AGREEMENT AND PLAN OF MERGER AND REORGANIZATION

Exhibit 99.2

 

EXECUTION COPY

 

 

 

 

AGREEMENT AND PLAN OF MERGER AND REORGANIZATION

 

BY AND AMONG

 

MARSHALL & ILSLEY CORPORATION,

 

M&I MERGER CORP.,

 

M&I MERGER SUB, LLC

 

AND

 

 

NORTH STAR FINANCIAL CORPORATION

 

 

DATED AS OF JANUARY 12, 2007

 

 

 

 

 

 

 

 

 

 

AGREEMENT AND PLAN OF MERGER AND REORGANIZATION

 

 

AGREEMENT AND PLAN OF MERGER AND REORGANIZATION, dated as of January 12, 2007, (the “Agreement”), among Marshall & Ilsley Corporation, a Wisconsin corporation (“M&I”), M&I Merger Corp., a Wisconsin corporation and a wholly owned subsidiary of M&I (“Merger Corp.”), M&I Merger Sub, LLC, a single member Wisconsin limited liability company and a wholly owned subsidiary of M&I (“Merger Sub”), and North Star Financial Corporation, a Delaware corporation, (the “Company”).

 

W I T N E S S E T H:

 

WHEREAS, the Company is a financial services holding company, the wholly-owned subsidiaries of which are North Star Trust Company, a trust company chartered as such under the laws of the State of Illinois (“NS Trust”) and North Star Deferred Exchange Corp., North Star Realty Services, LLC, North Star Realty Investors Inc. and various wholly-owned direct or indirect subsidiaries used in connection with the Company’s reverse like kind exchange business (all of the foregoing subsidiaries referred to collectively hereinafter as the “Subsidiaries”); and

 

WHEREAS, the Merger Corp. upon the terms and subject to the conditions of this Agreement and in accordance with the Delaware General Corporation Law (“Delaware Law”) and the Wisconsin Business Corporation Law (“Wisconsin Law”), will merge with and into the Company (the “Step One Merger”) and immediately thereafter the Company, as the surviving corporation of the Step One Merger (the “Interim Surviving Corporation”), will merge with and into Merger Sub (the “Step Two Merger” and together with the Step One Merger, the “Mergers”), with Merger Sub being the ultimate surviving entity in the Mergers (the “Surviving Company”) pursuant to which, among other things, M&I, through its affiliated entities, will acquire the goodwill of the Company; and

 

WHEREAS, the respective Boards of Directors of M&I, Merger Corp. and the manager of Merger Sub have determined that the Mergers pursuant and subject to the terms and conditions of this Agreement are fair to and in the best interests of the respective companies and their shareholders, and have each approved and adopted this Agreement and the transactions contemplated hereby; and

 

WHEREAS, for federal income tax purposes, it is intended that the Step One Merger and the Step Two Merger each shall constitute steps in one integrated transaction and the Mergers taken together shall qualify as a reorganization under the provisions of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”), and this Agreement shall constitute a plan of reorganization within the meaning of the regulations promulgated under Section 368(a) of the Code.

 

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements herein contained, and intending to be legally bound hereby, M&I, Merger Corp., Merger Sub and the Company hereby agree as follows:

 

ARTICLE I

THE MERGERS

 

SECTION 1.01. The Step One Merger .  Upon the terms and subject to the conditions set forth in this Agreement, and in accordance with the Delaware Law and Wisconsin Law, at the Effective Time (as defined in Section 1.02(b), below), Merger Corp. shall be merged with and into the Company.  As a result of the Step One Merger, the separate corporate existence of Merger Corp. shall cease and the Company, as a direct, wholly owned subsidiary of M&I, shall continue as the Interim Surviving Corporation under the laws of the State of Delaware.

 

SECTION 1.02. The Closing, Effective Time .  

(a)

The closing of the Step One Merger and the transactions contemplated hereby (the “Closing”) shall be held at such time, date and location as may be mutually agreed by the parties.  In the absence of such agreement, the Closing shall occur as soon as reasonably practical, but in no event later than two (2) business days, following the satisfaction or waiver of the latest to occur of the conditions set forth in Article VII, at the offices of Godfrey & Kahn, S.C., 780 North Water Street, Milwaukee, Wisconsin, commencing at 9:00 a.m. Central Time, or at such other date, time and location as the parties hereto agree to in writing.

 

(b)

As promptly as practicable after the date of the Closing, the parties hereto shall cause the Step One Merger to be consummated by filing a certificate of merger (the “Certificate of Merger”) and any other required documents with the Secretary of State of the State of Delaware (the “Delaware Secretary of State”) and the Department of Financial Institutions of the State of Wisconsin (“DFI”), in such form as required by, and executed in accordance with the relevant provisions of, Delaware Law and Wisconsin Law.  The Step One Merger will become effective at such time as the Certificate of Merger is filed with the Delaware Secretary of State and DFI, or at such later time as the M&I, Merger Corp., Merger Sub and the Company, agree and specify in the Certificate of Merger (the date and time the Step One Merger becomes effective is referred to herein as the “Effective Time”) (but in no event will the Step Two Effective Time occur prior to the Effective Time).

 

SECTION 1.03. Effect of the Step One Merger .  From and after the Effective Time, the effect of the Step One Merger shall be as provided in this Agreement, the Certificate of Merger and the applicable provisions of the Delaware Law and Wisconsin Law.  Without limiting the generality of the foregoing, and subject thereto, at the Effective Time, except as otherwise provided herein, all the property, rights, privileges, powers and franchises of Merger Corp. and the Company shall vest in the Interim Surviving Corporation, and all debts, liabilities and duties of Merger Corp. and the Company shall become the debts, liabilities and duties of the Interim Surviving Corporation.

 

SECTION 1.04. Articles of Incorporation and Bylaws .  The articles of incorporation of Merger Corp., as in effect immediately prior to the Effective Time, will be the articles of incorporation of the Interim Surviving Corporation until thereafter changed or amended as provided therein or by applicable law (the “Articles of Incorporation”).  The by-laws of Merger Corp., as in effect immediately prior to the Effective Time, will be the by-laws of the Interim Surviving Corporation, until thereafter changed or amended as provided therein, by the articles of incorporation or by applicable law (the “By-Laws”).

 

SECTION 1.05. Directors and Officers of the Interim Surving Corporation .  At the Effective Time, the directors of Merger Corp. immediately prior to the Effective Time shall be the initial directors of the Interim Surviving Corporation, each to hold office in accordance with the Articles of Incorporation and By-Laws of the Interim Surviving Corporation.  At the Effective Time, the officers of Merger Corp. immediately prior to the Effective Time shall be the initial officers of the Interim Surviving Corporation, in each case until their respective successors are duly elected or appointed.

