1
EXHIBIT 2.1 - AGREEMENT AND PLAN OF MERGER
2
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
ALLIANCE BANCORP
AND
SOUTHWEST BANCSHARES, INC.
DATED AS OF DECEMBER 16, 1997
3
AGREEMENT AND PLAN OF MERGER
TABLE OF CONTENTS
Page
ARTICLE I
CERTAIN DEFINITIONS
Section 1.01 Definitions....................................................2
ARTICLE II
THE MERGER AND RELATED MATTERS
Section 2.01 Conversion and Exchange of Shares .............................6
Section 2.02 The Exchange Ratio.............................................7
Section 2.03 Surviving Corporation in the Company Merger....................8
Section 2.04 Authorization for Issuance of Alliance Bancorp Common Stock;
Exchange of Certificates.......................................9
Section 2.05 No Fractional Shares..........................................11
Section 2.06 Stock Options.................................................11
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SWB
Section 3.01 Organization..................................................12
Section 3.02 Capitalization................................................13
Section 3.03 Authority; No Violation.......................................14
Section 3.04 Consents......................................................15
Section 3.05 Financial Statements..........................................15
Section 3.06 Taxes.........................................................16
Section 3.07 No Material Adverse Effect....................................16
Section 3.08 Contracts.....................................................16
Section 3.09 Ownership of Property; Insurance Coverage.....................17
Section 3.10 Legal Proceedings.............................................18
Section 3.11 Compliance With Applicable Law................................18
Section 3.12 ERISA.........................................................19
Section 3.13 Brokers, Finders and Financial Advisors.......................20
Section 3.14 Environmental Matters.........................................20
Section 3.15 Loan Portfolio................................................21
Section 3.16 Information to be Supplied....................................21
Section 3.17 Securities Documents..........................................21
4
Section 3.18 Related Party Transactions....................................21
Section 3.19 Schedule of Termination Benefits..............................22
Section 3.20 Loans.........................................................22
Section 3.21 Antitakeover Provisions Inapplicable..........................22
Section 3.22 Fairness Opinion...............................................22
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ALLIANCE BANCORP
Section 4.01 Organization..................................................23
Section 4.02 Capitalization................................................23
Section 4.03 Authority; No Violation.......................................24
Section 4.04 Consents......................................................25
Section 4.05 Financial Statements..........................................25
Section 4.06 Taxes.........................................................26
Section 4.07 No Material Adverse Effect....................................26
Section 4.08 Ownership of Property; Insurance Coverage.....................26
Section 4.09 Legal Proceedings.............................................27
Section 4.10 Compliance With Applicable Law................................28
Section 4.11 Information to be Supplied....................................28
Section 4.12 ERISA and Employment Arrangements.............................28
Section 4.13 Securities Documents..........................................29
Section 4.14 Environmental Matters.........................................30
Section 4.15 Loan Portfolio................................................30
Section 4.16 Brokers, Finders and Financial Advisors.......................30
Section 4.17 Loans.........................................................30
Section 4.18 Antitakeover Provisions Inapplicable..........................31
Section 4.19 Fairness Opinion..............................................31
ARTICLE V
COVENANTS OF THE PARTIES
Section 5.01 Conduct of SWB's Business.....................................31
Section 5.02 Access; Confidentiality.......................................34
Section 5.03 Regulatory Matters and Consents...............................35
Section 5.04 Taking of Necessary Action....................................36
Section 5.05 Certain Agreements............................................37
Section 5.06 No Other Bids and Related Matters.............................38
Section 5.07 Duty to Advise; Duty to Update SWB's Disclosure Schedule......38
Section 5.08 Conduct of Alliance Bancorp's Business........................39
Section 5.09 Board and Committee Minutes...................................39
Section 5.10 Undertakings by Alliance Bancorp and SWB......................39
Section 5.11 Employee and Termination Benefits; Directors and Management...42
5
Section 5.12 Duty to Advise; Duty to Update Alliance Bancorp's Disclosure
Schedule..................................................... 43
Section 5.13 Affiliate Letter..............................................43
ARTICLE VI
CONDITIONS
Section 6.01 Conditions to SWB's Obligations under this Agreement..........44
Section 6.02 Conditions to Alliance Bancorp's Obligations under this
Agreement.....................................................45
ARTICLE VII
TERMINATION, WAIVER AND AMENDMENT
Section 7.01 Termination...................................................47
Section 7.02 Effect of Termination.........................................48
ARTICLE VIII
MISCELLANEOUS
Section 8.01 Expenses......................................................48
Section 8.02 Non-Survival of Representations and Warranties................49
Section 8.03 Amendment, Extension and Waiver...............................49
Section 8.04 Entire Agreement..............................................49
Section 8.05 No Assignment.................................................49
Section 8.06 Notices.......................................................49
Section 8.07 Captions......................................................50
Section 8.08 Counterparts..................................................50
Section 8.09 Severability..................................................50
Section 8.10 Governing Law.................................................51
6
EXHIBITS:
Exhibit A Stock Option Agreement
Exhibit B Form of Alliance Bancorp Voting Agreement
Exhibit C Form of SWB Voting Agreement
Exhibit 2.1 Bank Plan of Merger
Exhibit 6.1 Form of Opinion of Counsel for Alliance Bancorp
Exhibit 6.2 Form of Tax Opinion of Xxxx Xxxxxx Xxxxxx Xxxxxxxx &
Xxxxxx, P.C.
Exhibit 6.3 Form of Opinion of Counsel for SWB
7
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of December
16, 1997, is by and among by and among Alliance Bancorp, a Delaware corporation
and Southwest Bancshares, Inc., a Delaware corporation ("SWB"). Each of Alliance
Bancorp and SWB is sometimes individually referred to herein as a "party," and
Alliance Bancorp and SWB are sometimes collectively referred to herein as the
"parties."
RECITALS
WHEREAS, Alliance Bancorp, a non-diversified, unitary savings and loan
holding company, with principal offices in Hinsdale, Illinois, owns all of the
issued and outstanding capital stock of Liberty Federal Bank, a federally
chartered savings bank ("Liberty Federal"), with principal offices in Hinsdale,
Illinois.
WHEREAS, SWB, a non-diversified, unitary savings and loan holding company,
with principal offices in Hometown, Illinois, owns all of the issued and
outstanding capital stock of Southwest Federal Savings and Loan Association of
Chicago, a federally chartered savings and loan association ("Southwest
Federal"), with principal offices in Hometown, Illinois.
WHEREAS, the Boards of Directors of the respective parties hereto deem it
advisable and in the best interests of the respective stockholders to consummate
the business combination transaction contemplated herein in which SWB, subject
to the terms and conditions set forth herein, shall be merged with and into
Alliance Bancorp (the "Company Merger"), with Alliance Bancorp being the
surviving corporation, in a tax-free, stock-for-stock merger transaction so that
the respective stockholders of SWB will have a continuing equity ownership in
Alliance Bancorp; and
WHEREAS, upon execution and delivery of this Agreement, Liberty Federal,
and Southwest Federal will enter into a Plan of Merger (the "Bank Merger
Agreement") providing for the merger (the "Bank Merger") of Southwest Federal
with and into Liberty Federal, with Liberty Federal as the surviving
institution, and it is intended that the Bank Merger be consummated immediately
following consummation of the Company Merger; and
WHEREAS, in connection with the execution of this Agreement, as an
inducement to Alliance Bancorp to enter into this Agreement, SWB and Alliance
Bancorp have entered into a Stock Option Agreement dated as of even date
herewith pursuant to which SWB will grant Alliance Bancorp the right to purchase
certain shares of SWB Common Stock; and
WHEREAS, the parties hereto desire to provide for certain undertakings,
conditions, representations, warranties and covenants in connection with Company
Merger, and the other
1
8
transactions contemplated by this Agreement, the Plan of Merger and the Stock
Option Agreement (collectively, the "Merger Documents").
NOW, THEREFORE, in consideration of the premises and of the mutual
representations, warranties and covenants herein contained and intending to be
legally bound hereby, the parties hereto do hereby agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
SECTION 1.01 DEFINITIONS. Except as otherwise provided herein, as used in
this Agreement, the following terms shall have the indicated meanings (such
meanings to be equally applicable to both the singular and plural forms of the
terms defined):
"Affiliate" means, with respect to any Person, any Person who
directly, or indirectly, through one or more intermediaries, controls, or
is controlled by, or is under common control with, such Person and,
without limiting the generality of the foregoing, includes any executive
officer or director of such Person and any Affiliate of such executive
officer or director.
"Agreement" means this agreement, and any amendment or supplement
hereto.
"Alliance Bancorp Common Stock" has the meaning given to that term
in Section 4.02(a) of this Agreement.
"Alliance Bancorp Disclosure Schedules" means the disclosure
schedules delivered by Alliance Bancorp to SWB pursuant to Article IV of
this Agreement.
"Alliance Bancorp Financials" means (i) the audited consolidated
financial statements of Alliance Bancorp as of September 30, 1995 and 1996
and for the three years ended September 30, 1996, including the notes
thereto, and (ii) the unaudited interim consolidated financial statements
of Alliance Bancorp as of each calendar quarter thereafter included in
Securities Documents filed by Alliance Bancorp.
"Alliance Bancorp Market Value" shall mean the average of the inside
closing bid price of Alliance Bancorp Common Stock on the Nasdaq National
Market System (as reported by The Wall Street Journal) for each of the
twenty (20) consecutive trading days ending on the fifth business day
before the Closing Date.
"Alliance Bancorp Regulatory Reports" means the Quarterly Thrift
Financial Reports of Liberty Federal and accompanying schedules, as filed
with the OTS, for each calendar quarter beginning with the quarter ended
December 31, 1996, through the Closing Date, and
2
9
any Current or Annual Reports on Form H(b)-11 filed with the OTS by
Alliance Bancorp since December 31, 1995.
"Alliance Bancorp Option" means the option granted to Alliance
Bancorp to acquire shares of SWB Common Stock pursuant to the Stock Option
Agreement.
"Alliance Bancorp Subsidiary" means any corporation, 50% or more of
the capital stock of which is owned, either directly or indirectly, by
Alliance Bancorp or Liberty Federal, except any corporation the stock of
which is held as security by Liberty Federal in the ordinary course of its
lending activities.
"Applications" means the applications for regulatory approval which
are required by the transactions contemplated hereby.
"Bank Merger" means the merger of Southwest Federal with and into
Liberty Federal, with Liberty Federal as the surviving institution.
"Bank Merger Effective Date" shall mean the date on which the
articles of combination for the Bank Merger are endorsed by the OTS
pursuant to Section 552.12(k) of the OTS Regulations.
"Closing Date" means the date determined by Alliance Bancorp, in its
sole discretion, upon five (5) days prior written notice to SWB, but in no
event later than thirty (30) days after the last condition precedent
pursuant to this Agreement has been fulfilled or waived (including the
expiration of any applicable waiting period), or such other date as to
which Alliance Bancorp and SWB shall agree.
"Company Merger" means the merger of SWB with and into Alliance
Bancorp, with Alliance Bancorp being the surviving corporation, in a
tax-free, stock-for-stock merger transaction.
"Company Merger Effective Date" means that date upon which the
certificate of merger is filed with the Delaware Secretary of State, or as
otherwise stated in the certificate of merger, in accordance with Section
251 of the DGCL.
"DGCL" means the Delaware General Corporation Law.
"Environmental Laws" means any Federal or state law, statute, rule,
regulation, code, order, judgement, decree, injunction, common law or
agreement with any Federal or state governmental authority relating to (i)
the protection, preservation or restoration of the environment (including
air, water vapor, surface water, groundwater, drinking water supply,
surface land, subsurface land, plant and animal life or any other natural
resource), (ii) human health or safety, or (iii) exposure to, or the use,
storage, recycling, treatment, generation,
3
10
transportation, processing, handling, labeling, production, release or
disposal of, hazardous substances, in each case as amended and now in
effect.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated from time to time
thereunder.
"Exchange Agent" means the entity selected by Alliance Bancorp and
agreed to by SWB, as provided in Section 2.01(b) of this Agreement.
"Exchange Ratio" shall have the meaning given to such term in the
Section 2.02 of this Agreement.
"FDIA" means the Federal Deposit Insurance Act, as amended.
"FDIC" means the Federal Deposit Insurance Corporation.
"GAAP" means generally accepted accounting principles as in effect
at the relevant date and consistently applied.
"IRC" means the Internal Revenue Code of 1986, as amended.
"IRS" means the Internal Revenue Service.
"Material Adverse Effect" shall mean, with respect to Alliance
Bancorp or SWB, any adverse effect on its assets, financial condition or
results of operations which is material to its assets, financial condition
or results of operations on a consolidated basis, except for any material
adverse effect caused by (i) any change in the value of the assets of
Alliance Bancorp or SWB resulting from a change in interest rates
generally or (ii) any individual or combination of changes occurring after
the date hereof in any federal or state law, rule or regulation or in
GAAP, which change(s) affect(s) financial institutions generally,
including any changes affecting the Bank Insurance Fund or the Savings
Association Insurance Fund. Any effect caused by any judicial
determination or other development relating to the goodwill lawsuit
initiated by Liberty Federal (its predecessor) against the United States
Government shall not be considered a Material Adverse Effect as to
Alliance Bancorp.
"Person" means any individual, corporation, partnership, joint
venture, association, trust or "group" (as that term is defined under the
Exchange Act).
"Plan of Merger" means the Plan of Merger by and between Southwest
Federal and Liberty Federal.
4
11
"Prospectus/Proxy Statement" means the prospectus/proxy statement,
together with any supplements thereto, to be transmitted to holders of SWB
Common Stock and Alliance Bancorp Common Stock in connection with the
transactions contemplated by this Agreement.
"Registration Statement" means the registration statement on Form
S-4, including any pre-effective or post-effective amendments or
supplements thereto, as filed with the SEC under the Securities Act with
respect to the Alliance Bancorp Common Stock to be issued in connection
with the transactions contemplated by this Agreement.
"Regulatory Agreement" has the meaning given to that term in Section
3.11 of this Agreement.
"Regulatory Authority" means any agency or department of any federal
or state government, including without limitation the OTS, the FDIC, the
SEC or the respective staffs thereof.
"Rights" means warrants, options, rights, convertible securities and
other capital stock equivalents which obligate an entity to issue its
securities.
"SAIF" means the Savings Association Insurance Fund, as
administered by the FDIC.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations promulgated from time to time thereunder.
"Securities Documents" means all registration statements, schedules,
statements, forms, reports, proxy material, and other documents required
to be filed under the Securities Laws.
"Securities Laws" means the Securities Act and the Exchange Act and
the rules and regulations promulgated from time to time thereunder.
"Stock Option Agreement" means the Stock Option Agreement dated as
of even date herewith pursuant to which SWB has granted Alliance Bancorp
the right to purchase certain shares of SWB Common Stock and which is
attached to this Agreement as Exhibit A thereto.
"Subsidiary" means any corporation, 50% or more of the capital stock
of which is owned, either directly or indirectly, by another entity,
except any corporation the stock of which is held as security by either
Alliance Bancorp Bank or SWB, as the case may be, in the ordinary course
of its lending activities.
5
12
"SWB Common Stock" means the common stock of SWB described in
Section 3.02(a).
"SWB Disclosure Schedules" means the disclosure schedules delivered
by SWB to Alliance Bancorp pursuant to Article III of this Agreement.
"SWB Financials" means (i) the audited consolidated financial
statements of SWB as of December 31, 1995 and1996 and for the three years
ended December 31, 1996, including the notes thereto, and (ii) the
unaudited interim consolidated financial statements of SWB as of each
calendar quarter thereafter included in Securities Documents filed by SWB.
"SWB Regulatory Reports" means the Quarterly Thrift Financial
Reports of Southwest Federal and accompanying schedules for each calendar
quarter, beginning with the quarter ended December 31, 1995, through the
Closing Date, as filed with the OTS, and any Current or Annual Reports on
Form H(b)-11 filed with the OTS by SWB since December 31, 1995.
"SWB Subsidiary" means any corporation, 50% or more of the capital
stock of which is owned, either directly or indirectly, by SWB, except any
corporation the stock of which is held in the ordinary course of the
lending activities of SWB.
ARTICLE II
THE MERGER AND EXCHANGE OF SHARES
SECTION 2.01 CONVERSION AND EXCHANGE OF SHARES.
(a) At the Company Merger Effective Date, by virtue of the Company Merger
and without any action on the part of Alliance Bancorp or SWB or the holders of
shares of Alliance Bancorp or SWB Common Stock:
(i) Each outstanding share of SWB Common Stock issued and
outstanding at the Company Merger Effective Date, except as provided in clause
(a) (ii) of this Section and Section 2.05 hereof, shall cease to be outstanding,
shall cease to exist and shall be converted into and represent solely one share
of Alliance Bancorp Common Stock multiplied by the Exchange Ratio as determined
below (rounded to the nearest fourth decimal).
(ii) Any shares of SWB Common Stock which are owned or held by
either party hereto or any of their respective Subsidiaries (other than in a
fiduciary capacity or in connection with debts previously contracted) at the
Company Merger Effective Date shall cease to exist, the certificates for such
shares shall as promptly as practicable be canceled, such shares shall not be
converted into or represent any shares of Alliance Bancorp Common Stock, and no
shares of capital stock of Alliance Bancorp shall be issued or exchanged
therefor.
6
13
(iii) Each share of Alliance Bancorp Common Stock issued and
outstanding immediately before the Company Merger Effective Date shall remain an
outstanding share of Common Stock of Alliance Bancorp as the surviving
corporation.
(iv) The holders of certificates representing shares of SWB Common
Stock shall cease to have any rights as stockholders of SWB, except such rights,
if any, as they may have pursuant to applicable law.
(b) Prior to the Company Merger Effective Date, Alliance Bancorp shall
appoint a bank, trust company or other stock transfer agent selected by it and
agreed to by SWB as the Exchange Agent to effect the exchange of certificates
evidencing shares of SWB Common Stock (any such certificate being hereinafter
referred to as a "Certificate") for shares of Alliance Bancorp Common Stock to
be received in the share exchange. On the Company Merger Effective Date,
Alliance Bancorp shall have granted the Exchange Agent the requisite power and
authority to effect for and on behalf of Alliance Bancorp the issuance of the
number of shares of Alliance Bancorp Common Stock issuable in the share
exchange. The Exchange Agent shall accept such Certificates upon compliance with
such reasonable terms and conditions as the Exchange Agent may impose to effect
an orderly exchange thereof in accordance with customary exchange practices.
(c) In connection with this Agreement, Liberty Federal and Southwest
Federal shall enter into the Plan of Merger.
SECTION 2.02 THE EXCHANGE RATIO
(a) For purposes of this Agreement, and subject to the provisions of
Section 7.01(c), the Exchange Ratio shall be:
(i) if the Alliance Bancorp Market Value is less than or equal to $30.475
and greater than or equal to $22.525, then 1.1981 shares of Alliance Bancorp
Common Stock;
(ii) if the Alliance Bancorp Market Value is greater than $30.475 and less
than or equal to $35.00, then that number of shares of fully paid and
nonassessable shares of Alliance Bancorp Common Stock, determined by dividing
$36.5125 by the Alliance Bancorp Market Value;
(iii) if the Alliance Bancorp Market Value is greater than $35.00, then
1.0432 shares of Alliance Bancorp Common Stock; and
(iv) if the Alliance Bancorp Market Value is less than $22.525, then that
number of shares of fully paid and nonassessable shares of Alliance Bancorp
Common Stock, determined by dividing $26.9875 by the Alliance Bancorp Market
Value, subject to the provisions of Section 7.01(c) of this Agreement.
7
14
(b) In the event that, between the date hereof and prior to the Company
Merger Effective Date, the outstanding shares of Alliance Bancorp Common Stock
shall have been increased, decreased or changed into or exchanged for a
different number or kind of shares or securities by reorganization,
recapitalization, reclassification, stock split or other like changes in the
capitalization of Alliance Bancorp, or if a stock dividend is declared on
Alliance Bancorp Common Stock with a record date (as to a stock split, the pay
date) within such period, then an appropriate and proportionate adjustment shall
be made in the number and kind of shares of Alliance Bancorp Common Stock to be
thereafter delivered pursuant to this Agreement, and the Exchange Ratio set
forth herein, so that each shareholder of SWB shall be entitled to receive such
number of shares of Alliance Bancorp Common Stock or other securities as such
shareholder would have received pursuant to such reorganization,
recapitalization, reclassification, stock split, exchange of shares or
readjustment or other like changes in the capitalization of Alliance Bancorp, or
as a result of a stock dividend on Alliance Bancorp Common Stock, had the record
(or pay) date therefor been immediately following the Company Merger Effective
Date.
SECTION. 2.SURVIVING CORPORATION IN THE COMPANY MERGER.
(a) Alliance Bancorp shall be the surviving corporation in the Company
Merger. The headquarters of the surviving corporation shall be located in
Hinsdale, Illinois.
(b) The Certificate of Incorporation of Alliance Bancorp as in effect
immediately prior to the Company Merger Effective Date, except as to the
amendment to increase the number of authorized shares of Common Stock provided
for in Section 5.08 hereof, shall be the Certificate of Incorporation of
Alliance Bancorp as the surviving corporation until subsequently amended.
(c) At the Company Merger Effective Date, the Bylaws of Alliance Bancorp,
as then in effect shall be the Bylaws of Alliance Bancorp as the surviving
corporation, until subsequently amended in accordance with the DGCL.
(d) The directors and executive officers of Alliance Bancorp as the
surviving corporation following the Company Merger shall be the directors and
executive officers as the surviving corporation, except as otherwise provided in
Section 5.11 of this Agreement.
(e) From and after the Company Merger Effective Date:
(i) Alliance Bancorp as the surviving corporation shall possess all
assets and property of every description, and every interest in the assets and
property, wherever located, and the rights, privileges, immunities, powers,
franchises, and authority, of a public as well as of a private nature, of each
of Alliance Bancorp and SWB, and all obligations belonging or due to each of
Alliance Bancorp and SWB, all of which shall vest in Alliance Bancorp as the
surviving corporation without further act or deed. Title to any real estate or
any interest in the real estate vested in Alliance Bancorp or SWB shall not
revert or in any way be impaired by reason of the Company Merger.
8
15
(ii) Alliance Bancorp as the surviving corporation will be liable
for all the obligations of each of Alliance Bancorp and SWB. Any claim existing,
or action or proceeding pending, by or against Alliance Bancorp or SWB, may be
prosecuted to judgement, with right of appeal, as if the Company Merger had not
taken place, or Alliance Bancorp as the surviving corporation may be substituted
in its place.
(iii) All the rights of creditors of each of Alliance Bancorp and
SWB will be preserved unimpaired, and all liens upon the property of Alliance
Bancorp and SWB will be preserved unimpaired only on the property affected by
such liens immediately before the Company Merger Effective Date.
SECTION 2.04 AUTHORIZATION FOR ISSUANCE OF ALLIANCE BANCORP COMMON STOCK;
EXCHANGE OF CERTIFICATES.
(a) Alliance Bancorp shall reserve for issuance a sufficient number of
shares of its common stock for the purpose of issuing its shares to SWB's
stockholders in accordance with this Article II.
(b) After the Company Merger Effective Date, holders of certificates
theretofore representing outstanding shares of SWB Common Stock (other than as
provided in Section 2.01 (a) (ii) hereof), upon surrender of such certificates
to the Exchange Agent, shall be entitled to receive (i) certificates for the
number of whole shares of Alliance Bancorp Common Stock into which shares of SWB
Common Stock theretofore evidenced by the certificates so surrendered shall have
been converted, as provided in Section 2.01 hereof, and (ii) cash payments in
lieu of fractional shares, if any, as provided in Section 2.05 hereof. As soon
as practicable after the Company Merger Effective Date, and in no event more
than five business days thereafter, the Exchange Agent will send a notice and
transmittal form to each SWB stockholder of record at the Company Merger
Effective Date whose SWB Common Stock shall have been converted into Alliance
Bancorp Common Stock advising such stockholder of the effectiveness of the
Company Merger and the procedure for surrendering to the Exchange Agent
outstanding certificates formerly representing SWB Common Stock in exchange for
new certificates for Alliance Bancorp Common Stock. Upon surrender, each
certificate representing SWB Common Stock shall be canceled.
(c) Until surrendered as provided in this Section 2.04, each outstanding
certificate which, before the Company Merger Effective Date, represented SWB
Common Stock (other than shares canceled at the Company Merger Effective Date
pursuant to Section 2.01 (a) (ii) hereof) will be deemed for all corporate
purposes to represent the number of whole shares of Alliance Bancorp Common
Stock into which the shares of SWB Common Stock formerly represented thereby
were converted and the right to receive cash in lieu of fractional shares.
