THE MERGER
This section of the proxy statement/prospectus describes material aspects of the merger. While Wintrust and HPK believe that the
description covers the material terms of the merger and the related transactions, this summary may not contain all of the information that is important to you. You should carefully read this entire proxy statement/prospectus, the attached Annexes,
and the other documents to which this proxy statement/prospectus refers for a more complete understanding of the merger. The agreement and plan of merger attached hereto as Annex A, not this summary, is the legal document which governs the merger.
General
The HPK board of directors is using this proxy statement/prospectus to solicit proxies from the holders of HPK common stock for use at the HPK special meeting, at which HPK stockholders will be asked to
vote on the adoption of the merger agreement and thereby approve the merger. When the merger is consummated, HPK will merge with and into Merger Sub and will cease to exist. Merger Sub will survive the merger and remain a wholly-owned subsidiary of
Wintrust. At the effective time of the merger, holders of HPK common stock will exchange their shares for cash, shares of Wintrust common stock or a combination of cash and shares of Wintrust common stock, in each case subject to proration and
adjustment. Each share of HPK common stock will be exchanged for the per share merger consideration, the stock component of which cannot be determined until two trading days before completion of the merger. See Description of the Merger
AgreementConsideration to be received in the merger for a detailed description of the method for determining the per share merger consideration.
Only whole shares of Wintrust common stock will be issued in the merger. As a result, cash will be paid instead of any fractional shares based on the reference price of Wintrusts common stock during
the reference period. Shares of HPK common stock held by HPK stockholders who elect to exercise their appraisal rights will not be converted into merger consideration.
The companies
Wintrust
Wintrust Financial Corporation, an Illinois corporation which was incorporated in 1992, is a financial holding company based in Rosemont,
Illinois. Wintrust provides community-oriented, personal and commercial banking services to customers located in the Chicago metropolitan area and in southeastern Wisconsin through its fifteen wholly-owned banking subsidiaries, as well as the
origination and purchase of residential mortgages for sale into the secondary market through Wintrust Mortgage, a division of Barrington Bank and Trust Company, N.A. Wintrust provides specialty finance services, including financing for the payment
of commercial insurance premiums and life insurance premiums throughout the United States and Canada through its wholly-owned subsidiary, First Insurance Funding Corporation and its Canadian affiliate, and short-term accounts receivable financing
and outsourced administrative services through its wholly-owned subsidiary, Tricom, Inc. of Milwaukee. Wintrust also provides a full range of wealth management services primarily to customers in the Chicago metropolitan area and in southeastern
Wisconsin through three separate subsidiaries, including The Chicago Trust Company, N.A., Wayne Hummer Investments, LLC and Great Lakes Advisors, LLC.
As of September 30, 2012, Wintrust had total assets of approximately $17.0 billion, total loans of approximately $12.1 billion, total deposits of approximately $13.8 billion, and total
shareholders equity of approximately $1.8 billion.
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Wintrust common stock is traded on NASDAQ under the ticker symbol WTFC.
Financial and other information relating to Wintrust, including information relating to Wintrusts current directors
and executive officers, is set forth in Wintrusts 2011 Annual Report on Form 10-K, Wintrusts Proxy Statement for its 2012 Annual Meeting of Shareholders filed with the SEC on April 24, 2012 and Wintrusts Quarterly Reports
on Form 10-Q and Current Reports on Form 8-K filed during 2012, which are incorporated by reference to this proxy statement/prospectus. Copies of these documents may be obtained from Wintrust as indicated under Where You Can Find More
Information on page 72. See Incorporation of Certain Information by Reference on page 73.
Wintrust BHC
Merger Co.
Wintrust BHC Merger Co., a Delaware corporation, is a wholly-owned subsidiary of Wintrust and was formed solely
for the purpose of consummating the merger, and has not carried on any activities to date, except for activities incidental to its formation and activities undertaken in connection with the merger.
HPK Financial Corporation
HPK Financial Corporation, a Delaware corporation, is a bank holding company headquartered in Chicago, Illinois. Its primary business is operating its bank subsidiary, Hyde Park Bank, an Illinois state
bank, with two banking locations in the Hyde Park neighborhood of Chicago, Illinois and a loan production office to the north of downtown Chicago. Hyde Park Bank began operations in 1928. As of September 30, 2012, HPK had consolidated total
assets of approximately $395.3 million, deposits of $243.8 million and stockholders equity of $38.4 million. HPK is not a public company and, accordingly, there is no established trading market for HPKs common stock.
HPKs proposals
At the HPK special meeting, holders of shares of HPK common stock will be asked to vote on the adoption of the merger agreement and thereby approve the merger.
The merger will not be completed
unless HPKs stockholders adopt the merger agreement and thereby approve the merger.
Background of the
merger
HPKs board of directors and senior management regularly review and evaluate HPKs business, strategic
direction, performance, prospects and strategic alternatives. Near the end of 2011, HPKs senior management began discussions with representatives of Raymond James & Associates, Inc., an investment banking firm, which we refer to as
Raymond James, regarding HPKs strategic alternatives, including a possible sale of the organization. Over the next few months, HPKs senior management and representatives from Raymond James discussed the advantages and disadvantages of
remaining an independent operating concern, the historical performance and strategic direction of HPK and the lack of liquidity for HPKs stockholders. In addition, they discussed the range of possible valuations for a sale of HPK and potential
transaction partners. As part of this discussion, HPKs senior management considered the increasing amount of competition in Chicago, HPKs primary market, anticipated increases in regulatory costs and capital requirements, the continuing
low interest rate environment and trends in mergers and acquisitions in the financial services sector.
Following these
discussions, HPKs senior management asked Raymond James to prepare a presentation to discuss strategic alternatives with the board of directors. HPKs board of directors held a meeting on February 15, 2012, and reviewed with Raymond
James its presentation and evaluated the current banking environment, financial services industry trends, merger and acquisition activity within the industry and HPKs strategic alternatives, including, but not limited to, a possible merger or
sale with a larger institution. Representatives of Raymond James provided a market analysis, which included an analysis of trends in bank pricing and financial performance along with an analysis of bank merger activity. Raymond James also discussed
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with the HPK board the potential pricing HPK might anticipate should it decide to consider a possible sale transaction and several financial institutions, including Wintrust, with possible
interest in a possible business combination with HPK. At this same meeting, representatives of Barack Ferrazzano Kirschbaum & Nagelberg LLP, which we refer to as Barack Ferrazzano, HPKs special counsel, gave a comprehensive
presentation concerning the fiduciary duties of the board of directors when considering strategic alternatives such as a sale of an institution and engaged in extensive discussion with the directors regarding these duties.
Following the financial and legal presentations, the HPK board engaged in a detailed discussion regarding the prospects of the
organization in light of the risks and uncertainties related to increased competition in Hyde Park Banks market area, anticipated increases in regulatory costs and capital requirements and the continuing low interest rate environment, and the
possible strategic alternatives discussed with Raymond James. After a long discussion, the HPK board authorized management to investigate a strategic transaction, including a possible sale transaction, and approved the engagement of Raymond James as
its financial advisor. The HPK board instructed Raymond James to continue evaluating the market and identifying possible transaction partners. HPK and Raymond James entered into a formal engagement letter on February 15, 2012, the day of the
board meeting.
Shortly after the February 15, 2012 meeting, Raymond James began a more comprehensive due diligence
review of HPK and Hyde Park Bank, meeting with members of HPKs management, and began developing confidential marketing materials concerning HPK. On March 20, 2012, Raymond James began contacting prospective bidders and distributed
confidentiality agreements to those bidders expressing an interest in a possible transaction with HPK. Raymond James provided copies of the confidential marketing materials to each party that had executed a confidentiality agreement, worked with
other potential bidders to obtain executed confidentiality agreements to be able to provide them with the confidential marketing materials and continued working with potential strategic partners with the goal of receiving initial bids by
April 30, 2012.
At a meeting of the HPK board on May 1, 2012, Raymond James reviewed the results of the proposal
solicitation process with HPKs board and management. Raymond James reported that it had contacted ten prospective strategic partners, seven of which had executed confidentiality agreements and received copies of the marketing materials. Of
these parties, two institutions, including Wintrust, presented HPK with non-binding expressions of interest for a proposed acquisition, subject to due diligence and the negotiation of a definitive agreement. Raymond James and the board discussed the
price range of each of the two proposals received, the form of consideration offered, the reputation of each party, the strategic opportunity offered by each possible transaction and the perceived ability of each party to consummate a transaction.
The board members asked Raymond James a number of questions regarding the expressions of interest and their terms. They also engaged in a long discussion among themselves regarding the advisability of proceeding with any type of strategic
transaction, and if so, the relative advantages and disadvantages of the two expressions of interest. The board ultimately concluded that, given the relative merits of the proposals presented by Raymond James, the initial proposal from Wintrust was
the more attractive proposal received, as the other expression of interest included a lower purchase price and other less desirable terms. The board determined that HPK should move forward by inviting Wintrust to conduct additional due diligence in
order to obtain a final bid.
Wintrust conducted its additional due diligence on May 16-17 and June 15-18, 2012. In
addition, members of the senior management of both Wintrust and HPK, along with representatives of Raymond James, met at HPKs headquarters on June 7, 2012. Throughout the due diligence and bidding process, Raymond James remained in
contact with Wintrust to assist in the due diligence process and negotiate the terms of the final offer. On June 19, 2012, HPK received email correspondence from the U.S. Treasury concerning the outstanding HPK preferred stock issued through
the Capital Purchase Program. Along with several other institutions, the U.S. Treasury selected the HPK preferred stock for possible inclusion in a pooled auction process unless it was able to identify a qualified designated bidder that could
potentially remove HPK from the process. After discussing the possibility with the management of HPK, Raymond James discussed with Wintrust the possibility of Wintrust acting as the designated bidder of the HPK preferred stock. Wintrust submitted a
revised written, non-binding expression of interest on July 3, 2012, which included its intent to act as HPKs designated bidder for the HPK preferred stock.
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HPKs board met with Raymond James on July 10, 2012 to review and discuss
Wintrusts revised bid of approximately $89.36 per share comprised of approximately 50% cash and 50% shares of Wintrust common stock. During that meeting, the HPK board held a long discussion on the aggregate value of a possible transaction,
the type of consideration involved, the tax treatment and effects of a possible transaction, employment and employee benefit issues, as well as other possible conditions that may be involved in a transaction. This discussion included a review of
Wintrusts financial information, Wintrusts history of prior transactions, Wintrusts community bank operating philosophy and stock performance history. Following this discussion, HPKs board determined to pursue a transaction
with Wintrust and authorized Barack Ferrazzano and Raymond James to enter into discussions with Wintrust and its legal counsel to negotiate the terms of a merger agreement. HPKs board did not seek additional offers at that time because of the
favorable terms of Wintrusts proposal, HPKs confidence in Wintrusts management team and Raymond Jamess prior discussions with other possible transaction partners over the past several months.
On August 6, 2012, HPK submitted the appropriate documentation to the U.S. Treasury which named Wintrust as the designated bidder
for the HPK preferred stock. HPK subsequently received notice from the U.S. Treasury that the bid qualified them to opt out from the pooled auction process, however, no information regarding the potential timing or next steps were provided by the
U.S. Treasury.
HPK and its advisors received an initial draft of the merger agreement on August 1, 2012. On
August 8, 2012, Barack Ferrazzano provided HPKs comments to the initial draft of the merger agreement. HPKs comments included the addition of a mechanism for HPK stockholders to elect cash or stock consideration and the elimination
of an escrow of a portion of the merger consideration to fund indemnification obligations on the part of the HPK. During the month of August 2012, HPK, Wintrust and their respective legal advisors and Raymond James negotiated the terms of the merger
agreement, exchanging comments and revised drafts of the merger agreement. Throughout this period, representatives of Raymond James had several conversations with Wintrust regarding the proposed indemnity provisions in the merger agreement. On
August 30, 2012, Wintrust furthered its due diligence when a representative was provided with an onsite tour of HPKs primary headquarters by members of Aegis Properties Corporation, the property manager for the primary building.
On September 4, 2012, the parties met in person to further negotiate the terms of the merger agreement. The principal
outstanding issue related to the indemnification escrow. Ultimately, after much additional discussion between the parties and their respective advisors, HPK agreed to the indemnification escrow with certain limitations, including a $500,000
deductible and a cap on the total amount of indemnification at 10% of the total merger consideration. The parties also discussed the terms of the voting agreement and which parties were expected to sign such agreement. Furthermore, on
September 6, members of Wintrust, HPK, Barack Ferrazzano and Raymond James had a conference call with officials of the U.S. Treasury to discuss the timing of the process whereby the U.S. Treasury would auction shares of the HPK preferred stock.
After the parties were informed by the U.S. Treasury that any such auction would not likely take place for several months, HPK and Wintrust agreed to proceed toward a final merger agreement. Subsequently the U.S. Treasury removed HPK from the
auction process and Wintrusts bid to purchase HPK preferred stock was withdrawn.
On September 11, 2012, members of
HPKs management and representatives of Barack Ferrazzano met by telephone with David A. Dykstra, Wintrusts Senior Executive Vice President and Chief Operating Officer, to conduct an interview with Mr. Dykstra as part of HPKs
due diligence efforts with respect to Wintrust and its operations. In addition, Wintrust conducted final confirmatory diligence on the loan portfolio during a meeting between the respective chief credit officers on September 11, 2012.
At a meeting of the HPK board held on September 13, 2012, representatives of Barack Ferrazzano and Raymond James
reviewed with the board the process leading to the proposed transaction and the course of negotiations with Wintrust. Representatives of Barack Ferrazzano reviewed in detail with the board the terms of the current draft of the merger agreement,
including the indemnification escrow, the scope of the representations
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and warranties, the nature of HPKs operating covenants prior to closing, the proposed closing conditions and termination provisions. Raymond James provided a financial analysis to the board
of the proposed transaction with Wintrust and reviewed in detail with the board the terms of the merger consideration and election procedure. The HPK board engaged in a long discussion with HPKs advisors regarding the proposed draft of the
merger agreement, including the final business terms of the transaction.
After the conclusion of the presentations and
discussions at the September 13 meeting, the HPK board unanimously approved the merger agreement and resolved to recommend that HPK stockholders approve the merger and, subject to the boards approval of the form of escrow agreement to be
attached to the merger agreement, authorized the Chief Executive Officer of HPK to execute the merger agreement on behalf of HPK in substantially the form reviewed by the board subject to such changes agreed to by such officer, and approved the
voting agreement. On September 14, 2012, the HPK board held a special meeting to review and discuss with representatives from Barack Ferrazzano the most recent draft of the form of escrow agreement. After a detailed discussion of the proposed
terms of the form agreement, the board unanimously approved the escrow agreement in substantially the form reviewed by the board and ratified the actions taken at the September 13, 2012 meeting of the HPK board.
On September 18, 2012, the merger agreement was finalized and executed by HPK and Wintrust. HPK and Wintrust issued a joint press
release on September 18, 2012 announcing the execution of the merger agreement.
HPKs reasons for the
merger and recommendation of the board of directors
HPKs board of directors has concluded that the merger offers
HPKs stockholders an attractive opportunity to achieve the boards strategic business objectives, including increasing stockholder value, growing the size of the business and enhancing liquidity for HPKs stockholders. In addition,
HPKs board of directors believes that the customers and communities served by Hyde Park Bank will benefit from the merger.
In deciding to approve the merger agreement and the transactions it contemplates, HPKs board of directors consulted with HPKs management, as well as its legal counsel and financial advisor,
and considered numerous factors, including the following:
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information with respect to the businesses, earnings, operations, financial condition, prospects, capital levels and asset quality of HPK and Wintrust,
both individually and as a combined company;
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the perceived risks and uncertainties attendant to HPKs operation as an independent banking organization, including the risks and uncertainties
related to the continuing low-interest rate environment, competition in HPKs market area, increased regulatory costs and increased capital requirements;
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based on the closing price of Wintrust common stock on September 17, 2012 and HPKs June 30, 2012 unaudited balance sheet, the aggregate
merger consideration was priced at 106.3% of tangible common book value and 101.0% of common book value;
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the value to be received by HPK stockholders in the merger as compared to stockholder value projected for HPK as an independent entity;
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the enhanced liquidity for HPKs stockholders, including with respect to the Wintrust common stock to be received in the merger;
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the market value of Wintrust common stock prior to the execution of the merger agreement and the prospects for future appreciation as a result of
Wintrusts strategic initiatives;
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Wintrusts strategy to seek profitable future expansion in the Chicago metropolitan area, leading to continued growth in overall stockholder
value;
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the fact that Wintrust is publicly held and the merger would provide access to a public trading market for HPKs stockholders whose investments
currently are in a privately held company, as well as enhanced access to capital markets to finance the combined companys capital requirements; and
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the likelihood that the merger will be approved by the relevant bank regulatory authorities without undue burden and in a timely manner.
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The above discussion of the information and factors considered by HPKs board of directors is not
intended to be exhaustive, but includes a description of all material factors considered by HPKs board. In view of the wide variety of factors considered by the HPK board of directors in connection with its evaluation of the merger, the HPK
board did not consider it practical to, nor did it attempt to, quantify, rank or otherwise assign relative weights to the specific factors that it considered. In considering the factors described above, individual directors may have given differing
weights to different factors. HPKs board of directors collectively made its determination with respect to the merger based on the conclusion reached by its members, based on the factors that each of them considered appropriate, that the merger
is in the best interests of HPKs stockholders.
HPKs board of directors believes that the merger is fair to,
and in the best interests of, HPK and its stockholders. HPKs board of directors unanimously approved the merger agreement and recommends that stockholders vote FOR approval of the merger agreement.
Certain directors and officers of HPK and Hyde Park Bank have interests in the merger different from or in addition to their interests as
stockholders generally, including certain cash payments that will be made as a result of the merger under various benefit plans and agreements currently in place in order to terminate such agreements and to be made under agreements entered into
between the individuals and Hyde Park Bank in connection with the merger. You may wish to consider these interests in evaluating HPKs board of directors recommendation that you vote in favor of the merger. See The
MergerInterests of certain persons in the merger. All of HPKs directors who own shares of HPK common stock have agreed to vote their shares in favor of the merger at the special meeting.
Wintrusts reasons for the merger
Wintrusts board of directors believes that the merger is in the best interests of Wintrust and its shareholders. In deciding to approve the merger, Wintrusts board of directors considered a
number of factors, including:
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managements view that the acquisition of HPK provides an attractive opportunity to expand into desirable markets;
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HPKs community banking orientation and its compatibility with Wintrust and its subsidiaries;
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a review of the demographic, economic and financial characteristics of the markets in which HPK operates, including existing and potential competition
and history of the market areas with respect to financial institutions;
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managements review of the business, operations, earnings and financial condition, including capital levels and asset quality, of Hyde Park Bank;
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efficiencies to come from integrating certain of HPKs operations into Wintrusts existing operations; and
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the likelihood that the merger will be approved by the relevant bank regulatory authorities without undue burden and in a timely manner.
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The above discussion of the information and factors considered by Wintrusts board of directors is not
intended to be exhaustive, but includes a description of all material factors considered by Wintrusts board. In view of the wide variety of factors considered by the Wintrust board of directors in connection with its evaluation of the merger,
the Wintrust board did not consider it practical to, nor did it attempt to, quantify, rank or otherwise assign relative weights to the specific factors that it considered. In considering the factors described above, individual directors may have
given differing weights to different factors. Wintrusts board of directors
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collectively made its determination with respect to the merger based on the conclusion reached by its members, based on the factors that each of them considered appropriate, that the merger is in
the best interests of Wintrusts shareholders.
Material U.S. federal income tax consequences of the merger
The following summary describes the material U.S. federal income tax consequences of the merger to U.S. holders (as
defined below) of HPK common stock. The summary is based upon the Code, applicable Treasury Regulations, judicial decisions and administrative rulings and practice, all as in effect as of the date hereof, and all of which are subject to change,
possibly with retroactive effect. This summary does not address any tax consequences of the merger under state, local or foreign laws, or any federal laws other than those pertaining to income tax.
For purposes of this discussion, the term U.S. holder means a beneficial owner that is: an individual citizen or resident of
the United States; a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) created or organized under the laws of the United States or any of its political subdivisions; a trust that (1) is subject to the
supervision of a court within the United States and the control of one or more U.S. persons or (2) has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person; or an estate that is subject to U.S.
federal income taxation on its income regardless of its source.
This discussion addresses only those holders of HPK common
stock that hold their HPK common stock as a capital asset within the meaning of Section 1221 of the Code and does not address all the U.S. federal income tax consequences that may be relevant to particular holders of HPK common stock in light
of their individual circumstances or to holders of HPK common stock that are subject to special rules, such as:
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financial institutions;
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investors in pass-through entities;
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persons who are subject to alternative minimum tax;
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tax-exempt organizations;
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dealers in securities or currencies;
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traders in securities that elect to use a mark-to-market method of accounting;
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persons that hold HPK common stock as part of a straddle, hedge, constructive sale or conversion transaction;
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regulated investment companies;
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real estate investment trusts;
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persons whose functional currency is not the U.S. dollar;
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persons who are not citizens or residents of the United States; and
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holders who acquired their shares of HPK common stock through the exercise of an employee stock option or otherwise as compensation.
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If a partnership (or other entity that is taxed as a partnership for federal income tax purposes) holds HPK
common stock, the tax treatment of a partner in that partnership generally will depend upon the status of the partner and the activities of the partnership. Partnerships and partners in partnerships should consult their own tax advisors about the
tax consequences of the merger to them.
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The parties intend for the merger to be treated as a reorganization for U.S.
federal income tax purposes. It is a condition to HPKs obligation to complete the merger that HPK receive an opinion from Barack Ferrazzano, dated the closing date of the merger, to the effect that (1) the merger will constitute a
reorganization within the meaning of Section 368(a) of the Code, (2) HPK and Wintrust will each be a party to such reorganization within the meaning of Section 368(a) of the Code, and (3) except to the extent of any
cash consideration received in the merger and except with respect to cash received in lieu of fractional share interests in Wintrust common stock, no gain or loss will be recognized by any of the holders of HPK common stock in the merger. This
condition is waivable, and Wintrust and HPK undertake to recirculate and resolicit if this condition is waived and the change in tax consequences is material. This opinion is and will be based upon representation letters provided by Wintrust and HPK
and upon customary factual assumptions. Neither Wintrust nor HPK has sought, and neither of them will seek, any ruling from the IRS regarding any matters relating to the merger, and the opinion described above will not be binding on the IRS or any
court. Consequently, there can be no assurance that the IRS will not assert, or that a court would not sustain, a position contrary to any of the conclusions set forth below. In addition, if any of the representations or assumptions upon which the
opinion is based are inconsistent with the actual facts, the U.S. federal income tax consequences of the merger could be adversely affected.
At the time a U.S. holder makes a cash or stock election pursuant to the terms of the merger agreement, such U.S. holder will not know whether, and to what extent, the proration provisions of the merger
agreement might alter the mix of consideration such U.S. holder will receive. As a result, the U.S. federal income tax consequences to such U.S. holder will not be ascertainable with certainty until such U.S. holder knows the precise amount of cash
and Wintrust common stock that such U.S. holder will receive in the merger.
The actual tax consequences of the merger to you
may be complex and will depend upon your specific situation and upon factors that are not within the control of Wintrust or HPK. You should consult with your own tax advisor as to the tax consequences of the merger in light of your particular
circumstances, including the applicability and effect of the alternative minimum tax and any state, local or foreign and other tax laws.
The following expresses the opinion of Barack Ferrazzano, special counsel to HPK, insofar as it relates to matters of U.S. federal income tax law and legal conclusions with respect to those matters:
Tax Consequences of the Merger Generally.
The material U.S. federal income tax consequences of the merger will be as
follows:
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no gain or loss will be recognized by Wintrust or HPK as a result of the merger;
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except as discussed below with respect to cash received (i) in lieu of a fractional share of Wintrust common stock, under Receipt of Cash
Consideration Only and Cash Received Instead of a Fractional Share of Wintrust Common Stock, and/or (ii) from the escrow account as discussed below under Tax Consequences of the Escrow Account, no gain or loss will be
recognized by U.S. holders who exchange all of their HPK common stock solely for Wintrust common stock pursuant to the merger;
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gain (but not loss) will be recognized by U.S. holders of HPK common stock who receive shares of Wintrust common stock and cash in exchange for shares
of HPK common stock pursuant to the merger in an amount equal to the lesser of (1) the amount by which the sum of the fair market value of the Wintrust common stock and cash received by a U.S. holder of HPK common stock exceeds such U.S.
holders basis in its HPK common stock and (2) the amount of cash received by such U.S. holder of HPK common stock (except with respect to U.S. holders who receive the entirety of their consideration in cash, which is discussed below under
Receipt of Cash Consideration Only and Cash Received Instead of a Fractional Share of Wintrust Common Stock and with respect to U.S. holders who receive payments from the escrow account as discussed below under Tax
Consequences of the Escrow Account);
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the aggregate basis of the Wintrust common stock received by a U.S. holder of HPK common stock in the merger (including fractional shares of Wintrust
common stock deemed received and redeemed as
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described below) will be the same as the aggregate basis of the HPK common stock for which it is exchanged, decreased by the amount of cash received in the merger (other than cash received in
lieu of a fractional share in Wintrust common stock and cash received from the escrow account to the extent such cash represents interest income, as discussed below under Tax Consequences of the Escrow Account), and increased by
the amount of gain recognized on the exchange, other than with respect to cash received in lieu of a fractional share in Wintrust common stock (regardless of whether such gain is classified as capital gain or as dividend income, as discussed below
under Potential Recharacterization of Gain as a Dividend); and
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the holding period of Wintrust common stock received in exchange for shares of HPK common stock (including fractional shares of Wintrust common stock
deemed received and redeemed as described below) will include the holding period of the HPK common stock for which it is exchanged.
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If a U.S. holder of HPK common stock acquired different blocks of HPK common stock at different times or at different prices, any gain or loss will be determined separately with respect to each block of
HPK common stock, and the cash and shares of Wintrust common stock received will be allocated pro rata to each such block of stock. U.S. holders should consult their own tax advisors with regard to identifying the bases or holding periods of the
particular shares of Wintrust common stock received in the merger.
Taxation of Capital Gain.
Except as described under
Potential Recharacterization of Gain as a Dividend below, gain that U.S. holders of HPK common stock recognize in connection with the merger generally will constitute capital gain and will constitute long-term capital gain if such
U.S. holders have held (or are treated as having held) their HPK common stock for more than one year as of the date of the merger. For non-corporate U.S. holders of HPK common stock, the maximum U.S. federal income tax rate on long-term capital
gains is 15% if such gains are recognized prior to January 1, 2013 and, absent legislative action, 20% if such gains are recognized in 2013 or thereafter.
Potential Recharacterization of Gain as a Dividend.
All or part of the gain that a particular U.S. holder of HPK common stock recognizes could be treated as dividend income rather than capital gain
if (1) such U.S. holder is a significant shareholder of Wintrust or (2) such U.S. holders percentage ownership, taking into account constructive ownership rules, in Wintrust after the merger is not meaningfully reduced from what its
percentage ownership would have been if it had received solely shares of Wintrust common stock rather than a combination of cash and shares of Wintrust common stock in the merger. This could happen, for example, because of ownership of additional
shares of Wintrust common stock by such holder, ownership of shares of Wintrust common stock by a person related to such holder or a share repurchase by Wintrust from other holders of Wintrust common stock. The IRS has indicated in rulings that any
reduction in the interest of a minority shareholder that owns a small number of shares in a publicly and widely held corporation and that exercises no control over corporate affairs would result in capital gain as opposed to dividend treatment.
Because the possibility of dividend treatment depends primarily upon the particular circumstances of a holder of HPK common stock, including the application of certain constructive ownership rules, holders of HPK common stock should consult their
own tax advisors regarding the potential tax consequences of the merger to them.
Receipt of Cash Consideration Only and
Cash Received Instead of a Fractional Share of Wintrust Common Stock.
A U.S. holder of HPK common stock who receives the entirety of his or her consideration in the form of cash will generally recognize gain or loss equal to the difference
between the amount of cash received and the basis in his or her HPK common stock. In addition, a U.S. holder of HPK common stock who receives cash in lieu of a fractional share of Wintrust common stock will be treated as having received the
fractional share pursuant to the merger and then as having exchanged the fractional share for cash in a redemption by Wintrust. As a result, such U.S. holder of HPK common stock will generally recognize gain or loss equal to the difference between
the amount of cash received and the basis in his or her fractional share interest as set forth above. The gain or loss recognized by the U.S. holders described in this paragraph will generally be capital gain or loss, and will be long-term capital
gain or loss if, as of the effective date of the merger, the U.S. holders holding period for the relevant shares is greater than one year. The deductibility of capital losses is subject to limitations.
35
Tax Consequences of the Escrow Account
. If certain terms and conditions are met,
holders of HPK common stock will receive a cash distribution from the escrow account. Except as described below, a holder of HPK common stock who receives a cash distribution from the escrow account generally will be required to report such
distribution under the installment method pursuant to Section 453(a) of the Code. Generally, under the installment method, a portion of each cash payment received in the merger is taxable in the year of receipt and a portion represents a
tax-free recovery of the holders basis in its HPK common stock. The total gain will not exceed the cash received in the merger. The installment sale rules are highly complex and you are urged to discuss the application of the installment sale
rules with your tax advisor with respect to the tax consequence of a distribution, if any, you may receive from the Escrow Account.
In addition, a portion of the cash payments that are received after the close of the taxable year in which the merger occurs will be treated as interest income. Such interest income will be taxable at
ordinary income tax rates when received.
Finally, the installment method will not apply to holders of HPK common stock who
recognize a taxable loss as a result of the merger or who elect out of the installment method by filing a form with such holders federal income tax return for the tax year in which the merger occurs.
Pursuant to the terms of the escrow agreement, each holder of HPK common stock will be taxable on its proportionate share of interest
income earned by the escrow account in a given taxable year and will be required to report such interest on its federal income tax returns, regardless of whether such holder ever receives any distributions from the escrow account.
Given the complexities of the application of the installment method rules to cash payments received in the merger, you are strongly urged
to consult with your tax advisor regarding the U.S. federal income tax consequences of consideration you receive in the merger.
Medicare Tax on Unearned Income.
Under recently-enacted U.S. federal income tax legislation, for taxable years beginning after
December 31, 2012, a U.S. holder that is an individual is subject to a 3.8% tax on the lesser of (i) his or her net investment income for the relevant taxable year or (ii) the excess of his or her modified gross income for
the taxable year over a certain threshold (between $125,000 and $250,000 depending on the individuals U.S. federal income tax filing status). A similar regime applies to estates and trusts. Net investment income generally would include any
capital gain incurred in connection with the merger (including any gain treated as dividend).
Backup Withholding and
Information Reporting.
Payments of cash to a U.S. holder of HPK common stock pursuant to the merger may, under certain circumstances, be subject to information reporting and backup withholding unless the holder provides proof of an applicable
exemption or, in the case of backup withholding, furnishes its taxpayer identification number and otherwise complies with all applicable requirements of the backup withholding rules. Any amounts withheld from payments to a U.S. holder under the
backup withholding rules are not additional tax and generally will be allowed as a refund or credit against the U.S. holders U.S. federal income tax liability, provided the required information is timely furnished to the IRS.
A U.S. holder of HPK common stock who receives Wintrust common stock as a result of the merger will be required to retain records
pertaining to the merger. Each U.S. holder of HPK common stock who is required to file a U.S. federal income tax return and who is a significant holder that receives Wintrust common stock in the merger will be required to file a
statement with such U.S. federal income tax return in accordance with Treasury Regulations Section 1.368-3 setting forth such holders basis in the HPK common stock surrendered and the fair market value of the Wintrust common stock and
cash received in the merger. A significant holder is a holder of HPK common stock who, immediately before the merger, owned at least 5% of the outstanding stock of HPK or securities of HPK with a basis for federal income taxes of at
least $1 million.
36
This discussion does not address tax consequences that may vary with, or are
contingent upon, individual circumstances. Moreover, it does not address any non-income tax or any foreign, state or local tax consequences of the merger. Tax matters are very complicated, and the tax consequences of the merger to you will depend
upon the facts of your particular situation.
Accordingly, we strongly urge you to consult with a tax advisor to determine the particular federal, state, local or foreign income or other tax consequences to you of the merger.
Regulatory approvals
The merger cannot proceed without obtaining all requisite regulatory approvals. Wintrust and HPK have agreed to take all appropriate actions necessary to obtain the required approvals.
The merger of Wintrust and HPK is subject to prior approval of the Federal Reserve. Wintrust submitted an application with the Federal
Reserve Bank of Chicago on September 26, 2012 seeking the necessary approval.
The merger may not be consummated until
15 days after receipt of Federal Reserve approval, during which time the United States Department of Justice may challenge the merger on antitrust grounds. The commencement of an antitrust action would stay the effectiveness of the Federal
Reserves approval, unless a court specifically orders otherwise.
In addition, the obligation of Wintrust and HPK to
consummate the merger is subject to obtaining appropriate regulatory approval to repurchase or redeem all shares of HPK preferred stock held by the U.S. Treasury. HPK submitted a request for non-objection from the Federal Reserve on October 4,
2012 with respect to the repurchase or redemption of the shares of preferred stock held by the U.S. Treasury.
Interests of certain persons in the merger
General
. Members of the board of directors and executive officers of HPK and Hyde Park Bank may have interests in the merger that are different from, or are in addition to, the interests of HPK
stockholders generally. The HPK board of directors was aware of these interests and considered them, among other matters, in approving the merger agreement and determining to recommend to HPK stockholders to vote for adoption of the merger
agreement. As of October 30, 2012, HPKs directors and executive officers owned, in the aggregate, 85,297 shares of HPKs common stock, representing approximately 27.7% of HPKs outstanding shares of common stock. None of
HPKs directors or executive officers own any options to purchase shares of HPKs common stock.
