EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
BLACKHAWK BANCORP, INC.
DUNC MERGER CORPORATION
and
DUNC Corp.
DATED AS OF MARCH 17, 2003
TABLE OF CONTENTS
Page
RECITALS..................................................1
ARTICLE I......................................................1
1.1 Acquisition...........................................1
1.2 Acquisition Proposal..................................2
1.3 Affiliate.............................................2
1.4 Agreement.............................................2
1.5 Announcement..........................................2
1.6 Bank..................................................2
1.7 BHCA..................................................2
1.8 BIF...................................................2
1.9 Blackhawk.............................................2
1.10 Blackhawk and Merger Corp. Closing Certificate.......2
1.11 Blackhawk Counsel Opinion............................2
1.12 BSB..................................................3
1.13 Buildings............................................3
1.14 CERCLA...............................................3
1.15 Closing..............................................3
1.16 Closing Date.........................................3
1.17 Code.................................................3
1.19 Contracts............................................3
1.20 Control..............................................3
1.21 DunC.................................................3
1.22 DunC Closing Capital.................................3
1.23 DunC Closing Capital Measurement Date................3
1.24 DunC Closing Certificate.............................3
1.25 DunC Common Stock....................................4
1.26 DunC Counsel Opinion.................................4
1.27 DunC Disclosure Schedule.............................4
1.28 DunC Executives......................................4
1.29 DunC Existing Contracts..............................4
1.30 DunC Existing Employment Agreements..................4
1.31 DunC Existing Indebtedness...........................4
1.32 DunC Existing Insurance Policies.....................4
1.33 DunC Existing Investment Securities..................4
1.34 DunC Existing Liens..................................5
1.35 DunC Existing Litigation.............................5
1.36 DunC Existing Permits................................5
1.37 DunC Existing Plans..................................5
1.38 DunC Meeting.........................................5
1.39 DunC Profit Sharing Plan.............................5
1.40 DunC Proxy Statement.................................5
1.41 DunC Real Estate.....................................5
1.42 DunC Replacement Employment Agreement................5
1.43 DunC Reports.........................................5
1.44 DunC Shareholders....................................5
1.45 DunC Subsidiaries....................................6
1.46 Effective Time.......................................6
1.47 Employee Benefit Plans...............................6
1.48 Environmental Claim, Environmental Hazardous
Material, Environmental Laws, Environmental
Permits and Environmental Release....................6
1.49 Equipment............................................6
1.50 ERISA................................................6
1.51 FDIC.................................................6
1.52 Financial Information................................6
1.53 FRB..................................................6
1.54 IBCA.................................................6
1.55 Illinois Bank Regulatory Authority...................6
1.56 Indebtedness.........................................6
1.57 Information..........................................7
1.58 Investment Securities................................7
1.59 IRS..................................................7
1.60 Law..................................................7
1.61 Lien.................................................7
1.62 Material Adverse Effect..............................7
1.63 Merger...............................................7
1.64 Merger Corp..........................................7
1.65 Merger Per Share Consideration.......................7
1.66 Merger Stock.........................................7
1.67 Merger Total Consideration...........................7
1.68 Paying Agent.........................................7
1.69 Payment Fund.........................................8
1.70 Permits..............................................8
1.71 Permitted Liens......................................8
1.72 Person...............................................8
1.73 Regulatory Approvals.................................8
1.74 Restructuring........................................8
1.75 Subsidiary...........................................8
1.76 Surviving Corporation................................8
1.77 WBCL.................................................8
1.78 Wisconsin Bank Regulatory Agency.....................8
ARTICLE II.....................................................8
2.1 The Merger............................................8
2.2 Effect of the Merger..................................9
2.3 Effective Time........................................9
2.4 Articles and Bylaws of Surviving Corporation..........9
2.5 Charter and Bylaws of the Bank; Offices of the Bank..10
2.6 Directors and Officers of Surviving Corporation......10
2.7 Merger Total Consideration Adjustments...............10
2.8 Conversion of DunC Common Stock......................12
2.9 Conversion of Stock of Merger Corp...................12
2.10 Meeting of DunC Shareholders........................12
2.11 Payment of Merger Total Consideration...............13
2.12 Surrender of Certificates...........................13
2.13 Subsequent Restructuring............................15
2.14 Anti-Dilution Provisions............................15
ARTICLE III...................................................15
3.1 Access...............................................15
3.2 DunC's Disclosure Schedule...........................15
3.3 Duties Concerning Representations....................16
3.4 Deliveries of Information; Consultation..............16
3.5 Letter of DunC's Accountants.........................18
3.6 Legal Conditions to Merger...........................18
3.7 Announcements........................................18
3.8 Best Efforts.........................................18
3.9 Employment Agreements................................18
3.10 Employee Benefit Matters............................18
3.11 Confidentiality.....................................19
3.12 Conformance to Loan Policies and Reserve Policies...20
3.13 Conduct of Blackhawk's Business.....................20
3.14 Break-Up Fee........................................20
3.15 Board of Directors and Shareholder
Meetings; Certain Notices...........................20
ARTICLE IV....................................................21
4.1 Organization and Qualification; Subsidiaries.........21
4.2 Articles of Incorporation and Bylaws.................22
4.3 Capitalization.......................................22
4.4 Authorization:Enforceability.........................23
4.5 No Violation or Conflict.............................23
4.6 Title to Assets; Leases..............................23
4.7 Litigation...........................................23
4.8 Reports; Books and Records...........................24
4.9 Absence of Certain Changes...........................24
4.10 Buildings and Equipment.............................25
4.11 DunC Existing Contracts.............................25
4.12 Performance of DunC Existing Contracts..............26
4.13 Contingent and Undisclosed Liabilities..............26
4.14 DunC Existing Insurance Policies....................27
4.15 Employee Benefit Plans..............................27
4.16 No Violation of Law.................................28
4.17 Brokers.............................................28
4.18 Taxes...............................................28
4.19 Real Estate.........................................29
4.20 Governmental Approvals..............................30
4.21 No Pending Acquisitions.............................30
4.22 Labor Matters.......................................30
4.23 Indebtedness........................................31
4.24 DunC Existing Permits...............................31
4.25 Disclosure..........................................31
4.26 Information Supplied................................31
4.27 Vote Required.......................................32
4.28 Environmental Protection............................32
4.29 Investment Securities...............................33
ARTICLE V.....................................................33
5.1 Organization and Capitalization; Business............34
5.2 Authorization; Enforceability........................34
5.3 No Violation or Conflict.............................35
5.4 Litigation...........................................35
5.5 Brokers..............................................35
5.6 Governmental Approvals...............................35
5.7 Disclosure...........................................35
5.8 Information Supplied.................................35
5.9 Cash Payment.........................................35
ARTICLE VI....................................................36
6.1 Carry on in Regular Course...........................36
6.2 Use of Assets........................................36
6.3 No Default...........................................36
6.4 Existing Insurance Policies..........................36
6.5 Employment Matters...................................36
6.6 Contracts and Commitments............................36
6.7 Liabilities; Indebtedness; Investments...............36
6.8 Preservation of Relationships........................37
6.9 Compliance with Laws and Policies....................37
6.10 Taxes...............................................37
6.11 Amendments..........................................37
6.12 Issuance of Stock; Dividends; Redemptions...........37
6.13 Policy Changes......................................37
6.14 Specific Loans Matters..............................37
6.15 Acquisition Transaction.............................37
6.16 Branches............................................38
ARTICLE VII...................................................38
7.1 Conditions to Each Parties Obligations
to Effect the Merger.................................38
7.2 Conditions to Obligation of
Blackhawk and Merger Corp............................39
7.3 Conditions to Obligation of DunC.....................42
ARTICLE VIII..................................................42
8.1 Termination..........................................42
8.2 Rights on Termination; Waiver........................43
8.3 Survival of Representations,
Warranties and Covenants.............................43
8.4 Entire Agreement; Amendment..........................43
8.5 Expenses.............................................44
8.6 Governing Law........................................44
8.7 Assignment...........................................44
8.8 Notices..............................................44
8.9 Counterparts; Headings...............................46
8.10 Interpretation......................................46
8.11 Severability........................................46
8.12 Specific Performance................................46
8.13 No Reliance.........................................46
8.14 Further Assurances..................................46
8.15 Waiver of Jury Trial................................47
EXHIBITS
Exhibit 1 - Form of Blackhawk and Merger Corp. Closing Certificate
Exhibit 2 - Form of Blackhawk Counsel Opinion
Exhibit 3 - [Reserved]
Exhibit 4 - Form of DunC Replacement Employment Agreement
Exhibit 5 - Form of DunC Closing Certificate
Exhibit 6 - Form of DunC Counsel Opinion
Exhibit 7 - Form of DunC Closing Capital Calculation
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER is made as of this 17th day of March, 2003 by
and among BLACKHAWK BANCORP, INC. ("Blackhawk"), DUNC MERGER CORPORATION
("Merger Corp.") and DUNC CORP. ("DunC").
RECITALS
WHEREAS, the respective Boards of Directors of Blackhawk, Merger Corp. and
DunC have approved this Agreement by the requisite vote imposed by Law, and deem
it advisable and in the best interest of their respective institutions and
stockholders to consummate the reorganization provided for herein, pursuant to
which Merger Corp. will merge with and into DunC, the surviving corporation, and
in connection therewith the stockholders of DunC will receive cash in exchange
for their shares of DunC Common Stock; and
WHEREAS, the Board of Directors of DunC has directed that this Agreement and
the transactions described in this Agreement be submitted for approval by the
DunC Shareholders at the DunC Meeting.
NOW, THEREFORE, in consideration of the Recitals and of the Blackhawk
covenants, conditions and agreements set forth herein and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, it is hereby agreed that:
ARTICLE I
DEFINITIONS
When used in this Agreement, the following terms shall have the meanings
specified:
1.1 Acquisition. "Acquisition" shall mean any of the following involving
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DunC, the Bank or any other DunC Subsidiary, other than the Merger:
(a) any merger, consolidation, share exchange, business combination
or other similar transaction;
(b) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition of 10% or more of assets in a single transaction or series of
related transactions;
(c) any sale of 10% or more of the outstanding shares of capital
stock (or securities convertible or exchangeable into or otherwise evidencing,
or an agreement or instrument evidencing, the right to acquire capital stock);
(d) a tender offer or exchange offer for 10% or more of the
outstanding shares of capital stock;
(e) the filing of an acquisition application (or the giving of
acquisition notice), whether in draft or final form, under BHCA with respect to
DunC or the Bank;
(f) any Person shall have acquired beneficial ownership or the right
to acquire beneficial ownership of, or any "group" (as such term is defined
under Section 13(d) of the Securities Exchange Act of 1934 and the rules and
regulations of the SEC promulgated thereunder) shall have been formed which
beneficially owns or has the right to acquire beneficial ownership of, 10% or
more of the then outstanding shares of capital stock; or
(g) any public announcement of a proposal, plan or intention to do
any of the foregoing.
1.2 Acquisition Proposal. "Acquisition Proposal" shall mean the
--------------------
making of any proposal by any Person concerning an Acquisition.
1.3 Affiliate. "Affiliate" shall mean, with respect to any Person,
----------
any other Person who directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with the first Person,
including without limitation all directors and executive officers of the first
Person.
1.4 Agreement. "Agreement" shall mean this Agreement and Plan of Merger,
----------
together with the Exhibits attached hereto and together with the DunC Disclosure
Schedule, as the same may be amended or supplemented from time to time in
accordance with the terms hereof.
1.5 Announcement. "Announcement" shall mean any public notice, release,
-------------
statement or other communication to employees, suppliers, distributors,
customers, members, stockholders, the general public, the press or any
securities exchange or securities quotation system relating to the negotiation
and preparation of this Agreement or the transactions contemplated hereby.
1.6 Bank. "Bank" shall mean First Bank, bc, an Illinois banking
-----
corporation which is a wholly-owned subsidiary of DunC.
1.7 BHCA. "BHCA" shall mean the Bank Holding Company Act of 1956, as
-----
amended, including the rules and regulations of the FRB promulgated thereunder.
1.8 BIF. "BIF" shall mean the Bank Insurance Fund of the FDIC.
----
1.9 Blackhawk. "Blackhawk" shall mean Blackhawk Bancorp, Inc., a Wisconsin
----------
corporation which is registered as a bank holding company under the BHCA.
1.10 Blackhawk and Merger Corp. Closing Certificate. "Blackhawk and Merger
-----------------------------------------------
Corp. Closing Certificate" shall mean the Closing Certificate of Blackhawk and
Merger Corp. in substantially the form of Exhibit 1 attached to this Agreement.
---------
1.11 Blackhawk Counsel Opinion. "Blackhawk Counsel Opinion" shall mean the
--------------------------
opinion of ▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP in substantially the form of Exhibit 2 attached
---------
to this Agreement.
1.12 BSB. "BSB" shall mean Blackhawk State Bank, a Wisconsin chartered bank
---
which is a wholly-owned subsidiary of Blackhawk.
1.13 Buildings. "Buildings" shall mean all buildings, fixtures, structures
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and improvements (including without limitation stand-alone automated teller
machines or similar devices) used by DunC or an Affiliate and located on the
DunC Real Estate.
1.14 CERCLA. "CERCLA" shall mean the Comprehensive Environmental Response,
-------
Compensation and Liability Act of 1980, as the same may be in effect from time
to time.
1.15 Closing. "Closing" shall mean the conference to be held at 10:00 A.M.,
--------
Central Time, on the Closing Date at the offices of ▇▇▇▇▇▇▇ & ▇▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or such other time and place as
the parties may mutually agree to in writing, at which the transactions
contemplated by this Agreement shall be consummated.
1.16 Closing Date. "Closing Date" shall mean the date of the Effective Time
-------------
or such other date as the parties may mutually agree to in writing.
1.17 Code. "Code" shall mean the Internal Revenue Code of 1986, as the same
-----
may be in effect from time to time.
1.18 [Reserved]
1.19 Contracts. "Contracts" shall mean all of the contracts, agreements,
----------
leases, relationships and commitments, written or oral, to which the relevant
Person is a party or by which it is bound.
1.20 Control. "Control," as used with respect to any Person, shall mean the
--------
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities or by contract or otherwise. "Control," as used
with respect to securities or other property, shall mean the power to exercise
or direct the exercise of any voting rights associated therewith, or the power
to dispose or direct the disposition thereof, or both.
1.21 DunC. "DunC" shall mean DunC Corp., an Illinois corporation which is
-----
registered as a bank holding company under the BHCA.
1.22 DunC Closing Capital. "DunC Closing Capital" shall mean DunC's capital
---------------------
as of 11:59 p.m. on the DunC Closing Capital Measurement Date as determined in
accordance with Exhibit 7 attached to this Agreement.
---------
1.23 DunC Closing Capital Measurement Date. "DunC Closing Capital
--------------------------------------
Measurement Date" shall mean the last day of the month immediately prior to the
month containing the Effective Time.
1.24 DunC Closing Certificate. "DunC Closing Certificate" shall mean the
-------------------------
Closing Certificate of DunC in substantially the form of Exhibit 5 attached to
---------
this Agreement.
1.25 DunC Common Stock. "DunC Common Stock" shall mean all of the authorized
------------------
shares of common stock, no par value, of DunC.
1.26 DunC Counsel Opinion. "DunC Counsel Opinion" shall mean an opinion of
---------------------
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇ in substantially the form of Exhibit 6 attached to this
---------
Agreement.
1.27 DunC Disclosure Schedule. "DunC Disclosure Schedule" shall mean the
-------------------------
disclosure schedule, dated the date of this Agreement, delivered by DunC to
Blackhawk contemporaneously with the execution and delivery of this Agreement
and as the same may be amended from time to time after the date of this
Agreement and prior to the Closing Date in accordance with the terms of this
Agreement.
1.28 DunC Executives. "DunC Executives" shall mean the individuals set
----------------
forth in the table below in their capacities as executive officers of DunC or
the Bank, or both, as identified adjacent to their respective names:
OFFICE(S) HELD IN
NAME OF EXECUTIVE DUNC AND THE BANK
----------------- -----------------
▇▇▇▇▇▇ ▇▇▇▇▇ Chairman and Chief Executive Officer of
DunC and the Bank
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ President of DunC and the Bank
▇▇▇▇▇▇ ▇▇▇▇▇ Vice President - Real Estate and
Secondary Mortgage of the Bank
1.29 DunC Existing Contracts. "DunC Existing Contracts" shall mean those
------------------------
Contracts which are listed and briefly described pursuant to Section 4.11 of
this Agreement on the DunC Disclosure Schedule.