However, until such outstanding certificates formerly representing SWB Common
Stock are so surrendered, no dividend or distribution payable to holders of
record of Alliance Bancorp Common Stock shall be paid to any holder of such
outstanding certificates, but upon surrender of such outstanding certificates by
such holder there shall be paid to such holder the amount of any dividends or
distributions, without
9
16
interest, theretofore paid with respect to such whole shares of Alliance Bancorp
Common Stock, but not paid to such holder, and which dividends or distribution
had a record date occurring on or after the Company Merger Effective Date and
the amount of any cash, without interest, payable to such holder in lieu of
fractional shares pursuant to Section 2.05 hereof. After the Company Merger
Effective Date, there shall be no further registration of transfers on the
records of SWB of outstanding certificates formerly representing shares of SWB
Common Stock and, if a certificate formerly representing such shares is
presented to Alliance Bancorp, it shall be forwarded to the Exchange Agent for
cancellation and exchange for a certificate representing shares of Alliance
Bancorp Common Stock and cash for fractional shares (if any), as herein
provided. Following one year after the Company Merger Effective Date, the
Exchange Agent shall return to Alliance Bancorp as the surviving corporation any
certificates for Alliance Bancorp Common Stock and cash remaining in the
possession of the Exchange Agent (together with any dividends in respect
thereof) and thereafter shareholders of SWB shall look exclusively to Alliance
Bancorp for shares of the Alliance Bancorp Common Stock and cash to which they
are entitled hereunder.
(d) All shares of Alliance Bancorp Common Stock and cash in lieu of any
fractional share issued and paid upon the conversion of SWB Common Stock in
accordance with the above terms and conditions shall be deemed to have been
issued and paid in full satisfaction of all rights pertaining to such SWB Common
Stock.
(e) If any new certificate for Alliance Bancorp Common Stock is to be
issued in a name other than that in which the certificate surrendered in
exchange thereof is registered, it shall be a condition of the issuance therefor
that the certificate surrendered in exchange shall be properly endorsed and
otherwise in proper form for transfer and that the person requesting such
transfer pay to the Exchange Agent any transfer or other taxes required by
reason of the issuance of a new certificate representing shares of Alliance
Bancorp Common Stock in any name other than that of the registered holder of the
certificate surrendered, or establish to the satisfaction of the Exchange Agent
that such tax has been paid or is not payable.
(f) Certificates surrendered for exchange by any person who is an
"affiliate" of SWB for purposes of Rule 145(c) under the Securities Act of 1933,
as amended, shall not be exchanged for Certificates representing shares of
Alliance Common Stock until Alliance Bancorp has received the written agreement
of such person contemplated by Section 5.13 of the Agreement.
(g) In the event any certificate representing SWB Common Stock shall have
been lost, stolen or destroyed, the Exchange Agent shall issue in exchange for
such lost, stolen or destroyed certificate, upon the making of an affidavit of
that fact by the holder thereof, such shares of Alliance Bancorp Common Stock
and cash for fractional shares, if any, as may be required pursuant hereto;
provided, however, that Alliance Bancorp or the Exchange Agent may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate to deliver a bond in such
sum as is reasonably necessary as indemnity against any claim that may be made
against Alliance Bancorp, Alliance Bancorp, SWB, the Exchange Agent or any other
party with respect to the certificate alleged to have been lost, stolen or
destroyed.
10
17
SECTION 2.05 NO FRACTIONAL SHARES. Notwithstanding any term or
provision hereof, no fractional shares of Alliance Bancorp Common Stock, and no
certificates or scrip therefor, or other evidence of ownership thereof, will be
issued upon the conversion of or in exchange for any shares of SWB Common Stock;
no dividend or distribution with respect to Alliance Bancorp Common Stock shall
be payable on or with respect to any fractional share interest; and no such
fractional share interest shall entitle the owner thereof to vote or to any
other rights of a stockholder of Alliance Bancorp as the Surviving Corporation.
In lieu of such fractional share interest, any holder of SWB Common Stock who
would otherwise be entitled to a fractional share of Alliance Bancorp Common
Stock will, promptly following surrender of his certificate or certificates
representing SWB Common Stock outstanding immediately before the Company Merger
Effective Date, be paid the applicable cash value of such fractional share
interest, which shall be equal to the product of the fraction of the share to
which such holder would otherwise have been entitled and the Alliance Bancorp
Market Value. For the purposes of determining any such fractional share
interests, all shares of SWB Common Stock owned by a SWB stockholder shall be
combined so as to calculate the maximum number of whole shares of Alliance
Bancorp Common Stock issuable to such SWB stockholder.
SECTION 2.06 STOCK OPTIONS.
(a) At the Company Merger Effective Date, each option granted by SWB (a
"SWB Option") to purchase shares of SWB Common Stock which is outstanding and
unexercised immediately prior thereto shall, except as otherwise provided in
this Section 2.06(c) hereof, be converted automatically into an option to
purchase shares of Alliance Bancorp Common Stock in an amount and at an exercise
price determined as provided below (and otherwise subject to the terms of the
SWB's Stock Option Plan for Outside Directors and the Incentive Stock Option
Plan (collectively, the "SWB Option Plans")):
(1) The number of shares of Alliance Bancorp Common Stock to be
subject to the new option shall be equal to the product of the number of shares
of SWB Common Stock subject to the original option and the Exchange Ratio,
provided that any fractional share of Alliance Bancorp Common Stock resulting
from such multiplication shall be rounded down to the nearest share; and
(2) The exercise price per share of Alliance Bancorp Common Stock
under the new option shall be equal to the exercise price per share of SWB
Common Stock under the original option divided by the Exchange Ratio, provided
that such exercise price shall be rounded up to the nearest cent.
The adjustment provided herein with respect to any options which are
"incentive stock options" (as defined in Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code")) shall be and is intended to be effected
in a manner which is consistent with Section 424(a) of the Code. The duration
and other terms of the new option shall be the same as the original option,
except that all references to the SWB shall be deemed to be references to
Alliance Bancorp.
11
18
(b) Prior to the Company Merger Effective Date, Alliance Bancorp shall
reserve for issuance, the number of shares of Alliance Bancorp Common Stock
necessary to satisfy Alliance Bancorp's obligations under this Section 2.06.
Within thirty days after the Company Merger Effective Date, Alliance Bancorp
shall file with the Securities and Exchange Commission (the "SEC") a
registration statement on an appropriate form under the Securities Act of 1933,
as amended (the "Securities Act"), with respect to the shares of Alliance
Bancorp Common Stock subject to options to acquire Alliance Bancorp Common Stock
issued pursuant to Section 2.06(a) hereof, and shall use its reasonable best
efforts to maintain the current status of the prospectus contained therein, as
well as comply with applicable state securities or "blue sky" laws, for so long
as such options remain outstanding.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SWB
SWB represents and warrants to Alliance Bancorp that the statements
contained in this Article III are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date (as though
made then and as though the Closing Date were substituted for the date of this
Agreement throughout this Article III), except as set forth in the SWB
Disclosure Schedules delivered by SWB to Alliance Bancorp on the date hereof.
SWB has made a good faith effort to ensure that the disclosure on each schedule
of the SWB Disclosure Schedules corresponds to the section reference herein.
However, for purposes of the SWB Disclosure Schedules, any item disclosed on any
schedule therein is deemed to be fully disclosed with respect to all schedules
under which such item may be relevant.
SECTION 3.01 ORGANIZATION.
(a) SWB is a corporation duly organized ,validly existing and in good
standing under the laws of the State of Delaware, with full corporate power and
authority to carry on its business as now conducted and is duly licensed or
qualified to do business in the states of the United States and foreign
jurisdictions where its ownership or leasing of property or the conduct of its
business requires such qualification, except where the failure to be so licensed
or qualified would not have a Material Adverse Effect on SWB.
(b) Southwest Federal is a stock savings and loan association duly
organized and validly existing under the laws of the United States. Except as
set forth in SWB Disclosure Schedule 3.01(b), Southwest Federal is the only SWB
Subsidiary. The deposits of Southwest Federal are insured by the FDIC through
the SAIF to the fullest extent permitted by law, and all premiums and
assessments required to be paid in connection therewith have been paid when due
by Southwest Federal. Each other SWB Subsidiary is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation or organization.
12
19
(c) Southwest Federal is a member in good standing of the Federal Home
Loan Bank of Chicago and owns the requisite amount of stock therein.
(d) Except as disclosed in SWB Disclosure Schedule 3.01(d), the respective
minute books of SWB and each SWB Subsidiary accurately record, in all material
respects, all material corporate actions of their respective shareholders and
boards of directors (including committees) through the date of this Agreement.
(e) Prior to the date of this Agreement, SWB has delivered to Alliance
Bancorp true and correct copies of the of certificate of incorporation and
bylaws of SWB.
SECTION 3.02 CAPITALIZATION.
(a) The authorized capital stock of SWB consists of (a) 5,000,000 shares
of common stock, $0.01 par value ("SWB Common Stock"), of which 2,707,295 shares
are outstanding, validly issued, fully paid and nonassessable and free of
preemptive rights, and 1,756,063 shares are held by SWB as treasury stock
(including 401,921 shares of treasury stock re-acquired by SWB during the two
year period preceding the date of this Agreement) and (b) 1,000,000 shares of
preferred stock, $0.01 par value, none of which are issued or outstanding.
Neither SWB nor any SWB Subsidiary has or is bound by any Right of any character
relating to the purchase, sale or issuance or voting of, or right to receive
dividends or other distributions on any shares of SWB Common Stock, SWB
preferred stock or any other security of SWB or any securities representing the
right to vote, purchase or otherwise receive any shares of SWB Common Stock, SWB
preferred stock or any other security of SWB, other than shares issuable under
the Alliance Bancorp Option and other than as set forth in reasonable detail in
the SWB Disclosure Schedule 3.02. SWB Disclosure Schedule 3.02(a) sets forth the
name of each holder of options to purchase SWB Common Stock, the number of
shares each such individual may acquire pursuant to the exercise of such
options, and the exercise price relating to the options held. SWB Disclosure
Schedule 3.02(a) also sets forth the names of the holders of any unvested awards
of SWB Common Stock under the SWB Recognition and Retention Plan for Outside
Directors and the SWB Recognition and Retention Plan for Officers and Employees,
the number of shares underlying such awards, and the vesting periods relating
thereto.
(b) SWB owns all of the capital stock of Southwest Federal, free and clear
of any lien or encumbrance. Except for the SWB Subsidiaries, SWB does not
possess, directly or indirectly, any material equity interest in any
corporation, except for equity interests held in the investment portfolios of
SWB Subsidiaries, equity interests held by SWB Subsidiaries in a fiduciary
capacity, and equity interests held in connection with the lending activities of
SWB Subsidiaries.
(c) To SWB's knowledge, no Person or "group" (as that term is used in
Section 13(d)(3) of the Exchange Act), is the beneficial owner (as defined in
Section 13(d) of the Exchange Act) of 5% or more of the outstanding shares of
SWB Common Stock, except as disclosed in the SWB Disclosure Schedule 3.02.
13
20
SECTION 3.03 AUTHORITY; NO VIOLATION.
(a) SWB has full corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. Southwest
Federal has full corporate power and authority to execute and deliver the Plan
of Merger and to consummate the Bank Merger. The execution and delivery of this
Agreement by SWB and the completion by SWB of the transactions contemplated
hereby have been duly and validly approved by the Board of Directors of SWB and,
except for approval of the shareholders of SWB, no other corporate proceedings
on the part of SWB are necessary to complete the transactions contemplated
hereby. This Agreement has been duly and validly executed and delivered by SWB
and, subject to approval by the shareholders of SWB and receipt of the required
approvals of Regulatory Authorities described in Section 4.04 hereof,
constitutes the valid and binding obligation of SWB and Southwest Federal,
enforceable against SWB and Southwest Federal in accordance with its terms,
subject to applicable bankruptcy, insolvency and similar laws affecting
creditors' rights generally, and as to Southwest Federal, the conservatorship or
receivership provisions of the FDIA, and subject, as to enforceability, to
general principles of equity. The Plan of Merger, upon its execution and
delivery by Southwest Federal concurrently with the execution and delivery of
this Agreement, will constitute the valid and binding obligation of Southwest
Federal, enforceable against Southwest Federal in accordance with its terms,
subject to applicable conservatorship and receivership provisions of the FDIA,
or insolvency and similar laws affecting creditors' rights generally and
subject, as to enforceability, to general principles of equity.
(b) (A) The execution and delivery of this Agreement by SWB, (B) the
execution and delivery of the Plan of Merger by Southwest Federal, (C) subject
to receipt of approvals from the Regulatory Authorities referred to in Section
4.04 hereof and SWB's and Alliance Bancorp's compliance with any conditions
contained therein, the consummation of the transactions contemplated hereby, and
(D) compliance by SWB or Southwest Federal with any of the terms or provisions
hereof or of the Plan of Merger will not (i) conflict with or result in a breach
of any provision of the certificate of incorporation or bylaws of SWB or any SWB
Subsidiary or the charter and bylaws of Southwest Federal; (ii) violate any
statute, code, ordinance, rule, regulation, judgment, order, writ, decree or
injunction applicable to SWB or any SWB Subsidiary or any of their respective
properties or assets; or (iii) violate, conflict with, result in a breach of any
provisions of, constitute a default (or an event which, with notice or lapse of
time, or both, would constitute a default), under, result in the termination of,
accelerate the performance required by, or result in a right of termination or
acceleration or the creation of any lien, security interest, charge or other
encumbrance upon any of the properties or assets of SWB or Southwest Federal
under, any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, deed of trust, license, lease, agreement or other investment or
obligation to which SWB or Southwest Federal is a party, or by which they or any
of their respective properties or assets may be bound or affected, except for
such violations, conflicts, breaches or defaults under clause (ii) or (iii)
hereof which, either individually or in the aggregate, will not have a Material
Adverse Effect on SWB.
14
21
SECTION 3.04 CONSENTS. Except for the consents, waivers, approvals,
filings and registrations from or with the Regulatory Authorities referred to in
Section 4.04 hereof and compliance with any conditions contained therein, and
the approval of this Agreement by the requisite vote of the shareholders of SWB,
no consents, waivers or approvals of, or filings or registrations with, any
governmental authority are necessary, and, to SWB's knowledge, no consents,
waivers or approvals of, or filings or registrations with, any other third
parties are necessary, in connection with (a) the execution and delivery of this
Agreement by SWB, and (b) the completion by Southwest Federal of the
transactions contemplated hereby or by the Plan of Merger. SWB has no reason to
believe that (i) any required consents or approvals will not be received, or
that (ii) any public body or authority, the consent or approval of which is not
required or any filing with which is not required, will object to the completion
of the transactions contemplated by this Agreement.
SECTION 3.05 FINANCIAL STATEMENTS.
(a) SWB has previously delivered to Alliance Bancorp the SWB Regulatory
Reports. The SWB Regulatory Reports have been, or will be, prepared in all
material respects in accordance with applicable regulatory accounting principles
and practices throughout the periods covered by such statements, and fairly
present, or will fairly present in all material respects, the consolidated
financial position, results of operations and changes in shareholders' equity of
SWB as of and for the periods ended on the dates thereof, in accordance with
applicable regulatory accounting principles applied on a consistent basis.
(b) SWB has previously delivered to Alliance Bancorp the SWB Financials.
The SWB Financials have been, or will be, prepared in accordance with GAAP, and
(including the related notes where applicable) fairly present, or will fairly
present, in each case in all material respects (subject in the case of the
unaudited interim statements to normal year-end adjustments), the consolidated
financial position, results of operations and cash flows of SWB and the SWB
Subsidiaries as of and for the respective periods ending on the dates thereof,
in accordance with GAAP applied on a consistent basis during the periods
involved, except as indicated in the notes thereto, or in the case of unaudited
statements, as permitted by Form 10-Q.
(c) At the date of each balance sheet included in the SWB Financials or
the SWB Regulatory Reports, SWB did not have, or will not have any liabilities,
obligations or loss contingencies of any nature (whether absolute, accrued,
contingent or otherwise) of a type required to be reflected in such SWB
Financials or SWB Regulatory Reports or in the footnotes thereto which are not
fully reflected or reserved against therein or fully disclosed in a footnote
thereto, except for liabilities, obligations and loss contingencies which are
not material individually or in the aggregate and which are incurred in the
ordinary course of business, consistent with past practice and except for
liabilities, obligations and loss contingencies which are within the subject
matter of a specific representation and warranty herein and subject, in the case
of any unaudited statements, to normal, recurring audit adjustments and the
absence of footnotes.
15
22
SECTION 3.06 TAXES. SWB and the SWB Subsidiaries are members of the same
affiliated group within the meaning of IRC Section 1504(a). SWB has duly filed
all federal, state and material local tax returns required to be filed by or
with respect to SWB and all SWB Subsidiaries on or prior to the Closing Date
(all such returns being accurate and correct in all material respects) and has
duly paid or will pay, or made or will make, provisions for the payment of all
material federal, state and local taxes which have been incurred by or are due
or claimed to be due from SWB and any SWB Subsidiary by any taxing authority or
pursuant to any written tax sharing agreement on or prior to the Closing Date
other than taxes or other charges which (i) are not delinquent, (ii) are being
contested in good faith, or (iii) have not yet been fully determined.
SECTION 3.07. NO MATERIAL ADVERSE EFFECT. SWB and the SWB Subsidiaries,
taken as a whole, have not suffered any Material Adverse Effect since September
30, 1997.
Section 3.08. CONTRACTS.
(a) Except as described in the footnotes to the SWB Financials or in SWB
Disclosure Schedule 3.08(a), neither SWB nor any SWB Subsidiary is a party to or
subject to: (i) any employment, consulting or severance contract or material
arrangement with any past or present officer, director or employee of SWB or any
SWB Subsidiary, except for "at will" arrangements; (ii) any plan, material
arrangement or contract providing for bonuses, pensions, options, deferred
compensation, retirement payments, profit sharing or similar material
arrangements for or with any past or present officers, directors or employees of
SWB or any SWB Subsidiary; (iii) any collective bargaining agreement with any
labor union relating to employees of SWB or any SWB Subsidiary; (iv) any
agreement which by its terms limits the payment of dividends by SWB; (v) any
instrument evidencing or related to material indebtedness for borrowed money
whether directly or indirectly, by way of purchase money obligation, conditional
sale, lease purchase, guaranty or otherwise, in respect of which SWB or any SWB
Subsidiary is an obligor to any person, which instrument evidences or relates to
indebtedness other than deposits, repurchase agreements, bankers' acceptances,
Federal Home Loan Bank of Chicago advances, and "treasury tax and loan" accounts
established in the ordinary course of business and transactions in "federal
funds" or which contains financial covenants or other restrictions (other than
those relating to the payment of principal and interest when due) which would be
applicable on or after the Closing Date to Alliance Bancorp or any Alliance
Bancorp Subsidiary; or (vi) any contract (other than this Agreement) limiting
the freedom, in any material respect, of SWB or Southwest Federal to engage in
any type of banking or bank-related business which SWB is permitted to engage in
under applicable law as of the date of this Agreement. The SWB Subsidiaries
engaged in land acquisition and real estate development projects, as described
in Item 1 to the SWB Annual Report on Form 10-K for the year ended December 31,
1996 under the caption "SUBSIDIARY ACTIVITIES," have conducted their activities
in all material respects in accordance with the partnership and joint venture
agreements entered into in connection with such activities and projects.
(b) True and correct copies of agreements, plans, arrangements and
instruments referred to in Section 3.08(a), have been provided to Alliance
Bancorp on or before the date hereof, are listed
16
23
on SWB Disclosure Schedule 3.08(a) and are in full force and effect on the date
hereof and neither SWB nor any SWB Subsidiary (nor, to the knowledge of SWB, any
other party to any such contract, plan, arrangement or instrument) has breached
any provision of, or is in default in any respect under any term of, any such
contract, plan, arrangement or instrument which breach has resulted in or will
result in a Material Adverse Effect with respect to SWB. Except as set forth in
the SWB Disclosure Schedule 3.08(b), no party to any material contract, plan,
arrangement or instrument will have the right to terminate any or all of the
provisions of any such contract, plan, arrangement or instrument as a result of
the execution of, and the transactions contemplated by, this Agreement. Except
as set forth in SWB Disclosure Schedule 3.08(b), none of the employees
(including officers) of SWB, possess the right to terminate their employment as
a result of the execution of this Agreement. Except as set forth in SWB
Disclosure Schedule 3.08(b), no plan, employment agreement, termination
agreement, or similar agreement or arrangement to which SWB or any SWB
Subsidiary is a party or under which SWB or any SWB Subsidiary may be liable
contains provisions which permit an employee or independent contractor to
terminate it without cause and continue to accrue future benefits thereunder.
Except as set forth in SWB Disclosure Schedule 3.08(b), no such agreement, plan
or arrangement (x) provides for acceleration in the vesting of benefits or
payments due thereunder upon the occurrence of a change in ownership or control
of SWB or any SWB Subsidiary absent the occurrence of a subsequent event; or (y)
requires SWB or any SWB Subsidiary to provide a benefit in the form of SWB
Common Stock or determined by reference to the value of SWB Common Stock. No
such agreement, plan or arrangement with respect to officers of SWB, or to SWB's
knowledge, to its employees, provides for benefits which may cause the
disallowance of a federal income tax deduction under IRC Section 280G. No
limited rights (as such term is defined in the SWB stock option plans identified
in Disclosure Schedule 3.08(a)) have been granted with respect to any employee
or director stock option that is outstanding as of the date of this Agreement.
SECTION 3.09 OWNERSHIP OF PROPERTY; INSURANCE COVERAGE.
(a) Except as disclosed in SWB Disclosure Schedule 3.09, SWB and the SWB
Subsidiaries have good and, as to real property, marketable title to all
material assets and properties owned by SWB or any SWB Subsidiary in the conduct
of their businesses, whether such assets and properties are real or personal,
tangible or intangible, including assets and property reflected in the balance
sheets contained in the SWB Regulatory Reports and in the SWB Financials or
acquired subsequent thereto (except to the extent that such assets and
properties have been disposed of in the ordinary course of business, since the
date of such balance sheets), subject to no material encumbrances, liens,
mortgages, security interests or pledges, except (i) those items which secure
liabilities for public or statutory obligations or any discount with, borrowing
from or other obligations to any Federal Reserve Bank or any Federal Home Loan
Bank, inter-bank credit facilities, or any transaction by a SWB Subsidiary
acting in a fiduciary capacity, (ii) statutory liens for amounts not yet
delinquent or which are being contested in good faith, and (iii) items permitted
under Article IV. SWB and the SWB Subsidiaries, as lessee, have the right under
valid and subsisting leases of real and personal properties used by SWB and its
Subsidiaries in the conduct of their businesses to occupy or use all such
properties as presently occupied and used by each of them.
17
24
Except as disclosed in SWB Disclosure Schedule 3.09, such existing leases and
commitments to lease constitute or will constitute operating leases for both tax
and financial accounting purposes and the lease expense and minimum rental
commitments with respect to such leases and lease commitments are as disclosed
in the Notes to the SWB Financials.
(b) With respect to all material agreements pursuant to which SWB or any
SWB Subsidiary has purchased securities subject to an agreement to resell, if
any, SWB or such SWB Subsidiary, as the case may be, has a lien or security
interest (which to SWB's knowledge is a valid, perfected first lien) in the
securities or other collateral securing the repurchase agreement, and the value
of such collateral equals or exceeds the amount of the debt secured thereby.
(c) SWB and each SWB Subsidiary currently maintains insurance considered
by SWB to be reasonable for their respective operations and similar in scope and
coverage to that customarily maintained by other businesses similarly engaged in
a similar location, in accordance with good business practice. SWB has not
received notice from any insurance carrier that (i) such insurance will be
canceled or that coverage thereunder will be reduced or eliminated, or (ii)
premium costs with respect to such policies of insurance will be substantially
increased. There are presently no material claims pending under such policies of
insurance and no notices have been given by SWB under such policies. All such
insurance is valid and enforceable and in full force and effect, and within the
last three years SWB has received each type of insurance coverage for which it
has applied and during such periods has not been denied indemnification for any
material claims submitted under any of its insurance policies.
SECTION 3.10 LEGAL PROCEEDINGS. Except as disclosed in SWB Disclosure
Schedule 3.10, neither SWB nor any SWB Subsidiary is a party to any, and there
are no pending or, to the best of SWB's knowledge, threatened legal,
administrative, arbitration or other proceedings, claims (whether asserted or
unasserted), actions or governmental investigations or inquiries of any nature
(i) against SWB or any SWB Subsidiary, (ii) to which SWB or any SWB Subsidiary's
assets are or may be subject, (iii) challenging the validity or propriety of any
of the transactions contemplated by this Agreement, or (iv) which could
adversely affect the ability of SWB to perform under this Agreement, except for
any proceedings, claims, actions, investigations or inquiries referred to in
clauses (i) or (ii) which, if adversely determined, individually or in the
aggregate, could not be reasonably expected to have a Material Adverse Effect on
SWB and the SWB Subsidiaries, taken as a whole.
