Exhibit 2.1
AGREEMENT AND PLAN OF
MERGER
AMONG
MAIN STREET TRUST,
INC.,
CITIZENS ACQUISITION
LLC
AND
CITIZENS FIRST FINANCIAL
CORP.
NOVEMBER 7,
2004
TABLE OF
CONTENTS
ii
iii
iv
v
EXHIBIT
INDEX
|
A
|
Form of Legal Opinion of Counsel to
MSTI
|
|
B
|
Form of Legal Opinion of Counsel to
Citizens
|
|
C
|
Form of Stock Option Cancellation
Agreement
|
|
D
|
Form of Voting Agreement
|
|
E-1
|
Form of Landefeld Employment
Agreement
|
|
E-2
|
Form of Smiley Employment Agreement
|
|
F
|
Description of Tax Opinion
|
|
G
|
Index Companies
|
SCHEDULE
INDEX
|
Citizens Schedules
|
|
|
|
|
4.1
|
Citizens Organization
|
|
4.2
|
Citizens Subsidiary Organization
|
|
4.4
|
No Conflict
|
|
4.5
|
Citizens Capitalization
|
|
4.6
|
Citizens Subsidiary Capitalization
|
|
4.7
|
Financial Statements and Reports
|
|
4.9
|
Title to Properties
|
|
4.11
|
Loans; Allowance for Loan and Lease
Losses
|
|
4.12
|
Undisclosed Liabilities; Adverse
Changes
|
|
4.14
|
Compliance with ERISA
|
|
4.15
|
Compliance with Legal Requirements
|
|
4.16
|
Legal Proceedings; Orders
|
|
4.17
|
Absence of Certain Changes and Events
|
|
4.18
|
Properties, Contracts and Employee Benefit
Plans
|
|
4.19
|
No Defaults
|
|
4.20
|
Insurance
|
|
4.21
|
Compliance with Environmental Laws
|
|
4.25
|
Insider Interests
|
|
4.26
|
Brokerage Commissions
|
|
4.28
|
Code Sections 280G and 4999
|
|
|
|
|
MSTI Schedules
|
|
|
|
|
5.4
|
No Conflict
|
|
5.5
|
MSTI Capitalization
|
|
5.9
|
Title to Properties
|
|
5.12
|
Undisclosed Liabilities; Adverse
Changes
|
|
5.14
|
Compliance with ERISA
|
|
5.15
|
Compliance With Legal Requirements
|
|
5.16
|
Legal Proceedings; Orders
|
|
5.17
|
Absence of Certain Changes and Events
|
|
5.18
|
Material Contracts
|
|
5.19
|
No Defaults
|
|
5.20
|
Compliance with Environmental Laws
|
|
5.23
|
Brokerage Commissions
|
AGREEMENT AND PLAN OF
MERGER
THIS AGREEMENT AND PLAN OF
MERGER (this “
Agreement ”) is entered into as of November 7, 2004
(the “ Agreement Date ”), among MAIN STREET
TRUST, INC. , an Illinois corporation (“ MSTI
”), CITIZENS FIRST FINANCIAL CORP. , a Delaware
corporation (“ Citizens ”), and CITIZENS
ACQUISITION LLC , a Delaware limited liability company (“
Acquisition LLC ”).
RECITALS
A.
The parties to this Agreement desire to effect a reorganization
whereby MSTI desires to acquire control of Citizens through the
merger (the “ Merger ”) of Citizens with and
into Acquisition LLC, with Acquisition LLC being the surviving
entity as a wholly owned subsidiary of MSTI (the “
Surviving Entity ”).
B.
Pursuant to the terms of this Agreement, each outstanding share of
the common stock of Citizens, $0.01 par value per share (“
Citizens Common Stock ”), shall be converted at the
effective time of the Merger into the right to receive:
(a) shares of common stock of MSTI, $0.01 par value per share
(“ MSTI Common Stock ”); (b) cash;
or (c) a combination of MSTI Common Stock and cash, all in the
amounts set forth in this Agreement.
C.
The parties desire to make certain representations, warranties and
agreements in connection with the Merger and also agree to certain
prescribed conditions to the Merger.
AGREEMENTS
In consideration of the foregoing
premises and the following mutual promises, covenants and
agreements, the parties hereby agree as follows:
1.1
Definit ions
. In
addition to those terms defined throughout this Agreement, the
following terms, when used herein, shall have the following
meanings.
(a)
“ Adjusted
Stockholders’ Equity ” means the
consolidated tangible stockholders’ equity of Citizens,
calculated in accordance with GAAP and reflecting, among other
things, the accrued income and expenses of Citizens for all periods
ending on or prior to the Determination Date, but adjusted to
exclude: (i) the recognition of or accrual for all
expenses paid or incurred or projected to be paid or incurred by
Citizens or the Bank in connection with this Agreement and the
Contemplated Transactions, including Citizens Transactional
Expenses and any Remediation Cost (as defined in
Section 6.7 ); (ii) changes in
stockholders’ equity resulting from the exercise or cash-out
of any Citizens Stock Options from September 30, 2004, to the
Closing Date (as defined below); (iii) any realized gains or losses
resulting from sales of investment securities effected by Citizens
or any Citizens Subsidiary between September 30, 2004, and the
Closing Date; (iv) any realized gains on the sale of any
branch or on any other
extraordinary sales; (v) any adjustments made in
accordance with Statement of Financial Accounting Standard No. 115;
and (vi) any accounting or other adjustments made pursuant to
Section 6.18 . Citizens’ Adjusted
Stockholders’ Equity shall be calculated by Citizens’
independent auditors, in consultation with MSTI’s independent
auditors, as of the close of business on the Determination Date
using reasonable estimates of revenues and expenses where actual
amounts are not available. For purposes of this calculation,
Citizens shall assume a tax rate of 34%. Such calculation
shall be subject to verification and approval prior to the Closing
(as defined below) by MSTI’s independent auditors, which
approval shall not be unreasonably withheld.
(b)
“ Affiliate
” means
with respect to:
(i)
a particular individual: (A) each other member of such
individual’s Family; (B) any Person that is directly or
indirectly controlled by such individual or one or more members of
such individual’s Family; (C) any Person in which such
individual or members of such individual’s Family hold
(individually or in the aggregate) a Material Interest; and
(D) any Person with respect to which such individual or one or
more members of such individual’s Family serves as a
director, officer, partner, executor or trustee (or in a similar
capacity); and
(ii)
a specified Person other than an individual: (A) any
Person that directly or indirectly controls, is directly or
indirectly controlled by, or is directly or indirectly under common
control with such specified Person; (B) any Person that holds
a Material Interest in such specified Person; (C) each Person
that serves as a director, officer, partner, executor or trustee of
such specified Person (or in a similar capacity); (D) any
Person in which such specified Person holds a Material Interest;
(E) any Person with respect to which such specified Person
serves as a general partner or a trustee (or in a similar
capacity); and (F) any Affiliate of any individual described
in clause (B) or (C) of this subsection (ii).
(c)
“ Bank
” means
Citizens Savings Bank, an Illinois chartered savings bank with its
main office located in Bloomington, Illinois, and a wholly-owned
subsidiary of Citizens.
(d)
“ Best Efforts
” means the
efforts that a prudent Person desirous of achieving a result would
use in similar circumstances to ensure that such result is achieved
as expeditiously as possible, provided, however , that an
obligation to use Best Efforts under this Agreement does not
require the Person subject to that obligation to take actions that
would result in a materially adverse change in the benefits to such
Person of this Agreement and the Contemplated
Transactions.
(e)
“ Breach
” means
with respect to a representation, warranty, covenant, obligation or
other provision of this Agreement or any instrument delivered
pursuant to this Agreement: (i) any inaccuracy in or
breach of, or any failure to perform or comply with, such
representation, warranty, covenant, obligation or other provision;
or (ii) any claim (by any Person) or other occurrence or
circumstance that is or was inconsistent with such representation,
warranty, covenant, obligation or other provision, and the term
“Breach” means any such inaccuracy, breach, failure,
claim, occurrence or circumstance.
2
(f)
“ Business Day
” means any
day on which the trading of stock occurs on the OTCBB.
(g)
“ Call Reports
” means the
quarterly reports of income and condition filed by the Bank with
Regulatory Authorities.
(h)
“ Citizens SEC
Documents ” means the annual,
quarterly and other reports, schedules, forms, statements and other
documents (including exhibits and all other information
incorporated therein) filed by Citizens with the SEC.
(i)
“ Citizens
Stockholder ” means a holder of
record of Citizens Common Stock.
(j)
“ Citizens Stock
Option ” means each of the
stock options granted by Citizens prior to the Agreement Date to a
person under the terms of the Citizens Stock Option Plan or
otherwise, and that is outstanding on the Agreement
Date.
(k)
“ Citizens Stock Option
Plan ” means the Citizens
1997 Stock Based Incentive Plan.
(l)
“ Citizens
Subsidiary ” means any Subsidiary
of Citizens.