 

SECTION 1.06. The Step Two Merger .  

 

(a)

Timing .  On the date of the Closing, immediately following the Effective Time, the Interim Surviving Corporation shall be merged with and into Merger Sub in accordance with Delaware Law and Wisconsin Law.  As a result of the Step Two Merger, the separate corporate existence of the Interim Surviving Corporation shall cease and Merger Sub, as a direct, wholly owned subsidiary of M&I, shall continue as the Surviving Company of the Step Two Merger.

 

(b)

The Step Two Merger Effective Time .  On the date of the Closing, immediately following the Effective Time, Merger Sub shall cause the Step Two Merger to be consummated by filing a certificate of merger (the “Step Two Certificate of Merger”) and any other required documents with the Delaware Secretary of State and DFI, in such form as required by, and executed in accordance with the relevant provisions of, Delaware Law and Wisconsin Law.  The Step Two Merger will become effective at such time as the Step Two Certificate of Merger is filed with the Delaware Secretary of State and DFI, or at such later time as M&I, Merger Sub and the Interim Surviving Corporation agree and specify in the Step Two Certificate of Merger (the date and time the Step Two Merger becomes effective is referred to herein as the “Step Two Merger Effective Time”).

 

(c)

Effect of the Step Two Merger .  From and after the Step Two Merger Effective Time, the effect of the Step Two Merger shall be as provided in this Agreement, the Step Two Certificate of Merger and the applicable provisions of Delaware Law and Wisconsin Law.  Without limiting the generality of the foregoing, and subject thereto, at the Step Two Merger Effective Time, except as otherwise provided herein, all the property, rights, privileges, powers and franchises of Merger Sub and the Interim Surviving Corporation shall vest in the Surviving Company, and all debts, liabilities and duties of Merger Sub and the Interim Surviving Corporation shall become the debts, liabilities and duties of the Surviving Company.

 

(d)

Certificate of Formation; Operating Agreement .  The certificate of formation of Merger Sub, as in effect immediately prior to the Step Two Merger Effective Time, will be the certificate of formation of the Surviving Company; provided, however, that Article I of such certificate of formation shall be amended as of the Step Two Merger Effective Time to read as follows:  “The name of the limited liability company is:  North Star Financial, LLC” until thereafter changed or amended as provided therein or by applicable law (the “Certificate of Formation”).  The operating agreement of Merger Sub, as in effect immediately prior to the Step Two Merger Effective Time, will be the operating agreement of the Surviving Company, until thereafter changed or amended as provided therein, by the Certificate of Formation or by applicable law (the “Operating Agreement”).

 

(e)

Manager and Officers .  At the Step Two Merger Effective Time, the manager of Merger Sub immediately prior to the Effective Time shall be the initial manager of the Surviving Company, to hold its position in accordance with the Certificate of Formation and the Operating Agreement of the Surviving Company.  At the Step Two Merger Effective Time, the officers of Merger Sub immediately prior to the Step Two Merger Effective Time shall be the initial officers of the Surviving Company, in each case until their respective successors are duly elected or appointed.

 

(f)

Treatment of Capital Stock In Step Two Merger .  Subject to the provisions of this Agreement, at the Step Two Merger Effective Time, automatically by virtue of the Step Two Merger and without any action on the part of any shareholder:  (i) each membership interest of Merger Sub outstanding immediately prior to the Step Two Merger shall be unchanged and shall remain issued and outstanding; and (ii) each share of Interim Surviving Corporation common stock issued and outstanding prior to the Step Two Merger Effective Time shall be cancelled without consideration and shall cease to be an issued and outstanding share of Interim Surviving Corporation common stock.

 

SECTION 1.07. Conversion of Securities .  At the Effective Time, by virtue of the Mergers and without any action on the part of M&I, Merger Corp., Merger Sub, the Company, or the holders of any of the following securities:

 

(a)

Each share of Series A Preferred will be converted into six shares of Common Stock.  Each share of Series B Preferred will receive the liquidation preference to which it is entitled, which may be paid in either cash on hand in the Company at closing or by M&I Common Stock.  Each share of the common stock $0.01 par value, of the Company (“Company Common Stock”) (all issued and outstanding shares of the Company Common Stock being hereinafter collectively referred to as the “Shares”) issued and outstanding immediately prior to the Effective Time (other than any Dissenting Shares (as defined in Section 1.07(f)) shall be canceled and extinguished and be converted into and become a right to receive $2.89 per share (the “Merger Consideration”), to be paid in the manner provided in Section 1.07(c) below.

 

(b)

Each share of the Company Common Stock issued and outstanding immediately prior to the Effective Time and owned by M&I, Merger Corp., Merger Sub or the Company or any direct or indirect subsidiary of M&I, Merger Corp., Merger Sub or the Company shall be canceled and extinguished and no payment shall be made with respect thereto.

 

(c)

The Merger Consideration of $2.89 per share of Company Common Stock shall be paid with shares of $1.00 par value common stock of M&I (“M&I Common Stock”), for an aggregate purchase price of twenty-one million dollars ($21,000,000.00).  Each shareholder of the Company will be entitled to exchange for each share of his or her Company Common Stock for the number of shares of M&I Common Stock equal to $2.89 divided by the Daily Average Price, which is equal to the average closing price per share of M&I Common Stock on the New York Stock Exchange (the “NYSE”) for the thirty (30) calendar days ending on and including the calendar day immediately preceding the Effective Time (as reported in an authoritative source).

 

(d)

No fractional shares of M&I Common Stock and no certificates or scrip certificates therefore shall be issued to represent any such fractional interest, and any holder thereof shall be paid an amount pursuant to Section 1.08(e) hereof.