SECTION 3.11 COMPLIANCE WITH APPLICABLE LAW.
(a) SWB and SWB Subsidiaries hold all licenses, franchises, permits and
authorizations necessary for the lawful conduct of their respective businesses
under, and have complied in all material respects with, applicable laws,
statutes, orders, rules or regulations of any federal, state or local
governmental authority relating to them, other than where such failure to hold
or such noncompliance will neither result in a limitation in any material
respect on the conduct of their
18
25
respective businesses nor otherwise have a Material Adverse Effect on SWB and
the SWB Subsidiaries, taken as a whole.
(b) Except as disclosed in SWB Disclosure Schedule 3.11, neither SWB nor
any SWB Subsidiary has received any notification or communication from any
Regulatory Authority (i) asserting that SWB or any SWB Subsidiary is not in
material compliance with any of the statutes, regulations or ordinances which
such Regulatory Authority enforces; (ii) threatening to revoke any license,
franchise, permit or governmental authorization which is material to SWB or any
SWB Subsidiary; (iii) requiring or threatening to require SWB or any SWB
Subsidiary, or indicating that SWB or any SWB Subsidiary may be required, to
enter into a cease and desist order, agreement or memorandum of understanding or
any other agreement with any federal or state governmental agency or authority
which is charged with the supervision or regulation of banks or engages in the
insurance of bank deposits restricting or limiting, or purporting to restrict or
limit, in any material respect the operations of SWB or any SWB Subsidiary,
including without limitation any restriction on the payment of dividends; or
(iv) directing, restricting or limiting, or purporting to direct, restrict or
limit, in any manner the operations of SWB or any SWB Subsidiary, including
without limitation any restriction on the payment of dividends (any such notice,
communication, memorandum, agreement or order described in this sentence is
hereinafter referred to as a "Regulatory Agreement"). Neither SWB nor any SWB
Subsidiary has consented to or entered into any currently effective Regulatory
Agreement, except as set forth in SWB Disclosure Schedule 3.11.
SECTION 3.12 ERISA. SWB has previously delivered to Alliance Bancorp true
and complete copies of all employee pension benefit plans within the meaning of
ERISA Section 3(2), profit sharing plans, stock purchase plans, deferred
compensation and supplemental income plans, supplemental executive retirement
plans, employment agreements, annual or long term incentive plans, settlement
plans, policies and agreements, group insurance plans, and all other employee
welfare benefit plans within the meaning of ERISA Section 3(1) (including
vacation pay, sick leave, short-term disability, long-term disability, and
medical plans) and all other employee benefit plans, policies, agreements and
arrangements, all of which are set forth in SWB Disclosure Schedule 3.12,
maintained or contributed to for the benefit of the employees or former
employees (including retired employees) and any beneficiaries thereof or
directors or former directors of SWB or any SWB Subsidiary, together with (i)
each trust agreement and group annuity contract, if any, relating to such
benefit plans, (ii) the most recent actuarial (if any) and financial reports
relating to those plans which constitute "qualified plans" under IRC Section
401(a), (iii) the most recent annual reports relating to such plans filed with
any government agency, and (iv) all rulings and determination letters which
pertain to any such plans. Neither SWB, any SWB subsidiary nor any pension plan
maintained by SWB or any SWB Subsidiary, has incurred directly or indirectly,
within the past six (6) years any liability under Title IV of ERISA that has not
been satisfied in full, and no condition exists that presents a material risk of
incurring a liability under such Title, other than liability for premiums due to
the Pension Benefit Guaranty Corporation ("PBGC") which payments have been made
or will be made when due, nor has any "reportable event" under ERISA Section
4043 occurred with respect to such plan. With respect to each employee benefit
plan subject to Title IV of ERISA, the present value of accrued benefits under
such plan or plans, based upon the actuarial assumptions used for
19
26
funding purposes in the most recent actuarial report prepared by such plan's
actuary with respect to such plan, did not, as of its latest valuation date,
exceed the then current value of the assets of such plan and SWB is not aware of
any facts or circumstances that would materially change the funded status of any
such ERISA plan. All contributions required to be made under the terms of any
ERISA plan have been timely made. No such ERISA plan has an "accumulated funding
deficiency" (whether or not waived) within the meaning of Section 412 of the
Code or Section 302 of ERISA.
To the best of SWB's knowledge, neither SWB nor any SWB Subsidiary has
incurred or is subject to any liability under ERISA Section 4201 for a complete
or partial withdrawal from a multi-employer plan. All "employee benefit plans,"
as defined in ERISA Section 3(3), comply and within the past six (6) years have
complied in all material respects with (i) relevant provisions of ERISA and (ii)
in the case of plans intended to qualify for favorable income tax treatment,
provisions of the IRC relevant to such treatment. To the best of SWB's
knowledge, no prohibited transaction (which shall mean any transaction
prohibited by ERISA Section 406 and not exempt under ERISA Section 408 or any
transaction prohibited under IRC Section 4975) has occurred within the past six
(6) years with respect to any employee benefit plan maintained by SWB or any SWB
Subsidiary which would result in the imposition, directly or indirectly, of an
excise tax under IRC 4975 or other penalty under ERISA or the IRC, which,
individually or in the aggregate, has resulted in or will result in a Material
Adverse Effect with respect to SWB. SWB and the SWB Subsidiaries provide
continuation coverage under group health plans for separating employees and
"qualified beneficiaries" in accordance with the provisions of IRC Section
4980B(f). Such group health plans are in compliance in all material respects
with Section 1862(b)(1) of the Social Security Act. With respect to the
outstanding loan to SWB's employee stock ownership plan, as of September 30,
1997, the principal amount outstanding does not exceed $400,000.
SECTION 3.13 BROKERS, FINDERS AND FINANCIAL ADVISORS. Except for SWB's
engagement of Xxxxxx X. Xxxxx & Co. Incorporated ("Baird") in connection with
transactions contemplated by this Agreement, neither SWB nor any SWB Subsidiary,
nor any of their respective officers, directors, employees or agents, has
employed any broker, finder or financial advisor in connection with the
transactions contemplated by this Agreement or the Plan of Merger, or, except
for its commitments disclosed in SWB Disclosure Schedule 3.13, incurred any
liability or commitment for any fees or commissions to any such person in
connection with the transactions contemplated by this Agreement or the Plan of
Merger, which has not been reflected in the SWB Financials.
SECTION 3.14. ENVIRONMENTAL MATTERS. To the knowledge of SWB, neither SWB
nor any SWB Subsidiary, nor any properties owned or operated by SWB or any SWB
Subsidiary has been or is in violation of or liable under any Environmental Law
which violation or liability, individually or in the aggregate, has resulted, or
will result, in a Material Adverse Effect with respect to SWB and its
Subsidiaries taken as a whole. There are no actions, suits or proceedings, or
demands, claims, notices or, to SWB's knowledge, investigations (including
without limitation notices, demand letters or requests for information from any
environmental agency) instituted or pending, or to the knowledge of SWB,
threatened, relating to the liability of any property owned or operated by SWB
or any SWB Subsidiary under any Environmental Law. SWB Disclosure Schedule 3.14
identifies
20
27
all material reports, studies, sampling data, permits, and governmental filings
in the possession of or reasonably available to SWB or any SWB Subsidiary
concerning the Environmental Laws and SWB or any SWB Subsidiary or any of their
current or former properties or operations.
SECTION 3.15. LOAN PORTFOLIO. The allowance for loan losses reflected, and
to be reflected, in the SWB Regulatory Reports, and shown, and to be shown, on
the balance sheets contained in the SWB Financials have been, and will be,
established in accordance with the requirements of GAAP and all applicable
regulatory criteria. SWB Disclosure Schedule 3.15 sets forth all loans that are
classified by SWB or federal bank regulatory or supervisory authority as
"Special Mention," "Substandard," "Doubtful," "Loss" or "Classified," together
with the aggregate principal amount of and accrued and unpaid interest on such
loans, by category.
SECTION 3.16. INFORMATION TO BE SUPPLIED. The information to be supplied
by SWB for inclusion in the Registration Statement (including the
Prospectus/Proxy Statement) will not, at the time the Registration Statement is
declared effective pursuant to the Securities Act, contain any untrue statement
of a material fact or omit to state any material fact necessary in order to make
the statements therein not misleading. The information supplied, or to be
supplied, by SWB for inclusion in the Applications will, at the time such
documents are filed with any Regulatory Authority, be accurate in all material
aspects.
SECTION 3.17. SECURITIES DOCUMENTS. SWB has delivered to Alliance Bancorp
copies of its (i) annual reports on Form 10-K for the years ended December 31,
1996, 1995 and 1994, (ii) quarterly reports on Form 10-Q for the quarters ended
March 31, 1997, June 30, 1997 and September 30, 1997 and (iii) proxy materials
used or for use in connection with its meetings of shareholders held in 1997,
1996 and 1995. Such reports and such proxy materials complied, at the time filed
with the SEC, in all material respects, with the Securities Laws.
SECTION 3.18. RELATED PARTY TRANSACTIONS. Except as disclosed in SWB
Disclosure Schedule 3.18, or as described in SWB's Proxy Statement distributed
in connection with the 1997 annual meeting of shareholders (which has previously
been provided to Alliance Bancorp), SWB is not a party to any transaction
(including any loan or other credit accommodation) with any Affiliate of SWB
(except a SWB Subsidiary). Except as disclosed in SWB Disclosure Schedule 3.18,
all such transactions (a) were made in the ordinary course of business, (b) were
made on substantially the same terms, including interest rates and collateral,
as those prevailing at the time for comparable transactions with other Persons,
and (c) did not involve more than the normal risk of collectability or present
other unfavorable features. Except as set forth on SWB Disclosure Schedule 3.18,
no loan or credit accommodation to any Affiliate of SWB is presently in default
or, during the three year period prior to the date of this Agreement, has been
in default or has been restructured, modified or extended. SWB has not been
notified that principal and interest with respect to any such loan or other
credit accommodation will not be paid when due or that the loan grade
classification accorded such loan or credit accommodation by SWB is
inappropriate.
21
28
SECTION 3.19. SCHEDULE OF TERMINATION BENEFITS. SWB Disclosure Schedule
3.19 includes a schedule of all termination benefits and related payments that
would be payable to the individuals identified thereon, excluding any options to
acquire SWB Common Stock granted to such individuals, under any and all
employment agreements, special termination agreements, supplemental executive
retirement plans, deferred bonus plans, deferred compensation plans, salary
continuation plans, or any compensation arrangement, or other pension benefit or
welfare benefit plan maintained by SWB solely for the benefit of officers or
directors of SWB or SWB Subsidiaries (the "Benefits Schedule"), assuming their
employment or service is terminated as of December 31, 1997 and the Closing Date
occurs prior to such termination. No other individuals are entitled to benefits
under any such plans. Notwithstanding the foregoing, Alliance Bancorp
acknowledges that additional payments may be required to be made by Southwest
Federal, SWB, or Alliance Bancorp to the Southwest Federal Savings and Loan
Association of Chicago Supplemental Executive Retirement Plan in order to
satisfy the obligations to the beneficiaries of such plan.
SECTION 3.20. LOANS. Each loan reflected as an asset in the SWB Financial
Statements (i) is evidenced by notes, agreements or other evidences of
indebtedness which are true, genuine and correct in all material respects, (ii)
to the extent secured, to SWB's knowledge has been secured by valid liens and
security interests which have to SWB's knowledge been perfected, and (iii) is
the legal, valid and binding obligation of the obligor named therein,
enforceable in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent conveyance and other laws of general applicability relating to or
affecting creditors' rights and to general equity principles, in each case other
than loans as to which the failure to satisfy the foregoing standards would not
have a Material Adverse Effect on SWB and the SWB Subsidiaries taken as a whole.
SECTION 3.21. ANTITAKEOVER PROVISIONS INAPPLICABLE. Except as set forth on
SWB Disclosure Schedule 3.21, the transactions contemplated by this Agreement
are not subject to any applicable state takeover law.
Section 3.22. FAIRNESS OPINION. SWB has received a written opinion from
Baird to the effect that, subject to the terms, conditions and qualifications
set forth therein, as of the date thereof, the consideration to be received by
the stockholders of SWB pursuant to this Agreement is fair to such stockholders
from a financial point of view. Such opinion has not been amended or rescinded
as of the date of this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ALLIANCE BANCORP
Alliance Bancorp represents and warrants to SWB that the statements
contained in this Article IV are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date (as though
made then and as though the Closing Date were substituted for the date of this
Agreement throughout this Article IV), except as set forth in the Alliance
Bancorp Disclosure Schedules delivered by Alliance Bancorp to SWB on the date
hereof. Alliance Bancorp has made a good faith effort to ensure that the
disclosure on each schedule of the Alliance Bancorp
22
29
Disclosure Schedules corresponds to the section reference herein. However, for
purposes of the Alliance Bancorp Disclosure Schedules, any item disclosed on any
schedule therein is deemed to be fully disclosed with respect to all schedules
under which such item may be relevant.
SECTION 4.01. ORGANIZATION.
(a) Alliance Bancorp is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware, with full corporate
power and authority to carry on its business as now conducted and is duly
licensed or qualified to do business in the states of the United States and
foreign jurisdictions where its ownership or leasing of property or the conduct
of its business requires such qualification, except where the failure to be so
licensed or qualified would not have a Material Adverse Effect on Alliance
Bancorp.
(b) Liberty Federal is a stock savings bank duly organized, validly
existing and in good standing under the laws of the United States. Except as set
forth in Alliance Bancorp Disclosure Schedule 4.01(b), Liberty Federal is the
only Alliance Bancorp Subsidiary. The deposits of Liberty Federal are insured by
the FDIC through the SAIF to the fullest extent permitted by law, and all
premiums and assessments required to be paid in connection therewith have been
paid when due by Liberty Federal. Each other Alliance Bancorp Subsidiary is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation or organization.
(c) Liberty Federal is a member in good standing of the Federal Home Loan
Bank of Chicago and owns the requisite amount of stock therein.
(d) Except as disclosed in Alliance Bancorp Disclosure Schedule 4.01(d),
the respective minute books of Alliance Bancorp and each Alliance Bancorp
Subsidiary accurately record, in all material respects, all material corporate
actions of their respective shareholders and boards of directors (including
committees) through the date of this Agreement.
(e) Prior to the date of this Agreement, Alliance Bancorp has delivered to
SWB true and correct copies of the of certificate of incorporation and bylaws of
Alliance Bancorp.
SECTION 4.02 CAPITALIZATION.
(a) The authorized capital stock of Alliance Bancorp consists of (a)
11,000,000 shares of common stock, par value $0.01 per share (the "Alliance
Bancorp Common Stock"), of which, at the date of this Agreement, 8,175,885
shares are validly issued, fully paid and nonassessable and 154,087 shares are
held by Alliance Bancorp as treasury stock, and (b) 1,500,000 shares of
preferred stock, par value $0.01 per share, of which, at the date of this
Agreement, no shares of were issued and outstanding. No shares of Alliance
Bancorp Common Stock were issued in violation of any preemptive rights. Alliance
Bancorp has no Rights authorized, issued or outstanding, other than options to
acquire 1,003,920 shares of Alliance Bancorp Common Stock under Alliance
Bancorp's employee benefit plans and stock option plans.
23
30
(b) To Alliance Bancorp's knowledge, and except as set forth in the
Alliance Bancorp Disclosure Schedule 4.02(b), no Person or "group" (as that term
is used in Section 13(d)(3) of the Exchange Act) is the beneficial owner (as
defined in Section 13(d) of the Exchange Act) of 5% or more of the outstanding
shares of Alliance Bancorp Common Stock.
(c) Alliance Bancorp owns all of the capital stock of Liberty Federal,
free and clear of any lien or encumbrance. Except for the Alliance Bancorp
Subsidiaries, Alliance Bancorp does not possess, directly or indirectly, any
material equity interest in any corporation, except for equity interests held in
the investment portfolios of Alliance Bancorp Subsidiaries, equity interests
held by Alliance Bancorp Subsidiaries in a fiduciary capacity, and equity
interests held in connection with the lending activities of Alliance Bancorp
Subsidiaries.
SECTION 4.03 AUTHORITY; NO VIOLATION.
(a) Alliance Bancorp has full corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
Liberty Federal has full corporate power and authority to execute and deliver
the Plan of Merger and to consummate the Bank Merger. The execution and delivery
of this Agreement by Alliance Bancorp and the completion by Alliance Bancorp of
the transactions contemplated hereby have been duly and validly approved by the
Board of Directors of Alliance Bancorp and, except for approval of the
shareholders of Alliance Bancorp, no other corporate proceedings on the part of
Alliance Bancorp are necessary to complete the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by Alliance
Bancorp and, subject to approval by the shareholders of Alliance Bancorp and
receipt of the required approvals of Regulatory Authorities described in Section
4.04 hereof, constitutes the valid and binding obligation of Alliance Bancorp
and Liberty Federal, enforceable against Alliance Bancorp and Liberty Federal in
accordance with its terms, subject to applicable bankruptcy, insolvency and
similar laws affecting creditors' rights generally, and as to Liberty Federal,
the conservatorship or receivership provisions of the FDIA, and subject, as to
enforceability, to general principles of equity. The Plan of Merger, upon its
execution and delivery by Liberty Federal concurrently with the execution and
delivery of this Agreement, will constitute the valid and binding obligation of
Liberty Federal, enforceable against Liberty Federal in accordance with its
terms, subject to applicable conservatorship and receivership provisions of the
FDIA, or insolvency and similar laws affecting creditors' rights generally and
subject, as to enforceability, to general principles of equity.
(b) (A) The execution and delivery of this Agreement by Alliance Bancorp,
(B) the execution and delivery of the Plan of Merger by Liberty Federal, (C)
subject to receipt of approvals from the Regulatory Authorities referred to in
Section 4.04 hereof and SWB's and Alliance Bancorp's compliance with any
conditions contained therein, the consummation of the transactions contemplated
hereby, and (D) compliance by Alliance Bancorp or Liberty Federal with any of
the terms or provisions hereof or of the Plan of Merger will not (i) conflict
with or result in a breach of any provision of the certificate of incorporation
or bylaws of Alliance Bancorp or any Alliance Bancorp Subsidiary or the charter
and bylaws of Liberty Federal; (ii) violate any statute, code,
24
31
ordinance, rule, regulation, judgment, order, writ, decree or injunction
applicable to Alliance Bancorp or any Alliance Bancorp Subsidiary or any of
their respective properties or assets; or (iii) violate, conflict with, result
in a breach of any provisions of, constitute a default (or an event which, with
notice or lapse of time, or both, would constitute a default), under, result in
the termination of, accelerate the performance required by, or result in a right
of termination or acceleration or the creation of any lien, security interest,
charge or other encumbrance upon any of the properties or assets of Alliance
Bancorp or Liberty Federal under, any of the terms, conditions or provisions of
any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or
other investment or obligation to which Alliance Bancorp or Liberty Federal is a
party, or by which they or any of their respective properties or assets may be
bound or affected, except for such violations, conflicts, breaches or defaults
under clause (ii) or (iii) hereof which, either individually or in the
aggregate, will not have a Material Adverse Effect on Alliance Bancorp.
SECTION 4.04. CONSENTS. Except for consents, approvals, filings and
registrations from or with the OTS and SEC, and state "blue sky" authorities,
and compliance with any conditions contained therein, and the approval of this
Agreement by the shareholders of Alliance Bancorp in accordance with Nasdaq
requirements applicable to it, and the approval of the Plan of Merger by
Alliance Bancorp as sole shareholder of Liberty Federal, and by the Liberty
Federal Board of Directors, the filing of a certificate of merger with the
Secretary of State of the State of Delaware pursuant to the DGCL, and the
articles of combination with the OTS, no consents or approvals of, or filings or
registrations with, any public body or authority are necessary, and no consents
or approvals of any third parties are necessary, or will be, in connection with
(a) the execution and delivery of this Agreement by Alliance Bancorp or the Plan
of Merger by Liberty Federal, and (b) the completion by Alliance Bancorp of the
transactions contemplated hereby or by Liberty Federal of the Bank Merger.
Alliance Bancorp has no reason to believe that (i) any required consents or
approvals will not be received or will be received with conditions, limitations
or restrictions unacceptable to it or which would adversely impact Alliance
Bancorp's ability to complete the transactions contemplated by this Agreement or
that (ii) any public body or authority, the consent or approval of which is not
required or any filing with which is not required, will object to the completion
of the transactions contemplated by this Agreement.
SECTION 4.05. FINANCIAL STATEMENTS.
(a) Alliance Bancorp has previously delivered, or will deliver, to SWB the
Alliance Bancorp Regulatory Reports. The Alliance Bancorp Regulatory Reports
have been, or will be, prepared in accordance with applicable regulatory
accounting principles and practices and fairly present, or will fairly present,
the consolidated financial position, results of operations and changes in
shareholders' equity of Alliance Bancorp as of and for the periods ending on the
dates thereof, in accordance with applicable regulatory accounting principles.
Alliance Bancorp will make the Alliance Bancorp Regulatory Reports available to
SWB for inspection.
(b) Alliance Bancorp has previously delivered to SWB the Alliance Bancorp
Financials. The Alliance Bancorp Financials have been, or will be, prepared in
accordance with GAAP and
25
32
practices applied on a consistent basis throughout the periods covered by such
statements, and (including the related notes where applicable) fairly present,
or will fairly present (subject in the case of the unaudited interim statements
to normal year-end adjustments), the consolidated financial position, results of
operations and cash flows of Alliance Bancorp and the Alliance Bancorp
Subsidiaries as of and for the respective periods ending on the dates thereof,
in accordance with GAAP applied on a consistent basis during the periods
involved, except as indicated in the notes thereto, or in the case of unaudited
statements, as permitted by Form 10-Q.
(c) At the date of each balance sheet included in the Alliance Bancorp
Financials, Alliance Bancorp did not have any liabilities, obligations or loss
contingencies of any nature (whether absolute, accrued, contingent or otherwise)
of a type required to be reflected in such Alliance Bancorp Financials or in the
footnotes thereto which are not fully reflected or reserved against therein or
disclosed in a footnote thereto, except for liabilities, obligations or loss
contingencies which are not material in the aggregate and which are incurred in
the ordinary course of business, consistent with past practice, and except for
liabilities, obligations or loss contingencies which are within the subject
matter of a specific representation and warranty herein and subject, in the case
of any unaudited statements, to normal recurring audit adjustments and the
absence of footnotes.
SECTION 4.06. TAXES. Alliance Bancorp and the Alliance Bancorp
Subsidiaries are members of the same affiliated group within the meaning of IRC
Section 1504(a). Alliance Bancorp has duly filed, and will file, all federal,
state and local tax returns required to be filed by or with respect to Alliance
Bancorp and all Alliance Bancorp Subsidiaries on or prior to the Closing Date
(all such returns being accurate and correct in all material respects) and has
duly paid or will pay, or made or will make, provisions for the payment of all
federal, state and local taxes which have been incurred by or are due or claimed
to be due from Alliance Bancorp and any Alliance Bancorp Subsidiary by any
taxing authority or pursuant to any tax sharing agreement or arrangement
(written or oral) on or prior to the Closing Date other than taxes which (i) are
not delinquent or (ii) are being contested in good faith.
SECTION 4.07. NO MATERIAL ADVERSE EFFECT. Alliance Bancorp and the
Alliance Bancorp Subsidiaries, taken as a whole, have not suffered any Material
Adverse Effect since September 30, 1997.
SECTION 4.08. OWNERSHIP OF PROPERTY; INSURANCE COVERAGE; CONTRACTS.
(a) Except as set forth in Alliance Bancorp Disclosure Schedule 4.08(a),
Alliance Bancorp and the Alliance Bancorp Subsidiaries have good and, as to real
property, marketable title to all material assets and properties owned by
Alliance Bancorp or any of its Subsidiaries in the conduct of their businesses,
whether such assets and properties are real or personal, tangible or intangible,
including assets and property reflected in the balance sheets contained in the
Alliance Bancorp Financials or acquired subsequent thereto (except to the extent
that such assets and properties have been disposed of for fair value, in the
ordinary course of business, since the date of
26
33
such balance sheets), subject to no material encumbrances, liens, mortgages,
security interests or pledges, except (i) those items that secure liabilities
for borrowed money and that are described in the Alliance Bancorp Disclosure
Schedule 4.08(a) or described in Section 5.01(v) of Article V hereof, and (ii)
statutory liens for amounts not yet delinquent or which are being contested in
good faith. Alliance Bancorp and the Alliance Bancorp Subsidiaries, as lessee,
have the right under valid and subsisting leases of real and personal properties
used by Alliance Bancorp and its Subsidiaries in the conduct of their businesses
to occupy and use all such properties as presently occupied and used by each of
them.