(m)
“ Citizens
Transactional Expenses ” means:
(i) all transaction costs of Citizens necessary to consummate
the Contemplated Transactions; (ii) the aggregate fees and
expenses of attorneys, accountants, consultants, financial advisors
and other professional advisors incurred by Citizens in connection
with this Agreement and the Contemplated Transactions;
(iii) the costs of preparing, printing and mailing the Proxy
Statement to Citizens Stockholders and obtaining the approval of
Citizens Stockholders of the Contemplated Transactions;
(iv) all amounts paid or payable to any director, officer or
employee of Citizens or any Citizens Subsidiary under any Contract
or plan as a result of the Contemplated Transactions; and
(v) all other non-payroll related costs and expenses in each
case incurred or to be incurred by Citizens through the Effective
Time in connection with this Agreement and the Contemplated
Transactions.
(n)
“ Code
” means
the Internal Revenue Code of 1986, as amended.
(o)
“ Contemplated
Transactions ” means all of the
transactions contemplated by this Agreement, including:
(i) the Merger; (ii) the performance by MSTI, Acquisition
LLC and Citizens of their respective covenants and obligations
under this Agreement; (iii) MSTI’s acquisition of
control of Citizens and, indirectly, the Bank; and (iv)
MSTI’s issuance of registered shares of MSTI Common Stock and
payment of cash in exchange for shares of Citizens Common
Stock.
(p)
“ Contract
” means any
agreement, contract, obligation, promise or understanding (whether
written or oral and whether express or implied) that is legally
binding: (i) under which a Person has or may acquire any
rights; (ii) under which such Person has or may
3
become subject to any obligation or liability;
or (iii) by which such Person or any of the assets owned or
used by such Person is or may become bound.
(q)
“ CRA
” means
the Community Reinvestment Act, as amended.
(r)
“ Delaware Act
” means the
Delaware Limited Liability Company Act, as amended.
(s)
“ Determination
Date ” means the close of
business on the last Business Day preceding the Closing
Date.
(t)
“ DFPR
” means
all the Illinois Department of Professional and Financial
Regulation.
(u)
“ DGCL
” means
the Delaware General Corporation Law, as amended.
(v)
“ ERISA
” means the
Employee Retirement Income Security Act of 1974, as
amended.
(w)
“ Exchange Act
” means the
Securities Exchange Act of 1934, as amended.
(x)
“ Family
” means
with respect to an individual: (i) the individual;
(ii) the individual’s spouse and former spouses;
(iii) any other natural person who is related to the
individual or the individual’s spouse within the second
degree; and (iv) any other natural person who resides with
such individual.
(y)
“ FDIC
” means
the Federal Deposit Insurance Corporation.
(z)
“ Federal
Reserve ” means the Board of
Governors of the Federal Reserve System.
(aa)
“ GAAP
” means
generally accepted accounting principles in the United States
consistent with those used in the preparation of the most recent
audited consolidated financial statements of MSTI or Citizens, as
the case may be.
(bb)
“ Index Value
” means,
for a given date, the average of the closing prices per share of
each of the common stock of the companies listed on Exhibit
G as reported on the New York Stock Exchange, The Nasdaq Stock
Market or the American Stock Exchange, as applicable, as of such
date.
(cc)
“ Knowledge
” with
respect to:
(i)
an individual means that such person will be deemed to have
“Knowledge” of a particular fact or other matter
if: (A) such individual is actually aware of such fact
or other matter; or (B) a prudent individual could be expected
to discover or otherwise become aware of such fact or other matter
in the course of conducting a reasonably comprehensive
investigation concerning the existence of such fact or other
matter; and
4
(ii)
a Person (other than an individual) means that such Person will be
deemed to have “Knowledge” of a particular fact or
other matter if any individual who is serving, or who has served in
the past twelve (12) months as a director, outside advisor,
officer, manager, partner, executor or trustee of such Person (or
in any similar capacity) has Knowledge of such fact or other
matter.
(dd)
“ Legal
Requirement ” means any federal,
state, local, municipal, foreign, international, multinational or
other Order, constitution, law, ordinance, regulation, rule, policy
statement, directive, statute or treaty.
(ee)
“ Material Adverse
Effect ” with respect to a
Person (other than an individual) means, a material adverse effect
(whether or not required to be accrued or disclosed under Statement
of Financial Accounting Standards No. 5): (i) on
the condition (financial or otherwise), properties, assets,
liabilities, businesses or results of operations of such Person; or
(ii) on the ability of such Person to perform its obligations
under this Agreement on a timely basis, but not including the
effect of any change of any Legal Requirement or economic event
affecting financial institutions generally.
(ff)
“ Material
Interest ” means the direct or
indirect beneficial ownership (as currently defined in
Rule 13d-3 under the Exchange Act) of voting securities or
other voting interests representing at least ten percent (10%) of
the outstanding voting power of a Person or equity securities or
other equity interests representing at least ten percent (10%) of
the outstanding equity securities or equity interests in a
Person.
(gg)
“ MSTI SEC
Documents ” means the annual,
quarterly and other reports, schedules, forms, statements and other
documents (including exhibits and all other information
incorporated therein) filed by MSTI with the SEC.
(hh)
“ MSTI
Subsidiary ” means any Subsidiary
of MSTI.
(ii)
“ Old
Certificates ” means certificates
formerly representing shares of Citizens Common Stock.
(jj)
“ Order
” means any
award, decision, injunction, judgment, order, ruling, extraordinary
supervisory letter, policy statement, memorandum of understanding,
resolution, agreement, directive, subpoena or verdict entered,
issued, made, rendered or required by any court, administrative or
other governmental agency, including any Regulatory Authority, or
by any arbitrator.
(kk)
“ Ordinary Course of
Business ” means any action
taken by a Person only if such action:
(i)
is consistent with the past practices of such Person and is taken
in the ordinary course of the normal day-to-day operations of such
Person;
5
(ii)
is not required to be authorized by the board of directors of such
Person (or by any Person or group of Persons exercising similar
authority), other than loan approvals for customers of a financial
institution; and
(iii)
is similar in nature and magnitude to actions customarily taken,
without any authorization by the board of directors (or by any
Person or group of Persons exercising similar authority), other
than loan approvals for customers of a financial institution, in
the ordinary course of the normal day-to-day operations of other
Persons that are in the same line of business as such
Person.
(ll)
“ OTCBB
” means the
over-the-counter bulletin board.
(mm)
“ OTS
” means
the Office of Thrift Supervision.
(nn)
“ Per Share Cash
Consideration ” means an amount equal
to Thirty-Five Dollars ($35.00), in cash.
(oo)
“ Per Share Stock
Consideration ” means 1.1051 shares
of MSTI Common Stock, calculated as the quotient of (i) Thirty-Five
Dollars ($35.00), divided by (ii) Thirty-One Dollars and
Sixty-Seven Cents ($31.67).
(pp)
“ Person
” means any
individual, corporation (including any non-profit corporation),
general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union or
other entity or Regulatory Authority.
(qq)
“ Proceeding
” means any
action, arbitration, audit, hearing, investigation, litigation or
suit (whether civil, criminal, administrative, investigative or
informal) commenced, brought, conducted or heard by or before, or
otherwise involving, any judicial or governmental authority,
including a Regulatory Authority, or arbitrator.
(rr)
“ Proxy
Statement ” means the proxy
statement-prospectus to be used by Citizens in connection with the
solicitation by its board of directors of proxies for use at the
meeting of its stockholders to be convened for the purpose of
voting on this Agreement and the Merger, pursuant to
Section 6.11
.
(ss)
“ Regulatory
Authority ” means any federal,
state or local governmental body, agency, court or authority that,
under applicable Legal Requirements: (i) has
supervisory, judicial, administrative, police, enforcement, taxing
or other power or authority over Citizens, MSTI or any of their
respective Subsidiaries; (ii) is required to approve, or give
its consent to the Contemplated Transactions; or (iii) with
which a filing must be made in connection therewith, including, in
any case, the Federal Reserve, the DFPR, the FDIC and the
OTS.
(tt)
“ Representative
” means
with respect to a particular Person, any director, officer,
manager, employee, agent, consultant, advisor or other
representative of such Person, including legal counsel, accountants
and financial advisors.
(uu)
“ SEC
” means
the Securities and Exchange Commission.
6
(vv)
“ Securities Act
” means the
Securities Act of 1933, as amended.
(ww)
“ Subsidiary
” means
with respect to any Person (the “ Owner ”), any corporation or
other Person of which securities or other interests having the
power to elect a majority of that corporation’s or other
Person’s board of directors or similar governing body, or
otherwise having the power to direct the business and policies of
that corporation or other Person (other than securities or other
interests having such power only upon the happening of a
contingency that has not occurred) are held by the Owner or one or
more of its Subsidiaries.
