.....................................31
6.09 Indemnification.............................................31
6.10 Benefit Plans...............................................32
6.11 Notification of Certain Matters.............................32
6.12 Covenant Relating to the Tax Status of the Agreement........33
6.13 Human Resources Issues......................................33
6.14 Assistance with Third-Party Agreements......................33
6.15 Additional Agreements.......................................34
6.16 Pre-Closing Adjustments.....................................34
6.17 Voting Agreements...........................................34
6.18 Bank Merger.................................................35
6.19 Delivery of Supplements to Disclosure Schedules.............35
6.20 Environmental Investigation.................................35
ARTICLE VII CONDITIONS TO CONSUMMATION OF THE MERGER................36
7.01 Conditions to Each Party's Obligation to Effect
the Merger.............................................36
7.02 Conditions to Obligation of RLBI............................37
7.03 Conditions to Obligation of the Company
and Merger Subsidiary....................................37
ARTICLE VIII TERMINATION............................................39
8.01 Termination.................................................39
8.02 Effect of Termination and Abandonment.......................40
ARTICLE IX MISCELLANEOUS...........................................41
9.01 Survival....................................................41
9.02 Waiver; Amendment...........................................41
9.03 Counterparts................................................41
9.04 Governing Law, Jurisdiction and Venue.......................41
9.05 Expenses....................................................42
9.06 Notices.....................................................42
9.07 Entire Understanding; No Third Party Beneficiaries..........43
9.08 Effect......................................................43
9.09 Severability................................................43
9.10 Enforcement of the Agreement................................43
9.11 Consequential Damages.......................................43
9.12 Interpretation..............................................44
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SCHEDULES TO AGREEMENT AND PLAN OF
MERGER BY AND BETWEEN ROUND LAKE BANKCORP,
INC. AND NORTHERN STATES FINANCIAL CORPORATION
1. Schedule 4.01(b): Rights
2. Schedule 4.01(d): Compensation; Employment Agreements; Etc.
3. Schedule 4.01(f): Benefit Plans
4. Schedule 5.02(a)(i): Organization, Standing and Authority
5. Schedule 5.02(a)(ii): Organization, Standing and Authority
6. Schedule 5.02(f): Regulatory Approvals; No Violations
7. Schedule 5.02(g)(i): Financial Reports; Undisclosed Liabilities
8. Schedule 5.02(g)(iv): Financial Reports; Undisclosed Liabilities
9. Schedule 5.02(h): Litigation
10. Schedule 5.02(i): Regulatory Matters
11. Schedule 5.02(k): Material Contracts
12. Schedule 5.02(n): Employee Benefit Plans
13. Schedule 5.02(p): Environmental Matters
14. Section 5.02(q): Tax Matters
15. Schedule 5.02(r): Risk Management Instruments
16. Schedule 5.02(t): Insurance
17. Schedule 5.02(v): Transactions with Affiliates
18. Schedule 5.02(w): Real Property
19. Schedule 5.02(z): Loans
20. Schedule 6.10(d): Benefit Plans
21. Schedule 6.17: Voting Agreements
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EXHIBITS
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Exhibit A: Stockholder Voting Agreement
Exhibit B: Agreement Of Merger By And Between First State Bank of Round Lake
And Bank Of Waukegan
Exhibit C: Legal Opinion
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AGREEMENT AND PLAN OF MERGER, dated as of September 11, 2003 (this
"Agreement"), by and between Round Lake Bankcorp, Inc. ("RLBI"), an Illinois
corporation and Northern States Financial Corporation, a Delaware corporation
(the "Company").
RECITALS
A. RLBI. RLBI is an Illinois corporation having its principal
place of business in Round Lake, Illinois. RLBI is a bank holding company duly
registered as such with the Board of Governors of the Federal Reserve System
(the "Federal Reserve Board") under the Federal Bank Holding Company Act of
1956, as amended (the "Federal Bank Holding Company Act").
B. The Company. The Company is a Delaware corporation having its
principal place of business in Waukegan, Illinois. The Company is a bank holding
company duly registered as such with the Federal Reserve Board under the Federal
Bank Holding Company Act.
C. Merger Subsidiary. Upon execution of this Agreement, the
Company shall form, or shall cause one of its wholly owned Subsidiaries to form,
a merger subsidiary ("Merger Subsidiary"), all of the outstanding capital stock
of which shall be owned by the Company or the Company's wholly owned Subsidiary,
as the case may be.
D. Bank Merger. In connection with the transactions described
herein, RLBI and the Company intend that Merger Subsidiary will be merged into
RLBI, and that First State Bank of Round Lake (the "Bank"), a wholly-owned
Subsidiary of RLBI, shall merge (the "Bank Merger") with and into Bank of
Waukegan, a wholly-owned Subsidiary of the Company.
E. Intentions of the Parties. Pursuant to the terms and
conditions of this Agreement, the Company will acquire RLBI by causing the
Merger Subsidiary to merge with and into RLBI and RLBI shall survive and
continue to exist as the surviving entity. It is the intention of the parties to
this Agreement that the business combination contemplated hereby be treated as a
purchase of all of the stock of RLBI by the Company for U.S. federal income tax
purposes and that for such purposes the transitory existence of Merger
Subsidiary be ignored.
F. Board Action. The respective Boards of Directors of the
Company and RLBI have determined that it is in the best interests of their
respective companies and their shareholders to consummate the strategic business
combination transaction provided for herein.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, representations, warranties and agreements contained herein the
parties agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
1.01 Certain Definitions. The following terms shall have the meanings
set forth below:
"Acquisition Proposal" has the meaning set forth in Section 6.06(b).
"Advisors" has the meaning set forth in Section 7.03(g).
"Agreement" has the meaning set forth in the first paragraph of this
Agreement, as amended or modified from time to time in accordance with Section
9.02.
"ALL" has the meaning set forth in Section 5.02(u).
"Articles of Merger" has the meaning set forth in Section 2.01(b).
"Bank" has the meaning set forth in Recital D.
"Bank Insurance Fund" means the Bank Insurance Fund maintained by the
FDIC.
"Bank Merger" has the meaning set forth in Recital D.
"Bank Secrecy Act" means the Currency and Foreign Transaction Reporting
Act (31 U.S.C. Section 5311 et seq.), as amended.
"Benefit Plans" has the meaning set forth in Section 5.02(n)(i).
"Business Day" means Monday through Friday of each week, except a legal
holiday recognized as such by the U.S. Government or any day on which banking
institutions in the State of Illinois are authorized or obligated to close.
"Certificate" has the meaning set forth in Section 3.01(a).
"Closing" has the meaning set forth in Section 6.16.
"Closing Financial Statements" has the meaning set forth in Section
7.03(e).
"Code" means the Internal Revenue Code of 1986, as amended.
"Community Reinvestment Act" means the Community Reinvestment Act of
1977, as amended.
"Company" has the meaning set forth in the first paragraph to this
Agreement.
"Company Board" means the Board of Directors of the Company.
"Company Common Stock" means the common stock, no par value per share,
of the Company.
"Company Preferred Stock" means the preferred stock, no par value per
share, of the Company.
"Company Stock" means, collectively, the Company Common Stock and the
Company Preferred Stock.
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"Costs" has the meaning set forth in Section 6.09(a).
"Derivatives Contract" has the meaning set forth in Section 5.02(r).
"Disclosure Schedule" has the meaning set forth in Section 5.01.
"Dissenters' Shares" has the meaning set forth in Section 3.01(d).
"Dissenting Shareholder" means any holder of Dissenters' Shares.
"Effective Date" has the meaning set forth in Section 2.02.
"Effective Time" has the meaning set forth in Section 2.02.
"Employees" has the meaning set forth in Section 5.02(n)(i).
"Employment Agreements" means the employment contracts between the Bank
and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇, collectively.
"Environmental Laws" has the meaning set forth in Section 5.02(p).
"Equal Credit Opportunity Act" means the Equal Credit Opportunity Act
(15 U.S.C. Section 1691 et seq.), as amended.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" has the meaning set forth in Section 5.02(n)(iii).
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder.
"Exchange Fund" has the meaning set forth in Section 3.03(a).
"Fair Housing Act" means the Fair Housing Act (420 U.S.C. Section 3601
et seq.), as amended.
"FDIC" means the Federal Deposit Insurance Corporation.
"Federal Bank Holding Company Act" has the meaning set forth in Recital
A to this Agreement.
"Federal Reserve Act" means the Federal Reserve Act, as amended.
"Federal Reserve Board" has the meaning set forth in Recital A to this
Agreement.
"GAAP" means generally accepted accounting principles, applied on a
consistent basis.
"Governmental Authority" means any court, administrative agency or
commission or other federal, state or local governmental authority or
instrumentality.
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"Hazardous Substance" has the meaning set forth in Section 5.02(p).
"Home Mortgage Disclosure Act" means the Home Mortgage Disclosure Act
(12 U.S.C. Section 2801 et seq.), as amended.
"IBCA" means the Illinois Business Corporation Act.
"Illinois Commissioner" means the Illinois Commissioner of the Illinois
Office of Banks and Real Estate.
"Illinois Secretary" means the Illinois Secretary of State.
"Indemnified Party" has the meaning set forth in Section 6.09(a).
"Insurance Policies" has the meaning set forth in Section 5.02(t).
"Knowledge" of RLBI or the Company, as the case may be, means to the
actual knowledge after reasonable investigation of any director or any officer
with the title of Vice President or above of RLBI and the Bank, or the Company,
as the case may be, or of any employee of RLBI, the Bank, or the Company, as the
case may be, with primary responsibility for the subject matter as to which
Knowledge is at issue.
"Lien" means any charge, mortgage, pledge, security interest,
restriction, claim, lien or encumbrance or any other encumbrance or exception to
title of any kind.
"Material Adverse Effect" means, with respect to the Company or RLBI,
any effect, circumstance, occurrence or change that (i) is material and adverse
to the financial position, results of operations, business or prospects of the
Company and its Subsidiaries taken as a whole or RLBI, as the case may be, or
(ii) would materially impair the ability of either the Company or RLBI to
perform its obligations under this Agreement or otherwise materially threaten or
materially impede the consummation of the Merger and the other transactions
contemplated by this Agreement; provided, however, that a Material Adverse
Effect shall not be deemed to include the impact of (a) changes in banking and
similar laws of general applicability or interpretations thereof by Governmental
Authorities, (b) changes in GAAP or regulatory accounting requirements
applicable to banks and their holding companies generally, (c) changes in
general economic conditions, including changes in interest rates, affecting
similarly situated banks and their holding companies, (d) changes agreed to in
writing by the Company and RLBI, (e) any fees associated with the Merger,
including attorney, accounting, investment banking and consultant fees, and (f)
any pre-closing costs or adjustments as referenced in Section 6.16.
"Merger" has the meaning set forth in Section 2.01(a).
"Merger Consideration" has the meaning set forth in Section 2.01(a).
"Merger Subsidiary" has the meaning set forth in the Recital C to this
Agreement.
"National Labor Relations Act" means the National Labor Relations Act,
as amended.
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"Offer Price" has the meaning set forth in Section 3.01(a).
"Office of Banks and Real Estate" means the Illinois Office of Banks
and Real Estate.
"Paying Agent" has the meaning set forth in Section 3.03(a).
"Pension Plan" has the meaning set forth in Section 5.02(n)(ii).
"Person" means any individual, bank, corporation, partnership,
association, joint-stock company, business trust, limited liability company,
limited liability partnership, unincorporated organization, governmental
organization or similar type entity.
"Proxy Statement" has the meaning set forth in Section 6.03(a).
"Regulatory Authorities" has the meaning set forth in Section 5.02(i).
"Regulatory Filings" has the meaning set forth in Section 5.02(g)(ii).
"Rights" means, with respect to any Person, stock appreciation rights,
warrants and any other securities or obligations convertible into or exercisable
or exchangeable for, or giving any Person any right to subscribe for or acquire,
or any options, calls or commitments relating to, or other instrument the value
of which is determined in whole or in part by reference to the market price or
value of, the capital stock of such Person.
"RLBI" has the meaning set forth in the first paragraph of this
Agreement.
"RLBI Articles" means the Articles of Incorporation of RLBI, as
amended.
"RLBI Board" means the Board of Directors of RLBI.
"RLBI Bylaws" means the Bylaws of RLBI.
"RLBI Common Stock" means the common stock, no par value per share, of
RLBI.
"RLBI Meeting" has the meaning set forth in Section 6.02.
"SEC" means the United States Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations thereunder.
"Subsidiary" has the meaning ascribed to it in Rule 102 of Regulation
S-X of the SEC.
"Superior Proposal" has the meaning set forth in Section 6.06(b).
"Surviving Company" has the meaning set forth in Section 2.01(a).
"Tax" and "Taxes" mean all federal, state, local or foreign taxes,
charges, fees, levies or other assessments, however denominated, including,
without limitation, all net income, gross
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income, gains, gross receipts, sales, use, ad valorem, goods and services,
capital, production, transfer, franchise, windfall profits, license,
withholding, payroll, employment, disability, employer health, excise,
estimated, severance, stamp, occupation, property, environmental, unemployment
or other taxes, custom duties, fees, assessments, levies or charges of any kind
whatsoever, together with any interest, additions or penalties thereto and any
interest in respect of such interest and penalties.
"Tax Returns" means any return, amended return or other report
(including elections, declarations, forms, disclosures, schedules, estimates and
information returns) required to be filed with any taxing authority having
jurisdiction over RLBI or an RLBI Subsidiary on or before the Effective Date
with respect to any Taxes including, without limitation, any documentation
required to be filed with any taxing authority or to be retained by RLBI or an
RLBI Subsidiary in respect of information reporting requirements imposed by the
Code or any similar foreign, state or local law.
"Termination Fee" has the meaning set forth in Section 8.02(b).
"Treasury Shares" has the meaning set forth in Section 3.01(e).
"USA Patriot Act" means the USA Patriot Act (Pub. L. No. 107-56).