1.30 DunC Existing Employment Agreements. "DunC Existing Employment
------------------------------------
Agreements" shall mean the employment agreements by and between DunC and/or the
Bank and each of the DunC Executives, each dated as of March 23, 2001 and
amended on December 12, 2002.
1.31 DunC Existing Indebtedness. "DunC Existing Indebtedness" shall mean
---------------------------
all Indebtedness of DunC and the DunC Subsidiaries, all of which is listed and
briefly described on the DunC Disclosure Schedule.
1.32 DunC Existing Insurance Policies. "DunC Existing Insurance Policies"
---------------------------------
shall mean all of the insurance policies in effect and owned by DunC or any DunC
Subsidiary, all of which are listed and briefly described on the DunC Disclosure
Schedule.
1.33 DunC Existing Investment Securities. "DunC Existing Investment
------------------------------------
Securities" shall mean Investment Securities of DunC and the DunC Subsidiaries,
all of which are listed and briefly described on the DunC Disclosure Schedule.
1.34 DunC Existing Liens. "DunC Existing Liens" shall mean all Liens
--------------------
affecting any of the assets and properties of DunC or any DunC Subsidiary,
except for Liens for current taxes not yet due and payable and pledges to secure
deposits, all of which are listed and briefly described on the DunC Disclosure
Schedule.
1.35 DunC Existing Litigation. "DunC Existing Litigation" shall mean all
-------------------------
pending or, to the knowledge of DunC, threatened claims, suits, audit inquiries,
charges, workers compensation claims, litigation, arbitrations, proceedings,
governmental investigations, citations and actions of any kind against DunC or
any DunC Subsidiary, or affecting any assets or the business of DunC or any DunC
Subsidiary, all of which are listed and briefly described on the DunC Disclosure
Schedule.
1.36 DunC Existing Permits. "DunC Existing Permits" shall mean all Permits
----------------------
of DunC and all DunC Subsidiaries, all of which are listed and briefly described
on the DunC Disclosure Schedule.
1.37 DunC Existing Plans. "DunC Existing Plans" shall mean all Employee
--------------------
Benefit Plans of DunC and the DunC Subsidiaries, all of which are listed and
briefly described on the DunC Disclosure Schedule.
1.38 DunC Meeting. "DunC Meeting" shall mean the special or annual
-------------
meeting of the DunC Shareholders for the purpose of approving the Merger, this
Agreement and the transactions contemplated by this Agreement, and for such
other purposes as may be necessary or desirable.
1.39 DunC Profit Sharing Plan. "DunC Profit Sharing Plan" shall mean the
-------------------------
Bank Profit Sharing Plan, a tax qualified defined contribution plan covering
substantially all full-time employees of DunC and the Bank.
1.40 DunC Proxy Statement. "DunC Proxy Statement" shall have the meaning
---------------------
specified in Section 2.10(b) of this Agreement.
1.41 DunC Real Estate. "DunC Real Estate" shall mean the parcels of real
-----------------
property identified in the legal descriptions set forth in the DunC Disclosure
Schedule.
1.42 DunC Replacement Employment Agreement. "DunC Replacement Employment
--------------------------------------
Agreement" shall mean an employment agreement in substantially the form of
Exhibit 4 attached to this Agreement, to be entered into at the time of
---------
the execution of this Agreement and to be effective as of the Effective Time, by
and between the Bank and any one or more of the DunC Executives other than
▇▇▇▇▇▇ ▇▇▇▇▇, all as provided in Section 3.9(b) of this Agreement.
1.43 DunC Reports. "DunC Reports" shall have the meaning specified in
-------------
Section 4.8 of this Agreement.
1.44 DunC Shareholders. "DunC Shareholders" shall mean all Persons owning
------------------
shares of DunC Common Stock on the relevant date of inquiry.
1.45 DunC Subsidiaries. "DunC Subsidiaries" shall mean those Subsidiaries
------------------
of DunC listed on the DunC Disclosure Schedule pursuant to Section 4.1(c) of
this Agreement.
1.46 Effective Time. "Effective Time" shall have the meaning specified in
---------------
Section 2.3 of this Agreement.
1.47 Employee Benefit Plans. "Employee Benefit Plans" shall mean any
-----------------------
pension plan, profit sharing plan, bonus plan, incentive compensation plan,
deferred compensation plan, stock ownership plan, stock purchase plan, stock
option plan, stock appreciation plan, employee benefit plan, employee benefit
policy, retirement plan, fringe benefit program, insurance plan, severance plan,
disability plan, health care plan, sick leave plan, death benefit plan, or any
other plan or program to provide retirement income, fringe benefits or other
benefits to former or current employees of the relevant Person.
1.48 Environmental Claim, Environmental Hazardous Material, Environmental
--------------------------------------------------------------------
Laws, Environmental Permits and Environmental Release. "Environmental Claim,"
------------------------------------------------------
"Environmental Hazardous Material," "Environmental Laws," "Environmental
Permits" and "Environmental Release" shall have the meanings specified in
Section 4.28 of this Agreement.
1.49 Equipment. "Equipment" shall mean all equipment, boilers, furniture,
----------
fixtures, motor vehicles, furnishings, office equipment, computers and other
items of tangible personal property owned by the relevant Person which are
either presently used, or are used on the Closing Date, by the relevant Person
in the conduct of its business.
1.50 ERISA. "ERISA" shall mean the Employee Retirement Income Security
------
Act of 1974, as the same may be in effect from time to time.
1.51 FDIC. "FDIC" shall mean the Federal Deposit Insurance Corporation.
-----
1.52 Financial Information. "Financial Information" shall mean the (a)
----------------------
audited consolidated financial statements of DunC for the year ended
December 31, 2002, (b) the compiled financial statements of DunC for the years
ended December 31, 2002, 2001 and 2000; (c) unaudited consolidated financial
statements of DunC for the month ended February 28, 2003; (d) all monthly
financial statements of the Bank to be delivered to Blackhawk pursuant to
Section 3.4(a)(iii) hereof; and (e) the transaction records of DunC for the
periods from March 1, 2003 through the Closing Date.
1.53 FRB. "FRB" shall mean the Board of Governors of the Federal Reserve
----
System.
1.54 IBCA. "IBCA" shall mean the Illinois Business Corporation Act.
-----
1.55 Illinois Bank Regulatory Authority. "Illinois Bank Regulatory
-----------------------------------
Authority" shall mean the Office of Banks and Real Estate Division of Commercial
Bank Supervision for the State of Illinois.
1.56 Indebtedness. "Indebtedness" shall mean all liabilities or
-------------
obligations (except deposit accounts) of the relevant Person, whether primary or
secondary, absolute or contingent: (a) for borrowed money; (b) evidenced by
notes, bonds, debentures or similar instruments; or (c) secured by Liens on any
assets of the relevant Person.
1.57 Information. "Information" shall refer to the financial and other
------------
business information, whether in written or oral form, furnished to Blackhawk or
any of its Affiliates by DunC or any of the DunC Subsidiaries.
1.58 Investment Securities. "Investment Securities" shall mean all
----------------------
investment securities of the relevant Person permitted to be held by the
relevant Person under Law.
1.59 IRS. "IRS" shall mean the United States Internal Revenue Service.
----
1.60 Law. "Law" shall mean any federal, state, local or other law, rule,
----
regulation, policy or governmental requirement of any kind, and the rules,
regulations and orders promulgated thereunder by any regulatory agencies or
other Persons.
1.61 Lien. "Lien" shall mean, with respect to any asset: (a) any
-----
mortgage, pledge, lien, charge, claim, restriction, reservation, condition,
easement, covenant, lease, encroachment, title defect, imposition, security
interest or other encumbrance of any kind; and (b) the interest of a vendor or
lessor under any conditional sale agreement, financing lease or other title
retention agreement relating to such asset.
1.62 Material Adverse Effect. "Material Adverse Effect" shall mean any
------------------------
change or effect that is or is reasonably likely to be materially adverse to the
relevant Person's business, operations, properties (including intangible
properties), condition (financial or otherwise), assets, liabilities (including
contingent liabilities) or prospects.
1.63 Merger. "Merger" shall mean the merger of Merger Corp. with and
-------
into DunC pursuant to this Agreement.
1.64 Merger Corp. "Merger Corp." shall mean DunC Merger Corporation, an
------------
Illinois corporation organized as a wholly-owned subsidiary of Blackhawk
specifically for the purpose of effecting the transactions contemplated by this
Agreement.
1.65 Merger Per Share Consideration. "Merger Per Share Consideration"
-------------------------------
shall mean the amount of the Merger Total Consideration divided by the number of
shares of Merger Stock.
1.66 Merger Stock. "Merger Stock" shall mean the shares of DunC Common
-------------
Stock outstanding as of the Effective Time.
1.67 Merger Total Consideration. "Merger Total Consideration" shall mean
---------------------------
Seven Million Two Hundred Thousand Dollars ($7,200,000), subject to the
adjustments set forth herein.
1.68 Paying Agent. "Paying Agent" shall mean a bank or trust company
-------------
selected by Blackhawk and reasonably satisfactory to DunC.
1.69 Payment Fund. "Payment Fund" shall have the meaning specified in
-------------
Section 2.11 of this Agreement.
1.70 Permits. "Permits" shall mean all licenses, permits, approvals,
--------
franchises, qualifications, permissions, agreements, orders, easements,
consents, certificates and governmental authorizations required for the conduct
of the business of the relevant Person.
1.71 Permitted Liens. "Permitted Liens" shall mean those DunC Existing Liens
----------------
which are expressly noted as Permitted Liens on the DunC Disclosure Schedule.
1.72 Person. "Person" shall mean a natural person, corporation, bank,
-------
trust, partnership, association, governmental entity, agency or branch or
department thereof, or any other legal entity.
1.73 Regulatory Approvals. "Regulatory Approvals" shall mean all of the
---------------------
approvals which are conditions precedent to consummating the Merger, as
specified in Section 7.1(c) of this Agreement.
1.74 Restructuring. "Restructuring" shall mean the consolidation of DunC
--------------
with and into Blackhawk and/or BSB and/or the consolidation of the Bank with and
into BSB as described in Section 2.14 of this Agreement.
1.75 Subsidiary. "Subsidiary" shall mean any corporation, financial
-----------
institution, joint venture, partnership, limited liability company, trust or
other business entity: (i) 25% or more of any outstanding class of whose voting
interests is directly or indirectly owned by the relevant Person, or is held by
it with power to vote; (ii) the election of a majority of whose directors,
trustees, general partners or comparable governing body is controlled in any
manner by the relevant Person; or (iii) with respect to the management or
policies of which the relevant Person has the power, directly or indirectly, to
exercise a controlling influence. Subsidiary shall include an indirect
Subsidiary of the relevant Person which is controlled in any manner specified
above through one of more corporations or financial institutions which are
themselves Subsidiaries.
1.76 Surviving Corporation. "Surviving Corporation" shall have the meaning
----------------------
specified in Section 2.1 of this Agreement.
1.77 WBCL. "WBCL" shall mean the Wisconsin Business Corporation Law.
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1.78 Wisconsin Bank Regulatory Agency. "Wisconsin Bank Regulatory Agency"
---------------------------------
shall mean the Administrator of the Division of Banking of the Wisconsin
Department of Financial Institutions.
ARTICLE II
THE MERGER
2.1 The Merger. This Agreement provides for the merger of Merger Corp. with
-----------
and into DunC, whereby the Merger Stock outstanding as of the Effective Time
will be converted to cash as described herein. As of the Effective Time, Merger
Corp. will be merged with and into DunC which, as the surviving corporation (the
"Surviving Corporation"), shall remain an Illinois business corporation
registered under BHCA as a bank holding company and, in such capacity, shall be
governed by the laws of the State of Illinois and federal laws applicable to
registered bank holding companies, including rules and regulations of regulatory
authorities thereunder. The separate existence of Merger Corp. shall thereupon
cease. The Merger shall be effected pursuant to the provisions of federal law
and the IBCA, and shall have the effects provided in the IBCA.
2.2 Effect of the Merger.
---------------------
(a) At the Effective Time, the effect of the Merger shall be as
provided in the IBCA, including the effects described in Sections 2.2(b) and
2.2(c) of this Agreement.
(b) The corporate identity, existence, purposes, powers, franchises,
privileges, assets, properties and rights of both DunC and Merger Corp. shall be
merged into and continued in the Surviving Corporation, and the Surviving
Corporation shall be fully vested therewith. The separate existence of Merger
Corp., except insofar as otherwise specifically provided by Law, shall cease at
the Effective Time, whereupon Merger Corp. and the Surviving Corporation shall
be and become one single corporation.
(c) At the Effective Time, the Surviving Corporation shall succeed
to, without other transfer, and shall possess and enjoy, all the rights,
privileges, assets, properties, powers and franchises both of a public and a
private nature, and be subject to all the restrictions, disabilities and duties
of DunC and Merger Corp., and all the rights, privileges, assets, properties,
powers and franchises of DunC or Merger Corp. and all property, real, personal
and mixed, tangible or intangible, and all debts due to DunC or Merger Corp. on
whatever account, shall be vested in the Surviving Corporation; and all rights,
privileges, assets, properties, powers and franchises, and all and every other
interest shall be thereafter as effectively the property of the Surviving
Corporation as they were of DunC or Merger Corp.; and the title to or any
interest in any real estate vested by deed or otherwise in DunC or Merger Corp.
shall not revert or be in any way impaired by reason of the Merger; provided,
however, that all rights of creditors and Liens upon any property of either DunC
or Merger Corp. shall be preserved unimpaired, and all debts, liabilities and
duties of DunC or Merger Corp. shall thenceforth attach to the Surviving
Corporation and may be enforced against the Surviving Corporation to the same
extent as if said debts, liabilities and duties had been incurred or contracted
by the Surviving Corporation.
2.3 Effective Time. The consummation of the Merger shall be effected as
---------------
promptly as practicable after the satisfaction or waiver of the conditions set
forth in Article VII of this Agreement and the determination of the DunC Closing
Capital pursuant to Sections 2.7(a) or 2.7(b), as the case may be, of this
Agreement. The Merger shall become effective on the date and time specified in
Articles of Merger to be filed with the Illinois Secretary of State. The date
and time on which the Merger shall become effective is referred to in this
Agreement as the "Effective Time."
2.4 Articles and Bylaws of Surviving Corporation.
---------------------------------------------
(a) The Articles of Incorporation of Merger Corp. as in effect
immediately prior to the Effective Time shall be the Articles of Incorporation
of the Surviving Corporation until amended in accordance with Law, except that
the name of the corporation identified therein shall be changed to DunC
Bancshares, Inc.
(b) The Bylaws of Merger Corp. as in effect immediately prior to the
Effective Time shall be the Bylaws of the Surviving Corporation until amended in
accordance with Law, except that the name of the corporation identified therein
shall be changed to DunC Bancshares, Inc.
2.5 Charter and Bylaws of the Bank; Offices of the Bank.
----------------------------------------------------
(a) The Articles and Bylaws of the Bank in force immediately prior to
the Effective Time initially shall be the Articles and Bylaws of the Bank
immediately following the Effective Time.
(b) The location of the main office of the Bank immediately prior to
the Effective Time initially shall continue as the main office of the Bank
immediately following the Effective Time, and the location of each of the Bank's
branch offices immediately prior to the Effective Time shall continue as a
branch location of the Bank immediately following the Effective Time.
2.6 Directors and Officers of Surviving Corporation. As of the Effective
------------------------------------------------
Time, the duly qualified and acting directors and officers of Merger Corp.
immediately prior to the Effective Time shall be the directors and officers of
the Surviving Corporation, to hold office as provided in the Bylaws of the
Surviving Corporation.
2.7 Merger Total Consideration Adjustments.
---------------------------------------
(a) Promptly following the receipt by Blackhawk of the materials described
in Section 3.4(a) for the month ending on the DunC Closing Capital Measurement
Date, DunC and Blackhawk and, if requested, their respective accountants and
other advisors, shall attempt to agree on the amount of the DunC Closing
Capital. Along with such materials, DunC shall provide Blackhawk with its good
faith calculation of the amount of the DunC Closing Capital (the "First
Estimated DunC Closing Capital"). In the event DunC and Blackhawk agree on the
amount of the DunC Closing Capital, the Merger Total Consideration shall be
adjusted in accordance with subsection (c) below.