(b) Alliance Bancorp and the Alliance Bancorp Subsidiaries currently
maintain insurance in amounts considered by Alliance Bancorp to be reasonable
for their respective operations, and such insurance is similar in scope and
coverage to that maintained by other businesses similarly engaged. Neither
Alliance Bancorp nor any Alliance Bancorp Subsidiary has received notice from
any insurance carrier that (i) such insurance will be canceled or that coverage
thereunder will be reduced or eliminated or (ii) premium costs with respect to
such insurance will be substantially increased.
(c) Neither Alliance Bancorp nor any Alliance Bancorp Subsidiary is a
party to or subject to: (i) any collective bargaining agreement with any labor
union relating to employees of Alliance Bancorp or any Alliance Bancorp
Subsidiary; (ii) any agreement which by its terms limits the payment of
dividends by Alliance Bancorp; or (iii) any instrument evidencing or related to
material indebtedness for borrowed money whether directly or indirectly, by way
of purchase money obligation, conditional sale, lease purchase, guaranty or
otherwise, in respect of which Alliance Bancorp or any Alliance Bancorp
Subsidiary is an obligor to any person, which instrument evidences or relates to
indebtedness other than deposits, repurchase agreements, bankers' acceptances,
Federal Home Loan Bank of Chicago advances, and "treasury tax and loan" accounts
established in the ordinary course of business and transactions in "federal
funds" or which contains financial covenants or other restrictions (other than
those relating to the payment of principal and interest when due) which would be
applicable on or after the Closing Date to Alliance Bancorp or any Alliance
Bancorp Subsidiary; or (iv) any contract (other than this Agreement) limiting
the freedom, in any material respect, of Alliance Bancorp or Liberty Federal to
engage in any type of banking or bank-related business which Alliance Bancorp or
Liberty Federal is permitted to engage in under applicable law as of the date of
this Agreement.
SECTION 4.09. LEGAL PROCEEDINGS. Neither Alliance Bancorp nor any Alliance
Bancorp Subsidiary is a party to any, and there are no pending or, to the best
of Alliance Bancorp's knowledge, threatened legal, administrative, arbitration
or other proceedings, claims, actions or governmental investigations or
inquiries of any nature (i) against Alliance Bancorp or any Alliance Bancorp
Subsidiary, (ii) to which Alliance Bancorp's or any Alliance Bancorp
Subsidiary's assets are or may be subject, (iii) challenging the validity or
propriety of any of the transactions contemplated by this Agreement, or (iv)
which could adversely affect the ability of Alliance Bancorp to perform under
this Agreement, except for any proceedings, claims, actions, investigations or
inquiries referred to in clauses (i) or (ii) which, individually or in the
aggregate, could not be
27
34
reasonably expected to have a Material Adverse Effect on Alliance Bancorp and
the Alliance Bancorp Subsidiaries taken as a whole.
SECTION 4.10. COMPLIANCE WITH APPLICABLE LAW.
(a) Alliance Bancorp and the Alliance Bancorp Subsidiaries hold all
licenses, franchises, permits and authorizations necessary for the lawful
conduct of their businesses under, and have complied in all material respects
with, applicable laws, statutes, orders, rules or regulations of any federal,
state or local governmental authority relating to them, other than where such
failure to hold or such noncompliance will neither result in a limitation in any
material respect on the conduct of their businesses nor otherwise have a
Material Adverse Effect on Alliance Bancorp and its Subsidiaries taken as a
whole.
(b) Neither Alliance Bancorp nor any Alliance Bancorp Subsidiary has
received any notification or communication from any Regulatory Authority (i)
asserting that Alliance Bancorp or any Alliance Bancorp Subsidiary is not in
compliance with any of the statutes, regulations or ordinances which such
Regulatory Authority enforces; (ii) threatening to revoke any license,
franchise, permit or governmental authorization which is material to Alliance
Bancorp or any Alliance Bancorp Subsidiary; (iii) requiring or threatening to
require Alliance Bancorp or any Alliance Bancorp Subsidiary, or indicating that
Alliance Bancorp or any Alliance Bancorp Subsidiary may be required, to enter
into a cease and desist order, agreement or memorandum of understanding or any
other agreement restricting or limiting, or purporting to restrict or limit, in
any manner the operations of Alliance Bancorp or any Alliance Bancorp
Subsidiary, including without limitation any restriction on the payment of
dividends; or (iv) directing, restricting or limiting, or purporting to direct,
restrict or limit, in any manner the operations of Alliance Bancorp or any
Alliance Bancorp Subsidiary, including without limitation any restriction on the
payment of dividends (any such notice, communication, memorandum, agreement or
order described in this sentence is hereinafter referred to as a "Regulatory
Agreement"). Neither Alliance Bancorp nor any Alliance Bancorp Subsidiary is a
party to, nor has consented to any Regulatory Agreement.
SECTION 4.11. INFORMATION TO BE SUPPLIED. The information to be supplied
by Alliance Bancorp for inclusion in the Registration Statement (including the
Prospectus/Proxy Statement) will not, at the time the Registration Statement is
declared effective pursuant to the Securities Act, contain any untrue statement
of a material fact or omit to state any material fact necessary in order to make
the statements therein not misleading. The information supplied, or to be
supplied, by Alliance Bancorp for inclusion in the Applications will, at the
time such documents are filed with any Regulatory Authority, be accurate in all
material aspects.
SECTION 4.12. ERISA AND EMPLOYMENT ARRANGEMENTS. Alliance Bancorp has
previously made available to SWB true and complete copies of the employee
pension benefit plans within the meaning of ERISA Section 3(2), profit sharing
plans, stock purchase plans, deferred compensation and supplemental income
plans, supplemental executive retirement plans, employment and special
termination agreements, annual incentive plans, group insurance plans, and all
other employee
28
35
welfare benefit plans within the meaning of ERISA Section 3(1) (including
vacation pay, sick leave, short-term disability, long-term disability, and
medical plans), and all other employee benefit plans, policies, agreements and
arrangements, all of which are set forth on the Alliance Bancorp Disclosure
Schedule, maintained or contributed to for the benefit of the employees or
former employees (including retired employees) and any beneficiaries thereof or
directors or former directors of Alliance Bancorp or any Alliance Bancorp
Subsidiary, together with (i) the most recent actuarial (if any) and financial
reports relating to those plans which constitute "qualified plans" under IRC
Section 401(a), (ii) the most recent annual reports relating to such plans filed
by them, respectively, with any government agency, and (iii) all rulings and
determination letters which pertain to any such plans. Neither Alliance Bancorp
nor any Alliance Bancorp Subsidiary, and no pension plan maintained by Alliance
Bancorp or any Alliance Bancorp Subsidiary, has incurred, directly or
indirectly, within the past six (6) years any liability under Title IV of ERISA
(including to the Pension Benefit Guaranty Corporation) or to the IRS with
respect to any pension plan qualified under IRC Section 401(a) which liability
has resulted in or will result in a Material Adverse Effect with respect to
Alliance Bancorp, except liabilities to the Pension Benefit Guaranty Corporation
pursuant to ERISA Section 4007, all of which have been fully paid, nor has any
reportable event under ERISA Section 4043 occurred with respect to any such
pension plan. With respect to each of such plans that is subject to Title IV of
ERISA, the present value of the accrued benefits under such plan, based upon the
actuarial assumptions used for funding purposes in the plan's most recent
actuarial report did not, as of its latest valuation date, exceed the then
current value of the assets of such plan allocable to such accrued benefits.
Neither Alliance Bancorp nor any Alliance Bancorp Subsidiary has incurred any
liability under ERISA Section 4201 for a complete or partial withdrawal from a
multi-employer plan. All "employee benefit plans," as defined in ERISA Section
3(3), comply and in the past six (6) years have complied in all material
respects with (i) relevant provisions of ERISA, and (ii) in the case of plans
intended to qualify for favorable income tax treatment, provisions of the IRC
relevant to such treatment. No prohibited transaction (which shall mean any
transaction prohibited by ERISA Section 406 and not exempt under ERISA Section
408 or any transaction prohibited under IRC Section 4975) has occurred within
the past six (6) years with respect to any employee benefit plan maintained by
Alliance Bancorp or any Alliance Bancorp Subsidiary that would result in the
imposition, directly or indirectly, of an excise tax under IRC Section 4975 or
other penalty under ERISA or the IRC, which individually or in the aggregate,
has resulted in or will result in a Material Adverse Effect with respect to
Alliance Bancorp. Alliance Bancorp and the Alliance Bancorp Subsidiaries provide
continuation coverage under group health plans for separating employees in
accordance with the provisions of IRC Section 4980B(f). Such group health plans
are in compliance with Section 1862(b)(1) of the Social Security Act.
SECTION 4.13. SECURITIES DOCUMENTS. Alliance Bancorp has delivered, or
will deliver, to SWB copies of its (i) annual reports on SEC Form 10-K for the
years ended September 30, 1996, 1995, and 1994, (ii) quarterly reports on SEC
Form 10-Q for the quarters ended December 31, 1996, March 31, 1997, June 30,
1997 and September 30, 1997, and (iii) proxy statement dated May 1, 1997 used in
connection with its annual meeting of shareholders held in May 1997. Such
reports and such proxy materials complied, at the time filed with the SEC, in
all material respects, with the Exchange Act and the applicable rules and
regulations of the SEC.
29
36
SECTION 4.14. ENVIRONMENTAL MATTERS. To the knowledge of Alliance Bancorp,
neither Alliance Bancorp nor any Alliance Bancorp Subsidiary, nor any properties
owned or operated by Alliance Bancorp or any Alliance Bancorp Subsidiary has
been or is in violation of or liable under any Environmental Law which violation
or liability, individually or in the aggregate, has resulted, or will result, in
a Material Adverse Effect with respect to Alliance Bancorp and its Subsidiaries
taken as a whole. There are no actions, suits or proceedings, or demands,
claims, notices or, to Alliance Bancorp's knowledge, investigations (including
without limitation notices, demand letters or requests for information from any
environmental agency) instituted or pending, or to the knowledge of Alliance
Bancorp, threatened, relating to the liability of any property owned or operated
by Alliance Bancorp or any Alliance Bancorp Subsidiary under any Environmental
Law.
SECTION 4.15. LOAN PORTFOLIO. The allowance for loan losses reflected, and
to be reflected, in the Alliance Bancorp Regulatory Reports, and shown, and to
be shown, on the balance sheets contained in the Alliance Bancorp Financials
have been, and will be, established in accordance with the requirements of GAAP
and all applicable regulatory criteria. Alliance Bancorp Disclosure Schedule
4.15 sets forth all loans that are classified by Alliance Bancorp or federal
bank regulatory or supervisory authority as "Special Mention," "Substandard,"
"Doubtful," "Loss" or "Classified," together with the aggregate principal amount
of and accrued and unpaid interest on such loans, by category.
SECTION 4.16. BROKERS, FINDERS AND FINANCIAL ADVISORS. Except for Alliance
Bancorp's engagement of Friedman, Billings, Xxxxxx & Co. Inc. ("FBR") in
connection with transactions contemplated by this Agreement, neither Alliance
Bancorp nor any Alliance Bancorp Subsidiary, nor any of their respective
officers, directors, employees or agents, has employed any broker, finder or
financial advisor in connection with the transactions contemplated by this
Agreement or the Plan of Merger, or, except for its commitments disclosed in
Alliance Bancorp Disclosure Schedule 4.16, incurred any liability or commitment
for any fees or commissions to any such person in connection with the
transactions contemplated by this Agreement or the Plan of Merger, which has not
been reflected in the Alliance Bancorp Financials.
SECTION 4.17. LOANS. Each loan reflected as an asset in the Alliance
Bancorp Financial Statements (i) is evidenced by notes, agreements or other
evidences of indebtedness which are true, genuine and correct (ii) to the extent
secured, has been secured by valid liens and security interests which have been
perfected, and (iii) is the legal, valid and binding obligation of the obligor
named therein, enforceable in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent conveyance and other laws of general applicability
relating to or affecting creditors' rights and to general equity principles, in
each case other than loans as to which the failure to satisfy the foregoing
standards would not have a Material Adverse Effect on Alliance Bancorp. All loan
transactions with Affiliates (a) were made in the ordinary course of business,
(b) were made on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with
other Persons, and (c) did not involve more than the normal risk of
collectability or present other unfavorable features.
30
37
SECTION 4.18. ANTITAKEOVER PROVISIONS INAPPLICABLE. Except as set forth on
Alliance Bancorp Disclosure Schedule 4.18, the transactions contemplated by this
Agreement are not subject to any applicable state takeover law.
Section 4.19. FAIRNESS OPINION. Alliance Bancorp has received a written
opinion from FBR to the effect that, subject to the terms, conditions and
qualifications set forth therein, as of the date thereof, the Exchange Ratio is
fair to Alliance Bancorp stockholders from a financial point of view. Such
opinion has not been amended or rescinded as of the date of this Agreement.
ARTICLE V
COVENANTS OF THE PARTIES
SECTION 5.01. CONDUCT OF SWB'S BUSINESS.
(a) From the date of this Agreement to the Closing Date, SWB and Southwest
Federal will conduct their business and engage in transactions, including
extensions of credit, only in the ordinary course and consistent with past
practice and policies, except as otherwise required or contemplated by this
Agreement or with the written consent of Alliance Bancorp. SWB and Southwest
Federal will use its reasonable good faith efforts, to (i) preserve their
business organizations intact, (ii) maintain good relationships with employees,
and (iii) preserve for themselves the good will of their customers and others
with whom business relationships exist. From the date hereof to the Closing
Date, except as otherwise consented to or approved by Alliance Bancorp in
writing or as contemplated or required by this Agreement, SWB will not, and SWB
will not permit any SWB Subsidiary to:
(i) amend or change any provision of its certificate of incorporation,
charter, or bylaws;
(ii) change the number of authorized or issued shares of its capital stock
or issue or grant any Right or agreement of any character relating to its
authorized or issued capital stock or any securities convertible into shares of
such stock, or split, combine or reclassify any shares of capital stock, or
declare, set aside or pay any dividend or other distribution in respect of
capital stock, other than the quarterly cash dividend of $0.20 per share, or
redeem or otherwise acquire any shares of capital stock, except that (A) SWB may
issue shares of SWB Common Stock upon the valid exercise, in accordance with the
information set forth in SWB Disclosure Schedule 3.02, of presently outstanding
options to acquire SWB Common Stock under the SWB Stock Option Plans. After the
dividend paid by SWB in the first calendar quarter in 1998, if requested by
Alliance Bancorp, the Board of Directors of SWB shall promptly cause its regular
quarterly dividend record dates and payment dates to be the same as Alliance
Bancorp's regular quarterly dividend record dates and payment dates for Alliance
Bancorp Common Stock, and SWB shall not change its regular dividend payment
dates and record dates without the prior written consent of Alliance Bancorp.
Nothing contained in this Section 5.01(ii) or in any other Section of this
Agreement shall be construed to permit SWB stockholders to receive two cash
dividends in any quarter;
31
38
(iii) except pursuant to the arrangements set forth in SWB Disclosure
Schedule 5.01, grant any severance or termination pay (other than pursuant to
written policies or written agreements of SWB in effect on the date hereof and
provided to Alliance Bancorp prior to the date hereof) to, or enter into any new
or amend any existing employment agreement with, or increase the compensation of
(except for normal increases in the ordinary course of business consistent in
timing and amount with past practice), any employee, officer or director of SWB
or any SWB Subsidiary;
(iv) merge or consolidate SWB or any SWB Subsidiary with any other
corporation; sell or lease all or any substantial portion of the assets or
business of SWB or any SWB Subsidiary; make any acquisition of all or any
substantial portion of the business or assets of any other person, firm,
association, corporation or business organization other than in connection with
foreclosures, settlements in lieu of foreclosure, troubled loan or debt
restructuring, or the collection of any loan or credit arrangement between SWB,
or any SWB Subsidiary, and any other person; enter into a purchase and
assumption transaction with respect to deposits and liabilities; permit the
revocation or surrender by any SWB Subsidiary of its certificate of authority to
maintain, or file an application for the relocation of, any existing branch
office, or file an application for a certificate of authority to establish a new
branch office;
(v) sell or otherwise dispose of the capital stock of SWB or sell or
otherwise dispose of any asset of SWB or of any SWB Subsidiary other than in the
ordinary course of business consistent with past practice; subject any asset of
SWB or of any SWB Subsidiary to a lien, pledge, security interest or other
encumbrance (other than in connection with deposits, repurchase agreements, SWB
acceptances, advances from the Federal Home Loan Bank of Chicago, "treasury tax
and loan" accounts established in the ordinary course of business and
transactions in "federal funds" and the satisfaction of legal requirements in
the exercise of trust powers) other than in the ordinary course of business
consistent with past practice; incur any indebtedness for borrowed money (or
guarantee any indebtedness for borrowed money), except in the ordinary course of
business consistent with past practice;
(vi) take any action which would result in any of the representations and
warranties of SWB set forth in this Agreement becoming untrue as of any date
after the date hereof or in any of the conditions set forth in Article VI hereof
not being satisfied, except in each case as may be required by applicable law;
(vii) change any method, practice or principle of accounting, except as
may be required from time to time by GAAP (without regard to any optional early
adoption date) or any Regulatory Authority responsible for regulating SWB or
Southwest Federal;
(viii)waive, release, grant or transfer any material rights of value or
modify or change in any material respect any existing material agreement or
indebtedness to which SWB or any SWB Subsidiary is a party, other than in the
ordinary course of business, consistent with past practice;
32
39
(ix) implement any pension, retirement, profit sharing, bonus, welfare
benefit or similar plan or arrangement that was not in effect on the date of
this Agreement, or materially amend any existing plan or arrangement except to
the extent such amendments do not result in an increase in cost; contribute to
any pension, retirement, profit sharing, bonus, welfare benefit or similar plan
or arrangement other than in amounts and in a manner consistent with past
practice;
(x) purchase any security for its investment portfolio not rated "A" or
higher by either Standard & Poor's Corporation or Xxxxx'x Investor Services,
Inc.;
(xi) fail to review with a representative of Alliance Bancorp on a regular
basis proposed loans or other credit facility commitments (including without
limitation, lines of credit and letters of credit, but excluding loans to be
secured by mortgages on one- to four-family residential real estate) to any
borrower or group of affiliated borrowers in excess of $1,000,000, or any
increase, compromise, extension, renewal or modification of any existing loan or
commitment outstanding in excess of $1,000,000;
(xii) except as set forth on the SWB Disclosure Schedule 5.01(a)(xii),
enter into, renew, extend or modify any other transaction with any Affiliate;
(xiii) enter into any interest rate swap or similar commitment, agreement
or arrangement;
(xiv) except for the execution of this Agreement, take any action that
would give rise to a right of payment to any individual under any employment
agreement;
(xv) intentionally and knowingly take any action that would preclude
satisfaction of the condition to closing contained in Section 6.02(k) relating
to financial accounting treatment of the Merger;
(xvi) change its lending, investment, asset/liability management or other
material banking policies in any material respect except as may be required by
changes in applicable law or regulations or in response to examination comments
by a Regulatory Authority;
(xvii) enter into any new joint venture or partnership agreement or any
new land acquisition or real estate development project, or increase the amount
of credit that SWB or any SWB Subsidiary is committed to extend to any joint
venture or partnership in connection with land acquisition or real estate
development activities; or
(xviii)agree to do any of the foregoing.
For purposes of this Section 5.01, unless provided for in a business
plan, budget or similar document delivered to Alliance Bancorp prior to the date
of this Agreement, it shall not be considered in the ordinary course of business
for SWB or any SWB Subsidiary to do any of the following: (i) make any capital
expenditure of $50,000 or more not disclosed on SWB Disclosure
33
40
Schedule 5.01, without the prior written consent of Alliance Bancorp; (ii)
except as set forth in SWB Disclosure Schedule 5.01, make any sale, assignment,
transfer, pledge, hypothecation or other disposition of any assets having a book
or market value, whichever is greater, in the aggregate in excess of $1,000,000,
other than pledges of assets to secure government deposits, to exercise trust
powers, sales of assets received in satisfaction of debts previously contracted
in the normal course of business, issuance of loans, sales of previously
purchased government guaranteed loans, or transactions in the investment
securities portfolio by SWB or a SWB Subsidiary or repurchase agreements made,
in each case, in the ordinary course of business; or (iii) undertake or enter
any lease, contract or other commitment for its account, other than in the
normal course of providing credit to customers as part of its banking business,
involving a payment by SWB or any SWB Subsidiary of more than $50,000 annually,
or containing a material financial commitment and extending beyond 12 months
from the date hereof.
SECTION 5.02. ACCESS; CONFIDENTIALITY.
(a) From the date of this Agreement through the Closing Date, SWB or
Alliance Bancorp, as the case may be, shall afford to, and shall cause each SWB
Subsidiary or Alliance Bancorp Subsidiary to afford to, the other party and its
authorized agents and representatives, access to their respective properties,
assets, books and records and personnel, during normal business hours and after
reasonable notice; and the officers of SWB and Alliance Bancorp will furnish any
person making such investigation on behalf of the other party with such
financial and operating data and other information with respect to the
businesses, properties, assets, books and records and personnel as the person
making such investigation shall from time to time reasonably request. None of
the parties or their respective subsidiaries shall be required to provide access
to or to disclose information where such access or disclosure would violate or
prejudice the rights of their respective customers, jeopardize the
attorney-client privilege of the institution or company in possession or control
of such information or contravene any law, rule, regulation, order, judgment,
decree, fiduciary duty or binding agreement entered into prior to the date of
this Agreement. The parties hereto will make appropriate substitute disclosure
arrangements under circumstances in which the restrictions of the preceding
sentence apply. The parties will hold all such information delivered in
confidence to the extent required by, and in accordance with, the provisions of
the confidentiality agreement, dated December 4, 1997, among SWB and Alliance
Bancorp (the "Confidentiality Agreement").
(b) SWB and Alliance Bancorp each agree to conduct such investigation and
discussions hereunder in a manner so as not to interfere unreasonably with
normal operations and customer and employee relationships of the other party.
(c) In addition to the access permitted by subparagraph (a) above, from
the date of this Agreement through the Closing Date, SWB shall permit employees
of Alliance Bancorp reasonable access to information relating to problem loans,
loan restructurings and loan work-outs of SWB.
34
41
(d) If the transactions contemplated by this Agreement shall not be
consummated, SWB and Alliance Bancorp will each destroy or return all documents
and records obtained from the other party or its representatives, during the
course of its investigation and will cause all information with respect to the
other party obtained pursuant to this Agreement or preliminarily thereto to be
kept confidential, except to the extent such information becomes public through
no fault of the party to whom the information was provided or any of its
representatives or agents and except to the extent disclosure of any such
information is legally required. SWB and Alliance Bancorp shall each give prompt
written notice to the other party of any contemplated disclosure where such
disclosure is so legally required.
SECTION 5.03. REGULATORY MATTERS AND CONSENTS.
(a) Alliance Bancorp and Liberty Federal will prepare all Applications and
make all filings for, and use their best efforts to obtain as promptly as
practicable after the date hereof, all necessary permits, consents, approvals,
waivers and authorizations of all Regulatory Authorities necessary or advisable
to consummate the transactions contemplated by this Agreement.
(b) SWB will furnish Alliance Bancorp with all information concerning SWB
and SWB Subsidiaries as may be necessary or advisable in connection with any
Application or filing made by or on behalf of Alliance Bancorp to any Regulatory
Authority in connection with the transactions contemplated by this Agreement.
(c) Alliance Bancorp and SWB will promptly furnish each other with copies
of all material written communications to, or received by them from any
Regulatory Authority in respect of the transactions contemplated hereby, except
information which is filed by either party which is designated as confidential.
(d) The parties hereto agree that they will consult with each other with
respect to the obtaining of all permits, consents, approvals and authorizations
of all third parties and Regulatory Authorities. Alliance Bancorp will furnish
SWB with (i) copies of all Applications prior to filing with any Regulatory
Authority and provide SWB a reasonable opportunity to provide changes to such
Applications,, (ii) copies of all Applications filed by Alliance Bancorp and
(iii) copies of all documents filed by Alliance Bancorp under the Securities
Exchange Act of 1934, as amended.