 

(e)

The parties acknowledge and agree to the following:  One of the Company's shareholders is the North Star Trust Company Employee Stock Ownership Plan (the “ESOP”).  The Shares held by the ESOP (the “ESOP Shares”) were acquired with the proceeds of loans from the Company to the ESOP (the “ESOP Loans”).  Section 6-1 of the ESOP provides for the ESOP Shares to be allocated to a “Suspense Account” and to be released from the Suspense Account and allocated to the accounts of the ESOP participants over the term of the ESOP Loans.  Section 7-12 of the ESOP provides that if the Trustee of the ESOP shall sell any of the ESOP Shares that are allocated to the Suspense Account (the “Suspense Account Shares”), the proceeds from that sale are to be allocated, first, toward repayment of the ESOP Loans, with the balance allocated to the “Other Investments Accounts” of the ESOP participants.  In order to comply with the provisions of Section 7-12 of the ESOP, the ESOP Trustee shall pay off the ESOP Loans immediately after the completion of the exchange by the ESOP Trustee of the Suspense Account Shares for shares of M&I Common Stock.  The ESOP Trustee shall pay off the ESOP Loans by transferring to M&I the cash proceeds received from the sale of that number of shares of M&I Common Stock with a value equal to the sum of the outstanding principal balance of the ESOP Loans plus all accrued interest on the ESOP Loans.  Upon receipt of this payment, M&I shall deliver to the ESOP Trustee the note evidencing the ESOP Loans.

 

(f)

Each Share which shall be issued and outstanding as of the Effective Time and held by a shareholder who has validly perfected dissenter's rights in accordance with Delaware Law, shall not be converted into or represent a right to receive the Merger Consideration pursuant to this Section 1.07 (all such Shares are hereinafter called “Dissenting Shares”).  The Company shall give M&I prompt notice upon receipt by the Company of any written notice from any such shareholder of the Company (“Dissenting Shareholder”).  The Company agrees that prior to the Effective Time, it will not, except with prior written consent of M&I, voluntarily make any payment with respect to, or settle or offer to settle, any request for withdrawal pursuant to the exercise of dissenter's rights.  Each Dissenting Shareholder who becomes entitled, pursuant to the provisions of applicable law, to payment for his or her Shares shall receive payment therefore from M&I (but only after the amount thereof shall be agreed upon or finally determined pursuant to the provisions of applicable law).  If any Dissenting Shareholder shall fail to perfect or shall effectively withdraw or lose his or her right to receive the value of his or her Shares, his or her Shares shall be thereupon be deemed to have been canceled as of the Effective Time and converted into the right to receive the Merger Consideration in accordance with the provisions of this Section 1.07.

 

(g)

The parties acknowledge that, no later than the Effective Time, the Company will terminate its stock appreciation rights plan and will pay to the participants therein the amounts they are entitled to receive under the terms of the plan assuming a fair market value for each share of Company Common Stock equal to the amount of consideration to be received in the Merger for a share of Company Common Stock.  All payments in connection with the termination shall be made in cash, and shall only be made to the extent a participant would be vested under the plan immediately after the Effective Time.

 

SECTION 1.08. Exchange of Certificates .

 

(a)

Exchange Agent .  As of the Effective Time, M&I shall deposit, or shall cause to be deposited, with Illinois Stock Transfer Company (the “Exchange Agent”), and such deposit shall be solely for the benefit of the holders of Company Common Stock, for exchange in accordance with this Article I through the Exchange Agent, the aggregate Merger Consideration consisting of certificates representing the shares of M&I Common Stock (such certificates for shares of M&I Common Stock, together with any dividends or distributions with respect thereto, being hereinafter referred to as the “Exchange Fund”) issuable or payable, as the case may be, pursuant to Section 1.07 in exchange for outstanding shares of Company Common Stock.

 

(b)

Exchange Procedures .  As soon as reasonably practicable after the Effective Time, the Exchange Agent shall mail or personally deliver to each holder of record (or his or her attorney-in-fact) of a certificate or certificates which immediately prior to the Effective Time represented outstanding Shares (the “Certificates”), whose Shares were converted into the right to receive the Merger Consideration pursuant to Section 1.07 and cash in lieu of fractional shares (if any), (i) a letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon delivery of the Certificates to the Exchange Agent and shall be in such form and have such other provisions as M&I may reasonably specify) and (ii) instructions for use in effecting the surrender of the Certificates in exchange for the applicable amount and form of Merger Consideration.  Upon surrender of a Certificate for cancellation to the Exchange Agent, together with such letter of transmittal, duly executed, the holder of such Certificate shall be entitled to receive in exchange therefore the applicable amount of the Merger Consideration which such holder has the right to receive in respect of the Certificate surrendered pursuant to the provisions of this Article I (after taking into account all Shares then held by such holder) and cash in lieu of fractional shares (if any), and the Certificate so surrendered shall forthwith be canceled.  In the event of a transfer of ownership of Shares which is not registered in the transfer records of the Company, a certificate representing the proper Merger Consideration may be delivered (or cash may be paid in lieu of fractional shares, if applicable), to a transferee if the Certificate representing such shares is presented to the Exchange Agent, accompanied by all documents required to evidence and effect such transfer and by evidence that any applicable stock transfer taxes have been paid.  Certificates surrendered for exchange by any affiliate of the Company shall not be exchanged for the Merger Consideration until M&I has received a written agreement from such person as provided in Section 4.04 hereof.  Until surrendered as contemplated by this Section 1.08, each Certificate shall be deemed at any time after the Effective Time to represent only the right to receive upon such surrender the applicable amount of the Merger Consideration and cash in lieu of any fractional shares of M&I Common Stock as contemplated by Section 1.08(e).

 

(c)

Distributions with Respect to Unexchanged Shares .  No dividends or other distributions declared or made after the Effective Time with respect to M&I Common Stock with a record date after the Effective Time shall be paid to the holder of any unsurrendered Certificate with respect to the shares of M&I Common Stock represented thereby, and no cash payment in lieu of fractional shares shall be paid to any such holder pursuant to Section 1.08(e), until the holder of such Certificate shall surrender such Certificate.  Subject to the effect of applicable laws, following surrender of any such Certificate, there shall be paid to the holder of the certificates representing whole shares of M&I Common Stock issued in exchange therefore, without interest, (i) promptly, the amount of any cash payable with respect to a fractional share of M&I Common Stock to which such holder is entitled pursuant to Section 1.08(e) and the amount of dividends or other distributions with a record date after the Effective Time theretofore paid with respect to such whole shares of M&I Common Stock, and (ii) at the appropriate payment date, the amount of dividends or other distributions, with a record date after the Effective Time but prior to surrender and a payment date occurring after surrender, payable with respect to such whole shares of M&I Common Stock.

 

(d)

No Further Rights in the Shares .  All shares of M&I Common Stock issued and cash paid, as the case may be, upon conversion of the Shares in accordance with the terms hereof (including any cash paid pursuant to Section 1.08(e)) shall be deemed to have been issued or paid in full satisfaction of all rights pertaining to such Shares.