ARTICLE II
THE MERGER
2.01 The Merger. (a) The Combination. As of the Effective Time, the
Merger Subsidiary shall merge with and into RLBI (the "Merger"), the separate
corporate existence of Merger Subsidiary shall cease and RLBI shall survive and
continue to exist (RLBI, as the surviving entity in the Merger, sometimes being
referred to herein as the "Surviving Company"). The Company, at any time prior
to the Effective Time (including, to the extent permitted by applicable law,
after RLBI's shareholders have approved this Agreement), may change the method
of effecting the combination of Merger Subsidiary with RLBI (including, without
limitation, the provisions of this Article II and including, without limitation,
by electing not to merge Merger Subsidiary with and into RLBI; provided,
however, that no such change shall (i) alter or change the amount or kind of
consideration to be issued to holders of RLBI Common Stock as provided for in
this Agreement (the "Merger Consideration"), (ii) adversely affect the tax
treatment of RLBI's shareholders as a result of receiving the Merger
Consideration, (iii) impede or delay consummation of the transactions
contemplated by this Agreement or (iv) otherwise be materially prejudicial to
the interests of the shareholders of RLBI.
(b) Filings. Subject to the satisfaction or waiver of the
conditions set forth in Article VII, the Merger shall become effective at the
Effective Time. Articles of Merger (the "Articles of Merger"), in a form
acceptable to the parties shall be filed with the Illinois Secretary.
(c) Articles of Incorporation and Bylaws. The Articles of
Incorporation and Bylaws of the Surviving Company immediately after the
Effective Time shall be those of RLBI as in effect immediately prior to the
Effective Time.
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(d) Directors and Officers of the Surviving Company. The
directors and officers of the Surviving Company immediately after the Effective
Time shall be the directors and officers of the Merger Subsidiary immediately
prior to the Effective Time, until such time as their successors shall be duly
elected and qualified.
(e) Effect of the Merger. At the Effective Time, the effect
of the Merger shall be as provided in the IBCA, including any regulations or
rules promulgated thereunder. Without limiting the generality of the foregoing,
and subject thereto, at the Effective Time, all the property, rights,
privileges, powers and franchises of RLBI and Merger Subsidiary shall vest in
the Surviving Company, and all debts, liabilities, obligations, restrictions,
disabilities and duties of RLBI and Merger Subsidiary shall become the debts,
liabilities, obligations, restrictions, disabilities and duties of the Surviving
Company.
2.02 Effective Date and Effective Time. Subject to the satisfaction or
waiver of the conditions set forth in Article VII (other than those conditions
that by their nature are to be satisfied at the consummation of the Merger, but
subject to the fulfillment or waiver of those conditions), the parties shall
cause the filings contemplated by Section 2.01(b) to be made (i) no later than
the third (3rd) Business Day after such satisfaction or waiver or (ii) on such
other date to which the parties may agree in writing (the date of such filing
referred to herein as the "Effective Date"). The "Effective Time" of the Merger
shall be the time of such filing or as set forth in such filing if other than
the time of filing.
ARTICLE III
CONSIDERATION; EXCHANGE PROCEDURES
3.01 Effect on Capital Stock. Subject to the provisions of this
Article III, at the Effective Time of the Merger, as a result of the Merger and
without any action on the part of the Company, RLBI or the holders of shares of
RLBI Common Stock:
(a) Outstanding RLBI Common Stock. Each share of RLBI Common
Stock, excluding Treasury Shares and Dissenters' Shares, issued and outstanding
immediately prior to the Effective Time, shall become and be converted into the
right to receive from the Surviving Company $1,114.68 (the "Offer Price"). At
the Effective Time all such shares shall no longer be outstanding and shall
automatically be cancelled and shall cease to exist, and each holder of a
certificate that immediately prior to the Effective Time represented any such
shares (a "Certificate") shall cease to have any rights with respect thereto,
except the right to receive the Merger Consideration.
(b) Outstanding Merger Subsidiary Stock. Each share of Merger
Subsidiary Stock issued and outstanding immediately prior to the Effective Time
shall become and be converted into one duly and validly issued, fully paid and
nonassessable share of the Surviving Company.
(c) Outstanding Company Stock. Each share of the Company
Stock issued and outstanding immediately prior to the Effective Time shall
remain an issued and outstanding share of the Company Stock and shall not be
affected by the Merger.
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(d) Dissenter's Shares. All shares of RLBI Common Stock that
are "dissenting shares" within the meaning of Article 11 of the IBCA
("Dissenters' Shares") shall not be converted into or represent a right to
receive cash hereunder unless and until such shares have lost their status as
dissenting shares under Article 11 of the IBCA, at which time such shares shall
cease to exist and the holder thereof shall be entitled to receive the Merger
Consideration.
(e) Cancellation of Certain Shares. Any shares of RLBI Common
Stock held directly or indirectly by the Company (or any of its Subsidiaries) or
by RLBI, other than those held in a fiduciary capacity or as a result of debts
previously contracted ("Treasury Shares"), shall be cancelled and retired at the
Effective Time and no consideration shall be issued in exchange therefor.
3.02 Rights as Shareholders; Stock Transfers. At the Effective Time,
holders of RLBI Common Stock shall cease to be, and shall have no rights as,
shareholders of RLBI other than the right to receive the Merger Consideration.
After the Effective Time, there shall be no transfers on the stock transfer
books of RLBI or the Surviving Company of the shares of RLBI Common Stock that
were outstanding immediately prior to the Effective Time.
3.03 Exchange Procedures. (a) Paying Agent. At or prior to the
Effective Time, the Company shall deposit, or shall cause to be deposited, with
the Bank of Waukegan (the "Paying Agent"), for the benefit of the holders of
Certificates, for exchange in accordance with this Article III, funds in amounts
(the "Exchange Fund") for the payment of the Merger Consideration pursuant to
Section 3.01(a) upon surrender of Certificates, it being understood that any and
all interest or income earned on funds made available to the Paying Agent
pursuant to this Agreement shall be turned over to the Company.
(b) Exchange of Certificates for Cash. After the Effective
Date, the Company shall send or cause to be sent, as promptly as practicable and
in no event later than five (5) Business Days after the Effective Date, to each
former holder of record of shares of RLBI Common Stock immediately prior to the
Effective Time transmittal materials for use in exchanging such shareholder's
Certificates for the Merger Consideration. Upon delivery to the Paying Agent of
such transmittal materials (properly completed) and the Certificates
representing such shares of RLBI Common Stock (or indemnity reasonably
satisfactory to the Company and the Paying Agent, if any of such certificates
are lost, stolen or destroyed) the Company shall cause the amount of cash into
which the shares formerly represented by such Certificates shall have been
converted pursuant to this Article III, which such Person shall be entitled to
receive, to be delivered to such holder of record of shares and the Certificates
so delivered shall forthwith be cancelled. The Paying Agent shall process
materials received and issue the Merger Consideration within three Business Days
of the receipt of such materials. In the event of a transfer of ownership of
RLBI Common Stock that is not registered in the stock transfer books of RLBI,
the Merger Consideration may be paid in exchange therefor to a Person other than
the Person in whose name the Certificate so delivered is registered if such
Certificate shall be properly endorsed or otherwise be in proper form for
transfer and the Person requesting such payment shall pay any transfer or other
taxes required by reason of the payment to a Person other than the registered
holder of such Certificate or establish to the satisfaction of the Company
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that such tax has been paid or is not applicable. No interest will be paid on
any such cash which any such Person shall be entitled to receive pursuant to
this Article III upon such delivery.
(c) No Liability. Notwithstanding the foregoing, neither the
Paying Agent nor any party hereto shall be liable to any former holder of RLBI
Common Stock for any amount properly delivered to a public official pursuant to
applicable abandoned property, escheat or similar laws.
(d) Unclaimed Funds. Any portion of the Exchange Fund that
remains unclaimed by the holders or record of shares of RLBI for six months
after the Effective Time shall be paid to the Company. Any shareholders of RLBI
who have not theretofore complied with this Article III shall thereafter look
only to the Company for payment of the Merger Consideration in respect of each
share of RLBI Common Stock such shareholder holds as determined pursuant to this
Agreement, in each case, without any interest thereon.
(e) Withholding Rights. The Company or the Paying Agent shall
be entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any holder of record of shares of RLBI Common
Stock such amounts as the Company or the Paying 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 the Company or the Paying Agent, such withheld amounts shall be
treated for all purposes of this Agreement as having been paid to the holder of
the shares of RLBI Common Stock in respect of which such deduction and
withholding was made by the Company or the Paying Agent.
3.04 Anti-Dilution Provisions. In the event RLBI changes (or
establishes a record date for changing) the number of shares of RLBI Common
Stock issued and outstanding prior to the Effective Date as a result of a stock
split, stock dividend, recapitalization or similar transaction with respect to
the outstanding RLBI Common Stock and the record date therefor shall be prior to
the Effective Date, the Offer Price shall be proportionately adjusted.
3.05 Dissenters' Rights. Any Dissenting Shareholder who shall be
entitled to be paid the value of such shareholder's shares of RLBI Common Stock
as provided in Article 11 of the IBCA shall not be entitled to Merger
Consideration in respect thereof provided for thereunder unless and until such
Dissenting Shareholder shall have failed to perfect or shall have effectively
withdrawn or lost such Dissenting Shareholder's right to dissent from the Merger
under the IBCA, and shall be entitled to receive only the payment provided for
by Article 11 of the IBCA with respect to such Dissenters' Shares. If any
Dissenting Shareholder shall fail to perfect or shall have effectively withdrawn
or lost such right to dissent, each share of RLBI Common Stock held by such
Dissenting Shareholder shall be converted into the right to receive the Merger
Consideration. The Company will have the right to participate in all
negotiations and proceedings related to the Dissenters' Shares. RLBI shall not
make any payment with respect to, or settle or offer to settle, any appraisal
demands without the prior written consent of the Company.
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ARTICLE IV
ACTIONS PENDING ACQUISITION
4.01 Forbearances of RLBI. From the date hereof until the Effective
Time, except as expressly contemplated by this Agreement, without the prior
written consent of the Company, RLBI and the Bank will not:
(a) Ordinary Course. Conduct the business of RLBI and the
Bank other than in the ordinary and usual course, maintain their respective
books in a manner inconsistent with past practices, or fail to use its best
efforts to preserve intact its business organizations and assets and maintain
its rights, franchises and existing goodwill and relations with customers,
suppliers, employees and business associates, or take any action that would
adversely affect or delay the ability of RLBI, the Company or Merger Subsidiary
to perform any of their obligations on a timely basis under this Agreement, or
take any action that would be reasonably likely to have a Material Adverse
Effect on RLBI or the Bank.
(b) Capital Stock. Other than pursuant to the Rights set
forth in Section 4.01(b) of the Disclosure Schedule and outstanding on the date
hereof, (i) issue, sell or otherwise permit to become outstanding, or authorize
the creation of, any additional shares of stock or any Rights, (ii) enter into
any agreement with respect to (i) above or (iii) permit any shares of stock to
become subject to grants of employee or director stock options, other Rights or
similar stock-based employee rights.
(c) Dividends; Etc. With the exception of the dividend of $6
per share paid on July 2, 2003 and a dividend to be paid immediately before the
Effective Date for the dividend that would normally be declared in December 2003
and paid in January 2004 (with such dividend not to exceed $6 per share and
which shall be pro rated if the Effective Date occurs prior to December 31,
2003), (i) make, declare, pay or set aside for payment any dividend on or in
respect of, or declare or make any distribution on any shares of stock or (ii)
directly or indirectly adjust, split, combine, redeem, reclassify, purchase or
otherwise acquire, any shares of its capital stock.
(d) Compensation; Employment Agreements; Etc. Enter into,
renew, make any new grants of awards under or amend or otherwise modify any
employment, consulting, severance or similar agreements or arrangements with any
director, officer or employee of RLBI or the Bank or grant any salary or wage
increase or increase any employee benefit (including incentive or bonus
payments), except (i) for normal individual increases in compensation to
employees in the ordinary course of business consistent with past practice,
provided that no such increase shall result in an annual adjustment of more than
five percent (5%), (ii) for other changes that are required by applicable law,
(iii) to satisfy contractual obligations existing as of the date hereof and set
forth in Section 4.01(d) of the Disclosure Schedule, (iv) actions required under
the terms of this Agreement, (v) the adoption of a Severance Policy for
employees of the Bank in substantially the form set forth in Schedule 4.01(d).
or (vi) if the Closing has not occurred on or before December 31, 2003, the Bank
may make bonus payments pursuant to the agreements or understandings identified
in Schedule 6.10(d).
10
(e) Hiring. Hire any person as an employee of RLBI or the
Bank or promote any employee.
(f) Benefit Plans. Enter into, establish, adopt or amend
(except (i) as may be required by applicable law or (ii) to satisfy contractual
obligations existing as of the date hereof and set forth in Section 4.01(f) of
the Disclosure Schedule) any pension, retirement, stock purchase, savings,
profit sharing, deferred compensation, consulting, bonus, group insurance or
other employee benefit, incentive or welfare contract, plan or arrangement, or
any trust agreement (or similar arrangement) related thereto, in respect of any
current or former director, officer or employee of RLBI or the Bank or take any
action to accelerate the vesting or exercisability of restricted stock or other
compensation or benefits payable thereunder.
(g) Dispositions. Sell, transfer, mortgage, pledge, encumber
or otherwise dispose of or discontinue any of its assets, deposits, business or
properties except in the ordinary course of business and in a transaction that,
together with all other such transactions, is not material to RLBI or the Bank.
(h) Acquisitions. Acquire (other than by way of foreclosures
or acquisitions of control in a bona fide fiduciary capacity or in satisfaction
of debts previously contracted in good faith) all or any portion of the assets,
business, deposits or properties of any other entity except in the ordinary
course of business consistent with past practice and in a transaction that,
together with all other such transactions, is not material to RLBI or the Bank.
(i) Capital Expenditures. Make any capital expenditures other
than capital expenditures not exceeding $15,000 individually or $50,000 in the
aggregate that are (i) in the ordinary course of business consistent with past
practice in amounts, or (ii) relate to events or occurrences covered,
immediately or otherwise, by insurance, indemnification, or other legal
obligation.
(j) Governing Documents. Amend RLBI's Articles of
Incorporation or Bylaws, or allow the Bank charter or Bylaws to be amended.
(k) Accounting Methods. Implement or adopt any change in
their accounting principles, practices or methods, other than as may be required
by GAAP or this Agreement.
(l) Contracts. Enter into any contract or agreement that
calls for aggregate annual payments of $25,000 or more and which is not
terminable at will or with sixty (60) days or less notice without payment of a
premium or penalty, other than loans and other transactions made in the ordinary
course of the banking business.