(xx)
“ Tax
” means
any tax (including any income tax, capital gains tax, value added
tax, sales tax, property tax, gift tax or estate tax), levy,
assessment, tariff, duty (including any customs duty), deficiency
or other fee, and any related charge or amount (including any fine,
penalty, interest or addition to tax), imposed, assessed or
collected by or under the authority of any Regulatory Authority or
payable pursuant to any tax sharing agreement or any other Contract
relating to the sharing or payment of any such tax, levy,
assessment, tariff, duty, deficiency or fee.
(yy)
“ Tax Return
” means any
return (including any information return), report, statement,
schedule, notice, form or other document or information filed with
or submitted to, or required to be filed with or submitted to, any
Regulatory Authority in connection with the determination,
assessment, collection or payment of any Tax or in connection with
the administration, implementation, or enforcement of or compliance
with any Legal Requirement relating to any Tax.
(zz)
“ Threatened
” means a
claim, Proceeding, dispute, action or other matter for which any
demand or statement has been made (orally or in writing) or any
notice has been given (orally or in writing), or if any other event
has occurred or any other circumstances exist, that would lead a
prudent Person to conclude that such a claim, Proceeding, dispute,
action or other matter is likely to be asserted, commenced, taken
or otherwise pursued in the future.
(a)
In this Agreement, unless otherwise stated or the context otherwise
requires, the following uses apply: (i) actions permitted
under this Agreement may be taken at any time and from time to time
in the actor’s reasonable discretion; (ii) references to
a statute shall refer to the statute and any successor statute, and
to all regulations promulgated under or implementing the statute or
its successor, as in effect at the relevant time; (iii) in
computing periods from a specified date to a later specified date,
the words “ from
” and
“ commencing on
” (and the
like) mean “ from and
including ,” and the words
“ to
,”
“ until
” and
“ ending on
” (and the
like) mean “ to, but
excluding ”;
(iv) references to a governmental or quasi-governmental
agency, authority or instrumentality shall also refer to a
regulatory body that succeeds to the functions of the agency,
authority or instrumentality; (v) indications of time of day
mean Champaign, Illinois time; (vi) ”
including ” means “
including, but not limited to
”;
(vii) all references to sections, schedules and exhibits are
to sections, schedules and exhibits in or to this Agreement unless
otherwise specified; (viii) all words used in this Agreement
will be construed to be of such gender or number as the
circumstances and context require; (ix) the captions
and
7
headings of articles, sections, schedules and
exhibits appearing in or attached to this Agreement have been
inserted solely for convenience of reference and shall not be
considered a part of this Agreement nor shall any of them affect
the meaning or interpretation of this Agreement or any of its
provisions; and (x) any reference to a document or set of
documents in this Agreement, and the rights and obligations of the
parties under any such documents, shall mean such document or
documents as amended from time to time, and any and all
modifications, extensions, renewals, substitutions or replacements
thereof.
(b)
The Schedules referred to in this Agreement consist of the
agreements and other documentation described and referred to in
this Agreement, which Schedules were delivered by Citizens to MSTI
or by MSTI to Citizens, as applicable, before the Agreement
Date. The disclosures in the Schedules, and those in any
supplement thereto, shall relate only to the representations and
warranties in the section of this Agreement to which they
reasonably relate and not to any other representation or warranty
in this Agreement. In the event of any inconsistency between
the statements in the body of this Agreement and those in the
Schedules (other than an exception expressly set forth as such in
the Schedules with respect to a specifically identified
representation or warranty), the statements in the body of this
Agreement will control.
(c)
All accounting terms not specifically defined herein shall be
construed in accordance with GAAP.
(d)
With regard to each and every term and condition of this Agreement
and any and all agreements and instruments subject to the terms
hereof, the parties hereto understand and agree that the same have
or has been mutually negotiated, prepared and drafted, and that if
at any time the parties hereto desire or are required to interpret
or construe any such term or condition or any agreement or
instrument subject hereto, no consideration shall be given to the
issue of which party hereto actually prepared, drafted or requested
any term or condition of this Agreement or any agreement or
instrument subject hereto.
2.1
The Merger . Provided that this
Agreement shall not have been terminated in accordance with its
express terms, upon the terms and subject to the conditions of this
Agreement and in accordance with the applicable provisions of the
DGCL and the Delaware Act, at the Effective Time (as defined
below), Citizens shall be merged with and into Acquisition LLC
pursuant to the provisions of, and with the effects provided in,
the DGCL and the Delaware Act, the separate corporate existence of
Citizens shall cease and Acquisition LLC will be the Surviving
Entity. As a result of the Merger, each share of Citizens
Common Stock issued and outstanding immediately prior to the
Effective Time, other than Dissenting Shares (as defined below),
will be converted into the right to receive the Merger
Consideration as defined and provided in Article 3 .
8
2.2
Effective Time; Closing .
(a)
Provided that this Agreement shall not have been terminated in
accordance with its express terms, the closing of the Merger (the
“ Closing
”) shall
occur through the mail or at a place that is mutually acceptable to
MSTI and Citizens, or if they fail to agree, at the offices of
Barack Ferrazzano Kirschbaum Perlman & Nagelberg LLP, located
at 333 W. Wacker Drive, Suite 2700, Chicago, Illinois 60606, at
10:00 a.m. on the date that is ten (10) Business Days
after the end of the calendar month in which all of the following
conditions are satisfied: (i) the receipt of the last
required regulatory approval of the Merger and the expiration of
the last requisite waiting period; and (ii) the satisfaction
or waiver in writing of all of the conditions provided for
in Articles 9 and
10 ;
whichever is later, or at such other time as Citizens and MSTI may
agree in writing (the “ Closing Date ”). Subject to
the provisions of Article 11 , failure to consummate the
Merger on the date and time and at the place determined pursuant to
this Section will not result in the termination of this Agreement
and will not relieve any party of any obligation under this
Agreement.
(b)
The parties hereto agree to file an appropriate certificate of
merger as contemplated by Section 264 of the DGCL and Section
18-209 of the Delaware Act, with the Secretary of State of the
State of Delaware. The Merger shall be effective on the
Closing Date and at the time stated in the certificate of merger
filed with the Secretary of State of the State of Delaware (the
“ Effective Time
”).
2.3
Effects of Merger . At the Effective Time, the
effect of the Merger shall be as provided in Section 264 of the
DGCL and Section 18-209 of the Delaware Act. Without limiting
the generality of the foregoing, at the Effective Time, all the
property, rights, privileges, powers and franchises of Acquisition
LLC and Citizens shall be vested in the Surviving Entity, and all
debts, liabilities and duties of Acquisition LLC and Citizens shall
become the debts, liabilities and duties of the Surviving
Entity.
2.4
Certificate of Formation . At the Effective
Time, the certificate of formation of Acquisition LLC, as in effect
immediately prior to the Effective Time, shall be the certificate
of formation of the Surviving Entity until thereafter amended in
accordance with applicable law.
2.5
Operating Agreement . At the Effective
Time, the operating agreement of Acquisition LLC, as in effect
immediately prior to the Effective Time, shall be the operating
agreement of the Surviving Entity until thereafter amended in
accordance with applicable law.
2.6
Manager . From and after the
Effective Time, until duly changed in compliance with applicable
law and the certificate of formation and operating agreement of the
Surviving Entity, the manager of the Surviving Entity shall be the
manager of Acquisition LLC immediately prior to the Effective
Time.