(e) SWB will cooperate with Alliance Bancorp in the foregoing matters and
will furnish Alliance Bancorp with all information concerning SWB and SWB
Subsidiaries as may be necessary or advisable in connection with any Application
or filing (including the Registration Statement and any report filed with the
SEC) made by or on behalf of Alliance Bancorp to any Regulatory Authority in
connection with the transactions contemplated by this Agreement, and such
information will be accurate and complete in all material respects. In
connection therewith, SWB will provide certificates and other documents
reasonably requested by Alliance Bancorp.
35
42
SECTION 5.04. TAKING OF NECESSARY ACTION.
(a) Alliance Bancorp and SWB shall each use its best efforts in good
faith, and each of them shall cause its Subsidiaries to use their best efforts
in good faith, to (i) furnish such information as may be required in connection
with the preparation of the documents referred to in Section 5.03 of this
Agreement, and (ii) take or cause to be taken all action necessary or desirable
on its part using its best efforts so as to permit completion of the Merger
including, without limitation, (A) obtaining the consent or approval of each
individual, partnership, corporation, association or other business or
professional entity whose consent or approval is required or desirable for
consummation of the transactions contemplated hereby (including assignment of
leases without any change in terms), provided that neither SWB nor any SWB
Subsidiary shall agree to make any payments or modifications to agreements in
connection therewith without the prior written consent of Alliance Bancorp, and
(B) requesting the delivery of appropriate opinions, consents and letters from
its counsel and independent auditors. No party hereto shall take, or cause, or
to the best of its ability permit to be taken, any action that would
substantially impair the prospects of completing the Merger pursuant to this
Agreement and the Plan of Merger; provided that nothing herein contained shall
preclude Alliance Bancorp or SWB from exercising its rights under this Agreement
or the Option Agreement.
(b) Alliance Bancorp shall prepare, subject to the review and consent of
SWB with respect to matters relating to SWB and the transactions contemplated by
this Agreement, a Prospectus/Proxy Statement on Form S-4 to be filed by Alliance
Bancorp with the SEC and to be mailed to the shareholders of SWB and Alliance
Bancorp in connection with the meetings of their respective shareholders and
transactions contemplated hereby, which Prospectus/Proxy statement shall conform
to all applicable legal requirements. The parties shall cooperate with each
other with respect to the preparation of the Prospectus/Proxy Statement.
Alliance Bancorp shall, as promptly as practicable following the preparation
thereof, file the Registration Statement with the SEC and SWB and Alliance
Bancorp shall use all reasonable efforts to have the Registration Statement
declared effective under the Securities Act as promptly as practicable after
such filing. Alliance Bancorp will advise SWB, promptly after Alliance Bancorp
receives notice thereof, of the time when the Registration Statement has become
effective or any supplement or amendment has been filed, of the issuance of any
stop order or the suspension of the qualification of the shares of capital stock
issuable pursuant to the Registration Statement, or the initiation or threat of
any proceeding for any such purpose, or of any request by the SEC for the
amendment or supplement of the Registration Statement or for additional
information. Alliance Bancorp shall use its best efforts to obtain, prior to the
effective date of the Registration Statement, all necessary state securities
laws or "Blue Sky" permits and approvals required to carry out the transactions
contemplated by this Agreement. Alliance Bancorp will provide SWB with as many
copies of such Registration Statement and all amendments thereto promptly upon
the filing thereof as SWB may reasonably request.
36
43
SECTION 5.05. CERTAIN AGREEMENTS.
(a) From and after the Company Merger Effective Date through the sixth
anniversary thereof, Alliance Bancorp agrees to indemnify, defend and hold
harmless each present and former director and officer of SWB and its
Subsidiaries determined as of the Closing Date (the "Indemnified Parties")
against all losses, claims, damages, costs, expenses (including reasonable
attorneys' fees and expenses), liabilities, judgments or amounts paid in
settlement (with the approval of Alliance Bancorp, which approval shall not be
unreasonably withheld) or in connection with any claim, action, suit, proceeding
or investigation arising out of matters existing or occurring at or prior to the
Company Merger Effective Date (a "Claim") in which an Indemnified Party is, or
is threatened to be made, a party or a witness based in whole or in part on, or
arising in whole or in part out of, the fact that such person is or was a
director or officer of SWB or any of its subsidiaries, regardless of whether
such Claim is asserted or claimed prior to, at or after the Closing Date, to the
fullest extent to which directors and officers of SWB are entitled under the
DGCL, SWB's certificate of incorporation and bylaws, or other applicable law as
in effect on the date hereof (and Alliance Bancorp shall pay expenses in advance
of the final disposition of any such action or proceeding to each Indemnified
Party to the extent permissible to a Delaware corporation under the DGCL and
SWB's certificate of incorporation and bylaws as in effect on the date hereof;
provided, that the person to whom expenses are advanced provides an undertaking
to repay such expenses if it is ultimately determined that such person is not
entitled to indemnification). All rights to indemnification in respect of a
Claim asserted or made within the period described in the preceding sentence
shall continue until the final disposition of such Claim.
(b) Any Indemnified Party wishing to claim indemnification under Section
5.05(a), upon learning of any Claim, shall promptly notify Alliance Bancorp, but
the failure to so notify shall not relieve Alliance Bancorp of any liability it
may have to such Indemnified Party except to the extent that such failure
materially prejudices Alliance Bancorp. In the event of any Claim, (1) Alliance
Bancorp shall have the right to assume the defense thereof (with counsel
reasonably satisfactory to the Indemnified Party) and shall not be liable to
such Indemnified Parties for any legal expenses of other counsel or any other
expenses subsequently incurred by such Indemnified Parties in connection with
the defense thereof, except that, if Alliance Bancorp elects not to assume such
defense or counsel for the Indemnified Parties advises that there are issues
which raise conflicts of interest between Alliance Bancorp and the Indemnified
Parties, the Indemnified Parties may retain counsel satisfactory to them, and
Alliance Bancorp shall pay all reasonable fees and expenses of such counsel for
the Indemnified Parties promptly as statements therefor are received, provided
further that Alliance Bancorp shall in all cases be obligated pursuant to this
paragraph to pay for only one firm of counsel for all Indemnified Parties, (2)
the Indemnified Parties will cooperate in the defense of any such Claim and (3)
Alliance Bancorp shall not be liable for any settlement effected without its
prior written consent (which consent shall not unreasonably be withheld).
(c) Alliance Bancorp shall use its best efforts to cause the persons
serving as officers and directors of SWB immediately prior to the Company Merger
Effective Date to be covered for a period of six years from the Company Merger
Effective Date by the directors' and officers' liability
37
44
insurance policy maintained by SWB (provided that Alliance Bancorp may
substitute therefor policies of at least the same coverage and amounts
containing terms and conditions which are not less advantageous than such
policy) with respect to acts or omissions occurring prior to the Company Merger
Effective Date which were committed by such officers and directors in their
capacity as such.
(d) In the event Alliance Bancorp or any of is successors or assigns (1)
consolidates with or merges into any other Person and shall not continue or
survive such consolidation or merger, or (2) transfers or conveys all or
substantially all of its properties and assets to any Person, then, and in each
such case, to the extent necessary, proper provision shall be made so that the
successors and assigns of Alliance Bancorp assume the obligations set forth in
this Section 5.05.
(e) The provisions of this Section 5.05 are intended to be for the benefit
of, and shall be enforceable by, each Indemnified Party and his or her heirs and
representatives.
(f) Alliance Bancorp agrees to honor and Alliance Bancorp agrees to cause
Liberty Federal to honor all terms and conditions of the existing employment
agreement disclosed in the SWB Disclosure Schedules. Except as otherwise
provided herein, and unless otherwise agreed to in writing by the affected
officer and employee, Alliance Bancorp agrees for itself and the Alliance
Bancorp Subsidiaries that the consummation of the transactions contemplated
hereby is a "Change in Control" as defined in the employment agreement entered
into by SWB.
SECTION 5.06. NO OTHER BIDS AND RELATED MATTERS. SWB will immediately
cease and cause to be terminated any existing activities, discussions or
negotiations with any parties conducted heretofore with respect to any
Acquisition Proposal (as hereinafter defined), will enforce any confidentiality
agreements and will take the necessary steps to inform the appropriate
individuals or entities referred to in the first sentence of this Section 5.06
of the obligations undertaken in this Section 5.06. SWB agrees that neither SWB
nor any of its Subsidiaries shall, and that SWB and its Subsidiaries shall
direct and use all reasonable efforts to cause their respective directors,
officers, employees, agents and representatives (including, without limitation,
any investment banker, attorney or accountant retained by it or any of its
subsidiaries) not to, initiate, solicit or encourage, directly or indirectly,
any inquiries or the making or implementation of any proposal or offer with
respect to a merger, acquisition, consolidation or similar transaction
involving, or any purchase of all or any substantial part of the assets or any
equity securities of, SWB or any of its Subsidiaries (any such proposal or offer
being hereinafter referred to as an "Acquisition Proposal") or engage in any
---------------------
discussions or negotiations with, or provide any confidential information or
data to, any Person relating to an Acquisition Proposal. Nothing contained in
this Section 5.06 shall be deemed to prohibit SWB from taking or disclosing to
shareholders any position necessary in order to comply with the filing and
disclosure requirements of Section 14(d) of the Exchange Act and the related
rules and regulations of the SEC.
SECTION 5.07. DUTY TO ADVISE; DUTY TO UPDATE SWB'S DISCLOSURE SCHEDULE.
SWB shall promptly advise Alliance Bancorp of any change or event having a
Material Adverse Effect on it or on any SWB Subsidiary or which it believes
would or would be reasonably likely to cause or
38
45
constitute a material breach of any of its representations, warranties or
covenants set forth herein. SWB shall update SWB's Disclosure Schedule as
promptly as practicable after the occurrence of an event or fact which, if such
event or fact had occurred prior to the date of this Agreement, would have been
disclosed in the SWB Disclosure Schedule. The delivery of such updated Schedule
shall not relieve SWB from any breach or violation of this Agreement and shall
not have any effect for the purposes of determining the satisfaction of the
condition set forth in Sections 6.02(c) hereof.
SECTION 5.08. CONDUCT OF ALLIANCE BANCORP'S BUSINESS.
(a) From the date of this Agreement to the Closing Date, Alliance Bancorp
will use its best efforts to (x) preserve its business organizations intact, (y)
maintain good relationships with employees, and (z) preserve for itself the
goodwill of customers of Liberty Federal. From the date of this Agreement to the
Closing Date, neither Alliance Bancorp nor Liberty Federal will (i) amend its
certificate of incorporation, charter or bylaws in any manner inconsistent with
the prompt and timely consummation of the transactions contemplated by this
Agreement, (ii) issue any equity securities except in connection with the
exercise of any employee or director stock options, (iii) take any action which
would result in any of the representations and warranties of Alliance Bancorp or
Liberty Federal set forth in this Agreement becoming untrue as of any date after
the date hereof or in any of the conditions set forth in Article VI hereof not
being satisfied, except in each case as may be required by applicable law, (iv)
intentionally and knowingly take any action that would preclude satisfaction of
the condition to closing contained in Section 6.01(n) and 6.02(k) relating to
financial accounting treatment of the Merger; or (v) agree to do any of the
foregoing. At the Alliance Bancorp Stockholders' Meeting to be held to obtain
stockholder approval of this Agreement, Alliance Bancorp shall also submit for
stockholder approval an amendment to its certificate of incorporation increasing
the number of authorized shares of all classes of stock to no less than 16.5
million shares and the number of authorized shares of common stock to no less
than 15 million shares.
(b) From the date of this Agreement through the Closing Date, Alliance
Bancorp will not, nor will it permit Liberty Federal to, make or undertake any
acquisition of any company or business that could jeopardize the receipt of the
approval of any Regulatory Authority or materially delay the consummation of the
Merger or the Subsidiary Merger, unless the prior written consent of SWB is
obtained.
SECTION 5.09. BOARD AND COMMITTEE MINUTES. Alliance Bancorp and SWB shall
each provide to the other, within thirty (30) days after any meeting of their
respective Board of Directors, or any committee thereof, or any senior
management committee, a copy of the minutes of such meeting, except that with
respect to any meeting held within thirty (30) days of the Closing Date, such
minutes shall be provided to each party prior to the Closing Date.
SECTION 5.10. UNDERTAKINGS BY ALLIANCE BANCORP AND SWB.
(a) From and after the date of this Agreement:
39
46
(i) VOTING BY DIRECTORS. Alliance Bancorp and SWB shall recommend to
all members of their respective Board of Directors to vote all shares of SWB
Common Stock, or Alliance Bancorp Common Stock, as the case may be, beneficially
owned by each such director in favor of this Agreement. As promptly as
practicable following execution of this Agreement, Alliance Bancorp's Directors
shall enter into the agreement set forth as Exhibit B to this Agreement;
(ii) PROXY SOLICITOR. Alliance Bancorp and SWB shall each retain a
proxy solicitor in connection with the solicitation of shareholder approval of
this Agreement;
(iii) TIMELY REVIEW. If requested by Alliance Bancorp at Alliance
Bancorp's sole expense, SWB shall cause its independent certified public
accountants to perform a review of its unaudited consolidated financial
statements as of the end of any calendar quarter, in accordance with Statement
of Auditing Standards No. 36, and to issue their report on such financial
statements as soon as is practicable thereafter;
(iv) OUTSIDE SERVICE BUREAU CONTRACTS. If requested to do so by
Alliance Bancorp, SWB shall use its best efforts to obtain an extension of any
contract with an outside service bureau or other vendor of services to SWB, on
terms and conditions mutually acceptable to SWB and Alliance Bancorp;
(v) BOARD MEETINGS. SWB shall respond reasonably and in good faith
to any request of Alliance Bancorp to permit a representative of Alliance
Bancorp, who is reasonably acceptable to SWB, to attend any meeting of SWB's
Board of Directors or the Executive Committee thereof;
(vi) LIST OF NONPERFORMING ASSETS. SWB and Alliance Bancorp shall
provide the other, within ten (10) days of the end of each calendar month, a
written list of nonperforming assets (the term "nonperforming assets," for
purposes of this subsection, means (i) loans that are "troubled debt
restructuring" as defined in Statement of Financial Accounting Standards No. 15,
"Accounting by Debtors and Creditors for Troubled Debt Restructuring," (ii)
loans on nonaccrual, (iii) real estate owned, (iv) all loans ninety (90) days or
more past due) as of the end of such month and (iv) and impaired loans; and
(vii) RESERVES AND MERGER-RELATED COSTS. On or before the Effective
Date, SWB shall establish such additional accruals and reserves as may be
necessary to conform the accounting reserve practices and methods (including
credit loss practices and methods) of SWB to those of Alliance Bancorp (as such
practices and methods are to be applied to SWB from and after the Closing Date)
and Alliance Bancorp's plans with respect to the conduct of the business of SWB
following the Merger and otherwise to reflect Merger-related expenses and costs
incurred by SWB, provided, however, that SWB shall not be required to take such
action unless Alliance Bancorp agrees in writing that all conditions to closing
set forth in Section 6.02 have been satisfied or waived (except for the
expiration of any applicable waiting periods); prior to the delivery by Alliance
Bancorp of the writing referred to in the preceding clause, SWB shall provide
Alliance Bancorp a
40
47
written statement, certified without personal liability by the chief executive
officer of SWB and dated the date of such writing, that the representation made
in Section 3.15 hereof is true as of such date or, alternatively, setting forth
in detail the circumstances that prevent such representation from being true as
of such date; and no accrual or reserve made by SWB or any SWB Subsidiary
pursuant to this subsection, or any litigation or regulatory proceeding arising
out of any such accrual or reserve, shall constitute or be deemed to be a breach
or violation of any representation, warranty, covenant, condition or other
provision of this Agreement or to constitute a termination event within the
meaning of Section 7.01(b) hereof.
(b) From and after the date of this Agreement, Alliance Bancorp and SWB
shall each:
(i) SHAREHOLDERS MEETINGS. Submit this Agreement to its shareholders
for approval at a meeting to be held as soon as practicable, and have their
Boards of Director recommend approval of this Agreement to their respective
shareholders;
(ii) FILINGS AND APPROVALS. Cooperate with the other in the
preparation and filing, as soon as practicable, of (A) the Applications, (B) the
Registration Statement and related filings under state securities laws covering
the Alliance Bancorp Common Stock to be issued pursuant to the Merger, (C) all
other documents necessary to obtain any other approvals and consents required to
effect the completion of the Merger, and (D) all other documents contemplated by
this Agreement;
(iii) IDENTIFICATION OF SWB'S AFFILIATES. Cooperate with the other
and use its best efforts to identify those persons who may be deemed to be
Affiliates of SWB;
(iv) PUBLIC ANNOUNCEMENTS. Cooperate and cause its respective
officers, directors, employees and agents to cooperate in good faith, consistent
with their respective legal obligations, in the preparation and distribution of,
and agree upon the form and substance of, any press release related to this
Agreement and the transactions contemplated hereby, and any other public
disclosures related thereto, including without limitation communications to SWB
shareholders, SWB's internal announcements and customer disclosures, but nothing
contained herein shall prohibit either party from making any disclosure which
its counsel deems necessary, provided that the disclosing party notifies the
other party reasonably in advance of the timing and contents of such disclosure;
(v) MAINTENANCE OF INSURANCE. Maintain, and cause their respective
Subsidiaries to maintain, insurance in such amounts as are reasonable to cover
such risks as are customary in relation to the character and location of its
properties and the nature of its business;
(vi) MAINTENANCE OF BOOKS AND RECORDS. Maintain, and cause their
respective Subsidiaries to maintain, books of account and records in accordance
with generally accepted accounting principles applied on a basis consistent with
those principles used in preparing the financial statements heretofore
delivered;
41
48
(vii) DELIVERY OF SECURITIES DOCUMENTS. Deliver to the other, copies
of all Securities Documents simultaneously with the filing thereof;
(viii)TAXES. File all federal, state, and local tax returns required
to be filed by them or their respective Subsidiaries on or before the date such
returns are due (including any extensions) and pay all taxes shown to be due on
such returns on or before the date such payment is due; or
(ix) POOLING OF INTEREST. Prior to the Company Merger Effective
Date, Alliance Bancorp and SWB will use their best efforts to cure any action
previously taken that would prevent Alliance Bancorp from accounting for the
Company Merger as a "pooling of interest," including cooperating in a private
placement, to take place immediately prior to Closing, of shares of SWB Common
Stock.
SECTION 5.11. EMPLOYEE AND TERMINATION BENEFITS; DIRECTORS AND MANAGEMENT.
(a) EMPLOYEE BENEFITS. On and after the Company Merger Effective Date, the
employee pension and welfare benefit plans of Alliance Bancorp and SWB may, at
Alliance Bancorp's election and subject to the requirements of the IRC, continue
to be maintained separately or consolidated, or terminated; provided, however,
that Alliance Bancorp may not terminate the Southwest Federal Supplemental
Executive Retirement Plan in any matter by which the participant of such plan
would not be permitted to continue to receive payments thereunder on a monthly
basis, without the consent of any affected individual. In the event of a
consolidation of any or all of such plans or in the event of termination of the
SWB benefit plans, SWB and SWB employees shall receive credit for service with
SWB under any Alliance Bancorp benefit plan, or new Alliance Bancorp benefit
plan in which such employees would be eligible to enroll for purposes of
eligibility and vesting determination (but not for benefit accrual purposes).
Alliance Bancorp and/or Liberty Federal shall make available to SWB employees
who become employed by Alliance Bancorp or an Alliance Bancorp subsidiary,
employer-provided health coverage on the same basis as it provides such coverage
to Alliance Bancorp or Liberty Federal employees. In the event of any
termination of or consolidation of any SWB health plan with any Alliance Bancorp
health plan, all employees of SWB who become full-time employees of Alliance
Bancorp or Liberty Federal, who were eligible for continued coverage under the
terminated or consolidated plan shall have immediate coverage of any
pre-existing condition. In the event of a termination or consolidation of any
SWB health plan, terminated SWB employees and qualified beneficiaries or
retained SWB employees who do not satisfy the Alliance Bancorp conditions for
employer-provided coverage, will have the right to continue coverage under group
health plans of Alliance Bancorp and/or Alliance Bancorp subsidiaries in
accordance with IRC Section 4980B(f).
(b) After the Company Merger Effective Date, any former employees of SWB
or any SWB Subsidiary whose employment is terminated, other than for cause,
shall be provided with severance benefits in accordance with the Liberty Federal
severance plan in effect on the date hereof, a copy of which plan has been
provided to SWB.
42
49
(c) Alliance Bancorp shall cause its Board of Directors to be expanded by
one member and shall appoint Xxxxxxx X. Xxxxxx (such person, and any substitute
person as provided in the last sentence of this paragraph, the "Nominee") to
Alliance Bancorp's Board of Directors immediately following the Company Merger
Effective Date. Xx. Xxxxxx shall be elected to a class of directors which
provides for no less than a two-year term following the Company Merger Effective
Date. Alliance Bancorp shall include the Nominee on the list of nominees for
directors presented by the Board of Directors of Alliance Bancorp and for which
said Board shall solicit proxies at the annual meeting of shareholders of
Alliance Bancorp following the Company Merger Effective Date at which directors
of Alliance Bancorp are elected for such class. In the event that the Nominee is
unable to serve as a director of Alliance Bancorp as a result of illness, death,
resignation or any other reason, such Nominee (or in the event of the death of
nominee, the other Nominee) shall select a substitute nominee to serve as a
member of the Board of Directors of Alliance Bancorp, subject to the approval of
Alliance Bancorp, which shall not be unreasonably withheld and in accordance
with the Alliance Bancorp's By-laws. The provisions of this Section 5.11(c) are
intended to be for the benefit of, and shall be enforceable by, the Nominee.
(d) At the Company Merger Effective Date, Liberty Federal shall establish
an advisory board of directors, which shall be comprised of those members of the
Southwest Federal's Board of Directors set forth in Section 5.11(d) of the
Company Disclosure Schedule. Such advisory board shall meet at such times (not
less than quarterly) and at such places as Liberty Federal shall determine. Each
advisory board member shall receive an annual retainer of $4,500 payable
quarterly or monthly, and a fee of $375 per monthly meeting (the Chairman of the
Advisory Board shall receive a fee of $575 per meeting). The provisions of this
Section 5.11(d) are intended to be for the benefit of, and shall be enforceable
by, each member of such advisory board.
(e) At the Company Merger Effective Date, Alliance Bancorp shall enter
into a consultation agreement in the form attached hereto as Exhibit 5.11.
SECTION 5.12. DUTY TO ADVISE; DUTY TO UPDATE ALLIANCE BANCORP'S DISCLOSURE
SCHEDULE. Alliance Bancorp shall promptly advise SWB of any change or event
having a Material Adverse Effect on it or on any Alliance Bancorp Subsidiary or
which it believes would or would be reasonably likely to cause or constitute a
material breach of any of its representations, warranties or covenants set forth
herein. Alliance Bancorp shall update Alliance Bancorp's Disclosure Schedules as
promptly as practicable after the occurrence of an event or fact which, if such
event or fact had occurred prior to the date of this Agreement, would have been
disclosed in the Alliance Bancorp Disclosure Schedule. The delivery of such
updated Schedule shall not relieve Alliance Bancorp from any breach or violation
of this Agreement and shall not have any effect for the purposes of determining
the satisfaction of the condition set forth in Sections 5.01(c) hereof.
SECTION 5.13. AFFILIATE LETTER. No later than five days after the date of
this Agreement, SWB shall use its best efforts to cause to be delivered to
Alliance Bancorp the Letter Agreement attached hereto as Exhibit 1, executed by
each director and executive officer of SWB.