 

(e)

No Fractional Shares . No certificates or scrip representing fractional shares of M&I Common Stock shall be issued upon the surrender for exchange of Certificates, and such fractional share interest will not entitle the owner thereof to vote or to any rights of a shareholder of M&I.  Each holder of a fractional share interest shall be paid an amount in cash equal to the product obtained by multiplying such fractional share interest to which such holder (after taking into account all fractional share interests then held by such holder) would otherwise be entitled by the Merger Consideration.

 

(f)

Termination of Exchange Fund .  Any portion of the Exchange Fund which remains undistributed to the shareholders of the Company for six (6) months after the Effective Time shall be delivered to M&I, upon demand, and any shareholders of the Company who have not theretofore complied with this Article I shall thereafter look only to M&I for payment of their claim to the applicable amount and form of the Merger Consideration, any cash in lieu of fractional shares of M&I Common Stock and any dividends or distributions with respect to M&I Common Stock.

 

(g)

Liability . Neither M&I, Merger Corp. nor the Company shall be liable to any holder of Shares for any such shares (or dividends or distributions with respect thereto) or cash delivered to a public official pursuant to any abandoned property, escheat or similar law.

 

(h)

Withholding Rights .  M&I shall be entitled to deduct and withhold from any cash consideration payable pursuant to this Agreement to any holder of Shares such amounts as M&I 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 M&I, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the holder of the Shares in respect of which such deduction and withholding was made by M&I.

 

SECTION 1.09. Stock Transfer Books .  At the Effective Time, the stock ­transfer books of the Company shall be closed and there shall be no further registration of transfers of Shares thereafter on the records of the Company.  From and after the Effective Time, the holders of certificates evidencing ownership of Shares outstanding immediately prior to the Effective Time shall cease to have any rights with respect to such Shares except as otherwise provided herein or by law.  On or after the Effective Time, any Certificates presented to the Exchange Agent or M&I for any reason shall be converted into shares of M&I Common Stock or cash, as the case may be, in accordance with this Article I.

 

ARTICLE II

 REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

For purposes of any representation, warranty, covenant, agreement or statement of the Company or the Subsidiaries in this Agreement, the term “Company and Subsidiaries” or “Company or Subsidiaries” shall mean the Company and the Subsidiaries.  A true and complete list of the Subsidiaries, together with the jurisdiction of incorporation or organization of each Subsidiary and the percentage of each Subsidiary’s outstanding capital stock or other equity interest owned by the Company or another Subsidiary of the Company is set forth on Schedule 2.03.

 

In addition to the Subsidiaries identified in the Preambles of this Agreement, the term “Subsidiary” (or its plural) as used in this Agreement with respect to the Company shall mean any corporation, partnership, joint venture or other legal entity of which the Company, either alone or together with any other Subsidiary, owns directly or indirectly, twenty-five percent (25%) or more of the stock or other equity interest the holders of which are generally entitled to vote for the election of the directors or other governing body of such corporation or other legal entity.

 

Except as expressly set forth in the Disclosure Schedule attached hereto (the “Company Disclosure Schedule”), the Company hereby represents and warrants to M&I, Merger Corp. and Merger Sub as of the date of this Agreement, that:

 

SECTION 2.01. Organization and Qualification of the Company; Subsidiaries .  The Company is a corporation duly organized and validly existing under the laws of the State of Delaware.  Each of the Subsidiaries is a state-chartered trust company, association, corporation, limited liability company, limited partnership, charitable foundation or trust duly organized, validly existing and in good standing under the laws of the state of its incorporation or organization.  The Company and the Subsidiaries have the requisite corporate power and authority and are in possession of all franchises, grants, authorizations, licenses, permits, easements, consents, certificates, approvals and orders (“Approvals”) necessary to own, lease and operate their respective properties and to carry on their business as it is now being conducted (including, without limitation, appropriate authorizations from the Securities and Exchange Commission (the “SEC”), the National Association of Securities Dealers, Inc. (the “NASD”) and the Illinois Department of Financial and Professional Regulation, except where the failure to be so organized, existing and in good standing or to have such power, authority and Approvals would not, individually or in the aggregate, have a Material Adverse Effect (as defined below) on the Company and the Subsidiaries, taken as a whole.  The term “Material Adverse Effect” as used in this Agreement shall mean any change or effect that, individually or in the aggregate, is or is reasonably likely to be materially adverse to a party's business, operations, properties (including intangible properties), condition (financial or otherwise), assets or liabilities (including contingent liabilities) except to the extent caused by an act of terrorism or events that affect the entire national economy or the financial services industry as a whole.  Neither the Company nor the Subsidiaries have received notice of proceedings relating to the revocation or modification of any Approvals.  The Company and the Subsidiaries are duly qualified or licensed as foreign corporations to do business, and are in good standing, in each jurisdiction where the character of their properties owned, leased or operated by them or the nature of their activities makes such qualification or licensing necessary, except for such failures to be so duly qualified or licensed and in good standing that would not, either individually or in the aggregate, have a Material Adverse Effect on the Company and the Subsidiaries, taken as a whole.  In addition to the Subsidiaries, the Company holds interests, either directly or indirectly, in other entities, all of which are duly organized and validly existing under the laws of their respective state of organization and each of which has the requisite corporate power and authority and is in possession of all Approvals necessary to own, lease and operate its property and to carry on its business as is now being conducted.

 

SECTION 2.02. Certificate of Incorporation and Bylaws .  The Company and the Subsidiaries have heretofore furnished to M&I a complete and correct copy of the Certificate of Incorporation and the Bylaws, as amended or restated, of each entity and such Certificate of Incorporation and Bylaws are in full force and effect and none of the entities is in violation of any of the provisions of its Certificate of Incorporation or Bylaws.