Employment
Agreements
. The merger agreement required Michael McGarry and Claudio Ricci to enter into employment agreements with Hyde Park Bank. Under the respective agreements, Mr. McGarry will serve as President and Mr. Ricci will serve as
Senior Vice President Lending of Hyde Park Bank upon the effective time of the merger and each will be entitled to receive a base salary substantially similar to his current base salary. Each agreement has an initial term of two years, which
begins as of the effective time of the merger, with automatic one-year renewal terms unless either party gives notice of non-renewal. In the event of a change in control of Hyde Park Bank, the terms of the agreements will automatically extend for
two years.
Under their respective employment agreements, if Mr. McGarrys or Mr. Riccis employment is
terminated by the employer without cause or if the executive terminates his employment due to a constructive termination, the terminated executive will be entitled to severance pay up to one times annual base salary plus target annual bonus, payable
in 12 equal monthly installments (or in a lump sum if the termination occurs within 18 months following a change in control of Hyde Park Bank), as well as continued health insurance for up to the maximum period under COBRA. The agreements also
provide that, if necessary, severance pay will be reduced to an amount that is one dollar less than the maximum amount payable without loss of a deduction under Section 280G of the Code.
Change in Control Agreements
. HPK and Hyde Park Bank previously entered into change in control agreements with each of Timothy G.
Goodsell and Patrick J. Barrett. The agreements generally provide that if
37
(i) HPK terminates the executives employment for any reason other than cause, disability, or death in connection with or within 12 months following a change in control of HPK or Hyde
Park Bank, (ii) the executive terminates his employment for any reason within six months following such a change in control, or (iii) the executive terminates his employment for good reason in connection with or within 12 months following
such a change in control, then the executive will be entitled to a lump sum severance payment equal to 250% of the executives annual base salary plus annual bonus, as well as 18 months of employer-paid continued medical, dental and vision
coverage.
The merger agreement requires HPK to take such actions as may be necessary to effectuate the payments due and owing
to Messrs. Goodsell and Barrett pursuant to their change in control agreements prior to the effective time of the merger.
Split-Dollar Life Insurance
. Hyde Park Bank previously entered into split-dollar life insurance agreements with Messrs. Goodsell
and Barrett. As of June 30, 2012, the surrender value under those agreements was $226,082 for Mr. Goodsell and $87,200 for Mr. Barrett. The merger agreement requires HPK to cause Hyde Park Bank to terminate the split-dollar life
insurance agreements with Messrs. Goodsell and Barrett and pay out in a single lump sum all amounts due to them under such agreement prior to the effective time of the merger.
Supplemental Retirement Benefits Plan
. Hyde Park Bank previously established the Hyde Park Bank and Trust Company Supplemental Retirement Benefits Plan, which we refer to as the SERP, to supplement
the benefits provided by the Hyde Park Bank and Trust Company Retirement Plan for certain of its highly compensated key management employees. Mr. Goodsell is the only participant in the SERP. As of June 30, 2012, Mr. Goodsells
account balance under the SERP was $201,391. The merger agreement requires HPK to terminate the SERP and pay out in a single lump sum Mr. Goodsells entire account balance prior to the effective time of the merger.
Continued Director and Officer Liability Coverage
. Pursuant to the terms of the merger agreement, Wintrust has agreed to provide
to each person who serves as a director or officer of HPK or its subsidiaries after the effective time substantially the same insurance coverage against personal liability for actions taken after the effective time as is provided to other directors
and officers of Wintrust and its subsidiary banks. In addition, Wintrust agreed to maintain, for up to six years following the effective time, insurance coverage under the current policy of directors and officers liability and other
professional insurance maintained by HPK and its subsidiaries for actions taken on or prior to the effective time of the merger. If a six-year term of insurance coverage is not available, the term for the insurance will be such other maximum period
of time for which coverage is available at a cost not to exceed $125,000. Following the effective time and for same period as the insurance coverage Wintrust agreed to maintain, to the extent permitted by applicable law, Wintrust has agreed to
indemnify and hold harmless the current and former directors and officers of HPK and its subsidiaries for all actions taken by them prior to the effective time of the merger, to the same extent as the indemnification currently provided by HPK and
its subsidiaries under their respective organizational documents.
Voting agreement
On September 18, 2012, all directors of HPK who own shares of HPK common stock and certain other stockholders of HPK entered into a
voting agreement with Wintrust. Under this agreement, these stockholders have each agreed to vote their respective shares of HPK common stock:
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in favor of the merger and the transactions contemplated by the merger agreement;
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against any action or agreement that would result in a breach of any term or obligation of HPK under the merger agreement; and
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against any action or agreement that would impede, interfere with or attempt to discourage the transactions contemplated by the merger agreement.
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Furthermore, subject to the fiduciary duties of any of these stockholders that is a director of HPK, each
of these stockholders has also agreed not to grant any proxies, deposit any shares of HPK common stock into a
38
voting trust or enter into any other voting agreement with respect to any shares of HPK common stock that they own or, without the prior approval of Wintrust, solicit, initiate or encourage any
inquiries or proposals for a merger or other business combination involving HPK. The shares subject to the voting agreement represent approximately 44% of HPKs outstanding shares of common stock as of October 30, 2012. The voting
agreement will terminate upon the earlier of the consummation of the merger or termination of the merger agreement in accordance with its terms.
Restrictions on resale of Wintrust common stock
The shares of Wintrust common stock to be issued in connection with the merger will be registered under the Securities Act of 1933, as
amended, which we refer to as the Securities Act, and will be freely transferable, except for shares issued to any stockholder who may be deemed to be an affiliate of Wintrust for purposes of Rule 144 under the Securities Act. Persons
who may be deemed to be affiliates of Wintrust include individuals or entities that control, are controlled by, or are under common control with, Wintrust and may include the executive officers, directors and significant stockholders of Wintrust.
HPK stockholder appraisal rights
In connection with the merger, record holders of HPK common stock who comply with the requirements of Section 262 of the DGCL, which is summarized below, will be entitled to appraisal rights if the
merger is completed. Under Section 262 of the DGCL, which we refer to as Section 262, holders of shares of HPK common stock with respect to which appraisal rights are properly demanded and perfected and not withdrawn or lost are entitled,
in lieu of receiving the merger consideration, to have the fair value of their shares at the effective time (exclusive of any element of value arising from the accomplishment or expectation of the merger) judicially determined and paid
to them in cash. HPK is required to send a notice to that effect to each stockholder not less than 20 days prior to the special meeting. This proxy statement/prospectus constitutes that notice to you.
The following is a brief summary of Section 262, which sets forth the procedures for demanding statutory appraisal rights.
This summary is not a complete statement of the law pertaining to appraisal rights under the DGCL and is qualified in its entirety by reference to Section 262, the text of which is attached to this proxy statement/prospectus as
Annex B
.
Stockholders of record who desire to exercise their appraisal rights must
satisfy all of the following conditions:
A stockholder who desires to exercise appraisal rights must (1) not vote in
favor of the merger and (2) deliver a written demand for appraisal of the stockholders shares to the President of HPK before the vote on the merger at the special meeting. Merely not voting for the merger will not preserve the right of
HPK stockholders to appraisal of their shares of HPK common stock under Delaware law because a submitted proxy not marked against or abstain will be voted FOR the proposal to adopt the merger agreement and
FOR the HPK special meeting adjournment proposal. Accordingly, the submission of a proxy not marked against or abstain will result in the waiver of appraisal rights. HPK stockholders who wish to exercise their
appraisal rights and hold shares in the name of a broker or other nominee must instruct their nominees to take the steps necessary to enable them to demand appraisal for their shares.
A demand for appraisal must be executed by or for the stockholder of record, fully and correctly, as the stockholders name appears
on the certificates representing shares. If shares are owned of record in a fiduciary capacity, such as by a trustee, guardian or custodian, such demand must be executed by the fiduciary. If shares are owned of record by more than one person, as in
a joint tenancy or tenancy in common, the demand must be executed by all joint owners. An authorized agent, including an agent of two or more joint owners, may execute the demand for appraisal for a stockholder of record; however, the agent must
identify the record owner and expressly disclose that, in exercising the demand, the agent is acting as agent for the record owner. In addition,
39
the stockholder must continuously hold the shares of record from the date of making the demand through the effective time since appraisal rights will be lost if the shares are transferred prior
to the effective time.
A record owner, such as a broker, who holds shares as a nominee for others may exercise appraisal
rights with respect to the shares held for all or less than all beneficial owners of shares as to which the holder is the record owner. In that case, the written demand must set forth the number of shares covered by the demand. Where the number of
shares is not expressly stated, the demand will be presumed to cover all shares outstanding in the name of the record owner.
Beneficial owners who are not record owners and who intend to exercise appraisal rights should instruct the record owner to comply
strictly with the statutory requirements with respect to the exercise of appraisal rights before the vote on the proposal to adopt the merger agreement at the special meeting. A beneficial owner of shares held in street name who desires
appraisal rights with respect to those shares should take such actions as may be necessary to ensure that a timely and proper demand for appraisal is made by the record owner of the shares. Shares held through brokerage firms, banks and other
financial institutions are frequently deposited with and held of record in the name of a nominee of a central security depositary, such as Cede & Co., The Depository Trust Companys nominee. Any beneficial owner of shares desiring
appraisal rights with respect to such shares should instruct such firm, bank or institution that the demand for appraisal must be made by the record holder of the shares, which might be the nominee of a central security depositary if the shares have
been so deposited.
As required by Section 262, a demand for appraisal must be in writing and must reasonably inform HPK
of the identity of the record holder (which might be a nominee as described above) and of such holders intention to seek appraisal of such shares.
Stockholders of record who elect to demand appraisal of their shares must mail or deliver their written demand to: HPK Financial Corporation, 1525 East 53
rd
Street, Chicago, Illinois 60615, Attention: Timothy G. Goodsell or
by facsimile at (773) 753-9624. The written demand for appraisal should specify the stockholders name and mailing address, the number of shares owned, and that the stockholder is demanding appraisal of his, her or its shares. The written
demand must be received by HPK prior to the special meeting. Neither voting (in person or by proxy) against, abstaining from voting on or failing to vote on the proposal to adopt the merger agreement will alone suffice to constitute a written demand
for appraisal within the meaning of Section 262.
In addition, a stockholder demanding appraisal must not vote its shares
of common stock in favor of the proposal to adopt the merger agreement. Because a signed proxy card that does not contain voting instructions will, unless revoked, be voted in favor of the proposal to adopt the merger agreement, a stockholder who
votes by proxy and who wishes to exercise appraisal rights must vote against the merger agreement or abstain from voting on the merger agreement.
Within 120 days after the effective time, either the surviving corporation in the merger or any stockholder who has timely and properly demanded appraisal of such stockholders shares and who
has complied with the required conditions of Section 262 and is otherwise entitled to appraisal rights may file a petition in the Delaware Court of Chancery demanding a determination of the fair value of the shares of all stockholders who
have properly demanded appraisal. Within 120 days after the effective time, any stockholder who has complied with the requirements for exercise of appraisal rights will be entitled, upon written request, to receive from the surviving
corporation a statement setting forth the aggregate number of shares not voted in favor of the proposal to adopt the merger agreement and with respect to which demands for appraisal have been received and the aggregate number of holders of such
shares. The statement must be mailed within ten days after a written request therefor has been received by the surviving corporation or within ten days after the expiration of the period for delivery of demands for appraisal, whichever is later.
Notwithstanding the foregoing, a person who is the beneficial owner of shares held either in a voting trust or by a nominee on behalf of such person may, in such persons own name, file a petition or request from the surviving corporation
the statement described in this paragraph.
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If a petition for an appraisal is timely filed by a stockholder and a copy thereof is served
upon the surviving corporation, the surviving corporation will then be obligated within 20 days to file with the Delaware Register in Chancery a duly verified list containing the names and addresses of all stockholders who have demanded an
appraisal of their shares and with whom agreements as to the value of their shares have not been reached. After notice to the stockholders as required by the court, the Delaware Court of Chancery is empowered to conduct a hearing on the petition to
determine those stockholders who have complied with Section 262 and who have become entitled to appraisal rights thereunder. The Delaware Court of Chancery may require the stockholders who demanded appraisal for their shares to submit their
stock certificates, if any, to the Register in Chancery for notation thereon of the pendency of the appraisal proceeding; and if any stockholder fails to comply with the direction, the Delaware Court of Chancery may dismiss the proceedings as to the
stockholder.
If a petition for an appraisal is timely filed, after a hearing on such petition, the Delaware Court of Chancery
will determine which stockholders are entitled to appraisal rights and thereafter will appraise the shares owned by those stockholders, determining the fair value of the shares exclusive of any element of value arising from the accomplishment or
expectation of the merger, together with a fair rate of interest to be paid, if any, upon the amount determined to be the fair value. In determining fair value, the Delaware Court of Chancery is to take into account all relevant factors.
In
Weinberger v. UOP, Inc., et al.
, the Delaware Supreme Court discussed the considerations that could be considered in determining fair value in an appraisal proceeding, stating that proof of value by any techniques or
methods which are generally considered acceptable in the financial community and otherwise admissible in court should be considered and that [f]air price obviously requires consideration of all relevant factors involving the value of a
company. The Delaware Supreme Court stated that in making this determination of fair value, the court must consider market value, asset value, dividends, earnings prospects, the nature of the enterprise and any other facts which were
known or which could be ascertained as of the date of merger which throw any light on future prospects of the merged corporation. The Delaware Supreme Court construed Section 262 to mean that elements of future value, including the
nature of the enterprise, which are known or susceptible of proof as of the date of the merger and not the product of speculation, may be considered. However, the Delaware Supreme Court noted that Section 262 provides that fair value is
to be determined exclusive of any element of value arising from the accomplishment or expectation of the merger.
Stockholders considering seeking appraisal should bear in mind that the fair value of their shares determined under Section 262
could be more than, the same as, or less than the merger consideration they are entitled to receive pursuant to the merger agreement if they do not seek appraisal of their shares.
The cost of the appraisal proceeding may be determined by the Delaware Court of Chancery and taxed upon the parties as the Delaware Court
of Chancery deems equitable in the circumstances. Upon application of a stockholder seeking appraisal rights, the Delaware Court of Chancery may order that all or a portion of the expenses incurred by such stockholder in connection with the
appraisal proceeding, including, without limitation, reasonable attorneys fees and the fees and expenses of experts, be charged pro rata against the value of all shares entitled to appraisal. In the absence of such a determination of
assessment, each party bears its own expenses.
From and after the effective time, no stockholder who has demanded appraisal
rights will be entitled to vote any shares subject thereto for any purpose or receive dividends or other distributions thereon (except dividends or other distributions payable to the stockholders of record at a date prior to the effective time).
Except as explained in the second to last sentence of this paragraph, at any time within 60 days after the effective
time, any stockholder who has demanded appraisal will have the right to withdraw such stockholders demand for appraisal and to accept the cash and shares of Wintrust common stock to which the stockholder is entitled pursuant to the merger
agreement by delivering to the surviving corporation a written withdrawal of the demand for appraisal. After this period, the stockholder may withdraw such stockholders demand for appraisal only with the written consent of the surviving
corporation in the merger. If no petition for appraisal is filed with the Delaware Court of Chancery within 120 days after the effective time, stockholders rights to appraisal will cease and all stockholders will be entitled only to
receive the cash and shares of Wintrust common stock as
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provided for in the merger agreement. Inasmuch as the parties to the merger agreement have no obligation to file such a petition, and have no present intention to do so, any stockholder who
desires that such petition be filed is advised to file it on a timely basis. No petition timely filed in the Delaware Court of Chancery demanding appraisal will be dismissed as to any stockholder without the approval of the Delaware Court of
Chancery, and that approval may be conditioned upon such terms as the Delaware Court of Chancery deems just. If the surviving corporation in the merger does not approve a request to withdraw a demand for appraisal when that approval is required, or,
except with respect to any stockholder who withdraws such stockholders right to appraisal in accordance with the first sentence of this paragraph, if the Delaware Court of Chancery does not approve the dismissal of an appraisal proceeding, the
stockholder will be entitled to receive only the appraised value determined in any such appraisal proceeding, which value could be less than, equal to or more than the consideration being offered pursuant to the merger agreement.
The foregoing is a brief summary of Section 262 that sets forth the procedures for demanding statutory appraisal rights. This
summary is qualified in its entirety by reference to Section 262, the text of which is attached hereto as
Annex B
. Failure to comply with all the procedures set forth in Section 262 will result in the loss of a
stockholders statutory appraisal rights. Consequently, if you desire to exercise your appraisal rights you are urged to consult a legal advisor before attempting to exercise these rights.
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THE MERGER
1.1
The Merger.
Upon the
terms and subject to the conditions of this Agreement, on the Closing Date (as defined in Section 1.12) and in accordance with the Delaware General Corporation Law (the
DGCL
), the Company shall be merged with and into Merger
Co., whereupon the separate corporate existence of the Company shall cease, and Merger Co. shall continue as the corporation surviving the Merger (the
Surviving Corporation
).
1.2
Effective Time.
As of the Closing, the Parties will cause a Certificate of Merger (the
Certificate of Merger
) to be executed and filed with the Delaware Secretary of State as provided in the DGCL. The Merger shall become effective on the date and time (referred to as the
Effective Time
) at which
the Certificate of Merger is duly filed with the Delaware Secretary of State, or at such other date and time as is agreed among the Parties and specified in the Certificate of Merger.
1.3
Effects of the Merger.
At and as of the Effective Time:
(a) as a result of the Merger, the certificate of incorporation and the by-laws of Merger Co. shall be the certificate of incorporation
and the by-laws of the Surviving Corporation;
(b) the persons serving as directors of Merger Co. shall comprise the board of
directors of the Surviving Corporation, and the officers of the Company shall be the officers of the Surviving Corporation, in each case until their successors have been duly elected or appointed and qualified or until their earlier death,
resignation or removal; and
(c) the Merger shall have the effects set forth in Section 259 of the DGCL.
A-1
1.4
Merger Consideration; Conversion of Shares.
(a)
Merger Consideration
. The aggregate consideration to be paid in the Merger (the
Merger
Consideration
) shall be $27,500,000, subject to adjustment pursuant to Section 6.11(b). The Merger Consideration is intended to be paid approximately fifty percent (50%) in cash and fifty percent (50%) in shares of common
stock, without par value, of Wintrust (
Wintrust Common Stock
). Of the Merger Consideration, an amount equal to $2,750,000 in cash (the
Indemnification Escrow Amount
) will be deposited by Wintrust at Closing into
a special purpose escrow account, to be held subject to an Escrow Agreement as further described in Section 1.9.
(b)
Per Share Merger Consideration
shall mean one of the following:
(i) an amount of cash equal to
(A) the quotient obtained by dividing (I) $27,500,000 by (II) the number of shares of Company Common Stock issued and outstanding immediately prior to the Effective Time multiplied by (B) 0.9, plus the right to receive the per Share
Escrowed Consideration (as defined below) (the
Per Share Cash Consideration
);
(ii) a number of shares of
Wintrust Common Stock equal to (A) the quotient obtained by dividing (I) the Aggregate Share Amount (as defined below) by (II) the number of shares of Company Common Stock issued and outstanding immediately prior to the Effective Time
multiplied by (B) 0.9, plus the right to receive the Per Share Escrowed Consideration (the
Per Share Stock Consideration
); or
(iii) a combination of the Per Share Cash Consideration and the Per Share Stock Consideration determined in accordance with Section 1.5(a).
(c) The
Aggregate Share Amount
shall be determined as follows:
(i) If the unweighted average of the high and low sale prices of a share of Wintrust Common Stock as reported on the
Nasdaq Global Select Market for each of the ten (10) trading days ending on the second (2
nd
) trading day preceding the Closing Date (as defined in Section 1.12) (the
Wintrust Common Stock Price
) is at least $33.50 and no more than $43.50, the Aggregate Share Amount
shall be the number of shares of Wintrust Common Stock equal to the quotient (rounded up to the nearest whole share) obtained by dividing (A) $27,500,000 by (B) the Wintrust Common Stock Price;
(ii) If the Wintrust Common Stock Price is less than $33.50, the Aggregate Share Amount shall be 820,896 shares of Wintrust Common Stock
($27,500,000 divided by $33.50); and
(iii) If the Wintrust Common Stock Price is greater than $43.50, the Aggregate Share
Amount shall be 632,184 shares of Wintrust Common Stock ($27,500,000 divided by $43.50).
(d)
Per Share Escrowed
Consideration
means the right to receive an amount in cash, to be paid from the Escrow Account in the manner described in Section 1.9 and as further set forth in the Escrow Agreement, equal to the quotient obtained by dividing
(x) the total Escrow Amount remaining at the termination of the Escrow Account by (y) the number of shares of Company Common Stock issued and outstanding immediately prior to the Effective Time.
(e) At the Effective Time, by virtue of the Merger and without any action on the part of the holder thereof, each share of common stock
of the Company, $1.00 par value per share (
Company Common Stock
), issued and outstanding immediately prior to the Effective Time (other than shares of Company Common Stock to be cancelled and retired pursuant to Section 1.10
and Dissenting Shares (as defined in Section 1.11)) shall be converted into the right to receive the applicable elected or otherwise assigned Per Share Merger Consideration and thereupon shall no longer be outstanding and shall automatically be
cancelled and shall cease to exist. Each
A-2
certificate previously evidencing any such share of Company Common Stock (other than shares cancelled and retired pursuant to Section 1.10 and Dissenting Shares) shall thereafter represent
only the right to receive, upon surrender of such certificate in accordance with Section 1.8, the applicable elected or otherwise assigned Per Share Merger Consideration (and cash in lieu of any fractional shares in accordance with
Section 1.7). The holders of any such certificates previously evidencing such shares of Company Common Stock outstanding immediately prior to the Effective Time shall cease to have any rights with respect thereto except as otherwise provided in
this Agreement or by law.
(f) Notwithstanding the foregoing, the Merger Consideration is subject to adjustment pursuant to
Section 6.11(b). In the event the Closing Balance Sheet of the Company reflects the Companys stockholders equity at less than the Minimum Adjusted Net Worth applicable to the Company, the Merger Consideration shall be reduced
dollar-for-dollar by an amount equal to the amount of such shortfall, subject to the Companys termination right pursuant to Section 9.2(h). Any such reduction shall be allocated equally to the cash and stock portions of the Merger
Consideration.
1.5
Election Procedures
.
(a) Subject to the proration and redesignation procedures set forth in Section 1.6 below, each holder of record of shares of
Company Common Stock (excluding shares to be canceled pursuant to Section 1.10 and Dissenting Shares) will be entitled to elect to receive for each such share (i) the Per Share Cash Consideration (a
Cash Election
);
(ii) the Per Share Stock Consideration (a
Stock Election
); or (iii) fifty percent (50%) of the Per Share Cash Consideration and fifty percent (50%) of the Per Share Stock Consideration (a
Combination
Election
). All such elections shall be made on a form designed for that purpose prepared by the Company and acceptable to Wintrust (an
Election Form
). Holders of record of shares of Company Common Stock who hold such
shares as nominees, trustees or in other representative capacities (
Representatives
) may submit multiple Election Forms,
provided
that such Representative certifies that each such Election Form covers all the shares of
Company Common Stock held by each such Representative for a particular beneficial owner.
(b) The maximum number of shares of
Company Common Stock to be converted into the right to receive Per Share Cash Consideration for such shares, consisting of (i) those shares subject to Cash Elections and (ii) those shares subject to the cash portion of Combination
Elections, as such terms are defined above, shall be forty-five percent (45%) of the number of shares of Company Common Stock outstanding immediately prior to the Effective Time (excluding shares to be canceled and retired pursuant to
Section 1.10 and Dissenting Shares) (the
Maximum Cash Election Number
). The maximum number of shares of Company Common Stock to be converted into the right to receive Per Share Stock Consideration for such shares, consisting
of (i) those shares subject to Stock Elections and (ii) those shares subject to the stock portion of Combination Elections, shall be fifty-five percent (55%) of the number of shares of Company Common Stock outstanding immediately
prior to the Effective Time (excluding shares to be canceled and retired pursuant to Section 1.10 and Dissenting Shares) (the
Maximum Stock Election Number
). Notwithstanding the foregoing, the percentages used in the
preceding definitions are subject to waiver or modification pursuant to Section 1.6(d) or adjustment pursuant to Section 9.2(f) or 9.2(g).
(c) The Election Form shall be mailed with the proxy statement/prospectus to all holders of record of shares of Company Common Stock as of the record date of the Stockholders Meeting. Thereafter,
the Company and Wintrust shall each use its reasonable and diligent efforts to mail or make available the Election Form to all persons who become holders of shares of Company Common Stock during the period between the record date for the
Stockholders Meeting and 5:00 pm., Chicago Time, on the date ten (10) business days prior to the anticipated Effective Time. To be effective, an Election Form must be received by IST Shareholder Services, Wintrusts exchange agent
(the
Exchange Agent
), on or before 5:00 p.m., Chicago Time, on the fifth (5
th
) business day prior to the Effective Time (the
Election Deadline
). An election shall have been properly made only if the Exchange Agent shall have actually received a properly
completed Election Form by the Election Deadline. Subject to the terms of this Agreement and the Election Form, the Exchange Agent shall have
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reasonable discretion to determine whether any election has been properly or timely made and to disregard immaterial defects in any Election Form, and any good faith decisions of the Exchange
Agent regarding such matters shall be binding and conclusive. All elections will be irrevocable.
(d) Any Election Form
received by the Exchange Agent after the Election Deadline shall be deemed to be a Combination Election and any holder of Company Common Stock not returning an Election Form to the Exchange Agent shall be deemed to have made a Combination Election.
In addition, if the Exchange Agent shall have determined that any purported Stock Election or Cash Election was not properly made, such purported Stock Election or Cash Election shall be deemed to be of no force and effect and the holder of shares
of Company Common Stock making such purported Stock Election or Cash Election shall for all purposes hereof be deemed to have made a Combination Election.
1.6
Proration and Redesignation Procedures
.
(a) All shares of Company Common Stock which are subject to Cash Elections, and that portion of shares of Company Common Stock which are
subject to Combination Elections and would, but for the application of this Section 1.6, be converted into Per Share Cash Consideration, are referred to herein as
Cash Election Shares
. All shares of Company Common Stock which
are subject to Stock Elections, and that portion of shares of Company Common Stock which are subject to Combination Elections and would, but for the application of this Section 1.6, be converted into Per Share Stock Consideration, are referred
to herein as
Stock Election Shares
.
(b) If, after the results of the Election Forms are calculated, the
number of shares of Company Common Stock to be converted into shares of Wintrust Common Stock exceeds the Maximum Stock Election Number, Wintrust shall cause the Exchange Agent to determine the number of Stock Election Shares which must be
redesignated as Cash Election Shares in order to reduce the number of such shares to the Maximum Stock Election Number. All holders who have Stock Election Shares shall, on a pro rata basis, have such number of their Stock Election Shares
redesignated as Cash Election Shares so that the Maximum Stock Election Number is achieved.
(c) If, after the results of the
Election Forms are calculated, the number of shares of Company Common Stock to be converted into cash exceeds the Maximum Cash Election Number, Wintrust shall cause the Exchange Agent to determine the number of Cash Election Shares which must be
redesignated as Stock Election Shares in order to reduce the amount of such cash to the Maximum Cash Election Number. All holders who have Cash Election Shares shall, on a pro rata basis, have such number of their Cash Election Shares redesignated
as Stock Election Shares so that the Maximum Cash Election Number is achieved.
(d) Notwithstanding the foregoing, Wintrust
may, in its sole discretion, taking into account the actual results of the election process described in Section 1.5, direct at any time prior to the Effective Time that the redesignation procedures provided in this Section 1.6 be waived
in whole or in part. In such event, the percentage limits specified in Section 1.5(b) for the Maximum Cash Election Number and the Maximum Stock Election Number, respectively, shall be disregarded and the procedures provided for in clause
(b) or (c) above shall be applied substituting such percentage limits as Wintrust shall designate between the percentage limits specified in Section 1.5(b) and the percentages reflected in the actual results of such election process;
provided
,
however
, that such actions would not adversely affect the Merger from qualifying as a reorganization under Section 368(a) of the Code.
(e) As contemplated by the foregoing proviso, and notwithstanding any provision in this Agreement to the contrary,
the Maximum Cash Election Number shall be reduced to the extent necessary so that the aggregate fair market value of the shares of Wintrust Common Stock (based on the closing price of Wintrust Common Stock as reported on the NASDAQ Global Select
Market on the second (2
nd
) trading day immediately
preceding the Closing Date (the
Wintrust Closing Date Price
)) received by the holders of Company Common
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Stock in the Merger shall be equal to at least forty-five percent (45%) of the aggregate amount of the cash portion of the Merger Consideration (i.e., including the Per Share Escrowed
Consideration) plus the fair market value of the shares of Wintrust Common Stock (based on the Wintrust Closing Date Price) received by the holders of Company Common Stock in exchange for their shares of Company Common Stock in the Merger.
(f) After the redesignation procedures, if any, required by this Section 1.6 are completed, each Cash Election Share
shall be converted into the right to receive the Per Share Cash Consideration, and each Stock Election Share shall be converted into the right to receive the Per Share Stock Consideration. Certificates previously evidencing shares of Company Common
Stock (
Company Stock Certificates
) shall be exchanged, as applicable, for (i) certificates evidencing the Per Share Stock Consideration, or (b) the Per Share Cash Consideration, multiplied in each case by the number of
shares previously evidenced by the canceled Company Stock Certificate, upon the surrender of such certificates in accordance with the provisions of Section 1.8, without interest.
1.7
No Fractional Shares.
Notwithstanding anything to the contrary contained in this Agreement, no
fractional shares of Wintrust Common Stock shall be issued as Per Share Stock Consideration in the Merger. Each holder of shares of Company Common Stock who would otherwise be entitled to receive a fractional share of Wintrust Common Stock pursuant
to this ARTICLE I shall instead be entitled to receive an amount in cash (without interest) rounded to the nearest whole cent, determined by multiplying the Wintrust Common Stock Price by the fractional share of Wintrust Common Stock to which such
former holder would otherwise be entitled.
1.8
Exchange of Certificates.
(a) At or prior to the Effective Time, Wintrust shall authorize the issuance of and shall make available to the Exchange Agent, for the
benefit of the holders of Company Stock Certificates for exchange in accordance with this ARTICLE I, (i) a sufficient number of shares of Wintrust Common Stock, to be issued by book-entry transfer pursuant to Section 1.4, for payment of
the Per Share Stock Consideration pursuant to Section 1.4, (ii) sufficient cash for payment of the Per Share Cash Consideration pursuant to Section 1.4 and (iii) sufficient cash for payment of cash in lieu of any fractional
shares of Wintrust Common Stock in accordance with Section 1.7. Such amount of cash and shares of Wintrust Common Stock, together with any dividends or distributions with respect thereto paid after the Effective Time, are referred to in this
ARTICLE I as the
Conversion Fund
. Wintrust shall be solely responsible for the payment of any fees and expenses of the Exchange Agent.
(b) Within three (3) business days after the Closing Date, Wintrust shall cause the Exchange Agent to mail to each holder of record of one or more Company Stock Certificates a letter of transmittal
(
Letter of Transmittal
), in a form to be agreed by the Parties, which specifies, among other things, that delivery shall be effected, and risk of loss and title to Company Stock Certificates shall pass, only upon delivery of such
certificates to the Exchange Agent, together with instructions for use in effecting the surrender of the Company Stock Certificates pursuant to this Agreement.
(c) Upon proper surrender of a Company Stock Certificate for exchange to the Exchange Agent, together with a properly completed Letter of Transmittal, duly executed, the holder of such Company Stock
Certificate shall be entitled to receive in exchange therefor his, her or its portion of the Merger Consideration (in the form or forms elected by such holder subject to the proration and redesignation provisions set forth in this ARTICLE I)
deliverable in respect of the shares of Company Common Stock represented by such Company Stock Certificate; thereupon such Company Stock Certificate shall forthwith be cancelled. No interest, other than interest payable under the Escrow Agreement
with respect to the Per Share Escrowed Consideration, will be paid or accrued on the Per Share Merger Consideration deliverable upon surrender of a Company Stock Certificate.
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(d) After the Effective Time, there shall be no transfers on the stock transfer books of
the Company of the shares of Company Common Stock that were issued and outstanding immediately prior to the Effective Time.
(e) No dividends or other distributions declared with respect to Wintrust Common Stock and payable to the holders of record thereof
after the Effective Time shall be paid to the holder of any unsurrendered Company Stock Certificate until the holder thereof shall surrender such Company Stock Certificate in accordance with this ARTICLE I. Promptly after the surrender of a Company
Stock Certificate in accordance with this ARTICLE I, the record holder thereof shall be entitled to receive any such dividends or other distributions, without interest thereon, which theretofore had become payable with respect to shares of Wintrust
Common Stock into which the shares of Company Common Stock represented by such Company Stock Certificate were converted at the Effective Time pursuant to Section 1.4(e). No holder of an unsurrendered Company Stock Certificate shall be entitled,
until the surrender of such Company Stock Certificate, to vote the shares of Wintrust Common Stock into which such holders Company Common Stock shall have been converted.
(f) Any portion of the Conversion Fund that remains unclaimed by the stockholders of the Company twelve months after the Effective Time
shall be paid to the Surviving Corporation, or its successors in interest. Any stockholders of the Company who have not theretofore complied with this ARTICLE I shall thereafter look only to the Surviving Corporation, or its successors in interest,
for the issuance of the Per Share Stock Consideration, the payment of the Per Share Cash Consideration and the payment of cash in lieu of any fractional shares deliverable in respect of such stockholders shares of Company Common Stock, as well
as any accrued and unpaid dividends or distributions on such Per Share Stock Consideration. Notwithstanding the foregoing, none of Wintrust, the Surviving Corporation, the Exchange Agent or any other person shall be liable to any former holder of
shares of Company Common Stock for any amount delivered in good faith to a public official pursuant to applicable abandoned property, escheat or similar laws.