2.7
MSTI’s Deliveries at Closing . At the Closing, MSTI
shall deliver or cause to be delivered the following items to or on
behalf of Citizens:
9
(a)
a good standing certificate for MSTI issued by the Secretary of
State of the State of Illinois and dated not more than
fifteen (15) Business Days prior to the Closing
Date;
(b)
a copy of the articles of incorporation of MSTI certified not more
than fifteen (15) Business Days prior to the Closing Date by
the Secretary of State of the State of Illinois;
(c)
a certificate of the Secretary or any Assistant Secretary of MSTI
dated the Closing Date certifying a copy of the bylaws of
MSTI;
(d)
copies of resolutions of the board of directors of MSTI approving
this Agreement and the consummation of the Contemplated
Transactions, certified as of the Closing Date by the Secretary or
any Assistant Secretary of MSTI;
(e)
copies of resolutions of the manager and the sole member of
Acquisition LLC approving this Agreement and the consummation of
the Contemplated Transactions, certified as of the Closing Date by
the manager of Acquisition LLC;
(f)
a good standing certificate for Acquisition LLC issued by the
Secretary of State of the State of Delaware, and dated not more
than fifteen (15) Business Days prior to the Closing
Date;
(g)
a copy of the certificate of formation of Acquisition LLC certified
not more than fifteen (15) Business Days prior to the Closing
Date by the Secretary of State of the State of
Delaware;
(h)
a certificate of the manager of Acquisition LLC dated the Closing
Date certifying a copy of the operating agreement of Acquisition
LLC;
(i)
a certificate executed by the manager of Acquisition LLC, dated the
Closing Date, stating that: (i) all of the
representations and warranties of Acquisition LLC set forth in this
Agreement, as the same may have been updated pursuant to
Section 7.3 , are true and correct in all
material respects with the same force and effect as if all of such
representations and warranties were made at the Closing Date,
provided, however, that to the extent such representations
and warranties expressly relate to an earlier date, such
representations shall be true and correct in all material respects
on and as of such earlier date, and provided further , that
to the extent that representations and warranties are made in this
Agreement subject to a standard of materiality or Knowledge, such
representations and warranties shall be true and correct in all
respects; and (ii) Acquisition LLC has performed or complied
in all material respects with all of the covenants and obligations
to be performed or complied with by it under the terms of this
Agreement on or prior to the Closing Date, provided,
however, that to the extent performance and compliance with
such covenants and obligations are subject in this Agreement to a
standard of materiality, Acquisition LLC shall have performed and
complied in all respects with such covenants and
obligations;
(j)
a certificate executed by the Chief Executive Officer or Executive
Vice President, and by the Secretary or any Assistant Secretary of
MSTI, dated the Closing Date, stating
10
that: (i) all of the representations
and warranties of MSTI set forth in this Agreement, as the same may
have been updated pursuant to Section 7.3 , are true
and correct in all material respects with the same force and effect
as if all of such representations and warranties were made at the
Closing Date, provided, however, that to the extent such
representations and warranties expressly relate to an earlier date,
such representations shall be true and correct in all material
respects on and as of such earlier date, and provided
further , that to the extent that representations and
warranties are made in this Agreement subject to a standard of
materiality or Knowledge, such representations and warranties shall
be true and correct in all respects; and (ii) MSTI has
performed or complied in all material respects with all of the
covenants and obligations to be performed or complied with by it
under the terms of this Agreement on or prior to the Closing Date,
provided, however, that to the extent performance and
compliance with such covenants and obligations are subject in this
Agreement to a standard of materiality, MSTI shall have performed
and complied in all respects with such covenants and
obligations;
(k)
a legal opinion of MSTI’s counsel dated the Closing Date in
the form attached as Exhibit A ;
(l)
the tax opinion described in Section 10.10 ; and
(m)
such other documents as Citizens may reasonably
request.
All of such items shall be reasonably
satisfactory in form and substance to Citizens and its
counsel.
2.8
Citizens’ Deliveries at Closing .
At the Closing,
Citizens shall deliver or cause to be delivered the following items
to or on behalf of MSTI:
(a)
a good standing certificate for Citizens issued by each of the
Secretary of State of the State of Delaware and the Secretary of
State of the State of Illinois and dated in each case not more than
fifteen (15) Business Days prior to the Closing
Date;
(b)
a copy of the certificate of incorporation of Citizens certified
not more than fifteen (15) Business Days prior to the Closing
Date by the Secretary of State of the State of
Delaware;
(c)
a certificate of the Secretary or any Assistant Secretary of
Citizens dated the Closing Date certifying a copy of the bylaws of
Citizens;
(d)
copies of resolutions of the board of directors and Citizens
Stockholders authorizing and approving this Agreement and the
consummation of the Contemplated Transactions certified as of the
Closing Date by the Secretary or any Assistant Secretary of
Citizens;
(e)
a good standing certificate for the Bank issued by the DFPR and
dated not more than fifteen (15) Business Days prior to the
Closing Date;
11
(f)
a copy of the charter of the Bank certified by the DFPR and dated
not more than fifteen (15) Business Days prior to the Closing
Date;
(g)
a certificate of the Cashier of the Bank dated the Closing Date
certifying a copy of the bylaws of the Bank and stating that there
have been no further amendments to the charter of the Bank
delivered pursuant to the immediately preceding paragraph of this
Section;
(h)
a certificate executed by the Chief Executive Officer or Executive
Vice President, and by the Secretary or any Assistant Secretary of
Citizens, dated the Closing Date, stating that: (i) all
of the representations and warranties of Citizens set forth in this
Agreement, as the same may have been updated pursuant to
Section 6.8 , are true and correct in all
material respects with the same force and effect as if all of such
representations and warranties were made at the Closing Date,
provided, however, that to the extent such representations
and warranties expressly relate to an earlier date, such
representations shall be true and correct in all material respects
on and as of such earlier date, and provided further , that
to the extent that representations and warranties are made in this
Agreement subject to a standard of materiality or Knowledge, such
representations and warranties shall be true and correct in all
respects; and (ii) Citizens has performed or complied in all
material respects with all of the covenants and obligations to be
performed or complied with by it under the terms of this Agreement
on or prior to the Closing Date, provided, however, that to
the extent performance and compliance with such covenants and
obligations are subject in this Agreement to a standard of
materiality, Citizens shall have performed and complied in all
respects with such covenants and obligations; and
(i)
a list of all Citizens Stockholders as of the Determination Date
and a list of all Persons as of the Determination Date who have the
right at any time to acquire shares of Citizens Common Stock,
certified in each case by the Secretary or any Assistant Secretary
of Citizens;
(j)
owner’s title insurance policies issued by Chicago Title
Insurance Company or such other title insurance company as is
reasonably acceptable to MSTI in accordance with the title
commitments delivered by Citizens to MSTI in accordance with
Section 6.5 , and in each case, in policy
amounts at least equal to the book value of the property covered by
such policies, as shown on the books and records of Citizens or the
Bank;
(k)
a legal opinion of Citizens’ counsel dated the Closing Date
in the form attached as Exhibit B ;
(l)
a certificate of each of Citizens’ legal counsel, accountants
and financial advisor or investment banker, if any, representing
that all of their respective fees and expenses relating to the
Contemplated Transactions incurred by Citizens prior to and
including the Effective Time have been paid in full;
(m)
a resignation from each of the directors and executive officers of
Citizens and the Bank, all as the same may be identified in writing
by MSTI, from such individual’s position as a director and/or
an officer of Citizens and/or the Bank, as the case may
be;
12
(n)
a Stock Option Cancellation Agreement between Citizens and any
holder of Citizens Stock Options, in the form attached as
Exhibit C ; and
(o)
such other documents as MSTI may reasonably request.
All of such items shall be reasonably
satisfactory in form and substance to MSTI and its
counsel.
2.9
Alternative Structure . Notwithstanding
anything contained herein to the contrary, upon receipt of
Citizens’ prior written consent (which consent shall not be
unreasonably withheld), MSTI may specify, for any reasonable
business, tax or regulatory purpose, that, before the Effective
Time, MSTI, Acquisition LLC and Citizens shall enter into
transactions other than those described in this Agreement to effect
the purposes of this Agreement, including the merger of Citizens
with any Affiliate of MSTI, and the parties to this Agreement shall
take all action necessary and appropriate to effect, or cause to be
effected, such transactions; provided, however , that no
such proposed change in the structure of the transactions
contemplated in this Agreement shall delay the Closing Date (if
such a date has already been firmly established) by more than
thirty (30) Business Days or adversely affect the economic
benefits, the form of consideration or the tax effect of the Merger
at the Effective Time to the Citizens Stockholders.
2.10
Absence of Control . Subject to any
specific provisions of this Agreement, it is the intent of the
parties to this Agreement that neither MSTI nor Citizens by reason
of this Agreement shall be deemed (until consummation of the
Contemplated Transactions) to control, directly or indirectly, the
other party or any of its respective Subsidiaries and shall not
exercise, or be deemed to exercise, directly or indirectly, a
controlling influence over the management or policies of such other
party or any of its respective Subsidiaries.
3.1
Additional Definitions . In addition to those
terms defined throughout this Agreement, the following terms, when
used herein, shall have the following meanings:
(a)
“ Aggregate Cash
Election Number ” means the aggregate
number of Cash Election Shares, Non-Election Shares and Mandatory
Election Shares (as each such term is defined in
Section 3.3(b)
) held by all
Citizens Stockholders.
(b)
“ Aggregate Stock
Election Number ” means the aggregate
number of Stock Election Shares (as defined in Section 3.3(b) ) held by all Election
Stockholders.
(c)
“ Cash Election Excess
Amount ” means the amount, if
any, by which the Aggregate Cash Election Number exceeds the
Required Cash Election Number.
(d)
“ Cash Election
Percentage ” means, for each
Election Stockholder, the quotient of: (i) such
stockholder’s Individual Cash Election Number; divided by
(ii) the Aggregate Cash Election Number.
13
(e)
“ Election
Stockholder ” means a Citizens
Stockholder that is not a Mandatory Cash Stockholder.
(f)
“ Individual Cash
Election Number ” means the number of
Cash Election Shares and Non-Election Shares held by an Election
Stockholder.
(g)
“ Individual Stock
Election Number ” means the number of
Stock Election Shares held by an Election Stockholder.
(h)
“ Mandatory Cash
Stockholder ” means a Citizens
Stockholder that holds fewer than one hundred (100) shares of
Citizens Common Stock at the Effective Time.