 

SECTION 2.03. Capitalization .  The authorized capital stock of the Company consists of 12,800,000 shares of Common Stock, par value $0.01 per share; Series A Preferred Stock, par value $0.01 per share, 1,200,000 shares authorized (“Series A Preferred”); and Series B Preferred, par value $0.01 per share, 325,000 shares authorized (“Series B Preferred”).  As of the date of this Agreement, (i) 5,997,909 shares of the Company’s Common Stock, 200,000 shares of the Company’s Series A Preferred Stock, and 55,155 shares of the Company’s Series B Preferred Stock are issued and outstanding, all of which are validly issued, fully paid and non-assessable (except as provided by Delaware Law), and all of which common and preferred shares have been issued in compliance with applicable securities laws; and (ii) no shares of the Company’s Common Stock are held in the Company’s treasury.  Upon conversion of the Series A and Series B Preferred Stock, a total of 7,253,064 shares of the Company’s Common Stock shall be outstanding.  Except as set forth in the Company’s Disclosure Schedule at Section 2.03(a), as of the date of this Agreement, there are no options, warrants or other rights, agreements, arrangements or commitments of any character relating to the issued or unissued capital stock of the Company or the Subsidiaries or obligating the Company to issue or sell any shares of capital stock of, or other equity interests in the Company or the Subsidiaries.  There are no obligations, contingent or otherwise, of the Company to repurchase, redeem or otherwise acquire any shares of the Company’s Common Stock or the unissued capital stock of any Subsidiary or to provide funds to or make any investment (in the form of a loan, capital contribution or otherwise) in any other entity.  No shares of the Company’s Common Stock were issued in violation of any preemptive rights.  Each of the outstanding shares of capital stock or other equity interests in each of the Subsidiaries are duly authorized, validly issued, fully paid and non-assessable, and were not issued in violation of any preemptive rights applicable to any Subsidiary and such shares or other equity interests owned by the Company or any Subsidiary are owned free and clear of all security interests, liens, claims, pledges, agreements, limitations of the Company’s voting rights, charges or other encumbrances of any nature whatsoever.

 

SECTION 2.04. Authority .  The Company has the requisite corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby.  The execution and delivery of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby have been duly and validly authorized by all necessary corporate action and no other corporate proceedings on the part of the Company are necessary to authorize this Agreement or to consummate the transactions contemplated hereby (other than, with respect to the Merger, the approval and adoption of this Agreement by (i) the Board of Directors and (ii) the holders of a majority of the outstanding shares of the Company's Common Stock in accordance with Delaware Law and the Company's Articles of Incorporation and Bylaws).  This Agreement has been duly and validly executed and delivered by the Company and, assuming the due authorization, execution and delivery by M&I, Merger Corp. and Merger Sub constitutes the legal, valid and binding obligation of the Company enforceable in accordance with its terms.

 

SECTION 2.05. No Conflict; Required Filings and Consents .

 

(a)

The execution and delivery of this Agreement by the Company does not, and the performance of this Agreement by the Company shall not, (i) conflict with or violate the Certificate of Incorporation or Bylaws of the Company and the Subsidiaries, (ii) conflict with or violate any domestic (Federal, state or local) law, statute, ordinance, rule, regulation, order, judgment or decree (collectively, “Laws”) applicable to the Company and the Subsidiaries, or by which their respective properties are bound or affected, or (iii) result in any breach of 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, or result in the creation of a lien or encumbrance on any of the properties or assets of the Company and the Subsidiaries pursuant to, or require the giving of any notice to a party to or third party beneficiary of, any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument or obligation to which the Company and the Subsidiaries is a party or by which the Company and the Subsidiaries or its or any of their respective properties are bound or affected, except for any such breaches, defaults or other occurrences that would not, individually or in the aggregate, have a Material Adverse Effect on the Company and the Subsidiaries, taken as a whole.

 

(b)

Except as disclosed in the Company’s Disclosure Schedule at Section 2.05(b), the execution and delivery of this Agreement by the Company does not, and the performance of this Agreement by the Company shall not, require any consent, approval, authorization or permit of, or filing with or notification to, any governmental or regulatory authority, domestic or foreign, except (i) for applicable requirements, if any, of the Securities Act of 1933, as amended (the “Securities Act”), and the Securities Exchange of 1934, as amended (the “Exchange Act”), state securities or blue sky laws (“Blue Sky Laws”), the Division of Banking of the Illinois Department of Financial and Professional Regulation (“Trust Company Laws”), regulations and rules promulgated by the NASD, the state and Federal banking laws and regulations, and the filing and recordation of appropriate merger or other documents as required by Delaware Law and Wisconsin Law and (ii) where the failure to obtain such consents, approvals, authorizations or permits, or to make such filings or notifications, would not prevent or delay consummation of the Merger, or otherwise prevent the Company from performing its obligations under this Agreement, and would not have a Material Adverse Effect on the Company and the Subsidiaries, taken as a whole, all of the foregoing being disclosed in the Company’s Disclosure Schedule at Section 2.05(b).

 

SECTION 2.06. Compliance; Permits .  Neither the Company nor the Subsidiaries are in conflict with, or in default or violation of, (a) any Laws applicable to the Company or the Subsidiaries or by which any of their respective properties are bound or affected, or (b) any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument or obligation to which the Company or the Subsidiaries is a party or by which the Company or the Subsidiaries or any of their respective properties are bound or affected, except for any such conflicts, defaults or violations which would not, individually or in the aggregate, have a Material Adverse Effect on the Company and its Subsidiaries, taken as a whole.

 

SECTION 2.07. Regulatory Reports and Financial Statements .

 

(a)

The Company and the Subsidiaries have timely filed all forms, reports and other documents required to be filed with the Illinois Department of Financial and Professional Regulation and any other applicable federal or state securities or banking authorities (all such reports and statements are collectively referred to as the “Company Reports”).  The Company Reports, including all Company Reports filed after the date of this Agreement, (i) were or will be prepared in accordance with the requirements of applicable law and (ii) did not at the time they were filed, or will not at the time they are filed, contain any untrue statement of material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.

 

(b)

Each of the consolidated financial statements of the Company (including, in each case, any related notes thereto) delivered to M&I, whether or not contained in the Company Reports (the “Financial Statements”), including, but not limited to, any Company Reports filed since the date of this Agreement and prior to or at the Effective Time, have been or will be prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) applied on a consistent basis throughout the periods involved (except as may be indicated in the notes thereto), and each fairly presents the consolidated financial position of the Company and the Subsidiaries as of the respective dates thereof and the consolidated results of its or their operations and changes in financial position for the periods indicated, except that any unaudited interim financial statements were or are subject to normal and recurring year-end adjustments which were not or are not expected to be material in amount.

 

(c)

Except as and to the extent set forth on the consolidated balance sheets of the Company and the Subsidiaries as of December 31, 2005 and September 30, 2006, including all notes thereto (the “Company Balance Sheet”), neither the Company nor the Subsidiaries have any liabilities or obligations of any nature (whether accrued, absolute, contingent or otherwise) that would be required to be reflected on a balance sheet, or in the notes thereto, prepared in accordance with GAAP, except (i) for liabilities or obligations incurred in the ordinary course of business that would not, individually or in the aggregate, have a Material Adverse Effect on the Company or the Subsidiaries, taken as a whole, or (ii) as otherwise reflected in the Company Reports referred to in Section 2.07(a) hereof.