(g) In the event any Company Stock Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming such Company Stock Certificate to be lost,
stolen or destroyed and, if required by the Surviving Corporation, the posting by such person of a bond in such amount as the Exchange Agent may determine is reasonably necessary as indemnity against any claim that may be made against it with
respect to such Company Stock Certificate, the Exchange Agent will issue in exchange for such lost, stolen or destroyed Company Stock Certificate, and in accordance with this ARTICLE I, the Per Share Merger Consideration (in the form or forms
elected by such holder subject to the proration and redesignation procedures set forth in this ARTICLE I) and cash in lieu of any fractional shares deliverable in respect thereof pursuant to this Agreement.
1.9
Escrow Agreement
. At the Effective Time, Wintrust shall pay the Indemnification Escrow Amount to
Wells Fargo Bank, National Association, as escrow agent (the
Escrow Agent
), to be held in escrow for the purpose of securing the Companys indemnification obligations set forth in Section 8.2(a). The Indemnification
Escrow Amount, together with any interest earned thereon (collectively, the
Escrow Amount
), shall be held, invested and released by the Escrow Agent in accordance with the terms of an Escrow Agreement in the form attached hereto
as
Exhibit B
(the
Escrow Agreement
). Following release of the Escrow Disbursement (as such term is defined in the Escrow Agreement) by the Escrow Agent, the Exchange Agent shall then distribute to the stockholders of the
Company such Escrow Disbursement as Per Share Escrowed Consideration, calculated by dividing the Escrow Disbursement by the number of shares of Company Common Stock issued and outstanding immediately prior to the Effective Time. Distributions
to the stockholders of the Company shall be made using the instructions previously provided by each such stockholder to the Exchange Agent in their Letter of Transmittal delivered in accordance with this Agreement, unless such delivery instructions
are modified in writing in accordance with the terms of each such Letter of Transmittal.
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1.10
Cancellation of Treasury Shares
. At the Effective
Time, each share of Company Common Stock held as treasury stock or otherwise held by the Company or Hyde Park Bank and Trust Company (the
Bank
) (other than in a fiduciary capacity), if any, immediately prior to the Effective Time
shall automatically be cancelled and retired and cease to exist, and no Per Share Merger Consideration shall be exchanged therefor.
1.11
Dissenting Shares.
Any holder of shares of Company Common Stock otherwise entitled to receive the Per Share Merger Consideration in exchange for each of his or her
shares of Company Common Stock shall be entitled to demand payment in cash of the fair value for his or her shares of Company Common Stock as specified in Section 262 of the DGCL if the holder fully complies with the requirements specified
therein (such shares hereinafter referred to as
Dissenting Shares
). No holder of Dissenting Shares shall, after the Effective Time, be entitled to receive any payment of the Per Share Merger Consideration pursuant to this
Agreement, or be entitled to vote for any purpose or receive any dividends or other distributions with respect to any Wintrust Common Stock included in the Per Share Merger Consideration;
provided
,
however
, that shares of Company
Common Stock held by a dissenting stockholder who subsequently withdraws a demand for payment, fails to comply with the requirements of Section 262 of the DGCL, or otherwise fails to establish the right of such stockholder to receive payment in
cash of the fair value of such stockholders shares under the DGCL shall be deemed to be converted into the right to receive the Per Share Merger Consideration in exchange for each such share, upon surrender of the certificate or certificates
that formerly evidenced such Dissenting Shares in the manner set forth in Section
1.8.
1.12
Closing
. The consummation of the transactions contemplated by
this Agreement shall take place at a closing (the
Closing
) to be held on the fifth (5
th
) business day following the date on which all of the conditions set forth in ARTICLE VI and ARTICLE VII have been satisfied, or on such other date as the Parties may mutually agree (the
Closing Date
). In the event of the filing of any motion for rehearing or any appeal from the decision of any regulatory authority approving the transactions contemplated in this Agreement or any legal proceedings of the type
contemplated by Sections 6.6 or 7.7, Wintrust or the Company may postpone the Closing by written notice to the other parties until such approvals have been obtained or such motion, appeal or litigation has been resolved, but in no event shall such
Closing be postponed beyond the close of business on December 31, 2012 (except as may be extended pursuant to Section 9.2(b)) without the consent of the boards of directors of Wintrust and the Company. The Closing shall take place at 10:00
a.m., Chicago time, on the Closing Date at the offices of Schiff Hardin LLP, 233 S. Wacker Drive, Suite 6600, Chicago, Illinois, or at such other place and time upon which the Parties may agree.
ARTICLE II
REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANY
The Company hereby
represents and warrants to Wintrust as follows:
2.1
Organization
.
(a) The Company is duly registered as a bank holding company under the Bank Holding Company Act of 1956, as amended (the
BHCA
), is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, and has the corporate power and authority to own its properties and to carry on its business as presently
conducted. The Company is duly qualified and in good standing as a foreign corporation in each other jurisdiction where the location and character of its properties and the business conducted by it require such qualification, except where the
failure to be so qualified would not have a Material Adverse Effect on the Company. As used in this Agreement,
Material Adverse Effect
shall mean changes, developments, occurrences or events having a material adverse effect on the
financial condition, assets, liabilities, business or results of operations of the person referenced in such usage; provided, however, that Material Adverse Effect shall not be deemed to include the effects of (i) changes after the
date hereof in general United States or global business, political, economic or market (including capital or financial markets) conditions, (ii) any outbreak, escalation or worsening of hostilities, declared or undeclared acts of war, sabotage,
A-7
military action or terrorism, (iii) changes or proposed changes after the date hereof in United States generally accepted accounting principles (
GAAP
) or authoritative
interpretations thereof, (iv) changes or proposed changes after the date hereof in applicable law (in the case of each of these clauses (i), (ii), (iii) or (iv), other than changes, developments occurrences or events to the extent that
they have or would reasonably be expected to have a materially disproportionate adverse effect on the assets, liabilities, business or results of operations of the person referenced in such usage), (v) the negotiation, execution or announcement
of the Merger or this Agreement, or (vi) any actions by the Parties as required or contemplated by this Agreement or taken with the consent of the other Parties.
(b) Other than (i) their ownership of the Bank and Hyde Park Facilities, Inc., an Illinois corporation and wholly owned subsidiary of the Bank (the
Facilities Subsidiary
, and
together with the Bank, the
Subsidiaries
, and each, a
Subsidiary
), (ii) their investments in Investment Securities (as defined in Section 2.13(a)), (iii) securities owned in a fiduciary capacity,
and (iv) as set forth on
Schedule 2.1(b)
, none of the Company, the Bank nor the Facilities Subsidiary owns, whether directly or indirectly, any voting stock, equity securities or membership, partnership, joint venture or similar
ownership interest in any corporation, association, partnership, limited liability company or other entity.
(c) The Bank is
an Illinois state bank, duly chartered and organized, validly existing and currently authorized to transact the business of banking under the laws of the state of Illinois, and has the requisite power and authority to own its properties and to carry
on its business as presently conducted.
(d) The Facilities Subsidiary is an Illinois corporation duly organized, validly
existing and in good standing under the laws of the State of Illinois, and has the corporate power and authority to own its properties and to carry on its business as presently conducted.
2.2
Organizational Documents; Minutes and Stock Records.
Except as set forth on
Schedule 2.2
,
the Company has furnished Wintrust with copies of the certificate of incorporation and by-laws of the Company, the charter and by-laws of the Bank and the articles of incorporation and by-laws of the Facilities Subsidiary, in each case as amended to
the date hereof, and with such other documents as requested by Wintrust relating to the authority of the Company, the Bank and the Facilities Subsidiary to conduct their respective businesses. All such documents are complete and correct. Except as
set forth on
Schedule 2.2
, the stock registers and minute books of the Company, the Bank and the Facilities Subsidiary are each complete, correct and accurately reflect, in each case in all material respects, all meetings, consents, and other
actions of the organizers, incorporators, stockholders, board of directors, and committees of the boards of directors of the Company, the Bank and the Facilities Subsidiary, respectively, and all transactions in each such entitys capital stock
occurring since the initial organization of the Company, the Bank and the Facilities Subsidiary, respectively.
2.3
Capitalization
.
(a)
The Company
. The authorized capital stock of the Company consists of
(i) 500,000 shares of common stock, $1.00 par value per share, of which 307,724 shares are issued and outstanding as of the date of this Agreement and 132,947 shares are held in treasury, and (ii) 100,000 shares of preferred stock, $1.00
par value per share (the
Preferred Stock
), of which 4,000 shares are designated Fixed Rate Cumulative Perpetual Preferred Stock, Series A (the
Series A Shares
), 200.20020 shares are designated
Fixed Rate Cumulative Perpetual Preferred Stock, Series B (the
Series B Shares
), 5,000 shares are designated Fixed Rate Cumulative Preferred Stock, Series C (the
Series C Shares
, and
144.14414 shares are designated Fixed Rate Cumulative Perpetual Preferred Stock, Series D (the
Series D Shares
, and together with the Series A Shares, the Series B Shares and the Series C Shares, the
CPP
Shares
), and of which 4,000 Series A Shares, 200 Series B Shares, 5,000 Series C Shares and 144 Series D Shares are issued and outstanding and held of record by the United States Department of Treasury (the
U.S.
Treasury
) as of the date of this Agreement. The issued and outstanding shares of Company Common Stock and Preferred Stock have been duly and validly authorized and issued and are fully paid and nonassessable. Except for the CPP Shares,
none of the shares of Company Common
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Stock or Preferred Stock is subject to any preferences, qualifications, limitations, restrictions or special or relative rights under the Companys certificate of incorporation as in effect
as of the date of this Agreement. There are no options, warrants, agreements, contracts, or other rights in existence to purchase or acquire from the Company any shares of capital stock of the Company, whether now or hereafter authorized or issued.
Except for the Voting Agreement to be entered into concurrently with this Agreement, there are no voting trusts, voting agreements, proxies or other agreements, instruments or undertakings with respect to the voting of any interests in the Company.
Schedule 2.3(a)
sets forth a true and complete list of all stockholders of record of the Company, indicating their name and address of record and number of shares of capital stock of the Company held by each such stockholder.
(b)
The Bank
. The authorized capital stock of the Bank consists of 258,000 shares of common stock, $10.00 par value per share, of
which 258,000 shares are issued and outstanding. The issued and outstanding shares of common stock of the Bank have been duly and validly authorized and issued and are fully paid and nonassessable and owned by the Company. There are no options,
agreements, contracts, or other rights in existence to purchase or acquire from the Bank any shares of capital stock of the Bank, whether now or hereafter authorized or issued.
(c)
The Facilities Subsidiary
. The authorized capital stock of the Facilities Subsidiary consists of 25,000 shares of common
stock, $10.00 par value per share, of which 2,000 shares are issued and outstanding. The issued and outstanding shares of common stock of the Facilities Subsidiary have been duly and validly authorized and issued and are fully paid and nonassessable
and owned by the Bank. There are no options, agreements, contracts, or other rights in existence to purchase or acquire from the Facilities Subsidiary any shares of capital stock of the Facilities Subsidiary, whether now or hereafter authorized or
issued.
2.4
Authorization; No Violation.
The execution and delivery of this Agreement and
the performance of the Companys obligations hereunder have been duly and validly authorized by the board of directors of the Company (the
Company Board
), and do not violate or conflict with the Companys certificate of
incorporation, by-laws, the DGCL, or any applicable law, court order or decree to which the Company or the Subsidiaries is a party or subject, or by which the Company or the Subsidiaries or their respective properties are bound. The execution and
delivery of this Agreement and the performance of the Companys obligations hereunder do not and will not result in any default or give rise to any right of termination, cancellation or acceleration under any material note, bond, mortgage,
indenture or other agreement by which the Company or either Subsidiary or their respective properties are bound. This Agreement, when executed and delivered, and subject to the regulatory approvals described in Section 2.5, will be a valid,
binding and enforceable obligation of the Company, subject to applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors generally and to general principles of equity.
2.5
Consents and Approvals.
No consents or approvals of, or filings or registrations with, any court,
administrative agency or commission or other governmental authority or instrumentality (each, a
Governmental Authority
) or with any third party are necessary in connection with the execution and delivery by the Company of this
Agreement and the consummation by the Company of the Merger, except for (a) those third-party consents, approvals, filings or registrations set forth on
Schedule 2.5
, (b) the filing by Wintrust of an application with the Board of
Governors of the Federal Reserve System (the
Federal Reserve
) under the BHCA (the
Federal Reserve Application
), (c) the filing by Wintrust of an application with the Illinois Department of Financial and
Professional Regulation (the
IDFPR
) under the Illinois Banking Act (the
IDFPR Application
), (d) the filing of the Certificate of Merger with the Delaware Secretary of State under the DGCL, and (e) the
approval of this Agreement and the Merger by the requisite vote of the stockholders of the Company.
2.6
Financial Statements.
Schedule 2.6
sets forth true and complete copies of the following
financial statements (collectively, the
Financial Statements
): (a) the audited consolidated balance sheets of the Company and the Subsidiaries as of December 31, 2009 and 2010 and the related statements of income,
changes in stockholders equity and cash flows for the fiscal years then ended; (b) the audited consolidated balance sheet of
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the Company and the Subsidiaries as of December 31, 2011 (the
Audited Balance Sheet
, and such date, the
Audited Balance Sheet Date
) and the related
statements of income, changes in stockholders equity and cash flows for the fiscal year then ended; and (c) the unaudited consolidated interim balance sheet of the Company and the Subsidiaries as of August 31, 2012 (the
Interim Balance Sheet
) and the related statement of income for the eight-month period then ended (together with the Interim Balance Sheet, the
Interim Financial Statements
). The Financial Statements are complete
and correct and have been prepared in conformity with GAAP applied on a consistent basis throughout the periods involved. Each balance sheet (including any related notes) included in the Financial Statements presents fairly the consolidated
financial position of the Company and the Subsidiaries as of the date thereof, and each income statement (including any related notes) and statement of cash flow included in the Financial Statements presents fairly the consolidated results of
operations and cash flow, respectively, of the Company and the Subsidiaries for the period set forth therein;
provided
,
however
, that the Interim Financial Statements contain all adjustments necessary for a fair presentation, subject
to normal, recurring year-end adjustments (which adjustments will not be, individually or in the aggregate, material), and lack footnotes. Each of the audited Financial Statements has been certified by the Companys independent auditor, who has
expressed an unqualified opinion on such Financial Statements, and each of the unaudited or Interim Financial Statements has been certified by the Companys chief executive officer and principal accounting officer. The books, records and
accounts of each of the Company and the Subsidiaries accurately and fairly reflect, in reasonable detail, all transactions and all items of income and expense, assets and liabilities and accruals relating to the Company and the Subsidiaries, as
applicable.
2.7
No Undisclosed Liabilities.
None of the Company or the Subsidiaries has
any liabilities, whether accrued, absolute, contingent, or otherwise, existing or arising out of any transaction or state of facts existing on or prior to the date hereof, except (a) as and to the extent disclosed, reflected or reserved against
in the Financial Statements, (b) as and to the extent arising under contracts, commitments, transactions, or circumstances identified in the Schedules provided for herein, excluding any liabilities for Company or Subsidiary breaches thereunder,
and (c) liabilities, not material in the aggregate and incurred in the Ordinary Course of Business, which, under GAAP, would not be required to be reflected on a balance sheet prepared as of the date hereof. An action taken in the
Ordinary Course of Business
shall mean an action taken in the ordinary course of business of the Company, the Bank or the Facilities Subsidiary, as applicable, in conformity with past custom and practice (including with respect to
quantity and frequency) and where for such action to be taken, no separate authorization by the Company Board or the board of directors of the Bank or the Facilities Subsidiary, as applicable, is required. Any liabilities incurred in connection with
litigation or judicial, administrative or arbitration proceedings or claims against the Company or either Subsidiary shall not be deemed to be incurred in the Ordinary Course of Business.
2.8
Loans; Loan Loss Reserves.
(a) Each outstanding loan, loan agreement, note, lease or other borrowing agreement, any participation therein and any guaranty, renewal
or extension thereof (collectively,
Loans
) reflected on the books and records of the Bank is evidenced by appropriate and sufficient documentation and constitutes the legal, valid and binding obligation of the obligor named
therein, enforceable in accordance with its terms, except to the extent such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors rights and
remedies generally from time to time in effect and by applicable laws which may affect the availability of equitable remedies. No obligor named in any Loan has provided notice (whether written or, to the knowledge of the Company or the Bank, oral)
to the Company or the Bank that such obligor intends to attempt to avoid the enforceability of any term of any Loan under any such laws or equitable remedies, and no Loan is subject to any valid defense, set-off, or counterclaim that has been
threatened or asserted with respect to such Loan. All Loans that are secured, as evidenced by the appropriate and sufficient ancillary security documents, are so secured by valid and enforceable liens. Neither the Company nor any Subsidiary has
entered into any loan repurchase agreements except in connection with loans
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sold by the Bank in the Ordinary Course of Business in the secondary market subject to 90-day repurchase obligations. Attached as
Schedule 2.8(a)
is a true and complete list of all such
loans sold in the secondary market within the 90 days preceding the date of this Agreement.
(b) The reserves for loan and
lease losses shown on each of the balance sheets contained in the Financial Statements are adequate in the judgment of management and consistent with applicable bank regulatory standards and under GAAP to provide for losses, net of recoveries
relating to loans and leases previously charged off, on loans and leases outstanding (including accrued interest receivable) as of the applicable date of such balance sheet. The aggregate loan balances of the Bank as of August 31, 2012 in
excess of such reserves as shown on the Interim Balance Sheet are, to the knowledge of the Company and the Bank, collectible in accordance with their terms.
2.9
Properties and Assets
.
(a)
Real
Property; General
. Attached as
Schedule 2.9(a)
is a Schedule of Real Property, which sets forth a complete and correct description of all real property owned or leased by the Company or the Subsidiaries or in which the Company or the
Subsidiaries has an interest (other than as a mortgagee) (the
Real Property
). Except as set forth on
Schedule 2.9(a)
, no real property or improvements are carried on the Banks books and records as Other Real
Estate Owned. The Company and the Subsidiaries own, or have a valid right to use or a leasehold interest in, all Real Property used by them in the conduct of their respective businesses as such businesses are presently conducted. Except as otherwise
set forth on
Schedule 2.9(a)
, the ownership or leasehold interest of the Company and the Subsidiaries in such Real Property is not subject to any mortgage, pledge, lien, option, conditional sale agreement, encumbrance, security interest,
title exceptions or restrictions or claims or charges of any kind (collectively,
Encumbrances
), except for Permitted Encumbrances. As used in this Agreement,
Permitted Encumbrances
shall mean
(i) Encumbrances arising under conditional sales contracts and equipment leases with third parties under which the Company or either of the Subsidiaries is not delinquent or in default, (ii) carriers, workers, repairers,
materialmens, warehousemen liens and similar Encumbrances incurred in the Ordinary Course of Business, (iii) Encumbrances for taxes not yet due and payable or that are being contested in good faith and for which proper reserves have
been established and reflected on the Interim Balance Sheet, (iv) minor exceptions or defects in title to real property or recorded easements, rights-of-way, covenants, conditions or restrictions that in each case do not materially impair the
intended use thereof, (v) zoning and similar restrictions on the use of real property, and (vi) in the case of any leased assets, (A) the rights of any lessor and/or lessors lender under the applicable lease agreement or any
Encumbrance granted by any such lessor and (B) any statutory lien for amounts not yet due and payable, or that are being contested in good faith and for which proper reserves have been established and reflected on the Interim Balance Sheet. All
material certificates, licenses and permits required for the lawful use and occupancy of any of the Real Property by the Company or the Subsidiaries, as the case may be, have been obtained and are in full force and effect.
(b)
Landlord Operations and Leased Premises
.
(i)
Schedule 2.9(b)(i)
(the
Rent Roll
) sets forth a complete list of all premises for which the Company, the Bank or the Facilities Subsidiary leases any Real Property to any
third party tenant(s) (the
Leased Premises
). The Company has made available to Wintrust true and complete copies of each lease, occupancy agreement, rental agreement, services agreement or license, and any amendments or
modifications thereto, with respect to any of the Leased Premises (collectively, the
Tenant Leases
), and has identified on the Rent Roll the name and contact information for each tenant under the Tenant Leases (the
Tenants
) as set forth in the Companys records. There is no person or entity in possession or having right to possession of the Leased Premises not listed on the Rent Roll.
(ii) The Rent Roll further sets forth (1) the unit leased to each Tenant, (2) the expiration date of the current term for each
Tenant Lease, (3) the current rent under each Tenant Lease, (4) the current outstanding balance of all security deposits and the like held thereunder, (5) the current amounts owed by each
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Tenant and the periods to which such amounts relate, and (6) any amounts owed by the Company or its Subsidiaries to each Tenant. The rents set forth on the Rent Roll are being collected on a
current basis and no Tenant has paid rent more than one month in advance. No Tenant is entitled to rental concessions or abatements for any period subsequent to the Closing Date.
(iii) Except as set forth on
Schedule 2.9(b)(iii)
, none of the Company or its Subsidiaries has received any written notice of any
pending, nor has any knowledge of any proposed or threatened condemnation proceedings affecting the Leased Premises or any proposed or threatened proceeding for any rezoning that would affect the Leased Premises.
(iv) Each of the Tenant Leases is in full force and effect and enforceable against the Tenant in accordance with its terms. There are no
pending or, to the knowledge of the Company or its Subsidiaries, threatened actions, suits, claims or legal proceedings against the Company, the Bank or the Facilities Subsidiary with regard to the Leased Premises or any of the Tenant Leases. Except
as set forth on
Schedule 2.9(b)(iv)
, no commissions to any broker or leasing agent or allowances to Tenants are due or will become due on account of any of the Tenant Leases. Except as set forth on
Schedule 2.9(b)(iv)
, to the knowledge
of the Company and its Subsidiaries, there are no breaches or defaults by any of the Tenants under their respective Tenant Leases (after giving effect to any applicable notice or cure periods) and there are no facts or circumstances which would give
rise to such a breach or default.
(v) All work required to be performed by the Company or its Subsidiaries under the Tenant
Leases or any other contract or agreement affecting the Leased Premises has been completed, or will be completed prior to the Closing Date, in a workmanlike manner and in accordance with the Tenant Leases and all applicable law and regulations.
(vi) To the knowledge of the Company and its Subsidiaries, there is not now pending nor has there been threatened or
asserted any action, suit or proceeding against or affecting the Company or its Subsidiaries or the Leased Premises before or by any federal or state court, commission, regulatory body, administrative agency or other governmental or administrative
body.
(c)
Personal Property
. Attached as
Schedule 2.9(c)
is a Schedule of tangible personal property, which
sets forth a complete and correct description of all tangible personal property owned by the Company or the Subsidiaries or used by the Company or the Subsidiaries in the conduct of their respective businesses that is reflected as a capital asset in
the Interim Balance Sheet. Except as otherwise set forth on
Schedule 2.9(c)
, (i) the Company or a Subsidiary, as applicable, owns, or has a valid right to use or a leasehold interest in, all such personal property, (ii) all such
property is owned free and clear of any Encumbrances, except for Permitted Encumbrances and (iii) all such property is in satisfactory working condition and repair, normal wear and tear excepted.
(d)
Assets
. The assets reflected on the Interim Balance Sheet or identified in this Agreement or on the Schedules provided for
herein include all of the material assets (i) owned by the Company and the Subsidiaries, except for those assets subsequently disposed of or purchased by the Company or the Subsidiaries for fair value in the Ordinary Course of Business, and
(ii) used, intended or required for use by the Company or the Subsidiaries in the conduct of their respective businesses as is currently conducted as of the date of the Agreement.
2.10
Material Contracts.
Attached as
Schedule 2.10
is a Schedule of Material Contracts. True
and complete copies of which have been delivered to Wintrust, except with respect to the Tenant Leases which the Company made available to Wintrust during the course of its due diligence investigation and those Material Contracts described in
Section 2.10(f) for which the Company has delivered to Wintrust a complete and correct list and made available to Wintrust during the course of its due diligence investigation.
Material Contracts
includes every contract,
commitment, or arrangement (whether written or oral) of a material nature (or that
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assumes materiality because of its continuing nature) under which the Company or either of the Subsidiaries is obligated on the date hereof, including the following:
(a) all consulting arrangements, and contracts for professional, advisory, and other services, including contracts under which the
Company or a Subsidiary performs services for others;
(b) the Tenant Leases and any other leases for real property for which
the Company or its Subsidiaries is a tenant, and any leases of personal property;
(c) all contracts, commitments and
agreements for the acquisition, development or disposition of real or personal property other than conditional sales contracts and security agreements whereunder total future payments are, in each instance, less than $75,000;
(d) all contracts relating to the employment, engagement, compensation or termination of directors, officers, employees, consultants or
agents of the Company or either Subsidiary, and all pension, retirement, profit sharing, stock option, stock purchase, stock appreciation, insurance or similar plans or arrangements for the benefit of any employees, officers or directors of the
Company or the Subsidiaries, including all Benefit Plans as defined in Section 2.21;
(e) all loans, loan commitments,
promissory notes, letters of credit or other financial accommodations or arrangements or evidences of indebtedness, including modifications, waivers or amendments thereof, extended to or for the benefit of the Company or either Subsidiary;
(f) all loans, loan commitments, promissory notes, letters of credit or other financial accommodations or arrangements or
evidences of indebtedness, including modifications, waivers or amendments thereof, extended to or for the benefit of any single borrower or related group of borrowers if the aggregate amount of all such loans, loan commitments, promissory notes,
letters of credit or other financial accommodations or arrangements or evidences of indebtedness extended to such borrower or related group of borrowers exceeds $375,000;
(g) all agreements, contracts, mortgages, loans, deeds of trust, leases, commitments, indentures, notes, instruments and other arrangements which are with officers or directors of the Company or the
Subsidiaries, any affiliates of the Company or the Bank within the meaning of Section 23A of the Federal Reserve Act or any record or beneficial owner of 5% or more of Company Common Stock, or any member of the immediate family or a
related interest (as such terms are defined in 12 C.F.R. §215.2(m)) of any such person, excepting any ordinary and customary loans and deposits that comply with applicable banking regulations;
(h) any contract involving total future payments by the Company or a Subsidiary of more than $75,000 or which
requires performance by the Company or a Subsidiary beyond the first (1
st
) anniversary of the Closing Date, that by its terms does not terminate or is not terminable by the Company or a Subsidiary without penalty within 30 days after the date of this Agreement;
(i) except for provisions of the certificate of incorporation and by-laws of the Company, the charter and by-laws of the
Bank or the articles of incorporation and by-laws of the Facilities Subsidiary, all contracts under which the Company, the Bank or the Facilities Subsidiary has any obligation, direct, indirect, contingent or otherwise, to assume or guarantee any
liability or to indemnify any person (other than in a fiduciary capacity);
(j) all joint venture or marketing agreements
with any other person or entity; and
(k) all other material contracts, made other than in the Ordinary Course of Business of
the Company or the Subsidiaries, to which any such person is a party or under which any such person is obligated.
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2.11
No Defaults
. Each of the Company and the
Subsidiaries has fulfilled and taken all action reasonably necessary to date to enable it to fulfill, when due, all of its material obligations under all Material Contracts to which it is a party. There are no breaches or defaults by the Company or
a Subsidiary under any Material Contract that could give rise to a right of termination or claim for material damages under such Material Contract, and no event has occurred that, with the lapse of time or the election of any other party, will
become such a breach or default by the Company or a Subsidiary. To the knowledge of the Company or the Subsidiaries, no breach or default by any other party under any Material Contract has occurred or is threatened that will or could impair the
ability of the Company or the Subsidiaries to enforce any of its rights under such Material Contract.
2.12
Conflict of Interest Transactions.
No principal officer or director of the Company, the Subsidiaries, or holder of 10% or more of the Company Common Stock or any member of the immediate family or a related interest (as such terms are
defined in 12 C.F.R. §215.2(m)) of such person: (a) has any direct or indirect ownership interest in (i) any entity which does business with, or is a competitor of, the Company or a Subsidiary (other than the ownership of not more
than 1% of the outstanding capital stock of such entity if such stock is listed on a national securities exchange or market or is regularly traded in the over-the-counter market by a member of a national securities exchange or market) or
(ii) any property or asset which is owned or used by the Company or a Subsidiary in the conduct of their respective businesses; or (b) has any financial, business or contractual relationship or arrangement with the Company or a Subsidiary,
excluding any agreements and commitments entered into in respect of the Banks acceptance of deposits and investments or the making of any loans, in each case in the Ordinary Course of Business of the Bank.
2.13
Investments
.
(a) Set forth on
Schedule 2.13(a)
is a complete and correct list and description as of August 31, 2012, of all investment and debt securities, mortgage-backed and related securities,
marketable equity securities and securities purchased under agreements to resell that are owned by the Company or its Subsidiaries, other than, with respect to the Bank, in a fiduciary or agency capacity (the
Investment
Securities
). Except as set forth on
Schedule 2.13(a)
with respect to each Investment Security, the Company and each Subsidiary has good and marketable title to all Investment Securities held by it, free and clear of all
Encumbrances, except for Permitted Encumbrances and except to the extent such Investment Securities are pledged in the Ordinary Course of Business consistent with prudent banking practices to secure obligations of the Company or the Bank. A complete
and correct list of such pledged Investment Securities is included on
Schedule 2.13(a)
. The Investment Securities are valued on the books of the Company, the Bank and (if applicable) the Facilities Subsidiary in accordance with GAAP.
(b) Except as set forth on
Schedule 2.13(b)
and as may be imposed by applicable securities laws, none of the
Investment Securities is subject to any restriction, whether contractual or statutory, that materially impairs the ability of the Company or a Subsidiary to dispose of such investment at any time. With respect to all material repurchase agreements
to which the Company or a Subsidiary is a party, the Company or Subsidiary, as the case may be, has a valid, perfected first lien or security interest in the securities or other collateral securing each such repurchase agreement, and the value of
the collateral securing each such repurchase agreement equals or exceeds the amount of the debt secured by such collateral under such agreement.
(c) None of the Company or the Subsidiaries has sold or otherwise disposed of any Investment Securities in a transaction in which the acquiror of such Investment Securities or other person has the right,
either conditionally or absolutely, to require the Company or a Subsidiary to repurchase or otherwise reacquire any such Investment Securities.
(d) There are no interest rate swaps, caps, floors, option agreements or other interest rate risk management arrangements to which the Company or the Subsidiaries is bound.
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2.14
Compliance with Laws; Legal Proceedings
.
(a) The Company and the Subsidiaries are each in compliance with all applicable federal, state, county and municipal laws and
regulations (i) that regulate or are concerned in any way with the ownership and operation of banks, their holding companies and their subsidiaries or the business of banking or of acting as a fiduciary, including those laws and regulations
relating to the investment of funds, the taking of deposits, the lending of money, the collection of interest, the extension of credit and the location and operation of banking facilities, or (ii) that otherwise relate to or affect the business
or assets of the Company or the Subsidiaries or the assets owned, used, occupied or managed by any of them, except for, with respect to each of (i) and (ii), matters concerning such compliance that would not be material to the Company or the
Subsidiaries.
(b) The Company and the Subsidiaries hold all material licenses, certificates, permits, authorizations,
franchises and rights from all appropriate federal, state or other Governmental Authorities necessary for the conduct of their respective businesses and the ownership of their respective assets (collectively,
Licenses
), all
Licenses are in full force and effect, and none of the Company or the Subsidiaries has received any notice (whether written or, to the knowledge of the Company or the Subsidiaries, oral) of any pending or threatened action by any Governmental
Authority to suspend, revoke, cancel or limit any License.
(c) There are no claims, actions, suits or proceedings pending
or, to the knowledge of the Company or the Subsidiaries, threatened or contemplated against or affecting the Company or a Subsidiary, at law or in equity, or before any federal, state or other Governmental Authority or any arbitrator or arbitration
panel, whether by contract or otherwise, including any claims, actions, suits or proceedings that might seek to challenge the validity or propriety of the Merger, and except as set forth on
Schedule 2.14(c)
, there is no decree, judgment or
order or supervisory agreement of any kind in existence against or restraining the Company or the Subsidiaries from taking any action of any kind in connection with their respective businesses. Except as set forth on
Schedule 2.14(c)
, none of
the Company or the Subsidiaries has received from any federal, state or other Governmental Authority any notice or threat (whether written or, to the knowledge of the Company or the Subsidiaries, oral) of enforcement actions, or any criticism or
recommendation of a material nature, and none of the Company or the Subsidiaries has any reasonable basis for believing that any such notice or threat, criticism, recommendation or suggestion not otherwise disclosed herein is contemplated,
concerning capital, compliance with laws or regulations, safety or soundness, fiduciary duties or other banking or business practices that has not been resolved to the reasonable satisfaction of such Governmental Authority.
2.15
Insurance.
Attached as
Schedule 2.15
is a Schedule of Insurance, which sets forth a
complete and correct list of all policies of insurance in which the Company or a Subsidiary is named as an insured party, which otherwise relate to or cover any assets, properties, premises, operations or personnel of the Company or a Subsidiary, or
which is owned or carried by the Company or a Subsidiary. All such policies are legal, valid, binding, enforceable and in full force and effect as of the date hereof and will continue in effect until Closing (or if such policies are cancelled or
lapse prior to Closing, renewals or replacements thereof will be entered into in the Ordinary Course of Business). No application for any such policies included a material misstatement or omission. All premiums and costs with respect to such
policies are set forth on
Schedule 2.15
and have been paid to the extent due. None of the Company nor any Subsidiary is in breach or default under any such policy, and no event has occurred which, with notice or the lapse of time, would
constitute a breach or default or permit termination, modification or acceleration, under such policy. No claim currently is pending under any such policy involving an amount in excess of $75,000. All material insurable risks in respect of the
business and assets of the Company and Subsidiaries are covered by such insurance policies and the types and amounts of coverage provided therein are usual and customary in the context of the business and operations in which the Company and
Subsidiaries are engaged. None of the Company or the Subsidiaries has received notice (whether written or, to the knowledge of the Company or the Subsidiaries, oral) from any party of interest in or to any such policies claiming any breach or
violation of any provisions thereof, disclaiming or denying coverage thereof or canceling or threatening cancellation of any such insurance contracts.