(i)
“ Outstanding Citizens
Shares ” means the number of
shares of Citizens Common Stock issued and outstanding immediately
prior to the Effective Time, excluding any shares held as treasury
stock.
(j)
“ Stock Election Excess
Amount ” means the amount, if
any, by which the Aggregate Stock Election Number exceeds the
Required Stock Election Number.
(k)
“ Stock Election
Percentage ” means, for each
Election Stockholder, the quotient of: (i) such
stockholder’s Individual Stock Election Number; divided by
(ii) the Aggregate Stock Election Number.
(l)
“ Required Cash
Election Number ” means the number
equal to fifty percent (50%) of the Outstanding Citizens
Shares.
(m)
“ Required Stock
Election Number ” means the number
equal to fifty percent (50%) of the Outstanding Citizens
Shares.
3.2
Manner of Merger . Subject to the provisions of
this Agreement, at the Effective Time, automatically by virtue of
the Merger and without any action on the part of any
Person:
(a)
Each membership interest of Acquisition LLC issued and outstanding
immediately prior to the Effective Time shall be converted into one
validly issued, fully paid and non-assessable membership interest
of the Surviving Entity.
(b)
Each share of Citizens Common Stock held by any Election
Stockholder (other than shares held by Citizens or any Citizens
Subsidiary, except for shares held by any of them in a fiduciary
capacity, and Dissenting Shares) shall be converted, subject to the
election of the holder as provided in, and subject to the
limitations set forth in, this Article, into: (i) the
Per Share Stock Consideration, or (ii) the Per Share Cash
Consideration. The Per Share Cash Consideration that may be
paid, on an aggregate basis, to Citizens Stockholders is referred
to herein as the “ Cash
Consideration ,” and the Per Share
Stock Consideration that may be paid, on an aggregate basis, to
Citizens Stockholders is referred to herein as the “
Stock Consideration
.” The Cash
Consideration and the Stock Consideration are referred to herein
collectively as the “ Merger Consideration .” Each
Outstanding Citizens Share held by any Mandatory Cash Stockholder
(other than shares held by Citizens or any Citizens Subsidiary,
except for shares held
14
by any of them in a fiduciary capacity, and
Dissenting Shares) shall be converted into the right to receive the
Per Share Cash Consideration.
(c)
Each share of Citizens Common Stock held as treasury stock
immediately prior to the Effective Time shall be cancelled and
retired at the Effective Time and no consideration shall be issued
in exchange therefor.
(d)
An Election Stockholder may, upon the making of a proper election
under Section 3.3
, elect to
receive all Stock Consideration, all Cash Consideration or a
combination of Stock Consideration and Cash Consideration in
exchange for their shares of Citizens Common Stock.
(e)
Notwithstanding any other provision contained in this Agreement, on
an aggregate basis, fifty percent (50%) of the Outstanding
Citizens Shares shall be converted into the Stock Consideration and
the remaining fifty percent (50%) of the Outstanding Citizens
Shares shall be converted into the Cash Consideration.
3.3
Election Procedures .
(a)
An election form in such form as MSTI and Citizens shall mutually
agree (an “ Election
Form ”) shall be mailed no
later than the Mailing Date (as defined below) to each Election
Stockholder as of the Effective Time. The “
Mailing Date ” shall be the date
that is ten (10) Business Days after the Effective
Time.
(b)
Each Election Form shall entitle the Election Stockholder (or
the beneficial owner of Citizens Common Stock through appropriate
and customary documentation and instructions) to:
(i) elect to receive the Stock Consideration for all of such
holder’s shares (a “ Stock Election ”); (ii) elect to
receive the Cash Consideration for all of such holder’s
shares (a “ Cash
Election ”); (iii) elect to
receive the Stock Consideration with respect to some of such
holder’s shares and the Cash Consideration with respect to
such holder’s remaining shares (a “ Mixed Election ”), provided that no
Citizens Stockholder may make a Mixed Election in which such
Citizens Stockholder elects to receive the Stock Consideration with
respect to fewer than one hundred (100) of such holder’s
shares; or (iv) make no valid election as to the receipt of
the Cash Consideration or the Stock Consideration (a “
Non-Election ”). Holders of
record of shares of Citizens Common Stock who hold such shares as
nominees, trustees or in other representative capacities (a
“ Share
Representative ”) may submit multiple
Election Forms, provided that such Share Representative certifies
that each such Election Form covers all the shares of Citizens
Common Stock held by that Share Representative for a particular
beneficial owner. Shares of Citizens Common Stock as to which
a Cash Election has been made (including pursuant to a Mixed
Election) are referred to herein as “ Cash Election Shares .” Shares of
Citizens Common Stock as to which a Stock Election has been made
(including pursuant to a Mixed Election) are referred to herein as
“ Stock Election
Shares .” Shares of
Citizens Common Stock as to which no election has been made are
referred to as “ Non-Election Shares .” Shares of
Citizens Common Stock held by any Mandatory Cash Stockholder are
referred to herein as “ Mandatory Election Shares .” For purposes
of this Section, Dissenting Shares shall be deemed Cash Election
Shares.
15
(c)
To be effective, a properly completed Election Form must be
received by BankIllinois, an Illinois state bank with its main
office located in Champaign, Illinois, and an MSTI Subsidiary (the
“ Exchange
Agent ”), on or before 5:00
p.m. on the thirtieth (30 th ) Business Day
following the Mailing Date (or such other time and date as MSTI and
Citizens may mutually agree) (the “ Election Deadline ”). An election
shall have been properly made only if the Exchange Agent shall have
actually received a properly completed Election Form by the
Election Deadline. An Election Form shall be deemed
properly completed only if accompanied by one or more Old
Certificates (or customary affidavits and, if required by MSTI,
indemnification and a surety bond, regarding the loss or
destruction of such Old Certificates or the guaranteed delivery of
such Old Certificates) representing all shares of Citizens Common
Stock covered by such Election Form, together with a duly executed
Transmittal Letter included with the Election Form. Subject
to the terms of this Agreement and of the Election Form, the
Exchange Agent shall have reasonable discretion to determine
whether any election has been properly or timely made and to
disregard immaterial defects in any Election Form, and any good
faith decisions of the Exchange Agent regarding such matters shall
be binding and conclusive.
(d)
Within ten (10) Business Days after the Election Deadline,
MSTI shall cause the Exchange Agent to effect the allocation among
Election Stockholders of rights to receive the Cash Consideration
and the Stock Consideration as follows:
(i)
If the Aggregate Stock Election Number exceeds the Required Stock
Election Number, then all Cash Election Shares and all Non-Election
Shares will be converted into the right to receive the Cash
Consideration, and, with respect to each holder of Stock Election
Shares, then:
(A)
that number of Stock Election Shares which is equal to the product
obtained by multiplying (1) the Stock Election Excess Amount
by (2) such stockholder’s Stock Election Percentage
(such amount being referred to as such stockholder’s “
Individual Stock Excess Amount ”), shall be
converted into the right to receive the Cash Consideration;
and
(B)
that number of Stock Election Shares equal to the difference
between (1) such stockholder’s Individual Stock Election
Number, less (2) such stockholder’s Individual Stock
Excess Amount, shall be converted into the right to receive the
Stock Consideration.
(ii)
If the Aggregate Cash Election Number exceeds the Required Cash
Election Number, then all Stock Election Shares will be converted
into the right to receive the Stock Consideration, and, with
respect to each holder of Cash Election Shares and Non-Election
Shares, then:
(A)
that number of Cash Election Shares and Non-Election Shares which
is equal to the product obtained by multiplying (1) the Cash
Election Excess Amount by (2) such stockholder’s Cash
Election Percentage (such amount being referred to as such
stockholder’s “ Individual Cash Excess
Amount ”), shall be converted into the right to receive
the Stock Consideration; and
16
(B)
that number of Cash Election Shares and Non-Election Shares which
is equal to the difference between (1) such
stockholder’s Individual Cash Election Number, less
(2) such stockholder’s Individual Cash Excess Amount,
shall be converted into the right to receive the Cash
Consideration.
(iii)
If the Aggregate Stock Election Number is equal to the Required
Stock Election Number, then all Stock Election Shares will be
converted into the right to receive the Stock Consideration, and
all Cash Election Shares and Non-Election Shares will be converted
into the right to receive the Cash Consideration.
(iv)
If (A) all Election Stockholders make only a Stock Election, and
(B) there are no Mandatory Cash Stockholders, such that the
Aggregate Stock Election Number is equal to one hundred percent
(100%) of the Outstanding Citizens Shares, then the Outstanding
Citizens Shares held by each Election Stockholder shall be
converted into the Merger Consideration in accordance with the
following formula, viz. , fifty percent (50%) of the
shares of Citizens Common Stock held by each Election Stockholder
shall be converted into the right to receive the Stock
Consideration, and fifty percent (50%) of the shares of
Citizens Common Stock held by each Election Stockholder shall be
converted into the right to receive the Cash
Consideration.