 

(d)

To the extent applicable, the Company, and to the knowledge of the Company, each of its officers and directors are in compliance with and have complied in all material respects with the applicable provisions of the Sarbanes-Oxley Act of 2002, as amended (“Sarbanes-Oxley”), and any related rules and regulations promulgated by the SEC thereunder.

 

(e)

The Company has established and maintains a system of internal control over financial reporting (“internal controls”).  To the knowledge of the Company based on its evaluation of internal controls prior to the date hereof, such internal controls are sufficient to provide reasonable assurance regarding the reliability of the Company’s financial reporting and the preparation of the Company financial statements for external purposes in accordance with GAAP.  The Company has disclosed, based on its most recent evaluation of internal controls prior to the date hereof, to the Company’s auditors and audit committee (i) any significant deficiencies and material weaknesses known to the Company in the design or operation of internal controls which are reasonably likely to adversely affect in a material respect the Company’s ability to record, process, summarize and report financial information and (ii) any material fraud known to the Company that involves management or other employees who have a significant role in internal controls.  The Company has made available to M&I a summary of any such disclosure regarding material weaknesses and fraud made by management to the Company’s auditors and audit committee since December 31, 2004.  For purposes of this agreement, a “significant deficiency” in controls means a control deficiency that adversely affects an entity’s ability to initiate, authorize, record, process, or report external financial data reliably in accordance with GAAP.  A “significant deficiency” may be a single deficiency or a combination of deficiencies that results in more than a remote likelihood that a misstatement of the annual or interim financial statements that is more than inconsequential will not be prevented or detected.  For purposes of this Agreement, a “material weakness” in controls means a significant deficiency, or a combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected.

 

(f)

Except as disclosed on Section 2.07(f) of the Company’s Disclosure Schedule, there are no outstanding loans made by the Company or any of the Subsidiaries to any executive officer or director of the Company.

 

(g)

Except (i) for those liabilities that are fully reflected or reserved against on the consolidated balance sheets of the Company as of September 30, 2006, (ii) for liabilities incurred in the ordinary course of business consistent with past practice since September 30, 2006 and (iii) as set forth in Section 2.07(g) of the Company’s Disclosure Schedule, neither the Company nor any of the Subsidiaries has incurred any liability of any nature whatsoever (whether absolute, accrued, contingent or otherwise due or to become due), required to be disclosed on a balance sheet prepared in accordance with GAAP, that, either alone or when combined with all similar liabilities, has had, or would reasonably be expected to have, a Material Adverse Effect on the Company or the Subsidiaries taken as a whole.

 

(h)

The Company has not been notified by its independent registered public accounting firm that such accounting firm is of the view that any financial statement included in any registration statement or report filed by the Company under any Federal or state securities law should be restated, or that the Company should modify its accounting in future periods in a manner that would have, or would be reasonably expected to have, a Material Adverse Effect on the Company or the Subsidiaries taken as a whole.

 

(i)

Since January 1, 2006, neither the Company nor the Subsidiaries nor, to the Company’s knowledge, any director, officer, employee, auditor, accountant or representative of the Company or the Subsidiaries, has received or otherwise had or obtained knowledge of any complaint, allegation, assertion or claim, whether written or oral, regarding the accounting or auditing practices, procedures, methodologies or methods of the Company or the Subsidiaries or their respective internal accounting controls, including any complaint, allegation, assertion or claim that the Company or the Subsidiaries has engaged in questionable accounting or auditing practices.  To the Company’s knowledge, no attorney representing the Company or the Subsidiaries, whether or not employed by the Company or the Subsidiaries, has reported evidence of a material violation of securities laws, breach of fiduciary duty or similar violation by the Company or any of its officers, directors, employees or agents to the Company’s Board of Directors or any committee thereof or to any director or officer of the Company.  Since January 1, 2006, there have been no internal investigations regarding accounting or revenue recognition discussed with, reviewed by or initiated at the direction of the chief executive officer, chief financial officer, general counsel or the Company’s Board of Directors or any committee thereof.

 

SECTION 2.08. Absence of Certain Changes or Events .  Except as disclosed in the Financial Statements or in the Company’s Disclosure Schedules pursuant to this Agreement, since December 31, 2005, to the date of this Agreement, the Company and the Subsidiaries have conducted their businesses only in the ordinary course and in a manner consistent with past practice and, since December 31, 2005, there has not been (a) any change in the financial condition, results of operations or business of the Company or the Subsidiaries having a Material Adverse Effect on the Company or the Subsidiaries taken as a whole, (b) any damage, destruction or loss (whether or not covered by insurance) with respect to any assets of the Company or the Subsidiaries having a Material Adverse Effect on the Company or the Subsidiaries taken as a whole, (c) any change by the Company or the Subsidiaries in their accounting methods, principles or practices, except for compliance with applicable new requirements of the Financial Accounting Standards Board, (d) any revaluation by the Company or the Subsidiaries of any of their material assets in any material respect, (e) any entry by the Company or the Subsidiaries into any commitment or transactions material to the Company or the Subsidiaries, taken as a whole, other than in the ordinary course and other than this Agreement, (f) any declaration, setting aside or payment of any dividends (other than dividends paid in the ordinary course, consistent with past practice) or distributions in respect of shares of the Company's Common Stock or any redemption, purchase or other acquisition of any of its securities or any of the securities of the Subsidiaries, or (g) any increase in or establishment of any bonus, insurance, severance, deferred compensation, pension, retirement, profit sharing, stock option (including, without limitation, the granting of stock options, stock appreciation rights, performance awards, or restricted stock awards), stock purchase or other employee benefit plan, or any other increase in compensation payable or to become payable to any officers or key employees of the Company or the Subsidiaries, other than in the ordinary course consistent with past practice disclosed in the Company’s Disclosure Schedule at Section 2.08.

 

SECTION 2.09. Absence of Litigation .  

 

(a)

Except as disclosed in the Company’s Disclosure Schedule at Section 2.09, (i) neither the Company nor the Subsidiaries is subject to any continuing order of, or written agreement or memorandum of understanding with, or continuing material investigation by, any Federal or state banking or securities authority, self-regulatory organization 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 regulatory authority, (ii) there is no claim of any kind, action, suit, litigation, proceeding, arbitration, investigation, or controversy affecting the Company or the Subsidiaries pending or, to the knowledge of the Company, threatened, and (iii) 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 the Company or the Subsidiaries as a result of the examination by any regulatory authority.