43
50
ARTICLE VI
CONDITIONS
SECTION 6.01. CONDITIONS TO SWB'S OBLIGATIONS UNDER THIS AGREEMENT. The
obligations of SWB hereunder shall be subject to satisfaction at or prior to the
Closing Date of each of the following conditions, unless waived by SWB pursuant
to Section 7.03 hereof:
(a) CORPORATE PROCEEDINGS. All action required to be taken by, or on the
part of, Alliance Bancorp and Liberty Federal to authorize the execution,
delivery and performance of this Agreement and the Plan of Merger, respectively,
and the consummation of the transactions contemplated by this Agreement and the
Plan of Merger, shall have been duly and validly taken by Alliance Bancorp and
Liberty Federal; and SWB shall have received certified copies of the resolutions
evidencing such authorizations;
(B) COVENANTS. The obligations and covenants of Alliance Bancorp required
by this Agreement to be performed by Alliance Bancorp at or prior to the Closing
Date shall have been duly performed and complied with in all respects, except
where the failure to perform or comply with any obligation or covenant would
not, either individually or in the aggregate, result in a Material Adverse
Effect with respect to Alliance Bancorp;
(c) REPRESENTATIONS AND WARRANTIES. The representations and warranties of
Alliance Bancorp set forth in this Agreement shall be true and correct, as of
the date of this Agreement, and as of the Closing Date as though made on and as
of the Closing Date, except as to any representation or warranty (i) which
specifically relates to an earlier date or (ii) where the breach of the
representation or warranty would not, either individually or in the aggregate,
constitute a Material Adverse Effect with respect to Alliance Bancorp and
Liberty Federal;
(d) APPROVALS OF REGULATORY AUTHORITIES. Alliance Bancorp shall have
received all required approvals of Regulatory Authorities of the Merger (without
the imposition of any conditions that are in Alliance Bancorp's reasonable
judgement unduly burdensome) and delivered copies thereof to SWB; and all notice
and waiting periods required thereunder shall have expired or been terminated;
(e) NO INJUNCTION. There shall not be in effect any order, decree or
injunction of a court or agency of competent jurisdiction which enjoins or
prohibits consummation of the transactions contemplated hereby;
(f) NO MATERIAL ADVERSE EFFECT. Since September 30, 1997, there shall not
have occurred any Material Adverse Effect with respect to Alliance Bancorp;
(g) OFFICER'S CERTIFICATE. Alliance Bancorp shall have delivered to SWB a
certificate, dated the Closing Date and signed, without personal liability, by
its chairman of the board or
44
51
president, to the effect that the conditions set forth in subsections (a)
through (f) of this Section 6.01 and Section 6.02(m) have been satisfied, to the
best knowledge of the officer executing the same;
(h) OPINION OF ALLIANCE BANCORP'S COUNSEL. SWB shall have received an
opinion of Xxxx Xxxxxx Xxxxxx Xxxxxxxx & Xxxxxx, P.C., counsel to Alliance
Bancorp, dated the Closing Date, in form and substance reasonably satisfactory
to SWB and its counsel to the effect set forth on Exhibit 6.1 attached hereto;
(i) REGISTRATION STATEMENT. The Registration Statement shall be effective
under the Securities Act and no proceedings shall be pending or threatened by
the SEC to suspend the effectiveness of the Registration Statement; and all
required approvals by state securities or "blue sky" authorities with respect to
the transactions contemplated by this Agreement, shall have been obtained;
(j) TAX OPINION. SWB shall have received an opinion of Xxxx Xxxxxx Xxxxxx
Xxxxxxxx & Xxxxxx, P.C. substantially to the effect set forth on Exhibit 6.2
attached hereto;
(k) APPROVAL OF SWB'S SHAREHOLDERS. This Agreement shall have been
approved by the shareholders of SWB by such vote as is required under applicable
Delaware law, SWB's certificate of incorporation and bylaws, and under Nasdaq
requirements applicable to it;
(l) INVESTMENT BANKING OPINION. SWB shall have received the written
opinion from Baird on or before the date of this Agreement and updated in
writing as of a date within five (5) days of mailing the Prospectus/Proxy
Statement, to the effect that the Exchange Ratio is fair, from a financial point
of view, to such shareholders;
(m) STOCK EXCHANGE LISTING. The shares of Alliance Bancorp Common Stock
which shall be issued to the shareholders of SWB upon consummation of the Merger
shall have been authorized for listing on the Nasdaq National Market System,
subject to official notice of issuance; and
(n) POOLING LETTER. Alliance Bancorp shall have received an opinion from
KPMG Peat Marwick LLP to the effect that the Company Merger will be treated as a
"pooling of interest," as defined by GAAP, for financial accounting purposes.
SECTION 6.02. CONDITIONS TO ALLIANCE BANCORP'S OBLIGATIONS UNDER THIS
AGREEMENT. The obligations of Alliance Bancorp hereunder shall be subject to
satisfaction at or prior to the Closing Date of each of the following
conditions, unless waived by Alliance Bancorp pursuant to Section 8.03 hereof:
(a) CORPORATE PROCEEDINGS. All action required to be taken by, or on the
part of, SWB and Southwest Federal to authorize the execution, delivery and
performance of this Agreement and the Plan of Merger, respectively, and the
consummation of the transactions contemplated by this Agreement and the Plan of
Merger, shall have been duly and validly taken by SWB and Southwest
45
52
Federal; and Alliance Bancorp shall have received certified copies of the
resolutions evidencing such authorizations;
(b) COVENANTS. The obligations and covenants of SWB, required by this
Agreement to be performed by it at or prior to the Closing Date shall have been
duly performed and complied with in all respects, except where the failure to
perform or comply with any obligation or covenant would not, either individually
or in the aggregate, result in a Material Adverse Effect with respect to SWB;
(c) REPRESENTATIONS AND WARRANTIES. The representations and warranties of
SWB set forth in this Agreement shall be true and correct as of the date of this
Agreement, and as of the Closing Date as though made on and as of the Closing
Date, except as to any representation or warranty (i) which specifically relates
to an earlier date or (ii) where the breach of the representation or warranty
would not, either individually or in the aggregate, result in a Material Adverse
Effect with respect to SWB;
(d) APPROVALS OF REGULATORY AUTHORITIES. Alliance Bancorp shall have
received all required approvals of Regulatory Authorities of the Merger (without
the imposition of any conditions that are in Alliance Bancorp's reasonable
judgement unduly burdensome) and delivered copies thereof to SWB; and all notice
and waiting periods required thereunder shall have expired or been terminated;
(e) NO INJUNCTION. There shall not be in effect any order, decree or
injunction of a court or agency of competent jurisdiction which enjoins or
prohibits consummation of the transactions contemplated hereby;
(f) NO MATERIAL ADVERSE EFFECT. Since September 30, 1997, there shall not
have occurred any Material Adverse Effect with respect to SWB;
(g) OFFICER'S CERTIFICATE. SWB shall have delivered to Alliance Bancorp a
certificate, dated the Closing Date and signed, without personal liability, by
its chairman of the board or president, to the effect that the conditions set
forth in subsections (a) through (f) of this Section 6.02 and Section 6.01(k)
have been satisfied, to the best knowledge of the officer executing the same;
(h) OPINIONS OF SWB'S COUNSEL. Alliance Bancorp shall have received an
opinion of Xxxxxxx, Xxxxxx & Xxxxxxxx, counsel to SWB, dated the Closing Date,
in form and substance reasonably satisfactory to Alliance Bancorp and its
counsel to the effect set forth on Exhibit 6.3 attached hereto;
(i) REGISTRATION STATEMENT. The Registration Statement shall be effective
under the Securities Act and no proceedings shall be pending or threatened by
the SEC to suspend the effectiveness of the Registration Statement; and all
required approvals by state securities or "blue sky" authorities with respect to
the transactions contemplated by this Agreement, shall have been obtained;
46
53
(j) TAX OPINION. Alliance Bancorp shall have received an opinion of Xxxx
Xxxxxx Xxxxxx Xxxxxxxx & Xxxxxx, P.C., its counsel, substantially to the effect
set forth on Exhibit 6.3 attached hereto;
(k) POOLING LETTER. Alliance Bancorp shall have received (i) an opinion
from KPMG Peat Marwick LLP to the effect that the Company Merger will be treated
as a "pooling of interest," as defined by GAAP, for financial accounting
purposes and (ii) a letter, in a form satisfactory to KPMG Peat Marwick, LLP,
from SWB's independent auditor representing that they are not aware of any
transactions or of any events or circumstances that would preclude the Merger
from being treated as a "pooling of interest" for financial accounting purposes;
(l) LIQUIDATION ACCOUNT. Neither the Merger or consummation of the Plan of
Merger shall require Alliance Bancorp or SWB to distribute to depositors the
liquidation account established by Southwest Federal in connection with its
conversion from mutual to stock form;
(m) APPROVAL OF ALLIANCE BANCORP'S SHAREHOLDERS. This Agreement shall have
been approved by the shareholders of Alliance Bancorp by such vote as is
required under applicable Delaware law, Alliance Bancorp's certificate of
incorporation and bylaws and under Nasdaq requirements applicable to it; and
(n) INVESTMENT BANKING OPINION. Alliance Bancorp shall have received the
written opinion from FBR on or before the date of this Agreement and updated in
writing as of a date within five (5) days of mailing the Prospectus/Proxy
Statement to the effect that the Merger is fair to Alliance Bancorp.
ARTICLE VII
TERMINATION, WAIVER AND AMENDMENT
SECTION 7.01 TERMINATION. This Agreement may be terminated on or at any
time prior to the Closing Date:
(a) By the mutual written consent of the parties hereto;
(b) By Alliance Bancorp or SWB:
(i) if there shall have been any breach of any representation,
warranty, covenant or other obligation of Alliance Bancorp which results in a
Material Adverse Effect with respect to Alliance Bancorp, on the one hand, or of
SWB which results in a Material Adverse Effect with respect to SWB, on the other
hand, and such breach cannot be, or shall not have been, remedied within 30 days
after receipt by such other party of notice in writing specifying the nature of
such breach and requesting that it be remedied;
47
54
(ii) if the Closing Date shall not have occurred on or before
September 30, 1998, unless the failure of such occurrence shall be due to the
failure of the party seeking to terminate this Agreement to perform or observe
its agreements set forth in this Agreement required to be performed or observed
by such party on or before the Closing Date; or
(iii) if either party has been informed in writing by a Regulatory
Authority whose approval or consent has been requested that such approval or
consent is unlikely to be granted, unless the failure of such occurrence shall
be due to the failure of the party seeking to terminate this Agreement to
perform or observe its agreements set forth herein required to be performed or
observed by such party on or before the Closing Date; or
(iv) by either Alliance Bancorp or SWB if any approval of the
shareholders of Alliance Bancorp or SWB required for the consummation of the
Merger shall not have been obtained by reason of the failure to obtain the
required vote at a duly held meeting of shareholders or at any adjournment or
postponement thereof.
(c) By Alliance Bancorp by written notice to SWB within four days of the
Closing Date if the Alliance Bancorp Market Value shall be less than $19.875,
provided that Alliance Bancorp's determination to terminate this Agreement shall
be nullified if SWB provides written notice, within three days of the receipt of
notice provided to it by Alliance Bancorp, stating that it wants to proceed with
the Company Merger, in which event the Exchange Ratio shall be 1.3579.
SECTION 7.02. EFFECT OF TERMINATIOM. If this Agreement is terminated
pursuant to Section 7.01 hereof, this Agreement shall forthwith become void
(other than Section 6.02(d), Section 6.10(b)(iii) and Section 8.01 hereof, which
shall remain in full force and effect), and there shall be no further liability
on the part of Alliance Bancorp or SWB to the other, except that no party shall
be relieved or released from any liabilities or damages arising out of its
willful breach of any provision of this Agreement.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. EXPENSES. (a) Except for the cost of printing and mailing
the Proxy Statement/Prospectus which shall be shared equally, and except as
provided herein, each party hereto shall bear and pay all costs and expenses
incurred by it in connection with the transactions contemplated hereby,
including fees and expenses of its own financial consultants, accountants and
counsel.
(b) In the event of any termination of this Agreement by a party pursuant
to Section 7.01(b)(i) hereof based on a breach of a representation or warranty,
or the breach of a covenant, by the other party hereto, the breaching party
shall pay to the non-breaching party all out-of-pocket costs and expenses,
including, without limitation, reasonable legal, accounting and investment
banking fees and expenses, incurred by the non-breaching party in connection
with entering into this
48
55
Agreement and carrying out of any and all acts contemplated hereunder, plus a
sum equal to $500,000; provided, however, that this clause shall not be
construed to relieve or release a breaching party from any additional
liabilities or damages arising out of its willful breach of any provision of
this Agreement.
SECTION 8.02. NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations, warranties and, except to the extent specifically provided
otherwise herein, agreements and covenants, other than those covenants set forth
in Sections 6.05, and 6.11(a), (c), (d) and (e) which will survive the Merger,
shall terminate on the Closing Date.
SECTION 8.03. AMENDMENT, EXTENSION AND WAIVER. Subject to applicable law,
at any time prior to the consummation of the transactions contemplated by this
Agreement, the parties may (a) amend this Agreement, (b) extend the time for the
performance of any of the obligations or other acts of either party hereto, (c)
waive any inaccuracies in the representations and warranties contained herein or
in any document delivered pursuant hereto, or (d) waive compliance with any of
the agreements or conditions contained in Articles V and VI hereof or otherwise.
This Agreement may not be amended except by an instrument in writing authorized
by the respective Boards of Directors and signed, by duly authorized officers,
on behalf of the parties hereto. Any agreement on the part of a party hereto to
any extension or waiver shall be valid only if set forth in an instrument in
writing signed by a duly authorized officer on behalf of such party, but such
waiver or failure to insist on strict compliance with such obligation, covenant,
agreement or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure.
SECTION 8.04. ENTIRE AGREEMENT. This Agreement, including the documents
and other writings referred to herein or delivered pursuant hereto, contains the
entire agreement and understanding of the parties with respect to its subject
matter. This Agreement supersedes all prior arrangements and understandings
between the parties, both written or oral with respect to its subject matter.
This Agreement shall inure to the benefit of and be binding upon the parties
hereto and their respective successors; provided, however, that nothing in this
Agreement, expressed or implied, is intended to confer upon any party, other
than the parties hereto and their respective successors, any rights, remedies,
obligations or liabilities other than pursuant to Sections 2.04, 2.05(g), 5.05,
and 5.11(a), (c) and (d), with respect to indemnification, employee benefits and
certain other matters, and provided, further, that any such rights, remedies,
obligations or liabilities conferred pursuant to Sections 5.11(b) and (d) shall
terminate and expire one (1) year from the Effective Date.
SECTION 8.05. NO ASSIGNMENT. Neither party hereto may assign any of its
rights or obligations hereunder to any other person, without the prior written
consent of the other party hereto.
SECTION 8.06. NOTICES. All notices or other communications hereunder shall
be in writing and shall be deemed given if delivered personally, mailed by
prepaid registered or certified mail (return receipt requested), or sent by
telecopy, addressed as follows:
49
56
(a) If to Alliance Bancorp, to:
Alliance Bancorp
Xxx Xxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xx. Xxxxxxx X. Xxxx
Chairman of the Board
with a copy to: Xxxx Xxxxxx Xxxxxx Xxxxxxxx & Xxxxxx, PC
0000 Xxxxxxxxx Xxxxxx, XX
Xxxxxxxxxx, X.X. 00000
Attention: Xxxx X. Xxxxxx, Esq.
Xxxxxx Xxxxxxx, Esq.
(b) If to SWB, to:
Southwest Bancshares, Inc.
0000 Xxxxxxxxx Xxxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxx
President and Chief Financial Officer
with a copy to:
Xxxxxxx, Xxxxxx & Xxxxxxxx
0000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attn: Xxxx X. Xxxxxxxx, Esq.
SECTION 8.07. CAPTIONS. The captions contained in this Agreement are for
reference purposes only and are not part of this Agreement.
SECTION 8.08. COUNTERPARTS. This Agreement may be executed in any number
of counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
SECTION 8.09. SEVERABILITY. If any provision of this Agreement or the
application thereof to any person or circumstance shall be invalid or
unenforceable to any extent, the remainder of this Agreement and the application
of such provisions to other persons or circumstances shall not be affected
thereby and shall be enforced to the greatest extent permitted by law.
50
57
SECTION 8.10. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the domestic internal law (including the law of
conflicts of law) of the State of Delaware.
51
58
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized officers as of the day and year first above written.
ALLIANCE BANCORP
By: /s/ Xxxxxxx X. Xxxx
--------------------------------------
Xxxxxxx X. Xxxx
Chairman of the Board
SOUTHWEST BANCSHARES, INC.
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------------
Xxxxxxx X. Xxxxxx
President and Chief Financial Officer
52
59
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated December 16, 1997, between Alliance Bancorp,
a Delaware corporation ("Grantee") and Southwest Bancshares, Inc. ("Issuer"), a
Delaware corporation.
W I T N E S S E T H:
WHEREAS, Grantee and Issuer have entered into an Agreement and Plan of
Merger dated December 16, 1997 (the "Merger Agreement"), which agreement has
been executed by the parties hereto prior to this Agreement; and
WHEREAS, as a condition to Grantee's entering into the Merger Agreement
and in consideration therefor, Issuer has agreed to grant Grantee the Option (as
hereinafter defined):
NOW, THEREFORE. in consideration of the foregoing and the mutual covenants
and agreements set forth herein and in the Merger Agreement, the parties hereto
agree as follows:
1. (a)Issuer hereby grants to Grantee an unconditional, irrevocable option
(the "Option") to purchase, subject to the terms hereof, up to 297,471 fully
paid and nonassessable shares of its common stock, par value $0.01 per share
("Common Stock"), at a price of $25.50 per share (such price, as adjusted if
applicable, the "Option Price"); provided, however, that in the event Issuer
issues or agrees to issue any shares of Common Stock (other than as permitted
under the Merger Agreement) at a price less than $25.50 per share, such Option
Price shall be equal to such lesser price. The number of shares of Common Stock
that may be received upon the exercise of the Option and the Option Price are
subject to adjustment as herein set forth.
(b) In the event that any additional shares of Common Stock are issued or
otherwise become outstanding after the date of this Agreement (other than
pursuant to this Agreement), the number of shares of Common Stock subject to the
Option shall be increased so that, after such issuance, it equals 9.9% of the
number of shares of Common Stock then issued and outstanding, giving effect to
any shares subject or issued pursuant to the Option. Nothing contained in this
Section 1(b) or elsewhere in this Agreement shall be deemed to authorize Issuer
or Grantee to breach any provision of the Merger Agreement.
2. (a)The holder or holders of the Option (including Grantee or any
subsequent transferee(s)) (the "Holder") may exercise the Option, in whole or
part, if, but only if, both an Initial Triggering Event (as hereinafter defined)
and a Subsequent Triggering Event (as hereinafter defined) shall have occurred
prior to the occurrence of an Exercise Termination Event (as hereinafter
defined), provided that the Holder shall have sent the written notice of such
exercise (as provided in subsection (e) of this Section 2) within 180 days
following the first such Subsequent Triggering Event. Each of the following
shall be an Exercise Termination Event: (i) the Company Merger Effective Time
(as defined in the Merger Agreement); (ii) termination of the Merger Agreement
in accordance with the provisions thereof if such termination occurs prior to
the occurrence of an Initial
53
60
Triggering Event; or (iii) the passage of twelve months after termination of the
Merger Agreement if such termination follows or occurs at the same time as the
occurrence of an Initial Triggering Event.
(b) The term "Initial Triggering Event" shall mean any of the following
events or transactions occurring after the date hereof:
(i) Issuer or any of its Subsidiaries (each an "Issuer Subsidiary"),
without having received Grantee's prior written consent, shall have
entered into an agreement to engage in an Acquisition Transaction (as
hereinafter defined) with any person (the term "person" for purposes of
this Agreement having the meaning assigned thereto in Sections 3(a)(9) and
13(d)(3) of the Securities Exchange Act of 1934, and the rules and
regulations thereunder (the "1934 Act")) other than Grantee or any of its
Subsidiaries (each a "Grantee Subsidiary"). For purposes of this
Agreement, "Acquisition Transaction" shall mean (x) a merger or
consolidation, or any similar transaction, involving Issuer or any
Significant Subsidiary (as defined in Rule 1-02 of Regulation S-X
promulgated by the SEC) of Issuer, (y) a purchase, lease or other
acquisition of all or substantially all of the assets of Issuer or any
Significant Subsidiary of Issuer, or (z) a purchase or other acquisition
(including by way of merger, consolidation, share exchange or otherwise)
of beneficial ownership of securities representing 25% or more of the
voting power of Issuer or any Significant Subsidiary of Issuer, provided
that the term "Acquisition Transaction" does not include any internal
merger or consolidation involving only Issuer and/or Issuer Subsidiaries;
(ii) (A) Any person other than Grantee, or any Grantee Subsidiary,
or any Issuer Subsidiary acting in a fiduciary capacity (collectively,
"Excluded Persons"), alone or together with such person's affiliates and
associates (as such terms are defined in Rule 12b-2 under the 0000 Xxx)
shall have acquired beneficial ownership or the right to acquire
beneficial ownership of 25% or more of the outstanding shares of Common
Stock (the term "beneficial ownership" for purposes of this Option
Agreement having the meaning assigned thereto in Section 13(d) of the 1934
Act, and the rules and regulations thereunder) or (B) any group (as such
term is defined in Section 13(d)(3) of the 1934 Act), other than a group
of which only Excluded Persons are members, shall have been formed that
beneficially owns 25% or more of the shares of Common Stock then
outstanding;
(iii) Any person other than Grantee or any Grantee Subsidiary shall
have made a bona fide proposal to Issuer or its shareholders by public
announcement or written communication that is or becomes the subject of
public disclosure to (A) engage in an Acquisition Transaction or (B)
commence a tender or exchange offer the consummation of which would result
in such person acquiring beneficial ownership of securities representing
25% or more of Issuer's voting power;
54
61
(iv) The Board of Directors of Issuer shall have failed to recommend
to its stockholders the adoption of the Merger Agreement or shall have
withdrawn, modified or changed its recommendation in a manner adverse to
Grantee;
(v) After a proposal is made by a third party (other than an
Excluded Person) to Issuer to engage in an Acquisition Transaction, Issuer
shall have intentionally and knowingly breached any representation,
warranty, covenant or agreement contained in the Merger Agreement and such
breach (x) would entitle Grantee to terminate the Merger Agreement
pursuant to Section 7.01(b) therein (without regard to any grace period
provided for therein) and (y) shall not have been cured prior to the
Notice Date (as defined below); or
(vi) Any person other than Grantee or any Grantee Subsidiary, other
than in connection with a transaction to which Grantee has given its prior
written consent, shall have filed an application or notice with the Office
of Thrift Supervision ("OTS") or other federal or state bank regulatory
authority, for approval to engage in an Acquisition Transaction.
(c) The term "Subsequent Triggering Event" shall mean either of the
following events or transactions occurring after the date hereof:
(i) The acquisition by any person other than an Excluded Person of
beneficial ownership of 25% or more of the then outstanding Common Stock;
or
(ii) The occurrence of the Initial Triggering Event described in
subparagraph (i) of subsection (b) of this Section 2.
(d) Issuer shall notify Grantee promptly in writing of the occurrence of
any Initial Triggering Event or Subsequent Triggering Event (together, a
"Triggering Event"), it being understood that the giving of such notice by
Issuer shall not be a condition to the right of the Holder to exercise the
Option.
(e) In the event the Holder is entitled to and wishes to exercise the
Option, it shall send to Issuer a written notice (the date of which is herein
referred to as the "Notice Date") specifying (i) the total number of shares it
will purchase pursuant to such exercise and (ii) a place and date not earlier
than three business days nor later than 60 business days from the Notice Date
for the closing of such purchase (the "Closing Date"); provided that if prior
notification to or approval of the OTS or any other regulatory agency is
required in connection with such purchase, the Holder shall promptly file the
required notice or application for approval and shall expeditiously process the
same and the period of time that otherwise would run pursuant to this sentence
shall run instead from the date on which any required notification periods have
expired or been terminated or such approvals have been obtained and any
requisite waiting period or periods shall have passed. Any exercise of the
Option shall be deemed to occur on the Notice Date relating thereto.
55
62
(f) At each closing referred to in subsection (e) of this Section 2, the
Holder shall pay to Issuer the aggregate purchase price for the shares of Common
Stock purchased pursuant to the exercise of the Option in immediately available
funds by wire transfer to a bank account designated by Issuer, provided that
failure or refusal of Issuer to designate such a bank account shall not preclude
the Holder from exercising the Option.
(g) At such closing, simultaneously with the delivery of immediately
available funds as provided in subsection (f) of this Section 2, Issuer shall
deliver to the Holder a certificate or certificates representing the number of
shares of Common Stock purchased by the Holder and, if the Option should be
exercised in part only, a new Option evidencing the rights of the Holder thereof
to purchase the balance of the shares purchasable hereunder.
(h) Certificates for Common Stock delivered at a closing hereunder may be
endorsed with a restrictive legend that shall read substantially as follows:
"The transfer of the shares represented by this certificate is
subject to certain provisions of an agreement between the registered
holder hereof and Issuer and to resale restrictions arising under the
Securities Act of 1933, as amended. A copy of such agreement is on file at
the principal office of Issuer and will be provided to the holder hereof
without charge upon receipt by Issuer of a written request therefor. "
It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act of 1933 ("1933 Act") in the above legend shall be removed
by delivery of substitute certificate(s) without such reference if the Holder
shall have delivered to Issuer a copy of a letter from the staff of the SEC, or
an opinion of counsel, in form and substance satisfactory to Issuer, to the
effect that such legend is not required for purposes of the 1933 Act; (ii) the
reference to the provisions of this Agreement in the above legend shall be
removed by delivery of substitute certificate(s) without such reference if the
shares have been sold or transferred in compliance with the provisions of this
Agreement and under circumstances that do not require the retention of such
reference; and (iii) the legend shall be removed in its entirety if the
conditions in the preceding clauses (i) and (ii) are both satisfied. In
addition, such certificates shall bear any other legend as may be required by
law.