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2.16
Taxes
.
(a)
Definitions
. For the purposes of this Agreement, the term
Tax
or, collectively,
Taxes
shall mean (1) any and all U.S. federal, state, local and non-U.S. taxes, duties, fees, premiums, assessments, imposts, levies, tariffs and other charges of any kind whatsoever imposed, assessed, reassessed or collected by any governmental
entity, including all interest, penalties, fines, installments, additions to tax or other additional amounts imposed, assessed, reassessed or collected by any governmental entity in respect thereof, and including those related to, or levied on, or
measured by, or referred to as, net income, gross income, income as specially defined, earnings, profits or selected items of income, earnings or profits, gross receipts, royalty, capital, capital gain, sales, goods and services, harmonized sales,
use, value added, ad valorem, transfer, land transfer, real property, capital stock, personal property, environmental, business, property development, occupancy, franchise, license, withholding, payroll, employment, employer health, health
insurance, social services, education, all surtaxes, unemployment or employment insurance premiums, workers compensation payments, excise, severance, stamp, premium, escheat, or windfall profits, alternative or minimum taxes, customs duties, import
and export taxes, countervail and anti-dumping, and registration fees, whether disputed or not and whether payable directly or by withholding and whether or not requiring the filing of a Tax Return; (2) any liability of the Company for the
Taxes described in clause (1) hereof arising as a result of being or ceasing to be a member of a consolidated, affiliated or combined group whether pursuant to Treasury Regulation §1.1502-6 (and any corresponding provision of state,
local or foreign law) or otherwise; and (3) any liability for Taxes referenced in clauses (1) and (2) as a transferee, successor, guarantor, by contract or by operation of applicable laws or otherwise.
(b)
Tax Returns and Audits
.
(i) The Company has prepared and timely filed all material U.S. federal, state, local and non-U.S. returns, elections, notices, filings, declarations, forms, claims for refund, estimates, information
statements, reports and other documents, including any amendments, schedules, attachments, supplements, appendices and exhibits thereto (
Tax Returns
), with the appropriate governmental entity in all jurisdictions in which such Tax
Returns are required to be filed relating to any and all Taxes concerning or attributable to the Company. Such Tax Returns have been prepared and completed in accordance with applicable Legal Requirements in all material respects.
Schedule
2.16(b)(i)
lists all of the jurisdictions in which the Company or any of the Subsidiaries is required to file Tax Returns or pay Taxes.
(ii) The Company and each of the Subsidiaries has duly and timely paid, or caused to be duly and timely paid, all material Taxes that are due and payable by it (whether or not shown or required to be
shown on any Tax Return).
(iii) The Company and each of the Subsidiaries has duly and timely withheld or deducted all
material Taxes and other amounts required by applicable laws to be withheld or deducted by it, including Taxes and other amounts required to be deducted or withheld by it in respect of any amount paid or credited, or deemed to be paid or credited,
by it to or for the account or benefit of any person, including any former or current Employees, officers or directors and any non-resident person, and has duly and timely remitted, or will duly and timely remit, as applicable, to the appropriate
governmental entity such Taxes and other amounts required by applicable laws to be remitted by it, for all periods ending on or prior to the Closing Date.
(iv) The Company has not entered into any agreement or other arrangement, or executed any waiver, providing for any extension of time, including any statute of limitations on or outstanding extension of
the period for the assessment or collection of any Tax, and the Company is not the beneficiary of any such extension of time, which will be outstanding and in effect on the Closing Date, within which (A) to file any Tax Return covering any
Taxes for which the Company may be liable; (B) to file any elections, designations or similar filings relating to Taxes for which the Company may be liable; (C) the Company may be required to pay or remit Taxes or amounts on account of
Taxes; or (D) any governmental entity may assess, reassess, or collect Taxes for which the Company may be liable.
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(v) No audit or other examination of any Tax Return of the Company is currently in
progress, nor has the Company been notified in writing of any request for such an audit or other examination.
(vi) There are
no liens on the assets of the Company relating to or attributable to Taxes, except for inchoate tax liens that are attached by operation of law.
(vii) The Company has not been at any time a United States Real Property Holding Corporation within the meaning of Section 897(c)(2) of the Code.
(viii) The Company (1) has never been a member of an affiliated group (within the meaning of Code §1504(a)) filing a
consolidated, combined, unitary or similar Tax Return (other than a group the common parent of which was Company), (2) does not owe any amount under any Tax sharing, indemnification, allocation or similar agreement, (3) has never been a
party to or bound by any Tax sharing, indemnification, allocation or similar agreement, contract plan or arrangement allocating or sharing the payment of, indemnity for or liability for Taxes that will not be terminated on the Closing Date without
any future liability to Wintrust, the Company or any of their respective subsidiaries, or (4) has no liability for the Taxes of any person (other than Company) under Treas. Reg. § 1.1502-6 (or any similar provision of state, local or
foreign law), as a transferee or successor, by contract, or otherwise.
(ix) No claim in writing has ever been made by any
governmental entity in a jurisdiction in which the Company does not file Tax Returns that the Company is or may be subject to Taxes in such jurisdiction.
(x) The Company has not entered into, been a party to or otherwise participated (directly or indirectly) in any listed transaction within the meaning of Treasury Regulations
Section 1.6011-4(b)(2) or any other reportable transaction within the meaning of Treasury Regulations Section 1.6011-4(b) or any transaction requiring disclosure under similar provisions of state, local or foreign Tax laws.
(xi) The Company has not applied for any Tax ruling which, if granted, would affect the computation of Tax liability of the
Company for any periods (or portions thereof) beginning on or after the Closing Date.
(xii) The Company has not agreed to
make, or is required to make, any adjustment under Section 481(a) of the Code by reason of a change in accounting method or otherwise.
(xiii) There is no contract covering any current or former employee or current or former independent contractor of the Company or any of the Subsidiaries that, individually or collectively, could give
rise to a payment by the Company (or the provision by the Company of any other benefits such as accelerated vesting) that would not be deductible by the Company by reason of Code Section 280G or subject to an excise Tax under Code
Section 4999. The Company has no indemnity obligations for any excise Taxes imposed under Code Section 4999 or for any Taxes of any employee, including the Taxes under Code 409A.
(xiv) The Company has disclosed on its Tax Returns all positions taken therein that could reasonably give rise to a substantial
understatement of Taxes within the meaning of Code Section 6662.
2.17
Environmental Laws
and Regulations
.
(a) Except as set forth on
Schedule 2.17
, the Company and the Subsidiaries:
(i) have had and now have all material environmental approvals, consents, licenses, permits and orders required to conduct the
businesses in which they have been or are now engaged; and
A-17
(ii) have been and are in compliance in all material respects with all applicable
Environmental Laws (as defined in Section 2.17(e)).
(b) Except as set forth on
Schedule 2.17
:
(i) there are no claims, actions, suits or proceedings pending or, to the knowledge of the Company or the Subsidiaries, threatened or
contemplated against, or involving, the Company or a Subsidiary, any assets of the Company or a Subsidiary, under any of the Environmental Laws (whether by reason of any failure to comply with any of the Environmental Laws or otherwise);
(ii) no decree, judgment or order of any kind under any of the Environmental Laws has been entered against the Company or a Subsidiary;
(iii) none of the Company or the Subsidiaries:
(A) is or was a generator or transporter of hazardous waste, or the owner, operator, lessor, sublessor, lessee or, to its knowledge, mortgagee of a treatment, storage, or Disposal facility or underground
storage tank as those terms are defined under the Resource Conservation and Recovery Act, as amended, or regulations promulgated thereunder, or of real property on which such a treatment, storage or Disposal facility or underground storage tank is
or was located;
(B) arranged for the Disposal or treatment, arranged with a transporter for transport for Disposal or
treatment of Hazardous Materials at any facility from which there is a release or threat of release, or accepts or accepted Hazardous Materials for transport for Disposal or treatment at any facility;
(C) is or was the holder of a security interest where the party giving the security is or was, to the knowledge of the Company or the
Subsidiaries, the owner or operator of a treatment, storage or Disposal facility, underground storage tank or any facility at which any Hazardous Materials are or were treated, stored in significant quantities, recycled or disposed, and where either
the Company or the Bank participates or participated in management decisions concerning the facilitys Hazardous Materials Disposal activities; or
(D) owns, operates, leases, subleases or, to its knowledge, holds a security interest in, or owned, operated, leased or subleased (1) any facility at which any Hazardous Materials were treated,
stored in significant quantities, recycled, disposed or are or were installed or incorporated into the structure or (2) any real property on which such a facility is or was located.
(c) With respect to the Leased Premises, except as set forth on
Schedule 2.17(c)
:
(i) The Facilities Subsidiary requires Tenants to covenant and agree to not use and utilize Hazardous Materials on the Leased Premises.
Each of the Company and Subsidiaries complies with all legal requirements applicable to the use, utilization, handling, storage and transportation on the Leased Premises of any Hazardous Materials.
(ii) The Facilities Subsidiary requires Tenants to covenant and agree to indemnify, defend and hold the Facilities Subsidiary harmless
from any and all claims, losses, liabilities, penalties, costs or expenses of any kind or nature whatsoever, including attorney fees which may at any time during Tenants occupancy, be asserted or imposed against the Facilities Subsidiary and
which arise out of and are caused by the Disposal of Hazardous Materials onto, under, from or upon the Leased Premises by Tenants, except to the extent that any of the same arises from the intentional or grossly negligent acts of the Facilities
Subsidiary or the Facilities Subsidiarys agents or employees.
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(iii) None of the Company or its Subsidiaries has received notice (whether written or, to
the knowledge of the Company or Subsidiaries, oral) from any Tenant or any adjoining or nearby property owner that a release of Hazardous Materials has occurred at any of the Leased Premises or adjoining or nearby property and has not been
remediated, mitigated, abated or the like.
(d) To the knowledge of the Company or the Subsidiaries, there are no other
facts, conditions or situations, whether now or heretofore existing, that could form the basis for any claim against, or result in any liability of, the Company or a Subsidiary under any of the Environmental Laws.
(e) For purposes of this Section 2.17,
Hazardous Materials
means (A) pollutants, contaminants, pesticides,
petroleum or petroleum products, radioactive substances, solid wastes or hazardous or extremely hazardous, special, dangerous, or toxic wastes, substances, chemicals or materials within the meaning of any Environmental Law, including any
hazardous substance as defined in or under the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C., Sec. 9601, et seq., as amended and reauthorized, and any hazardous waste as defined in or under
the Resource Conservation and Recovery Act, 42 U.S.C., Sec. 6902, et seq., and all amendments thereto and reauthorizations thereof, and (B) any other pollutants, contaminants, hazardous, dangerous or toxic chemicals, materials, wastes or other
substances, including any industrial process or pollution control waste or asbestos, which pose a hazard to the environment or the health and safety of any person.
Disposal
means the discharge, deposit, injection, dumping,
spilling, leaking, or placing any materials, wastes or substances into the environment.
Environmental Laws
means all federal, state and local statutes, regulations, ordinances, rules and policies, all court and administrative
orders and decrees, all arbitration awards, and the common law, which pertain to environmental or natural resource matters or contamination of any type whatsoever.
2.18
Community Reinvestment Act Compliance.
Neither the Company nor the Bank has received any notice of non-compliance with the applicable provisions of the Community
Reinvestment Act (
CRA
) and the regulations promulgated thereunder, and the Bank has received a CRA rating of satisfactory or better from the Federal Deposit Insurance Corporation (the
FDIC
) or other applicable
Governmental Authority. The Company knows of no facts or circumstances which would cause either the Company or the Bank to fail to comply with such provisions or the Bank to receive a rating less than satisfactory.
2.19
Company Regulatory Reports.
Since January 1, 2011, the Company and the Subsidiaries have
each timely filed all material reports, registrations and statements, together with any amendments required to be made with respect thereto, required to be filed with the Federal Reserve, the FDIC and any other Governmental Authority or
self-regulatory organization with jurisdiction over any of the activities of the Company or the Subsidiaries (the
Company Regulatory Reports
), and have paid all fees and assessments due and payable in connection therewith. As of
their respective dates, the Company Regulatory Reports complied in all material respects with the statutes, rules and regulations enforced or promulgated by the applicable regulatory authority with which they were filed and did not contain any
untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statement therein, in light of the circumstances under which they were made, not misleading.
2.20
Employee Matters
.
(a) Except as set forth on
Schedule 2.20
, (i) the Company and its Subsidiaries have not entered into, and are not otherwise bound by, any collective bargaining agreement that is now in effect
with respect to their employees nor has any of them experienced any labor disturbance, slow-down, strike, lockout, material grievance, claim of unfair labor practices, or other dispute relating to any union or collective bargaining within the past
three (3) years; (ii) there is no labor strike, labor dispute, or work slow-down, stoppage or lockout pending or, to the Companys knowledge, threatened against or affecting the Company or its Subsidiaries; (iii) to the
Companys knowledge, no union organization campaign is threatened or in progress with respect to any of the employees of the Company or its Subsidiaries, and no question concerning representation exists respecting
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such employees; (iv) there is no unfair labor practice charge or complaint threatened or pending against the Company or its Subsidiaries before the National Labor Relations Board; and
(v) neither the Company nor any of its Subsidiaries has agreed to recognize any union or other collective bargaining representative, and no union or other collective bargaining representative has been certified as the exclusive bargaining
representative of any of the employees of the Company or its Subsidiaries. Neither the Company nor any of its Subsidiaries has committed any unfair labor practice. The Company, each Subsidiary and the Facilities Subsidiarys agent Aegis
Properties Corporation (
Aegis Properties
) have complied at all times and are in compliance with the collective bargaining agreement to which the Company or such Subsidiary or Aegis Properties is a party, and neither the Company
nor the Facilities Subsidiary is aware of any facts or circumstances which could give rise to any liability on the part of the Company, its Subsidiaries or Aegis Properties under any such agreement. To the Companys or the Subsidiaries
knowledge, (1) no event has occurred or circumstance exists that could provide the basis for any work slow-down or stoppage or other labor dispute and (2) there is no organizational effort presently being made or threatened by or on behalf
of any labor union with respect to employees of the Company or its Subsidiaries.
(b)
Schedule 2.20(b)
sets forth the
name, job title and date of commencement of employment with respect to each employee of the Company and each of its Subsidiaries (the
Employees
).
(c) The Company and its Subsidiaries have complied and are in compliance in all material respects with all laws relating to the employment of labor, including any provisions thereof relating to
(i) wages, hours, bonuses, commissions, termination pay, vacation pay, sick pay, fringe benefits, employee benefits, health insurance continuation (COBRA), and the payment and/or accrual of the same and all insurance and all other costs and
expenses applicable thereto; (ii) unlawful, wrongful, retaliatory, harassing, or discriminatory employment or labor practices; (iii) occupational health and safety standards; (iv) employment taxes, deductions, reporting and licensure
requirements, and (v) plant closing, mass layoff, immigration, workers compensation, disability, unemployment compensation, whistleblower laws, driver regulations, and other employment laws, regulations and ordinances. The Company and its
Subsidiaries are in material compliance with the Immigration Reform and Control Act of 1986 and maintain a current Form I-9, as required by such Act, in the personnel file of each employee hired after November 9, 1986 and the Company and its
Subsidiaries have verified that each and every employee who is currently working in the United States is eligible to work in the United States.
(d) All employees of the Company and its Subsidiaries have been or will have been on or before the Closing, paid in full by the Company or its Subsidiaries for all earned wages, salaries, commissions,
bonuses (including any bonuses or incentive compensation related to the Merger), vacation pay, sick pay, and other compensation for all services performed by such employees up to and including the Closing or any such unpaid amounts existing at the
time of the Closing will be properly reflected in the Closing Balance Sheet. All independent contractors who have worked for the Company or its Subsidiaries at any time are and have been properly classified as independent contractors pursuant to all
applicable regulations. The Company and its Subsidiaries have withheld all amounts required by law or by agreement to be withheld from the wages, salaries and other payments to employees and are not liable for any arrears of wages or any taxes or
any penalty for failure to comply with any of the foregoing. To the Companys knowledge, no officer of any of the Company or its Subsidiaries intends to terminate employment with the Company and its Subsidiaries prior to or, except as set forth
on
Schedule 2.20(d)
, following the Closing.
2.21
Employee Benefit Plans
.
(a) The Schedule of Material Contracts, attached as
Schedule 2.10
, includes a complete and correct list of each
employee welfare benefit plan and employee pension benefit plan within the meaning of ERISA Sections 3(1) and 3(2), respectively (the
ERISA Plans
), each compensation, consulting, employment or collective bargaining agreement, and
each stock option, stock purchase, stock appreciation right, life, health, disability or other insurance or benefit, bonus, deferred or incentive compensation, severance or separation, profit sharing, retirement, or other employee benefit plan,
practice, policy or arrangement of any kind, oral or written,
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covering employees or former employees of the Company or the Subsidiaries which the Company or the Subsidiaries maintain or contribute to (or, with respect to any employee pension benefit plan
has maintained or contributed to since the date of its incorporation) or to which the Company or a Subsidiary is a party or by which it is otherwise bound (collectively, together with the ERISA Plans, the
Benefit Plans
). None of
the Company or the Subsidiaries has, and has ever had, an affiliate that would be treated as a single employer together with the Company or any Subsidiary (an
ERISA Affiliate
) under Section 414 of the Code other than the
Company, the Bank and the Facilities Subsidiary with respect to each other. The Company previously has delivered to Wintrust true and complete copies of the following with respect to each Benefit Plan: (i) copies of each Benefit Plan, and all
related plan descriptions; (ii) the last three (3) years Annual Returns on Form 5500, including all schedules thereto and the opinions of independent accountants; and (iii) other material plan documents. In addition, the Company
has delivered to Wintrust true and complete copies of the following:
(i) all contracts with third party administrators,
actuaries, investment managers, consultants, insurers, and independent contractors that relate to any Benefit Plan;
(ii) all
notices and other communications that were given by the Company or any Benefit Plan to the IRS, the Department of Labor, the PBGC, or any participant or beneficiary, pursuant to applicable law, within the four years preceding the date of this
Agreement;
(iii) all notices or other communications that were given by the IRS, the PBGC, or the Department of Labor to the
Company or any Benefit Plan within the four (4) years preceding the date of this Agreement; and
(iv) with respect to
Benefit Plans subject to ERISA Title IV, the Form PBGC-1 filed for each of the three (3) most recent plan years.
(b)
Except as set forth on
Schedule 2.21(b)
, neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby will cause an increase or acceleration of benefits or benefit entitlements to employees
or former employees of the Company or the Subsidiaries under any Benefit Plan or any other increase in the liabilities of the Company or the Subsidiaries under any Benefit Plan as a result of the transactions contemplated by this Agreement.
(c) Except as set forth on
Schedule 2.21(c)
, none of the Company or the Subsidiaries maintains or participates, and
has ever maintained or participated, in a multiemployer plan within the meaning of Section 3(37) of ERISA (a
Multiemployer Plan
). None of the Company or the Subsidiaries or, to their knowledge, any director or employee of the
Company or the Subsidiaries, or any fiduciary of any ERISA Plan has engaged in any transaction in violation of Section 406 or 407 of ERISA or, to the Companys or the Subsidiaries knowledge, any prohibited transaction (as
defined in Section 4975(c)(1) of the Code) for which no exemption exists under Section 408(b) of ERISA or Section 4975(d) of the Code in connection with such ERISA Plan. The Company and the Subsidiaries do not provide and have never
provided medical benefits, life insurance or similar welfare benefits to former employees, except as required by Section 601 of ERISA.
(d) Each ERISA Plan that is intended to qualify under Section 401 and related provisions of the Code is the subject of a favorable determination letter from the Internal Revenue Service
(
IRS
), or satisfies the provisions of IRS Announcement 2001-77, Section II, if applicable, to the effect that it is so qualified under the Code and that its related funding instrument is tax exempt under Section 501 of the
Code (or the Company and the Subsidiaries are otherwise relying on an opinion letter issued to the prototype sponsor), and, to the Companys or the Subsidiaries knowledge, there are no facts or circumstances that would adversely affect
the qualified status of any ERISA Plan or the tax-exempt status of any related trust. The Company has provided Wintrust with copies of the most recent IRS determination letters (or opinion or advisory letters) for each Benefit Plan that is intended
to qualify under Section 401 and related provisions of the Code.
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(e) Except as set forth on
Schedule 2.21(e)
, each Benefit Plan is, and since its
inception, has been administered in material compliance with its terms and with all applicable laws, rules and regulations governing such Benefit Plan, including the rules and regulations promulgated by the U.S. Department of Labor, the Pension
Benefit Guaranty Corporation and the IRS under ERISA, the Code or any other applicable law, including without limitation the requirement to file Annual Returns on Form 5500. Neither the Company nor any affiliate of the Company that is a fiduciary
with respect to any Benefit Plan has breached any of the responsibilities, obligations or duties imposed on it by ERISA. No Benefit Plan is currently the subject of a submission under IRS Employee Plans Compliance Resolution System or any similar
system, nor under any Department of Labor amnesty program, and neither the Company nor the Bank anticipates any such submission of any Benefit Plan.
(f) Other than routine claims for benefits made in the Ordinary Course of Business, there is no litigation, claim or assessment pending or, to the Companys or the Subsidiaries knowledge,
threatened by, on behalf of, or against any of the Benefit Plans or against the administrators or trustees or other fiduciaries of any of the Benefit Plans that alleges a violation of applicable state or federal law or violation of any Benefit Plan
document or related agreement. To the Companys or the Subsidiaries knowledge, there is no reasonable basis for any such litigation, claim or assessment.
(g) No Benefit Plan fiduciary or any other person has, or has had, any liability to any Benefit Plan participant, beneficiary or any other person under any provisions of ERISA or any other applicable law
by reason of any action or failure to act in connection with any Benefit Plan, including any liability by any reason of any payment of, or failure to pay, benefits or any other amounts or by reason of any credit or failure to give credit for any
benefits or rights. Every Benefit Plan fiduciary and official is bonded to the extent required by Section 412 of ERISA.
(h) All accrued contributions and other payments to be made by the Company or the Subsidiaries to any Benefit Plan (i) through the
date hereof have been made or reserves adequate for such purposes have been set aside therefor and reflected in the Financial Statements and (ii) through the Closing Date will have been made or reserves adequate for such purposes will have been
set aside therefore and reflected in the Financial Statements. None of the Company or the Subsidiaries is in default in performing any of its contractual obligations under any of the Benefit Plans or any related trust agreement or insurance
contract. There are no outstanding liabilities with respect to any Benefit Plan other than liabilities for benefits to be paid to participants in such Benefit Plan and their beneficiaries in accordance with the terms of such Benefit Plan. Except to
the extent reserved for and reflected in the Financial Statements in accordance with this subsection (h), none of the Company or the Subsidiaries has committed to, or announced, a change to any Benefit Plan that increases the cost of the Benefit
Plan to the Company or the Subsidiaries.
(i) No Benefit Plan provides for payment of any amount which, considered in the
aggregate with amounts payable pursuant to all other Benefit Plans, would exceed the amount deductible for federal income tax purposes by virtue of Section 280G or 162(m) of the Code.
(j) Except as set forth on
Schedule 2.21(j)
, the provisions of any Benefit Plan that constitutes a non-qualified deferred
compensation plan under Code Section 409A, and the operation of any such plan, have at all times been in compliance with Code Section 409A or guidance issued thereunder.
(k) Except as set forth on
Schedule 2.21(k)
, there are no obligations or liabilities, whether outstanding or subject to future
vesting, for any post-retirement benefits to be paid to participants under any of the Benefit Plans or otherwise. The Company has complied in all respects with the requirements for continued healthcare coverage under ERISA Section 601 et seq.
and Code Section 4980B.
(l) With respect to each Benefit Plan that is subject to ERISA Title IV (a
Title IV
Plan
):
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(i) The Company has at all times met the minimum funding standard, and has made all
contributions required, under ERISA § 302 and Code § 412;
(ii) The Company has paid all amounts due to the Pension
Benefit Guaranty Corporation (the
PBGC
);
(iii) The Company has not ceased operations at any facility or
withdrawn from any Title IV Plan in a manner that would subject any entity or the Company to liability under ERISA § 4062(e), § 4063, or § 4064;
(iv) The Company has not filed a notice of intent to terminate any Title IV Plan or adopted any amendment to treat a Title IV Plan as terminated. The PBGC has not instituted proceedings to treat any Title
IV Plan as terminated. No event has occurred or circumstance exists that may constitute grounds under ERISA § 4042 for the termination of, or the appointment of a trustee to administer, any Title IV Plan;
(v) No amendment has been made, or is reasonably expected to be made, to any Title IV Plan that has required or could require the
provision of security under ERISA § 307 or Code § 401(a)(29);
(vi) Since the last valuation date for each Title IV
Plan, no event has occurred or circumstance exists that would increase the amount of benefits under any Title IV Plan or that would cause the excess of Title IV Plan assets over benefit liabilities (as defined in ERISA § 4001) to decrease, or
the amount by which benefit liabilities exceed assets to increase;
(vii) No reportable event (as defined in ERISA §
4043 and in regulations issued thereunder) has occurred; and
(viii) Except as set forth on
Schedule 2.21(l)
, the
Company has no knowledge of any facts or circumstances that may give rise to any liability of the Company or Wintrust to the PBGC under Title IV of ERISA.
(m) Except as set forth on
Schedule 2.21(m)
, the consummation of the transactions contemplated by this Agreement will not result in the payment, vesting, or acceleration of any benefit by the
Company or under any Benefit Plan.
(n) No condition exists as a result of which the Company would have any liability,
whether absolute or contingent, under any Benefit Plan with respect to any misclassification of a person performing services for the Company as an independent contractor rather than as an employee.
(o) The Company has the right to modify and terminate benefits to retirees (other than pensions provided pursuant to Title IV Plans)
with respect to both retired and active employees.
(p) Neither the Company nor any Subsidiary has withdrawn, completely or
partially, within the meaning of Section 4203 or 4205 of ERISA, from any Multiemployer Plan so as to incur liability under the Multiemployer Pension Plan Amendments Act of 1980 and there exists no fact which could reasonably be expected to
result in any such liability. Neither the Company nor any Subsidiary has received notice from any Multiemployer Plan, or otherwise has knowledge, that (i) the Company or a Subsidiary has incurred withdrawal liability, (ii) the
Multiemployer Plan intends to terminate, (iii) the PBGC has instituted proceedings under Section 4042 of ERISA to terminate the Multiemployer Plan, or (iv) the Multiemployer Plan is in endangered or critical status.
A-23
2.22
Technology and Intellectual Property
.
(a) Attached as
Schedule 2.22
is a Schedule of Intellectual Property, which sets forth a complete and correct list of all
(i) registered trademarks, service marks, domain names, copyrights and patents; (ii) applications for registration or grant of any of the foregoing; (iii) unregistered trademarks, service marks, trade names, logos and assumed names;
and (iv) licenses for any of the foregoing, in each case, owned by the Company or the Subsidiaries or used in or necessary to conduct the Companys or the Subsidiaries businesses as presently conducted. The items on
Schedule
2.22
, together with all other trademarks, service marks, trade names, logos, assumed names, patents, copyrights, trade secrets, computer software, licenses, formulae, customer lists or other databases, business application designs and inventions
currently used in or necessary to conduct the businesses of the Company and the Subsidiaries constitute the
Intellectual Property
.
(b) The Company or the Subsidiaries, as applicable, has ownership of, or such other rights by license, lease or other agreement in and to, the Intellectual Property as is necessary to permit the Company
and the Subsidiaries to use the Intellectual Property in the conduct of their respective businesses as presently conducted. None of the Company or the Subsidiaries has received notice (whether written or, to the knowledge of the Company or the
Subsidiaries, oral) alleging that the Company or a Subsidiary has infringed or violated any trademark, trade name, copyright, patent, trade secret right or other proprietary right of others, and to the Companys or the Subsidiaries
knowledge, it has not committed any such violation or infringement. To the knowledge of the Company or the Subsidiaries, there are no facts or circumstances that, upon consummation of the transactions contemplated hereby, would cause the Company or
the Subsidiaries to be in any way more restricted in their respective use of any of the Intellectual Property than it was on the date hereof under any contract to which the Company or each Subsidiary is a party or by which it is bound, or that use
of such Intellectual Property by the Company or the Subsidiaries will, as a result of such consummation, violate or infringe the rights of any person, or subject Wintrust, the Company or the Subsidiaries to liability of any kind, under any such
contract.
(c) The IT Assets operate and perform in all material respects in accordance with their documentation and
functional specifications and otherwise as required by the Company and the Subsidiaries in connection with their respective businesses, and have not materially malfunctioned or failed within the past three (3) years.
IT
Assets
means the computers, computer software, firmware, servers, workstations, routers, hubs, switches, data communications lines and all other information technology equipment, and all associated documentation, owned or leased by the
Company or the Subsidiaries. To the knowledge of the Company or the Subsidiaries, the IT Assets do not contain any worms, viruses, bugs, faults or other devices or effects that (i) enable or assist any person or entity to access without
authorization the IT Assets, or (ii) otherwise significantly adversely affect the functionality of the IT Assets, except as disclosed in its documentation. To the knowledge of the Company or the Subsidiaries, no person or entity has gained
unauthorized access to the IT Assets. The Company and the Subsidiaries have implemented reasonable back-up and disaster recovery technology consistent with industry practices. To the knowledge of the Company or the Subsidiaries and except for
off the shelf software licensed by the Company or the Subsidiaries in the Ordinary Course of Business, none of the IT Assets contains any shareware, open source code, or other software the use of which requires disclosure or licensing of
any intellectual property.
2.23
Absence of Certain Changes or Events.
Other than as
specifically disclosed in this Agreement, the Financial Statements, or the Schedules delivered pursuant to this Agreement, there has not occurred (a) since the Audited Balance Sheet Date, any Material Adverse Effect on the Company or the
Subsidiaries, or (b) any change, condition, event, circumstance, fact or other occurrence, whether occurring before or since the Audited Balance Sheet Date that may reasonably be expected to have or result in a Material Adverse Effect on the
Company or the Subsidiaries. No fact or condition exists with respect to the business, operations or assets of the Company or the Subsidiaries which the Company has reason to believe may cause the Federal Reserve Application, the IDFPR Application
or any of the other regulatory approvals referenced in Section 6.3 or 7.3 to be denied or unduly delayed.
A-24
2.24
Operations since Audited Balance Sheet Date.
Except
as set forth on
Schedule 2.24
, since the Audited Balance Sheet Date the businesses of each of the Company and the Subsidiaries have been conducted only in the Ordinary Course of Business. Without limiting the generality of the foregoing,
since the Audited Balance Sheet Date, except as set forth on such Schedule, none of the Company or the Subsidiaries has taken, or has caused, suffered or permitted to be taken any of the following actions:
(a) sold, leased (as lessor), transferred or otherwise disposed of (including any transfers to any of its Affiliates), or mortgaged or
pledged, or imposed or suffered to be imposed any Encumbrance on, any of the assets reflected on the Audited Balance Sheet or any assets acquired by the Company or the Subsidiaries after the Audited Balance Sheet Date, except for (i) OREO,
loans held for sale and Investment Securities sold or otherwise disposed of in the Ordinary Course of Business, (ii) real estate loans pledged as collateral for Federal Home Loan Bank advances and (iii) Permitted Encumbrances;
(b) cancelled any debts owed to or claims held by the Company or a Subsidiary (including the settlement of any claims or litigation)
other than in the Ordinary Course of Business;
(c) created, incurred or assumed, or agreed to create, incur or assume, any
indebtedness for borrowed money in respect of the Company or a Subsidiary or entered into, as lessee, any capitalized lease obligations (as defined in Accounting Standards Codification Topic 840), in either case other than in the Ordinary Course of
Business;
(d) accelerated or delayed collection of notes, accounts or loans receivable generated by the Company or a
Subsidiary in advance of or beyond their regular due dates or the dates when the same would have been collected in the Ordinary Course of Business;
(e) delayed or accelerated payment of any account payable or other liability of the Company or a Subsidiary beyond or in advance of its due date or the date when such liability would have been paid in the
Ordinary Course of Business;
(f) declared or paid any dividend or other distribution (other than to the Company or a
Subsidiary or on the CPP Shares);
(g) instituted any increase in any compensation payable to any employee of the Company or
a Subsidiary, other than routine increases in the Ordinary Course of Business, or instituted any increase in any profit-sharing, bonus, incentive, deferred compensation, insurance, pension, retirement, medical, hospital, disability, welfare or other
benefits made available to employees of the Company or a Subsidiary;
(h) prepared or filed any Tax Return inconsistent with
past practice or, on any such Tax Return, taken any position, made any election, or adopted any method that is inconsistent with positions taken, elections made or methods used in preparing or filing similar Tax Returns in prior periods); or
(i) made any change in the accounting principles and practices used by the Company and Subsidiaries from those applied in
the preparation of the Audited Balance Sheet and the related statements of income and cash flow for the period then ended.
2.25
Change in Business Relationships
. Neither the Company nor either of the Subsidiaries has received notice (whether written or, to their knowledge, oral), whether on account of the transactions contemplated by this Agreement or
otherwise, (a) that any customer, agent, representative, supplier, vendor or business referral source of the Company or the Subsidiaries intends to discontinue, diminish or change its relationship with the Company or the Bank, the effect of
which would be material to the business, assets or operations of the Company or the Subsidiaries, or (b) that any executive officer of the Company or the Subsidiaries intends to terminate or substantially alter the terms of his or her
employment. There have been no
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complaints or disputes (in each case set forth in writing) with any customer, employee, agent, representative, supplier, vendor, business referral source or other parties that have not been
resolved which are reasonably likely to be material to the business, assets or operations of the Company or the Subsidiaries.
2.26
Brokers and Finders Fees.