(m) Claims. Enter into any settlement or similar agreement
with respect to, or take any other significant action with respect to the
conduct of, any action, suit, proceeding, order or investigation to which RLBI
or the Bank is or becomes a party, which settlement, agreement or action
involves payment by them of an amount, individually or for all such settlements,
other than insured claims, that exceed $50,000 and/or would impose any material
restriction on their business or the business of the Surviving Company or create
precedent for claims that are reasonably likely to be material to the Surviving
Company, RLBI or the Bank.
11
(n) Adverse Actions. Knowingly take any action that is
intended or is reasonably likely to result in (i) any of RLBI's representations
and warranties set forth in this Agreement being or becoming untrue in any
material respect at any time at or prior to the Effective Time, (ii) any of the
conditions to the Merger set forth in Article VII not being satisfied or (iii) a
material violation of any provision of this Agreement, except as may be required
by applicable law or regulation.
(o) Risk Management. Except as required by applicable law or
regulation or the Federal Reserve Board, the FDIC or the Illinois Office of
Banks and Real Estate, (i) implement or adopt any material change in its
interest rate and other risk management policies, procedures or practices, (ii)
fail to substantially follow RLBI's or the Bank's existing policies or practices
with respect to managing its exposure to interest rate and other risk or (iii)
fail to use reasonable means to avoid any material increase in RLBI's or the
Bank's aggregate exposure to interest rate risk.
(p) Indebtedness. Incur any indebtedness for borrowed money
(other than deposits, Federal Funds borrowings and borrowings from the Federal
Home Loan Bank of Chicago, all in the ordinary course of business and consistent
with past practices) or assume, guarantee, endorse or otherwise as an
accommodation become responsible for the obligations of any other Person, other
than in the ordinary course of business and consistent with past practices.
(q) Loans. Make any loan, loan commitment or renewal or
extension thereof to any Person which would be materially inconsistent with the
existing loan policies or practices of the Bank or which would, when aggregated
with all outstanding loans, commitments for loans or renewals or extensions
thereof made to such Person and any affiliate or immediate family member of such
Person, exceed $500,000 without submitting complete loan package information to
the chief credit officer of the Company for review with a right of comment at
least two (2) full Business Days prior to taking such action.
(r) Investments. (i) Other than in the ordinary course of
business consistent with past practice in individual amounts not to exceed
$500,000 or in securities transactions as provided in (ii) below, make any
investment either by contributions to capital, property transfers or purchase of
any property or assets of any Person or (ii) other than purchases of direct
obligations of the United States of America or obligations of U.S. government
agencies which are entitled to the full faith and credit of the United States of
America, in any case with a remaining maturity at the time of purchase of five
years or less, purchase or acquire securities of any type; provided, however,
that in the case of investment securities, RLBI or the Bank may purchase
investment securities if, within five Business Days after RLBI or the Bank
requests in writing (which request shall describe in detail the investment
securities to be purchased and the price thereof) that the Company consent to
making of any such purchase, the Company has approved such request in writing or
has not responded in writing to such request.
(s) Taxes. Settle any material audit, make or change any
material tax election, file any amended Tax Return, take any action which would
have a material impact on the tax position of RLBI or the Bank or their
successor after the Merger or take any other action with respect to Taxes that
is outside the ordinary course of business or inconsistent with past practice.
12
(t) Commitments. Agree or commit to do any of the foregoing.
4.02 Forbearances of the Company. From the date hereof until the
Effective Time, except as expressly contemplated by this Agreement, without the
prior written consent of RLBI, the Company will not, and will cause Merger
Subsidiary and each of the Company's Subsidiaries not to:
(a) Ordinary Course. Take any action reasonably likely to
have an adverse effect on the Company's ability to perform any of its material
obligations under this Agreement.
(b) Adverse Actions. Knowingly take any action that is
intended or is reasonably likely to result in (i) any of its representations and
warranties set forth in this Agreement being or becoming untrue in any material
respect at any time at or prior to the Effective Time, (ii) any of the
conditions to the Merger set forth in Article VII not being satisfied or (iii) a
material violation of any provision of this Agreement, except as may be required
by applicable law or regulation.
(c) Commitments. Agree or commit to do any of the foregoing.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.01 Disclosure Schedules. At least three Business Days prior to the
date hereof, RLBI shall have delivered to the Company a schedule (the
"Disclosure Schedule") setting forth the items the disclosure of which is
necessary or appropriate either in response to an express disclosure requirement
contained in a provision hereof or as an exception to one or more
representations or warranties contained in Section 5.02 or to one or more of its
covenants contained in Article IV.
5.02 Representations and Warranties of RLBI. Except as set forth in
the corresponding sections or subsections of the Disclosure Schedule, RLBI
hereby represents and warrants to the Company and to Merger Subsidiary:
(a) Organization, Standing and Authority. RLBI is a
corporation duly organized, validly existing and in good standing under the laws
of Illinois and is a registered bank holding company under the Federal Bank
Holding Company Act. True and accurate copies of the RLBI Articles and RLBI
Bylaws are set forth in Schedule 5.02(a)(i). The Bank is a member of the Federal
Reserve System and its deposits are insured by the FDIC through the Bank
Insurance Fund in the manner and to the fullest extent provided by law. True and
correct copies of the Charter and Bylaws of the Bank are set forth in Schedule
5.02(a)(ii). Neither RLBI nor the Bank are required to be qualified in any other
jurisdictions.
(b) RLBI Capital Stock. The authorized capital stock of RLBI
consists solely of 40,000 shares of RLBI Common Stock, of which 17,763 shares
are issued and outstanding. As of the date hereof, no shares of RLBI Common
Stock are held in treasury by RLBI or otherwise owned directly or indirectly by
RLBI. The outstanding shares of RLBI Common Stock have been duly authorized and
are validly issued and outstanding, and are not subject to
13
preemptive rights (and were not issued in violation of any preemptive rights).
As of the date hereof, there are no shares of RLBI Common Stock authorized and
reserved for issuance, RLBI does not have any other Rights issued or outstanding
with respect to RLBI Common Stock, and RLBI does not have any commitment to
authorize, issue or sell any RLBI Common Stock or Rights, except pursuant to
this Agreement.
(c) Subsidiaries. The authorized capital stock of the Bank
consists of 20,000 shares of common stock, par value $50 per share ("Bank Common
Stock"), 20,000 of which are issued and outstanding. All of the outstanding
shares of the Bank Common Stock are validly issued, fully paid and nonassessable
and are owned by RLBI, free and clear of all Liens. There are no outstanding
options, warrants or other rights in or with respect to the shares of the Bank
Common Stock nor any securities convertible into such stock and the Bank is not
obligated to issue any additional shares of its common stock or any options,
warrants or other rights in or with respect to the unissued shares of the Bank
Common Stock or any other securities convertible into such common stock.
(i) RLBI has one subsidiary, namely the Bank.
(ii) RLBI does not own beneficially, directly or
indirectly, any equity securities or similar interests of any Person or
any interests of any Person or any interest in a partnership or joint
venture of any kind.
(d) Corporate Power. Each of RLBI and the Bank has the
corporate power and authority to carry on its business as it is now being
conducted and to own all of its respective properties and assets and is duly
qualified to do business and in good standing in Illinois and foreign
jurisdictions where its ownership of property or leasing of property or assets
or the conduct of its business operations requires it to be so qualified; and
RLBI has the corporate power and authority and has taken all corporate action
necessary to execute, deliver and perform its obligations under this Agreement
and to consummate the transactions contemplated hereby.
(e) Corporate Authority. As of the date hereof, with respect
to each of clauses (i), (ii) and (iii) below, RLBI's Board, by resolutions duly
adopted by unanimous vote at a meeting duly called and held, has duly (i)
determined that this Agreement and the Merger are advisable and fair to and in
the best interests of RLBI and its shareholders, (ii) approved this Agreement
and the Merger and (iii) resolved that such matter be submitted for
consideration by its shareholders at a meeting of such shareholders and that
such matter be recommended for approval at such meeting. RLBI has duly executed
and delivered this Agreement, and this Agreement is a valid and legally binding
obligation of RLBI, enforceable in accordance with its terms (except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar laws of general
applicability relating to or affecting creditors' rights or by general equity
principles). RLBI Board has received the written opinion of ▇▇▇▇▇ Financial LLC
to the effect that as of the date hereof the Offer Price is fair to the holders
of RLBI Common Stock from a financial point of view.
(f) Regulatory Approvals; No Violations.
14
(i) No consents or approvals of, or waivers by, or
filings or registrations with, any Governmental Authority or with any
third party are required to be made or obtained by RLBI or the Bank in
connection with the execution, delivery or performance by RLBI of this
Agreement or to consummate the Merger or the Bank Merger except for (A)
filings of applications or notices with, and approvals or waivers by,
the Federal Reserve Board, the FDIC, the Illinois Secretary, the
Illinois Commissioner and any other Regulatory Authority, as may be
required, (B) filings with the SEC and state securities authorities, if
any, (C) the approval of the principal terms of the Merger contemplated
by this Agreement by the holders of a majority of the outstanding
shares of RLBI Common Stock, and (D) the filing of the Agreement of
Merger with the Illinois Secretary pursuant to the IBCA and (E) any
consents required under agreements set forth in Sections 5.02(f) and
(k) of the Disclosure Schedule. The Company shall be solely responsible
for obtaining any consents required by contracts set forth in Sections
5.02(f) and (k) of the Disclosure Schedule. As of the date hereof, RLBI
has no Knowledge of any reason for which the approvals sought and set
forth in this Section 5.02(f) and in Section 7.01(b) would not be
received or would be received with the imposition of a condition,
restriction or requirement of the type described in Section 7.01(b).
(ii) Subject to receipt of the approvals
referred to in the preceding paragraph, and the expiration of related
waiting periods, and required filings under federal and state
securities laws, the execution, delivery and performance of this
Agreement by RLBI and the consummation of the transactions contemplated
hereby and thereby do not and will not (A) constitute a breach or
violation of, or a material default under, or give rise to any Lien,
any acceleration of remedies or any right of termination under, any
law, rule or regulation or any judgment, decree, order, governmental
permit or license, or agreement, indenture or instrument of RLBI or to
which RLBI or any of its respective properties is subject or bound, (B)
constitute a breach or violation of, or a material default under, RLBI
Articles or Bylaws (or similar governing documents) of RLBI or (C)
require any consent or approval under any such law, rule, regulation,
judgment, decree, order, governmental permit or license, agreement,
indenture or instrument.
(g) Financial Reports; Undisclosed Liabilities. (i) The
consolidated balance sheets of RLBI as of December 31, 2002 and December 31,
2001, and the related statements of income, cash flows and changes in
shareholders' equity of RLBI for the two years then ended, audited by ▇▇▇▇▇
▇▇▇▇▇▇ and Company LLP, and the unaudited financial statements for the six (6)
months ended June 30, 2003, fairly present the consolidated financial position
of RLBI as of such dates and the consolidated results of the operations of RLBI
for the periods then ended, in accordance with GAAP (except, in the case of the
unaudited financial statements, for the absence of footnotes and for normal and
recurring year-end adjustments which are not material). Such financial
statements are attached hereto as Section 5.02(g)(i) of the Disclosure Schedule.
The call report of the Bank as of December 31, 2002 is true and correct in all
material respects. The call report of the Bank as described above is attached
hereto as Section 5.2(g)(i) of the Disclosure Schedule. The books and records of
RLBI have been, and are being, maintained in accordance with GAAP, or to the
extent inconsistent with GAAP, the laws, rules and regulations of the applicable
Regulatory Authority which compel the maintenance of such books and records, and
any other applicable legal and accounting requirements.
15
(ii) RLBI and the Bank have, timely filed all
reports, registrations and statements, together with any amendments
required to be made with respect thereto, that they were required to
file since December 31, 2000 with (A) the FDIC and the Illinois
Commissioner and (B) any other Regulatory Authority (collectively, the
"Regulatory Filings"), and all other material report and statements
required to be filed by it since December 31, 2000, including, without
limitation, any report or statement required to be filed pursuant to
the laws of the United States or the State of Illinois and the rules
and regulations of the FDIC, the Illinois Commissioner, or any other
Regulatory Authority, and has paid all fees and assessments due and
payable in connection therewith. As of their respective dates, such
reports, registrations and statements complied in all material respects
with all the laws, rules and regulations of the applicable Regulatory
Authority with which they were filed.
(iii) Since December 31, 2002, RLBI and the Bank
have not incurred any liability other than in the ordinary course of
business consistent with past practice (excluding the incurrence of
expenses related to negotiations with potential acquiring parties and
expenses related to this Agreement and the transactions contemplated
hereby).
(iv) Since December 31, 2002, except as set forth in
Section 4.01(a) to the Disclosure Schedule, (A) RLBI and the Bank have
conducted their business in the ordinary and usual course consistent
with past practice (excluding the incurrence of expenses related to
negotiations with potential acquiring parties and expenses related to
this Agreement and the transactions contemplated hereby) and (B) no
event has occurred or circumstance arisen that, individually or taken
together with all other facts, circumstances and events (described in
any paragraph of this Section 5.02 or otherwise), has had, or to RLBI's
Knowledge could be reasonably likely to have, a Material Adverse Effect
with respect to RLBI or the Bank.
(v) Neither RLBI nor the Bank have any securities
that are registered under the Securities Exchange Act of 1934.
(h) Litigation. Except as set forth on Section 5.02(h) of the
Disclosure Schedule, no litigation, claim, action, suit, hearing, alternative
dispute resolution proceedings, investigation or other proceeding before any
Governmental Authority is pending against RLBI and the Bank and, to RLBI's
Knowledge, no such litigation, claim, action, suit, hearing, investigation or
other proceeding has been threatened and to RLBI's Knowledge there are no facts
which could reasonably give rise to such litigation, claim or other proceeding.
(i) Regulatory Matters. Except as set forth in Section
5.02(i) of the Disclosure Schedule, (i) neither RLBI, the Bank nor any of their
properties are, directly or indirectly, a party to or subject to any order,
decree, agreement, memorandum of understanding or similar arrangement with, or a
commitment letter or similar submission to, or extraordinary supervisory letter
from, any federal or state Governmental Authority charged with the supervision
or regulation of financial institutions or issuers of securities or engaged in
the insurance of deposits (including, without limitation, the Illinois
Commissioner, the Federal Reserve Board and the FDIC) or the supervision or
regulation of it (collectively, the "Regulatory
16
Authorities"). RLBI and the Bank have paid all assessments made or imposed by
any Regulatory Authority.