 

(b)

The Company is not aware of, has not been advised of, and has no reason to believe that any facts or circumstances exist, which would cause it or any of the Subsidiaries to be deemed (i) to be operating in violation of any material respect of the Bank Secrecy Act, as amended, the USA PATRIOT ACT of 2001 and the regulations promulgated thereunder, as amended (the “Patriot Act”), any order issued with respect to anti-money laundering by the U.S. Department of the Treasury’s Office of Foreign Assets Control, or any other applicable anti-money laundering statute, rule or regulation; or (ii) not to be in satisfactory compliance in any material respect with the applicable privacy, data protection, security breach notification and customer information requirements contained in any Laws including, without limitation, in Title V of the Gramm-Leach-Bliley Act of 1999 and the Fair Credit Reporting Act and the regulations, promulgated thereunder, as well as the provisions of the information security program adopted pursuant to 12 Code of Federal Regulations Part 40.  The Company is not aware of any facts or circumstances which would cause it to believe that any non-public customer information has been disclosed to or accessed by an unauthorized third party in a manner which would cause it or any of the Subsidiaries to undertake any material remedial action or be subject to any applicable data breach notification Laws.  The Company’s Board of Directors (or where appropriate the board of any of the Subsidiaries) has adopted and implemented an anti-money laundering program that contains adequate and appropriate customer identification verification procedures that comply with Section 326 of the Patriot Act and such anti-money laundering program meets the requirements in all material respects of Section 352 of the Patriot Act and the regulations thereunder, and it (or such other of the Subsidiaries) has complied in all material respects with any requirements to file reports and other necessary documents as required by the Patriot Act and the regulations thereunder.

 

SECTION 2.10. Employee Benefit Plans .

 

(a)

The Company Disclosure Schedule at Section 2.10(a) lists all “employee pension benefit plans,” as such term is defined in section 3(2) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) without regard to any exemptions from any requirements thereunder issued by the United States Department of Labor in regulations or otherwise, maintained, sponsored or contributed to by the Company or the Subsidiaries (the “Pension Plans”).  The term “Pension Plan” shall also include any terminated “employee pension benefit plan” previously maintained, sponsored or contributed to by the Company or the Subsidiaries which, as of the Effective Time, has not distributed all of its assets in full satisfaction of accrued benefits and/or obligations.

 

(b)

The Company Disclosure Schedule at Section 2.10(b) lists all “employee welfare benefit plans,” as defined in ERISA section 3(1) without regard to any exemptions from any requirements thereunder issued by the United States Department of Labor in regulations or otherwise, maintained, sponsored or contributed to by the Company or the Subsidiaries (the “Welfare Plans”).  The term “Welfare Plans” shall also include any terminated employee welfare benefit plan previously maintained, sponsored or contributed to by the Company or the Subsidiaries which, as of the Effective Time, has not distributed all of its assets and/or satisfied all of its obligations.

 

(c)

The Company has made available to M&I true and complete copies of the documents governing each of the Pension Plans and Welfare Plans.

 

(d)

The Company Disclosure Schedule at Section 2.10(d) lists all plans or programs to provide fringe benefits to the Company's and the Subsidiaries’ employees (other than Pension Plans and Welfare Plans) including, but not limited to vacation, sick leave, disability, medical, hospitalization, life insurance and other insurance plans or related benefits (the “Fringe Benefit Plans”).

 

(e)

The Company has made available to M&I true and complete copies of the documents governing each Fringe Benefit Plan.

 

(f)

The Company has no direct or indirect, formal or informal, plan, fund or program to change any Pension Plan, Welfare Plan or Fringe Benefit Plan that would affect any of the Company's or the Subsidiaries’ employees.  Neither the Company nor the Subsidiaries has made a material modification, within the meaning of ERISA Section 102 and the regulations thereunder, to any existing Pension Plan, Welfare Plan or Fringe Benefit Plan which is not set forth in the Pension Plan, Welfare Plan or Fringe Benefit Plan documents provided to M&I.

 

(g)

For purposes of this Section 2.10, “Company” shall include the Company, the Subsidiaries and all members of any controlled group of corporations (within the meaning of Code section 414(b), relevant Treasury Regulations and Pension Benefit Guaranty Corporation (“PBGC”) regulations issued pursuant to ERISA Section 4001), any group of trades or businesses under common control (within the meaning of Code Section 414(c), relevant Treasury Regulations and Pension Benefit Guaranty Corporation regulations issued pursuant to ERISA Section 4001) and any affiliated service group (within the meaning of Code Section 414(m) and relevant Treasury Regulations and proposed Treasury Regulations) of which the Company or any Subsidiary is a member.

 

(h)

Neither the Company nor the Subsidiaries has ever been obligated to contribute to any multi-employer plan within the meaning of ERISA Section 3(37).

 

(i)

To the Company's knowledge, the Pension Plans, Welfare Plans and Fringe Benefit Plans and the trusts and other funding vehicles related to the Pension Plans, Welfare Plans and Fringe Benefit Plans have been administered in all material respects in compliance with the applicable requirements of ERISA, the Code, the plan documents and all other applicable rules, regulations and laws.  To the Company’s knowledge, the Pension Plans, Welfare Plans and Fringe Benefit Plans and the trusts or other funding vehicles related to the Pension Plans, Welfare Plans and Fringe Benefit Plans meet all applicable requirements, in form and in operation required for favorable tax treatment under the Code.  All required contributions pursuant to the Pension Plans, Welfare Plans and Fringe Benefit Plans for all periods prior to the Effective Time have been made or will be made prior to the Effective Time.  There are no pending or, to the Company's knowledge, threatened claims, lawsuits or arbitrations which have been asserted or instituted against the Pension Plans, Welfare Plans or Fringe Benefit Plans or any fiduciaries thereof with respect to their duties to the Pension Plans, Welfare Plans or Fringe Benefit Plans or the assets of any of the trusts under any Pension Plans, Welfare Plans or Fringe Benefit Plans.  To the Company’s knowledge, no representations or communications with respect to participation, eligibility for benefits, vesting, benefit accrual or coverage under the Pension Plans, Welfare Plans or Fringe Benefit Plans have been made to the Company's or the Subsidiaries’ employees other than those which are in accordance with the terms of such Pension Plans, Welfare Plans or Fringe Benefit Plans in effect immediately prior to the Effective Time.

 

(j)

With respect to any Welfare Plan which is a “group health plan” as defined in Code Section 4980B, the Company and the Subsidiaries have complied with the continuation coverage requirements of Code Section 4980B for any periods prior to the Effective Time.