Except as set forth on
Schedule 2.26
, none of the
Company or the Subsidiaries has incurred any liability for brokerage commissions, finders fees, or like compensation with respect to the transactions contemplated by this Agreement.
2.27
Section 280G Payments.
Neither the execution of this Agreement nor the consummation of the
transactions contemplated hereby will result in any payment that would be deemed an excess parachute payment under Section 280G of the Code.
2.28
No Omissions.
None of the representations and warranties contained in ARTICLE II, in the Schedules provided for herein by the Company is false or misleading in any
material respect or omits to state a fact herein or therein necessary to make such statements not misleading in any material respect.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
CONCERNING WINTRUST AND MERGER CO.
Wintrust and Merger Co. hereby jointly and severally represent to the Company as follows:
3.1
Organization.
(a) Wintrust is a
corporation duly organized, validly existing and in good standing under the laws of the State of Illinois, has the corporate power and authority to own its own properties and to carry on its business as it is now being conducted, and is duly
qualified and in good standing as a foreign corporation in each jurisdiction where the location and character of its properties and the business conducted by it require such qualification, except where the failure to be so qualified would not have a
Material Adverse Effect on Wintrust.
(b) Merger Co. is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and has the corporate power and authority to enter into this Agreement and to consummate the transactions contemplated hereby. Merger Co. has conducted no business other than in connection with the execution
and delivery of this Agreement.
3.2
Capitalization
.
(a) The authorized capital stock of Wintrust consists of (i) 100,000,000 shares of common stock, no par value per share, of which
36,402,749 shares were issued and outstanding as of July 31, 2012, (ii) 20,000,000 shares of preferred stock, no par value per share, $1,000 liquidation value per share, of which 176,500 shares are issued and outstanding, and
(iii) 239,762 shares are held in treasury. The issued and outstanding shares of Wintrust Common Stock have been duly and validly authorized and issued and are fully paid and nonassessable. As of August 31, 2012, there were
(i) outstanding options and restricted stock units in respect of 2,185,977 shares of Wintrust Common Stock and outstanding performance share awards that, if awarded per their terms, could total 430,440 shares of Wintrust Common Stock, and
(ii) outstanding warrants for the purchase of 1,644,295 shares of Wintrust Common Stock. Such options, restricted stock units and warrants have been duly authorized by all necessary corporate action (including shareholder approval, if
necessary) and have been validly executed, issued and delivered by Wintrust, and constitute the legal, valid and binding obligations of Wintrust, and are enforceable as to Wintrust in accordance with their terms. The shares of Wintrust Common Stock
to be issued upon exercise of such options, restricted stock units and warrants are validly authorized and, upon such exercise in accordance with their terms, will be validly issued, fully paid, and nonassessable. The Wintrust Common Stock is
subject to certain preferences, qualifications, limitations,
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restrictions or special or relative rights under Wintrusts articles of incorporation, a true and complete copy of which has been previously provided to the Company. Except as disclosed on
Schedule 3.2
, there are no options, agreements, contracts or other rights in existence to purchase or acquire from Wintrust any shares of capital stock of Wintrust, whether now or hereafter authorized or issued, other than shares issuable
pursuant to employee benefit or compensation plans referred to in the Wintrust SEC Documents.
(b) The authorized capital
stock of Merger Co. consists of 1,000 shares of common stock, no par value per share, all of which are issued and outstanding. The issued and outstanding shares of Common Stock of Merger Co. have been duly authorized and issued and are fully paid
and nonassessable and owned by Wintrust.
3.3
Authorization; No Violations.
The execution
and delivery of this Agreement by Wintrust and Merger Co. and the performance of Wintrusts and Merger Co.s obligations hereunder have been duly and validly authorized by the boards of directors of Wintrust and Merger Co. and by Wintrust
as the sole stockholder of Merger Co., do not violate or conflict with the articles of incorporation or by-laws of Wintrust, the certificate of incorporation or by-laws of Merger Co., the Illinois BCA, the DGCL or any applicable law, court order or
decree to which Wintrust or Merger Co. is a party or subject, or by which Wintrust or Merger Co. is bound, and require no further corporate or shareholder approval on the part of Wintrust or Merger Co. The execution and delivery of this Agreement by
Wintrust and Merger Co. and the performance of Wintrusts and Merger Co.s obligations hereunder do not and will not result in any default or give rise to any right of termination, cancellation or acceleration under any material note,
bond, mortgage, indenture or other agreement by which Wintrust or Merger Co. is bound. This Agreement, when executed and delivered, and subject to the matters described in Section 3.4, will be a valid, binding and enforceable obligation of each
of Wintrust and Merger Co., subject to applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors generally and to general principles of equity.
3.4
Consents and Approvals.
No consents or approvals of, or filings or registrations with, any
Governmental Authority or with any third party are necessary in connection with the execution and delivery by Wintrust or Merger Co. of this Agreement and the consummation by Wintrust and Merger Co., as of the Effective Date, of the Merger except
for (a) the filing by Wintrust of the Federal Reserve Application and the IDFPR Application, (b) the filing by Wintrust with the Securities and Exchange Commission (the
Commission
) of a registration statement on an
appropriate form under the Securities Act of 1933, as amended (the
Securities Act
), relating to the shares of Wintrust Common Stock issuable in the Merger and (c) the filing of the Certificate of Merger with the Delaware
Secretary of State under the DGCL.
3.5
Wintrust SEC Filings and Financial Statements
.
(a) Since January 1, 2011, Wintrust has timely filed all reports, registration statements and other documents
(including any amendments thereto) required to be filed with the Commission under the Securities Act, the Securities Exchange Act of 1934, as amended (the
Exchange Act
) and the rules and regulations of the Commission (the
Wintrust SEC Documents
), and all such Wintrust SEC Documents have complied in all material respects, as of their respective filing dates and effective dates, as the case may be, with all applicable requirements of the Securities
Act or the Exchange Act. As of their respective filing and effective dates, none of the Wintrust SEC Documents contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they were made, not misleading.
(b) The audited
consolidated financial statements contained or incorporated by reference in Wintrusts Annual Report on Form 10-K for the year ended December 31, 2011 and the unaudited interim financial statements included in Wintrusts most recent
Quarterly Report on Form 10-Q have been prepared in conformity with GAAP applied on a consistent basis, and, together with the notes thereto, present fairly the consolidated financial position of Wintrust and its subsidiaries at the dates shown and
the consolidated results of their operations, changes in shareholders equity and cash flows for the periods then ended. The interim financial
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statements as of, and for, the periods ending after December 31, 2011 included in Wintrusts Quarterly Report on Form 10-Q, as filed with the Commission, include all adjustments
necessary for a fair presentation of the financial position of Wintrust and its subsidiaries and the results of their operations for the interim periods presented, subject to normal, recurring year-end adjustments and the omission of footnote
disclosure.
(c) The allowances for loan losses shown on each of the balance sheets contained in the Wintrust SEC Documents
are adequate in the judgment of management and consistent with applicable regulatory standards and under GAAP to provide for losses, net of recoveries relating to loans previously charged off, on loans and leases outstanding (including accrued
interest receivable) as of the applicable date of such balance sheet. The aggregate loan balances of the subsidiaries of Wintrust as of June 30, 2012 in excess of such reserves as shown on the Wintrust SEC Documents are, to the knowledge of
Wintrust, collectible in accordance with their terms.
3.6
Compliance with Laws; Legal
Proceedings.
(a) Wintrust and its subsidiaries are each in compliance with all applicable federal, state, county and
municipal laws and regulations (i) that regulate or are concerned in any way with the ownership and operation of banks, their holding companies and their subsidiaries or the business of banking or of acting as a fiduciary, including those laws
and regulations relating to the investment of funds, the taking of deposits, the lending of money, the collection of interest, the extension of credit and the location and operation of banking facilities, or (ii) that otherwise relate to or
affect the business or assets of Wintrust or any of its subsidiaries or the assets owned, used, occupied or managed by Wintrust or any of its subsidiaries, except for such noncompliance which individually or in the aggregate would not have a
Material Adverse Effect on Wintrust. Wintrust and its subsidiaries (direct and indirect) hold all material licenses, certificates, permits, franchises and rights from all appropriate federal, state or other Governmental Authorities necessary for the
conduct of their respective businesses and the ownership of their respective assets.
(b) Except as may be disclosed in the
Wintrust SEC Documents, there are no material claims, actions, suits or proceedings pending or, to the knowledge of Wintrust, threatened or contemplated against or affecting Wintrust or its subsidiaries, at law or in equity, or before any federal,
state or other Governmental Authority or any arbitrator or arbitration panel, whether by contract or otherwise, including any claims, actions, suits or proceedings that might seek to challenge the validity or propriety of the Merger, and there is no
decree, judgment or order or supervisory agreement of any kind in existence against or restraining Wintrust or its subsidiaries from taking any action of any kind in connection with their respective businesses. Except as may be disclosed in the
Wintrust SEC Documents, none of Wintrust or its subsidiaries has received from any federal, state or other Governmental Authority any notice or threat (whether written or, to the knowledge of Wintrust, oral) of any enforcement action, criticism or
recommendation concerning capital, compliance with laws or regulations, safety or soundness, fiduciary duties or other banking or business practices that has not been resolved to the reasonable satisfaction of such Governmental Authority and that
would be materially adverse to Wintrust and its subsidiaries taken as a whole, and Wintrust has no reasonable basis to believe that any such enforcement action, criticism or recommendation not otherwise disclosed herein is contemplated.
3.7
Wintrust Regulatory Reports.
Since January 1, 2011, Wintrust and its subsidiaries have filed
all material reports, registrations and statements, together with any amendments required to be made with respect thereto, required to be filed with the Federal Reserve, the FDIC, the IDFPR, the Office of the Comptroller of the Currency (the
OCC
) and any other Governmental Authority or self-regulatory organization with jurisdiction over any of the activities of Wintrust or its subsidiaries (the
Wintrust Regulatory Reports
), and have paid all fees
and assessments due and payable in connection therewith. As of their respective dates, the Wintrust Regulatory Reports complied in all material respects with the statutes, rules and regulations enforced or promulgated by the applicable regulatory
authority with which they were filed and did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which
they were made, not misleading.
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3.8
No Adverse Change.
Except as disclosed in the
Wintrust SEC Documents or this Agreement, there has not occurred (a) since December 31, 2011, any Material Adverse Effect on Wintrust, or (b) any change, condition, event, circumstance, fact or other occurrence, whether occurring
before or since December 31, 2011 that may reasonably be expected to have or result in a Material Adverse Effect on Wintrust. No fact or condition exists with respect to the business, operations or assets of Wintrust or its subsidiaries which
Wintrust has reason to believe may cause the Federal Reserve Application, the IDFPR Application or any of the other regulatory approvals referenced in Section 6.3 or 7.3 to be denied or unduly delayed.
3.9
Brokers and Finders Fees
. Neither Wintrust nor Merger Co. has incurred any liability
for brokerage commissions, finders fees, or like compensation with respect to the transactions contemplated by this Agreement.
3.10
Taxation of the Merger
. Neither Wintrust nor any subsidiary of Wintrust has taken any action or agreed to take any action that would preclude the Merger from
qualifying as a reorganization under Section 368(a) of the Code and, to the knowledge of Wintrust, there are no agreements or arrangements to which Wintrust or any subsidiary of Wintrust is a party that would prevent the Merger from so
qualifying.
3.11
No Omissions.
None of the representations and warranties contained in
ARTICLE III or in the Schedules provided for herein is false or misleading in any material respect or omits to state a fact herein necessary to make such statements not misleading in any material respect.
ARTICLE IV
AGREEMENTS AND COVENANTS
4.1
Conduct of
Business
. As required in Section 6.2, as a condition precedent to the obligations of Wintrust and Merger Co., the Company shall certify as to the fulfillment of the Companys agreement that during the period commencing on the date
hereof and continuing until the Effective Time, the Company shall conduct the Companys business and shall cause the Subsidiaries to conduct their respective businesses in the Ordinary Course of Business consistent with prudent banking
practice. Without limiting the generality of the foregoing, without the prior written consent of Wintrust:
(a) no change
shall be made in the certificate of incorporation or by-laws of the Company, or the charter or by-laws of the Bank or the articles of incorporation or by-laws of the Facilities Subsidiary;
(b) no change shall be made in the capitalization of the Company or the Subsidiaries or in the number of issued and outstanding shares
of Company Common Stock;
(c) except as set forth on
Schedule 4.1(c)
, the compensation of officers or key employees of
the Company or the Subsidiaries shall not be increased, nor any bonuses paid except in the Ordinary Course of Business;
Schedule 4.1(c)
sets forth a description of any such changes to compensation or bonuses anticipated to be made during the
next six (6) months;
(d) no Loan, or renewal or restructuring of a Loan, in the amount of $375,000 or more (including
Loans to any one borrower or related group of borrowers which, in the aggregate, equal or exceed $375,000) shall be made by the Bank except after delivering to Wintrust a complete loan package for such Loan, renewal or restructuring, in a form
consistent with the Banks policies and practice, and obtaining Wintrusts prior consent, which consent shall not be unreasonably withheld or delayed and shall be deemed given if Wintrust shall have not responded to the Companys
request within two (2) business days after receipt of such complete loan package, and such Loan or renewal or restructuring of a Loan shall be made in the Ordinary Course of Business consistent with prudent banking practices, the Banks
current loan policies and applicable rules and regulations of applicable Governmental Authorities with respect to amount, term, security and quality of such borrowers or borrowers credit;
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(e) other than dividends on the CPP Shares in the Ordinary Course of Business, no dividends
or other distributions shall be declared or paid by the Company to the extent it would cause the stockholders equity in the Company, as adjusted pursuant to Section 6.11 below, to fall below the Minimum Adjusted Net Worth, or as otherwise
would not be permitted under applicable law;
(f) except as required in connection with the repurchase or redemption of the
CPP Shares, no dividends or other distributions shall be declared or paid by the Bank to the extent it would cause the minimum net worth of the Bank to fall below well-capitalized status, as defined by applicable FDIC regulations, or as would not be
permitted under applicable law;
(g) the Company and the Subsidiaries shall each use their commercially reasonable efforts to
maintain their present insurance coverage in respect of its properties and business;
(h) no significant changes shall be
made in the general nature of the business conducted by the Company or the Subsidiaries;
(i) except as contemplated pursuant
to Section 6.9, no employment, consulting or similar agreements shall be entered into by the Company or a Subsidiary that are not terminable by the Company or such Subsidiary on 30 days or fewer notice without penalty or obligation, nor
shall the Bank terminate the employment of any officer without first notifying Wintrust;
(j) except as expressly provided in
this Agreement, none of the Company or the Subsidiaries shall take any action that would result in a termination, partial termination, curtailment, discontinuance of a Benefit Plan or merger of any Benefit Plan into another plan or trust;
(k) the Company and the Subsidiaries shall file all Tax Returns in a timely manner and shall not make any application for or
consent to any extension of time for filing any Tax Return or any extension of the period of limitations applicable thereto;
(l) none of the Company or the Subsidiaries shall make any expenditure for fixed assets in excess of $50,000 for any single item, or
$200,000 in the aggregate, or shall enter into leases of fixed assets having an annual rental in excess of $50,000;
(m) none
of the Company or the Subsidiaries shall incur any liabilities or obligations, make any commitments or disbursements, acquire or dispose of any property or asset, make any contract or agreement, or engage in any transaction except in the Ordinary
Course of Business consistent with prudent banking practices and the Companys and the Subsidiaries current policies;
(n) none of the Company or the Subsidiaries shall do or fail to do anything that will cause a breach by the Company or the Subsidiaries of, or default by the Company or the Subsidiaries under, any
Material Contract;
(o) the Bank shall not engage or agree to engage in any covered transaction within the
meaning of Sections 23A or 23B of the Federal Reserve Act (without regard to the applicability of any exemptions contained in Section 23A) or any transaction of the kind referred to in Section 2.12, unless the Bank has complied with
Sections 23A and 23B of the Federal Reserve Act;
(p) the Bank shall only purchase or invest in obligations of the government
of the United States or agencies of the United States or state or local governments having maturities of not more than five (5) years and which municipal obligations have been assigned a rating of A or better by Moodys Investors Service
or by Standard and Poors;
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(q) the Bank shall not (i) accept or renew any brokered deposits (except for renewals
of existing CDARS deposits), (ii) incur additional Federal Home Loan Bank advances or other types of ordinary course wholesale funding (except for renewals of existing Federal Home Loan Bank advances or Federal funds purchased) or
(iii) enter into any new term repurchase agreements; and
(r) no changes of a material nature shall be made in either
the Companys or the Subsidiaries accounting procedures, methods, policies or practices or the manner in which the Company or the Subsidiaries maintain their records.
4.2
Access to Information and Premises
.
(a) The Company shall provide and shall cause the Subsidiaries to provide Wintrust and its representatives full access, during normal
business hours and on reasonable advance notice to the Company, to further information (to the extent permissible under applicable law) and the Subsidiaries premises for purposes of (i) observing the Subsidiaries business activities
and operations and to consult with their officers and employees regarding the same on an ongoing basis to verify compliance by the Company with all terms of this Agreement, and (ii) making all necessary preparations for conversion of the
Banks IT systems;
provided
,
however
, that the foregoing actions shall not unduly interfere with the business operations of the Company or the Subsidiaries.
(b) Wintrust will use such information as is provided to it by the Company or the Subsidiaries, or representatives thereof, solely for
the purpose of conducting business, legal and financial reviews of the Company and the Subsidiaries and for such other purposes as may be related to this Agreement, and Wintrust will, and will direct all of its agents, employees and advisors to,
maintain the confidentiality of all such information in accordance with the terms of the letter agreement regarding confidentiality entered into by and between the Company and Wintrust dated March 22, 2012 (the
Confidentiality
Agreement
).
4.3
Board of Directors Notices and Minutes.
The Company shall
give reasonable notice to Wintrust of all meetings of the Company Board and any of its committees, and the board of directors of the Subsidiaries and any of their respective committees, and if known, the agenda for or business to be discussed at
such meetings. To the extent permissible under law, the Company shall promptly transmit to Wintrust copies of all notices, minutes, consents and other materials that the Company or either of the Subsidiaries provides to their respective directors.
Wintrust agrees to hold in confidence all such information pursuant to the Confidentiality Agreement. Notwithstanding the foregoing, the Company will not be required to provide any information called for in this Section 4.3 that (i) if
received by Wintrust would result in a waiver of the Companys attorney-client privilege, (ii) relates to the negotiation, interpretation or implementation of this Agreement or (iii) relates to the Company Boards deliberations
regarding an Acquisition Proposal (as defined in Section 4.11(a)), other than the information required to be provided to Wintrust pursuant to Section 4.11(c).
4.4
Registration Statement and Wintrust Regulatory Filings
.
(a) Wintrust shall file with the Commission within 30 days after the execution of this Agreement or as soon as practicable thereafter, a registration statement on an appropriate form under the Securities
Act covering Wintrust Common Stock to be issued pursuant to the Merger and shall use its reasonable and diligent efforts to cause the same to become effective and thereafter, until the Effective Time or termination of this Agreement, to keep the
same effective and, if necessary, amend and supplement the same. Such registration statement and any amendments and supplements thereto are referred to herein as the
Registration Statement
). The Registration Statement shall
include a proxy statement/prospectus acceptable to Wintrust and the Company, prepared by Wintrust and the Company for use in connection with the Stockholders Meeting, all in accordance with the rules and regulations of the Commission, it being
understood that Wintrust shall have final approval authority with respect to the content of the proxy statement/prospectus. Wintrust shall, as soon as practicable after the execution of this Agreement, make all filings, if any, required to obtain
all blue sky permits,
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authorizations, consents or approvals required for the issuance of Wintrust Common Stock. In advance of the filing of the Registration Statement, Wintrust shall provide the Company and its
counsel with an opportunity to comment thereon, and thereafter shall promptly advise the Company and its counsel of any material communication received by Wintrust or its counsel from the Commission with respect to the Registration Statement. None
of the information furnished by Wintrust or the Company for inclusion in the Registration Statement, the proxy statement/prospectus included therein or any other document filed with the Commission or any state securities commission, at the
respective times at which such documents are filed with the Commission or such state securities commission or, in the case of the Registration Statement, when it becomes effective or, in the case of the proxy statement/prospectus contained therein,
when mailed or at the time of the Stockholders Meeting, shall be false or misleading with respect to any material fact or shall omit to state any material fact necessary in order to make the statements therein, in light of the circumstances in
which they were made, not misleading.
(b) Within 20 days following execution and delivery of this Agreement, Wintrust will
file the Federal Reserve Application and the IDFPR Application and take all other appropriate actions necessary to obtain the regulatory approvals referred to in Sections 6.3 and 7.3 hereof, and the Company will use all reasonable and diligent
efforts to assist in obtaining all such approvals. The obligation of Wintrust to take all appropriate actions shall not be construed as including an obligation to accept any terms of or conditions to a consent, authorization, order, or approval of,
or any exemption by, any Governmental Authority or other party that are not acceptable to Wintrust, in its sole reasonable discretion, or to change the business practices of Wintrust or any of its subsidiaries in a manner not acceptable to Wintrust,
in its sole reasonable discretion. In advance of filing any applications for such regulatory approvals, Wintrust shall provide the Company and its counsel with a copy of such applications (but excluding any information contained therein regarding
Wintrust and its business or operations for which confidential treatment has been requested) and provide an opportunity to comment thereon, and thereafter shall promptly advise the Company and its counsel of any material communication received by
Wintrust or its counsel from any regulatory authorities with respect to such applications.
4.5
Company Regulatory Filings
. Within 20 days following execution and delivery of this Agreement, the Company will file an application with the Federal Reserve and, if necessary, the FDIC and the U.S. Treasury, and thereafter shall use all
reasonable and diligent efforts to obtain the approval of the Federal Reserve and, if necessary, the FDIC and the U.S. Treasury for the repurchase or redemption, effective on or before the Closing Date, of the CPP Shares, and Wintrust will use all
reasonable and diligent efforts to assist in obtaining all such approvals. In advance of filing any applications for such regulatory approvals, the Company shall provide Wintrust and its counsel with a copy of such applications (but excluding any
information contained therein regarding the Company and its business or operations for which confidential treatment has been requested) and provide an opportunity to comment thereon, and thereafter shall promptly advise Wintrust and its counsel of
any material communication received by the Company or its counsel from any regulatory authorities with respect to such applications.
4.6
Meeting of Stockholders of the Company.
As soon as practicable after the Registration Statement becomes effective, the Company shall call and hold a meeting of its
stockholders for the purpose of voting upon this Agreement, the Merger and the transactions contemplated hereby, including the appointment of a Stockholders Agent (as defined and further described in Section 8.4), in accordance with the
Companys certificate of incorporation, its by-laws and the DGCL (the
Stockholders Meeting
). The Company shall, through the Company Board, recommend to its stockholders, subject to its fiduciary duties, approval of this
Agreement, the Merger and the transactions contemplated hereby.
4.7
Listing of Shares.
Wintrust shall use all reasonable and diligent efforts to cause the shares of Wintrust Common Stock issuable in the Merger to be approved for listing on the Nasdaq Global Select Market.
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4.8
Redemption of CPP Shares.
On or before the Closing
and in accordance with the approvals obtained as contemplated in Section 4.5, the Company shall redeem the CPP Shares in accordance with their terms as set forth in the corresponding Certificates of Designation contained in the Companys
Certificate of Incorporation. If Wintrust is the holder of the CPP Shares, Wintrust will use all reasonable and diligent efforts to assist in effecting such redemption.
4.9
Business Relations and Publicity.
The Company shall use reasonable and diligent efforts to preserve the reputation and relationship of the Company and the
Subsidiaries with suppliers, clients, customers, employees, and others having business relations with the Company or the Subsidiaries. Wintrust and the Company shall coordinate all publicity relating to the transactions contemplated by this
Agreement and, except as otherwise required by applicable law or the rules of the Nasdaq Global Select Market, or with respect to employee meetings, neither Party shall issue any press release, publicity statement or other public notice or
communication, whether written or oral, relating to this Agreement or any of the transactions contemplated hereby without obtaining the prior consent of the other, which consent shall not be unreasonably withheld, conditioned or delayed. The Company
shall obtain the prior consent (which shall not be unreasonably withheld, conditioned or delayed) of Wintrust to the content of any communication to the Companys stockholders.
4.10
Tenant Estoppel Certificates
. The Company shall use reasonable and diligent efforts to obtain and
deliver to Wintrust an estoppel certificate signed by the Tenant under each of the Tenant Leases set forth on
Schedule 4.10
substantially in the form set forth on
Exhibit C
attached hereto (collectively, the
Tenant Estoppel
Certificates
). In addition, the Company shall deliver to each other Tenant a written request to execute an estoppel certificate substantially in the form set forth on
Exhibit C
, and shall deliver to Wintrust copies of all executed
estoppel certificates received from such Tenants.
4.11
No Conduct Inconsistent with this
Agreement.
(a) The Company shall not, and shall cause the Subsidiaries to not, during the term of this Agreement,
directly or indirectly, solicit, encourage or facilitate inquiries or proposals or enter into any agreement with respect to, or initiate or participate in any negotiations or discussions with any person or entity concerning, any proposed transaction
or series of transactions involving or affecting the Company or the Subsidiaries (or the securities or assets of either) that, if effected, would constitute an acquisition of control of either the Company or the Subsidiaries within the meaning of 12
U.S.C.A. §1817(j) (disregarding the exceptions set forth in 12 U.S.C.A. §1817(j)(17)) and the regulations of the Federal Reserve thereunder (each, an
Acquisition Proposal
), or furnish any information to any person or
entity proposing or seeking an Acquisition Proposal.
(b) Notwithstanding the foregoing, in the event that the Company Board
determines in good faith and after consultation with outside counsel, that in light of an Acquisition Proposal (other than an Acquisition Proposal the terms of which were made known to the Company Board prior to the date hereof), it is necessary to
provide such information or engage in such negotiations or discussions in order to act in a manner consistent with such Boards fiduciary duties, the Company Board may, in response to an Acquisition Proposal which was not solicited by or on
behalf of the Company or the Bank or which did not otherwise result from a breach of Section 4.11(a), subject to its compliance with Section 4.11(c), (i) furnish information with respect to the Company or the Subsidiaries to such
person or entity making such Acquisition Proposal pursuant to a customary confidentiality agreement that is no less restrictive than the Confidentiality Agreement and (ii) participate in discussions or negotiations regarding such Acquisition
Proposal. In the event that the Company Board determines in good faith and after consultation with outside counsel, that the Acquisition Proposal is a Superior Acquisition Proposal (as defined below) and that it is necessary to pursue such Superior
Acquisition Proposal in order to act in a manner consistent with such Boards fiduciary duties, the Company may (A) withdraw, modify or otherwise change in a manner adverse to Wintrust, the Companys recommendation to its stockholders
with respect to this Agreement and the Merger, and/or (B) terminate this Agreement in order to concurrently enter into an agreement with respect to such Superior Acquisition Proposal;
provided
,
however
, that the Company Board may
not
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terminate this Agreement pursuant to this Section 4.11(b) unless and until (x) five (5) business days have elapsed following the delivery to Wintrust of a written notice of such
determination by the Company Board and during such five (5) business-day period, the Company and the Bank otherwise cooperate with Wintrust with the intent of enabling the Parties to engage in good faith negotiations so that the Merger and
other transactions contemplated hereby may be effected and (y) at the end of such five (5) business-day period the Company Board continues reasonably to believe the Acquisition Proposal at issue constitutes a Superior Acquisition Proposal.
A
Superior Acquisition Proposal
shall mean any Acquisition Proposal containing terms which the Company Board determines in its good faith judgment (based on the advice of an independent financial advisor) to be more favorable to
the Companys stockholders than the Merger and for which financing, to the extent required, is then committed or which, in the good faith judgment of the Company Board, is reasonably capable of being obtained by such third party, but shall
exclude any Acquisition Proposal the terms of which were made known to the Company Board prior to the date of this Agreement.
(c) In addition to the obligations of the Company set forth in Section 4.11(a) and (b), the Company shall immediately advise
Wintrust orally and in writing of any request for information or of any Acquisition Proposal, the material terms and conditions of such request or Acquisition Proposal and the identity of the person or entity making such request or Acquisition
Proposal. The Company shall keep Wintrust reasonably informed of the status and details (including amendments or proposed amendments) of any such request or Acquisition Proposal, including the status of any discussions or negotiations with respect
to any Superior Acquisition Proposal.
4.12
Loan Charge-Off; Pre-Closing Loan Review
.
(a) The Company shall cause the Bank, prior to the Closing Date, (i) to write off all Loans of the Bank that are
required to be written off by the Banks regulators or that, in conformity with past practices and policies of the Bank and GAAP, should be written off as Loan losses and (ii) to write down potential Loan losses in conformity with past
practices and policies of the Bank and GAAP. Any such write down shall not have any effect on, or result in a breach of, the representations and warranties under Section 2.8 made by the Company as of the date of this Agreement and shall not
result in a Material Adverse Effect on the Company, but shall be taken into account in determining the Minimum Adjusted Net Worth (as defined in Section 6.11 below) of the Company as of the Closing Date; and nothing in this Section 4.12(a)
shall require the Company to make any additional provision to the Banks reserve for loan losses so long as such reserve, determined as described in Section 2.8 and in compliance with the second sentence of Section 4.14 below, is
adequate and in compliance with GAAP.
(b) The Company shall make available to Wintrust the files maintained by the Bank with
respect to, and information regarding the status of, each Loan contained in the Loan portfolio of the Bank, as of a date not more than 15 days prior to the Closing Date.
4.13
Director and Officer Insurance Coverage
.
(a) Wintrust agrees to provide each person who serves as a director or officer of the Company and the Subsidiaries after the Effective
Time substantially the same insurance coverage against personal liability for actions taken after the Effective Time as is provided to other directors and officers of Wintrust and its subsidiary banks. Wintrust further agrees to cause the Surviving
Corporation, to the extent permitted by applicable law, to indemnify the current and past directors and officers of the Company and the Subsidiaries after the Effective Time, for the duration of the Tail Coverage Period (as defined below), for all
actions taken by them prior to the Effective Time in their respective capacities as directors and officers of the Company and the Subsidiaries to the same extent (and subject to the same limitations) as the indemnification provided by the Company
and the Subsidiaries under their respective charters and by-laws (as applicable) to such directors and officers immediately prior to the Effective Time.
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(b) Wintrust agrees that for the duration of the Tail Coverage Period, Wintrust shall cause
to be maintained in effect the Companys and the Subsidiaries current policy (as in effect on the Closing Date) of directors and officers liability and other professional insurance coverage maintained by the Company and the
Subsidiaries with respect to actions and omissions occurring on or prior to the Effective Time, subject to the following conditions:
(i) On or prior to the Closing Date, the Company shall purchase, at the Surviving Corporations expense, for the benefit of the Company (including its successors) and persons who were officers or
directors of the Company or the Subsidiaries immediately prior to the Closing Date, a tail policy or policies from the Companys current directors and officers liability insurer providing coverages equivalent to the level and scope
of directors and officers liability and other professional insurance coverages as set forth in the Companys and the Subsidiaries current directors and officers liability and other professional insurance policies
in effect as of the Closing (together, such tail policy or policies are referred to as the
Tail Policy
).
(ii) The term of the Tail Policy shall be for a period of six (6) years or, if such term of coverage is not available, such other
maximum period of coverage available at a cost not exceeding the Maximum Amount (as defined below) (the
Tail Coverage Period
).
(iii) In the event such insurer declines to provide the Tail Policy prior to the Closing Date, or after the Effective Time terminates the Tail Policy, the Company (if prior to the Closing Date) or
Wintrust (if after the Effective Time) shall use its commercially reasonable efforts to identify and obtain similar coverage from another insurance carrier of substantially similar size and reputation to that of such former insurer, if such coverage
is reasonably obtainable from the marketplace. If after such reasonable efforts another such insurance carrier is unable or unwilling to provide such similar coverage, the Company (if prior to the Closing Date) or Wintrust (if after the Effective
Time) shall obtain the best coverage available, as determined in the reasonable judgment of the Company or Wintrust, as applicable, for a cost up to but not exceeding the Maximum Amount (as defined below).
(iv) In no event shall Wintrust or the Surviving Corporation be obligated to expend, in order to provide or maintain the insurance
coverages pursuant to this Section 4.13(b), any amount, in aggregate, in excess of $125,000 (the
Maximum Amount
). If the amount of the annual premiums necessary to maintain or procure such insurance coverage exceeds the
Maximum Amount, Wintrust shall use reasonable efforts to maintain the most advantageous policies of directors and officers insurance obtainable for a total cost equal to the Maximum Amount.
(v) Prior to the Effective Time, the Company shall notify the appropriate directors and officers liability insurers of the
Merger and of all pending or threatened claims, actions, suits, proceedings or investigations asserted or claimed against any officer or director of the Company or its Subsidiaries, or circumstances likely to give rise thereto to the extent known by
the Company, in accordance with the terms and conditions of the applicable policies.
(vi) The Companys directors and
officers shall use reasonable and diligent efforts to cooperate with the Company (if prior to the Closing Date) or Wintrust (if after the Effective Time) in obtaining the above-described insurance coverages.
4.14
Corrective Action Regarding SERP.
Prior to the Closing Date, the Company shall (a) correct
the operational violation that has occurred under the Companys Supplemental Retirement Benefits Plan (
SERP
) with respect to distributions previously made in 2011 and 2012, in accordance with the procedures set forth in IRS
Notice 2008-113, (b) terminate the SERP in accordance with Section 8.2(b) thereunder and make a lump sum distribution to the sole participant, and (c) provide Wintrust with copies of all corrective materials.
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4.15
Interim Financial Statements.
Prior to the Closing
Date, the Company shall deliver to Wintrust a monthly balance sheet, income statement and statement of stockholders equity of the Company and the Subsidiaries as of the end of each month as promptly as practicable after they become available.