(ii) Neither RLBI or the Bank have been advised by,
and do not have any Knowledge of facts which could give rise to an
advisory notice by, any Regulatory Authority that such Regulatory
Authority is contemplating issuing or requesting (or is considering the
appropriateness of issuing or requesting) any such order, decree,
agreement, memorandum of understanding, commitment letter, supervisory
letter or similar submission.
(iii) RLBI and the Bank are unaware of any reason
why any of the requisite regulatory approvals should be denied or
unduly delayed.
(j) Compliance With Laws. RLBI and the Bank:
(i) are in material compliance with all material
applicable federal, state, local and foreign statutes, laws,
regulations, ordinances, rules, judgments, orders or decrees applicable
thereto or to the employees conducting such businesses, including,
without limitation, the Equal Credit Opportunity Act, the Fair Housing
Act, the Community Reinvestment Act, the Home Mortgage Disclosure Act,
the Bank Secrecy Act, Title III of the USA Patriot Act and all other
applicable bank secrecy laws, fair lending laws and other laws relating
to discriminatory business practices;
(ii) have all material permits, licenses,
authorizations, orders and approvals of, and have made all filings,
applications and registrations with, all Governmental Authorities that
are required in order to permit it to own or lease its properties and
to conduct its businesses as presently conducted; all such permits,
licenses, certificates of authority, orders and approvals are in full
force and effect and, to the Knowledge of RLBI and the Bank, no
suspension or cancellation of any of them is threatened; and
(iii) have received, since December 31, 2000, no
notification or communication from any Governmental Authority (A)
asserting that RLBI or the Bank are not in compliance with any of the
statutes, regulations or ordinances which such Governmental Authority
enforces or (B) threatening to revoke any license, franchise, permit or
governmental authorization (nor, to the Knowledge of RLBI and the Bank,
do any grounds for any of the foregoing exist).
(k) Material Contracts. Except as described in the Disclosure
Schedule, neither RLBI nor the Bank is a party to any agreement or understanding
described below:
(i) any agreement, arrangement or commitment not
made in the ordinary course of business consistent with past practices
that is material to RLBI on a consolidated basis, or any contract,
agreement or understanding relating to the sale or disposition by RLBI
or the Bank of any significant assets or businesses of RLBI or the
Bank;
17
(ii) any material agreement, indenture, credit
agreement or other instrument relating to the borrowing of money by
RLBI or the Bank (other than certificates of deposit and customary
deposit instruments) or the guarantee by RLBI or the Bank of any such
obligation;
(iii) any contract containing covenants which limit
the ability of the Bank to compete in any line of business or with any
person or which involve any restriction in the geographical area in
which, or method by which, RLBI and the Bank may carry on their
respective businesses (other than as may be required by law or
applicable regulatory authority);
(iv) any agreement or understanding which obligates
RLBI or the Bank for a period in excess of one year, or which has a
value in excess of $25,000, to purchase, sell or provide services,
materials, supplies, merchandise, facilities or equipment and which is
not terminable without penalty or not more than thirty (30) days
notice;
(v) any agreement or understanding of any kind,
except for deposit relationships or loans made in the ordinary course
of business with any current director or executive officer of RLBI or
the Bank or with any affiliate thereof or any member of the immediate
family of any such director or executive officer; or
(vi) any material agreement or understanding which
would be terminable by any other party other than RLBI or the Bank as a
result of the consummation of the transactions contemplated by this
Agreement.
(l) True and correct copies of all documents identified in
Section 5.02(k) are attached hereto as Section 5.02(k) to the Disclosure
Schedule.
(m) Brokers and Investment Bankers. Except for the retention
of ▇▇▇▇▇ Financial, LLC, no action has been taken by RLBI or the Bank that would
give rise to any valid claim against any other party hereto for a brokerage
commission, finder's fee or other like payment with respect to the transactions
contemplated by this Agreement.
(n) Employee Benefit Plans.
(i) All benefit and compensation plans,
contracts, policies or arrangements covering current or former
employees of RLBI and the Bank (the "Employees") and current or former
directors of RLBI and the Bank including, but not limited to, "employee
benefit plans" within the meaning of Section 3(3) of ERISA, and
deferred compensation, stock option, stock purchase, stock appreciation
rights and stock based, incentive and bonus plans (the "Benefit
Plans"), are set forth in Section 5.02(n) of the Disclosure Schedule.
True and complete copies of all Benefit Plans including, but not
limited to, any trust instruments and insurance contracts forming a
part of any Benefit Plans and all amendments thereto have been provided
or made available to the Company as of the date hereof.
(ii) All Benefit Plans, to the extent subject to
ERISA, are in substantial compliance with ERISA. Each Benefit Plan
which is an "employee pension benefit plan"
18
within the meaning of Section 3(2) of ERISA ("Pension Plan") and which
is intended to be qualified under Section 401(a) of the Code, has
received a favorable determination letter from the Internal Revenue
Service, and RLBI is not aware of any circumstances likely to result in
revocation of any such favorable determination letter or the loss of
the qualification of such Pension Plan under Section 401(a) of the
Code. There is no pending or, to RLBI's Knowledge, threatened
litigation relating to the Benefit Plans. RLBI has not to its
Knowledge, engaged in a transaction with respect to any Benefit Plan or
Pension Plan that, assuming the taxable period of such transaction
expired as of the date hereof, could subject RLBI to a tax or penalty
imposed by either Section 4975 of the Code or Section 502(i) of ERISA
in an amount which would be material.
(iii) No Pension Plan is subject to Title IV of
ERISA or subject to Section 412 of the Code. No liability under
Subtitle C or D of Title IV of ERISA has been or is expected to be
incurred by RLBI or the Bank with respect to any ongoing, frozen or
terminated "single-employer plan," within the meaning of Section
4001(a)(15) of ERISA, currently or formerly maintained by RLBI or the
Bank, or single-employer plan of any entity which is considered one
employer with RLBI or the Bank under Section 4001 of ERISA or Section
414 of the Code (an "ERISA Affiliate"). RLBI and the Bank have not
incurred, and do not expect to incur, any withdrawal liability with
respect to a multiemployer plan under Subtitle E of Title IV of ERISA
(regardless of whether based on contributions of an ERISA Affiliate).
Neither RLBI or the Bank nor any ERISA Affiliate has within the past
six years maintained or contributed to a Pension Plan that is subject
to Subtitles C or D of Title IV of ERISA.
(iv) All filings required by ERISA and the Code as
to each Plan have been timely filed, and all notices and disclosures to
Benefit Plan participants, beneficiaries and alternate payees have been
timely provided. All contributions required to be made under the terms
of any Benefit Plan have been timely made. Neither any Pension Plan nor
any single-employer plan of an ERISA Affiliate has an "accumulated
funding deficiency" (whether or not waived) within the meaning of
Section 412 of the Code or Section 302 of ERISA and no ERISA Affiliate
has an outstanding funding waiver. RLBI and the Bank have not provided,
nor is it required to provide, security to any Pension Plan or to any
single-employer plan of an ERISA Affiliate pursuant to Section
401(a)(29) of the Code.
(v) Under each Pension Plan which is a single-
employer plan, as of the last day of the most recent plan year ended
prior to the date hereof, the actuarially determined present value of
all "benefit liabilities," within the meaning of Section 4001(a)(16) of
ERISA (as determined on the basis of the actuarial assumptions
contained in the Pension Plan's most recent actuarial valuation), did
not exceed the then current value of the assets of such Pension Plan,
and there has been no material change in the financial condition of
such Plan since the last day of the most recent plan year.
(vi) Except as set forth on Schedule 5.02(n), RLBI
and the Bank do not have any obligations for retiree health and life
benefits under any Benefit Plan. RLBI and the Bank may amend or
terminate any such Benefit Plan at any time without incurring any
liability thereunder.
19
(vii) Except as set forth in Section 5.02(n) to
the Disclosure Schedule, none of the execution of this Agreement,
shareholder approval of this Agreement or consummation of the
transactions contemplated by this Agreement will (A) entitle any
employees of RLBI or the Bank to severance pay or any increase in
severance pay upon any termination of employment after the date hereof,
(B) accelerate the time of payment or vesting or trigger any payment or
funding (through a grantor trust or otherwise) of compensation or
benefits under, increase the amount payable or trigger any other
material obligation pursuant to, any of the Benefit Plans, (C) result
in any breach or violation of, or a material default under, any of the
Benefit Plans or (D) result in any payment that would be a "parachute
payment" to a "disqualified individual" as those terms are defined in
Section 280G of the Code, without regard to whether such payment is
reasonable compensation for personal services performed or to be
performed in the future. Notwithstanding anything set forth in Section
5.02(n) of the Disclosure Schedule, no payment made hereunder by RLBI
or the Bank or agreed to be made by the Company on behalf of RLBI or
pursuant to this transaction shall constitute a "parachute payment" as
described in Section 280G of the Code.
(o) Labor Matters. RLBI and the Bank are not a party to and
are not bound by any collective bargaining agreement, contract or other
agreement or understanding with a labor union or labor organization, nor is RLBI
or the Bank the subject of a proceeding asserting that it has committed an
unfair labor practice (within the meaning of the National Labor Relations Act)
or seeking to compel RLBI or the Bank to bargain with any labor organization as
to wages or conditions of employment, nor is there any strike or other labor
dispute involving it pending or, to the Knowledge of RLBI or the Bank,
threatened, nor does RLBI or the Bank have Knowledge of any activity involving
its employees seeking to certify a collective bargaining unit or engaging in
other organizational activity.
(p) Environmental Matters. Except as set forth in Section
5.02(p) of the Disclosure Schedule, to RLBI's Knowledge (i) RLBI and the Bank
are in material compliance with applicable Environmental Laws; (ii) no real
property (including buildings or other structures) currently owned or operated
by RLBI or the Bank has been contaminated with, or has had any release of, any
Hazardous Substance; (iii) RLBI and the Bank are not subject to liability for
any Hazardous Substance disposal or contamination on property that they
currently own or operate; (iv) RLBI and the Bank have not received any notice,
demand letter, claim or request for information alleging any violation of, or
liability under, any Environmental Law; (v) RLBI and the Bank are not subject to
any order, decree, injunction or other agreement with any Governmental Authority
or any third party relating to any Environmental Law; and (vi) with the
exception of environmental documents related to the property identified in
Section 5.02(p) of the Disclosure Schedule (which documents have been previously
provided to the Company), attached hereto as Section 5.02(p) to the Disclosure
Schedule are copies of all environmental reports, studies, sampling data,
correspondence, filings and other environmental information in its possession
relating to RLBI or the Bank, and any currently owned or operated property or
any properties for which RLBI or the Bank is liable for environmental matters.
As used herein, the term "Environmental Laws" means any
federal, state or local law, regulation, order, decree, permit, authorization,
opinion, common law or agency requirement relating to: (A) the protection or
restoration of the environment, health, safety, or
20
natural resources, (B) the handling, use, presence, disposal, release or
threatened release of any Hazardous Substance or (C) noise, odor, wetlands,
indoor air, pollution, contamination or any injury or threat of injury to
persons or property in connection with any Hazardous Substance, and the term
Hazardous Substance means any substance in any concentration that is: (1)
listed, classified or regulated pursuant to any Environmental Law, (2) any
petroleum product or by-product, asbestos-containing material, lead-containing
paint or plumbing, polychlorinated biphenyls, radioactive materials or radon, or
(3) any other substance which is or has in the past been the subject of
regulatory action by any Governmental Authority in connection with any
Environmental Law.
(q) Tax Matters. (i) (A) RLBI and the Bank (I) have prepared
in good faith and duly and timely filed (taking into account any extension of
time within which to file) all significant Tax Returns required to have been
filed by it and all such filed Tax Returns are to RLBI's Knowledge true,
complete and accurate; (II) have paid in full or accrued all Taxes that are
required to have been paid or accrued and has withheld from amounts owing to any
employee, creditor or third party all amounts that RLBI or the Bank are
obligated to have withheld; (III) in the case of any Tax Return required to be
retained by RLBI or the Bank prior to the Effective Date in respect of any
information reporting or other tax requirements, has retained properly completed
Tax Returns in RLBI's files; and (IV) has complied with all information
reporting (and related withholding) requirements related to payments to, and
transaction completed for, customers, (B) all deficiencies asserted or
assessments made as a result of such examinations have been paid in full or
otherwise finally resolved, (C) no issues that have been raised by the relevant
taxing authority in connection with the examination of any of the Tax Returns
referred to in clause (i)(A) are currently pending, (D) RLBI and the Bank have
not waived any statute of limitations with respect to Taxes that has continuing
effect or agreed to any extension of time with respect to a Tax assessment or
deficiency that has continuing effect, (E) there are not pending or threatened
in writing, any audits, examinations, investigations or other proceedings in
respect of Taxes or tax matters, and (F) as of the date hereof, RLBI and the
Bank have made available to the Company true and correct copies of all material
income, franchise, capital and similar Tax Returns filed by RLBI and the Bank
for all taxable years or periods for which the relevant statute of limitations
has not expired.
(ii) There are no Liens on any of RLBI or the Bank's
assets that arose in connection with any failure (or alleged failure)
to pay any Tax.
(iii) RLBI and the Bank will not be required, as a
result of (A) a change in accounting method for a Tax period beginning
on or before the Effective Time to include any adjustment under Section
481(c) of the Code (or any similar provision of state, local or foreign
law) in taxable income for any Tax period beginning on or after the
Effective Time, or (B) any "closing agreement" as described in Section
7121 of the Code (or any similar provision of state, local or foreign
Tax law), to include any item of income in or exclude any item of
deduction from any Tax period beginning on or after the Effective Time.
(iv) RLBI and the Bank do not have any significant
liability with respect to income, franchise or similar Taxes that
accrued on or before the end of the most recent period covered by the
Regulatory Filings filed prior to the date hereof in
21
excess of the amounts accrued with respect thereto that are reflected
in the financial statements included in the Regulatory Filings filed on
or prior to the date hereof.
(v) Except as set forth in Section 5.02(q), RLBI and
the Bank are not a party to any Tax allocation or sharing agreement, is
not and have never been a member of an affiliated, consolidated,
unitary or combined Tax group filing consolidated or combined Tax
Returns or otherwise has any liability for the Taxes of any Person
(other than RLBI or the Bank).
(vi) No closing agreements, private letter rulings,
technical advice memoranda or similar agreement or rulings have been
entered into or issued by any taxing authority with respect to RLBI or
the Bank.