(v)
If all Election Stockholders make only a Cash Election, such that
the Aggregate Cash Election Number is equal to one hundred percent
(100%) of the Outstanding Citizens Shares, then the Exchange Agent
shall allocate the Cash Consideration and the Stock Consideration
on a pro rata basis among all Election Stockholders, such that,
following such allocation and taking into account the Cash
Consideration to be paid to any Mandatory Cash Stockholders, fifty
percent (50%) of the Outstanding Citizens Shares are converted
into the right to receive the Stock Consideration, and fifty
percent (50%) of the Outstanding Citizens Shares are converted
into the right to receive the Cash Consideration.
3.4
Rights as Stockholders; Stock Transfers . At the Effective
Time, Citizens Stockholders shall cease to be, and shall have no
rights as, Citizens Stockholders, other than to receive the Merger
Consideration. After the Effective Time, there shall be no
transfers on the stock transfer books of Citizens or the Surviving
Entity of shares of Citizens Common Stock.
3.5
Fractional Shares . Notwithstanding any
other provision hereof, no fractional shares of MSTI Common Stock
and no certificates or scrip therefore, or other evidence of
ownership thereof, will be issued in the Merger; instead, MSTI
shall pay to each Citizens Stockholder who would otherwise be
entitled to a fractional share of MSTI Common Stock (after taking
into account all Old Certificates registered in the name of such
holder) an amount in cash (without interest) determined by
multiplying such fraction by Thirty-One Dollars and Sixty-Seven
Cents ($31.67).
3.6
Exchange Procedures
(a)
On the Mailing Date, and with the Election Form, if applicable, the
Exchange Agent shall mail to each Citizens Stockholder instructions
for use in effecting the
17
surrender of the Old Certificates in exchange
for the Merger Consideration (the “ Transmittal Letter
”). Upon proper surrender to the Exchange Agent of an
Old Certificate for exchange and cancellation, together with such
properly completed and duly executed Transmittal Letter, the holder
of such Old Certificates shall be entitled to receive in exchange
therefor: (i) a new certificate representing that number
of whole shares of MSTI Common Stock that such holder has the right
to receive pursuant to this Article; (ii) a check representing
the amount of Cash Consideration that such holder is entitled to
receive pursuant to this Article; and (iii) a check
representing the amount of any cash in lieu of fractional shares
that such holder has the right to receive in respect of the Old
Certificates surrendered pursuant to the provisions of this
Article, and the Old Certificates so surrendered shall forthwith be
cancelled.
(b)
On the Closing Date, MSTI shall deposit with the Exchange Agent for
the benefit of holders of Old Certificates: (i) cash or
immediately available funds equal to the aggregate Cash
Consideration; and (ii) certificates representing the shares of
MSTI Common Stock to be issued as Stock Consideration (the
“ Exchange Fund
”).
The Exchange Fund shall be held by the Exchange Agent for the
benefit of Citizens Stockholders pursuant to the terms of an
Exchange Agent Agreement in such form as MSTI and Citizens shall
mutually agree. All fees, costs and expenses of the Exchange
Agent shall be borne solely by MSTI.
(c)
Neither the Exchange Agent nor any party hereto shall be liable to
any former Citizens Stockholder for any amount properly delivered
to a public official pursuant to applicable abandoned property,
escheat or similar laws.
(d)
No dividends or other distributions with respect to MSTI Common
Stock with a record date occurring after the Effective Time shall
be paid to the holder of any unsurrendered Old Certificate
representing shares of Citizens Common Stock converted in the
Merger into the right to receive shares of MSTI Common Stock until
the holder of such unsurrendered Old Certificate shall be entitled
to receive a new certificate representing shares of MSTI Common
Stock in exchange therefor in accordance with the procedures set
forth in this Section. After becoming so entitled in
accordance with this Section, the record holder thereof also shall
be entitled to receive any such dividends or other distributions by
the Exchange Agent, without any interest thereon, which theretofore
had become payable with respect to shares of MSTI Common Stock such
holder had the right to receive upon surrender of the Old
Certificates.
(e)
Any portion of the Merger Consideration that remains unclaimed by
the Citizens Stockholders on the first anniversary of the Effective
Time shall be paid to MSTI to be held for the benefit of holders of
unsurrendered Old Certificates. Any Citizens Stockholders who
have not theretofore complied with this Article shall thereafter
look only to MSTI for payment of the Merger Consideration, cash in
lieu of any fractional shares and unpaid dividends and
distributions on MSTI Common Stock deliverable in respect of each
share of Citizens Common Stock such stockholder holds as determined
pursuant to this Agreement, in each case without any interest
thereon.
(f)
If a certificate representing shares of MSTI Common Stock or a
check representing Cash Consideration is to be issued in a name
other than that in which the Old Certificate surrendered in
exchange therefor is registered, it shall be a condition of the
issuance
18
thereof that the Old Certificate so surrendered
shall be properly endorsed, accompanied by all documents required
to evidence and effect such transfer and otherwise in proper form
for transfer and that the Person requesting such exchange shall pay
to MSTI any transfer or other taxes required by reason of the
issuance of a certificate representing shares of MSTI Common Stock
or a check representing Cash Consideration in any name other than
that of the registered holder of the Old Certificate surrendered,
or otherwise required, or shall establish to the satisfaction of
MSTI that such tax has been paid or is not payable.
3.7
Anti-Dilution Provisions .
(a)
If MSTI issues additional shares of MSTI Common Stock (other than
as provided below) or declares a stock dividend, stock split,
reverse split or other general distribution, reclassification or
recapitalization of MSTI Common Stock and the record date for such
stock dividend, stock split, distribution, reclassification or
recapitalization occurs at any time after the Agreement Date and
prior to the Effective Time, then the amount of Stock Consideration
shall be adjusted appropriately to give effect to the change in
MSTI capitalization. Notwithstanding the foregoing, no adjustment
shall be made to the amount of Stock Consideration:
(i) in the event of the issuance of additional shares of MSTI
Common Stock pursuant to the grant or sale of shares to, or for the
account of, employees of MSTI pursuant to any stock incentive,
qualified or non-qualified retirement, or dividend reinvestment
plans; or (ii) in the event of the issuance of additional
shares of MSTI Common Stock or other securities pursuant to a
public offering, private placement or an acquisition of one or more
banks, corporations or business assets for consideration which the
board of directors, or a duly authorized committee of the board of
directors, of MSTI in its reasonable business judgment determines
to be fair and reasonable.
(b)
Subject only to making any adjustment to the Stock Consideration
and related computations prescribed by this Section, nothing
contained in this Agreement is intended to preclude MSTI from
amending its articles of incorporation to change its capital
structure or from issuing additional shares of MSTI Common Stock,
preferred stock, shares of other capital stock or securities that
are convertible into shares of capital stock.
3.8
Tax Free Reorganization . The parties to this
Agreement intend for the Merger to qualify as a nontaxable
reorganization within the meaning of Section 368 and related sections of
the Code and agree to cooperate and to take such actions as may be
reasonably necessary to ensure such result and no party shall file
any Tax Return or take any action or position inconsistent
therewith, except as required pursuant to any Legal
Requirement.
3.9
Dissenting Shares . Notwithstanding
anything to the contrary contained in this Agreement, to the extent
appraisal rights are available to Citizens Stockholders pursuant to
the provisions of any applicable Legal Requirements, including
Section 262 of the DGCL, any shares of Citizens Common Stock held
by a Person who objects to the Merger, whose shares were not voted
in favor of the Merger and who complies with and satisfies all of
the provisions of the applicable Legal Requirements concerning the
rights of such Person to dissent from the Merger and to require
appraisal of such Person’s shares and who has not withdrawn
such objection or waived such rights prior to the Effective Time
(collectively with respect to all such Citizens
19
Stockholders, the “ Dissenting
Shares ”), shall not be converted pursuant to
Section 3.2 , but shall become the right to receive
such consideration as may be determined to be due to the holder of
such Dissenting Shares pursuant to the applicable Legal
Requirements, including, if applicable, any costs determined to be
payable by Citizens to the holders of Dissenting Shares pursuant to
an order of any court pursuant to any applicable Legal
Requirements; provided, however , that each Dissenting Share
held by a Person at the Effective Time who shall, after the
Effective Time, withdraw the demand for appraisal or lose the right
of appraisal, in either case pursuant to applicable Legal
Requirements shall be deemed to have been converted, as of the
Effective Time, into the right to receive the Merger Consideration
as is determined in accordance with this Article 3
.