Such monthly financial statements shall be prepared consistent with past practice and in conformity in all material respects with GAAP (excluding footnote disclosure) applied on a basis consistent with the Financial Statements.
4.16
Dissent Process.
The Company will give to Wintrust prompt notice of any written notice or demands
for appraisal for any Company Common Stock, any attempted withdrawals of such demands and any other notice given or instrument served relating to the exercise of dissenters rights granted under the DGCL, including the name of each dissenting
stockholder and the number of shares of Company Common Stock to which the dissent relates. Wintrust will have the right to participate in all negotiations and proceedings relating thereto, except as otherwise required by law. The Company will not
make any payment with respect to, or settle or offer to settle, any appraisal demands without Wintrusts prior written consent.
4.17
Section 368(a) Reorganization
. Either prior to or after the Closing Date, none of the Parties shall take or cause to be taken any action, or omit to take any
action or cause any omission, which would cause the Merger not to qualify as a reorganization under Section 368(a) of the Code.
4.18
Untrue Representations and Warranties
. During the term of this Agreement, if any Party becomes aware of any facts, circumstances or of the occurrence or impending
occurrence of any event that would cause one or more of such Partys representations and warranties contained in this Agreement to be or to become untrue as of the Closing Date then:
(a) such Party shall promptly give detailed written notice thereof to the other Parties; and
(b) such Party shall use reasonable and diligent efforts to change such facts or events to make such representations and warranties
true, unless the same shall have been waived in writing by the other Party.
4.19
Reasonable
and Diligent Efforts
. The Parties shall use reasonable and diligent efforts in good faith to satisfy the various conditions to Closing and to consummate the Merger as soon as practicable. None of the Parties will intentionally take or
intentionally permit to be taken any action that would be in breach of the terms or provisions of this Agreement (including any action that would impair or impede the timely obtainment of the regulatory approvals referenced in Sections 6.3 and 7.3)
or that would cause any of the representations contained herein to be or become untrue.
ARTICLE
V
EMPLOYEE BENEFIT MATTERS
5.1
Benefit Plans.
To the extent Employees participate in any Wintrust benefit plans, Employees shall be given credit for amounts paid under a corresponding Benefit Plan
during the plan year in which the Closing occurs for purposes of applying deductibles, co-payments and out-of-pocket maximums as though such amounts had been paid in accordance with the terms and conditions of such Wintrust benefit plan for the plan
year in which the Closing occurs. The Company shall request that its health insurance provider, to the extent permitted under applicable law, (i) provide to Wintrust a schedule of de-identified information regarding the claims experience of
insured Persons under the applicable Benefit Plans, and (ii) provide Wintrust with de-identified information as to any significant pre-existing conditions of any insured persons that are not reflected in such schedule. Wintrust shall use its
reasonable and diligent efforts to cause any pre-existing condition limitations (as administered in accordance with applicable law) under Wintrusts medical benefit plans to be waived to the extent such conditions have been waived under the
Companys health insurance plans. For purposes of determining eligibility to participate in and, where applicable, vesting under Wintrusts applicable retirement savings plan and employee stock purchase plan, Wintrusts short-term
disability plans and vacation policy, each Employee shall receive past service credit for his or her prior employment with the Company as if such
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Employee had then been employed by Wintrust. Wintrust reserves the right to change or terminate its employee benefit plans at any time. On or before the Closing Date, the Company Board shall
cause the Company to terminate the SERP, in accordance with Section 4.14, and the Hyde Park Bank and Trust Company Split-Dollar Insurance Agreement for Key Employee with Timothy G. Goodsell, dated September 29, 1990, and the Hyde Park Bank
and Trust Company Split-Dollar Insurance Agreement for Key Employee with Patrick J. Barrett, dated September 29, 1990, and pay out in single lump sum payments any amounts due and arising under such plan and agreements in accordance with the
applicable provisions of the Treasury Regulations under Code Section 409A.
5.2
No Rights
or Remedies
. Nothing in this Article shall confer upon any Employee or his or her legal representative, any rights or remedies, including any right to employment, or continued employment, for any specified period, or any nature or kind
whatsoever under or by reason of this Agreement.
ARTICLE VI
CONDITIONS PRECEDENT TO
OBLIGATIONS OF WINTRUST AND MERGER CO.
Unless the conditions are waived
by Wintrust, all obligations of Wintrust and Merger Co. under this Agreement are subject to the fulfillment, on or before the Closing, of each of the following conditions:
6.1
Representations and Warranties; Performance of Agreements
. Each of the representations and warranties contained in ARTICLE II that are qualified by materiality shall
be true and correct in all respects as of the Closing Date, and each of the representations and warranties contained in ARTICLE II that are not qualified by materiality shall be true and correct in all material respects, except to the extent such
representations and warranties speak as of an earlier date, they shall be tested as of such earlier date. The Company shall have performed in all material respects all agreements herein required to be performed by the Company on or before the
Closing.
6.2
Closing Certificate.
Wintrust shall have received a certificate of the
Company signed by a senior executive officer of the Company, dated as of the Closing Date, certifying in such detail as Wintrust may reasonably request (including, that the Bank has conducted its business as described in Section 4.1), as to the
fulfillment of the conditions to the obligations of Wintrust set forth in this Agreement that are required to be fulfilled by the Company on or before the Closing.
6.3
Regulatory and Other Approvals
. Wintrust shall have obtained the approval of all appropriate regulatory entities of the transactions contemplated by this Agreement
and the Merger, all required regulatory waiting periods shall have expired, and there shall be pending on the Closing Date no motion for rehearing or appeal from such approval or any suit or action seeking to enjoin the Merger or to obtain
substantial damages in respect of such transaction. The Company shall have obtained the approval of all appropriate regulatory entities for the repurchase or redemption of the CPP Shares.
6.4
Approval of Merger and Delivery of Certificate of Merger.
This Agreement and the transactions and
agreements contemplated hereby, including the Merger, the Escrow Agreement and the appointment of the Stockholders Agent, shall have been approved by the stockholders of the Company in accordance with the Companys certificate of
incorporation, by-laws and the DGCL, and the proper officers of the Company shall have executed and delivered to Wintrust the Certificate of Merger, in form suitable for filing with the Delaware Secretary of State, and shall have executed and
delivered all such other certificates, statements or instruments as may be necessary or appropriate to effect such a filing.
6.5
Effectiveness of the Registration Statement.
The Registration Statement shall have become effective with respect to the shares of Wintrust Common Stock to be issued in the Merger, no stop order suspending the effectiveness of such
Registration Statement shall have been issued, and no proceeding for that purpose shall have been instituted or threatened in writing.
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6.6
No Litigation.
No suit or other action shall have
been instituted or threatened in writing seeking to enjoin the consummation of the Merger or to obtain other relief in connection with this Agreement or the transactions contemplated herein that Wintrust believes, in good faith and with the written
advice of outside counsel, makes it undesirable or inadvisable to consummate the Merger by reason of the probability that the proceeding would result in the issuance of an order enjoining the Merger or in a determination that the Company or the
Subsidiaries have failed to comply with applicable legal requirements of a material nature in connection with the Merger or actions preparatory thereto or would have a Material Adverse Effect on the Company or the Subsidiaries.
6.7
Environmental Review.
(a)
Environmental Surveys
. The Company has provided to Wintrust copies of all existing environmental assessments and reports that the Company or the Subsidiaries have commissioned, and any other
existing environmental assessments or reports commissioned by others that are in the Companys or such Subsidiaries possession or control, and in connection with any of the Real Property (including the Leased Premises). Within 30 days
following the date of this Agreement, Wintrust may complete, at Wintrusts expense, a Phase I environmental assessment or an update of the existing Phase I environmental assessment or a Hazardous Materials survey (each, an
Environmental Survey
) of the Real Property or Leased Premises. In the event any Environmental Survey indicates, in the sole discretion of Wintrust as reasonably supported by such Environmental Survey, the presence or suspected
presence of an Environmental Condition other than those environmental matters as disclosed on
Schedule 2.17
(it being understood that
Schedule 2.17
discloses the existence of known environmental matters but not the extent, severity or
impact of such environmental matters), Wintrust will give the Company written notice (an
Initial Environmental Notice
) of the presence or the suspected presence of the Environmental Condition within ten Business Days of
receipt of the Environmental Survey (together with all information it possesses relating to the Environmental Condition). For purposes of this Agreement, an
Environmental Condition
shall mean (i) an above ground storage tank,
underground storage tank, subsurface structure or container, and its associated piping, which is present at the Real Property or Leased Premises which violates an Environmental Law; (ii) a Hazardous Material found in building materials at the
Real Property or Leased Premises, such as asbestos-containing building materials, lead paint or mold, the presence of which poses health risks or hazards to occupants or Tenants or violates an Environmental Law; (iii) a Hazardous Material
present in soil and/or groundwater at the Real Property or Leased Premises which violates an Environmental Law; (iv) a discharge, emission or release of a Hazardous Material related to the Real Property or Leased Premises which violates an
Environmental Law; (v) an event or condition that likely has occurred or exists with respect to the Real Property or Leased Premises which constitutes a violation of an Environmental Law; or (vi) an event or condition related to the Real
Property or Leased Premises which requires cleanup, remedy, abatement or restoration of contaminated surface water, groundwater, soil or natural resource under an Environmental Law;
provided
,
however
, that for purposes of the
indemnification obligations of the Company under ARTICLE VIII,
Schedule 2.17
shall automatically be deemed to be updated and amended as of the Closing to include the contents of any Environmental Survey or Phase II Survey Report (as defined
below), subject to Section 6.7(c) below.
(b)
Phase II Survey
. Within ten (10) Business Days after delivery
of the Initial Environmental Notice, Wintrust will notify the Company of whether it will elect to complete, at its sole discretion and expense, a physical examination and investigation of the Environmental Condition indicated in the Environmental
Survey (the
Phase II Survey
). The completion of a Phase II Survey shall not be prerequisite for the exercise of any termination or modification rights set forth in clause (c) below. The subject, scope, manner and method
of the Phase II Survey will be subject to the Companys prior review and reasonable approval, which approval shall not be unreasonably delayed, conditioned or withheld. At all times the Company shall have access to all field data,
analytical data and analytical results obtained or generated in connection with the Phase II Survey. Upon Wintrusts receipt of a final written report of the Phase II Survey, Wintrust shall promptly deliver to the Company copies of
the Phase II Survey report, all written reports, analytical data, correspondence, notices or other written materials relating thereto (which collectively constitutes the
Phase II Survey Report
).
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(c) If any Environmental Survey or Phase II Survey Report indicates or confirms, in
the sole discretion of Wintrust, the presence of an Environmental Condition related to the Real Property or Leased Premises other than those environmental matters disclosed on
Schedule 2.17
(
provided
,
however
, that if the
Environmental Survey or Phase II Survey Report indicates that remediation or repair work above and beyond that which has historically been performed by the Company or Facilities Subsidiary in the Ordinary Course of Business in connection with
periodic repair or maintenance, is necessary to remediate or correct such previously disclosed environmental matters, such remediation or repair work would apply to this Section 6.7(c)), Wintrust will have until the later of (i) ten
(10) Business Days from its receipt of the Phase II Survey Report (if a Phase II Survey is conducted) or (ii) thirty (30) days after its delivery of the Initial Environmental Notice to the Company (if a Phase II Survey is not
conducted), to either (A) accept the Real Property in its current condition subject to a reduction in the Merger Consideration equal to an amount to be mutually agreed upon in good faith by Wintrust and the Company, or (B) notify the
Company in writing that Wintrust has elected to terminate this Agreement;
provided
,
however
, that in the event the estimated cost of remediation of such Environmental Condition(s) is less than $250,000, at Wintrusts election, in
lieu of exercising its termination rights, Wintrust may accept the Real Property in its current condition but for purposes of Section 6.11, the Stockholders Equity set forth in the Closing Balance Sheets shall be reduced by the amount of
such estimated cost of remediation, and the Company shall agree to such reduction, in which case the updated representations and disclosures referenced in the last sentence of Section 6.7(a) shall be deemed made. For purposes of clarification,
if the parties are able to agree in good faith upon a reduction in the Merger Consideration pursuant to clause (A) in the preceding sentence, such same updated representations and disclosures referenced in the last sentence of
Section 6.7(a) shall be deemed made.
6.8
Opinion of Counsel.
Wintrust shall have
received the opinion of Barack Ferrazzano Kirschbaum & Nagelberg LLP, counsel for the Company, dated as of the Closing Date, and in form substantially similar to
Exhibit D
and reasonably satisfactory to Wintrust and its counsel.
6.9
Employment Agreements
. Those persons identified on
Schedule 6.9
shall each have
entered into an employment agreement with Wintrust or the Bank, executed and delivered on the date hereof and to become effective as of the Closing Date, in the form attached as
Exhibit E
, and shall each be capable of performing his duties
under his employment agreement as of the Closing Date.
6.10
No Adverse Changes.
Between
the date of this Agreement and the Closing Date, the business of the Company and the Bank, taken as a whole, shall have been conducted in the Ordinary Course of Business, except as otherwise required under this Agreement, in all respects consistent
with prudent banking practices, and there shall not have occurred any change or any condition, event, circumstance, fact or occurrence, other than as required under this Agreement, that would have a Material Adverse Effect on the Company.
6.11
Minimum Net Worth and Loan Loss Reserve Requirements
.
(a) The Company shall have delivered to Wintrust balance sheets for the Company and each of the Subsidiaries as of the Closing Date
reflecting the Companys good faith estimate of the accounts of the Company and the Subsidiaries, as applicable, as of the Closing Date (which, for the avoidance of doubt, shall include net income estimated to be earned by the Company and the
Bank through and including the Closing Date), prepared in conformity with past practices and policies of the Company and the Subsidiaries and in accordance with GAAP applied on a basis consistent with the preparation of the Financial Statements, and
adjusted to reflect the following adjustments, specifications and charges:
(i) there shall be no outstanding indebtedness
for borrowed monies of the Company reflected on the Closing Balance Sheets;
(ii) any applicable adjustments contemplated by
Section 6.7(c) shall be made; and
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(iii) the Banks reserve for loan losses, determined as described in Section 2.8,
shall be not less than 1.30% of the Banks net Loans (gross Loans less unearned discounts).
Wintrust shall have had an opportunity to
review and comment on such estimated balance sheets. Such estimated balance sheets, as revised to reflect any comments agreed to by the Company and Wintrust, are referred to as the
Closing Balance Sheets
.
(b) If the Closing Balance Sheets reflect, as applicable, stockholders equity in the Company equal to or greater than
$26,300,000.00 less the after-tax impact of the cost of those change of control payments as set forth on
Schedule 6.11(b)
(the
Minimum Adjusted Net Worth
), then there will be no adjustment to the Merger Consideration. If
the Closing Balance Sheets reflect the Companys stockholders equity is less than the Minimum Adjusted Net Worth, subject to the Companys termination right in Section 9.2(h), the Merger Consideration shall be reduced
dollar-for-dollar by an amount equal to the amount of such shortfall, and any such reduction shall be allocated equally to the cash and stock portions of the Merger Consideration.
6.12
Repurchase or Redemption of CPP Shares and Change of Control Payments
. The Company shall have
consummated the repurchase or redemption of the CPP Shares effective no later than immediately prior to the Closing Date. Following such repurchase or redemption, the Company shall take such action as may be necessary to effectuate, in a manner that
is permitted pursuant to 31 C.F.R. Part 30, the payments due and owing to Timothy A. Goodsell (
Goodsell
) and Patrick J. Barrett (
Barrett
) pursuant to the Change in Control Agreements, dated April 20, 2009,
by and among each of Goodsell and Barrett and the Company and the Bank, each as reinstated and amended by letter agreement dated February 15, 2012.
6.13
Tenant Estoppel Certificates
. Wintrust shall have received signed Tenant Estoppel Certificates from each Tenant on the Leased Premises set forth on
Schedule
4.10
.
6.14
Management Agreement.
The Company and its property manager, Aegis
Properties shall have executed and delivered an amended and restated management agreement containing terms and conditions (including compliance and reporting, standard of care, and termination) reasonably acceptable to Wintrust, to become effective
as of the Closing Date.
6.15
Life Safety Evaluation Report
. The Company and Facilities
Subsidiary shall have remedied the deficiencies and completed the corrective actions set forth on
Schedule 6.15
as are reflected in the Revised Life Safety Evaluation Report dated July 19, 2012, previously delivered to the Facilities
Subsidiary. The Company shall use commercially reasonable efforts to obtain a satisfactory certification from the City of Chicago Department of Buildings prior to Closing.
6.16
Delivery of Certificate of Merger
.
The proper officers of the Company shall have executed and delivered to Merger Co. the Certificate of Merger, in form
suitable for filing with the Delaware Secretary of State, and shall have executed and delivered all such other certificates, statements or instruments as may be necessary or appropriate to effect such a filing.
6.17
Consents.
The Company shall have obtained or caused to be obtained (a) all written consents
under those Material Contracts set forth on
Schedule 2.10
, and (b) all other written consents, permissions and approvals as required under any agreements, contracts, appointments, indentures, plans, trusts or other arrangements with
third parties required to effect the transactions contemplated by this Agreement, in each case where failure to obtain such consents, permissions and approvals would have a Material Adverse Effect on the Company or Wintrusts rights under this
Agreement.
6.18
Other Documents.
Wintrust shall have received at the Closing such other
customary documents, certificates, or instruments as they may have reasonably requested evidencing compliance by the Company with the terms and conditions of this Agreement.
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ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS
OF THE COMPANY
Unless the conditions are waived by the Company, all
obligations of the Company under this Agreement are subject to the fulfillment, on or before the Closing, of each of the following conditions:
7.1
Representations and Warranties; Performance of Agreements.
Each of the representations and warranties contained in ARTICLE III that are qualified by materiality
shall be true and correct in all respects as of the Closing Date, and each of the representations and warranties contained in ARTICLE III that are not qualified by materiality shall be true and correct in all material respects, except to the extent
such representations and warranties speak as of an earlier date, they shall be tested as of such earlier date. Wintrust shall have performed in all material respects all agreements herein required to be performed by Wintrust on or before the
Closing.
7.2
Closing Certificates.
The Company shall have received certificates signed by
the Chief Executive Officer, a Senior Executive Vice President, an Executive Vice President, or a Senior Vice President of Wintrust dated as of the Closing Date, certifying in such detail as the Company may reasonably request, as to the fulfillment
of the conditions to the obligations of the Company as set forth in this Agreement.
7.3
Regulatory and Other Approvals
. Wintrust shall have obtained the approval of all appropriate regulatory entities of the transactions contemplated by this Agreement and the Merger, all required regulatory waiting periods shall have expired,
and there shall be pending on the Closing Date no motion for rehearing or appeal from such approval or any suit or action seeking to enjoin the Merger or to obtain substantial damages in respect of such transaction. The Company shall have obtained
the approval of all appropriate regulatory entities for the repurchase or redemption of the CPP Shares.
7.4
Delivery of Certificate of Merger
.
The proper officers of Merger Co. shall have executed and delivered to the Company the Certificate of Merger, in form suitable for filing with the Delaware Secretary of State, and shall have
executed and delivered all such other certificates, statements or instruments as may be necessary or appropriate to effect such a filing.
7.5
Effectiveness of the Registration Statement
. The Registration Statement shall have become effective with respect to the shares of Wintrust Common Stock to be issued
in the Merger, no stop order suspending the effectiveness of such Registration Statement shall have been issued, and no proceeding for that purpose shall have been instituted or threatened in writing.
7.6
Nasdaq Listing
. The shares of Wintrust Common Stock to be issued in connection with the Merger
shall have been approved for listing on the Nasdaq Global Select Market.
7.7
No
Litigation.
No suit or other action shall have been instituted or threatened in writing seeking to enjoin the consummation of the Merger or to obtain other relief in connection with this Agreement or the transactions contemplated herein that the
Company believes, in good faith and with the written advice of outside counsel, makes it undesirable or inadvisable to consummate the Merger by reason of the probability that the proceeding would result in the issuance of an order enjoining the
Merger or in a determination that Wintrust has failed to comply with applicable legal requirements of a material nature in connection with the Merger or actions preparatory thereto or would have a Material Adverse Effect on Wintrust.
7.8
Opinions of Counsel.
(a) The Company shall have received the opinion of Schiff Hardin LLP, special counsel for Wintrust, dated as of the Closing Date, and in form substantially similar to
Exhibit F
and reasonably
satisfactory to the Company and its counsel.
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(b) The Company shall have received the opinion of Barack Ferrazzano Kirschbaum &
Nagelberg LLP, counsel for the Company, dated as of the Closing Date, to the effect that the Merger will constitute a reorganization within the meaning of Section 368(a) of the Code, that the Company and Wintrust will each be a
party to such reorganization within the meaning of Section 368(a) of the Code, and that no gain or loss will be recognized by the holders of shares of Company Common Stock upon the receipt of shares of Wintrust Common Stock in exchange for
their shares of Company Common Stock, except to the extent of any Cash Consideration received in the Merger and any cash received in lieu of fractional shares of Wintrust Common Stock. The tax opinion shall be supported by one or more fact
certificates or affidavits from Wintrust and the Company, in such form and content as may reasonably be requested by counsel to the Company.
7.9
No Adverse Changes.
Between the date of this Agreement and the Closing Date, there shall not have occurred any change or any condition, event, circumstance, fact or
occurrence, other than as provided in this Agreement, that would have a Material Adverse Effect on Wintrust.
7.10
Other Documents
. The Company shall have received at the Closing all such other customary documents, certificates, or instruments as they may have reasonably requested evidencing compliance by Wintrust with the terms and conditions of
this Agreement.
ARTICLE VIII
SURVIVAL; INDEMNIFICATION
8.1
Survival of Representations.
All representations and warranties made by the parties hereto shall survive until the last day of the fifteenth (15
th
) calendar month following the month in which the Closing Date
occurs, and shall thereafter expire. Any investigation by a party to be indemnified on account of any breach or incorrectness of such statements, representations, warranties or agreements shall not be a defense to a claim for indemnification.
8.2
Indemnification.
(a) The Company agrees that Wintrust, and each of its subsidiaries (including the Surviving Corporation) and affiliates (the
Wintrust Indemnified Parties
), shall be indemnified against and held harmless from (i) any and all losses, liabilities, claims, causes of actions, suits, damages or penalties (excluding punitive damages (other than punitive
damages claimed by third parties) and damages solely attributable to lost profits) (
Claims
) arising out of or resulting from (A) any breach or incorrectness of any of the representations and warranties contained in ARTICLE II
of this Agreement (including the Company Schedules thereto) or in any certificates delivered to Wintrust by the Company or with their express authorization, or (B) any breach of any covenant or agreement made by the Company in this Agreement,
and (ii) the reasonable out-of-pocket expenses or costs incurred by the Wintrust Indemnified Parties, including reasonable attorneys fees, in connection with investigating, attempting to correct or defending against any claims, liens or
charges that are asserted against the Wintrust Indemnified Parties for which any of the Wintrust Indemnified Parties is entitled to indemnity pursuant to the foregoing provisions;
provided
,
however
, that notwithstanding the foregoing,
the Wintrust Indemnified Parties shall not be indemnified for any Taxes arising from the Merger failing to qualify as a reorganization under Section 368(a) of the Code. Absent intentional breach or fraud, the foregoing indemnity obligations
shall be satisfied solely against the Escrow Amount pursuant to the procedures set forth below and specified in the Escrow Agreement. To the extent a Claim arises out of or results from a breach or incorrectness of a representation or warranty of
the Company, such Claim shall not be eligible to be satisfied against the Escrow Amount unless such Claim has been asserted by a written notice given to the Stockholders Agent on or before the expiration of such representation or warranty.
(b) Wintrust shall indemnify the holders of Company Common Stock as of immediately prior to the Effective Time (the
Company Indemnified Parties
) against and hold them harmless from (i) any and all Claims arising out of or resulting from (A) any breach or incorrectness of any of the representations and
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warranties contained in ARTICLE III or in any certificates delivered to the Company by Wintrust or with its express authorization, or (B) any breach of any covenant or agreement made by
Wintrust or Merger Co. in this Agreement, and (ii) the reasonable out-of-pocket expenses or costs incurred by the Company Indemnified Parties and the Stockholders Agent, including reasonable attorneys fees, in connection with
investigating, attempting to correct or defending against any claims, liens or charges that are asserted against the Company Indemnified Parties for which they are entitled to indemnity pursuant to the foregoing provisions. To the extent a Claim
arises out of or results from a breach or incorrectness of a representation or warranty of Wintrust or Merger Co., Wintrust shall not be liable under this Section 8.2(b) unless such Claim has been asserted by a written notice which is given to
Wintrust on or before the expiration of such statement, representation or warranty.
(c) In the event a Claim results in a
reduction in the amount of federal, state or foreign income taxes payable by the indemnified party by reason of any deduction or adjustment allowed such party as a result of the payment, settlement or satisfaction of such Claim, or in the event the
indemnified party receives any other monetary benefit (by way of counterclaim, set-off or otherwise) as a result of a judgment, compromise or settlement of a Claim and such monetary benefit arises out of the same transaction or occurrence that is
the subject matter of such Claim, the indemnifying partys indemnification obligation shall be net of the amount of such tax or monetary benefit, provided such tax or monetary benefit is sufficient to compensate the indemnified party for any
additional income taxes payable by the indemnified party as a result of any indemnification payments hereunder.
(d)
Notwithstanding anything to the contrary contained in this Section 8.2:
(i) no indemnified party shall be entitled to
indemnification under clause (i)(A) of Section 8.2(a) (in the case of the Wintrust Indemnified Parties) or clause (i)(A) of Section 8.2(b) (in the case of the Company Indemnified Parties) until the aggregate amount of liability suffered by
the indemnified parties with respect to which they are entitled to indemnification under the applicable clause (i)(A) exceeds $500,000, whereupon the indemnified parties shall be entitled to indemnification hereunder for only the aggregate of all
liabilities suffered in excess of $500,000;
(ii) the aggregate amount by which the Wintrust Indemnified Parties may
be indemnified pursuant to Section 8.2 shall not exceed the Escrow Amount;
(iii) the aggregate obligation of Wintrust
to indemnify the Company Indemnified Parties pursuant to this Section 8.2 shall not exceed an amount equal to the Indemnification Escrow Amount;
(iv) in no event will any Company stockholder be deemed to have any liability pursuant to this ARTICLE VIII in excess of the Per Share Escrowed Consideration that would be payable in respect of such
stockholders shares of Company Common Stock; and
(v) the indemnified party shall use commercially reasonable efforts
to mitigate any Claims and obtain or realize any insurance proceeds or tax deductions or tax benefits with respect to such Claims.
8.3
Indemnification Procedure.
A party seeking indemnification (which in the case of the stockholders of the Company shall be the Stockholders Agent acting on
their behalf) shall assert a claim for indemnification under Section 8.2 by giving prompt notice in writing to the indemnifying party of the facts and circumstances giving rise to such Claim. Subject to the limitations of any contract of
insurance, an indemnified party shall tender to the indemnifying parties the opportunity to manage and control any defense against any such Claim with counsel chosen by the indemnifying party, subject to the indemnified partys approval of such
counsel (which approval shall not be withheld unreasonably) and to such other conditions as the indemnified party reasonably determines in good faith to be necessary for the protection of its interests. If the indemnifying party assumes management
and control of such defense, the indemnified parties shall cooperate reasonably with the indemnifying parties in the conduct of any such defense, and the indemnifying party shall have full rights to
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negotiate and enter into any compromise or settlement which is dispositive of such Claim, provided that any compromise or settlement that will not be paid in full by the indemnifying party or
that involves any remedy other than the payment of money damages shall be subject to the consent of the indemnified party. The indemnified parties shall be entitled to participate in the defense of such action at their own expense. In the event the
indemnifying party fails to accept the management and control of such defense in a timely manner, the indemnified parties shall have the right to choose counsel and to assume management and control of the defense at the indemnifying parties
expense, and the indemnifying party shall be entitled to participate in such defense at its own expense.
8.4
Appointment of Stockholders Agent
. The decisions of the stockholders of the Company with respect to taking any and all actions specified or contemplated by this ARTICLE VIII or as provided under the Escrow Agreement shall be
determined by Timothy G. Goodsell, President and Chief Executive Officer of the Company, who upon the requisite approval by the Companys stockholders at the Stockholders Meeting shall be constituted and appointed as the
stockholders exclusive agent and attorney-in-fact in connection with the foregoing (
Stockholders Agent
). The Company Board shall cause the appointment of the Stockholders Agent at the Stockholders Meeting
to constitute the authorization by each stockholder of the Company, without regard to whether such stockholder voted to appoint the Stockholders Agent, that the powers granted to the Stockholders Agent are coupled with an interest and
shall be irrevocable and that Stockholders Agent shall be fully protected, held harmless and indemnified by the Companys stockholders in exercising, or in declining to exercise, a power provided for or contemplated by this Agreement or
as provided for in the Escrow Agreement for the benefit of all stockholders, as he or she shall determine, whether upon consultation with the stockholders or in his or her sole discretion, to be in the interests of all stockholders of the Company.
The actions of the Stockholders Agent pursuant to this Agreement and the Escrow Agreement shall bind each stockholder of the Company, and no notice to or approval by the stockholders of such action shall be required. Wintrust shall be entitled
to rely on any action taken by the Stockholders Agent (i) as may be contemplated by this Agreement and on any certificate or instrument related thereto provided by the Stockholders Agent in his or her capacity as agent for the
stockholders of the Company, and (ii) pursuant to the Escrow Agreement, for the benefit of all stockholders of the Company, and shall have no duty to inquire into the circumstances in which any such action is taken or such written instrument is
provided. If the initial Stockholders Agent, Goodsell, should die or become unable or unwilling to perform his duties, and unable or unwilling to appoint a successor, then Barrett shall be appointed as the successor Stockholders Agent,
to serve in the same capacity as the prior Stockholders Agent. If Barrett, as successor Stockholders Agent, should die or become unable or unwilling to perform his duties, and unable or unwilling to appoint a successor, then David
Sensibar shall be appointed as the successor Stockholders Agent, to serve in the same capacity as the prior Stockholders Agent. If the Stockholders Agent or any successor thereto named in this Agreement should die or become unable
or unwilling to perform his duties, and unable or unwilling to appoint a successor, then Wintrust shall appoint any reasonable successor Stockholders Agent. Any successor Stockholders Agent so appointed shall be vested with the same
power and authority as the Stockholders Agent named in this Agreement.
8.5
Indemnification Escrow; Adjustment to Merger Consideration
. Claims on the part of the Wintrust Indemnified Parties shall be paid solely out of the Escrow Amount pursuant to the terms of the Escrow Agreement. All amounts paid with respect to
Claims under this Agreement shall be treated by the parties hereto for all Tax purposes as adjustments to the Merger Consideration.
8.6
Release of Escrow.
The Escrow Amount shall be held and invested by the Escrow Agent in accordance with the terms of the Escrow Agreement. Upon termination of the
Escrow Agreement in accordance with its terms, any amounts remaining in the Escrow Amount shall be distributed to the former holders of Company Common Stock as Per Share Escrowed Consideration.
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8.7
Sole and Exclusive Remedy
. Except as set forth in
Section 9.1 or for claims based upon fraud or willful misconduct, the indemnification provisions of this ARTICLE VIII shall constitute the sole and exclusive remedy of Wintrust and the stockholders of the Company for any breach of
representations or warranties or covenants under this Agreement.
8.8
Arbitration.
(a) Any dispute, claim or controversy arising out of or relating to this Article VIII or the breach, termination,
enforcement, interpretation or validity thereof, including the determination of the scope or applicability of this agreement to arbitrate, shall be resolved by arbitration in Chicago, Illinois, before one arbitrator who is an attorney. The
arbitration shall be administered by the Chicago, Illinois, office of the American Arbitration Association (
AAA
) pursuant to this Section 8.8, the AAA Commercial Arbitration Rules and the Federal Arbitration Act. In the
event of a conflict, this Section 8.8 shall govern. The parties agree that the arbitrator shall have the power to provide any relief available at law or in equity under the laws of the State of Illinois. The arbitrator shall issue a
reasoned award to the parties deciding the issues in dispute within thirty (30) days of the evidentiary hearing, or, if no such hearing is held, within thirty (30) days of receiving all of the parties submissions. Judgment on
the award may be entered in any court that may properly assert jurisdiction over the parties against which judgment will be enforced.
(b) The arbitrator shall, in the award, allocate the costs of the arbitration, including the fees of the arbitrator and the reasonable attorneys fees of the Prevailing Party against the
non-prevailing party. The
Prevailing Party
, as it is used in this Section 8.8, shall be determined by the arbitrator, who shall consider, among other things, the good faith of the parties, the party that prevails on the
majority of the claims and counterclaims before the arbitrator and the monetary value of the claims or counterclaims decided by the arbitrator.
ARTICLE IX
GENERAL
9.1
Termination Fees; Expenses.
Except as otherwise provided in this Section 9.1, all costs and
expenses incurred in the consummation of this transaction, including any brokers or finders fees, shall be paid by the Party incurring such cost or expense.
(a) In the event that this Agreement is terminated by Wintrust because the Company committed a material breach of its material obligations under this Agreement, unless such breach is a result of the
failure by Wintrust to perform and comply in all material respects with any of its material obligations under this Agreement which are to be performed or complied with by it prior to or on the date of such termination, then, provided Wintrust is in
material compliance with all of its material obligations under this Agreement, the Company shall pay to Wintrust a termination fee of $750,000, plus documented out-of-pocket expenses and costs (up to a maximum of an additional $200,000 in such
expenses and costs), including reasonable attorneys fees, subject to verification thereof, that Wintrust (i) has incurred in furtherance of this Agreement and the transactions contemplated herein and (ii) is reasonably expected to
incur as a result of the Companys breach of this Agreement, including reasonable fees of professionals engaged for such purpose by or on behalf of Wintrust. Except as provided in the following sentence and in Section 9.1(b), such sums
shall constitute liquidated damages and the receipt thereof shall be Wintrusts sole and exclusive remedy under this Agreement. Notwithstanding the foregoing, if this Agreement is terminated by Wintrust as a result of the Companys willful
breach of this Agreement, then in addition to recovery of its out-of-pocket expenses and costs, Wintrust shall be entitled to recover such other amounts, including consequential damages, as it may be entitled to receive at law or in equity.