 

(k)

The Company has furnished to M&I true and complete copies of all documents relating to the Pension Plans, Welfare Plans or Fringe Benefit Plans, including, but not limited to, the following: any service provider agreements, any investment management agreements, fiduciary insurance policies, fidelity bonds, rules, regulations or policies of the trustees or any committee thereunder.

 

(1)

To the Company’s knowledge, no fiduciary of the Pension Plans or Welfare Plans has engaged in any “prohibited transaction” (as defined in ERISA Section 406 or Code Section 4975) nor has any fiduciary breached any fiduciary responsibility, as described in Part 4 of Title I of ERISA with respect to such Pension Plans or Welfare Plans.

 

(m)

The Company has no knowledge of the occurrence of any event with respect to any Pension Plan which could result in a liability of the Company, any Subsidiary or any member of the Company's controlled group to the PBGC, other than the timely payment of premiums pursuant to Section 4007 of ERISA.  All required PBGC premiums have been paid for the periods through the Effective Time.

 

(n)

Except as set forth in Company’s Disclosure Schedule at Section 2.10(n), no Welfare Plan or Fringe Benefit Plan provides any form of post-retirement health benefits to retired employees of the Company or the Subsidiaries, other than benefits required to be provided pursuant to Code Section 4980B.

 

SECTION 2.11. Employment Contracts; Material Contracts .  Except as set forth in the Company’s Disclosure Schedule at Section 2.11, neither the Company nor the Subsidiaries is a party to or bound by (a) any employment or consulting contract; (b) any contract or commitment for capital expenditures in excess of $10,000.00 for any one (1) project; (c) contracts or commitments for the purchase of materials or supplies or for the performance of services over a period of more than sixty (60) days from the date of this Agreement; (d) any joint venture, partnership or similar contract or commitment; or (e) any contract or commitment outside of the ordinary course of business.

 

SECTION 2.12. Registration Statement; Proxy Statement .  None of the information supplied or to be supplied by the Company for inclusion in (a) the Registration Statement (as defined in Section 6.01), (b) the Proxy Statement/Prospectus (as defined in Section 6.01), or (c) any other document to be filed with the SEC or other regulatory authority in connection with the transactions contemplated hereby, at the respective times such documents are filed and, in the case of the Registration Statement, when it becomes effective and at the Effective Time, and with respect to the Proxy Statement/Prospectus, when mailed, shall be false or misleading with respect to any material fact, or omit to state any material fact necessary in order to make the statements therein not misleading.  In the case of the Proxy Statement/Prospectus or any amendment thereof or supplement thereto, none of such information at the time of the Company's shareholders meeting (pursuant to Section 6.02) (the “Meeting”) shall be false or misleading with respect to any material fact or omit to state any material fact necessary to correct any statement in any earlier communication with respect to the solicitation of any proxy for the Meeting.

 

SECTION 2.13. Title to Property .  The Company Disclosure Schedule at Section 2.13 correctly identifies all real property leased by the Company and the Subsidiaries.  Neither the Company nor its Subsidiaries owns any real property.  The Company and the Subsidiaries each has good and defensible title to all of their personal properties and assets, tangible and intangible, free and clear of all mortgage liens, and free and clear of all other liens, charges and encumbrances except liens for taxes not yet due and payable and such minor imperfections of title, if any, as to not materially detract from the value of or interfere with the present use of the property affected thereby or which, individually or in the aggregate, would not have a Material Adverse Effect on the Company or the Subsidiaries, taken as a whole; and all leases pursuant to which the Company or the Subsidiaries leases from others real or personal property including, without limitation, leases for branch offices are in good standing, valid and effective in accordance with their respective terms, and there is not, under any of such leases, any existing material default or event of default (or event which with notice or lapse of time, or both, would constitute a material default and in respect of which the Company or the Subsidiaries has not taken adequate steps to prevent such a default from occurring).  The Company's and the Subsidiaries’ buildings and equipment in regular use have been reasonably maintained and are in good and serviceable condition, reasonable wear and tear excepted.  To the Company’s knowledge, none of the buildings, structures or appurtenances owned or leased by the Company or the Subsidiaries for their operation or maintenance as now operated or maintained, contravenes any zoning ordinances or other administrative regulations (whether or not permitted because of prior non-conforming use) or violates any restrictive covenant or any provision of law, the effect of which would materially interfere with or prevent the continued use of such properties for the purposes for which they are now being used or would materially and adversely affect the value thereof.

 

SECTION 2.14. Compliance with Environmental Laws .

 

(a)

The term “Company's Property” shall mean any real property and improvements currently owned, leased, used, operated or occupied by the Company or the Subsidiaries;

 

(b)

The term “Environmental Claims” shall mean any and all administrative, regulatory or judicial actions, suits, demands, demand letters, claims, liens, notices of noncompliance or violation, investigations or proceedings relating in any way to any Environmental Law or Environmental Permit;

 

(c)

The term “Environmental Laws” shall mean all Federal, state and local laws including statutes, regulations and other governmental restrictions and requirements relating to the discharge of air pollutants, water pollutants or process wastewater or the disposal of solid or hazardous waste or otherwise relating to the environment or hazardous substances or employee health and safety.

 

(d)

The term “Environmental Permits” shall mean all permits, approvals, identification numbers, licenses and other authorizations required under any applicable Environmental Law.

 

(e)

The term “Hazardous Substances” shall mean all hazardous and toxic substances, wastes and materials; any pollutants or contaminants (including, without limitation, petroleum products, asbestos and raw materials which include hazardous constituents); and any other similar substances or materials which are regulated under Environmental Laws.

 

(f)

The Environmental Permits (if any) are in full force and effect and, to the Company's knowledge, constitute all permits, licenses, approvals and consents relating to Environmental Laws or Hazardous Substances required for the conduct of the Company's and the Subsidiaries’ businesses and the use of the Company's Property (as presently conducted and used) is in compliance with Environmental Laws.

 

(g)

The Company and the Subsidiaries have filed all reports, returns and other filings required to be filed with respect to the Company's Property under Environmental Laws and the Environmental Permits except where the failure to do so would not have a Material Adverse Effect on the Company's or Subsidiaries’ businesses or financial condition, taken as a whole.

 

(h)

Except as set forth in the Company’s Disclosure Schedule at Section 2.14(h), to the Company's knowledge, the business of the Company and the Subsidiaries and the Company's Property have been and are being operated by the Company and the Subsidiaries in accordance with all Environmental Laws and Environmental Permits and neither the Company nor the Subsidiaries has received any written notice nor does the Company or the Subsidiaries have knowledge that the Company's Property is not in material compli