(b) In the event that Blackhawk and DunC are unable to agree on the amount
of the DunC Closing Capital within ten (10) days following Blackhawk's receipt
of the materials described in subsection (a) above, the Closing shall proceed on
the basis of the DunC Closing Capital as determined in good faith by Blackhawk
(the "Second Estimated DunC Closing Capital"), the Merger Total Consideration
shall be adjusted in accordance with subsection (c) below and the DunC Closing
Capital shall be finally determined in accordance with subsection (d) below.
(c) In the event that the DunC Closing Capital as agreed to by DunC and
Blackhawk pursuant to subsection (a) above or as determined by Blackhawk
pursuant to subsection (b) above is in excess of $4,782,000 (the "Upper DunC
Closing Capital Amount"), the Merger Total Consideration shall increase by $1.00
for each $1.00 of excess; provided, that, the increase in the
Merger Total Consideration shall not exceed $150,000 (the "Increase Cap"). If
the Closing has not occurred by September 1, 2003, the Increase Cap shall
increase by $25,000 for each month from September 1, 2003 through the Closing
Date. In the event that the DunC Closing Capital as agreed to by DunC and
Blackhawk pursuant to subsection (a) above or as determined by Blackhawk
pursuant to subsection (b) above is less than $4,582,000 (the "Lower DunC
Closing Capital Amount"), the Merger Total Consideration shall decrease by
$1.538 for each $1.00 of shortfall.
(d) In the event the Blackhawk and DunC do not agree on the amount of the
DunC Closing Capital and the Closing proceeds pursuant to subsection (b) above,
the DunC Closing Capital shall be determined by an independent accounting firm
mutually acceptable to them. If Blackhawk and DunC are unable to agree on the
choice of an accounting firm within ten (10) days following the Closing, they
will select a nationally recognized accounting firm by lot (after excluding any
such firm engaged by Blackhawk, DunC or their Affiliates) (the accounting firm
selected is referred to herein as the "Arbitrating Accountant"). Each party
will execute an engagement letter reasonably requested by the Arbitrating
Accountant. Within ten (10) business days after the Arbitrating Accountants
have been retained, Blackhawk and DunC may deliver to the Arbitrating Accountant
and the other such information or documents it deems relevant to the calculation
of the DunC Closing Capital and shall also provide the Arbitrating Accountants
with such information and documents as the Arbitrating Accountants may request,
in each case with appropriate notices or copies being provided to the other
party. Based on such submissions and any additional information or documents
requested by the Arbitrating Accountants, the Arbitrating Accountant in
accordance with the terms of this Agreement shall make a written determination
of the DunC Closing Capital no later than thirty (30) days following its
engagement and such determination will be conclusive and binding upon the
parties hereto; provided that the DunC Closing Capital as determined by the
Arbitrating Accountant shall not be greater than the First Estimated DunC
Closing Capital or less than the Second Estimated DunC Closing Capital. The
fees of the Arbitrating Accountants shall be paid by Blackhawk, but fifty
percent (50%) of such fees shall be deducted from the DunC Closing Capital. The
DunC Closing Capital as determined by the Arbitrating Accountant, is referred to
as the "Final DunC Closing Capital.
If the Final DunC Closing Capital is greater than the Second Estimated DunC
Closing Capital, then Blackhawk shall promptly pay to the Paying Agent the
following amount (the "Additional Capital Amount"):
(A) if the Second Estimated DunC Closing Capital and the Final
DunC Closing Capital are less than the Lower DunC Closing Capital Amount, then
$1.58 for each $1.00 by which the Second Estimated DunC Closing Capital is less
than the Final DunC Closing Capital;
(B) if the Second Estimated DunC Closing Capital is less than
the Lower DunC Closing Capital Amount and the Final DunC Closing Capital is
greater than the Lower DunC Closing Capital Amount, then (1) $1.58 for each
$1.00 by which the Second Estimated DunC Closing Capital is less than the Lower
DunC Closing Capital Amount and (2) $1.00 for each $1.00 by which the Final DunC
Closing Capital Amount is greater than the Upper DunC Closing Capital Amount, if
any; provided that the amount of the increase pursuant to (2) shall not exceed
the Increase Cap;
(C) if the Second Estimated DunC Closing Capital is greater than
the Lower DunC Closing Capital Amount but less than the Upper DunC Closing
Capital Amount and the Final DunC Closing Capital is greater than the Upper DunC
Closing Capital Amount, then $1.00 for each $1.00 by which the Final DunC
Closing Capital is greater than the Upper DunC Closing Capital Amount; provided
that the amount of such increase shall not exceed the Increase Cap;
(D) if the Second Estimated DunC Closing Capital and the Final
DunC Closing Capital are greater than the Upper DunC Closing Capital Amount,
then $1.00 for each $1.00 by which the Final DunC Closing Capital exceeds the
Second Estimated DunC Closing Capital; provided, that, the sum of the amount of
such increase and the amount of the increase to the Merger Total Consideration
pursuant to subsection (iii) above shall not exceed the Increase Cap; and
(E) in all other circumstances, the Additional Capital Amount
shall be $0.
2.8 Conversion of DunC Common Stock. At the Effective Time, and
--------------------------------
without any action on the part of the holders thereof:
(a) Each share of Merger Stock shall be converted into the right to
receive cash in an amount equal to the Merger Per Share Consideration in the
manner and form, and on the terms and conditions, set forth in this Agreement.
All such shares of Merger Stock shall no longer be outstanding and shall
automatically be cancelled and retired and shall cease to exist, and each
certificate previously representing any such shares shall thereafter represent
the right to receive cash at the rate of the Merger Per Share Consideration.
(b) Each share of DunC Common Stock held in the treasury of DunC or
owned by DunC or any DunC Subsidiary for its own account (other than shares of
DunC Common Stock held directly or indirectly in trust accounts, managed
accounts and the like or otherwise held in a fiduciary capacity that are
beneficially owned by third parties) immediately prior to the Effective Time
shall be canceled and extinguished without any conversion thereof and no payment
shall be made with respect thereto.
2.9 Conversion of Stock of Merger Corp. At the Effective Time, each share
-----------------------------------
of common stock of Merger Corp. then issued and outstanding, without any action
on the part of the holder thereof, shall be converted into one share of common
stock of the Surviving Corporation.
2.10 Meeting of DunC Shareholders.
-----------------------------
(a) DunC will promptly take all steps necessary to cause the DunC
Meeting to be duly called, noticed, and held as soon as practicable and, in any
event, no later than July 15, 2003 (unless postponed pursuant to Section 2.10(b)
hereof), for the purpose of voting to approve this Agreement, the Merger and all
matters related thereto. Subject to Section 2.10(c) of this Agreement, DunC
will use its best efforts to secure the required approval of the DunC
Shareholders.
(b) In connection with the DunC Meeting, DunC will prepare and cause
to be mailed to the DunC Shareholders a notice of the Meeting and a definitive
proxy statement (together the "DunC Proxy Statement") as soon as practicable.
Notwithstanding the foregoing, mailing of the DunC Proxy Statement shall be
postponed until all of the conditions set forth in Sections 7.1(a) and 7.1(c) of
this Agreement have been satisfied, unless the parties mutually agree that said
mailing should be commenced notwithstanding that any one or more of such
conditions has not been satisfied. In addition, the DunC Proxy Statement shall
include DunC's audited consolidated financial statements for the year ended
December 31, 2002 and no other financial statements for such year.
Blackhawk and Merger Corp. shall provide DunC with any information for
inclusion in the DunC Proxy Statement which is required by Law or which is
reasonably requested by DunC. DunC shall consult with Blackhawk with respect to
the DunC Proxy Statement and shall afford Blackhawk reasonable opportunity to
comment thereon. If, at any time prior to the DunC Meeting, any event should
occur relating to DunC which should be set forth in an amendment of, or a
supplement to, the DunC Proxy Statement, DunC will promptly inform Blackhawk.
In each such case, DunC, with the cooperation of Blackhawk, will promptly
prepare and mail such amendment or supplement and DunC shall consult with
Blackhawk with respect to such supplement or amendment and shall afford
Blackhawk reasonable opportunity to comment thereon prior to such mailing. DunC
shall notify Blackhawk at least 48 hours prior to the mailing of the DunC Proxy
Statement, or any amendment or supplement thereto, to the DunC Shareholders.
(c) The DunC Proxy Statement shall include the recommendation of the
Board of Directors of DunC in favor of the Merger; provided, however, that if
the Board of Directors of DunC shall, in good faith and after consulting with
legal counsel, determine that to make such a recommendation would be a violation
of its fiduciary obligations under applicable Law, then the Board of Directors
of DunC shall not be obligated to make any such recommendation. In addition,
Blackhawk and DunC shall notify the Paying Agent of the Merger Per Share
Consideration.
2.11 Payment of Merger Total Consideration. At the Closing and prior to
--------------------------------------
the Effective Time, Blackhawk shall deliver to the Paying Agent, by a single
wire transfer of immediately available funds to an account in the United States
of America designated by the Paying Agent, an amount (such amount hereinafter
referred to as the "Payment Fund") equal to the Merger Total Consideration. In
addition, Blackhawk and DunC shall notify the Paying Agent of the Merger Per
Share Consideration.
2.12 Surrender of Certificates.
--------------------------
(a) Promptly after the Effective Time but no later than three (3)
business days after the Effective Time, the Paying Agent shall deliver to each
DunC Shareholder a form of letter of transmittal and instructions for use in
effecting the surrender of Merger Stock certificates for payment. Upon
surrender to the Paying Agent of such certificates, together with such letter of
transmittal, duly executed, the Paying Agent shall promptly pay to the DunC
Shareholder entitled thereto, in cash, the Merger Per Share Consideration
multiplied by the number of shares of Merger Stock covered by such surrendered
certificates and transmittal letters.
(b) Until surrendered, each outstanding certificate, which prior to
the Effective Time represented shares of Merger Stock, shall be deemed to
represent and evidence only the right to receive the consideration to be paid
therefor as set forth in Section 2.7 of this Agreement and until such surrender,
no cash shall be paid to the holder of such outstanding certificate in respect
thereof.
(c) If payment of cash is to be made to a Person other than the
Person in whose name the certificate surrendered is registered, it shall be a
condition to such payment that the certificate so surrendered shall be properly
endorsed and otherwise in proper form for transfer, and that the Person
requesting such payment shall (i) pay to the Paying Agent any transfer or other
taxes required by reason of payment to a person other than the registered holder
of the certificates surrendered, (ii) authorize the Paying Agent to deduct any
such taxes from such payment, or (iii) establish to the satisfaction of the
Paying Agent that such tax has been paid or is not applicable.
(d) No interest shall accrue or be payable with respect to any
amounts which any holder of shares of Merger Stock shall be entitled to receive
pursuant to this Agreement. The Paying Agent shall be authorized to pay the
Merger Per Share Consideration attributable to any certificate representing
shares of Merger Stock which has been lost or destroyed upon receipt of evidence
of ownership of the shares of Merger Stock represented thereby and of
appropriate indemnification, in each case reasonably satisfactory to Blackhawk.
(e) After the Effective Time, there shall be no transfers on the
stock transfer books of the Surviving Corporation of the shares of Merger Stock
which were outstanding immediately prior to the Effective Time. If, after the
Effective Time, certificates representing such shares are presented to the
Surviving Corporation, they shall be canceled and exchanged for cash as provided
in this Section 2.12 of this Agreement.
(f) Any portion of the Payment Fund which remains undistributed to
the shareholders of the Company six (6) months after the Effective Time shall be
returned, at Blackhawk's request, by the Paying Agent to Blackhawk, which
thereafter shall act as paying agent subject to the rights of holders of
unsurrendered certificates of Merger Stock under this Article II and subject to
applicable Law. Notwithstanding the foregoing, neither Blackhawk, the Paying
Agent, nor any other party hereto shall be responsible or liable to any holder
of Merger Stock for any cash delivered to any public official pursuant to any
abandoned property, escheat or similar Law.
(g) Blackhawk shall be entitled to deduct and withhold from the
consideration otherwise payable pursuant to this Agreement to any holder of
Merger Stock such amounts as Blackhawk 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
Blackhawk, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the Merger Stock in respect of
which such deduction and withholding was made by Blackhawk.
(h) The Paying Agent shall pay to each DunC Shareholders an amount
equal to the Additional Capital Amount times a fraction, the numerator of which
is the number of shares of Merger Stock owned by such DunC Shareholder and the
denominator of which is the number of shares of Merger Stock. Such amount shall
be payable: (i) to DunC Shareholders who have surrendered their DunC stock
certificates prior to receipt by the Paying Agent of the Additional Capital
Amount, as soon as practicable after receipt thereof and (ii) to DunC
Shareholders who have not surrendered their DunC stock certificates prior to
receipt by the Paying Agent of the Additional Capital Amount, at the time of the
payment set forth in subsection (a) above.
2.13 Subsequent Restructuring. Concurrent with the Merger or promptly
-------------------------
following the Effective Time, Blackhawk plans to consolidate DunC and the Bank
with and into Blackhawk and BSB, respectively. Presently it is anticipated that
the Restructuring will be completed by liquidating DunC and distributing its
assets, after paying off or providing for all of its liabilities, to Blackhawk
as DunC's sole shareholder. Alternatively, DunC may be merged into Blackhawk
pursuant to applicable Law. Concurrent with or promptly following such
liquidation or merger, the Bank will be merged with and into BSB pursuant to the
provisions of applicable Law. The Restructuring is subject to certain
regulatory approvals. In the event the Restructuring is effected, Blackhawk
agrees that it will assume and timely discharge any and all obligations,
covenants and agreements of DunC under this Agreement which are to be performed
or discharged after the Effective Time, but which have not been fully performed
or discharged as of the time the Restructuring is effected. Blackhawk agrees,
however, that it will not alter the structure of the Restructuring as described
herein if it would: (i) alter, change or reduce the amount of the consideration
to be paid to holders of DunC Common Stock or the manner or basis upon which
such exchange is made; (ii) have an adverse federal or state income tax
consequence to DunC, or any of the DunC Shareholders; (iii) have an adverse
effect on the DunC Shareholders; or (iv) would be likely to delay or jeopardize
receipt of the Regulatory Approvals or satisfaction of any of the conditions to
the Merger set forth in Article VII.
2.14 Anti-Dilution Provisions. In the event that between the date of this
-------------------------
Agreement and the Effective Time the issued and outstanding shares of DunC
Common Stock shall have been changed into a different number of shares as a
result of a stock split, reverse stock split, stock dividend, recapitalization,
reclassification or other similar transaction, then the Per Share Merger
Consideration shall be adjusted appropriately.
ARTICLE III
OTHER AGREEMENTS
3.1 Access. Upon reasonable notice, DunC shall afford to Blackhawk's
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officers, employees, accountants, legal counsel and other representatives
access, during normal business hours, to all of DunC's and DunC's Subsidiaries'
properties, books, contracts, commitments, records and employees.
3.2 DunC's Disclosure Schedule.
---------------------------
(a) Contemporaneously with the execution and delivery of this
Agreement, DunC is delivering to Blackhawk the DunC Disclosure Schedule, which
is accompanied by a certificate signed by the Chief Executive Officer and
Secretary of DunC stating that the DunC Disclosure Schedule is being delivered
pursuant to this Agreement and is the DunC Disclosure Schedule referred to in
this Agreement. The DunC Disclosure Schedule is deemed to constitute an
integral part of this Agreement and to modify the representations, warranties,
covenants or agreements of DunC contained in this Agreement to the extent that
such representations, warranties, covenants or agreements expressly refer to the
DunC Disclosure Schedule. All capitalized terms used in the DunC Disclosure
Schedule shall have the definitions specified in this Agreement. All
descriptions or listings of documents contained in the DunC Disclosure Schedule
are qualified in their entirety by reference to the documents so described, true
copies of which DunC heretofore has delivered to Blackhawk. Except as expressly
stated to the contrary in the DunC Disclosure Schedule, disclosure of a matter
or document in the DunC Disclosure Schedule shall not be deemed to be an
acknowledgement that such matter is material or outside the ordinary course of
business of DunC. Disclosure of any matter or event in any of the schedules
included in the DunC Disclosure Schedule shall be deemed disclosure for purposes
of any and all other schedules included therein without the need of specific
cross reference or duplication, provided, however, that disclosure of an
agreement or other document in a listing of agreements or documents without any
summary or description of the substance thereof shall be deemed disclosure only
for purposes of the schedule in which such agreement or other document is
listed.