(b) In the event that this Agreement is terminated (i) by Wintrust as a result of a breach by the Company of its
covenant in Section 4.11, (ii) by the Company pursuant to Section 9.2(e), or (iii) pursuant to
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Section 9.2(b) or 9.2(c) and (in the case of this clause (iii)) within six (6) months after the date of such termination the Company or the Bank has either consummated or entered into a
definitive agreement relating to an Acquisition Proposal which was made known to any member of the Company Board or the boards of directors of the Subsidiaries and not disclosed to Wintrust prior to the date of such termination, then the Company
shall pay to Wintrust a termination fee equal to $1,500,000, plus documented out-of-pocket expenses and costs (up to a maximum of an additional $200,000 in such costs and expenses) including reasonable attorneys fees, subject to verification
thereof, that Wintrust (i) has incurred in furtherance of this Agreement and the transactions contemplated herein and (ii) is reasonably expected to incur as a result of the Companys conduct described in this clause (b) above,
including reasonable fees of professionals engaged for such purpose by or on behalf of Wintrust. Except as provided in Section 9.1(a), such sums shall constitute liquidated damages and the receipt thereof shall be Wintrusts sole and
exclusive remedy under this Agreement;
provided
that in no event shall Wintrust be entitled to a termination fee under both Sections 9.1(a) and 9.1(b).
(c) In the event that this Agreement is terminated by the Company because Wintrust committed a material breach of its material obligations under this Agreement, unless such breach is a result of the
failure by the Company or the Bank to perform and comply in all material respects with any of its material obligations under this Agreement which are to be performed or complied with by it prior to or on the date of such termination, then, provided
the Company is in material compliance with all of its material obligations under this Agreement, Wintrust shall pay the Company a termination fee of $750,000, plus documented out-of-pocket expenses and costs (up to a maximum of an additional
$200,000 in such expenses and costs), including reasonable attorneys fees, subject to verification thereof, that the Company (i) has incurred in furtherance of this Agreement and the transactions contemplated herein and (ii) is
reasonably expected to incur as a result of Wintrusts breach of this Agreement, including reasonable fees of professionals engaged for such purpose by or on behalf of the Company. Except as provided in the following sentence, such sums shall
constitute liquidated damages and the receipt thereof shall be the Companys sole and exclusive remedy under this Agreement. Notwithstanding the foregoing, if this Agreement is terminated by the Company as a result of Wintrusts willful
breach of this Agreement, then in addition to recovery of its out-of-pocket expenses and costs, the Company shall be entitled to recover such other amounts, including consequential damages, as it may be entitled to receive at law or in equity.
9.2
Termination.
This Agreement may be terminated:
(a) at any time by written agreement between Wintrust and the Company;
(b) by either Wintrust or the Company if the Closing has not occurred (other than through the failure of any Party seeking to terminate
this Agreement to comply fully with its material obligations under this Agreement) by December 15, 2012, or such later date agreed to by the Parties,
provided
,
however
, that such termination date shall automatically be extended
until January 31, 2013, if the sole impediment to Closing is a delay in the approval by the IDFPR of the IDFPR Application or the Federal Reserves approval of the Federal Reserve Application;
(c) by Wintrust by written notice to the Company, if (i) any of the conditions in ARTICLE VI has not been satisfied as of the
Closing Date or if satisfaction of such a condition is or becomes impossible (other than through the failure of Wintrust or Merger Co. to comply with its obligations under this Agreement); and (ii) Wintrust has not waived such condition on or
before the Closing Date;
(d) by the Company by written notice to Wintrust, if (i) any of the conditions in ARTICLE VII
has not been satisfied as of the Closing Date or if satisfaction of such a condition is or becomes impossible (other than through the failure of the Company or the Bank to comply with its obligations under this Agreement); and (ii) the Company
has not waived such condition on or before the Closing Date;
(e) by the Company pursuant to Section 4.11(b) or by
Wintrust if an Acquisition Proposal from a third party is accepted by the Company or consummated, in each case by written notice to the other Party;
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(f) by the Company, if at the time all of the conditions to the Closing set forth in
ARTICLE VI and ARTICLE VII are satisfied, the Wintrust Common Stock Price is less than $33.50;
provided
,
however
, that the Company may not terminate the Agreement pursuant to this Section 9.2(f) unless and until five
(5) business days have elapsed following the receipt by Wintrust of written notice of the Companys intent to terminate, and prior to the end of such five (5) business-day period Wintrust fails to notify the Company in writing that
Wintrust elects to increase the Merger Consideration to provide for an amount of cash (or additional shares of Wintrust Common Stock, if necessary pursuant to Section 1.6(e)) to be paid in exchange for each Stock Election Share (after
application of the proration and redesignation procedures provided for in Section 1.6) so that the amount of consideration exchanged for each such Stock Election Share (valuing Wintrust Common Stock at the unweighted average of the high and low
sales prices of a share of Wintrust Common Stock as reported on the Nasdaq Global Select Market for each of the ten trading days ending on the second trading day preceding the Closing Date) is equivalent to that amount of Per Share Stock
Consideration which would be obtained using $33.50 as the Wintrust Common Stock Price;
(g) by Wintrust, if at the time all
of the conditions to the Closing set forth in ARTICLE VI and ARTICLE VII are satisfied, the Wintrust Common Stock Price is more than $46.50;
provided
,
however
, that Wintrust may not terminate the Agreement pursuant to this
Section 9.2(g) unless and until five (5) business days have elapsed following the receipt by the Selling Shareholders Agent of written notice of Wintrusts intent to terminate, and prior to the end of such five
(5) business-day period the Parties in good faith are unable to reach agreement as to an amendment to this Agreement containing terms acceptable to both Parties so that the Merger and transactions contemplated hereby may be effected; or
(h) by the Company, if the Merger Consideration would be reduced by more than $5,500,000 pursuant to the adjustments
provided by Section 6.11(b).
Any termination of this Agreement shall not affect any rights accrued prior to such termination.
9.3
Confidential Information
. Wintrust and the Company each covenant that, in the event
the transactions contemplated by this Agreement are not consummated, each such Party will keep in strict confidence and either return or destroy (and certify in writing as to such destruction) all documents containing any information concerning the
properties, business, and assets of the other Parties that may have been obtained in the course of negotiations or examination of the affairs of each other Party either prior or subsequent to the execution of this Agreement (other than such
information as shall be in the public domain or otherwise ascertainable from public or outside sources), except to the extent that disclosure is required by judicial process or governmental or regulatory authorities or to the extent that retention
of such documents is required by applicable laws, rules or regulations governing record retention.
9.4
Non-Assignment
. Neither this Agreement nor any of the rights, interests or obligations of the
Parties under this Agreement shall be assigned by any Party (whether by operation of law or otherwise) without the prior written consent of the other Party. Notwithstanding the foregoing, Wintrust may assign its rights hereunder to another wholly
owned subsidiary of Wintrust, provided that no such assignment shall relieve Wintrust of its obligations hereunder. Subject to the foregoing, this Agreement shall be binding upon and inure to the benefit of the respective successors and assigns of
the Parties.
9.5
Notices.
All notices, requests, demands, and other
communications provided for in this Agreement shall be in writing and shall be deemed to have been given (a) when delivered in person, (b) the third (3
rd
) business day after being deposited in the United States mail, registered or certified mail (return receipt
requested), (c) the first (1
st
) business day
after being deposited with Federal Express or any other recognized national overnight courier service, or (d) if delivered by facsimile transmission, upon receipt, in each case addressed as follows or at such other address as provided by a
Party to the other Parties in accordance with these procedures:
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(i)
|
If to the Company, addressed to:
|
HPK Financial Corporation
1525 East 53
rd
Street
Chicago, Illinois 60615
Facsimile: (773) 753-9624
Attention: Timothy Goodsell, President
with a copy to:
Barack Ferrazzano Kirschbaum & Nagelberg LLP
200 W. Madison Street,
Suite 3900
Chicago, Illinois 60606
Facsimile: (312) 984-3150
Attention: Robert M. Fleetwood, Esq.
|
(ii)
|
If to Wintrust, addressed to:
|
Wintrust Financial Corporation
9700 W. Higgins Road, Suite 800
Rosemont, Illinois 60018
Facsimile: (877) 873-5406
Attention: Lisa J. Pattis
Executive Vice President and
General Counsel
with a copy to:
Schiff Hardin LLP
233 S. Wacker Drive, Suite 6600
Chicago, Illinois 60606-6473
Facsimile: (312) 258-5600
Attention: Matthew G. Galo, Esq.
9.6
Counterparts
. This Agreement may be executed in any number of counterparts with the same effect
as if the signatures to each counterpart were upon the same instrument.
9.7
Knowledge
.
References in this Agreement to the
knowledge
of a party shall mean: (a) with respect to a natural person, the actual knowledge of such person after his or her reasonable investigation into the subject matter at issue;
(b) with respect to the Company and the Subsidiaries, the actual knowledge of Timothy Goodsell, President of the Company, Patrick Barrett, Treasurer and Secretary of the Company and Chief Financial Officer of the Bank, Michael McGarry,
President of the Bank, Claudio Ricci, Senior Vice President of Lending, Anthony Serratore, Vice President and Controller of the Bank, or Sheldon Dugan, Human Resources Officer of the Bank, after their reasonable investigation into the subject matter
at issue, it being understood that with respect to all subject matters under this Agreement involving the Real Property or Leased Premises, or the management, maintenance or compliance with laws of such properties or of any operations or activities
thereon, reasonable investigation shall include the inquiry of Aegis Properties; and (c) with respect to Wintrust, the actual knowledge of Edward J. Wehmer, President and Chief Executive Officer, David A. Dykstra, Senior Executive
Vice President and Chief Operating Officer, Richard B. Murphy, Executive Vice President and Chief Credit Officer, David L. Stoehr, Executive Vice President and Chief Financial Officer, or Leona A. Gleason, Executive Vice President and Chief
Administrative Officer after their reasonable investigation into the subject matter at issue.
A-48
9.8
Interpretation
. The words
hereof
,
herein
and
herewith
and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole. Article, Section, Exhibit and Schedule references are to the Articles,
Sections, Exhibits and Schedules of this Agreement unless otherwise specified. The table of contents and headings contained in this Agreement are for reference purposes only and will not affect in any way the meaning or interpretation of this
Agreement. Whenever the words
include
,
includes
,
including
or similar expressions are used in this Agreement, they will be understood to be followed by the words
without
limitation
. The words describing the singular shall include the plural and vice versa, and words denoting any gender shall include all genders and words denoting natural persons shall include corporations, partnerships and other entities
and vice versa. The parties have participated jointly in the negotiation and drafting of this Agreement. In the event of an ambiguity or question of intent or interpretation arises, this Agreement will be construed as if drafted jointly by the
Parties and no presumption or burden of proof will arise favoring or disfavoring any Party by virtue of the authorship of any provision of this Agreement.
9.9
Entire Agreement.
This Agreement, including the Schedules and agreements delivered pursuant hereto, and the Confidentiality Agreement, sets forth the entire
understanding of the Parties and supersedes all prior agreements, arrangements, and communications, whether oral or written. This Agreement shall not be modified or amended other than by written agreement of the Parties hereto. Captions appearing in
this Agreement are for convenience only and shall not be deemed to explain, limit, or amplify the provisions hereof.
9.10
Governing Law
. This Agreement shall be governed by and construed in accordance with the laws of the State of Illinois, without giving effect to the conflicts of laws principles thereof.
9.11
Severability
. In the event that a court of competent jurisdiction shall finally determine that
any provision of this Agreement or any portion thereof is unlawful or unenforceable, such provision or portion thereof shall be deemed to be severed from this Agreement, and every other provision and portion thereof that is not invalidated by such
determination shall remain in full force and effect. To the extent that a provision is deemed unenforceable by virtue of its scope but may be made enforceable by limitation thereof, such provision shall be enforceable to the fullest extent permitted
under the laws and public policies of the state whose laws are deemed to govern enforceability.
** Signature Page Follows
**
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IN WITNESS WHEREOF,
Wintrust, the Company and Merger Co. have each executed this
Agreement and Plan of Merger as of the day and year first written above.
|
|
|
WINTRUST FINANCIAL CORPORATION
|
|
|
By:
|
|
/s/ David A. Dykstra
|
Name:
|
|
David A. Dykstra
|
Title:
|
|
Senior Executive Vice President
|
|
HPK FINANCIAL CORPORATION
|
|
|
By:
|
|
/s/ Timothy G. Goodsell
|
Name:
|
|
Timothy G. Goodsell
|
Title:
|
|
President
|
|
WINTRUST BHC MERGER CO.
|
|
|
By:
|
|
/s/ David A. Dykstra
|
Name:
|
|
David A. Dykstra
|
Title:
|
|
Senior Executive Vice President
|
[Signature
Page to Agreement and Plan of Merger]
Exhibit B
FORM OF ESCROW AGREEMENT
This Escrow Agreement (
Escrow Agreement
) is made and entered into as of
, 2012 (the
Effective Date
) by and among Wintrust Financial Corporation, an
Illinois corporation (
Wintrust
), Timothy G. Goodsell, as the exclusive agent (including any successors thereof, the
Stockholders Agent
) of the stockholders of HPK Financial Corporation, a Delaware
corporation (the
Company
), and Wells Fargo Bank, National Association, a national association (the
Escrow Agent
).
RECITALS
WHEREAS, Wintrust, Wintrust BHC Merger Co., a Delaware
corporation and wholly owned subsidiary of Wintrust (
Merger Co.
), and the Company are parties to that certain Agreement and Plan of Merger, dated as of September
, 2012 (the
Merger
Agreement
). The Merger Agreement provides for, among other things, the merger of the Company with and into Merger Co., as a result of which the Surviving Corporation will become a wholly owned subsidiary of Wintrust. Capitalized terms used
but not otherwise defined in this Escrow Agreement have the meanings given to them in the Merger Agreement.
WHEREAS, Sections
1.4 and 1.9 of the Merger Agreement provide that at Closing, Wintrust shall deposit a portion of the Merger Consideration in cash in the amount of $2,750,000 into an escrow account to secure the obligations of the Company to indemnify and hold the
Wintrust Indemnified Parties harmless with respect to Claims that may arise or result from certain matters as further set forth in Section 8.2(a) of the Merger Agreement. Such Indemnification Escrow Amount shall be held pursuant to this Escrow
Agreement until such time as it may be released in accordance with the terms hereunder pro rata to the stockholders of the Company as Per Share Escrowed Consideration.
WHEREAS, Timothy G. Goodsell was appointed Stockholders Agent by all necessary corporate and stockholder action of the Company at the Stockholders Meeting held pursuant to the Merger Agreement
on [
], 2012. Such appointment included (i) authorization to act on behalf of all holders of Common Stock of the Company (the
Stockholders
) in
connection with the indemnification obligations of the Company set forth in Article VIII of the Merger Agreement, including actions to be taken pursuant to this Escrow Agreement, (ii) indemnification by the Stockholders with respect to any
actions that may be taken by the Stockholders Agent pursuant to this Escrow Agreement on behalf of all Stockholders, and (iii) acknowledgment that Wintrust and the Wintrust Indemnified Parties may rely on all such actions taken by the
Stockholders Agent in such capacities.
WHEREAS,
Schedule I
to this Agreement sets forth the wire transfer
instructions for Wintrust, IST Shareholder Services, Wintrusts exchange agent (
Exchange Agent
) and Stockholders Agent.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants,
agreements, representations and warranties herein contained, the parties agree as follows:
1.
Establishment of Escrow Account
.
1.1
Appointment of Escrow Agent; Deposit of Funds
. Wintrust and the Stockholders Agent hereby
appoint the Escrow Agent to act in accordance with the express terms and provisions of this Escrow Agreement, and the Escrow Agent hereby accepts such appointment on the express terms and provisions of this Escrow Agreement. Wintrust shall deposit
or cause to be deposited with the Escrow Agent on behalf of the stockholders of the Company at Closing Two Million Seven Hundred Fifty Thousand and No/100 Dollars (US$2,750,000) in immediately available funds (such amount, together with any interest
accrued thereon, and any distributions made therefrom, is referred to hereafter as the
Escrow Amount
).
1.2
Power to Transfer Escrow
. The Escrow Agent is hereby granted the
power and is directed to effect any transfer of any portion of the Escrow Amount as provided for in this Escrow Agreement.
1.3
Establishment of Escrow Account
. As of the Effective Date, the Escrow Agent shall deposit the Escrow Amount into
an escrow account (the
Escrow Account
). The Escrow Agent hereby agrees to hold, invest, and disburse funds held in the Escrow Account as provided in this Escrow Agreement. The Escrow Agent shall hold and safeguard the Escrow
Amount and the Escrow Account during the term of this Escrow Agreement, shall treat the Escrow Amount in accordance with the terms of this Escrow Agreement and not as the property of Wintrust, and shall hold and dispose of the Escrow Amount only in
accordance with the express terms of this Escrow Agreement.
1.4
Interest on Escrow
.
(a) The Escrow Agent agrees to invest and reinvest all available funds in the Escrow Account in the Wells Fargo Bank Money Market Deposit
Account (the MMDA) or a successor or similar fund or account offered by the Escrow Agent, unless otherwise directed, in writing, by Wintrust with the express written concurrence of the Stockholders Agent. Amounts on deposit in the
MMDA are insured up to a total of $250,000 per depositor, per insured bank (including principal and accrued interest) by the Federal Deposit Insurance Corporation (FDIC), subject to applicable rules and regulations of the FDIC. The parties
understand that deposits in the MMDA are not secured. As used in this Escrow Agreement,
Permitted Investment
means any investment of the Escrow Amount by the Escrow Agent made in accordance with this
Section 1.4(a)
.
(b) The parties recognize and agree that the Escrow Agent will not provide supervision, recommendations or advice relating to
either the investment of monies held in the Escrow Account or the purchase, sale, retention or other disposition of any Permitted Investment.
(c) The Escrow Agent is hereby authorized to execute purchases and sales of Permitted Investments through the facilities of its own trading or capital markets operations or those of any affiliated entity.
The Escrow Agent shall send statements to each of the parties hereto on a monthly basis reflecting activity in the Escrow Account for the preceding month. In doing so, the Escrow Agent may provide a statement containing information regarding any
deposits and disbursements and a separate statement reflecting the investment detail, including the balance, purchases, sales, maturities, and dividend or interest postings. Although Wintrust and the Stockholders Agent each recognizes that
Wintrust or the Stockholders Agent may obtain a broker confirmation or written statement containing comparable information at no additional cost, Wintrust and the Stockholders Agent hereby agree that confirmations of Permitted
Investments are not required to be issued by the Escrow Agent for each month in which a monthly statement is rendered.
(d)
Wintrust and the Stockholders Agent acknowledge and agree that the delivery of the Escrow Amount is subject to the sale and final settlement of Permitted Investments. Proceeds of a sale of Permitted Investments will be delivered on the
business day on which the appropriate instructions are delivered to the Escrow Agent if received prior to the deadline for same day sale of such Permitted Investments. If such instructions are received after the applicable deadline, proceeds will be
delivered on the next succeeding business day.
1.5
Taxes and Charges on Escrow Amount
.
Prior to
the execution of this Escrow Agreement, the Stockholders Agent will deliver to the Escrow Agent a completed IRS Form W-9 for each of the Stockholders. The Stockholders shall be responsible for and shall pay and discharge all taxes, assessments
and governmental charges imposed on or with respect to the Escrow Amount based on their percentage interests set forth on Schedule II. The Stockholders Agent agrees to provide the Escrow Agent with a certified tax identification number by
returning a Form W-9 for each of the Stockholders, regardless of whether any of the Stockholders is exempt from reporting or withholding requirements under the Internal Revenue Code. Until the termination of this Agreement, all interest and other
income earned on the Escrow Amount shall be reported as taxable income
2
of the Stockholders based on their percentage interests set forth on Schedule II, and the Stockholders shall file applicable tax returns and forms consistent with such treatment. No later than 45
days after the end of each calendar year, the Escrow Agent shall deliver to each of the Stockholders a copy of an IRS Form 1099 reflecting the net taxable income reported as having been earned by the Escrow Amount during the previous calendar year
which is attributable to such Stockholder.
2.
Disbursement of Escrow Amount
.
Subject to Sections 3, 5 and 6.3
below, on [ ]
1
(the
Release Date
), of which date the Escrow Agent shall be notified in writing, by Wintrust, with a copy simultaneously sent to the Stockholders Agent, the Escrow Agent shall
distribute to the Exchange Agent, on behalf of the Stockholders Agent, an amount equal to (a) the amount of the then-remaining Escrow Amount minus (b) the aggregate dollar amount of all pending Indemnity Claims, as defined in
Section 3.1 below (the
Pending Claim Amount
) minus (c) the aggregate dollar amount of any indemnification claims pursuant to Section 6.3 below, as instructed to the Escrow Agent, in writing prior to the Release
Date, by the Stockholders Agent, which amount shall be paid to the Stockholders Agent promptly after the Release Date (the Escrow Disbursement). Wintrust shall cause the Exchange Agent to distribute the Escrow Disbursement to
the Stockholders as Per Share Escrowed Consideration, calculated by dividing the total Escrow Disbursement by the number of shares of Company Common Stock issued and outstanding immediately prior to the Effective Time. Distributions to the
Stockholders shall be made using the instructions previously provided by each Stockholder to the Exchange Agent in their Letter of Transmittal delivered in accordance with the Merger Agreement, unless such delivery instructions are modified in
writing in accordance with the terms of each such Letter of Transmittal. All interest thereafter accruing on a Pending Claim Amount shall be paid to the recipient of such Pending Claim Amount. All interest thereafter accruing on a Pending Claim
Amount shall be paid to the recipient of such Pending Claim Amount. The Escrow Agent shall have no duties or responsibilities for the further distribution of funds from the Exchange Agent.
3.
Indemnity Claims and Release Administration.
3.1
Indemnity Claims against Escrow Amount
.
(a) In the event and to the extent Wintrust makes a Claim for which a
Wintrust Indemnified Party is entitled to indemnification pursuant to Article VIII of the Merger Agreement (an
Indemnity Claim
), Wintrust shall issue or cause to be issued a written notice via facsimile or overnight mail
(
Indemnity Claim Notice
) to the Stockholders Agent and the Escrow Agent setting forth the details of the Indemnity Claim, including: (i) the fact that Wintrust has suffered, or anticipates suffering, an Indemnity Claim;
(ii) a specification of the amount of the actual or anticipated Indemnity Claim, including a reference to the applicable section(s) of the Merger Agreement; (iii) a description of the facts giving rise to the actual or anticipated
Indemnity Claim; (iv) a direction that the Escrow Agent deliver, subject to
Sections 3.1(b)
and
3.1(c)
hereof, an amount equal to such actual or anticipated Indemnity Claim in immediately available funds to Wintrust from the
Escrow Account to the extent available, or, if the Indemnity Claim amount is greater than the amount of the Escrow Account, the entire amount of the Escrow Account; and (v) wire transfer instructions for such amount.
(b) If the Stockholders Agent does not deliver an Indemnity Objection Notice (as defined in the next sentence) to the Escrow Agent
and Wintrust on or before the date which is thirty (30) calendar days after the date of the Stockholders Agents receipt of the Indemnity Claim Notice, then on the next business day, the Escrow Agent shall deliver to Wintrust that
portion of the Escrow Amount in the amount stated in, and in accordance with the terms of, the Indemnity Claim Notice. An
Indemnity Objection Notice
shall mean a written notice from the Stockholders Agent to Wintrust and the
Escrow Agent which sets forth: (i) an objection to delivery of all or any portion of the Escrow Amount in accordance with the terms of the Indemnity Claim Notice; (ii) a
1
|
Final Escrow Agreement to insert date which is the last day of the 15
th
calendar month following the month in which the Closing Date occurs (see Section 8.1 of Merger Agreement).
|
3
description of the facts which constitute the basis for the objection, and (iii) a description of the applicable section(s) of the Merger Agreement which support the basis for such
objection.
(c) If an Indemnity Objection Notice is timely received, the Escrow Agent thereafter shall not make the delivery
of the contested portion of the applicable Indemnity Claim except in accordance with a Final Determination (as defined below). If the contested portion of the Indemnity Claim is greater than the amount of the funds in the Escrow Account, the Escrow
Agent shall retain the entire amount of the Escrow Account until authorized to release the funds in the Escrow Account.
3.2
Release Administration
.
(a) At least five (5) business days prior to the Release Date as defined in
Section 2
above, Wintrust shall issue or cause to be issued a written notice via facsimile or overnight mail
(
Release Notice
) to the Stockholders Agent and the Escrow Agent instructing the Escrow Agent to deliver to the Exchange Agent, on behalf of the Stockholders Agent the amount of the Escrow Amount to be released thereon,
calculated as set forth in
Section 2
.
(b) If Wintrust indicates in its Release Notice that the full amount
remaining in the Escrow Account shall be paid to the Exchange Agent on behalf of the Stockholders Agent, then Wintrust may give unilateral written notice to the Escrow Agent to release on the Release Date the Escrow Amount in the amount stated
in, and accordance with the terms of, the Release Notice, calculated as set forth in
Section 2
.
(c) If
(i) Wintrust indicates in its Release Notice that less than the full amount remaining in the Escrow Account shall be paid to the Exchange Agent on behalf of the Stockholders Agent and (ii) the Stockholders Agent does not
deliver a Release Objection Notice (as defined below) to the Escrow Agent and Wintrust on or before the date which is fifteen (15) calendar days after the date of the Stockholders Agents receipt of the Release Notice, then on the
next business day, the Escrow Agent shall release such portion of the Escrow Amount to the Stockholders Agent or Wintrust, as the case may be, in the amount stated in, and accordance with the terms of, the Release Notice, calculated as set
forth in
Section 2
.
(d) If a Release Notice is not received, or if a Release Objection Notice is timely received,
the Escrow Agent thereafter shall not make the delivery of any contested portion of the Escrow Amount except in accordance with a Final Determination (as defined below). The Escrow Agent shall have no duty or obligation with respect to the Final
Determination unless and until it receives written notice of the occurrence.
3.3
Certain Definitions
.
(a) A
Release Objection Notice
shall mean a written notice from the Stockholders Agent to Wintrust
and the Escrow Agent which sets forth: (i) an objection to delivery (or non-delivery, as the case may be) of all or any portion of the Escrow Amount in accordance with the terms of the Release Notice; (ii) a description of the facts which
constitute the basis for the objection and (iii) reference to the applicable section(s) of the Merger Agreement which support the Stockholders Agents objection.
(b) A
Final Determination
means: (i) joint written instructions executed by Wintrust and the Stockholders
Agent; (ii) a settlement agreement between Wintrust and the Stockholders Agent with respect to the contested portion of the Escrow Amount; or (iii) final determination of the parties rights with respect to the contested Escrow Amount
in accordance with the Merger Agreement. Any distributions to the Stockholders following a Final Determination shall be made as Escrow Disbursements in accordance with the procedures set forth in Section 2 above. In the event that a Final
Determination does not reference a date for disbursement of funds, the Escrow Agent shall disburse funds no later than ten (10) business days from the date of receipt of Final Determination by the Escrow Agent.
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4.
Escrow Agent
.
4.1
Duties
. The duties of the Escrow Agent hereunder shall be entirely ministerial in nature, and shall under no circumstances be deemed a fiduciary for any of the parties to this
Agreement. The duties, responsibilities, and obligations of the Escrow Agent shall be limited to those expressly set forth herein and the Escrow Agent shall not have any responsibility as to the accuracy of, and shall incur no liability with respect
to, any written notice, instruction, direction, request or other communication, statement, representation, warranty, agreement (including without limitation the Merger Agreement), or covenant made by any other party hereto (even if any reference
thereto is made herein). Other than as set forth in
Section 1.4
with respect to interest and as set forth in
Section 1.5
with respect to tax, the Escrow Agent is not obligated to make any independent calculations under this
Escrow Agreement. The Escrow Agent shall be obligated to act only in accordance with written instructions received by it as provided in this Escrow Agreement and is authorized hereby to comply with any orders, judgments, or decrees of any court with
or without jurisdiction or decision of any arbitrator and shall not be liable as a result of its compliance with the same. The Escrow Agent will not be deemed to have knowledge of any event under this Escrow Agreement unless and until it receives
written notice of such event. None of the provisions of this Escrow Agreement shall require the Escrow Agent to use or advance its own funds in the performance of any of its duties hereunder, nor will the Escrow Agent be required to make any
payments under this Escrow Agreement unless and until it will have received sufficient funds to make such payments. The Escrow Agent may execute any of its powers and may perform any of its duties under this Escrow Agreement by or through attorneys,
agents, or employees. Notwithstanding anything herein to the contrary, the Escrow Agent is not responsible for nor assumed to have any knowledge of the contents of the Merger Agreement.
(a) The Escrow Agent shall be fully protected in acting upon any written notice, instruction, direction, request or other communication,
paper or document which the Escrow Agent believes to be genuine, and shall have no duty to inquire into or investigate the validity, accuracy or content of any thereof. Concurrent with the execution of this Agreement Wintrust and the
Stockholders Agent shall deliver to the Escrow Agent
Exhibit A-1
and
A-2
which contain an authorized signer designation in Part A thereof.
(b) The Escrow Agent may engage or be interested in financial or other transactions with Wintrust or any party hereto or affiliate thereof, and may act on, or as depositary, trustee or agent for, any
committee or body of holders of obligations of such party or affiliate, as freely as if it were not the Escrow Agent hereunder.
(c) The Escrow Agent shall not be responsible or liable for any failure or delay in the performance of its obligations under this
Agreement arising out of or caused, directly or indirectly, by circumstances beyond its reasonable control, including, without limitation: acts of God; earthquakes; fire; flood; wars; acts of terrorism; civil or military disturbances; sabotage;
epidemic; riots; interruptions, loss or malfunctions of utilities, computer (hardware or software) or communications services; accidents; labor disputes; acts of civil or military authority or governmental action; it being understood that the Escrow
Agent shall use commercially reasonable efforts which are consistent with accepted practices in the banking industry to resume performance as soon as reasonably practicable under the circumstances.
4.2
Legal Opinions
. As to any legal questions or other uncertainties arising in connection with the administration
of this Escrow Agreement, the Escrow Agent may rely absolutely upon the joint written instruction of Wintrust and the Stockholders Agent or the opinions or advice given to the Escrow Agent by its counsel (who may be an employee of the Escrow
Agent and may also be counsel to one or more other parties to this Escrow Agreement) and shall be free of liability resulting from any delay due to waiting for, taking, suffering, or omitting to take any action in reliance upon such opinions or
advice.
4.3
Signatures
. The Escrow Agent may rely absolutely upon the genuineness and authorization of
the signature and purported signature of any party upon any instruction, notice, release, receipt or other document delivered to it pursuant to this Escrow Agreement.
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4.4
Receipts and Releases
. In addition to the release requirements set
forth above, the Escrow Agent may, as a condition to the disbursement of monies or disposition of securities as provided herein, require from the payee or recipient a receipt therefor and, upon final payment or disposition, a release of the Escrow
Agent from any liability arising out of its execution or performance of this Escrow Agreement, such release to be in a form reasonably satisfactory to the Escrow Agent.
4.5
Refrain from Action
. The Escrow Agent shall be entitled to refrain from taking any action contemplated by this Escrow Agreement in the event it becomes aware of any dispute
between the Stockholders Agent and Wintrust and will be fully protected and will not be liable in any way to the Stockholders Agent, Wintrust, or any other person or entity for failure or refusal to take such action. In the event the
Escrow Agent believes any ambiguity or uncertainty exists hereunder or in any notice, instruction, direction, request, or other communication, paper, or document received by the Escrow Agent hereunder, the Escrow Agent, may, in its sole discretion,
refrain from taking any action, and shall be fully protected and shall not be liable in any way to Wintrust or the Stockholders Agent or any other person or entity for refraining from taking such action, unless the Escrow Agent receives
written instructions signed by Wintrust and the Stockholders Agent that eliminates such ambiguity or uncertainty to the satisfaction of the Escrow Agent.
4.6
Interpleader
. If any controversy arises between Wintrust and the Stockholders Agent or with any third person, the Escrow Agent shall not be required to determine the same or
to take any action, but the Escrow Agent in its discretion may institute such interpleader or other proceedings in connection therewith as the Escrow Agent may deem proper, and in following either course, the Escrow Agent shall not be liable.
5.
Stockholders Agent
.
5.1
Expenses of Stockholders Agent
.
(a) The
Stockholders Agent shall be entitled to reimbursement out of the Escrow Account for all reasonable out-of-pocket costs and expenses he may incur, if any, in performing the duties assigned to him by the Merger Agreement and the Escrow
Agreement. The Stockholders Agent may consult with, and obtain advice from, third-party advisors, including legal counsel and financial advisors, and the Escrow Account shall be used to reimburse the Stockholders Agent for all
reasonable expenses incurred in consulting with such advisors, including all reasonable expenses incurred by the Stockholders Agent (including third-party advisor fees) in reviewing and responding to any Indemnity Claim Notice or Release
Notice and in preparing any Indemnity Objection Notice or Release Objection Notice or in connection with any Final Determination.
(b) In the event and to the extent the Stockholders Agent makes a claim for reimbursement of his reasonable out-of-pocket costs and expenses, he shall issue a written notice (an Expense
Notice) to Wintrust and the Escrow Agent setting forth the amount of the expenses and appropriate supporting documentation. If Wintrust does not deliver a written notice (an Expense Notice Objection) to the Stockholders Agent
and the Escrow Agent within five (5) calendar days of receiving an Expense Notice, then on the next business day, the Escrow Agent shall deliver to the Stockholders Agent that portion of the Escrow Amount in the amount stated in the
Expense Notice. If an Expense Notice is timely received, the Escrow Agent thereafter shall not make the delivery of the contested portion of the Expense Notice except in accordance with a Final Determination.