(vii) (A) No Tax is required to be withheld pursuant
to Section 1445 of the Code as a result of the transaction contemplated
by this Agreement, and (B) all Taxes that RLBI or the Bank are or were
required by law to withhold or collect have been duly withheld or
collected and, to the extent required by applicable law, have been paid
to the proper Governmental Authority or other Person.
(r) Risk Management Instruments. Except as set forth in
Section 5.02(r) to the Disclosure Schedule, RLBI and the Bank are not a party
nor have they agreed to enter into an exchange traded or over-the-counter
equity, interest rate, foreign exchange or other swap, forward, future, option,
cap, floor or collar or any other contract that is a derivatives contract
(including various combinations thereof) (each, a "Derivatives Contract") and do
not own any securities that (i) are referred to generically as "structured
notes," "high risk mortgage derivatives," "capped floating rate notes" or
"capped floating rate mortgage derivatives" or (ii) could have changes in value
as a result of interest or exchange rate changes that significantly exceed
normal changes in value attributable to interest or exchange rate changes.
(s) Books and Records. The books and records of RLBI and the
Bank have been fully, properly and accurately maintained in all material
respects, there are no material inaccuracies or discrepancies of any kind
contained or reflected therein, and they fairly present the consolidated
financial position of RLBI. The minute books of RLBI and the Bank accurately
reflect in all material respects all corporate meetings held or actions taken
since January 1, 2000 by their respective Board of Directors.
(t) Insurance. Section 5.02(t) to the Disclosure Schedule
sets forth a true and complete list of all of the insurance policies, binders,
or bonds maintained by RLBI and the Bank ("Insurance Policies"), and policies
where RLBI or the Bank are named as an additional insured or otherwise relate to
coverage for RLBI or the Bank's property or assets. RLBI and the Bank are
insured with reputable insurers against such risks and in such amounts as the
management of RLBI or the Bank reasonably have determined to be prudent in
accordance with industry practices. All the Insurance Policies are, in full
force and effect; RLBI and the Bank are not, in material default thereunder; and
all claims thereunder have been filed in due and timely fashion. RLBI and the
Bank have no Knowledge of any set of facts that would provide the basis for a
claim under any of its policies.
22
(u) Allowance For Loan Losses. RLBI and the Bank's allowance
for loan losses ("ALL") is, and shall be as of the Effective Date, in
substantial compliance with RLBI's existing methodology for determining the
adequacy of its ALL as well as the standards established by applicable
Governmental Authorities and the Financial Accounting Standards Board and is,
to RLBI's Knowledge, adequate under all such standards.
(v) Transactions With Affiliates. Except as set forth in
Section 5.02(v) to the Disclosure Schedule, RLBI and the Bank have no
transactions with Affiliates within the meaning of Sections 23A and 23B of the
Federal Reserve Act.
(w) Real Property.
(i) Except as set forth in Section 5.02(w) to the
Disclosure Schedule, RLBI and the Bank do not own any real property or
premises on the date hereof in whole or in part. Schedule 5.02(w) to
the Disclosure Schedule contains a complete and correct list of all
real property or premises leased or subleased in whole or in part by
RLBI or the Bank and together with a list of all applicable leases or
subleases and the name of the lessor or sublessor. None of such
premises or properties have been condemned or otherwise taken by any
public authority and no condemnation or taking is, to RLBI's Knowledge,
threatened or contemplated and none thereof is subject to any claim,
contract or law which might affect its use or value for the purposes
now made of it. None of the premises or properties of RLBI or the Bank
is subject to any current or potential interests of third parties or
other restrictions or limitations that would impair or be inconsistent
in any material respect with the current use of such property by RLBI
or the Bank.
(ii) Each of the leases referred to in Section
5.02(w) of the Disclosure Schedule is valid and existing and in full
force and effect, and, RLBI is not in material default thereunder and
no notice of a claim of material default by RLBI has been delivered to
or is now pending, and, to RLBI's Knowledge, there does not exist any
event that with notice or the passing of time, or both, would
constitute a material default or excuse performance by any party
thereto.
(x) Title. RLBI and the Bank have good title to its
properties and assets (other than (i) property as to which they are lessee and
(ii) real estate owned as a result of foreclosure, transfer in lieu of
foreclosure or other transfer in satisfaction of a debtor's obligation
previously contracted) except (A) statutory liens not yet delinquent which are
being contested in good faith by appropriate proceedings, and liens for taxes
not yet due, (B) pledges of assets in the ordinary course of business to secure
public deposits, (C) for those assets and properties disposed of for fair value
in the ordinary course of business since the date of RLBI or the Bank's call
report dated as of and for the year ended December 31, 2002, and (D) defects and
irregularities of title and encumbrances that do not materially impair the use
thereof for the purposes for which they are held.
(y) Community Reinvestment Act Compliance. The Bank has not
received any notice of non-compliance with the applicable provisions of the
Community Reinvestment Act ("CRA") and regulations promulgated thereunder, and
the Bank has received a CRA rating of satisfactory or better. RLBI has no
Knowledge of any facts or circumstances, which would
23
cause the Bank to fail to comply with such provisions or to cause the CRA rating
of the Bank to fall below satisfactory.
(z) Loans
(i) Except as specifically set forth on Section
5.02(z) to the Disclosure Schedule, as of July 22, 2003: (a) neither
RLBI nor the Bank is a party to any loan agreement, note or other
borrowing agreement (each, a "Borrowing Agreement") under the terms of
which the obligor is more than ninety (90) days delinquent in payment
of principal or interest or, to Knowledge of RLBI, otherwise in
material default thereof, (b) neither RLBI nor the Bank is a party to
any Borrowing Agreement which has been classified as "substandard,"
"doubtful," "loss," "other loans especially mentioned" or any
comparable classifications by RLBI, or any Governmental Authority; (c)
neither RLBI nor the Bank is a party to any Borrowing Agreement,
including any loan guaranty, with any director or officer of RLBI or
the Bank, or, to the RLBI's Knowledge, any corporation or enterprise
controlling, controlled by or under common control with any of the
foregoing; and (d) to RLBI's Knowledge, neither RLBI nor the Bank is a
party to any Borrowing Agreement in violation in any material respect
of any law, regulation or rule of any Governmental Authority.
(ii) All loans of RLBI and the Bank are enforceable
against RLBI or the Bank in accordance with the terms thereof, and to
RLBI's Knowledge are the valid and binding obligations of the obligors,
except as limited by (a) bankruptcy, insolvency, moratorium,
reorganization and other similar laws affecting creditors' rights
generally, and (b) general principles of equity, regardless of whether
asserted in a proceeding in equity or at law.
5.03 Representations and Warranties of the Company. The Company hereby
represents and warrants to RLBI as follows:
(a) Organization, Standing and Authority. The Company is duly
organized, validly existing and in good standing under the laws of the State of
Delaware. The Company is duly qualified to do business and is in good standing
in Illinois and foreign jurisdictions where its ownership or leasing of property
or assets or the conduct of its business requires it to be so qualified except
where the failure to so qualify would not have a Material Adverse Effect on the
Company. The Company has in effect all federal, state, local, and foreign
governmental authorizations necessary for it to own or lease its properties and
assets and to carry on its business as it is now conducted.
(b) Corporate Power. The Company has the corporate power and
authority to carry on their business as it is now being conducted and to own all
its properties and assets; the Company has the corporate power and authority to
execute, deliver and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby; and it has the corporate power
and authority to execute, deliver and perform its obligations to consummate the
transactions contemplated thereby.
24
(c) Corporate Authority. This Agreement and the transactions
contemplated hereby have been authorized by all necessary corporate action of
the Company and the Company Board. This Agreement has been duly executed and
delivered by the Company and this Agreement is a valid and legally binding
agreement of the Company enforceable in accordance with its terms (except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar laws of general
applicability relating to or affecting creditors' rights or by general equity
principles).
(d) Regulatory Approvals; No Violations.
(i) No consents or approvals of, or waivers by, or
filings or registrations with, any Governmental Authority or with any
third party are required to be made or obtained by the Company or
Merger Subsidiary in connection with the execution, delivery or
performance by the Company or Merger Subsidiary of this Agreement or to
consummate the Merger except for (A) filings of applications or notices
with and approvals or waivers by the Federal Reserve Board, the FDIC,
the Illinois Secretary and the Illinois Commissioner, as may be
required, (B) filings with the SEC and state securities authorities, if
any, and (C) the filing of the Agreement of Merger with the Illinois
Secretary pursuant to the IBCA. As of the date hereof, the Company has
no Knowledge of any reason for which the approvals sought and set forth
in this Section 5.03(d) and in Section 7.01(b) would not be received or
would be received with the imposition of a condition, restriction or
requirement of the type described in Section 7.01(b).
(ii) Subject to receipt, or the making, of the
consents, approvals and filings referred to in the preceding paragraph
and expiration of the related waiting periods, the execution, delivery
and performance of this Agreement by the Company and the consummation
of the transactions contemplated hereby do not and will not (A)
constitute a breach or violation of, or a material default under, or
give rise to any Lien, any acceleration of remedies or any right of
termination under, any law, rule or regulation or any judgment, decree,
order, governmental permit or license, or Agreement, indenture or
instrument of the Company or to which the Company or its properties is
subject or bound, (B) constitute a breach or violation of, or a
material default under, the Articles of Incorporation or Bylaws (or
similar governing documents) of the Company or (C) require any consent
or approval under any such law, rule, regulation, judgment, decree,
order, governmental permit or license, agreement, indenture or
instrument.
(e) Adequate Funds. At the Effective Time, the Company will
have sufficient funds and capital to carry out its obligations under this
Agreement and will deposit such sufficient funds with the Paying Agent.
(f) No Brokers. No action has been taken by the Company that
would give rise to any valid claim against any party hereto for a brokerage
commission, finder's fee or other like payment with respect to the transactions
contemplated by this Agreement other than the payment by the Company of certain
fees to ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ & Company, Incorporated.
25
(g) Fairness Opinion. The Company has received an opinion,
dated the date of this Agreement, from ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & Company, Incorporated
that, subject to the terms, conditions and qualifications set forth therein, the
Merger Consideration is fair to the Company's shareholders from a financial
point of view.
(h) Litigation. No litigation, claim or other proceeding
before any court or Governmental Authority is pending against the Company and,
to the Knowledge of the Company, no such litigation, claim or other proceeding
has been threatened which would result in a Material Adverse Effect to the
Company and there are no facts which could reasonably give rise to such
litigation, claim or other proceeding.
(i) Regulatory Matters.
(i) The Company nor any of the Company's property
are, directly or indirectly, party to or is subject to any order,
decree, agreement, memorandum of understanding or similar arrangement
with, or a commitment letter or similar submission to, or extraordinary
supervisory letter from, any Regulatory Authority. The Company has paid
all assessments made or imposed by any Regulatory Authority.
(ii) The Company has not been advised by, and does
not have any Knowledge of facts which could give rise to an advisory
notice by, any Regulatory Authority that such Regulatory Authority is
contemplating issuing or requesting (or is considering the
appropriateness of issuing or requesting) any such order, decree,
agreement, memorandum of understanding, commitment letter, supervisory
letter or similar submission.
(iii) Except as set forth in the Disclosure
Schedule, the Company was rated "Satisfactory" or "Outstanding"
following its most recent CRA examination by the Regulatory Authority
responsible for its supervision. The Company has received no notice of,
and has no Knowledge of any, planned or threatened objection by any
community group to the transactions contemplated hereby. The Company
received a rating of 2 or better in its most recent Capital Adequacy,
Asset Quality, Management, Earnings and Liquidity evaluation.
ARTICLE VI
COVENANTS
6.01 Best Efforts. Subject to the terms and conditions of this
Agreement, each of RLBI and the Company agrees to use its best efforts in good
faith to take, or cause to be taken, all actions, and to do, or cause to be
done, all things necessary, proper or desirable, or advisable under applicable
laws, so as to permit consummation of the Merger as promptly as practicable and
otherwise to enable consummation of the transactions contemplated hereby,
including the satisfaction of the conditions set forth in Article VII hereof,
and shall cooperate fully with the other party hereto to that end.
6.02 Shareholder Approval. RLBI agrees to take, in accordance with
applicable law and RLBI Articles and RLBI Bylaws, all action necessary to
convene as soon as practicable a
26
meeting of its shareholders to consider and vote upon the approval of this
Agreement and the Merger and any other matters required to be approved by RLBI's
shareholders for consummation of the Merger (including any adjournment or
postponement, the "RLBI Meeting"), within forty-five (45) calendar days after
delivery of the Proxy Statement as defined in Section 6.03. Except with the
prior approval of the Company, no other matters shall be submitted for the
approval of RLBI shareholders. RLBI Board shall at all times prior to and during
such meeting recommend such approval and shall take all reasonable lawful action
to solicit such approval by its shareholders; provided that nothing in this
Agreement shall prevent RLBI Board from withholding, withdrawing, amending or
modifying its recommendation if RLBI Board determines, after consultation with
its outside counsel, that such action is legally required in order for the
directors to comply with their fiduciary duties to RLBI shareholders under
applicable law; provided, further, that Section 6.06 shall govern the
withholding, withdrawing, amending or modifying of such recommendation in the
circumstances described therein.
6.03 Proxy Statement. (a) After this Agreement is executed, RLBI shall
as soon as practicable mail at its expense a proxy statement (the "Proxy
Statement") to its shareholders. RLBI shall provide the Company, and its
counsel, a reasonable opportunity to review and comment on the proposed Proxy
Statement.
(b) RLBI agrees that the Proxy Statement and any amendment or
supplement thereto shall, at the date of mailing to its shareholders and at the
time of RLBI Meeting not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein not misleading. Each of RLBI and the Company agree that
if such party shall become aware prior to the RLBI Meeting of any information
furnished by such party that would cause any of the statements in the Proxy
Statement to be false or misleading with respect to any material fact, or to
omit to state any material fact necessary to make the statements therein not
false or misleading, to promptly inform the other parties thereof and to take
the necessary steps to correct the Proxy Statement.
6.04 Press Releases. RLBI and the Company shall consult with each
other before issuing any press release with respect to the Merger or this
Agreement and shall not issue any such press release or make any such public
statements without the prior, written consent of the other party, which consent
shall not be unreasonably withheld; provided, however, that a party may, without
the prior, written consent of the other party (but after such consultation, to
the extent practicable in the circumstances), issue such press release or make
such public statements as may upon the advice of outside counsel be required of
it by law. RLBI and the Company shall cooperate to develop all public
announcement materials and make appropriate management available at
presentations related to the transactions contemplated by this Agreement as
reasonably requested by the other party.