(b) Updates. Prior to the Closing Date, DunC shall update the DunC
-------
Disclosure Schedule on a monthly basis by written notice to Blackhawk to reflect
any matters which have occurred from and after the date of this Agreement which,
if existing on the date of this Agreement, would have been required to be
described in the DunC Disclosure Schedule.
3.3 Duties Concerning Representations. Each party to this Agreement shall:
----------------------------------
(a) to the extent within its control, use best efforts to cause all of its
representations and warranties contained in this Agreement to be true and
correct in all respects at the Effective Time with the same force and effect as
if such representations and warranties had been made on and as of the Effective
Time; and (b) use best efforts to cause all of the conditions precedent set
forth in Article VII of this Agreement to be satisfied. Each party shall
promptly notify the other if it becomes aware of any breach of any of its
representations, warranties, covenants or agreements contained herein and shall
use its best efforts to remedy the same. Neither party shall take any action,
nor agree to commit to take any action, which would or reasonably can be
expected to: (i) adversely affect the ability of either Blackhawk or DunC to
obtain the Regulatory Approvals; (ii) adversely affect a party's ability to
perform its covenants or agreements under this Agreement; or (iii) result in any
of the conditions to the Merger set forth in Article VII not being satisfied.
3.4 Deliveries of Information; Consultation. From time to time prior to
----------------------------------------
the Effective Time, and subject to the limitations on Blackhawk's access rights
under Section 3.1 of this Agreement and to the confidentiality provisions of
Section 3.11 of this Agreement:
(a) Deliveries by DunC. DunC shall furnish promptly to Blackhawk:
------------------
(i) a copy of each material report, schedule and other document filed by or
received by DunC or a DunC Subsidiary pursuant to the requirements of federal or
state securities or financial institution Laws or any other applicable Laws
promptly after such documents are available; (ii) its audited financial
statements for the year ended December 31, 2002 along with the report of its
accountants thereon promptly after such financial statements are available,
(iii) the Bank's monthly financial statements (as prepared in accordance with
its normal accounting procedures) promptly after such financial statements are
available and in any event by the third (3rd) business day of the succeeding
month; and (iv) DunC's transaction records and such other significant
information concerning DunC and the DunC Subsidiaries' business, properties and
personnel as Blackhawk may reasonably request.
(b) Consultation. Representatives of DunC and Blackhawk shall confer
------------
and consult with one another on a regular and frequent basis to report on
operational matters and the general status of DunC's ongoing business
operations.
(c) Regulatory Matters. Representatives of DunC and Blackhawk shall
------------------
discuss with one another any matters in which any state or federal regulator (i)
if DunC or any of its Subsidiaries, is involved, or (ii) if Blackhawk is
involved, if such involvement relates to any of the transactions contemplated by
this Agreement.
(d) Litigation. Each party to this Agreement shall provide prompt
----------
notice to the other party of any litigation, arbitration, proceeding,
governmental investigation, citation or action of any kind which may be
commenced, threatened or proposed by any Person concerning the legality,
validity or propriety of the transactions contemplated by this Agreement. If
any such litigation is commenced against any party to this Agreement, such party
shall diligently and in good faith defend such litigation. The parties shall
cooperate in all reasonable respects in connection with such litigation.
(e) Workout Plan. DunC and the Bank shall, as soon as practicable,
------------
develop written workout plans for each criticized and substandard assets of
$50,000 or more, which plans shall include targeted reductions in outstanding
balances for both six and twelve month time frames, and provide Blackhawk with
monthly progress reports with respect to such plans.
(f) Technical Exceptions. The Bank shall continue the employment or
--------------------
engagement of a Person to perform credit analysis, credit reviews, file and
documentation reviews and monitoring and technical exceptions management through
Closing. Technical exceptions identified in regulatory reports or by Blackhawk
in its due diligence, to the extent communicated to DunC, would be eliminated as
promptly as practicable. In addition, by April 1, 2003 the Bank shall have a
system in place to track documentation exceptions. The Bank's management shall
review such efforts on a weekly basis and shall report to the Bank's Board of
Directors on such efforts on a monthly basis.
(g) Relationships. DunC shall promptly notify Blackhawk of any
-------------
material adverse change in any borrowing relationship, including without
limitation, adverse changes in the financial condition of the borrower, adverse
changes in collateral value, and changes in the status of guaranties, as a
result of complying with the terms and conditions of this Agreement or
otherwise.
3.5 Letter of DunC's Accountants. DunC shall use its best efforts to
-----------------------------
cause to be delivered to Blackhawk a letter of McGladrey & ▇▇▇▇▇▇, LLP, DunC's
independent auditors, dated a date within three business days before the date on
which the DunC Proxy Statement is first mailed to DunC Shareholders and
addressed to Blackhawk, in form and substance reasonably satisfactory to
Blackhawk and customary in scope and substance for letters delivered by
independent public accountants in connection with proxy statements similar to
the DunC Proxy Statement.
3.6 Legal Conditions to Merger. Each party to this Agreement will:
---------------------------
(a) take all reasonable actions necessary to comply promptly with all legal
requirements which may be imposed on it with respect to the Merger (including
making all filings and requests in connection with the Regulatory Approvals and
furnishing all information required in connection therewith); (b) promptly
cooperate with and furnish information to the other party in connection with any
such requirements imposed upon any of them in connection with the Merger; and
(c) take all reasonable actions necessary to obtain (and will cooperate with the
other party in obtaining) any consent, authorization, order or approval of, or
any exemption by, any governmental entity or other public or private Person,
required to be obtained by the parties to this Agreement in connection with the
Merger or the taking of any action contemplated thereby or by this Agreement.
3.7 Announcements. Subject to each party's disclosure obligations imposed
--------------
by Law, DunC and Blackhawk will cooperate with each other in the development and
distribution of all news releases and other public information disclosures with
respect to this Agreement or any of the transactions contemplated hereby and
shall not issue any public Announcement or statement with respect thereto prior
to consultation with the other party.
3.8 Best Efforts. Subject to the terms and conditions of this Agreement
-------------
and subject to the fiduciary duties of the Board of Directors of each party,
each of the parties agrees to use its best efforts to take, or cause to be
taken, all action and to do, or cause to be done, all things necessary or
advisable to consummate the transactions contemplated by this Agreement.
3.9 Employment Agreements. At the execution of this Agreement, the
----------------------
DunC Executives and the Bank shall, with respect to each of the DunC Executives
other than ▇▇▇▇▇▇ ▇▇▇▇▇, enter into a DunC Replacement Employment Agreement.
3.10 Employee Benefit Matters.
-------------------------
(a) DunC Profit Sharing Plan. At or prior to the Effective Time,
------------------------
participation in the DunC Profit Sharing Plan shall be discontinued and no
additional participants shall be permitted in such Plan at or after such time.
Blackhawk shall as soon as reasonably practicable after the Effective Time
terminate the DunC Profit Sharing Plan and apply for a letter of determination
from the IRS confirming that the termination of the DunC Profit Sharing Plan
does not adversely affect its tax qualified status. Upon receipt of such a
determination letter, all assets held in the DunC Profit Sharing Plan shall be
distributed to participants or transferred on behalf of the participants to
Blackhawk's tax-qualified retirement plans in accordance with the terms of such
plans and ERISA.
(b) Health and Welfare Benefits. Prior to the Closing Date, DunC
---------------------------
shall cause to be taken all actions necessary to terminate and discontinue, as
of the Effective Time, all of DunC's and the Bank's health and welfare benefit
plans, programs, insurance and policies, except as necessary to continue paying
benefits to eligible participants receiving benefits as of the Effective Time
and except as necessary to provide COBRA benefits to any employees of the Bank
who may be entitled to receive such benefits as a result of discontinuance of
their employment with the Bank, if any.
(c) Sick Leave and Vacation Pay. Effective as of the Effective Time,
---------------------------
employees retained in the employment of the Bank will receive sick days and
vacation days in accordance with Blackhawk's standard policies. However, for
purposes of determining the amount of vacation time such employees will be
entitled to receive under Blackhawk's vacation policy, such employees will
receive credit for their years of credit service with the Bank prior to the
Effective Time. For purposes of determining the amount of sick days such
employees will be entitled to receive under Blackhawk's sick days policy,
employees will receive credit for their years of credit service prior to the
Effective Time.
(d) Participation in Qualified Blackhawk Employee Benefit Plans. All
-----------------------------------------------------------
employees retained in the employment of the Bank following the Effective Time
shall be eligible to participate in any and all qualified pension and retirement
plans and other qualified Employee Benefit Plans sponsored from time to time by
Blackhawk for the benefit of its employees. Such employees shall be credited
for eligibility and vesting purposes, but not for benefit purposes, for the
years of credit service they accumulated during their employment with the Bank
prior to the Effective Time. In addition, Blackhawk shall exercise all
reasonable efforts to enable employees retained by the Bank following the
Effective Time to reinvest in Blackhawk's 401(k) Savings Plan the proceeds
received by them in connection with the distributions from the DunC Profit
Sharing Plan described in Section 3.10(a) of this Agreement.
3.11 Confidentiality. Blackhawk agrees to treat as strictly confidential
----------------
and agrees not to divulge to any other Person (other than its employees,
attorneys, accountants, financial advisors and other agents and representatives
who have a need to know such information for purposes of assisting Blackhawk in
fulfilling its obligations under this Agreement) any financial statements,
schedules, contracts, agreements, instruments, papers, documents and other
information relating to DunC or a DunC Subsidiary which it may come to know or
which may come into its possession pursuant to this Agreement or otherwise
during the course of conducting its investigations contemplated by this
Agreement and, if the transactions contemplated by this Agreement are not
consummated for any reason, Blackhawk agrees promptly to return to DunC all
materials furnished to Blackhawk by or at the direction of DunC.
Notwithstanding the foregoing, information shall not be deemed confidential, and
Blackhawk shall have no duty of confidentiality with respect to information
which: (a) is known to Blackhawk at the time it is disclosed by or at the
direction of DunC; (b) is disclosed to Blackhawk by a third party not known by
Blackhawk to have an independent duty of confidentiality to DunC with respect
thereto; (c) is in the public domain at the time it is provided to Blackhawk by
or at the direction of DunC, or thereafter falls into the public domain
otherwise than as a result of a breach by Blackhawk of its obligation of
confidentiality under this Section 3.11 of this Agreement. In the event
Blackhawk is required or finds it necessary to disclose any of the confidential
information in connection with any of the Regulatory Approvals, Blackhawk will
notify DunC of that fact and will cooperate with DunC so as to minimize the
amount of confidential information to be so disclosed and to take such
reasonable precautions to maintain the confidentiality of such information as
may be requested by DunC, including requests to the regulatory authorities that
such information be deemed confidential and not subject to disclosure under the
Freedom of Information Act. In the event Blackhawk otherwise is required to
disclose any such confidential information, Blackhawk agrees that it will
provide DunC with prompt notice of such required disclosures so that DunC may
seek an appropriate protective order and/or waive Blackhawk's compliance with
the provisions of this Section 3.11 of this Agreement. Blackhawk's obligations
under this Section 3.11 shall terminate at the Effective Time.
3.12 Conformance to Loan Policies and Reserve Policies.
--------------------------------------------------
(a) DunC shall cause the Bank to adopt, by April 15, 2003, loan policies
which conform the Bank's loan policies to those of BSB which have been or are
subsequently communicated to DunC.
(b) DunC shall cause the Bank to establish such additional accruals and
reserves as may be necessary, in the reasonable judgment of Blackhawk, to
conform the Bank's general valuation allowances to Blackhawk's asset
classification policy, as well as to reflect the costs and expenses of DunC with
respect to the Merger and the other transactions contemplated by this Agreement;
provided, however, that DunC shall not be required to cause the Bank to take any
such action until the Regulatory Approvals have been received and DunC is
reasonably satisfied that the Merger will be consummated.
(c) DunC's representations, warranties and covenants contained in this
Agreement shall not be deemed to be untrue or breached in any respect for any
purpose as a consequence of any modification or changes undertaken by the Bank
in order for DunC to comply with the requirements of this Section 3.12 of this
Agreement.
3.13 Conduct of Blackhawk's Business. Blackhawk will maintain its corporate
--------------------------------
existence in good standing and conduct its business so as to be able to
consummate the transactions contemplated by the Agreement. Blackhawk shall, in
the event it becomes aware of the impending or threatened occurrence of any
event or condition which would cause or constitute a breach (or would have
caused or constituted a breach had such event occurred or been known prior to
the date hereof) of any of its representations, covenants or agreements
contained or referred to herein, give prompt written notice thereof to DunC and
use its best efforts to prevent or promptly remedy the same.
3.14 Break-Up Fee. In consideration of the substantial expenditure of
-------------
time, effort and expense incurred and to be incurred by Blackhawk in connection
with the consummation of the transactions contemplated by this Agreement, and
notwithstanding any provision of this Agreement to the contrary, in the event
this Agreement is terminated for any reason, DunC shall pay promptly to
Blackhawk Seven Hundred Fifty Thousand Dollars ($750,000) in the event that
within twelve (12) months following such termination, DunC or an Affiliate
thereof enters into an agreement providing for or closes an Acquisition.
3.15 Board of Directors and Shareholder Meetings; Certain Notices.
-------------------------------------------------------------
(a) DunC shall provide Blackhawk with notice of any meeting of the Board
of Directors (or a committee thereof) of DunC or a DunC Subsidiary or of their
shareholders when such notices are sent to the Directors, committee members or
shareholders, as the case may be, and shall permit representatives of Blackhawk
to attend such meetings; provided that representatives of Blackhawk shall not be
permitted to attend any portion of any meeting at which matters relating to
DunC's evaluation of the Merger or the obligations of the parties under this
Agreement are being discussed.
(b) DunC shall also provide Blackhawk with a copy of all reports,
documents, and other materials delivered to, prepared for or prepared at the
request of, the Board of Directors (or to any committee thereof) of DunC or a
DunC Subsidiary or to their shareholders, as the case may be, when such
reports, documents or other materials are delivered to the Directors, committee
members or shareholders; provided that DunC shall not be obligated to deliver to
Blackhawk any report, document or other material relating to the evaluation of
the Merger or the obligations of the parties under this Agreement.
(c) DunC shall cause the Bank to provide Blackhawk with notice at least
two (2) business days prior to the Bank making any new loan or renewing any
existing loan in excess of $100,000. Such notice shall include the material
terms of such loan and the relevant financial statements, cash flow statements,
appraisals or other information in the possession of the Bank which are relevant
to the decision whether to extend credit to the applicable debtor. The Bank may
make such loan unless, within such two (2) day period, Blackhawk notifies the
Bank that, in its reasonable determination, the Bank should not make such loan.
3.16 Tail Insurance. Blackhawk shall obtain a Directors and Officers tail
--------------
insurance policy covering the directors and officers of DunC and the Bank for
a period of six (6) months from the Closing Date with tail policy shall
coverages and limits substantially similar to the directors and officers
policy which DunC and First Bank currently have in place; provided, that
Blackhawk shall not be required to pay in excess of $10,000 for such tail
insurance policy.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF DunC
DunC hereby represents and warrants to Blackhawk that:
4.1 Organization and Qualification; Subsidiaries.
---------------------------------------------
(a) DunC is a corporation duly organized, validly existing and in
good standing under the Laws of the State of Illinois, and is a registered bank
holding company under the BHCA. The Bank is an Illinois banking corporation
duly organized, validly existing and in good standing under the Laws of
Illinois. The deposits of the Bank are insured by BIF as permitted by Law, and
the Bank has paid all premiums and assessments required thereunder. The Bank is
a member in good standing of the Federal Home Loan Bank of Chicago. Each of the
other DunC Subsidiaries is duly organized, validly existing and in good standing
under the Laws of the state of its incorporation. Each of DunC and the DunC
Subsidiaries has the requisite corporate power and authority and is in
possession of all material Permits necessary to own, lease and operate its
properties and to carry on its business as it is now being conducted, including
appropriate authorizations from the FRB, the FDIC, the Wisconsin Bank Regulatory
Agency and the Illinois Bank Regulatory Agency, and neither DunC nor any DunC
Subsidiary has received any notice of proceedings relating to the revocation or
modification of any DunC Approvals.