(i) Upon the giving by the Holder to Issuer of the written notice of
exercise of the Option provided for under subsection (e) of this Section 2 and
the tender of the applicable purchase price in immediately available funds, the
Holder shall be deemed to be the holder of record of the shares of Common Stock
issuable upon such exercise, notwithstanding that the stock transfer books of
Issuer shall then be closed or that certificates representing such shares of
Common Stock shall not then be actually delivered to the Holder. Issuer shall
pay all expenses, and any and all United States federal, state and local taxes
and other charges that may be payable in connection with the preparation, issue
and delivery of stock certificates under this Section 2 in the name of the
Holder or its assignee, transferee or designee.
56
63
3. Issuer agrees: (i) that it shall at all times maintain, free from
preemptive rights, sufficient authorized but unissued or treasury shares of
Common Stock so that the Option may be exercised without additional
authorization of Common Stock after giving effect to all other options,
warrants, convertible securities and other rights to purchase Common Stock; (ii)
that it will not, by charter amendment or through reorganization, consolidation,
merger, dissolution or sale of assets, or by any other voluntary act, avoid or
seek to avoid the observance or performance of any of the covenants,
stipulations or conditions to be observed or performed hereunder by Issuer;
(iii) promptly to take all action as may from time to time be required
(including (x) complying with all premerger notification, reporting and waiting
period requirements specified in 15 U.S.C. Section 18a and regulations
promulgated thereunder and (y) in the event, under the Home Owners' Loan Act, as
amended ("HOLA"), or the Change in Bank Control Act of 1978, as amended, or any
state banking law, prior approval of or notice to the OTS, or to any state
regulatory authority is necessary before the Option may be exercised,
cooperating fully with the Holder in preparing such applications or notices and
providing such information to the OTS or such state regulatory authority as they
may require) in order to permit the Holder to exercise the Option and Issuer
duly and effectively to issue shares of Common Stock pursuant hereto; and (iv)
promptly to take all action provided herein to protect the rights of the Holder
against dilution.
4. This Agreement (and the Option granted hereby) are exchangeable,
without expense, at the option of the Holder, upon presentation and surrender of
this Agreement at the principal office of Issuer, for other Agreements providing
for Options of different denominations entitling the holder thereof to purchase,
on the same terms and subject to the same conditions as are set forth herein, in
the aggregate the same number of shares of Common Stock purchasable hereunder.
The terms "Agreement" and "Option" as used herein include any Stock Option
Agreements and related Options for which this Agreement (and the Option granted
hereby) may be exchanged. Upon receipt by Issuer of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this
Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement if mutilated, Issuer will execute and deliver a new Agreement of like
tenor and date. Any such new Agreement executed and delivered shall constitute
an additional contractual obligation on the part of Issuer, whether or not the
Agreement so lost, stolen, destroyed or mutilated shall at any time be
enforceable by anyone.
5. In addition to the adjustment in the number of shares of Common Stock
that are purchasable upon exercise of the Option pursuant to Section 1 of this
Agreement, in the event of any change in Common Stock by reason of stock
dividends, split-ups, mergers, recapitalizations, combinations, subdivisions,
conversions, exchanges of shares, distributions, or the like, the type and
number, and/or the price, of shares of Common Stock purchasable upon exercise
hereof shall be appropriately adjusted, and proper provision shall be made in
the agreements governing such transaction so that the Holder shall receive, upon
exercise of the Option, the number and class of shares or other securities or
property that Holder would have received in respect of the Common Stock if the
Option had been exercised immediately prior to such event, or the record date
therefor, as applicable.
57
64
6. Upon the occurrence of a Subsequent Triggering Event that occurs prior
to an Exercise Termination Event, Issuer (including any successor thereto)
shall, at the request of the Holder delivered at the time of and together with a
written notice of exercise in accordance with Section 2(e) hereof (whether on
its own behalf or on behalf of any subsequent holder of this Option (or part
thereof) or any of the shares of Common Stock issued pursuant hereto), promptly
prepare, file and keep current a shelf registration statement under the 1933 Act
covering any shares issued or issuable pursuant to this Option and shall use its
best efforts to cause such registration statement to become effective and remain
current in order to permit the sale or other disposition of any shares of Common
Stock issued upon total or partial exercise of this Option ("Option Shares") in
accordance with any plan of disposition requested by the Holder. Issuer will use
its best efforts to cause such registration statement first to become effective
and then to remain effective for such period not in excess of 180 days from the
day such registration statement first becomes effective or such shorter time as
may be reasonably necessary to effect such sales or other dispositions. The
Holder shall have the right to demand not more than two such registrations under
this Agreement and all other agreements, for which this agreement may be
exchanged pursuant to Section 4 hereof; provided, however, that Issuer shall be
required to bear the expenses related only to the first such registration, and
the Holder shall bear such expenses to the extent related to the second. The
foregoing notwithstanding, if, at the time of any request by the Holder for
registration of Option Shares as provided above, Issuer is in registration with
respect to an underwritten public offering of shares of Common Stock, and if in
the good faith judgment of the managing underwriter or managing underwriters,
or, if none, the sole underwriter or underwriters, of such offering the
inclusion of the Holder's Option or Option Shares would interfere with the
successful marketing of the shares of Common Stock offered by Issuer, the number
of Option Shares otherwise to be covered in the registration statement
contemplated hereby may be reduced; and provided, however, that if such
reduction occurs, then the Issuer shall file a registration statement for the
balance as promptly as practical and no reduction shall thereafter occur. Each
such Holder shall provide all information reasonably requested by Issuer for
inclusion in any registration statement to be filed hereunder. If requested by
any such Holder in connection with such registration, Issuer shall become a
party to any underwriting agreement relating to the sale of such shares, but
only to the extent of obligating itself in respect of representations,
warranties, indemnities and other agreements customarily included in such
underwriting agreements for the Issuer. Upon receiving any request under this
Section 6 from any Holder, Issuer agrees to send a copy thereof to any other
person known to Issuer to be entitled to registration rights under this Section
6, in each case by promptly mailing the same, postage prepaid, to the address of
record of the persons entitled to receive such copies.
7. (a)In the event that prior to an Exercise Termination Event, Issuer
shall enter into an agreement (i) to consolidate with or merge into any person,
other than Grantee or one of its Subsidiaries, and shall not be the continuing
or surviving corporation of such consolidation or merger, (ii) to permit any
person, other than Grantee or one of its Subsidiaries, to merge into Issuer and
Issuer shall be the continuing or surviving corporation, but, in connection with
such merger, the then outstanding shares of Common Stock shall be changed into
or exchanged for stock or other securities of any other person or cash or any
other property or the then outstanding shares of Common Stock shall after such
merger represent less than 50% of the outstanding shares and share
58
65
equivalents of the merged company, or (iii) to sell or otherwise transfer all or
substantially all of its assets to any person, other than Grantee or one of its
Subsidiaries, then, and in each such case, the agreement governing such
transaction shall make proper provision so that the Option shall, upon the
consummation of any such transaction and upon the terms and conditions set forth
herein, be converted into, or exchanged for, an option (the "Substitute
Option"), at the election of the Holder, of either (x) the Acquiring Corporation
(as hereinafter defined) or (y) any person that controls the Acquiring
Corporation.
(b) The following terms have the meanings indicated:
(1) "Acquiring Corporation" shall mean (i) the continuing or
surviving corporation of a consolidation or merger with Issuer (if other
than Issuer), (ii) Issuer in a merger in which Issuer is the continuing or
surviving person, and (iii) the transferee of all or substantially all of
Issuer's assets.
(2) "Substitute Common Stock" shall mean the shares of capital stock
(or similar equity interest) with the greatest voting power with respect
of the election of directors (or other persons similarly responsible for
direction of the business and affairs) of the issuer of the Substitute
Option.
(3) "Assigned Value" shall mean the highest of (i) the price per
share of Common Stock at which a tender offer or exchange offer therefor
has been made, (ii) the price per share of Common Stock to be paid by any
third party pursuant to an agreement with Issuer, or (iii) in the event of
a sale of all or substantially all of Issuer's assets, the sum of the
price paid in such sale for such assets and the current market value of
the remaining assets of Issuer as determined by a nationally recognized
investment banking firm selected by the Holder, divided by the number of
shares of Common Stock of Issuer outstanding at the time of such sale. In
determining the market/offer price, the value of consideration other than
cash shall be determined by a nationally recognized investment banking
firm selected by the Holder.
(4) "Average Price" shall mean the average closing price of a share
of the Substitute Common Stock for the six months immediately preceding
the consolidation, merger or sale in question, but in no event higher than
the closing price of the shares of Substitute Common Stock on the day
preceding such consolidation, merger or sale; provided that if Issuer is
the issuer of the Substitute Option, the Average Price shall be computed
with respect to a share of Common Stock issued by the person merging into
Issuer or by any company which controls or is controlled by such person,
as the Holder may elect.
(c) The Substitute Option shall have the same terms and conditions as the
Option, provided, that if any term or condition of the Substitute Option cannot,
for legal reasons, be the same as the Option, such term or condition shall be as
similar as possible and in no event less advantageous to the Holder. The issuer
of the Substitute Option shall also enter into an agreement
59
66
with the then Holder or Holders of the Substitute Option in substantially the
same form as this Agreement, which shall be applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such number of shares
of Substitute Common Stock as is equal to (i) the product of (A) the Assigned
Value and (B) the number of shares of Common Stock for which the Option is then
exercisable, divided by (ii) the Average Price. The exercise price of the
Substitute Option per share of Substitute Common Stock shall then be equal to
the Option Price multiplied by a fraction the numerator of which shall be the
number of shares of Common Stock for which the Option is then exercisable and
the denominator of which shall be the number of shares of Substitute Common
Stock for which the Substitute Option is exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs, shall the
Substitute Option be exercisable for more than 19.9% of the shares of Substitute
Common Stock outstanding prior to exercise of the Substitute Option.
(f) Issuer shall not enter into any transaction described in subsection
(a) of this Section 7 unless the Acquiring Corporation and any person that
controls the Acquiring Corporation assume in writing all the obligations of
Issuer hereunder.
8. The 180-day period for exercise of certain rights under Sections 2 and
6 shall be extended: (i) to the extent necessary to obtain all regulatory
approvals for the exercise of such rights, and for the expiration of all
statutory waiting periods; and (ii) to the extent necessary to avoid liability
under Section 16(b) of the 1934 Act by reason of such exercise.
9. Repurchase at the Option of Holder. (a) At the request of Holder at any
time commencing upon the first occurrence of a Repurchase Event (as defined in
Section 9(d)) and ending 12 months immediately thereafter, Issuer shall
repurchase from Holder (i) the Option and (ii) all shares of Issuer Common Stock
purchased by Holder pursuant hereto with respect to which Holder then has
beneficial ownership. The date on which Holder exercises its rights under this
Section 9 is referred to as the "Request Date". Such repurchase shall be at an
aggregate price (the "Section 9 Repurchase Consideration") equal to the sum of:
(i) the aggregate Option Price paid by Holder for any shares of
Issuer Common Stock acquired pursuant to the Option with respect to which Holder
then has beneficial ownership;
(ii) the excess, if any, of (x) the Applicable Price (as defined below)
for each share of Common Stock over (y) the Option Price (subject to adjustment
pursuant to Sections 1 and 5), multiplied by the number of shares of Common
Stock with respect to which the Option has not been exercised; and
(iii) the excess, if any, of the Applicable Price over the Option
Price (subject to adjustment pursuant to Sections 1 and 5) paid (or, in the case
of Option Shares with respect to which the Option has been exercised but the
Closing Date has not occurred, payable) by Holder for each
60
67
share of Common Stock with respect to which the Option has been exercised and
with respect to which Holder then has beneficial ownership, multiplied by the
number of such shares.
(b) If Holder exercises its rights under this Section 8, Issuer
shall, within 10 business days after the Request Date, pay the Section 9
Repurchase Consideration to Holder in immediately available funds, and
contemporaneously with such payment, Holder shall surrender to Issuer the Option
and the certificates evidencing the shares of Common Stock purchased thereunder
with respect to which Holder then has beneficial ownership, and Holder shall
warrant that it has sole record and beneficial ownership of such shares and that
the same are then free and clear of all liens. Notwithstanding the foregoing, to
the extent that prior notification to or approval of any federal or state
regulatory authority is required in connection with the payment of all or any
portion of the Section 9 Repurchase Consideration, Holder shall have the ongoing
option to revoke its request for repurchase pursuant to Section 9, in whole or
in part, or to require that Issuer deliver from time to time that portion of the
Section 9 Repurchase Consideration that it is not then so prohibited from paying
and promptly file the required notice or application for approval and
expeditiously process the same (and each party shall cooperate with the other in
the filing of any such notice or application and the obtaining of any such
approval). If any federal or state regulatory authority disapproves of any part
of Issuer's proposed repurchase pursuant to this Section 9, Issuer shall
promptly give notice of such fact to Holder. If any federal or state regulatory
authority prohibits the repurchase in part but not in whole, then Holder shall
have the right (i) to revoke the repurchase request or (ii) to the extent
permitted by such regulatory authority, determine whether the repurchase should
apply to the Option and/or Option Shares and to what extent to each, and Holder
shall thereupon have the right to exercise the Option as to the number of Option
Shares for which the Option was exercisable at the Request Date less the sum of
the number of shares covered by the Option in respect of which payment has been
made pursuant to Section 9(a)(ii) and the number of shares covered by the
portion of the Option (if any) that has been repurchased. Holder shall notify
Issuer of its determination under the preceding sentence within five (5)
business days of receipt of notice of disapproval of the repurchase.
Notwithstanding anything herein to the contrary, all of Holder's rights
under this Section 9 shall terminate on the date of termination of this Option
pursuant to Section 2(a).
(c) For purposes of this Agreement, the "Applicable Price" means the
highest of (i) the highest price per share of Common Stock paid for any such
share by the person or groups described in Section 9(d)(i), (ii) the price per
share of Common Stock received by holders of Common Stock in connection with any
merger or other business combination transaction described in Section 7(a)(i),
7(a)(ii) or 7(a)(iii), or (iii) the highest closing sales price per share of
Issuer Common Stock quoted on the Nasdaq National Market System (or if Issuer
Common Stock is not quoted on the Nasdaq National Market System, the highest bid
price per share as quoted on the principal trading market or securities exchange
on which such shares are traded as reported by a recognized source chosen by
Holder) during the 40 business days preceding the Request Date; provided,
however, that in the event of a sale of less than all of Issuer's assets, the
Applicable Price shall be the sum of the price paid in such sale for such assets
and the current market value of the
61
68
remaining assets of Issuer as determined by a nationally recognized investment
banking firm selected by Holder, divided by the number of shares of Common Stock
outstanding at the time of such sale. If the consideration to be offered, paid
or received pursuant to either of the foregoing clauses (i) or (ii) shall be
other than in cash, the value of such consideration shall be determined in good
faith by an independent nationally recognized investment banking firm selected
by Holder and reasonably acceptable to Issuer, which determination shall be
conclusive for all purposes of this Agreement.
(d) As used herein, "Repurchase Event" shall occur if (i) any person
(other than Grantee or any subsidiary of Grantee) shall have acquired beneficial
ownership of (as such term is defined in Rule 13d-3 promulgated under the
Exchange Act), or the right to acquire beneficial ownership of, or any "group"
(as such term is defined under the Exchange Act) shall have been formed which
beneficially owns or has the right to acquire beneficial ownership of, 50% or
more of the then outstanding shares of Issuer Common Stock, or (ii) any of the
transactions described in Section 7(a)(i), 7(a)(ii) or 7(a)(iii) shall be
consummated.
10. Issuer hereby represents and warrants to Grantee as follows:
(a) Issuer has full corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
Board of Directors of Issuer and no other corporate proceedings on the part of
Issuer are necessary to authorize this Agreement or to consummate the
transactions so contemplated. This Agreement has been duly and validly executed
and delivered by Issuer. This Agreement is the valid and legally binding
obligation of Issuer.
(b) Issuer has taken all necessary corporate action to authorize and
reserve and to permit it to issue, and at all times from the date hereof through
the termination of this Agreement in accordance with its terms will have
reserved for issuance upon the exercise of the Option, that number of shares of
Common Stock equal to the maximum number of shares of Common Stock at any time
and from time to time issuable hereunder, and all such shares, upon issuance
pursuant hereto, will be duly authorized, validly issued, fully paid,
nonassessable, and will be delivered free and clear of all claims, liens,
encumbrance and security interests and not subject to any preemptive rights.
(c) Issuer has taken all necessary action to exempt this Agreement, and
the transactions contemplated hereby and thereby from, and this Agreement and
the transactions contemplated hereby and thereby are exempt from, (i) any
applicable state takeover laws, (ii) any state laws limiting or restricting the
voting rights of stockholders and (iii) any provision in its or any of its
subsidiaries' articles of incorporation, certificate of incorporation, charter
or bylaws restricting or limiting stock ownership or the voting rights of
stockholders.
62
69
(d) The execution, delivery and performance of this Agreement does not or
will not, and the consummation by Issuer of any of the transactions contemplated
hereby will not, constitute or result in (i) a breach or violation of, or a
default under, its certificate of incorporation or bylaws, or the comparable
governing instruments of any of its subsidiaries, or (ii) a breach or violation
of, or a default under, any agreement, lease, contract, note, mortgage,
indenture, arrangement or other obligation of it or any of its subsidiaries
(with or without the giving of notice, the lapse of time or both) or under any
law, rule, ordinance or regulation or judgment, decree, order, award or
governmental or nongovernmental permit or license to which it or any of its
subsidiaries is subject, that would, in any case referred to in this clause
(ii), give any other person the ability to prevent or enjoin Issuer's
performance under this Agreement in any material respect.
11. Grantee hereby represents and warrants to Issuer that:
(a) Grantee has full corporate power and authority to enter into this
Agreement and, subject to any approvals or consents referred to herein, to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of Grantee.
This Agreement has been duly executed and delivered by Grantee.
(b) This Option is not being acquired with a view to the public
distribution thereof and neither this Option nor any Option Shares will be
transferred or otherwise disposed of except in a transaction registered or
exempt from registration under applicable federal and state securities laws and
regulations.
12. Neither of the parties hereto may assign any of its rights or
obligations under this Option Agreement or the Option created hereunder to any
other person, without the express written consent of the other party, except (i)
to any wholly-owned Subsidiary or (ii) that in the event a Subsequent Triggering
Event shall have occurred prior to an Exercise Termination Event, Grantee,
subject to the express provisions hereof, may assign in whole or in part its
rights and obligations hereunder to one or more transferees.
13. Each of Grantee and Issuer will use its best efforts to make all
filings with, and to obtain consents of all third parties and governmental
authorities necessary to the consummation of the transactions contemplated by
this Agreement.
14. Notwithstanding anything to the contrary herein, in the event that the
Holder or any Related Person thereof is a person making an offer or proposal to
engage in an Acquisition Transaction (other than the transactions contemplated
by the Merger Agreement), then in the case of a Holder or any Related Person
thereof, the Option held by it shall immediately terminate and be of no further
force or effect. A Related Person of a Holder means any Affiliate (as defined in
Rule 12b-2 of the rules and regulations under the 0000 Xxx) of the Holder and
any person that is the beneficial owner of 20% or more of the voting power of
the Holder.
63
70
15. The parties hereto acknowledge that damages would be an inadequate
remedy for a breach of this Agreement by either party hereto and that the
obligations of the parties hereto shall be enforceable by either party hereto
through injunctive or other equitable relief.
16. If any term, provision, covenant or restriction contained in this
Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions and covenants and restrictions contained in this Agreement
shall remain in full force and effect, and shall in no way be affected, impaired
or invalidated. If for any reason such court or regulatory agency determines
that the Holder is not permitted to acquire the full number of shares of Common
Stock provided in Section 1(a) hereof (as adjusted pursuant to Section 1(b) or
Section 5 hereof), it is the express intention of Issuer to allow the Holder to
acquire such lesser number of shares as may be permissible, without any
amendment or modification hereof.
17. All notices, requests, claims, demands and other communications
hereunder shall be deemed to have been duly given when delivered in person, by
cable, telegram, telecopy or telex, or by registered or certified mail (postage
prepaid, return receipt requested) at the respective addresses of the parties
set forth in the Merger Agreement.
18. This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware, regardless of the laws that might otherwise
govern under applicable principles of conflicts of laws thereof.
19. This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which shall constitute one
and the same agreement.
20. Except as otherwise expressly provided herein, each of the parties
hereto shall bear and pay all costs and expenses incurred by it or on its behalf
in connection with the transactions contemplated hereunder, including fees and
expenses of its own financial consultants, investment bankers, accountants and
counsel. Notwithstanding anything to the contrary contained herein or in the
Merger Agreement, in the event a Subsequent Triggering Event shall occur prior
to an Exercise Termination Event, Issuer shall pay to Grantee upon demand the
amount of the expenses incurred by Grantee in connection with this Agreement and
the Merger Agreement and the transactions contemplated hereby and thereby.
21. Except as otherwise expressly provided herein, or in the Merger
Agreement, this Agreement contains the entire agreement between the parties with
respect to the transactions contemplated hereunder and supersedes all prior
arrangements or understandings with respect thereof, written or oral. The terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors and permitted assigns.
Nothing in this Agreement, expressed or implied, is intended to confer upon any
party, other than the parties hereto, and their respective successors and, as
permitted herein, assignees, any rights, remedies, obligations or liabilities
under or by reason of this Agreement, except as expressly provided herein.
64
71
22. Capitalized terms used in this Agreement and not defined herein shall
have the meanings assigned thereto in the Merger Agreement.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers, all as of the date first above written.
ALLIANCE BANCORP
BY: /s/ XXXXXXX X. XXXX
--------------------------------------
Xxxxxxx X. Xxxx
Chairman of the Board
SOUTHWEST BANCSHARES, INC.
BY: /s/ Xxxxxxx X. Xxxxxx
--------------------------------------
Xxxxxxx X. Xxxxxx
President and Chief Executive Officer
65
72
EXHIBIT 2.1
PLAN OF MERGER
OF
SOUTHWEST FEDERAL SAVINGS BANK
INTO
LIBERTY FEDERAL BANK
PLAN OF MERGER, dated as of the 16th day of December, 1997 by and between
Liberty Federal Bank, a savings bank chartered under the laws of the United
States of America (the "Bank" or the "Resulting Bank"), and Southwest Federal
Savings and Loan Association of Chicago, a savings association chartered under
the laws of the United States of America ("Southwest Federal"), such
institutions being sometimes hereinafter called the "Constituent Associations"
or, individually, "Constituent Association".
WITNESSETH:
WHEREAS, all of the outstanding capital stock of the Bank is owned
directly by Alliance Bancorp ("Alliance Bancorp");
WHEREAS, Alliance Bancorp, parent corporation of the Bank, and Southwest
Bancshares, Inc. ("SWB"), parent corporation of Southwest Federal, have entered
into an Agreement and Plan of Merger ("Merger Agreement") pursuant to which,
following the merger of SWB with and into Alliance Bancorp, Southwest Federal
shall be merged with and into the Bank; and
WHEREAS, the Boards of Directors of the Bank and of Southwest Federal each
believe that it is in the best interests of their institutions and their
stockholders to merge the Bank and Southwest Federal into a single federally
chartered savings bank in order that (i) the merged institution may operate with
an improved competitive position and operating efficiency and (ii) the parent
company of the Bank, Alliance Bancorp, will retain the advantage of a unitary
savings and loan holding company status.
1
73
NOW, THEREFORE, in consideration of the mutual covenants, agreements and
provisions hereinafter contained, and for the purpose of prescribing the terms
and conditions of said merger and mode of carrying the same into effect, the
Bank and Southwest Federal have agreed and do hereby agree and covenant as
follows:
1. Plan of Merger: The merger provided for herein shall be effected as
follows:
(a) The execution and delivery of this Agreement by the Bank and Southwest
Federal shall have been duly approved by at least a two-thirds (2/3) vote of the
Boards of Directors of the Bank and Southwest Federal, respectively.
(b) The Office of Thrift Supervision ("OTS") or any successor thereto
shall have approved the merger.
(c) The merger shall be approved by the shareholder of the Bank and by the
shareholder of Southwest Federal.