6.05 Access; Information. (a) RLBI agrees that upon reasonable notice
and subject to applicable laws relating to the exchange of information, it shall
afford the Company and the Company's officers, employees, counsel, accountants
and other authorized representatives such access during normal business hours
throughout the period prior to the Effective Time to the books, records
(including, without limitation, Tax Returns and work papers of independent
auditors), properties and personnel and to such other information as the Company
may reasonably request and, during such period, it shall furnish promptly to the
Company all
27
information concerning its business, properties and personnel as the Company may
reasonably request.
(b) Without limiting the generality of Section 6.05(a), prior
to the Effective Time, the Company and the Company's representatives shall have
the right to conduct a review to determine (i) that the assets, books, records
and operations of RLBI and the Bank are in satisfactory condition and will not
in a material way adversely impact the Company after consummation of the
transactions contemplated hereby and (ii) the accuracy of the representations
and warranties and the satisfaction of the conditions to closing as provided
hereunder.
(c) RLBI agrees that, subject to applicable laws, it shall
cooperate in good faith with the Company on mutually agreed operating issues
which the parties agree have priority.
(d) Each party agrees that it will not, and will cause its
representatives not to, use any information obtained pursuant to this Section
6.05 (as well as any other information obtained prior to the date hereof in
connection with the entering into of this Agreement) for any purpose unrelated
to the consummation of the transactions contemplated by this Agreement. Subject
to the requirements of law, each party shall keep confidential, and shall cause
its representatives to keep confidential, all information and documents obtained
pursuant to this Section 6.05 (as well as any other information obtained prior
to the date hereof in connection with the entering into of this Agreement)
unless such information (i) was already known to such party, (ii) becomes
available to such party from other sources not known by such party to be bound
by a confidentiality obligation, (iii) is disclosed with the prior written
approval of the party to which such information pertains or (iv) is or becomes
readily ascertainable from publicly available sources. In the event that this
Agreement is terminated or the transactions contemplated by this Agreement shall
otherwise fail to be consummated (A) each party shall promptly cause all copies
of documents or extracts thereof containing information and data as to another
party hereto to be returned to the party which furnished the same and (B) for
one year after such termination, neither RLBI on the one hand, nor the Company
or Merger Subsidiary on the other, shall solicit the services of any employee of
such other party for purposes of engaging them as an employee, agent, consultant
or independent contractor of such soliciting party. Notwithstanding the
foregoing, nothing herein shall prevent the parties hereto from any general
advertising or recruitment activities not directed specifically at the employees
of the other party hereto. No investigation by any party of the business and
affairs of any other party shall affect or be deemed to modify or waive any
representation, warranty, covenant or agreement in this Agreement, or the
conditions to any party's obligation to consummate the transactions contemplated
by this Agreement.
(e) RLBI shall provide to the Company the agenda for or a
summary of the business proposed to be discussed at: (i) all meetings of the
Boards of Directors of RLBI and the Bank, and (ii) all meetings of the
committees of each such Board of Directors, including without limitation the
audit and executive committees thereof. RLBI shall give reasonable notice to the
Company of any such meeting; however, the attendance at any such meeting by any
Company representative shall be deemed a waiver of any notice required for such
meeting pursuant to this Section 6.05(e). RLBI shall provide to the Company all
information provided to the directors
28
for, during and after all such Board of Directors and committee meetings, when
the same are provided to such directors, including minutes of prior meetings,
financial reports and any other analyses prepared by senior management of RLBI;
provided, however, that the Company shall provide information relating to an
Acquisition Proposal only in accordance with Section 6.06 hereof. All such
information provided to Company shall be treated in confidence as provided
herein. RLBI shall allow two representatives of the Company to attend as an
observer all meetings of the Board of Directors of RLBI and the Bank and all
committee meetings; provided, however, that such representatives shall be
excluded from all discussions relating to an Acquisition Proposal or the terms
and conditions of this Agreement.
6.06 Acquisition Proposals. (a) From and after the date hereof until
the earlier of the Effective Time or the termination of this Agreement in
accordance with Article VIII hereof, none of RLBI, any of its Subsidiaries or
any of their respective directors, officers, employees, investment bankers,
financial advisors, counsel, accountants, representatives or agents, shall,
directly or indirectly: (i) make, encourage, facilitate, solicit, induce, assist
or initiate any inquiry or proposal, or participate in any negotiations with, or
knowingly provide any information to, any corporation, partnership, agent,
attorney, financial advisor, or other Person (other than the Company, an
affiliate of the Company or an officer, employee or other authorized
representative of the Company or such affiliate, or counsel for the Company or
its directors and financial advisor, solely for use in connection with the
transactions contemplated hereby) relating to any Acquisition Proposal; (ii)
knowingly furnish any information to any Person in connection with, or
participate in any negotiations with respect to, or knowingly take any other
action designed to facilitate, any Acquisition Proposal; or (iii) participate in
any discussions regarding any Acquisition Proposal; provided, however, that RLBI
make such disclosures that are necessary to comply with its disclosure
obligations under federal or state law, and if at any time prior to the approval
of this Agreement by the shareholders of RLBI, the RLBI Board determines in good
faith, after receipt of advice from outside counsel, that the failure to provide
such information or to participate in such negotiations or discussions would
likely be inconsistent with its fiduciary duties to the shareholders of RLBI
under applicable law, RLBI may, in response to a proposal that was not solicited
by it and that did not otherwise result from a breach of this Section 6.06(a),
and that has been determined by the RLBI Board to be a Superior Proposal,
subject to RLBI giving the Company at least two (2) Business Days' written
notice of its intention to do so, (x) furnish information with respect to RLBI
to any Person pursuant to a customary confidentiality agreement provided that a
copy of all such information is delivered simultaneously to the Company, and (y)
participate in negotiations regarding such proposal. RLBI shall as promptly as
practicable notify the Company in writing of any inquiry, request for
information or any proposal in connection with a Acquisition Proposal, the
material terms and conditions of such request or proposal (including a copy of
any written inquiry or proposal, or a written summary of any verbal inquiry or
proposal, as the case may be) and the identity of the Person making such request
or proposal. RLBI will keep the Company reasonably informed of the status and
material details (including amendments or proposed amendments) of such request
or proposal on a current basis, and will respond promptly in writing to any
reasonable inquiry by the Company concerning the foregoing. RLBI shall
immediately cease and terminate any existing solicitation, initiation,
encouragement, activity, discussion or negotiation with any Person conducted
heretofore by RLBI or its representatives with respect to the foregoing.
29
(b) For purposes of this Agreement, "Acquisition Proposal" shall mean,
whether in the form of an actual or intended proposal to or from a completed
action by or other communication with, as the case may be, any Person (or group
of Persons) other than the Company and its Subsidiaries (a "Acquisition Party"),
any of: (i) a merger (whether or not RLBI is the surviving corporation) or
consolidation, or any similar transaction (other than the Merger) of any company
with either RLBI or any of its Subsidiaries; (ii) a purchase, lease or other
acquisition of all or substantially all the assets of either RLBI or any of its
Subsidiaries; (iii) a purchase or other acquisition, in one or a series of
related transactions, of "beneficial ownership" by any "person" or "group" (as
such terms are defined in Section 13(d)(3) of the Exchange Act) (including by
way of merger, consolidation, share exchange or otherwise) which would cause
such Person or group to become the beneficial owner of securities representing
10% or more of the voting power of either RLBI or the Bank; (iv) a tender or
exchange offer to acquire securities representing 10% or more of the voting
power of RLBI; (v) a public proxy or consent solicitation made to the
shareholders of RLBI seeking proxies in opposition to any proposal relating to
any aspect of the Merger that has been recommended by the RLBI Board; (vi) a
liquidation, dissolution or recapitalization of RLBI or the Bank; (vii) a sale
outside the ordinary course of business of a significant amount of assets of
RLBI or the Bank; (viii) a purchase or sale of shares of capital stock of RLBI
or the Bank; (ix) any similar transactions involving RLBI or the Bank, other
than the transactions contemplated by this Agreement or the Bank Merger; (x) the
filing of an application or notice with the Federal Reserve, the FDIC, the
Illinois Commissioner, or any other federal or state Governmental Authority
(which application has been accepted for processing) seeking approval to engage
in one or more of the transactions referenced in clauses (i) through (ix) above;
or (xi) the making of a bona fide proposal to RLBI or the shareholders of RLBI
by public announcement or written communication that is or becomes the subject
of public disclosure to engage in one or more of the transactions referenced in
clauses (i) through (ix) above. For purposes of this Agreement, a "Superior
Proposal" shall mean any Acquisition Proposal (on its most recently amended or
modified terms, if amended or modified) that the RLBI Board determines in its
good faith judgment (based on, among other things, the advice of a financial
advisor of nationally recognized reputation) to be more favorable to the
shareholders of RLBI than the Merger, taking into account all relevant factors
(including but not limited to whether, in the good faith judgment of the RLBI
Board, after obtaining the advice of a financial advisor of nationally
recognized reputation, the Acquisition Party is reasonably able to finance the
Acquisition Proposal and any proposed changes to this Agreement that may be
proposed by the Company in response to such Acquisition Proposal). For purposes
of the foregoing, the Company acknowledges that ▇▇▇▇▇ Financial, LLC is a
financial advisor of nationally recognized reputation.
6.07 Certain Policies. Upon request by the Company, prior to the
Effective Date, RLBI and the Bank shall, consistent with GAAP, the rules and
regulations of the Office of Banks and Real Estate and applicable banking laws
and regulations (which shall govern in the event of any inconsistency with the
rules and regulations of the Office of Banks and Real Estate), modify or change
their loan, OREO, reserve, tax, litigation and real estate valuation policies
and practices (including loan classifications and levels of reserves) so as to
be applied on a basis that is consistent with that of the Company; provided,
however, that unless the modification or changes would otherwise be necessary to
be consistent with applicable law, rule or regulation or with regulatory
accounting principles and GAAP, no such modification or change shall constitute
or be deemed to be a breach, violation of or failure to satisfy any
representation,
30
warranty, covenant, agreement, condition or other provision of this Agreement or
otherwise be considered in determining whether any such breach, violation or
failure to satisfy shall have occurred. The recording of any such adjustments
shall not by itself be deemed to imply any misstatement of previously furnished
financial statements or information.
6.08 Regulatory Applications. (a) Each of the Company, RLBI and the
Bank shall cooperate and use their respective best efforts to prepare all
documentation, to effect all filings and to obtain all permits, consents,
approvals and authorizations of all third parties and Governmental Authorities
necessary to consummate the transactions contemplated by this Agreement
(including the consolidation of any the Bank branches with Merger Subsidiary
branches or branches of any other Subsidiary of the Company or the closure of
any RLBI branches, in each case as the Company in its sole discretion shall deem
necessary); and any initial filings with Governmental Authorities shall be made
by the Company as soon as reasonably practicable after the execution hereof but,
provided that RLBI has cooperated as described above, in no event later than
forty-five (45) days after the date hereof. Each of the Company and RLBI shall
have the right to review in advance, and to the extent practicable each shall
consult with the other, in each case subject to applicable laws relating to the
exchange of information, with respect to all material written information
submitted to any third party or any Governmental Authority in connection with
the transactions contemplated by this Agreement. In exercising the foregoing
right, each of such parties agrees to act reasonably and as promptly as
practicable. Each party hereto agrees that it shall consult with the other
parties hereto with respect to the obtaining of all material permits, consents,
approvals and authorizations of all third parties and Governmental Authorities
necessary or advisable to consummate the transactions contemplated by this
Agreement and each party shall keep the other parties apprised of the status of
material matters relating to completion of the transactions contemplated hereby.
(b) Each party agrees, upon request, to furnish the other
parties with all information concerning itself, its Subsidiaries (in the case of
the Company), directors, officers and shareholders and such other matters as may
be reasonably necessary or advisable in connection with any filing, notice or
application made by or on behalf of such other parties to any third party or
Governmental Authority.
6.09 Indemnification. (a) For a period of three (3) years following
the Effective Time, the Company shall indemnify, defend and hold harmless each
present and former director and officer of RLBI and the Bank (each, an
"Indemnified Party") against all costs or expenses (including reasonable
attorneys' fees), judgments, fines, losses, claims, damages or liabilities
(collectively, "Costs") incurred in connection with any claim, action, suit,
proceeding or investigation, whether civil, criminal, administrative or
investigative, arising out of actions or omissions occurring at or prior to the
Effective Time (including, without limitation, the transactions contemplated by
this Agreement or any related agreement, but excluding any Costs arising out of
any violation or alleged violation of the Exchange Act or the rules and
regulations thereunder with respect to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇) to the fullest extent
that RLBI or the Bank is permitted to indemnify (and advance expenses to) its
directors or officers under the IBCA, RLBI Articles and Bylaws, or the Bank
31
Charter and Bylaws, as in effect on the date hereof; provided that any
determination required to be made with respect to whether an officer's or
director's conduct complies with the standards set forth under the IBCA, RLBI
Articles and Bylaws, or the Bank Charter and Bylaws shall be made by independent
counsel selected by the Company and reasonably acceptable to the Indemnified
Party.
(b) Any Indemnified Party wishing to claim indemnification
under Section 6.09(a), upon learning of any claim, action, suit, proceeding or
investigation described above, shall promptly notify the Company thereof;
provided that the failure so to notify shall not affect the obligations of the
Company under Section 6.09(a) unless and to the extent that the Company is
actually prejudiced as a result of such failure.
(c) If the Company or any of its successors or assigns shall
consolidate with or merge into any other entity and shall not be the continuing
or surviving entity of such consolidation or merger or shall transfer all or
substantially all of its assets to any other entity, then and in each case,
proper provision shall be made so that the successors and assigns of the Company
shall assume the obligations set forth in this Section 6.09.