(b) DunC and each DunC Subsidiary is duly qualified or licensed as a
foreign corporation to conduct business, and is in good standing (or the
equivalent thereof) in each jurisdiction where the character of the properties
it owns, leases or operates or the nature of the activities it conducts make
such qualification or licensing necessary, except for such failures to be so
duly qualified and licensed and in good standing that would not, either
individually or in the aggregate, have a Material Adverse Effect on DunC and the
DunC Subsidiaries, taken as a whole.
(c) A true and complete list all Subsidiaries of DunC (the "DunC
Subsidiaries"), together with (i) DunC's direct or indirect percentage ownership
of each DunC Subsidiary; (ii) the jurisdiction in which the DunC Subsidiaries
are incorporated; and (iii) a description of the principal business activities
conducted by each DunC Subsidiary, is set forth in the DunC Disclosure Schedule.
Except as set forth in the DunC Disclosure Schedule, DunC and/or one or more of
the DunC Subsidiaries owns beneficially and of record all of the outstanding
shares of capital stock of each of the DunC Subsidiaries. Except for the
Subsidiaries identified in the DunC Disclosure Schedule, DunC does not directly
or indirectly own any equity or similar interests in, or any interests
convertible into or exchangeable or exercisable for any equity or similar
interest in, any corporation, partnership, limited liability company, joint
venture or other business association or entity other than in the ordinary
course of business, and in no event in excess of 10% of the outstanding equity
or voting securities of such entity.
4.2 Articles of Incorporation and Bylaws. DunC heretofore has furnished to
------------------------------------
Blackhawk a complete and correct copy of the Articles of Incorporation and
Bylaws, as amended or restated, of DunC and of each DunC Subsidiary. Such
Articles of Incorporation and Bylaws are in full force and effect. Neither DunC
nor any DunC Subsidiary is in violation of any of the provisions of its Articles
of Incorporation or Bylaws.
4.3 Capitalization. The authorized capital stock of DunC consists of 10,000
--------------
shares of DunC Common Stock no par value per share. As of the date of this
Agreement, 4,742 shares of DunC Common Stock are issued and outstanding, all of
which are duly authorized, validly issued, fully paid and non-assessable, not
issued in violation of any preemptive right of any DunC Shareholder and are
owned of record as set forth in the DunC Disclosure Schedule. There are no
shares of DunC Common Stock held in the treasury of DunC. As of the date of
this Agreement, DunC has not granted any options, warrants or other rights,
agreements, arrangements or commitments of any character, including without
limitation voting agreements or arrangements, relating to the issued or unissued
capital stock of DunC or any DunC Subsidiary or obligating DunC or any DunC
Subsidiary to issue or sell any shares of capital stock of, or other equity
interests in, DunC or any DunC Subsidiary. Except as described in the DunC
Disclosure Schedule, there are no obligations, contingent or otherwise, of DunC
or any DunC Subsidiary to repurchase, redeem or otherwise acquire any shares of
DunC Common Stock or the capital stock of any DunC Subsidiary or to provide
funds to or make any investment (in the form of a loan, capital contribution or
otherwise) in any DunC Subsidiary or any other entity. Each of the outstanding
shares of capital stock of each DunC Subsidiary is duly authorized, validly
issued, fully paid and nonassessable, and such shares owned by DunC or another
DunC Subsidiary are owned free and clear of all security interests, liens,
claims, pledges, agreements, limitations of DunC's voting rights, charges or
other encumbrances of any nature whatsoever.
4.4 Authorization: Enforceability. The entering into, execution, delivery
------------------------------
and performance of this Agreement and all of the documents and instruments
required by this Agreement to be executed and delivered by DunC or a DunC
Subsidiary are within the corporate power of DunC or such DunC Subsidiary, as
the case may be, and: (a) have been duly and validly authorized by the
requisite vote of the Board of Directors of DunC or such DunC Subsidiary, as the
case may be; and (b) upon the approval of the DunC Shareholders, shall be duly
and validly authorized by all necessary corporate action. This Agreement is,
and the other documents and instruments required by this Agreement to be
executed and delivered by DunC or a DunC Subsidiary will be, when executed and
delivered by DunC and such DunC Subsidiary, the valid and binding obligations of
DunC and such DunC Subsidiary, enforceable against each of them in accordance
with their respective terms, except as the enforcement thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar Laws
generally affecting the rights of creditors and subject to general equity
principles.
4.5 No Violation or Conflict. Subject to the receipt of the Regulatory
------------------------
Approvals, the execution, delivery and performance of this Agreement and all of
the documents and instruments required by this Agreement to be executed and
delivered by DunC do not and will not: (a) conflict with or result in a breach
of any Law, the Articles of Incorporation or Bylaws of DunC, the Charter or
Bylaws of the Bank, or the Articles of Incorporation or Bylaws of any other DunC
Subsidiary, or (b) constitute a default (or an event that with notice or lapse
of time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any DunC Existing
Contract or any DunC Existing Permit, or (c) result in the creation of any Lien
upon any of the properties or assets of DunC or any DunC Subsidiary.
4.6 Title to Assets; Leases. Except for Liens for current taxes not yet due
-----------------------
and payable and pledges to secure deposits, each of DunC and the DunC
Subsidiaries, as the case may be, own good and marketable title to its
respective assets and properties which its owns or purports to own, free and
clear of any and all Liens, except: (a) the DunC Existing Liens on the date
hereof; and (b) the Permitted Liens on the Closing Date. There is not, under
any leases pursuant to which DunC or any of the DunC Subsidiaries leases from
others real or personal property, any default by DunC, any DunC Subsidiary or,
to the best of DunC's knowledge, any other party thereto, or any event which
with notice or lapse of time or both would constitute such a default.
4.7 Litigation. Except for the DunC Existing Litigation: (a) neither DunC nor
----------
any DunC Subsidiary is subject to any continuing order of, or written agreement
or memorandum of understanding with, or, to the knowledge of DunC, any
continuing material investigation by, any federal or state bank regulatory
authority or other governmental entity, or any judgment, order, writ,
injunction, decree or award of any governmental entity or arbitrator, including,
without limitation, cease and desist or other orders of any bank regulatory
authority; (b) there is no claim, litigation, arbitration, proceeding,
governmental investigation, citation or action of any kind pending or, to the
knowledge of DunC, proposed or threatened, against or relating to DunC or any
DunC Subsidiary, nor is there any basis known to DunC for any such action; (c)
there are no actions, suits or proceedings pending or, to the knowledge of DunC,
proposed or threatened, against DunC by any Person which question the legality,
validity or propriety of the transactions contemplated by this Agreement; and
(d) there are no uncured material violations or violations with respect to which
material refunds or restitutions may be required, cited in any compliance report
to DunC or any DunC Subsidiary as a result of an examination by any regulatory
authority.
4.8 Reports; Books and Records.
--------------------------
(a) Since January 1, 2000, DunC and the Bank have filed all reports,
statements, notices and other documents, together with any amendments required
to be made with respect thereto, that were and are required to be filed under
any Law with: (i) the FRB; (ii) the FRB of Chicago; (iii) the FDIC; and (iv)
any other applicable state securities or bank regulatory authorities (all such
reports, statements, notices and other documents are collectively referred to
herein as the "DunC Reports"). When filed, each of the DunC Reports complied as
to form and substance in all material respects with the requirements of
applicable Law.
(b) The financial statements of DunC or the Bank, as the case may be,
included in the Financial Information, have been or will be, as the case may be,
prepared in accordance with generally accepted accounting principles applied on
a consistent basis and each fairly present the consolidated financial condition
of DunC as of the respective dates thereof and the consolidated income, equity
and cash flows for the periods then ended, subject, in the case of the
consolidated unaudited interim financial statements, to normal year-end and
audit adjustments and any other adjustments described therein. True and
complete copies of such financial statements are included in the DunC Disclosure
Schedules.
(c) The minute books of DunC and the DunC Subsidiaries contain
accurate and complete records of all meetings and actions taken by written
consent by their respective shareholders and Boards of Directors (including all
committees of such Boards), and all signatures contained therein are the true
signatures of the Persons whose signatures they purport to be. The share
transfer books of DunC and the DunC Subsidiaries are correct, complete and
current in all respects. The accounting books and records of DunC and the DunC
Subsidiaries, including the transaction records of DunC included in the
Financial Information: (i) are in all material respects correct and complete;
(ii) are current in a manner consistent with past practice; and (iii) have
recorded therein all the properties and assets and liabilities of DunC or the
DunC Subsidiary, as the case may be. True and correct copies of the transaction
records of DunC included in the Financial Information will be delivered to
Blackhawk.
4.9 Absence of Certain Changes. Except as set forth in the DunC Disclosure
--------------------------
Schedule, since December 31, 2002 there has not been any:
(a) change in the financial condition, properties, business, results
of operations or prospects of DunC or any DunC Subsidiary having, or reasonably
likely to have, a Material Adverse Effect on DunC and the DunC Subsidiaries,
taken as a whole;
(b) material damage, destruction or loss (whether or not covered by
insurance) with respect to any assets of DunC or any DunC Subsidiary;
(c) transactions by DunC or any DunC Subsidiary outside the ordinary
course of their respective businesses or inconsistent with past practices,
except for the transactions contemplated by this Agreement;
(d) declaration or payment or setting aside the payment of any
dividend or any distribution in respect of the capital stock of DunC or any
direct or indirect redemption, purchase or other acquisition of any such stock
by DunC or a DunC Subsidiary;
(e) waiver or release of rights or claims, other than claims of an
insubstantial value;
(f) cancellation or compromise of any material debts owed to DunC or
a DunC Subsidiary;
(g) allocations to the accounts of any directors, officers or
employees of DunC or of any DunC Subsidiary pursuant to any of the DunC Existing
Plans other than in the normal course and in accordance with the terms of the
DunC Existing Plans (none of which have been amended or established subsequent
to December 31, 2002);
(h) contribution to, increase or promised increase in, or
establishment of or promise to establish any Employee Benefit Plan (including,
without limitation, the granting of stock options, stock appreciation rights,
performance awards or restricted stock awards), or any other increase or
promised increase in the compensation payable or to become payable to any
officers, directors or employees of DunC or any DunC Subsidiary other than in
the normal course and in accordance with the terms of the DunC Existing Plans
(none of which have been amended or established subsequent to December 31,
2002); or
(i) change in the method of accounting or accounting practices of
DunC or any DunC Subsidiary.
4.10 Buildings and Equipment. Except as set forth in the DunC Disclosure
-----------------------
Schedule: (a) the Buildings and the Equipment of DunC and the DunC Subsidiaries
are in good operating condition and repair, reasonable wear and tear excepted;
(b) are adequately insured for the nature of DunC's business with the
self-insured retentions specified on the DunC Disclosure Schedule; (c) such
assets and their use conform in all material respects to applicable Law; and (d)
no notice of any violation of any building, zoning or other Law relating to such
assets or their use has been received by DunC or any DunC Subsidiary.
4.11 DunC Existing Contracts. The DunC Disclosure Schedule lists and briefly
-----------------------
describes each Contract (the "DunC Existing Contracts") to which DunC or a DunC
Subsidiary is a party or by which its assets are bound and which constitutes:
(a) a lease of, or agreement to purchase or sell, any real estate or
any capital assets;
(b) any management, consulting, employment, personal service,
severance, agency or other contract or contracts providing for employment or
rendition of services and which: (i) create other than an at will employment
relationship; or (ii) provide for any commission, bonus, profit sharing,
incentive, retirement, consulting or additional compensation;
(c) any agreements or notes evidencing any Indebtedness;
(d) a power of attorney (whether revocable or irrevocable) given to
any Person by DunC or any DunC Subsidiary;
(e) an agreement by DunC or any DunC Subsidiary not to compete in any
business or in any geographical area;
(f) an agreement restricting the right of DunC or any DunC Subsidiary
to use or disclose any information in its possession;
(g) a partnership, joint venture or similar arrangement;
(h) a license agreement, royalty agreement or similar arrangement;
(i) an agreement or arrangement with any Affiliate;
(j) an agreement for data processing services;
(k) any assistance agreement, supervisory agreement, memorandum of
understanding, consent order, cease and desist order or other regulatory order
or decree with or by the SEC, FRB, the FDIC or any other regulatory authority;
or
(l) any other agreement or set of related agreements or series of
agreements which: (i) involve an amount in excess of $5,000 on an annual basis
or $20,000 in the aggregate; (ii) is not in the ordinary course of business of
DunC or any DunC Subsidiary; or (iii) is otherwise material to the operation of
the business of DunC or any DunC Subsidiary.
4.12 Performance of DunC Existing Contracts. DunC has delivered to Blackhawk
--------------------------------------
a complete and accurate copy of each DunC Existing Contract. Each DunC Existing
Contract is in full force and effect and represents a valid, binding and
enforceable obligation of DunC or the DunC Subsidiary, as the case may be, and,
to the knowledge of DunC, the other party thereto. DunC and each DunC
Subsidiary and, to the knowledge of DunC, each other party, has fully performed
in all material respects each term, covenant and condition of each DunC Existing
Contract which is to be performed by them at or before the date hereof.
4.13 Contingent and Undisclosed Liabilities. DunC and the DunC Subsidiaries
--------------------------------------
have no material liabilities of any nature (contingent or otherwise) except for
those which: (a) are disclosed in the DunC Reports or in the DunC Disclosure
Schedule or in this Agreement; or (b) arise in the ordinary course of business
since December 31, 2002 and are not required to be disclosed in the DunC Reports
or pursuant to this Agreement or the DunC Disclosure Schedule.
4.14 DunC Existing Insurance Policies. All real and personal property owned
--------------------------------
or leased by DunC or any DunC Subsidiary has been and is being insured against,
and DunC or the respective DunC Subsidiary maintains liability insurance
against, such insurable risks and in such amounts as set forth in the DunC
Existing Insurance Policies. The DunC Existing Insurance Policies constitute
all insurance coverage owned by DunC or any DunC Subsidiary and are in full
force and effect and DunC or any DunC Subsidiary has not received notice of and
is not otherwise aware of any cancellation or threat of cancellation of such
insurance. Except as described in the DunC Disclosure Schedule, no property
damage, personal injury or liability claims have been made, or are pending,
against DunC or any DunC Subsidiary that are not covered by insurance. Within
the past five (5) years, no insurance company has canceled any insurance (of any
type) maintained by DunC or any DunC Subsidiary. Neither DunC nor any DunC
Subsidiary has any liability for unpaid premiums or premium adjustments for any
insurance policy. To the knowledge of DunC, the cost of any insurance currently
maintained by DunC or any DunC Subsidiary will not increase significantly upon
renewal other than increases consistent with the general upward trend in the
cost of obtaining insurance.
4.15 Employee Benefit Plans.
----------------------
(a) Except for the DunC Existing Plans, neither DunC nor any DunC
Subsidiary maintains, or is bound by, any Employee Benefit Plan. DunC has
furnished Blackhawk with a complete and accurate copy of each DunC Existing Plan
and a complete and accurate copy of each material document prepared in
connection with each such DunC Existing Plan, including, without limitation and
where applicable, a copy of (i) each trust or other funding arrangement, (ii)
each summary plan description and summary of material modifications, (iii) the
most recently filed IRS Form 5500 for the three most recently completed years,
(iv) the most recently received IRS determination letter, and (v) the most
recently prepared actuarial report and financial statement.
(b) Except as indicated on the DunC Disclosure Schedule, no member of
DunC's "controlled group," within the meaning of Section 4001(a)(14) of ERISA,
maintains or contributes to, or has maintained or contributed to, an employee
pension benefit plan subject to Title IV of ERISA. Except as indicated on the
DunC Disclosure Schedule, none of the DunC Existing Plans or DunC Existing
Contracts obligates DunC or any DunC Subsidiary to pay material separation,
severance, termination or similar-type benefits solely as a result of any
transaction contemplated by this Agreement or as a result of a "change in
control," within the meaning of such term under Section 280G of the Code.