(d) Thereupon Southwest Federal shall be merged with and into the Bank.
2. Effect of Merger. When this Plan of Merger shall become effective in
accordance with the laws and regulations of the United States of America:
(a) The separate existence of Southwest Federal shall cease and Southwest
Federal shall be merged into the Bank, which shall be the savings bank resulting
from the merger and shall continue its existence under the name "Liberty Federal
Bank." The date on which such merger becomes effective is hereinafter called the
"Bank Merger Effective Date."
(b) The Charter and Bylaws of the Bank, as in effect at the Bank
Merger Effective Date, shall be the Charter and Bylaws of the Resulting Bank and
may thereafter be amended in accordance with applicable law.
(c) The Directors of the Resulting Bank from and after the Bank Merger
Effective Date shall be nine (9) in number, and shall be those persons whose
names, residence addresses and terms of office are identified in Exhibit 1
hereto.
(d) The executive officers of the Bank following the Bank Merger Effective
Date shall be those persons in office immediately prior to the Bank Merger
Effective Date.
(e) All savings accounts of Southwest Federal shall be and become savings
accounts in the Resulting Bank without change in their respective terms,
maturity, minimum required balances or withdrawal value. Each savings account of
Southwest Federal shall, as of the Bank Merger Effective Date, be considered,
for purpose of interest paid by the Resulting Bank thereafter, as if it had been
a savings account of the Resulting Bank at the time said savings account was
opened in Southwest
2
74
Federal and at all times thereafter until such account ceases to be a savings
account of the Resulting Bank. Appropriate evidence of savings account ownership
interest in the Resulting Bank shall be provided by the Resulting Bank to each
savings account holder of Southwest Federal, as necessary, after consummation of
the merger.
(f) All savings accounts of the Bank prior to consummation of the merger
shall continue to be savings accounts in the Resulting Bank after consummation
of the merger without any change whatsoever in any of the provisions of such
savings accounts, including, without limitation, their respective terms,
maturity, minimum required balances or withdrawal value.
(g) All of the assets, properties, obligations and liabilities of every
kind and character, real, personal and mixed, tangible and intangible, choses in
action, rights, and credits then owned by either the Bank or Southwest Federal,
or which would inure or be subject to either of them, shall immediately by
operation of law and without any conveyance or transfer and without any further
act or deed, be vested in and become the property and obligations of the
Resulting Bank which shall have, hold and enjoy the same in its own right as
fully and to the same extent as the same were possessed, held and enjoyed by the
Bank and Southwest Federal immediately prior to the consummation of the merger.
The Resulting Bank shall be deemed to be and shall be a continuation of the
entity and identity both of the Bank and of Southwest Federal and the rights and
obligations of the Bank and of Southwest Federal shall remain unimpaired; and
the Resulting Bank, upon the consummation of the merger, shall succeed to all of
such rights and obligations and the duties and liabilities connected therewith.
(h) The main office of the Bank at Xxx Xxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxx,
shall be the main office of the Resulting Bank and branch offices thereof will
be located at the locations set forth in Exhibit 2 hereof.
(i) The liquidation account of Southwest Federal as in effect as of the
Bank Merger Effective Date shall be assumed in full by the Resulting Bank.
3. Disposition of Shares:
(a) All of the shares of Southwest Federal capital stock issued and
outstanding on the Bank Merger Effective Date, and all rights in respect
thereof, shall be cancelled.
(b) The shares of capital stock of the Bank outstanding immediately prior
to consummation of the Bank Merger shall constitute the only outstanding shares
of capital stock of the Resulting Bank following consummation of the merger.
4. Effective Date of Merger. The merger provided for herein shall become
effective on the date of endorsement of the Articles of Combination by the
Secretary of the OTS (the "Bank Merger Effective Date"). The merger shall not be
effective unless and until approved by the OTS. The
3
75
merger shall also not be effective until after the effective date of the merger
of SWB with and into Alliance Bancorp as set forth in the Merger Agreement by
and between SWB and Alliance Bancorp.
5. Action by Shareholders: The shareholders of the Bank and Southwest
Federal, respectively, shall take appropriate action to vote to approve this
Plan of Merger.
6. Condition of Closing: The obligations of the parties hereto to
consummate the transactions contemplated herein shall be subject to approval by
the OTS and fulfillment or wavier (as may be applicable) of the conditions set
forth in Article V of the Merger Agreement.
7. Amendment: This Agreement may be amended or modified at any time by a
written instrument signed by the Bank and Southwest Federal.
8. Paragraph Headings: The paragraph headings in this Plan of Merger are
for convenience only; they form no part of this Plan of Merger and shall not
affect its interpretation.
9. Governing Law: This Plan of Merger shall be governed by laws of the
State of Illinois, except to the extent federal law governs.
10. Termination. This Plan of Merger shall automatically terminate without
any further action of the parties hereto upon termination of the Merger
Agreement.
11. Miscellaneous: This Plan of Merger may be executed in counterparts,
each of which shall be deemed an original and all of which constitute one and
the same instrument.
4
76
IN WITNESS WHEREOF, the parties hereto have caused this Plan of Merger to
be executed on their behalf by their duly authorized representatives as of the
day and year first above written.
SOUTHWEST FEDERAL SAVINGS AND LIBERTY FEDERAL BANK
LOAN ASSOCIATION OF CHICAGO
By: By:
------------------------------------- ------------------------------
Xxxxxxx X. Xxxxxx Xxxxxxx X. Xxxx
President and Chief Executive Officer Chairman of the Board
5
77
EXHIBIT B
December 16, 1997
Southwest Bancshares, Inc.
0000 Xxxxxxxxx Xxxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
Alliance Bancorp Bankshares, Inc. ("Alliance Bancorp") and Southwest
Bancshares, Inc. ("SWB") desire to enter into an agreement dated December 16,
1997 ("Agreement"), pursuant to which, subject to the terms and conditions set
forth therein, (a) SWB will merge with and into Alliance Bancorp with Alliance
Bancorp surviving the merger, and (b) shareholders of SWB will receive common
stock of Alliance Bancorp in exchange for common stock of SWB outstanding on the
closing date (the foregoing, collectively, referred to herein as the "Merger").
SWB has requested, as a condition to its execution and delivery to
Alliance Bancorp of the Agreement, that the undersigned, being directors and
executive officers of Alliance Bancorp, execute and deliver to SWB this Letter
Agreement.
Each of the undersigned, in order to induce SWB to execute and deliver to
Alliance Bancorp the Agreement, hereby irrevocably:
(a) Agrees to be present (in person or by proxy) at all meetings of
shareholders of Alliance Bancorp called to vote for approval of the Merger so
that all shares of common stock of Alliance Bancorp then owned by the
undersigned will be counted for the purpose of determining the presence of a
quorum at such meetings and to vote all such shares in favor of the approval and
adoption of the Agreement and the transactions contemplated thereby (including
any amendments or modifications of the terms thereof approved by the Board of
Directors of Alliance Bancorp);
(b) Agrees not to vote or execute any written consent to rescind or amend
in any manner any prior vote or written consent, as a shareholder of Alliance
Bancorp, to approve or adopt the Agreement;
(c) Agrees to use reasonable best efforts to cause the Merger to be
consummated;
(d) Agrees not to sell, or in any other way reduce the risk of the
undersigned relative to, any shares of common stock of Alliance Bancorp or of
common stock of SWB, during the period commencing thirty days prior to the
effective date of the Merger and ending on the date on which financial results
covering at least thirty days of post-Merger combined operations of Alliance
66
78
Bancorp and SWB have been published within the meaning of Section 201.01 of the
Securities and Exchange Commission's Codification of Financial Reporting
Policies; and
(e) Represents that the undersigned has the capacity to enter into this
Letter Agreement and that it is a valid and binding obligation enforceable
against the undersigned in accordance with its terms, subject to bankruptcy,
insolvency and other laws affecting creditors' rights and general equitable
principles.
The obligations set forth herein shall terminate concurrently with any
termination of the Agreement.
----------------------------
This Letter Agreement may be executed in two or more counterparts, each of
which shall be deemed to constitute an original, but all of which together shall
constitute one and the same Letter Agreement.
----------------------------
This Letter Agreement shall terminate concurrently with any termination of
the Agreement in accordance with its terms.
----------------------------
The undersigned intend to be legally bound hereby.
Sincerely,
Name
Title
67
79
EXHIBIT C
December 16, 1997
Alliance Bancorp
Xxx Xxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
Alliance Bancorp Bankshares, Inc. ("Alliance Bancorp") and Southwest
Bancshares, Inc. ("SWB") desire to enter into an agreement dated December 16,
1997 ("Agreement"), pursuant to which, subject to the terms and conditions set
forth therein, (a) SWB will merge with and into Alliance Bancorp with Alliance
Bancorp surviving the merger, and (b) shareholders of SWB will receive common
stock of Alliance Bancorp in exchange for common stock of SWB outstanding on the
closing date (the foregoing, collectively, referred to herein as the "Merger").
Alliance Bancorp has required, as a condition to its execution and
delivery to SWB of the Agreement, that the undersigned, being directors,
executive officers and major shareholders of SWB, execute and deliver to
Alliance Bancorp this Letter Agreement.
Each of the undersigned, in order to induce Alliance Bancorp to execute
and deliver to SWB the Agreement, hereby irrevocably:
(a) Agrees to be present (in person or by proxy) at all meetings of
shareholders of SWB called to vote for approval of the Merger so that all shares
of common stock of SWB then owned by the undersigned will be counted for the
purpose of determining the presence of a quorum at such meetings and to vote all
such shares (i) in favor of approval and adoption of the Agreement and the
transactions contemplated thereby (including any amendments or modifications of
the terms thereof approved by the Board of Directors of SWB), and (ii) against
approval or adoption of any other merger, business combination,
recapitalization, partial liquidation or similar transaction involving SWB;
(b) Agrees not to vote or execute any written consent to rescind or amend
in any manner any prior vote or written consent, as a shareholder of SWB, to
approve or adopt the Agreement;
(c) Agrees to use reasonable best efforts to cause the Merger to be
consummated;
(d) Agrees not to sell, transfer or otherwise dispose of any common stock
of SWB between the date hereof and the record date for the meeting of SWB
shareholders to vote on the Merger;
(e) In accordance with Section 5.06 of the Agreement, agrees not to
solicit, initiate or engage in any negotiations or discussions with any party
other than Alliance Bancorp with respect
68
80
to any offer, sale, transfer or other disposition of, any shares of common stock
of SWB now or hereafter owned by the undersigned;
(f) Agrees not to offer, sell, transfer or otherwise dispose of any shares
of common stock of Alliance Bancorp received in the Merger, except (i) at such
time as a registration statement under the Securities Act of 1933, as amended
("Securities Act") covering sales of such Alliance Bancorp common stock is
effective and a prospectus is made available under the Securities Act, (ii)
within the limits, and in accordance with the applicable provisions of, Rule
145(d) under the Securities Act, or (iii) in a transaction which, in the opinion
of counsel satisfactory to Alliance Bancorp or as described in a "no-action" or
interpretive letter from the staff of the Securities and Exchange Commission
("SEC"), is not required to be registered under the Securities Act; and
acknowledges and agrees that Alliance Bancorp is under no obligation to register
the sale, transfer or other disposition of Alliance Bancorp common stock by the
undersigned or on behalf of the undersigned, or to take any other action
necessary to make an exemption from registration available;
(g) Notwithstanding the foregoing, agrees not to sell, or in any other way
reduce the risk of the undersigned relative to, any shares of common stock of
SWB or of common stock of Alliance Bancorp, during the period commencing thirty
days prior to the effective date of the Merger and ending on the date on which
financial results covering at least thirty days of post-Merger combined
operations of Alliance Bancorp and SWB have been published within the meaning of
Section 201.01 of the SEC's Codification of Financial Reporting Policies;
(h) Agrees that Alliance Bancorp shall not be bound by any attempted sale
of any shares of Alliance Bancorp common stock, and Alliance Bancorp's transfer
agent shall be given an appropriate stop transfer order and shall not be
required to register any such attempted sale, unless the sale has been effected
in compliance with the terms of this Letter Agreement; and further agrees that
the certificate representing shares of Alliance Bancorp common stock owned by
the undersigned may be endorsed with a restrictive legend consistent with the
terms of this Letter Agreement;
(i) Acknowledges and agrees that the provisions of subparagraphs (f), (g)
and (h) hereof also apply to shares of Alliance Bancorp common stock received in
the Merger (or any shares of SWB common stock or of Alliance Bancorp common
stock, whether or not received in the Merger, for the period referred to in
subparagraph (g) above) owned by (i) his or her spouse, (ii) any of his or her
relatives or relatives of his or her spouse occupying his or her home, (iii) any
trust or estate in which he or she, his or her spouse, or any such relative owns
at least a 10% beneficial interest or of which any of them serves as trustee,
executor or in any similar capacity, and (iv) any corporation or other
organization in which the undersigned, any affiliate of the undersigned, his or
her spouse, or any such relative owns at least 10% of any class of equity
securities or of the equity interest;
(j) Represents that the undersigned has no plan or intention to sell,
exchange, or otherwise dispose of any shares of common stock of Alliance Bancorp
to be received in the Merger prior to expiration of the time period referred to
in subparagraph (g) hereof; and
(k) Represents that the undersigned has the capacity to enter into this
Letter Agreement and that it is a valid and binding obligation enforceable
against the undersigned in accordance with
69
81
its terms, subject to bankruptcy, insolvency and other laws affecting creditors'
rights and general equitable principles.
The obligations set forth herein shall terminate concurrently with any
termination of the Agreement.
----------------------------
This Letter Agreement may be executed in two or more counterparts, each of
which shall be deemed to constitute an original, but all of which together shall
constitute one and the same Letter Agreement.
----------------------------
This Letter Agreement shall terminate concurrently with any termination of
the Agreement in accordance with its terms.
----------------------------
The undersigned intend to be legally bound hereby.
Sincerely,
Name
Title
70
82
EXHIBIT 6.1
FORM OF OPINION OF COUNSEL TO ALLIANCE BANCORP
SWB shall have received from counsel to Alliance Bancorp, an opinion, and
as to the statement contained in paragraph (g) below, a letter, dated as of the
Closing Date, substantially to the effect that, subject to normal exceptions and
qualifications:
(a) Alliance Bancorp and Liberty Federal have full corporate power to
carry out the transactions contemplated in the Agreement and the Plan of Merger,
respectively. The execution and delivery of the Agreement and the Plan of Merger
and the consummation of the transactions contemplated thereunder have been duly
and validly authorized by all necessary corporate action on the part of Alliance
Bancorp and Liberty Federal. Subject to the receipt of the requisite vote of
Alliance Bancorp shareholders and the receipt of approvals from the Regulatory
Authorities referred to in Section 4.04 of the Merger Agreement (and assuming
the due authorization, execution and delivery by SWB and Southwest Federal),
respectively, the Agreement and the Plan constitute a valid and legally binding
obligation, in accordance with their respective terms, of Alliance Bancorp and
Liberty Federal, respectively, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium, receivership, conservatorship, and other
laws affecting creditors' rights generally and institutions the deposits of
which are insured by the FDIC, and as may be limited by the exercise of judicial
discretion in applying principles of equity. Subject to satisfaction of the
conditions set forth in the Agreement, neither the transactions contemplated in
the Agreement or the Plan, nor compliance by Alliance Bancorp and Liberty
Federal with any of the respective provisions thereof, will (i) conflict with or
result in a breach or default under (A) the certificate of incorporation or
bylaws of Alliance Bancorp or the charter or bylaws of Liberty Federal, or, (B)
to the knowledge of such counsel, any note, bond, mortgage, indenture, license,
agreement or other material instrument or obligation to which Alliance Bancorp
or Liberty Federal is a party; or (ii) based on certificates of officers and
without independent verification, to the knowledge of such counsel, result in
the creation or imposition of any material lien or encumbrance upon the property
of Alliance Bancorp or Liberty Federal, except such material lien, instrument or
obligation that has been disclosed pursuant to the Agreement or the Plan; or
(iii) violate in any material respect any order, writ, injunction or decree
known to such counsel, or any federal or Delaware statute, rule or regulation
applicable to Alliance Bancorp or Liberty Federal.
(b) Liberty Federal is a validly existing savings bank organized under the
laws of the United States. The deposits of Liberty Federal are insured to the
maximum extent provided by law by the Federal Deposit Insurance Corporation.
(c) There is, to the knowledge of such counsel, no legal, administrative,
arbitration or governmental proceeding or investigation pending or threatened to
which Alliance Bancorp or Liberty Federal is a party which would, if determined
adversely to Alliance Bancorp or Liberty Federal, have a material adverse effect
on the financial condition or results of operation of Alliance
1
83
Bancorp and Liberty Federal taken as a whole, or which presents a claim to
restrain or prohibit the transactions contemplated by the Agreement and the
Plan, respectively.
(d) No consent, approval, authorization or order of any federal or state
court or federal or state governmental agency or body is required for the
consummation by Alliance Bancorp or Liberty Federal of the transactions
contemplated by the Agreement and the Plan, except for such consents, approvals,
authorizations or orders as have been obtained.
(e) Upon the filing and effectiveness of the filings with the appropriate
Delaware and federal authorities in accordance with the Agreement and the Plan,
the mergers of Alliance Bancorp and SWB and of Liberty Federal and Southwest
Federal contemplated by the Agreement and the Plan, respectively, will have been
effected in compliance with all applicable federal and Delaware laws and
regulations in all material respects.
(f) The shares of Alliance Bancorp Common Stock to be issued in connection
with the merger of SWB and Alliance Bancorp contemplated by the Agreement have
been duly authorized and will, when issued in accordance with the terms of the
Agreement, be validly issued, fully paid and nonassessable, free and clear of
any mortgage, pledge, lien, encumbrance or claim (legal or equitable).
(g) On the sole basis of such counsel's participation in conferences with
officers and employees of Alliance Bancorp in connection with the Proxy
Statement/Prospectus, and without other independent investigation or inquiry,
such counsel has no reason to believe that the Proxy Statement/Prospectus,
including any amendments or supplements thereto (except for the financial
information, financial schedules and other financial or statistical data
contained therein and except for any information supplied by SWB for inclusion
therein, as to which counsel need express no belief), as of the date of mailing
thereof, contained any untrue statement of a material fact with respect to
Alliance Bancorp or omitted to state any material fact with respect to Alliance
Bancorp necessary to make any statement therein with respect to Alliance
Bancorp, in light of the circumstances under which it was made, not misleading.
Counsel may state in delivering such opinion, that such counsel has not
independently verified and does not assume the responsibility for the accuracy,
completeness or fairness of any information or statements contained in the Proxy
Statement/Prospectus, except with respect to identified statements of law or
regulations or legal conclusions relating to Alliance Bancorp or the
transactions contemplated in the Agreement and the Plan.
2
84
EXHIBIT 6.2
FORM OF TAX OPINION OF XXXX XXXXXX XXXXXX XXXXXXXX & XXXXXX
Alliance Bancorp and SWB shall have received an opinion of substantially
to the effect that, under the provisions of the IRC:
1. The Company Merger and the Bank Merger will each qualify as a
reorganization under Section 368(a) of the Code.
2. No gain or loss will be recognized by Alliance Bancorp, Liberty
Federal, Alliance Bancorp stockholders, SWB or Southwest Federal as a result of
the Company Merger or the Bank Merger.
3. No gain or loss will be recognized by any SWB stockholder upon the
exchange of SWB Common Stock solely for Alliance Bancorp Common Stock pursuant
to the Merger (except with respect to cash received in lieu of a fractional
share interest in Alliance Bancorp Common Stock, if any, as discussed below).
4. The aggregate tax basis of the Alliance Bancorp Common Stock received
by each stockholder of SWB who exchanges SWB Common Stock for Alliance Bancorp
Common Stock in the Merger will be the same as the aggregate tax basis of the
SWB Common Stock surrendered in exchange therefor (subject to any adjustments
required as the result of receipt of cash in lieu of a fractional share interest
in Alliance Bancorp Common Stock).
5. The holding period of the shares of Alliance Bancorp Common Stock
received by a SWB stockholder in the Merger will include the holding period of
the SWB Common Stock surrendered in exchange therefor, provided that such shares
of SWB Common Stock were held as a capital asset by such stockholder at the
Effective Time.
6. Cash received in the Merger by a SWB stockholder in lieu of a
fractional share interest of Alliance Bancorp Common Stock will be treated as
having been received as a distribution in full payment in exchange for the
fractional share interest of Alliance Bancorp Common Stock which such
stockholder would otherwise be entitled to receive, and will qualify as capital
gain or loss (assuming the SWB Common Stock surrendered in exchange therefor was
held as a capital asset by such stockholder at the Effective Date).
1
85
EXHIBIT 6.3
FORM OF OPINION OF COUNSEL TO SOUTHWEST BANCSHARES, INC.
Alliance Bancorp shall have received from counsel to Southwest Bancshares,
Inc., an opinion, and as to the statement contained in paragraph (e) below, a
letter, dated as of the Closing Date, substantially to the effect that, subject
to normal exceptions and qualifications:
(a) SWB and Southwest Federal have full corporate power to carry out the
transactions contemplated in the Agreement and the Plan of Merger, respectively.
The execution and delivery of the Agreement and the Plan of Merger and the
consummation of the transactions contemplated thereunder have been duly and
validly authorized by all necessary corporate action on the part of SWB and
Southwest Federal. Subject to the receipt of the requisite vote of SWB
shareholders and the receipt of approvals from the Regulatory Authorities
referred to in Section 4.04 of the Agreement (and assuming the due
authorization, execution and delivery by Alliance Bancorp and Liberty Federal),
the Agreement and the Plan constitute a valid and legally binding obligation, in
accordance with their respective terms, of SWB and Southwest Federal,
respectively, except as may be subject to the conservatorship or receivership
provisions of the FDIA, or the insolvency and similar laws affecting creditors'
rights generally and institutions the deposits of which are insured by the FDIC,
and as may be subject, as to enforceability, to general principles of equity.
Subject to satisfaction of the conditions set forth in the Agreement, neither
the transactions contemplated in the Agreement and the Plan, nor compliance by
SWB with any of the respective certificate of incorporation or bylaws of SWB, or
(B) based on certificates of officers and without independent verification, to
the knowledge of such counsel, any note, bond, mortgage, indenture, license,
agreement or other instrument or obligation to which SWB is a party; or (ii) to
the knowledge of such counsel, result in the creation or imposition of any
material lien, instrument or encumbrance upon the property of SWB, except such
material lien, instrument or obligation that has been disclosed to Alliance
Bancorp pursuant to the Agreement and the Plan, or (iii) violate in any material
respect any order, writ, injunction, or decree known to such counsel, or any
statute, rule or regulation applicable to SWB.
(b) Southwest Federal is a validly existing savings association organized
under the laws of the United States. The deposits of Southwest Federal are
insured to the maximum extent provided by law by the Federal Deposit Insurance
Corporation.
(c) There is, to the knowledge of such counsel, no legal, administrative,
arbitration or governmental proceeding or investigation pending or threatened to
which SWB of Southwest Federal is a party which would, if determined adversely
to SWB, have a material adverse effect on the business, properties, results of
operations, or condition, financial or otherwise, of SWB or the SWB Subsidiaries
taken as a whole or which presents a claim to restrain or prohibit the
transactions contemplated by the Agreement and the Plan, respectively.
1
86
(d) No consent, approval, authorization, or order of any federal or state
court or federal or state governmental agency or body, or of any third party, is
required for the consummation by SWB or Southwest Federal of the transactions
contemplated by the Agreement and the Plan, except for such consents, approvals,
authorizations or orders as have been obtained or waived by Alliance Bancorp.
(e) On the sole basis of such counsel's participation in conferences with
officers and employees of SWB in connection with the preparation of the
Prospectus/Proxy Statement and without other independent investigation or
inquiry, such counsel has no reason to believe that the Prospectus/Proxy
Statement, including any amendments or supplements thereto (except for the
financial information, financial statements, financial schedules and other
financial or statistical data contained therein and except for any information
supplied by Alliance Bancorp for inclusion therein, as to which counsel need
express no belief), as of the date of mailing thereof and as of the date of the
meeting of shareholders of SWB to approve the merger, contained any untrue
statement of a material fact or omitted to state a material fact necessary to
make any statement therein, in light of the circumstances under which it was
made, not misleading. Counsel may state in delivering such letter, that such
counsel has not independently verified and does not assume any responsibility
for the accuracy, completeness or fairness of any information or statements
contained in the Prospectus/Proxy Statement, except with respect to identified
statements of law or regulations or legal conclusions relating to SWB or the
transactions contemplated in the Agreement and the Plan.
2