6.10 Benefit Plans. (a) From and after the Effective Time, the Company
shall provide former employees of RLBI or the Bank who remain as employees of
the Surviving Company, Company or any of the Company's Subsidiaries with
employee benefit plans, including severance policies, no less favorable in the
aggregate than those provided to similarly situated employees of the Company or
its Subsidiaries, as the case may be. The Company shall cause each employee
benefit plan, program, policy or arrangement of the Company in which employees
of RLBI or the Bank are eligible to participate to take into account for
purposes of eligibility and vesting thereunder the service of such employees
with RLBI or the Bank to the same extent as such service was credited for such
purpose by RLBI or the Bank. Nothing herein shall limit the ability of the
Company to amend or terminate any of the Benefit Plans in accordance with their
terms at any time.
(b) If employees of RLBI or the Bank become eligible to
participate in a medical, dental or health plan of the Company, the Company
shall cause, to the extent practicable, each such plan to (i) waive any
preexisting condition limitations to the extent such conditions were covered
under the applicable medical, health or dental plans of RLBI or the Bank, (ii)
honor under such plans any deductible, co-payment and out-of-pocket expenses
incurred by the employees and their beneficiaries during the portion of the
calendar year prior to such participation and (iii) waive any waiting period
limitation or evidence of insurability requirement which would otherwise be
applicable to such employee on or after the Effective Time to the extent such
employee had satisfied any similar limitation or requirement under an analogous
plan prior to the Effective Time.
(c) The Company shall be obligated to honor the Employment
Agreements.
(d) The Company shall be obligated to honor the agreements,
understandings and policies set forth in Section 6.10(d) of the Disclosure
Schedule.
6.11 Notification of Certain Matters. Each of RLBI and the Company
shall give prompt notice to the other of any fact, event or circumstance known
to it that (i) is reasonably likely, individually or taken together with all
other facts, events and circumstances known to it, to result in any Material
Adverse Effect with respect to it or (ii) would cause or constitute a
32
material breach of any of its representations, warranties, covenants or
agreements contained herein.
6.12 Covenant Relating to the Tax Status of the Agreement. The Company
and RLBI intend the Agreement to qualify as a stock purchase for all U.S.
federal income tax purposes. Each party will (and the Company will cause each of
its Subsidiaries to) both before and after the Effective Time (i) use reasonable
efforts to cause the Agreement to so qualify; (ii) refrain from taking any
action (including making any election under Section 338 of the Code) that would
reasonably be expected to cause the Agreement to fail to so qualify; and (iii)
take the position for all purposes that the Agreement so qualifies.
6.13 Human Resources Issues. (a) RLBI will consult in good faith with
the Company regarding the nature and content of any formal presentation of the
transactions contemplated by this Agreement to employees of RLBI and the Bank
and will include a Company representative in any such presentation or any formal
meeting at which the transaction is explained or discussed, under an arrangement
that is mutually satisfactory to the parties. RLBI agrees to work in good faith
with the Company to facilitate the timely and accurate dissemination of
information to employees regarding matters related to the transactions
contemplated by this Agreement in such a manner as to cause minimal disruption
of the business of RLBI and the Bank and their relationships with their
employees and to facilitate the transition of such relationships to the Company
or its Subsidiaries, as the case may be.
(b) The Company will not unreasonably withhold any consent
requested pursuant to Section 4.01. For any request for consent made pursuant to
Section 4.01(e), the Company shall respond within five (5) Business Days. The
Company's failure to so respond to a request within five (5) Business Days shall
be deemed to be its consent to the request.
6.14 Assistance with Third-Party Agreements. (a) RLBI and the Bank
shall use their reasonable efforts to obtain any required consents from all of
its third-party vendors, landlords of all of RLBI and the Bank's leased
properties and other parties to material agreements, promptly after the date of
this Agreement.
(b) Without limiting Section 6.14(a), RLBI and the Bank shall
use all reasonable efforts to provide data processing and other processing
support or outside contractors to assist the Company in performing all tasks
reasonably required to result in a successful conversion of their data and other
files and records to the Company's production environment, when requested by the
Company and sufficient to ensure that a successful conversion can occur at such
time as the Company requests on or after the Effective Time of the Merger. RLBI
and the Bank shall:
(i) cooperate with the Company to establish a
mutually agreeable project plan to effectuate the conversion;
(ii) use their best efforts to have RLBI's outside
contractors continue to support both the conversion effort and its
needs until the conversion can be established;
33
(iii) provide, or use their best efforts to obtain
from any outside contractors, all data or other files and layouts
requested by the Company for use in planning the conversion, as soon as
reasonably practicable;
(iv) provide reasonable access to personnel at
corporate headquarters, data and other processing centers, all branches
and, with the consent of outside contractors, at outside contractors,
to enable the conversion effort to be completed on schedule;
(v) to the extent reasonably practicable, give
notice of termination, conditioned upon the completion of the
transactions contemplated hereby, of the contracts of outside data and
other processing contractors or other third-party vendors when directed
to do so by the Company; and
(vi) take all actions pursuant to this Section 6.14
in a manner intended to minimize disruption to the customary business
activities of RLBI and the Bank.
6.15 Additional Agreements. If at any time after the Effective Time of
the Merger any further action is necessary or desirable to carry out the
purposes of this Agreement or to vest the Company with full title to all
properties, assets, rights, approvals, immunities and franchises of RLBI, the
undersigned parties agree that proper officers and directors of each party to
this Agreement shall take all necessary or appropriate action.
6.16 Pre-Closing Adjustments. At or before the Effective Time of the
Merger, RLBI and the Bank shall make such accounting entries or adjustments,
including additions to their ALL and charge-offs of loans, as the Company shall
direct as a result of their on-going review of RLBI (including its review of the
information provided to it pursuant to Sections 6.05 and 6.14) or in order to
implement its plans following the closing of the transactions contemplated by
this Agreement (the "Closing") or to reflect expenses and costs related to the
Merger; provided, however, that unless the adjustment would otherwise be
required by applicable law, rule or regulation, or by regulatory accounting
principles and GAAP applied on a basis consistent with the financial statements
of RLBI, (a) RLBI and the Bank shall not be required to take such actions more
than one day prior to the Effective Time of the Merger or prior to the time the
Company agrees in writing that all of the conditions to its obligation to close
as set forth in Section 7.03 have been satisfied or waived and each of the
approvals in Section 7.01(b) have been received, and (b) no such adjustment
shall (i) require any filing with any Governmental Authority, (ii) violate any
law, rule or regulation applicable to RLBI, the Bank or Company, (iii) otherwise
materially disadvantage RLBI and the Bank if the Merger was not consummated or
(iv) constitute or be deemed to be a Material Adverse Effect or breach,
violation of or failure to satisfy any representation, warranty, covenant,
condition or other provision of this Agreement or otherwise be considered in
determining whether any such breach, violation or failure to satisfy shall have
occurred.
6.17 Voting Agreements. Simultaneously with the execution of this
Agreement, the shareholders of RLBI set forth on Section 6.17 to the Disclosure
Schedule, with the exception of Keeco, Inc. and Northland Insurance Agency,
Inc., shall have entered into and delivered to the Company a Voting Agreement,
in the form attached hereto as Exhibit A. Keeco, Inc. and
34
Northland Insurance Agency shall have entered into and delivered to the
Company a Voting Agreement, in the form attached hereto as Exhibit A, within
twenty-one (21) days after this Agreement is fully executed.
6.18 Bank Merger. The Company and RLBI intend to take all action
necessary and appropriate to cause to be entered into the Bank Merger Agreement,
substantially on the terms and in the form attached hereto as Exhibit B (the
"Bank Merger Agreement") pursuant to which Bank of Waukegan and the Bank shall
merge simultaneously with or, if such Bank Merger cannot be effected
simultaneously, immediately after the consummation of the Merger.
6.19 Delivery of Supplements to Disclosure Schedules. Five (5)
Business Days prior to the Effective Time, RLBI will supplement or amend the
Disclosure Schedule with respect to any matter hereafter arising which, if
existing or occurring at or prior to the date of this Agreement, would have been
required to be set forth or described in such Disclosure Schedule or which is
necessary to correct any information in the Disclosure Schedule or in any
representation and warranty made by RLBI which has been rendered inaccurate
thereby.
6.20 Environmental Investigation.
(a) The Company has heretofore engaged an environmental
consultant acceptable to RLBI to conduct a preliminary ("Phase I") environmental
assessment of each of the parcels of owned real estate used in the operation of
the businesses of RLBI and the Bank and any other real estate owned by either of
them, or with respect to any real property identified in Schedule 5.02(p). The
fees and expenses of the consultant with respect to the Phase I assessments
shall be paid by the Company. RLBI shall fully cooperate with the Company to
provide the consultant reasonable access to the premises under assessment. The
Company acknowledges that with regard to any such real property not currently
owned or operated by RLBI or the Bank that the Company is obligated to make any
and all arrangements concerning its environmental due diligence. If any
environmental conditions are found or reasonably suspected or would tend to be
indicated by the report of the consultant which may be contrary to the
representations and warranties of RLBI set forth herein without regard to any
knowledge qualifiers or exceptions that may be contained in the Disclosure
Schedule, then the parties shall obtain from one or more mutually acceptable
consultants or contractors, as appropriate, an estimate of the cost of any
further environmental investigation, sampling, analysis, remediation, or other
follow-up work that may be necessary to address those conditions in accordance
with applicable laws and regulations. The costs, if any, of estimates from such
consultants or contractors shall be borne by the Company.
(b) Upon receipt of the estimate of the costs of all
follow-up work to the Phase I assessments obtained pursuant to Section 6.20(a)
or any subsequent investigation phases that may be conducted on the properties
for which any such Phase I assessment was obtained, the parties shall attempt to
agree upon a course of action for further investigation and remediation of any
environmental condition suspected, found to exist, or that would tend to be
indicated by the report of the consultant. All such post-Phase I investigations
or assessments (the cost of which shall be paid by the Company), all work plans
for any such post-Phase I assessments or remediation and any removal or
remediation actions that may be performed shall be mutually satisfactory to the
Company and RLBI. Except for the real property identified in Schedule
35
5.02(p) (for which the Company is assuming all risk of liability), if such work
plans or removal or remediation actions are estimated to cost more than $100,000
for any individual property (or $500,000 in the aggregate, excluding the
property identified in Schedule 5.02(p)) to complete, the Company and RLBI shall
discuss in good faith a mutually acceptable modification of this Agreement as it
relates to any property other than real property identified in Schedule 5.02(p).
(c) If the parties are unable to agree upon a course of
action for further investigation and remediation of an environmental condition
or issue raised by an environmental assessment conducted pursuant to this
Section 6.20 and/or a mutually acceptable modification to this Agreement as it
relates to any property other than real property identified in Schedule 5.02(p),
and the condition or issue is not one for which it can be determined to a
reasonable degree of certainty that the risk and expense to which the Surviving
Corporation and its subsidiaries would be subject as owner of the property
involved can be quantified, in good faith, and limited to an amount less than
$500,000, excluding the property identified in Schedule 5.02(p), then the
Company may terminate this Agreement upon ten (10) days prior written notice to
RLBI but in no event more than 60 days after the receipt of the Phase I
assessments. In the event the Company elects to terminate this Agreement, as set
forth in this Section 6.20, and abandon the merger, no party to this Agreement
shall have any liability or further obligation to any other party, including
without limitation, the payment of the Termination Fee.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
7.01 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each of the parties hereto to consummate the Merger is
subject to the fulfillment or written waiver by the parties hereto prior to the
Effective Time of each of the following conditions:
(a) Shareholder Approvals. The terms of the Merger Agreement
shall have been duly approved by the affirmative vote of a majority of the
outstanding shares of RLBI Common Stock entitled to vote.
(b) Regulatory Approvals. All regulatory approvals required
to consummate the transactions contemplated hereby shall have been obtained and
shall remain in full force and effect and all statutory waiting periods in
respect thereof shall have expired and no such approvals shall contain any
conditions, restrictions or requirements which the Company's Board reasonably
determines in good faith would (i) following the Effective Time, have a Material
Adverse Effect on the Company and its Subsidiaries taken as a whole or (ii)
reduce the benefits of the transactions contemplated hereby to such a degree
that the Company would not have entered into this Agreement had such conditions,
restrictions or requirements been known at the date hereof.
(c) No Injunction. No Governmental Authority of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
statute, rule, regulation, judgment, decree, injunction or other order (whether
temporary, preliminary or permanent)
36
which is in effect and prohibits consummation of the transactions contemplated
by this Agreement.
7.02 Conditions to Obligation of RLBI. The obligation of RLBI to
consummate the Merger is also subject to the fulfillment or written waiver prior
to the Effective Time of each of the following additional conditions:
(a) Representations and Warranties. The representations and
warranties of the Company set forth in this Agreement shall be true and correct
as of the date of this Agreement, and shall be true and correct as of the
Effective Date as though made on and as of the Effective Date (except that
representations and warranties that by their terms represent or warrant as of
the date of this Agreement or some other date shall be true and correct as of
such date) except where the failure to be true and correct would not have, or
would not reasonably be expected to have, a Material Adverse Effect on the
Company (without giving effect to any materiality, Material Adverse Effect or
similar qualification as set forth in such representations and warranties). The
Company shall have performed, in all material respects, each of its covenants
and agreements contained in this Agreement. RLBI shall have received a
certificate, dated the Effective Date, signed on behalf of the Company by the
Chief Executive Officer and the Chief Financial Officer of the Company to the
foregoing effect.
(b) Performance of Obligations of the Company. The Company
and Merger Subsidiary shall have performed in all material respects all
obligations required to be performed by them under this Agreement at or prior to
the Effective Time, and RLBI shall have received a certificate, dated the
Effective Date, signed on behalf of the Company by the Chief Executive Officer
and the Chief Financial Officer of the Company to such effect.
7.03 Conditions to Obligation of the Company and Merger Subsidiary.
The obligation of the Company and Merger Subsidiary to consummate the Merger is
also subject to the fulfillment or written waiver by each prior to the Effective
Time of each of the following conditions:
(a) Representations and Warranties. The representations and
warranties of RLBI set forth in this Agreement shall be true and correct as of
the date of this Agreement, and shall be true and correct as of the Effective
Date as though made on and as of the Effective Date (except that representations
and warranties that by their terms represent or warrant as of the date of this
Agreement or some other date shall be true and correct as of such date) except
where the failure to be true and correct would not have, or would not reasonably
be expected to have, a Material Adverse Effect on RLBI (without giving effect to
any materiality, Material Adverse Effect or similar qualification as set forth
in such representation and warranties). RLBI shall have performed, in all
material respects, each of its covenants and agreements contained in this
Agreement and the Company shall have received a certificate, dated the Effective
Date, signed on behalf of RLBI by the Chief Executive Officer and the Chief
Financial Officer of RLBI to such effect.