Except as indicated on the DunC Disclosure Schedule, none of the DunC Existing
Plans or DunC Existing Contracts provides for or promises retiree medical,
disability or life insurance benefits to any current or former employee, officer
or director of DunC or any DunC Subsidiary.
(c) Each DunC Existing Plan has always been operated in material
compliance with the requirements of all applicable Law, and all persons who
participate in the operation of such DunC Existing Plans and all DunC Existing
Plan "fiduciaries" (within the meaning of Section 3(21) of ERISA) have always
acted in material compliance with the provisions of all applicable Law. DunC
and all of the DunC Subsidiaries have performed in all material respects all
obligations required to be performed by any of them under, are not in any
material respect in default under or in violation of, and have no knowledge of
any material default or violation by any party to, any DunC Existing Plan. No
legal action, suit or claim is pending or, to the knowledge of DunC, threatened
with respect to any DunC Existing Plan (other than claims for benefits in the
ordinary course) and no fact or event exists to the knowledge of DunC that could
give rise to any such action, suit or claim.
(d) Except as set forth on the DunC Disclosure Schedule, each DunC
Existing Plan that is intended to be qualified under Section 401(a) of the Code
or Section 401(k) of the Code has received a favorable determination letter from
the IRS that it is so qualified, and each trust established in connection with
any DunC Existing Plan that is intended to be exempt from federal income
taxation under Section 501(a) of the Code has received a determination letter
from the IRS that it is so exempt, and no fact or event has occurred since the
date of such determination letter from the IRS to adversely affect the qualified
status of any such DunC Existing Plan or the exempt status of any such trust.
No trust maintained or contributed to by DunC or any DunC Subsidiary is intended
to be qualified as a voluntary employees' beneficiary association or is intended
to be exempt from federal income taxation under Section 501(c)(9) of the Code.
(e) There has been no non-exempt prohibited transaction (within the
meaning of Section 406 of ERISA or Section 4975 of the Code) with respect to any
DunC Existing Plan. DunC and each of the DunC Subsidiaries has not incurred any
liability for any excise tax arising under Section 4972 or 4980B of the Code and
no fact or event exists that could give rise to any such liability.
(f) All contributions, premiums or payments required to be made with
respect to any DunC Existing Plan have been made on or before their due dates.
There is no accumulated funding deficiency, within the meaning of ERISA or the
Code, in connection with the DunC Existing Plans and no reportable event, as
defined in ERISA, has occurred in connection with the DunC Existing Plans. DunC
and the DunC Subsidiaries are not contributing to, and have not contributed to
any multi-employer plan, as defined in ERISA. Neither DunC nor any DunC
Subsidiary has any liability or obligation under any Employee Benefit Plan that
has been terminated.
4.16 No Violation of Law. Except as set forth in the DunC Disclosure
-------------------
Schedule, DunC, the DunC Subsidiaries and the assets of DunC and the DunC
Subsidiaries are and have been in material compliance with all Law, all DunC
Exiting Permits, and all decrees, judgments and orders, or all zoning, building
line restriction, planning, use or other similar restriction.
4.17 Brokers. Except for fees to ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ & Co., DunC's financial
-------
advisor, neither DunC nor any DunC Subsidiary has incurred any brokers',
finders', financial advisor or any similar fee in connection with the
transactions contemplated by this Agreement. The DunC Disclosure Schedule
contains a list of all fees to be paid to ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ & Co. in connection
with the transactions contemplated by this Agreement.
4.18 Taxes.
-----
(a) Except as disclosed in the DunC Disclosure Schedule and except as
may arise as a result of the transactions contemplated by this Agreement: (i)
DunC and the DunC Subsidiaries have timely and properly filed all federal,
state, local and foreign tax returns (including but not limited to income,
franchise, sales, payroll, employee withholding and social security and
unemployment) which were required to be filed; (ii) DunC and the DunC
Subsidiaries have paid or made adequate provision, in reserves reflected in its
financial statements included in the DunC Reports in accordance with generally
accepted accounting principles, for the payment of all taxes (including interest
and penalties) and withholding amounts owed by them or assessable against them;
and (iii) no tax deficiencies have been assessed or proposed against DunC or any
DunC Subsidiary and to the knowledge of DunC there is no basis in fact for the
assessment of any tax or penalty tax against DunC or any DunC Subsidiary.
(b) There are no fiscal years of DunC currently under examination by
the IRS or the Illinois Department of Revenue, and none of the open years have
been examined by the IRS or the Illinois Department of Revenue. DunC and the
DunC Subsidiaries have not consented to any extension of the statute of
limitation with respect to any open tax returns. Neither DunC nor any DunC
Subsidiary has received from the IRS or other taxing authority any notice of
underpayment in taxes, assessment of additional taxes or other deficiency which
has not been paid.
(c) There are no tax Liens upon any property or assets of DunC or any
DunC Subsidiary except for Liens for current taxes not yet due and payable.
(d) DunC and the DunC Subsidiaries have delivered to Blackhawk
correct and complete copies of all tax returns and reports of DunC filed for all
periods not barred by the applicable statute of limitations. No examination or
audit of any tax return or report for any period not closed by audit or not
barred by the applicable statute of limitations has occurred, no such
examination is in progress and, to the knowledge of DunC, no such examination or
audit is planned.
(e) DunC and the DunC Subsidiaries have properly withheld and timely
paid all withholding and employment taxes which they were required to withhold
and pay relating to salaries, compensation and other amounts heretofore paid to
their employees or other Persons. All Forms W-2 and 1099 required to be filed
with respect thereto have been timely and properly filed.
(f) Neither DunC nor any DunC Subsidiary is or has been a member of a
"group" (within the meaning of Section 1504(c) of the Code) filing a
consolidated federal income tax return except for the affiliated group, the
common parent of which is DunC.
(g) Neither DunC nor any DunC Subsidiary is a party to or bound by
any tax allocation, tax sharing or tax indemnification or similar contract or
arrangement. Neither DunC nor any DunC Subsidiary has any liability for taxes
of any Person under Treasury Regulation Section 1.1502-6 promulgated under the
Code or any similar provision of state, local or foreign Law, as a transferee,
successor, by contract or otherwise.
4.19 Real Estate. The DunC Real Estate: (a) constitutes all real property
-----------
and improvements (or interest therein, including without limitation easements,
licenses or similar arrangements authorizing DunC or a DunC Subsidiary to place,
maintain, operate and/or use an automated teller machine or similar device on
real property of a third-party) leased or owned by DunC or any DunC Subsidiary;
(b) other than with respect to DunC or any DunC Subsidiary as lessee, is not
subject to any leases or tenancies of any kind; (c) is not in the possession of
any adverse possessors; (d) has direct access to and from a public road or
street; (e) is used in a manner which is consistent with applicable Law; (f) is,
and has been since the date of possession thereof by DunC or any DunC
Subsidiary, in the peaceful possession of DunC or any DunC Subsidiary; (g) is
served by all water, sewer, electrical, telephone, drainage and other utilities
required for the normal operations of the Buildings of DunC and the DunC
Subsidiaries and the DunC Real Estate; (h) except as disclosed in the DunC
Disclosure Schedule, to the knowledge of DunC, is not located in an area
designated as a flood plain or wetland; (i) is not subject to any outstanding
special assessment; (j) is not subject to any zoning, ordinance, decrees or
other Law which would materially restrict or prohibit any Person from continuing
the operations presently conducted thereon by DunC or any DunC Subsidiary; (k)
is not subject to any interest of any Person under an easement, contract, option
or mineral rights or other agreement which would have a Material Adverse Effect
on DunC and the DunC Subsidiaries, taken as a whole and; (l) is not subject to
any presently pending condemnation proceedings, nor to DunC's knowledge, are
such proceedings threatened against the DunC Real Estate. To the knowledge of
DunC, there are no planned or contemplated improvements which may result in
special assessments against the DunC Real Estate and there is no increase or
contemplated increase in the assessed value of the DunC Real Estate which would
increase the estimated real estate taxes therefor.
4.20 Governmental Approvals. Other than the Regulatory Approvals, no
----------------------
permission, approval, determination, consent or waiver by, or any declaration,
filing or registration with, any governmental or regulatory authority is
required in connection with the execution, delivery and performance of this
Agreement by DunC or any DunC Subsidiary. To the knowledge of DunC, no fact or
condition exists with respect to DunC or the Bank which is reasonably likely to
prevent DunC from timely obtaining the Regulatory Approvals.
4.21 No Pending Acquisitions. Except for this Agreement, neither DunC nor a
-----------------------
DunC Subsidiary is a party to or bound by any agreement, undertaking or
commitment with respect to an Acquisition on the date of this Agreement.
4.22 Labor Matters.
-------------
(a) Except as disclosed on the DunC Disclosure Schedule (or in an
updated DunC Disclosure Schedule with respect to vacations in (iii) below),
there is no present or former employee of DunC or any DunC Subsidiary who has
any claim against any of such entities (whether under Law, under any employee
agreement or otherwise) on account of or for: (i) overtime pay, other than
overtime pay for the current payroll period; (ii) wages or salaries, other than
wages or salaries for the current payroll period; or (iii) vacations, sick
leave, time off or pay in lieu of vacation, sick leave or time off, other than
vacation, sick leave or time off (or pay in lieu thereof) earned in the
twelve-month period immediately preceding the date of this Agreement or incurred
in the ordinary course of business and appearing as a liability on the most
recent financial statements included in the DunC Reports.
(b) There are no pending and unresolved claims by any Person against
DunC or any DunC Subsidiary arising out of any Law relating to discrimination
against employees or employee practices or occupational or safety and health
standards. There is no pending or, to the knowledge of DunC, threatened, nor
has DunC or any DunC Subsidiary ever experienced any, labor dispute, strike or
work stoppage which affected, affects or may affect the business of DunC or any
DunC Subsidiary or which did, may or would interfere with the continued
operation of DunC or any DunC Subsidiary.
(c) DunC and the DunC Subsidiaries are in material compliance with
all applicable Law regarding employment and employment practices, terms and
conditions of employment and wages and hours and has not and is not engaged in
any unfair labor practice.
(d) Neither DunC nor any DunC Subsidiary is a party to any collective
bargaining agreement. There is not now pending or, to the knowledge of DunC,
threatened, any charge or complaint against DunC or any DunC Subsidiary by or
before the National Labor Relations Board or any representative thereof, or any
comparable state agency or authority. No union organizing activities are in
process or contemplated and no petitions have been filed for union organization
or representation of employees of DunC or any DunC Subsidiary and DunC and the
DunC Subsidiaries have not committed any unfair labor practices which have not
heretofore been corrected and fully remedied.
(e) DunC and the DunC Subsidiaries have made all required payments to
its unemployment compensation reserve accounts with the appropriate governmental
authorities.
(f) To the knowledge of DunC, no employee of DunC or a DunC
Subsidiary is subject to any noncompetition, nondisclosure, employment,
consulting or other agreement or judgment relating to or affecting such
employee's duties to DunC or a DunC Subsidiary.
4.23 Indebtedness. Except for the DunC Existing Indebtedness, DunC has no
------------
Indebtedness.
4.24 DunC Existing Permits. The DunC Existing Permits constitute all Permits
---------------------
which DunC and the DunC Subsidiaries currently have and need for the conduct of
their respective businesses as currently conducted.
4.25 Disclosure. No statement of fact by DunC contained in this Agreement,
----------
the DunC Disclosure Schedule, the DunC Proxy Statement or any other document
furnished or to be furnished by DunC pursuant hereto contains or will contain
any untrue statement of a material fact or omits or will omit to state a
material fact necessary in order to make the statements herein or therein
contained, in the light of the circumstances under which they were made, not
misleading as of the date to which it speaks.
4.26 Information Supplied. None of the information supplied or to be
--------------------
supplied by DunC for inclusion or incorporation by reference in the DunC Proxy
Statement will, at the date(s) mailed to the DunC Shareholders and at the
time(s) of the DunC Meeting, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading.
4.27 Vote Required. The affirmative vote of the holders of a majority of the
-------------
outstanding shares of DunC Common Stock is the only vote of the holders of any
class or series of capital stock or other securities of DunC necessary to
approve the Merger, this Agreement and the transactions contemplated by this
Agreement.
4.28 Environmental Protection.
------------------------
(a) As used in this Section 4.28 of this Agreement:
(i) "Environmental Claim" shall mean any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, directives,
claims, Liens, investigations, proceedings or notices of noncompliance or
violation (written or oral) by any Person alleging potential liability
(including, without limitation, potential liability for enforcement,
investigatory costs, cleanup costs, governmental response costs, removal costs,
remedial costs, natural resources damages, property damages, personal injuries,
or penalties) arising out of, based on or resulting from: (A) the presence, or
release into the environment, of any Environmental Hazardous Materials at any
location, whether or not owned by DunC or any DunC Subsidiary; or (B)
circumstances forming the basis of any violation or alleged violation, of any
Environmental Law; or (C) any and all claims by any Person seeking damages,
contribution, indemnification, cost, recovery, compensation or injunctive relief
resulting from the presence or Environmental Release of any Environmental
Hazardous Materials.
(ii) "Environmental Laws" shall mean all federal, state, local or
foreign statute, Law, rule, ordinance, code, policy, guideline, rule of common
law and regulations relating to pollution or protection of human health or the
environment (including, without limitation, ambient air, surface water, ground
water, land surface or subsurface strata), including, without limitation, Laws
and regulations relating to Environmental Releases or threatened Environmental
Releases of Environmental Hazardous Materials, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Environmental Hazardous Materials.
(iii) "Environmental Hazardous Materials" shall mean: (A) any
petroleum or petroleum products, radioactive materials, asbestos in any form
that is or could become friable, urea formaldehyde foam insulation, and
transformers or other equipment that contain dielectric fluid containing levels
of polychlorinated biphenyls (PCBs) and radon gas; and (B) any chemicals,
materials or substances which are now defined as or included in the definition
of "hazardous substances," "hazardous wastes," "hazardous materials," "extremely
hazardous wastes, restricted hazardous wastes," "toxic substances," "toxic
pollutants," or words of similar import, under any Environmental Law; and (C)
any other chemical, material, substance or waste, exposure to which is now
prohibited, limited or regulated by any governmental authority.
(iv) "Environmental Release" shall mean any release, spill,
emission, leaking, injection, deposit, disposal, discharge, dispersal, leaching
or migration into the atmosphere, soil, surface water, groundwater or property.
(b) Except as set forth in the DunC Disclosure Schedule, DunC and the
DunC Subsidiaries: (i) are in material compliance with all applicable
Environmental Laws; and (ii) have not received any communication (written or
oral), from a governmental authority or other Person, that alleges that DunC is
not in compliance with applicable Environmental Laws.
(c) Except as set forth in the DunC Disclosure Schedule, DunC and the
DunC Subsidiaries have obtained all environmental, health and safety permits and
governmental authorizations (collectively, the "Environmental Permits")
necessary for its operations, and all such permits are in good standing and DunC
and the DunC Subsidiaries are in material compliance with all terms and
conditions of the Environmental Permits.
(d) Except as set forth in the DunC Disclosure Schedule, there is no
Environmental Claim pending or, to the knowledge of DunC, threatened against
DunC, any DunC Subsidiary or against any Person whose liability for any
Environmental Claim DunC or any DunC Subsidiary has or may have retained or
assumed either contractually or by operation of Law, or against any real or
personal property or operations which DunC or any DunC Subsidiary owns, leases
or manages.
(e) Except as set forth in the DunC Disclosure Schedule, there have
been no Environmental Releases of any Environmental Hazardous Material by DunC
or a DunC Subsidiary, or to the knowledge of DunC, by any other Person, on the
DunC Real Estate or any other real property owned (including REO properties of
the Bank), used, leased or operated by DunC or any of the DunC Subsidiaries.
(f) To the knowledge of DunC, no DunC Real Estate or any other real
property at any time owned (including REO properties of the Bank), operated,
used or controlled by DunC or any DunC Subsidiary is currently listed on the
National Priorities List or the Comprehensive Environmental Response,
Compensation and Liability Information System, both promulgated under CERCLA, or
on any comparable state list, and, except as described in the DunC Disclosure
Schedule, DunC has not received any written notice from any Person under or
relating to CERCLA or any comparable state or local Law.