Citizens hereby represents and
warrants to MSTI that the following are true and correct as of the
Agreement Date, and will be true and correct as of the Effective
Time:
4.1
Citizens Organization . Citizens:
(a) is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and is also
in good standing in each other jurisdiction in which the nature of
the business conducted or the properties or assets owned or leased
by it makes such qualification necessary; (b) is registered
with the OTS as a savings and loan holding company under the
federal Home Owners’ Loan Act, as amended (the “
HOLA ”); and (c) has
full power and authority, corporate and otherwise, to operate as a
savings and loan holding company and to own, operate and lease its
properties as presently owned, operated and leased, and to carry on
its business as it is now being conducted. Copies of the
certificate of incorporation and bylaws of Citizens and all
amendments thereto are set forth on Schedule 4.1 and are complete and
correct. Citizens has no Subsidiaries other than the Bank and
as set forth on Schedule 4.1 .
4.2
Citizens Subsidiary Organization . The Bank is an
Illinois chartered savings bank duly organized, validly existing
and in good standing under the laws of the State of Illinois.
Each other Citizens Subsidiary is duly organized, validly existing
and in good standing in its state or jurisdiction of
organization. Each Citizens Subsidiary has full power and
authority, corporate and otherwise, to own, operate and lease its
properties as presently owned, operated and leased, and to carry on
its business as it is now being conducted, and is duly qualified to
do business and is in good standing in each jurisdiction in which
the nature of the business conducted or the properties or assets
owned or leased by it makes such qualification necessary.
Copies of the charter and bylaws (or similar organizational
documents) of each Citizens Subsidiary and all amendments thereto
are set forth on Schedule 4.2 and are complete and
correct.
4.3
Authorization; Enforceability .
(a)
Citizens has the requisite corporate power and authority to enter
into and perform its obligations under this Agreement. The
execution, delivery and performance of this Agreement by Citizens,
and the consummation by it of its obligations under this Agreement,
have
20
been authorized by all necessary corporate
action, subject to stockholder approval, and this Agreement
constitutes a legal, valid and binding obligation of Citizens
enforceable in accordance with its terms, except as such
enforcement may be limited by bankruptcy, insolvency,
reorganization or other laws affecting creditors’ rights
generally and subject to general principles of equity.
(b)
Except for ordinary corporate requirements, no “business
combination,” “moratorium,” “control
share” or other state anti-takeover statute or regulation or
any provisions contained in the certificate of incorporation or
bylaws or similar organizational documents of Citizens or any
Citizens Subsidiary: (i) prohibits or restricts
Citizens’ ability to perform its obligations under this
Agreement, or its ability to consummate the Contemplated
Transactions; (ii) would have the effect of invalidating or
voiding this Agreement, or any provision hereof; or
(iii) would subject MSTI to any material impediment or
condition in connection with the exercise of any of its rights
under this Agreement. The board of directors of Citizens has
unanimously approved the execution of, and performance by Citizens
of its obligations under, this Agreement.
4.4
No Conflict . Except as set forth
on Schedule 4.4
, neither the
execution nor delivery of this Agreement nor the consummation or
performance of any of the Contemplated Transactions will, directly
or indirectly (with or without notice or lapse of time):
(a) contravene, conflict with or result in a violation of any
provision of the certificate of incorporation or charter or bylaws
(or similar organizational documents), each as in effect on the
Agreement Date, or any currently effective resolution adopted by
the board of directors or stockholders of Citizens or any Citizens
Subsidiary; (b) contravene, conflict with or result in a
violation of, or give any Regulatory Authority or other Person the
valid and enforceable right to challenge any of the Contemplated
Transactions or to exercise any remedy or obtain any relief under,
any Legal Requirement or any Order to which Citizens or any
Citizens Subsidiary, or any of their respective assets that are
owned or used by them, may be subject, except for any
contravention, conflict or violation that is permissible by virtue
of obtaining the regulatory approvals necessitated by the
Contemplated Transactions, including any such approvals under the
HOLA, the Federal Deposit Insurance Act, as amended (the
“ FDIA
”), the
Securities Act, the Exchange Act, the DGCL, the Delaware Act and
the Illinois Savings Bank Act (the “ ISBA ”);
(c) contravene, conflict with or result in a violation or
breach of any provision of, or give any Person the right to declare
a default or exercise any remedy under, or to accelerate the
maturity or performance of, or to cancel, terminate or modify any
material Contract to which Citizens or any Citizens Subsidiary is a
party or by which any of their respective assets is bound; or
(d) result in the creation of any lien, charge or encumbrance
upon or with respect to any of the assets owned or used by Citizens
or any Citizens Subsidiary. Except for the approvals referred
to in Section 8.1
and the requisite
approval of its stockholders, neither Citizens nor any Citizens
Subsidiary is or will be required to give any notice to or obtain
any consent from any Person in connection with the execution and
delivery of this Agreement or the consummation or performance of
any of the Contemplated Transactions.
4.5
Citizens Capitalization .
(a)
The authorized capital stock of Citizens currently consists
exclusively of: (i) 8,000,000 shares of Citizens Common
Stock, of which, as of the Agreement Date, 2,817,500
21
shares are duly issued, fully paid and
non-assessable, including 1,298,289 shares that are held by
Citizens as treasury shares; and (ii) 1,000,000 shares of
preferred stock, no par value per share, none of which are issued
and outstanding as of the Agreement Date. As of September 30,
2004, Citizens had issued and outstanding Citizens Stock Options
for the purchase of 242,100 shares of Citizens Common Stock, with
an average exercise price of $13.07. A complete list of all
Citizens Stock Options, including the exercise price, date of
grant, number granted and vesting schedule of all such options for
each holder thereof is set forth in Schedule 4.5 . The
maximum number of shares of Citizens Common Stock that would be
outstanding immediately prior to the Effective Time, excluding
treasury shares, if all options, warrants, conversion rights and
other rights with respect thereto were exercised and the
restrictions on any restricted stock were no longer applicable is
1,761,311 shares. Citizens acknowledges that the Per Share
Cash Consideration and the Per Share Stock Consideration have each
been determined based on the accuracy of the representations and
warranties made in this Section 4.5 with respect to the
number of outstanding Citizens Shares and the number of Citizens
Stock Options and the exercise prices thereof (as set forth on
Schedule 4.5 ), and acknowledges that any Breach of such
representations and warranties shall be deemed to have a Material
Adverse Effect on Citizens for purposes of this
Agreement.
(b)
The shares of Citizens Common Stock to be issued upon exercise of
any Citizens Stock Options are validly authorized and, upon
exercise of the Citizens Stock Options in accordance with their
terms, will be validly issued, fully paid and non-assessable.
None of the shares of Citizens Common Stock have been issued in
violation of any federal or state securities laws or any other
Legal Requirement. Since December 31, 2003, except as
disclosed in or permitted by this Agreement or as provided
on Schedule 4.5
, no shares of
Citizens capital stock have been purchased, redeemed or otherwise
acquired, directly or indirectly, by Citizens or any Citizens
Subsidiary and no dividends or other distributions payable in any
equity securities of Citizens or any Citizens Subsidiary have been
declared, set aside, made or paid to the Citizens
Stockholders. To the Knowledge of Citizens, none of the
shares of authorized capital stock of Citizens are, nor on the
Closing Date will they be, subject to any claim of right
inconsistent with this Agreement. Except as contemplated in
this Agreement or as set forth in Schedule 4.5 , there are, as of the
Agreement Date, no outstanding subscriptions, contracts, conversion
privileges, options, warrants, calls or other rights obligating
Citizens or any Citizens Subsidiary to issue, sell or otherwise
dispose of, or to purchase, redeem or otherwise acquire, any shares
of capital stock of Citizens or any Citizens Subsidiary, and except
as provided in this Section or otherwise disclosed in this
Agreement, Citizens is not a party to any Contract relating to the
issuance, purchase, sale or transfer of any equity securities or
other securities of Citizens. Citizens does not own or have
any Contract to acquire any equity securities or other securities
of any Person or any direct or indirect equity or ownership
interest in any other business except for the capital stock of the
Bank and as set forth in Schedule 4.5 or the Citizens SEC
Documents.
4.6
Citizens Subsidiary Capitalization . The authorized
capital stock of the Bank consists, and immediately prior to the
Effective Time, will consist exclusively of: (i) 8,000
shares of
capital common stock, $1.00 par value per share (the
“ Bank Shares
”), 1,000
of which shares are, and immediately prior to the Closing will be,
duly authorized, validly issued and outstanding, fully paid and
nonassessable, except to the extent subject to assessment under the
ISBA or the
22
FDIA, and (ii) 1,000 shares of preferred stock,
no par value, none of which are issued and outstanding.
Citizens is, and will be on the Closing Date, the record and
beneficial owner of one hundred percent (100%) of the Bank Shares
and all of the issued and outstanding shares of capital stock of
each other Citizens Subsidiary, free and clear of any lien or
encumbrance whatsoever. The Bank Shares are, and will be on
the Closing Date, freely transferable and are, and will be on the
Closing Date, subject to no claim except pursuant to this Agreement
and as set forth on Schedule 4.6 . There are no
unexpired or pending preemptive rights with respect to any shares
of capital stock of any Citizens Subsidiary, except for such rights
held exclusively by Citizens. There are no outstanding
securities of any Citizens Subsidiary that are convertible into or
exchangeable for any shares of such Citizens Subsidiary’s
capital stock, except for such rights held exclusively by Citizens,
and no Citizens Subsidiary is a party to any Contract relating to
the issuance, sale or transfer of any equity securities or other
securities of such Citizens Subsidiary. Neither Citizens nor
any Citizens Subsidiary owns or has any Contract to acquire, any
equity securities or other securities of any Person or any direct
or indirect equity or ownership interest in any other business,
except as set forth on Schedule 4.6 .