(b) Performance of Obligations of RLBI. RLBI shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Effective Time, and the Company and
Merger Subsidiary shall have received a certificate,
37
dated the Effective Date, signed on behalf of RLBI by the Chief Executive
Officer and the Chief Financial Officer of RLBI to such effect.
(c) Opinion of RLBI's Counsel. The Company shall have
received the opinion of ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, Ltd., dated the Effective
Time, in form and substance substantially in the form attached hereto as Exhibit
C.
(d) No Litigation. No litigation or proceeding shall be
pending against RLBI brought by any Governmental Authority seeking to prevent
consummation of the transactions contemplated hereby.
(e) Closing Financial Statements. At least four (4) Business
Days prior to the Effective Time of the Merger, RLBI shall provide the Company
with RLBI's internally prepared consolidated financial statements (not including
footnotes and normal and recurring year-end adjustments which are not material),
prepared in a manner consistent with past practices, presenting the financial
condition of RLBI as of the close of business on the last day of the last month
ended prior to the Effective Time of the Merger and RLBI's results of operations
for the period January 1, 2003 through the close of business on the last day of
the last month ended prior to the Effective Time of the Merger (the "Closing
Financial Statements"); provided, however, that if the Effective Time of the
Merger occurs on or before the fifth Business Day of the month, RLBI shall have
provided internally prepared consolidated financial statements as of and through
the second month preceding the Effective Time of the Merger. Except as otherwise
provided herein, such internally prepared consolidated financial statements
shall have been prepared in all material respects in a manner consistent with
past practices and in accordance with regulatory requirements and other
applicable legal and accounting requirements, and reflect all period-end
accruals and other adjustments. Such internally prepared consolidated financial
statements shall be accompanied by a certificate of RLBI's Chief Financial
Officer, dated as of a date no earlier than two Business Days prior to the
Effective Time of the Merger, to the effect that such internally prepared
consolidated financial statements continue to reflect accurately, as of the date
of the certificate, the consolidated financial condition of the Company in all
material respects.
(f) Consents. RLBI shall use reasonable efforts to assist the
Company in obtaining any material consents required by contracts listed in
Sections 5.02(f) and (k) of the Disclosure Schedule and any consents of the type
required to be identified in Schedule 5.02(f) of the Disclosure Schedule but
were not so identified as of the date of this Agreement.
(g) Transaction Expenses. RLBI shall exercise its best
efforts to ensure that at least two Business Days prior to the Effective Time of
the Merger, all attorneys, accountants, investment bankers and other advisors
and agents (collectively, "Advisors") for RLBI shall have submitted to RLBI
estimates of their fees and expenses for all services rendered or to be rendered
in any respect in connection with the transactions contemplated hereby to the
extent not already paid, and based on such estimates, RLBI shall have prepared
and submitted to the Company a summary of such fees and expenses for the
transaction. At or prior to the Effective Time of the Merger, RLBI shall use its
best efforts to (i) cause such Advisors to have submitted their final bills for
all material fees and expenses to RLBI for services rendered, a copy of which
RLBI shall have caused to be delivered to the Company, and based on such
summary, RLBI shall have prepared and submitted to the Company a final
calculation of such fees and expenses; and
38
(ii) accrue and pay the amount of such fees and expenses as calculated above,
after the Company has been given an opportunity to review all such bills and
calculation of such fees and expenses.
(h) Directors' Resignations. The Company shall have received
the written resignation of each director of RLBI (in such director's capacity as
a director of RLBI), effective as of the Effective Time.
ARTICLE VIII
TERMINATION
8.01 Termination. This Agreement may be terminated, and the Merger may
be abandoned:
(a) Mutual Consent. At any time prior to the Effective Time,
by the mutual consent of the Company and RLBI if the Board of Directors of each
so determines by vote of a majority of its members.
(b) Breach. At any time prior to the Effective Time, by the
Company or RLBI if the respective Board of Directors so determines by vote of a
majority of the members of its entire board, in the event of: (i) a breach by
the Company or Merger Subsidiary or by RLBI, as the case may be, of any material
representation or warranty contained herein, which breach cannot be or has not
been cured within thirty (30) days after the giving of written notice to the
breaching party or parties of such breach; or (ii) a breach by the Company or
Merger Subsidiary or by RLBI, as the case may be, of any of the material
covenants or agreements contained herein, which breach cannot be or has not been
cured within thirty (30) days after the giving of written notice to the
breaching party or parties of such breach, provided that such breach (whether
under (i) or (ii)) would be reasonably likely, individually or in the aggregate
with other breaches, to result in a Material Adverse Effect with respect to the
Company or RLBI, as the case may be.
(c) Delay. At any time prior to the Effective Time, by the
Company or RLBI if the respective Board of Directors so determines by vote of a
majority of the members of its entire board, in the event that the Merger is not
consummated by March 31, 2004, except to the extent that the failure of the
Merger then to be consummated arises out of or results from the knowing action
or inaction of (i) the party seeking to terminate pursuant to this Section
8.01(c), or (ii) Merger Subsidiary (if the Company is the party seeking to
terminate).
(d) No Approval. By RLBI or the Company, if the respective
Board of Directors so determines by a vote of a majority of the members of its
entire board, in the event (i) the approval of any Governmental Authority
required for consummation of the Merger and the other transactions contemplated
by this Agreement shall have been denied by final nonappealable action of such
Governmental Authority or an application therefor shall have been permanently
withdrawn at the invitation, request or suggestion of a Governmental Authority
or (ii) the shareholder approval referred to in Section 7.01(a) herein is not
obtained at RLBI Meeting.
(e) Acquisition Proposal. By the Company, if (i) RLBI shall
have exercised a right specified in the provision set forth in Section 6.06 with
respect to any Acquisition Proposal;
39
or (ii) an Acquisition Proposal that is publicly disclosed shall have been
commenced, publicly proposed or communicated to RLBI which contains a proposal
as to price (without regard to the specificity of such price proposal) and RLBI
shall not have rejected such proposal within fifteen (15) Business Days of (x)
its receipt or (y) the date its existence first becomes publicly disclosed, if
earlier.
(f) Superior Proposal. By RLBI, if (i) RLBI has complied with
the provisions of Section 6.06, and (ii) the RLBI Board shall have determined,
in its good faith judgment and in accordance with Section 6.06, that it has
received a Superior Proposal and that it would be in the best interests of the
shareholders of RLBI to pursue such Superior Proposal; provided, however, that
RLBI may not terminate this Agreement pursuant to this Section 8.01(f) until the
expiration of five (5) Business Days after the Superior Proposal referenced in
this Section 8.01(f) has been delivered to the Company, together with such other
information required pursuant to Section 6.06 and a summary of the terms of any
such Superior Proposal.
(g) Failure to Recommend. At any time prior to RLBI Meeting,
by the Company if RLBI shall have breached Section 6.06 or RLBI Board shall have
failed to make its recommendation referred to in Section 6.02, withdrawn such
recommendation or modified or changed such recommendation in a manner adverse in
any respect to the interests of the Company.
(h) Environmental Matters. By the Company, pursuant to, and
subject to, the terms of Section 6.20(c).
8.02 Effect of Termination and Abandonment. (a) In the event of
termination of this Agreement and the abandonment of the Merger pursuant to this
Article VIII, no party to this Agreement shall have any liability or further
obligation to any other party hereunder except (i) as set forth in subsections
(b) and (c) below and Section 9.01, (ii) that termination will not relieve a
breaching party from liability for actual damages for any willful breach of any
covenant, agreement, representation or warranty of this Agreement giving rise to
such termination and (iii) any other provision of this Agreement which expressly
survives the termination of this Agreement.
(b) If this Agreement is terminated by RLBI pursuant to
Section 8.01(f), or by the Company pursuant to Section 8.01(e), upon such
termination RLBI shall pay to the Company a termination fee, representing
liquidated damages, of $1,000,000 (the "Termination Fee"). Notwithstanding any
Termination Fee paid to the Company pursuant to Section 8.01(f), such
Termination Fee shall not be the sole remedy available to the Company in the
event that RLBI has breached Section 6.06 or any other provision of this
Agreement and the Company shall be entitled to pursue all remedies to which it
is entitled at law or equity.
(c) If this Agreement is terminated by RLBI pursuant to
Section 8.01(b) where the Company would not be entitled to terminate under
subdivisions (i) or (ii) of that subsection, the Company shall pay to RLBI a
Termination Fee of $1,000,000, representing liquidated damages. Notwithstanding
any Termination Fee paid to RLBI, such Termination Fee shall not be the sole
remedy available to RLBI in the event that the Company has breached any
40
provision of this Agreement, and RLBI shall be entitled to pursue all remedies
to which it is entitled at law or equity.
(d) Any Termination Fee that becomes payable to the Company
or RLBI pursuant to this Section 8.02 shall be paid by wire transfer of
immediately available funds to an account designated by the Company or RLBI, as
the case may be, either if this Agreement is terminated by the Company or RLBI
and the termination meets the conditions set forth in Section 8.02 at or prior
to such termination by the Company or RLBI.
(e) RLBI and the Company agree that the agreements contained
in paragraphs (b) and (c) above are an integral part of the transactions
contemplated by this Agreement, that without such agreements RLBI and the
Company would not have entered into this Agreement, and that such amounts do not
constitute a penalty. If the party owing the Termination Fee fails to pay the
other party the amounts due under paragraph (b) above within the time periods
specified in paragraph (c) above, the party owing the Termination Fee shall pay
all reasonable attorneys' fees, costs and expenses incurred by the other party
in connection with any action, including the filing of any lawsuit, taken to
collect payment of such amounts, together with interest on the amount of any
such unpaid amounts at the publicly announced Prime Rate of Bank One N.A. from
the date such amounts were required to be paid.
ARTICLE IX
MISCELLANEOUS
9.01 Survival. No representations, warranties, agreements and
covenants contained in this Agreement shall survive the Effective Time (other
than Sections 6.09 and 6.10 and this Article IX, which shall survive the
Effective Time) or the termination of this Agreement if this Agreement is
terminated prior to the Effective Time (other than Sections 6.05(d), 8.02 and
this Article IX which shall survive any such termination).
9.02 Waiver; Amendment. Prior to the Effective Time, any provision of
this Agreement may be (i) waived in whole or in part by the party benefited by
the provision or by both parties or (ii) amended or modified at any time, by an
agreement in writing between the parties hereto executed in the same manner as
this Agreement, except that after RLBI Meeting, this Agreement may not be
amended if it would reduce the aggregate value of the consideration to be
received by RLBI shareholders in the Merger without any subsequent approval by
such shareholders or be in violation of applicable law.
9.03 Counterparts. This Agreement may be executed in one 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.
9.04 Governing Law, Jurisdiction and Venue. This Agreement shall be
governed by, and interpreted in accordance with, the laws of the State of
Illinois (however, not to the exclusion of any applicable Federal law), without
regard to Illinois statutes or judicial decisions regarding choice of law
questions. The parties hereby irrevocably submit to the jurisdiction of the
courts of the State of Illinois and the federal courts of the United States of
America located in the
▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ of the State of Illinois solely in respect of the
interpretation and enforcement of the provisions of this Agreement and of the
documents referred to in this Agreement, and in respect of the transactions
contemplated herein and therein, and hereby waive and agree to assert, as a
defense in any action, suit or proceeding for the interpretation or enforcement
hereof or of any such documents, 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 the venue thereof may not be appropriate or that this Agreement
or any such document may not be enforced in or by such courts, and the parties
hereto irrevocably agree that all claims with respect to such action or
proceeding shall be heard and determined in such Illinois state or federal
court. The parties hereby consent to and grant any such court jurisdiction over
the person of such parties and over the subject matter of such dispute and agree
that mailing of process or other papers in connection with any such action or
proceeding in the manner provided in Section 9.06 or in such other manner as may
be permitted by law, shall be valid and sufficient service thereof.
9.05 Expenses. Each party hereto will bear all expenses incurred by it
in connection with this Agreement and the transactions contemplated hereby.
9.06 Notices. All notices, requests and other communications hereunder
to a party shall be in writing and shall be deemed given if personally
delivered, telecopied (with confirmation) or mailed by registered or certified
mail (return receipt requested) to such party at its address set forth below or
such other address as such party may specify by notice to the parties hereto.
If to RLBI to:
Round Lake Bankcorp, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, Ltd.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Company to:
Northern States Financial Corp.
▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇, Chairman, President and
Chief Executive Officer
42
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Vedder, Price, ▇▇▇▇▇▇▇ & Kammholz, P.C.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
9.07 Entire Understanding; No Third Party Beneficiaries. This
Agreement (including the Disclosure Schedule attached hereto and incorporated
herein) represents the entire understanding of the parties hereto and thereto
with reference to the transactions contemplated hereby and thereby and this
Agreement supersedes any and all other oral or written agreements heretofore
made. Except for Section 6.09, nothing in this Agreement, expressed or implied,
is intended to confer upon any Person, other than the parties hereto or their
respective successors, any rights, remedies, obligations or liabilities under or
by reason of this Agreement.
9.08 Effect. No provision of this Agreement shall be construed to
require RLBI, the Bank, the Company, the Merger Subsidiary or any Subsidiaries,
affiliates or directors of any of them to take any action or omit to take any
action which action or omission would violate applicable law (whether statutory
or common law), rule or regulation.
9.09 Severability. Except to the extent that application of this
Section 9.09 would have a Material Adverse Effect on RLBI, the Bank, the
Company, or Merger Subsidiary, any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
9.10 Enforcement of the Agreement. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state having jurisdiction, this being in addition to any other
remedy to which they are entitled at law or in equity.
9.11 Consequential Damages. No party to this Agreement shall be liable
for consequential, incidental, punitive, exemplary or indirect damages, lost
profits or other business interruption damages, pursuant to statute, common law,
tort, contract or warranty.
43
9.12 Interpretation. When a reference is made in this Agreement to
Sections, Exhibits or Schedules, such reference shall be to a Section of, or
Exhibit or Schedule to, this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and are not part of this Agreement. Whenever the words "include",
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation".
44
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers, as of the day and year respectively
written below.
ROUND LAKE BANKCORP, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President and Chief Executive Officer
Dated: September 11, 2003
NORTHERN STATES FINANCIAL CORPORATION
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: Chairman, President and Chief
Executive Officer
Date: September 11, 2003
45