(g) To the knowledge of DunC, no off-site location at which DunC or
any DunC Subsidiary has disposed or arranged for the disposal of any waste is
listed on the National Priorities List or on any comparable state list and
neither DunC nor any DunC Subsidiary has received any written notice from any
Person with respect to any off-site location, of potential or actual liability
or a written request for information from any Person under or relating to CERCLA
or any comparable state or local Law.
(h) The DunC Disclosure Schedule includes an estimate by DunC of
future costs to DunC and each DunC Subsidiary of compliance with, and
environmental cleanup and response under, Environmental Laws.
4.29 Investment Securities. Except for the DunC Existing Investment
---------------------
Securities, DunC does not own, and does not have any right or obligation to
acquire, any Investment Securities.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BLACKHAWK AND MERGER CORP.
Blackhawk and Merger Corp. hereby jointly and severally represent and warrant
to DunC that:
5.1 Organization and Capitalization; Business.
-----------------------------------------
(a) Blackhawk is a corporation validly existing under the laws of the
State of Wisconsin.
(b) BSB is a Wisconsin chartered bank validly existing under the laws
of the State of Wisconsin. The deposits of BSB are insured by BIF as permitted
by federal Law, and BSB has paid all premiums and assessments required
thereunder.
(c) Blackhawk has full corporate power and authority and those
Permits necessary to carry on its business as it is now conducted and to own,
lease and operate its assets and properties.
(d) Merger Corp. is a corporation duly organized, validly existing
and in good standing under the Laws of the State of Illinois. Prior to the date
of this Agreement, Merger Corp. engaged in no business other than matters
necessary to the organization and incorporation of Merger Corp. and to authorize
Merger Corp. to enter into, execute and deliver this Agreement. The authorized
capital stock of Merger Corp. consists of 10,000 shares of common stock, One
Cent ($.01) par value per share. As of the date of this Agreement, 100 shares
of Merger Corp.' s common stock are issued and outstanding, all of which are
duly authorized, validly issued, fully paid, and non-assessable and are owned by
Blackhawk.
(e) Copies of the Articles of Incorporation and Bylaws of Blackhawk
and of Merger Corp. have been delivered to DunC. Such copies are complete and
correct copies of such documents, and are in full force and effect. Neither
Blackhawk nor Merger Corp. are in violation of any of the provisions of their
Articles of Incorporation or Bylaws in any respect which reasonably could be
expected to have an adverse effect on their ability to consummate the
transactions contemplated by this Agreement.
5.2 Authorization; Enforceability. The entering into, execution, delivery
-----------------------------
and performance of this Agreement and all of the documents and instruments
required by this Agreement to be executed and delivered by Blackhawk or Merger
Corp. are within the corporate power of Blackhawk or Merger Corp., as the case
may be, and have been duly and validly authorized by all necessary corporate
action on the part of both Blackhawk and Merger Corp. This Agreement is, and
the other documents and instruments required by this Agreement to be executed
and delivered by Blackhawk or Merger Corp. will be, when executed and delivered
by Blackhawk or Merger Corp., as the case may be, the valid and binding
obligations of Blackhawk or Merger Corp., as the case may be, enforceable
against Blackhawk or Merger Corp., as the case may be, in accordance with their
respective terms, except as the enforcement thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar Law generally
affecting the rights of creditors and subject to general equity principles.
5.3 No Violation or Conflict. Subject to the receipt of the Regulatory
------------------------
Approvals, the execution, delivery and performance of this Agreement and all of
the documents and instruments required by this Agreement to be executed and
delivered by Blackhawk or Merger Corp. do not and will not conflict with or
result in a breach of any Law or the Articles of Incorporation or Bylaws of
Blackhawk or Merger Corp. or constitute a default (or an event that with notice
or lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, any Contract
of Blackhawk or Merger Corp. or any Permit held by or the creation of any Lien
upon any of the properties or assets of Blackhawk or Merger Corp.
5.4 Litigation. There are no actions, suits or proceedings pending or, to the
----------
knowledge of Blackhawk, proposed or threatened, against Blackhawk or Merger
Corp. by any Person which question the legality, validity or propriety of the
transactions contemplated by this Agreement. There is no reasonable basis for
any proceeding, claim, action or governmental investigation against Blackhawk
which reasonably can be expected to have an adverse effect on the ability of
Blackhawk to consummate the transactions contemplated by this Agreement.
5.5 Brokers. Except for fees to ▇▇▇▇ ▇▇▇▇▇▇, Blackhawk's financial advisor,
-------
neither Blackhawk nor Merger Corp. has incurred any brokers', finders',
financial advisor or any similar fee in connection with the transactions
contemplated by this Agreement.
5.6 Governmental Approvals. Other than the Regulatory Approvals, no
----------------------
permission, approval, determination, consent or waiver by, or any declaration,
filing or registration with, any governmental or regulatory authority is
required in connection with the execution, delivery and performance of this
Agreement by Blackhawk or Merger Corp. To the knowledge of Blackhawk, no fact
or condition exists with respect to Blackhawk or BSB which is reasonably likely
to prevent Blackhawk from timely obtaining the Regulatory Approvals.
5.7 Disclosure. No statement of fact by Blackhawk contained in this
----------
Agreement or any other document furnished or to be furnished by Blackhawk
pursuant hereto contains or will contain any untrue statement of a material fact
or omits or will omit to state a material fact necessary in order to make the
statements herein or therein contained, in the light of the circumstances under
which they were made, not misleading as of the date to which it speaks.
5.8 Information Supplied. None of the information supplied or to be supplied
--------------------
by Blackhawk for inclusion or incorporation by reference in the DunC Proxy
Statement will, at the date(s) mailed to the DunC Shareholders and at the
time(s) of the DunC Meeting, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading.
5.9 Cash Payment. Blackhawk has sufficient funds or has financing committed
------------
(evidence of which has been provided to DunC) to pay the cash payment required
under Section 2.11 of this Agreement and such payment will not cause Blackhawk
to fail to meet any regulatory capital requirements to which it is subject.
ARTICLE VI
CONDUCT OF BUSINESS BY DUNC PENDING THE MERGER
From and after the date of this Agreement and until the Effective Time, DunC
shall, and shall cause the DunC Subsidiaries to:
6.1 Carry on in Regular Course. Diligently carry on their business in the
--------------------------
regular course and substantially in the same manner as heretofore conducted and
shall not make or institute any unusual or novel methods of lending, investing,
purchasing, selling, leasing, managing, accounting or operating.
6.2 Use of Assets. Use, manage, operate, maintain and repair all of their
-------------
assets and properties in a normal business manner.
6.3 No Default. Not do any act or omit to do any act, or permit any act or
----------
omission to act, which will cause a material breach of any of the DunC Existing
Contracts.
6.4 Existing Insurance Policies. Maintain all of the DunC Existing Insurance
---------------------------
Policies in full force and effect, except as mutually agreed to by DunC and
Blackhawk.
6.5 Employment Matters. Not, without the prior written consent of Blackhawk:
------------------
(a) grant any increase in the rate of pay of any of their employees; (b)
institute or amend any Employee Benefit Plan, except as expressly contemplated
under this Agreement; (c) enter into or modify any written employment
arrangement with any Person, except as expressly contemplated by this Agreement;
(d) make any discretionary contributions to any of the DunC Existing Plans; (e)
make any allocation to the account of any participant(s) in any of the DunC
Existing Plans, other than in the normal course and in accordance with the terms
of the relevant DunC Existing Plan or except as expressly contemplated by this
Agreement; (f) terminate the employment of a DunC Executive except for good
cause; or (g) change the duties of a DunC Executive in a manner which would
permit such executive to terminate his or her employment with DunC or the Bank
and receive "severance pay" pursuant to his or her respective DunC Existing
Employment Agreement.
6.6 Contracts and Commitments. Except in usual and ordinary course of
-------------------------
business and consistent with DunC's normal business practice, not enter into any
contract or commitment or engage in any transaction and not purchase, lease,
sell or dispose of any asset; except that the Bank shall: (i) extend the real
property lease for its ▇▇▇▇ Avenue branch on a month-to-month basis and (ii)
notify Metavante that it will terminate its processing contract as of September
30, 2003 and make arrangements to continue such contract in place on a month-to-
month basis thereafter.
6.7 Liabilities; Indebtedness; Investments. Not incur liabilities of greater
--------------------------------------
than $25,000 individually or $250,000 in the aggregate, except for the sale of
1-4 family mortgage loans in the ordinary course of business. Not create,
incur, invest in or assume any Indebtedness or Investment Securities not in the
usual and ordinary course of business; and not, without the prior written
consent of Blackhawk, incur costs and expenses in connection with the
transactions contemplated by this Agreement which materially exceed the estimate
set forth in the DunC Disclosure Schedule pursuant to Section 8.5 of this
Agreement.
6.8 Preservation of Relationships. Use their best efforts to preserve their
-----------------------------
business organizations intact, to retain the services of their present officers
and key employees and to preserve the goodwill of depositors, borrowers and
other customers, suppliers, creditors and others having business relationships
with DunC or the DunC Subsidiaries.
6.9 Compliance with Laws and Policies. Comply in all material respects with
---------------------------------
all applicable Laws and all of its loan policies and procedures.
6.10 Taxes. Timely and properly file all federal, state, local and foreign
-----
tax returns which are required to be filed, and shall pay or make provision for
the payment of all taxes owed by it.
6.11 Amendments. Not amend DunC's Articles of Incorporation or Bylaws, the
----------
Bank's Articles of Incorporation or Bylaws, or the Articles of Incorporation or
Bylaws of any other DunC Subsidiary, except as mutually agreed to by DunC and
Blackhawk or as required by Law except for dividends by the Bank to DunC in an
amount not to exceed $100,000 in the aggregate.
6.12 Issuance of Stock; Dividends; Redemptions. Not: (a) issue any
-----------------------------------------
additional shares of stock of any class or grant any warrants, options or rights
to subscribe for or acquire any additional shares of stock of any class; (b)
declare or pay any dividend or make any capital or surplus distributions of any
nature, except for dividends paid by the Bank to DunC in an aggregate amount not
to exceed $100,000 and which are used to service DunC's debt and to pay expenses
associated with the transactions contemplated by this Agreement; or (c) directly
or indirectly redeem, purchase or otherwise acquire, recapitalize or reclassify
any of their capital stock or liquidate in whole or in part.
6.13 Policy Changes. Not make a material change in any lending, investment,
--------------
liability, management or other material policies concerning their business or
operations, except as contemplated by this Agreement, as required by Law or as
required by the Board of Directors of DunC in the exercise of its fiduciary
duties.
6.14 Specific Loans Matters. (a) Not make any new loan, of $100,000 or more
----------------------
without the prior approval of the Bank's Board of Directors; (b) not make any
new loan or renew any existing loan without support of current personal and
corporate financial statements, cash flow information and collateral evaluation
and analysis and (c) review all credit and consumer files to determine that they
contain appropriate documentation and, to the extent they do not, correct the
deficiencies.
6.15 Acquisition Transaction. Promptly following the execution of this
-----------------------
Agreement, take affirmative steps necessary to discontinue, and thereafter not
initiate, solicit or knowingly encourage (including by way of furnishing any
information or assistance), or take any other action to facilitate, any
inquiries or the making of any proposal that constitutes, or may reasonably be
expected to lead to, any Acquisition Proposal, or negotiate with any person in
furtherance of such inquires or to obtain an Acquisition Proposal, or agree to
endorse, or endorse, any Acquisition Proposal, or authorize or permit any of its
officers, directors or employees or any investment banker, financial advisor,
attorney, accountant or other representative retained by DunC or any of the DunC
Subsidiaries to take any such action, and DunC shall promptly notify Blackhawk
orally, and confirm in writing, subject to disclosure being consistent with the
fiduciary duties of the Board of Directors of DunC, all of the relevant details
relating to all inquiries and proposals which DunC or a DunC Subsidiary may
receive relating to any of such matters; provided, however, that nothing
contained in this Section 6.15 shall prohibit the Board of Directors of DunC
from furnishing or permitting any of its officers, directors, employees,
investment bankers, financial advisors, attorneys, accountants or other
representatives to furnish information to any party that requests information as
to DunC and/or the Bank or take any other action if (i) the Board of Directors
of DunC, after consultation with legal counsel, determines in good faith that
such action is required for the Board of Directors of DunC to comply with its
fiduciary duties to shareholders imposed by applicable Law, and (ii) prior to
furnishing such information to such party, DunC receives from such party an
executed confidentiality agreement in reasonably customary form.
6.16 Branches. Not close any branches of the Bank.
--------
ARTICLE VII
CONDITIONS PRECEDENT TO THE MERGER
7.1 Conditions to Each Parties Obligations to Effect the Merger. The
-----------------------------------------------------------
respective obligations of Blackhawk and Merger Corp., and DunC to effect the
transactions contemplated by this Agreement shall be subject to the fulfillment
at or prior to the Closing and as of the Effective Time of the following
conditions precedent:
(a) No Litigation. No suit, action or other proceeding shall be
-------------
pending or overtly threatened before any court in which the consummation of the
transactions contemplated by this Agreement is restrained or enjoined or in
which the relief requested is to restrain, enjoin or prohibit the consummation
of the transactions contemplated by this Agreement and, in either case, where in
the reasonable judgment of either Blackhawk or DunC, such suit, action or other
proceeding, is likely to have a Material Adverse Effect with respect to such
party's interest.
(b) Approval of DunC Shareholders. This Agreement and the Merger
-----------------------------
shall have received the requisite approval and authorization of the DunC
Shareholders.
(c) Regulatory Approvals.
--------------------
(i) The Merger, this Agreement and the transactions contemplated
hereby, shall have been approved by the FRB, the FDIC, the Wisconsin Bank
Regulatory Agency, the Illinois Bank Regulatory Agency, and any other
governmental entities whose approval is necessary, all conditions required to be
satisfied prior to the Effective Time imposed by the terms of such approvals
shall have been satisfied, and all waiting periods relating to such approvals
shall have expired. The Restructuring described in Section 2.13 of this
Agreement also shall have been approved by the FRB, the FDIC and the Wisconsin
Bank Regulatory Agency, and any other governmental entity whose approval is
necessary in order for Blackhawk to proceed with such restructuring.
(ii) No permission, approval, determination, consent or waiver
received pursuant to Section 7.1(c)(i) of this Agreement shall contain any
condition applicable to Blackhawk or BSB which is, in the reasonable judgment of
Blackhawk, materially burdensome upon the conduct of Blackhawk's or BSB's
business or which would so adversely impact the economic and business benefits
of the Merger to Blackhawk or BSB so as to render it inadvisable to proceed with
the Merger.
7.2 Conditions to Obligation of Blackhawk and Merger Corp.. The obligation
-----------------------------------------------------
of Blackhawk and Merger Corp. to effect the transactions contemplated by this
Agreement shall be subject to the fulfillment at or prior to the Closing and as
of the Effective Time of the following additional conditions precedent:
(a) Compliance with Agreement. DunC shall have performed and
-------------------------
complied in all material respects with all of its covenants, agreements and
other obligations under this Agreement which are to be performed or complied
with by it prior to or on the Closing Date and as of the Effective Time.
(b) Proceedings and Instruments Satisfactory. All proceedings,
----------------------------------------
corporate or other, to be taken by DunC in connection with the transactions
contemplated by this Agreement, and all documents incident thereto, shall be
reasonably satisfactory in form and substance to Blackhawk, and DunC shall have
made available to Blackhawk for examination the originals or true and correct
copies of all documents Blackhawk may reasonably request in connection with the
transactions contemplated by this Agreement.
(c) Representations and Warranties of DunC. Each of the
--------------------------------------
representations and warranties of DunC contained in Sections 4.1(c) and 4.3
shall hereof be true and correct when made and as of the Effective Time as
though made on and as of the Effective Time. Each of the other representations
and warranties of DunC contained in this Agreement shall be true and correct in
all material respects when made and, after giving effect to any update to the
DunC Disclosure Schedule or notice to Blackhawk under Section 3.2(b), shall be
true and correct in all material respects, as of the Effective Time with the
same force and effect as though made on and as of the Effective Time, except for
those representations and warranties which address matters only as of a
particular date (which shall remain true and correct as of such date).