4.7
Financial Statements and Reports . True, correct and
complete copies of the following financial statements are included
in Schedule 4.7
:
(a)
audited Consolidated Balance Sheets for Citizens as of
December 31, 2001, 2002 and 2003, and the related audited
Consolidated Statements of Income, Statements of Cash Flows and
Consolidated Statements of Changes in Stockholders’ Equity of
Citizens for the years ended December 31, 2001, 2002 and
2003;
(b)
unaudited Consolidated Balance Sheet for Citizens as of June 30,
2004, and the related unaudited Consolidated Statements of Income,
Statements of Cash Flows; and
(c)
Call Reports for the Bank as of the close of business on
December 31, 2001, 2002 and 2003, and for the six months ended
June 30, 2004.
The financial statements described
in clauses (a) and (b) have been prepared in conformity with GAAP
and comply in all material respects with the published rules and
regulations of the SEC. The financial statements described in
clause (c) above have been prepared on a basis consistent with past
accounting practices and as required by applicable Legal
Requirements and fairly present the consolidated financial
condition and results of operations at the dates and for the
periods presented. Taken together, the financial statements
described in clauses (a), (b) and (c) above (collectively, and
including the notes thereto, the “ Citizens Financial
Statements ”) are complete and correct in all material
respects and fairly and accurately present the respective financial
position, assets, liabilities and results of operations of Citizens
and the Bank as at the respective dates of, and for the periods
referred to in, the Citizens Financial Statements, subject to
normal year-end non-material audit adjustments in amounts
consistent with past practice in the case of the unaudited Citizens
Financial Statements. The Citizens Financial Statements do
not include any material assets or omit to state any material
liabilities, absolute or contingent, or other facts, which
inclusion or omission would render the Citizens Financial
Statements misleading in any material respect as of the respective
dates and for the periods referred to in the respective Citizens
Financial Statements.
23
4.8
Books and Records . The books of account,
minute books, stock record books and other records of Citizens and
each Citizens Subsidiary are complete and correct in all material
respects and have been maintained in accordance with
Citizens’ business practices and all applicable Legal
Requirements, including the maintenance of any adequate system of
internal controls required by the Legal Requirements. The
minute books of Citizens and each Citizens Subsidiary contain
accurate and complete records in all material respects of all
meetings held of, and corporate action taken by, its respective
stockholders, board of directors and committees of the board of
directors. At the Closing, all of those books and records
will be in the possession of Citizens and the Citizens
Subsidiaries.
4.9
Title to Properties . Citizens and each
Citizens Subsidiary has good and marketable title to all assets and
properties, whether real or personal, tangible or intangible, that
it purports to own, subject to no valid liens, mortgages, security
interests, encumbrances or charges of any kind except:
(a) as noted in the most recent Citizens Financial Statement
or on Schedule 4.6 or Schedule 4.9 ; (b) statutory liens
for Taxes not yet delinquent or being contested in good faith by
appropriate Proceedings and for which appropriate reserves have
been established and reflected on the Citizens Financial
Statements; (c) pledges or liens required to be granted in
connection with the acceptance of government deposits, granted in
connection with repurchase or reverse repurchase agreements,
pursuant to borrowings from Federal Home Loan Banks or similar
borrowings, or otherwise incurred in the Ordinary Course of
Business; and (d) minor defects and irregularities in title
and encumbrances that do not materially impair the use thereof for
the purposes for which they are held (all of such exceptions in
clauses (a) through (d) are collectively referred to as
“ Permitted
Exceptions ”). Except as set
forth on Schedule 4.9 , Citizens and each Citizens
Subsidiary as lessee has the right under valid and existing leases
to occupy, use, possess and control any and all of the respective
property leased by it. Except where any failure would not
reasonably be expected to have a Material Adverse Effect on
Citizens on a consolidated basis, all buildings and structures
owned by Citizens and each Citizens Subsidiary lie wholly within
the boundaries of the real property owned or validly leased by it,
and do not encroach upon the property of, or otherwise conflict
with the property rights of, any other Person.
4.10
Condition and Sufficiency of Assets . The buildings,
structures and equipment of Citizens and each Citizens Subsidiary
are structurally sound, are in good operating condition and repair,
and are adequate for the uses to which they are being put, and none
of such buildings, structures or equipment is in need of
maintenance or repairs except for ordinary, routine maintenance and
repairs that are not material in the aggregate in nature or in
cost. Except where any failure would not reasonably be
expected to have a Material Adverse Effect on Citizens on a
consolidated basis, the real property, buildings, structures and
equipment owned or leased by Citizens and each Citizens Subsidiary
are in compliance with the Americans with Disabilities Act of 1990,
as amended, and the regulations promulgated thereunder, and all
other building and development codes and other restrictions,
including subdivision regulations, building and construction
regulations, drainage codes, health, fire and safety laws and
regulations, utility tariffs and regulations, conservation laws and
zoning laws and ordinances. The assets and properties,
whether real or personal, tangible or intangible, that Citizens or
any Citizens Subsidiary purport to own are sufficient for the
continued conduct of the business of Citizens and
24
each Citizens Subsidiary after the Closing in
substantially the same manner as conducted prior to the
Closing.
4.11
Loans; Allowance for Loan and Lease Losses
. Except
as contemplated as set forth in Schedule 4.11 , all loans and loan
commitments extended by any Citizens Subsidiary and any extensions,
renewals or continuations of such loans and loan commitments (the
“ Citizens Loans
”) were
made materially in accordance with the lending policies of such
Citizens Subsidiary in the Ordinary Course of Business. The
Citizens Loans are evidenced by appropriate and sufficient
documentation and constitute valid and binding obligations to such
Citizens Subsidiary enforceable in accordance with their terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization or other laws affecting creditors’ rights
generally and subject to general principles of equity. All
such Citizens Loans are, and at the Closing will be, free and clear
of any encumbrance or other charge (except for liens, if any, set
forth on Schedule 4.9 ) and each Citizens
Subsidiary has complied, and at the Closing will have complied with
all Legal Requirements relating to such Citizens Loans, except
where any such failure to comply would not reasonably be expected
to have a Material Adverse Effect on Citizens on a consolidated
basis. The allowance for loan and lease losses of each
Citizens Subsidiary is and will be on the Closing Date adequate in
all material respects to provide for possible or specific losses,
net of recoveries relating to loans previously charged off, and
contains and will contain an additional amount of unallocated
reserves for unanticipated future losses at an adequate
level. To the Knowledge of Citizens: (i) none of
the Citizens Loans is subject to any material offset or claim of
offset; and (ii) the aggregate loan balances in excess of the
Bank’s allowance for loan and lease losses are, based on past
loan loss experience, collectible in accordance with their terms
(except as limited above) and all uncollectible loans have been
charged off.
4.12
Undisclosed Liabilities; Adverse Changes . Except as set forth
on Schedule 4.12
, neither
Citizens nor any Citizens Subsidiary has any material liabilities
or obligations of any nature (whether absolute, accrued, contingent
or otherwise), except for liabilities or obligations reflected or
reserved against in the Citizens Financial Statements and current
liabilities incurred in the Ordinary Course of Business since the
respective dates thereof. Except as set forth on
Schedule 4.12
, since the date
of the latest Citizens Financial Statement, there has not been any
change in the business, operations, properties, prospects, assets
or condition of Citizens or any Citizens Subsidiary, and, to
Citizens’ Knowledge, no event has occurred or circumstance
exists, that has had or would reasonably be expected to have a
Material Adverse Effect on Citizens on a consolidated
basis.
4.13
Taxes . Citizens and each
Citizens Subsidiary has duly filed all material Tax Returns
required to be filed by it, and each such Tax Return is complete
and accurate in all material respects. Citizens and each
Citizens Subsidiary has paid, or made adequate provision for the
payment of, all Taxes (whether or not reflected in Tax Returns as
filed or to be filed) due and payable by Citizens or any Citizens
Subsidiary, or claimed to be due and payable by any Regulatory
Authority, and is not delinquent in the payment of any Tax, except
such Taxes as are being contested in good faith and as to which
adequate reserves have been provided. There is no claim or
assessment pending or, to the Knowledge of Citizens, Threatened
against Citizens or any Citizens Subsidiary for any Taxes owed by
any of them. No audit, examination or investigation related
to Taxes paid or payable by Citizens or any Citizens Subsidiary is
presently
25
being conducted or, to the
|