(d) No Material Adverse Change. During the period from the date of
--------------------------
this Agreement to the Closing Date and as of the Effective Time there shall not
have occurred, and there shall not exist on the Closing Date and as of the
Effective Time, any condition(s) or fact(s) having, or reasonably like to have,
individually or in the aggregate a Material Adverse Effect on DunC or a DunC
Subsidiary (including any such condition(s) or fact(s) disclosed in an update to
the DunC Disclosure Schedule delivered to Blackhawk by DunC pursuant to Section
3.2(b) of this Agreement).
(e) Deliveries at Closing. DunC shall have delivered to Blackhawk
---------------------
the following documents, each properly executed and dated the Closing Date: (i)
the DunC Closing Certificate; and (ii) the DunC Counsel Opinion.
(f) Other Documents. DunC shall have delivered to Blackhawk such
---------------
certificates and documents of officers of DunC and public officials as shall be
reasonably requested by Blackhawk to establish the existence of DunC and the due
authorization of this Agreement and the transactions contemplated by this
Agreement by DunC.
(g) Accountant Letters. Blackhawk shall have received a copy of each
------------------
of the following letters from McGladrey & ▇▇▇▇▇▇, each of which shall be in form
and substance reasonably satisfactory to Blackhawk and shall contain information
concerning the financial condition of DunC: (i) the letter described in Section
3.5 of this Agreement; and (ii) a similar letter dated the Closing Date.
(h) [Reserved]
(i) DunC Replacement Employment Agreements. Pursuant to Section 3.9
--------------------------------------
of this Agreement, DunC shall have delivered to Blackhawk, as of the date of
this Agreement, with respect to each of the DunC Executives other than ▇▇▇▇▇▇
▇▇▇▇▇, a DunC Replacement Employment Agreement duly executed by the appropriate
DunC Executive and the DunC Executive shall remain agreeable to be employed by
BSB in accordance with the terms of the respective DunC Replacement Agreement..
(j) Employment Agreements. Except for the DunC Replacement
---------------------
Employment Agreement, all employment, severance, change in control, bonus or
other similar agreements or obligations of DunC or the Bank shall have been
terminated without additional liability or obligation of DunC or the Bank.
(k) General Loan Conditions.
-----------------------
(A) DunC and the Bank shall be in compliance with the Memorandum
of Understanding issued by the FDIC and any other applicable directive of the
Illinois Bank Regulatory Authority and any other regulatory agency.
(B) Blackhawk shall be reasonably satisfied that:
(1) the documentation of all of the Bank's participation
loans is accurate and complete, the Bank has properly perfected its security
interest in the collateral granted pursuant to such loans and the Bank is in
compliance with the terms of such loans;
(2) the Bank has a first priority secured position on all
loans secured by a general business security agreement;
(3) all inventory, equipment and real estate loans have
current evidence of title and liability and casualty insurance with the Bank
named as a loss payee;
(4) all loan secured by accounts receivable and inventory
have monthly aging reports and inventory certificates from the borrower;
(5) all real estate loans have title policies insuring the
Bank's security interest;
(6) all commercial real estate loans made after February 1,
2003 in excess of $100,000 have a current collateral appraisal prepared by an
independent licensed appraiser on a list approved by Blackhawk and DunC; and
(7) all commercial business and real estate loans have
current personal and/or business financial statements, cash flow statements,
rent rolls (i.e. listing of tenants, rent, terms of leases and responsibility
for expenses) and other documentation pertinent to cash flow generated by the
business or property.
(l) Specific Loan Conditions. DunC shall have:
------------------------
(A) made a special allocation of an additional $50,000 to the
loan loss reserve for Customer A;
(B) made an additional allocation of $50,000 to the loan loss
reserve for Customer B unless the sale of such Customer's business is completed
before the Effective Time;
(C) charged off Customer C loan and replenished the
corresponding reserve;
(D) either (1) received repayment of the Customer D loan or (2)
provided evidence reasonably satisfactory to Blackhawk that the Bank has valid
and enforceable perfected first liens on the relevant collateral, provided
evidence reasonably satisfactory to Blackhawk that the applicable title shows
the Bank has a priority position in the collateral, provided Blackhawk with an
appraisal from an appraiser reasonably acceptable to Blackhawk of such airplane
and reserved the amount by which the outstanding loan balance exceeds 80% of the
appraised value of the collateral;
(E) either (1) receive repayment of the Customer E loan, (2)
received alternative collateral reasonably acceptable to Blackhawk or (3)
reserved the entire outstanding balance of such loan;
(F) obtained, in respect of the Customer F loans, a guaranty on
corporate not individual form or as individuals and not as corporate officers as
well as new personal guaranties, personal financial statements, and rent rolls
on out buildings;
(G) with respect to the Customer G loans, obtained technical
corrections, obtained appraisals for the property securing notes #4926 and #5148
and obtained current cash flow information; and
(H) provided evidence reasonably satisfactory to Blackhawk of
the value of the life insurance pledged as collateral on the Customer H loans;
not have made any additional advance to such debtor and increased the reserve
for loan losses for these loans by an additional $50,000.
(m) Audited Financial Statements. DunC shall have delivered to
----------------------------
Blackhawk its financial statements for the year ending December 31, 2002
prepared in accordance with generally accepted accounting principles applied on
a consistent basis along with an unqualified, clean audit opinion of McGladrey &
▇▇▇▇▇▇, LLP and all audit adjustments recommended by McGladrey & ▇▇▇▇▇▇, LLP and
the cost of such audit shall have been recorded or accrued by DunC and reflected
in the DunC Closing Capital calculation described in Section 2.7 above.
(n) Loan Loss Reserve. The Bank's loan loss reserve, after all
-----------------
adjustments and charges described herein are taken, shall be at least 1.55% of
total loans, excluding mortgage loans held for sale and the matters described in
Section 7.2(l) above.
7.3 Conditions to Obligation of DunC. The obligation of DunC to effect the
--------------------------------
transactions contemplated by this Agreement shall be subject to the fulfillment
at or prior to the Closing and as of the Effective Time of the following
additional conditions precedent:
(a) Compliance with Agreement. Blackhawk and Merger Corp. each shall
-------------------------
have performed and complied in all material respects with all of its obligations
under this Agreement which are to be performed or complied with by it prior to
or on the Closing Date and as of the Effective Time.
(b) Proceedings and Instruments Satisfactory. All proceedings,
----------------------------------------
corporate or other, to be taken by Blackhawk and Merger Corp. in connection with
the transactions contemplated by this Agreement, and all documents incident
thereto, shall be reasonably satisfactory in form and substance to DunC, and
Blackhawk shall have made available to DunC for examination the originals or
true and correct copies of all documents which DunC may reasonably request in
connection with the transactions contemplated by this Agreement.
(c) Representations and Warranties of Blackhawk and Merger Corp.
-----------------------------------------------------------
Each of the representations and warranties of Blackhawk and Merger Corp.
contained in this Agreement shall be true and correct in all material respects
when made and as of the Effective Time with the same force and effect as though
made on and as of the Effective Time, except for those representations and
warranties which address matters only as of a particular date (which shall
remain true and correct as of such date).
(d) Deliveries at Closing. Blackhawk shall have delivered to DunC
---------------------
the following documents, each properly executed and dated the Closing Date:
(i) the Blackhawk and Merger Corp. Closing Certificate; and (ii) the Blackhawk
Counsel Opinion.
(e) Other Documents. Blackhawk shall have delivered to DunC such
---------------
certificates and documents of officers of Blackhawk and of public officials as
shall be reasonably requested by DunC to establish the existence of Blackhawk
and Merger Corp. and the due authorization of this Agreement and the
transactions contemplated by this Agreement by Blackhawk and Merger Corp.
ARTICLE VIII
TERMINATION; MISCELLANEOUS
8.1 Termination. This Agreement may be terminated and the transactions
-----------
contemplated by this Agreement may be abandoned at any time prior to the Closing
(whether before or after approval of this Agreement by the DunC Shareholders),
as follows:
(a) by the written agreement of Blackhawk and DunC;
(b) by Blackhawk if any of the conditions set forth in Sections 7.1
or 7.2 of this Agreement shall not have been fulfilled by the Closing;
(c) by DunC if any of the conditions set forth in Sections 7.1 or 7.3
of this Agreement shall not have been fulfilled by the Closing; and
(d) by either Blackhawk or DunC if the Closing has not occurred on or
before 11:59 p.m. on November 1, 2003; provided, that, this Agreement may not be
terminated for failure of the condition in Section 7.1(a) to be satisfied until:
(i) there is a final judgment prohibiting the consummation of the Merger and no
right of appeal exists or (ii) the parties mutually agree to terminate this
Agreement.
8.2 Rights on Termination; Waiver. The representations, warranties,
-----------------------------
covenants, agreements and other obligations of the parties set forth in this
Agreement shall terminate upon the termination of this Agreement pursuant to
Section 8.1 hereof, except that the agreements set forth in Section 3.12, and
Article VIII of this Agreement shall survive any such termination indefinitely,
and each party to this Agreement shall retain any and all remedies which it may
have for breach of contract provided by Law based on another party's willful
failure to comply with the terms of this Agreement. If any of the conditions
set forth in Sections 7.1 and 7.2 of this Agreement have not been satisfied,
Blackhawk may nevertheless elect to proceed with the consummation of the
transactions contemplated by this Agreement and if any of the conditions set
forth in Sections 7.1 and 7.3 of this Agreement have not been satisfied, DunC
may nevertheless elect to proceed with the consummation of the transactions
contemplated by this Agreement. Any such election to proceed shall be evidenced
by a certificate signed on behalf of the waiving party by an officer of that
party.
8.3 Survival of Representations, Warranties and Covenants. The
-----------------------------------------------------
representations, warranties, covenants, agreements and other obligations of the
parties set forth in this Agreement shall terminate at the Effective Time,
except the covenants, agreements, and other obligations of the parties which by
their terms are contemplated to be performed after the Effective Time, including
those set forth in Sections 2.10, 2.11, 2.12, 2.13, 3.5, 3.10, 3.11, 8.4, 8.6,
8.8, 8.9, 8.10, 8.11, 8.13 and 8.14 shall survive the Effective Time
indefinitely.
8.4 Entire Agreement; Amendment. This Agreement and the other documents
---------------------------
referred to in this Agreement and required to be delivered pursuant to this
Agreement constitute the entire agreement among the parties pertaining to the
subject matter of this Agreement, and supersede all prior and contemporaneous
agreements, understandings, negotiations and discussions of the parties, whether
oral or written, and there are no warranties, representations or other
agreements between the parties in connection with the subject matter of this
Agreement, except as specifically set forth in this Agreement. This Agreement
may be amended by the parties at any time before or after approval of this
Agreement by the DunC Shareholders, except that after such approval no amendment
shall be made without the further approval of the DunC Shareholders if such
amendment: (a) reduces the Merger Total Consideration; or (b) otherwise
materially adversely affects the rights of the DunC Shareholders. No amendment,
supplement, modification, waiver or termination of this Agreement shall be
binding unless executed in writing by the party to be bound thereby. No waiver
of any of the provisions of this Agreement shall be deemed or shall constitute a
waiver of any other provision of this Agreement, whether or not similar, nor
shall such waiver constitute a continuing waiver unless otherwise expressly
provided.
8.5 Expenses. All costs and expenses incurred in connection with this
--------
Agreement and the transactions contemplated by this Agreement shall be paid by
the party incurring such expenses. The DunC Disclosure Schedule includes an
estimate by DunC of all costs and expenses incurred or to be incurred by DunC in
connection with the transactions contemplated by this Agreement.
Notwithstanding the foregoing, in the event Blackhawk terminates this Agreement
pursuant to Section 8.1(b) on account of DunC having failed to fulfill or comply
with one or more of the conditions set forth in Section 7.2(a) or 7.2(c) of this
Agreement, or if DunC terminates this Agreement pursuant to Section 8.1(c)
hereof on account of Blackhawk having failed to fulfill or comply with one or
more of the conditions set forth in Section 7.3(a) or 7.3(c) of this Agreement,
then, in addition to any other rights or remedies such party (the "non-breaching
party") shall have against the other party (the "breaching party") under this
Agreement or at law or in equity, the non-breaching party shall have the right
to recover from the breaching party all reasonable and necessary expenses
incurred by the non-breaching party for the purpose of entering into this
Agreement and consummating the transactions contemplated hereby.
8.6 Governing Law. This Agreement shall be construed and interpreted
-------------
according to the Law of the State of Wisconsin without regard to its conflict of
law rules.
8.7 Assignment. This Agreement shall not be assigned by operation of law or
----------
otherwise, except that Blackhawk may assign all or any of its rights hereunder
and thereunder to any Affiliate provided that no such assignment shall relieve
Blackhawk of its obligations hereunder.
8.8 Notices. All communications or notices required or permitted by this
-------
Agreement shall be in writing and shall be deemed to have been given at the
earlier of the date when actually delivered to an officer of a party by personal
delivery or telephonic facsimile transmission or when deposited in the United
States mail, certified or registered mail, postage prepaid, return receipt
requested, and addressed as follows, unless and until any of such parties
notifies the others in accordance with this Section of a change of address:
IF TO BLACKHAWK OR MERGER CORP.: Blackhawk Bancorp, Inc.
Attn: R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ III
President and Chief Executive Officer
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax No: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
Fax No: ▇▇▇-▇▇▇-▇▇▇▇
IF TO DUNC: DunC Corp.
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇
President and Chief Executive Officer
▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
Fax No: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
8.9 Counterparts; Headings. This Agreement may be executed in several
----------------------
counterparts, each of which shall be deemed an original, but such counterparts
shall together constitute but one and the same Agreement. The Table of Contents
and Article and Section headings in this Agreement are inserted for convenience
of reference only and shall not constitute a part hereof.
8.10 Interpretation. Unless the context requires otherwise, all words used
--------------
in this Agreement in the singular number shall extend to and include the plural,
all words in the plural number shall extend to and include the singular, and all
words in any gender shall extend to and include all genders.
8.11 Severability. If any provision, clause, or part of this Agreement, or
------------
the application thereof under certain circumstances, is held invalid, the
remainder of this Agreement, or the application of such provision, clause or
part under other circumstances, shall not be affected thereby unless such
invalidity materially impairs the ability of the parties to consummate the
transactions contemplated by this Agreement.
8.12 Specific Performance. The parties agree that the assets and business of
--------------------
DunC as a going concern constitute unique property. There is no adequate remedy
at Law for the damage which any party might sustain for failure of the other
parties to consummate the Merger and the transactions contemplated by this
Agreement, and accordingly, each party shall be entitled, at its option, to the
remedy of specific performance to enforce the Merger pursuant to this Agreement.
8.13 No Reliance. Except for the parties to this Agreement, any assignees
-----------
permitted by Section 8.7 of this Agreement: (a) no Person is entitled to rely
on any of the representations, warranties and agreements of the parties
contained in this Agreement; and (b) the parties assume no liability to any
Person because of any reliance on the representations, warranties and agreements
of the parties contained in this Agreement.
8.14 Further Assurances. If, at any time after the Effective Time, any
------------------
further action is necessary or desirable to carry out the purposes of this
Agreement and to vest the Surviving Corporation with full right, title and
possession to all assets, properties, rights, privileges, powers and franchises
of either Merger Corp. or DunC, the officers of the Surviving Corporation are
fully authorized to take any such action in the name of Merger Corp. or DunC.
8.15 Waiver of Jury Trial. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY
--------------------
CONTROVERSY OR DISPUTE THAT MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE
COMPLICATED AND DIFFICULT ISSUES AND THEREFORE EACH SUCH PARTY HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY
CERTIFIES AND ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (II) EACH
SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (III)
EACH SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (IV) EACH SUCH PARTY HAS BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS OF THIS SECTION.
IN WITNESS WHEREOF, the parties have caused this Agreement and Plan of
Merger to be duly executed as of the day and year first above written.
BLACKHAWK BANCORP, INC.
By:/s/R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ III
-------------------------------------
R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ III
President and Chief Executive Officer
Attest:
/s/▇▇▇▇ ▇▇▇▇▇
-----------------------------------------
▇▇▇▇ ▇▇▇▇▇, Chief Financial Officer
DunC MERGER CORPORATION
By:/s/R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ III
-------------------------------------
R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ III
President
DunC Corp.
By:/s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President
Attest:
/s/▇▇▇▇▇▇ ▇▇▇▇▇
----------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇, Director