5.2
Change to Initial Stockholders Agent
. If the initial Stockholders Agent, Timothy G. Goodsell, should
die or become unable or unwilling to perform his duties, and unable or unwilling to appoint a successor, then Patrick J. Barrett shall be appointed as the successor Stockholders Agent, to serve in the same capacity as the prior
Stockholders Agent. If Patrick J. Barrett, as successor Stockholders Agent, should die or become unable or unwilling to perform his duties, and unable or unwilling to appoint a successor, then David Sensibar shall be appointed as
the successor Stockholders Agent, to serve in the same capacity as the prior Stockholders Agent. If the Stockholders Agent or any successor thereto named in this Escrow Agreement should die or become unable or unwilling to
perform his duties, and unable or unwilling to appoint a successor, then Wintrust
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shall appoint any reasonable successor Stockholders Agent. Any successor Stockholders Agent so appointed shall be vested with the same power and authority as the
Stockholders Agent named in this Escrow Agreement. The existing Stockholders Agent shall notify the Escrow Agent and Wintrust of any such change in the Stockholders Agent; provided, however, that if such notification is not
possible, the successor Stockholders Agent shall notify the Escrow Agent and Wintrust of any such change.
6.
Indemnification
.
6.1
Waiver and Indemnification
. Each of Wintrust and the Stockholders Agent agrees to and
hereby does waive any suit, claim, demand, or cause of action of any kind that they may have or may assert against the Escrow Agent and the Escrow Agent shall not be liable for any action taken, suffered, or omitted to be taken hereunder arising out
of or relating to the execution, administration, or performance by the Escrow Agent of this Escrow Agreement, unless such suit, claim, demand, or cause of action is based upon the willful misconduct or gross negligence of the Escrow Agent, each as
determined by a final, non-appealable judgment of a court of competent jurisdiction;
provided, however
, that notwithstanding anything in this Escrow Agreement to the contrary, the Escrow Agent shall not be liable, directly or indirectly, for
any (i) damages, losses or expenses arising out of the services provided hereunder, other than damages, losses or expenses which have been finally adjudicated to have directly resulted from the Escrow Agents willful misconduct or gross
negligence, or (ii) special, punitive, indirect, incidental, or consequential damages, losses or expenses of any kind whatsoever (including but not limited to lost profits), even if the Escrow Agent has been advised of the likelihood of such
loss or damage and regardless of the form of action. Each of Wintrust and the Stockholders Agent further agrees to jointly and severally indemnify the Escrow Agent and its affiliates and their respective successors, directors, officers,
employees, and consultants (collectively, the
Indemnitees
) and to defend and to hold the Indemnitees harmless against and from any and all claims, demands, costs, damages, losses, penalties, liabilities, and expenses, including
reasonable attorneys fees, that may be asserted against them or to which they may be exposed or that the Indemnitees may incur for any action taken, suffered, or omitted to be taken, by reason of the execution, administration, or performance
of this Escrow Agreement, except to the extent attributable to such Indemnitees willful misconduct or gross negligence, each as determined by a final, non-appealable judgment of a court of competent jurisdiction. This paragraph shall survive
the resignation, removal or replacement of the Escrow Agent and the termination of this Escrow Agreement until extinguished by any applicable statute of limitations.
6.2
Notice of Litigation
. In case any litigation is brought against the Escrow Agent or other Indemnitee in respect of which indemnification may be sought hereunder, the Escrow Agent
shall give prompt notice of that litigation to Wintrust and the Stockholders Agent, and upon receipt of that notice Wintrust and the Stockholders Agent shall have the obligation to pay the reasonable attorneys fees and expenses for
such attorneys. The parties hereto shall not be liable for any settlement without their respective consents.
6.3
Indemnification of Stockholders Agent
. The Escrow Disbursement, if any, shall be used to indemnify and hold the Stockholders Agent harmless against and from any and all claims, demands, costs, damages, losses, penalties,
liabilities, and expenses, including reasonable attorneys fees, arising out of, from, or in conjunction with the Stockholders Agents performance or inaction under this Escrow Agreement, except to the extent attributable to the
Stockholders Agents willful misconduct or gross negligence, each as determined by a final, non-appealable judgment of a court of competent jurisdiction.
7.
Acknowledgment by the Escrow Agent
. By execution and delivery of this Escrow Agreement, the Escrow Agent acknowledges that the terms and provisions of this Escrow Agreement are acceptable
and it agrees to carry out the express (and not implied) provisions of this Escrow Agreement on its part.
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8.
Resignation or Removal of Escrow Agent; Successor
.
8.1
Resignation and Removal
.
(a)
Notice
. The Escrow Agent may resign as such following not less than thirty (30) calendar days prior written notice to Wintrust and the Stockholders Agent. Similarly, the Escrow
Agent may be removed and replaced following not less than thirty (30) days prior written notice to the Escrow Agent jointly by the Stockholders Agent and Wintrust. In either event, the duties of the Escrow Agent shall terminate
thirty (30) days after the date of such notice (or as of such earlier date as may be mutually agreeable), and the Escrow Agent shall then deliver the balance of the Escrow Amount then in its possession to a successor Escrow Agent as shall be
appointed by the other parties hereto as evidenced by a written notice filed with the Escrow Agent.
(b)
Court
Appointment
. If Wintrust and the Stockholders Agent are unable to agree upon a successor or shall have failed to appoint a successor prior to the expiration of thirty (30) calendar days following the date of the notice of resignation
or removal of the acting Escrow Agent, then the acting Escrow Agent may petition any court of competent jurisdiction for the appointment of a successor Escrow Agent or other appropriate relief, and any such resulting appointment shall be binding
upon all of the parties hereto.
8.2
Successors
. Every successor Escrow Agent appointed hereunder shall
execute, acknowledge, and deliver to its predecessor, the Stockholders Agent and Wintrust a written acceptance of such appointment, and thereupon such successor, without any further act, shall become fully vested with all the duties,
responsibilities, and obligations of its predecessor; but such predecessor shall, nevertheless, on the written request of its successor or Wintrust or the Stockholders Agent, execute and deliver an instrument or instruments transferring to
such successor all the rights of such predecessor hereunder, and shall duly assign, transfer, and deliver all property, securities, and monies held by it pursuant to this Escrow Agreement to its successor.
8.3
New Escrow Agent
. In the event of an appointment of a successor Escrow Agent, the predecessor shall cease to be
Escrow Agent of any funds and records it may hold pursuant to this Escrow Agreement and the successor shall become the Escrow Agent hereunder.
8.4
Release
. Upon written acknowledgment by any successor Escrow Agent of the receipt of the then remaining balance of the Escrow Amount, the then acting Escrow Agent shall be fully
released and relieved of all duties, responsibilities, and obligations under this Escrow Agreement that may arise and accrue thereafter.
9.
Fees of Escrow Agent
. Wintrust will pay one half of the Escrow Agents fees for administering the Escrow Account in accordance with
the fee schedule attached hereto as
Exhibit B
, with the other half to be paid out of the Escrow Account. In the event the Escrow Agent is made a party to litigation with respect to the property held hereunder, or brings an action in
interpleader, or the Escrow Agent agrees in writing to render any service not provided for in this Escrow Agreement and fee schedule, or there is any assignment of the interests under this Escrow Agreement or any modification hereof agreed to in
writing by the Escrow Agent, the Escrow Agent shall be entitled to reasonable compensation from Wintrust and Escrow Account for such services and reimbursement for all fees, costs, liability, and expenses, including but not limited to reasonable
attorneys fees, which compensation and reimbursement obligations shall be shared 50/50 by Wintrust and Escrow Account. The Escrow Agent shall have, and is hereby granted, a prior lien and the right to set off and deduct from the Escrow Amount,
with respect to its unpaid fees, non-reimbursed expenses and unsatisfied indemnification rights, superior to the interests of any other persons or entities. The provisions of this
Section 8
shall survive the termination of this Escrow
Agreement and the resignation, removal or replacement of the Escrow Agent with respect to all fees earned and expenses incurred prior to such events.
10.
Termination
. Except as otherwise set forth herein, this Escrow Agreement and the escrow created hereby shall terminate following the Escrow Agents final delivery of the balance of
any remaining Escrow Amount to the Stockholders Agent and/or Wintrust pursuant to the terms of this Escrow Agreement. Notwithstanding the
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foregoing, the provisions of
Sections 5
and
8
of this Escrow Agreement shall survive the termination of this Escrow Agreement and the resignation, removal or replacement of the
Escrow Agent.
11.
Miscellaneous Provisions
.
11.1
Parties in Interest
. Otherwise as expressly set forth herein, this Escrow Agreement is not intended, nor shall it be construed, to confer any enforceable rights on any person not
a party hereto. All of the terms and provisions of this Escrow Agreement will be binding upon and inure to the benefit of and be enforceable by the respective successors and assigns of the parties hereto.
11.2
Entire Agreement
. This Escrow Agreement constitutes the final and entire agreement among the parties hereto
with respect to the subject matter hereof and supersedes all prior arrangements or understandings. Notwithstanding the foregoing, the Escrow Agent shall not be subject to, nor be required to comply with, or determine if any person or entity has
complied with, the Merger Agreement or any other agreement between or among the parties hereto other than this Escrow Agreement, even though reference thereto may be made in this Escrow Agreement.
11.3
Notices
. All notices, requests, demands, or other communications that are required or may be given pursuant to
the terms of this Escrow Agreement shall be in writing and shall be deemed to have been duly given (a) on the date of delivery if personally delivered by hand, (b) one day after such notice is sent by an internationally recognized
overnight express courier, specifying next day delivery, with written verification of receipt, or (c) if by facsimile, upon written confirmation (other than the automatic confirmation that is received from the recipients facsimile
machine) of receipt from the recipient. All communications shall be sent to the address as set forth below or at such other address as such party may designate from time to time by means of five (5) days advance written notice to the other
parties hereto given in the manner provided in this
Section 10.3
.
If to the Escrow Agent:
Wells Fargo Bank, National Association
230 W. Monroe Street
29
th
Floor, Corporate Trust Department
Chicago, IL 60606
Telephone: 312-726-2137
Facsimile: 312-726-2158
Attention: Timothy P. Martin
If to Wintrust:
Wintrust Financial Corporation
9700 W. Higgins Road, Suite 800
Rosemont, Illinois 60018
Telephone: (847) 939-9090
Facsimile: (877) 873-5406
Attention: Lisa J. Pattis
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Executive Vice President and
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With a copy to:
Schiff Hardin LLP
233 S. Wacker Drive, Suite 6600
Chicago, Illinois 60606
Facsimile: (312) 258-5600
Attention: Matthew G. Galo
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and
If to the Stockholders Agent:
Timothy G. Goodsell
[Address 1]
[Address 2]
Telephone:
Facsimile: [ ]
With a copy to:
Barack Ferrazzano Kirschbaum & Nagelberg LLP
200 West
Madison Street, Suite 3900
Chicago, Illinois 60606
Facsimile: (312) 984-3150
Attention: Robert M. Fleetwood
11.4
Changes
.
The terms of this Escrow Agreement may not be modified or amended, or any provisions waived, temporarily or permanently, except pursuant to the written agreement of Wintrust, the Stockholders Agent and the Escrow Agent. Such amendment,
modification or waiver shall be effective only in the specific instance and for the specific purpose given.
11.5
Severability
. In the event of any conflict between the terms and provisions of this Escrow Agreement and those of the Merger Agreement, the terms and conditions of this Escrow Agreement will apply. If any term or provision of this
Escrow Agreement or the application thereof as to any person or circumstance is held invalid or unenforceable to any extent, the remaining terms and provisions of this Escrow Agreement or the application of such term or provision to persons or
circumstances other than those as to which it is held invalid or unenforceable shall not be affected thereby and each term and provision of this Escrow Agreement shall be valid and enforceable to the fullest extent permitted by law.
11.6
Counterparts
. This Escrow Agreement may be executed in two or more counterparts, each of which shall be deemed
an original and shall bind the signatory, but all of which together shall constitute one and the same instrument. The execution and delivery (including via facsimile or electronic mail) of a signature page in the form attached to this Escrow
Agreement by any party hereto who has been furnished the final form of this Escrow Agreement shall constitute the execution and delivery of this Escrow Agreement by such party. Facsimile and PDF signatures shall be treated as if they were originals.
11.7
Headings
. The headings of the sections of this Escrow Agreement have been inserted for convenience
of reference only and shall not be deemed to be a part of this Escrow Agreement.
11.8
Assignment
.
This Escrow Agreement may not be assigned, or otherwise transferred, in whole or in part, by either party without the prior written consent of the other party, which the other party will not unreasonably
withhold, condition or delay; except that consent is not required for a merger, conversion, consolidation with or assignment to an affiliate of Wintrust. Any attempted assignment in violation of the foregoing will be void.
11.9
Governing Law
. This Escrow Agreement shall be construed and controlled by the laws of the State of Illinois
without regard to the principles of conflicts of laws.
11.10
Binding Effect
. This Escrow Agreement shall
inure to the benefit of and be binding upon the parties hereto and their respective heirs, affiliates, successors, and assigns.
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10.11
Merger
.
Any banking association or corporation into which the Escrow
Agent may be merged, converted or with which the Escrow Agent may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Escrow Agent shall be a party, or any banking association or corporation to
which all or substantially all of the corporate trust business of the Escrow Agent shall be transferred, shall succeed to all the Escrow Agents rights, obligations and immunities hereunder without the execution or filing of any instrument or
any further act, deed or conveyance on the part of any of the parties hereto, anything herein to the contrary notwithstanding.
10.12
Security Procedure For Funds Transfer
.
The Escrow Agent shall confirm each funds transfer instruction received in the
name of a party by means of the security procedure selected by such party and communicated to the Escrow Agent in the form of
Exhibit A-1
and
A-2
attached hereto, which upon receipt by the Escrow Agent shall become a part of this
Agreement. Once delivered to the Escrow Agent,
Exhibit A-1
and
A-2
may be revised or rescinded only by a writing signed by an authorized representative of the party. Such revisions or rescissions shall be effective only after actual
receipt and following such period of time as may be necessary to afford the Escrow Agent reasonable opportunity to act on it. If a revised
Exhibit A-1
or
A-2
or a rescission of an existing
Exhibit A-1
or
A-2
is delivered
to the Escrow Agent by an entity that is a successor-in-interest to a party, such document shall be accompanied by additional documentation satisfactory to the Escrow Agent showing that such entity has succeeded to the rights and responsibilities of
the party under this Agreement. The parties understand that the Escrow Agents inability to receive or confirm funds transfer instructions pursuant to the security procedure selected by such party may result in a delay in accomplishing such
funds transfer, and agree that the Escrow Agent shall not be liable for any loss caused by any such delay.
[
Signature Page Follows
]
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IN WITNESS WHEREOF
, the parties have executed this Escrow Agreement as of the date
first above written.
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WINTRUST:
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WINTRUST FINANCIAL CORPORATION
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By:
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Name:
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David A. Dykstra
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Title:
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Senior Executive Vice President & Chief Operating Officer
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STOCKHOLDERS AGENT:
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ESCROW AGENT:
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WELLS FARGO BANK, NATIONAL ASSOCIATION, AS ESCROW AGENT
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By:
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Name:
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Title:
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SCHEDULE I
WIRE TRANSFER INSTRUCTIONS
WINTRUST
STOCKHOLDERS AGENT
EXCHANGE AGENT
SCHEDULE II
STOCKHOLDER PERCENTAGE INTERESTS
[To be provided.]
EXHIBIT A-1
Wintrust Security Procedure
Wintrust hereby certifies that the names,
titles, telephone numbers, email addresses and specimen signatures set forth below identify the persons authorized to provide direction and initiate or confirm transactions, including funds transfer instructions, on behalf of the Wintrust, and that
the option checked in Part C of this Exhibit A-1 is the security procedure selected by the Wintrust for use in verifying that a funds transfer instruction received by the Escrow Agent is that of the Wintrust.
Wintrust has reviewed each of these security procedures and has determined that the option checked in Part C of this Exhibit A-1 best
meets its requirements; given the size, type and frequency of the instructions it will issue to the Escrow Agent. By selecting the security procedure specified in Part C of this Exhibit A-1, the Wintrust acknowledges that it has elected to not use
the other security procedures described below and agrees to be bound by any funds transfer instruction, whether or not authorized, issued in its name and accepted by the Escrow Agent in compliance with the particular security procedure chosen by the
Wintrust.
NOTICE
: The security procedure selected by the Wintrust will not be used to detect errors in the
funds transfer instructions given by the Wintrust. If a funds transfer instruction describes the beneficiary of the payment inconsistently by name and account number, payment may be made on the basis of the account number even if it identifies a
person different from the named beneficiary. If a funds transfer instruction describes a participating financial institution inconsistently by name and identification number, the identification number may be relied upon as the proper identification
of the financial institution. Therefore, it is important that the Wintrust take such steps as it deems prudent to ensure that there are no such inconsistencies in the funds transfer instructions it sends to the Escrow Agent.
Part A
Name, Title, Telephone Number, Email Address and Specimen Signature for person(s) designated to provide direction, including but not limited to funds transfer instructions, and to otherwise act on
behalf of the Wintrust
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Name
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Telephone
Number
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Email
Address
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Specimen
Signature
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[list more if desired]
Part B
Name, Title, Telephone Number and Email Address for person(s) designated to
confirm funds transfer instructions
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Name
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Title
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Telephone
Number
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Email
Address
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[list more if desired]
Part C
Means for delivery of instructions and/or confirmations
The security procedure to
be used with respect to funds transfer instructions is checked below:
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Option 1. Confirmation by telephone call-back
. The Escrow Agent shall confirm funds transfer instructions by telephone call-back to a person at the
telephone number designated on Part B above. The person confirming the funds transfer instruction shall be a person other than the person from whom the funds transfer instruction was received, unless only one person is designated in both Parts A and
B of this Exhibit.
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CHECK box, if applicable:
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If
the Escrow Agent is unable to obtain confirmation by telephone call-back, the Escrow Agent may, at its discretion, confirm by email, as described in Option 2.
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Option 2. Confirmation by email
. The Escrow Agent shall confirm funds transfer instructions by email to a person at the email address specified for such
person in Part B of this Exhibit. The person confirming the funds transfer instruction shall be a person other than the person from whom the funds transfer instruction was received, unless only one person is designated in both Parts A and B of this
Exhibit. The Wintrust understands the risks associated with communicating sensitive matters, including time sensitive matters, by email. The Wintrust further acknowledges that instructions and data sent by email may be less confidential or secure
than instructions or data transmitted by other methods. The Escrow Agent shall not be liable for any loss of the confidentiality of instructions and data prior to receipt by the Escrow Agent.
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CHECK box, if applicable:
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If
the Escrow Agent is unable to obtain confirmation by email, the Escrow Agent may, at its discretion, confirm by telephone call-back, as described in Option 1.
¨
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Option 3. Delivery of funds transfer instructions by password protected file transfer system onlyno confirmation
. The Escrow Agent offers the option
to deliver funds transfer instructions through a password protected file transfer system. If the Wintrust wishes to use the password protected file transfer system, further instructions will be provided by the Escrow Agent. If the Wintrust chooses
this Option 3, it agrees that no further confirmation of funds transfer instructions will be performed by the Escrow Agent.
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Option 4. Delivery of funds transfer instructions by password protected file transfer system with confirmation
. Same as Option 3 above, but the Escrow
Agent shall confirm funds transfer instructions by
¨
telephone call-back or
¨
email (must check at least one, may check both) to a person at the
telephone number or email address designated on Part B above. By checking a box in the prior sentence, the party shall be deemed to have agreed to the terms of such confirmation option as more fully described in Option 1 and Option 2 above.
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Dated this
day of
, 20
.
By
Name:
Title:
EXHIBIT A-2
Stockholders Agent Security Procedure
Stockholders Agent
hereby certifies that the names, titles, telephone numbers, email addresses and specimen signatures set forth below identify the persons authorized to provide direction and initiate or confirm transactions, including funds transfer instructions, on
behalf of the Stockholders Agent, and that the option checked in Part C of this Exhibit A-2 is the security procedure selected by the Stockholders Agent for use in verifying that a funds transfer instruction received by the Escrow Agent
is that of the Stockholders Agent.
Stockholders Agent has reviewed each of these security procedures and
has determined that the option checked in Part C of this Exhibit A-2 best meets its requirements; given the size, type and frequency of the instructions it will issue to the Escrow Agent. By selecting the security procedure specified in Part C of
this Exhibit A-2, the Stockholders Agent acknowledges that it has elected to not use the other security procedures described below and agrees to be bound by any funds transfer instruction, whether or not authorized, issued in its name and
accepted by the Escrow Agent in compliance with the particular security procedure chosen by the Stockholders Agent.
NOTICE
: The security procedure selected by the Stockholders Agent will not be used to detect errors in the funds transfer
instructions given by the Stockholders Agent. If a funds transfer instruction describes the beneficiary of the payment inconsistently by name and account number, payment may be made on the basis of the account number even if it identifies a
person different from the named beneficiary. If a funds transfer instruction describes a participating financial institution inconsistently by name and identification number, the identification number may be relied upon as the proper identification
of the financial institution. Therefore, it is important that the Stockholders Agent take such steps as it deems prudent to ensure that there are no such inconsistencies in the funds transfer instructions it sends to the Escrow Agent.
Part A
Name, Title, Telephone Number, Email Address and Specimen Signature for person(s) designated to provide direction, including but not limited to funds transfer instructions, and to otherwise act on
behalf of the Stockholders Agent
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Part B
Name, Title, Telephone Number and Email Address for person(s) designated to
confirm funds transfer instructions
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Part C
Means for delivery of instructions and/or confirmations
The security procedure to
be used with respect to funds transfer instructions is checked below:
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Option 1. Confirmation by telephone call-back
. The Escrow Agent shall confirm funds transfer instructions by telephone call-back to a person at the
telephone number designated on Part B above. The person confirming the funds transfer instruction shall be a person other than the person from whom the funds transfer instruction was received, unless only one person is designated in both Parts A and
B of this Exhibit.
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CHECK box, if applicable:
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If
the Escrow Agent is unable to obtain confirmation by telephone call-back, the Escrow Agent may, at its discretion, confirm by email, as described in Option 2.
¨
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Option 2. Confirmation by email
. The Escrow Agent shall confirm funds transfer instructions by email to a person at the email address specified for such
person in Part B of this Exhibit. The person confirming the funds transfer instruction shall be a person other than the person from whom the funds transfer instruction was received, unless only one person is designated in both Parts A and B of this
Exhibit. The Stockholders Agent understands the risks associated with communicating sensitive matters, including time sensitive matters, by email. The Stockholders Agent further acknowledges that instructions and data sent by email may
be less confidential or secure than instructions or data transmitted by other methods. The Escrow Agent shall not be liable for any loss of the confidentiality of instructions and data prior to receipt by the Escrow Agent.
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CHECK box, if applicable:
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If
the Escrow Agent is unable to obtain confirmation by email, the Escrow Agent may, at its discretion, confirm by telephone call-back, as described in Option 1.
¨
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Option 3. Delivery of funds transfer instructions by password protected file transfer system onlyno confirmation
. The Escrow Agent offers the option
to deliver funds transfer instructions through a password protected file transfer system. If the Stockholders Agent wishes to use the password protected file transfer system, further instructions will be provided by the Escrow Agent. If the
Stockholders Agent chooses this Option 3, it agrees that no further confirmation of funds transfer instructions will be performed by the Escrow Agent.
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Option 4. Delivery of funds transfer instructions by password protected file transfer system with confirmation
. Same as Option 3 above, but the Escrow
Agent shall confirm funds transfer instructions by
¨
telephone call-back or
¨
email (must check at least one, may check both) to a person at the
telephone number or email address designated on Part B above. By checking a box in the prior sentence, the party shall be deemed to have agreed to the terms of such confirmation option as more fully described in Option 1 and Option 2 above.
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Dated this
day of
, 20
.
By
Name:
Title:
EXHIBIT B
SCHEDULE OF ESCROW AGENT FEES
Annual
Charge $3,300.00
Any out-of-pocket expenses, or extraordinary fees or expenses such as attorneys fees or messenger costs, are additional and are not
included in the above schedule.
These fees cover a full year, or any part thereof, and thus are not prorated in the year of
termination. The annual fee is billed in advance and payable prior to that years service.
Exhibit C
FORM OF TENANT ESTOPPEL CERTIFICATE
To:
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Hyde Park Facilities, Inc. (Landlord) and HPK Financial Corporation (Company)
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Re:
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Office Lease dated as of
(Lease),
between Landlord and the undersigned tenant (Tenant) for that certain space known as
(the Property) in the building commonly known as 1525 East
53
rd
Street, Chicago, Illinois 60615.
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Tenant hereby certifies to Landlord and the Company as follows:
1. The current monthly rent amount due under the Lease is
$
.
2. The Lease term ends on
(unless Tenant exercises its renewal option, if any, under the Lease). Tenant has the following
option(s) to extend the Lease:
.
3. Tenant is the current tenant under the Lease. The Lease represents the entire agreement between Tenant and Landlord with respect to
the leasing and occupancy of the Property. A true and correct copy of the Lease (including any modifications or amendments) is attached to this certificate. The Lease is in full force and effect and has not been supplemented or amended, nor has any
portion of the Property been sublet by Tenant, except as follows (if none or inapplicable, write none):
.
4. No deposits or other security have been given to Landlord except the $
security deposit given pursuant to the Lease.
5. The address for notices to be sent to Tenant is:
.
6. The monthly rent due is continuing and is not past due or delinquent in any respect. Tenant has not prepaid rent under the Lease more than one (1) month in advance. As of the date of this
certificate, there are no outstanding sums due to Tenant pursuant to the terms of the Lease, and Tenant has no defense as to its obligations under the Lease and asserts no set-off, claim, or counterclaim against Landlord.
7. Neither Tenant nor Landlord is in default under the Lease, and all obligations of Landlord to be performed or complied with by
Landlord through the date hereof have been fully performed or complied with.
8. Tenant is not aware of any material defects
in the condition of the Property.
Tenant has delivered this certificate for the use and benefit of Landlord and Company with the
understanding that they, and their successors, will rely upon it in connection with the ownership and the acquisition of the Property.
IN
WITNESS WHEREOF, this certificate has been duly executed and delivered by Tenant as of
, 2012.
TENANT:
Exhibit D
Form of Opinion of Company Counsel
(a) The Company is duly registered as a bank holding company under the Bank Holding Company Act of 1956, as amended, and is a corporation validly existing and in good standing under the laws of the State
of Delaware. The Bank is an Illinois state bank validly existing and currently authorized to transact the business of banking under the laws of the state of Illinois.
(b) The Company has the corporate power and authority to execute, deliver and perform its obligations under the Merger Agreement, and the execution, delivery and performance thereof by the Company have
been duly authorized by all necessary corporate action on the part of the Company.
(c) The authorized capital stock of the
Company consists of [--------] shares of common stock, $1.00 par value per share and [------] shares of preferred stock, $1.00 par value per share.
1
To our knowledge based solely upon the stock records and corporate minutes of the Company, immediately prior to the
Effective Time (as defined in the Merger Agreement) there are [----] shares of common stock issued and outstanding, [---] shares of common stock held in treasury, and [--] shares of preferred stock outstanding and held of record by
[------- ]. The issued and outstanding shares of common stock and preferred stock of the Company have been duly and validly authorized and issued and are fully paid and nonassessable. [Except for the {preferred stock}], the common stock of the
Company is subject to no preferences, qualifications, limitations, restrictions or special or relative rights under the Companys certificate of incorporation other than as set forth therein. To our knowledge, there are no options, agreements,
contracts, or other rights in existence to purchase or acquire from the Company any shares of capital stock of the Company, whether now or hereafter authorized or issued.
(d) The authorized capital stock of the Bank consists of [---] shares of common stock, $10.00 par value per share. To our knowledge based solely upon the stock records and corporate minutes of the
Bank, [------] of such shares of common stock are issued and outstanding. The issued and outstanding shares of common stock of the Bank have been duly and validly authorized and issued and are fully paid and nonassessable (except as provided
in 12 U.S.C. §55) and owned by the Company. To our knowledge, there are no options, agreements, contracts or other rights in existence to purchase or acquire from the Bank any shares of capital stock of the Bank, whether now or hereafter
authorized or issued.
(e) The Merger Agreement has been duly executed and delivered by the Company and constitutes the valid
and binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors generally and to general principles of
equity.
(f) The execution and delivery by the Company of the Merger Agreement do not, and the performance by the Company of
its obligations under the Merger Agreement will not, (i) violate or conflict with the certificate of incorporation or by-laws of the Company, (ii) violate any banking law, rule or regulation applicable to the Company or the Bank,
(iii) violate any judgment, injunction, order or decree which is listed on the Officers Certificate of the Company attached to this opinion letter or (iv) breach or result in a default under any indenture, mortgage, instrument or
agreement listed on the Officers Certificate of the Company attached to this opinion letter.
(g) The execution and
delivery by the Company of the Merger Agreement does not require any consent or approval of, or filing or registration with, any Governmental Authority (as such term is defined in the Merger Agreement), except such as have been obtained or made
pursuant to the Merger Agreement.
In rendering its opinion, such counsel may rely as to matters of fact upon such
certificates of the officers of the Company and the Bank or governmental officials as such counsel deems appropriate.
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Reference to preferred stock to be updated to reflect capitalization at Closing.
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Exhibit E
FORM OF EMPLOYMENT AGREEMENT
This Employment Agreement (the
Agreement
) is made by and between Hyde Park Bank and Trust Company, an Illinois state bank (
Employer
) and
, an individual resident in the State of Illinois
(
Executive
) as of September
, 2012.
WITNESSETH THAT:
WHEREAS, Employer is engaged in the business of general banking;
WHEREAS, Employers parent company, HPK Financial Corporation, a Delaware corporation (the
Parent
), and Wintrust
Financial Corporation (
Wintrust
), have executed and delivered as of the date hereof an Agreement and Plan of Merger (the
Merger Agreement
), pursuant to which Wintrust shall acquire, in accordance with the terms
and conditions set forth in the Merger Agreement, the Parent via the Merger (as such term is defined therein), upon which Employer shall become a wholly owned subsidiary of Wintrust;
WHEREAS, the Merger Agreement provides that, as a condition to Closing (as such term is defined therein), Executive shall have entered
into this Agreement on the terms and conditions set forth herein, which Agreement is to become effective as of the consummation of the Merger (the
Effective Date
);
WHEREAS, Executive acknowledges and agrees that this Agreement is ancillary to the Merger Agreement and that Wintrust would not enter
into the transactions contemplated by the Merger Agreement if the Executive did not execute and deliver this Agreement;
WHEREAS, Executive has particular expertise and knowledge concerning the business of Employer;
WHEREAS, by virtue of Executives employment with Employer, Executive will become acquainted with certain confidential information
regarding the services, customers, methods of doing business, strategic plans, marketing, and other aspects of the business of Employer, Wintrust or its Affiliates;
WHEREAS, Employer and Executive desire to state and set forth in this Agreement the terms, conditions and obligations of the parties with respect to such employment; and as of the Effective Date this
Agreement is intended by the parties to supersede all previous agreements and understanding, whether written or oral, concerning such employment.
NOW THEREFORE, in consideration of the covenants and agreements contained herein, of Executives employment, of the compensation to be paid by Employer for Executives services, and of
Employers other undertakings in this Agreement, the parties hereto do hereby agree as follows:
1.
Scope of
Employment
. Executive will be employed as [Title] of Employer and shall perform such duties as may be assigned to Executive by the Chief Executive Officer and/or the Board of Directors of Employer in such position. Executive agrees that during
Executives employment Executive will be subject to and abide by the written policies and practices of Employer and Wintrust. Executive also agrees to assume such new or additional positions and responsibilities commensurate with the position
of [Title] of Employer as Executive may from time to time be assigned for or on behalf of Employer or Wintrust, it being understood that in the event Wintrust decides to combine Employer or certain of its operations with those of Employers
Affiliate Beverly Bank & Trust, that the position of [Title] Beverly Bank & Trust of such combined entity shall be within the scope of Executives employment hereunder and that, following such combination,
references to Employer hereunder shall include references to Beverly Bank & Trust. Notwithstanding the foregoing, during the Term (as defined in Section 8 herein) of this Agreement, Executive will not be required without
Executives consent to move Executives principal business location to another location more than a 35 mile radius from Executives
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principal business location. For purposes of this Agreement, the term
Affiliate
shall include but not be limited to the entities listed in Exhibit A to this Agreement and any
subsidiary of any of such entities and shall further include any present or future affiliate of any of them as defined by the rules and regulations of the Federal Reserve Board. In the event Executive shall perform services for Wintrust or any
Affiliate, the provisions of this Agreement shall also apply to the performance of such services by Executive on behalf of Wintrust or any Affiliate.
2.
Compensation and Benefits
. During the Term, Executive shall be entitled to the following compensation and benefits:
(a) Executives annual base salary (the
Annual Base Salary
) shall be as set forth in Schedule A, and shall be payable in accordance with the normal payroll practices of Employer.
During the Term, the Annual Base Salary may be increased or decreased by Employer, its sole and absolute discretion,
provided that
the Annual Base Salary may not be decreased below the amount set forth on Schedule A without Executives
consent so long as Executive remains a full-time employee of Employer.
(b) Executive shall be eligible to receive an annual
performance-based bonus (the
Incentive Bonus
) as set forth in Schedule A. The actual amount of the Incentive Bonus (if any) earned by and payable to the Executive for each fiscal year in the Term shall be determined by the
Compensation Committee of Wintrusts Board of Directors and/or the Board of Directors of Employer, in their sole and absolute discretion, based upon the satisfaction of goals and objectives applicable to Executive and established by the
Compensation Committee of Wintrusts Board of Directors and/or the Board of Directors of Employer. Any Incentive Bonus payable pursuant to this Section 2(b) shall be subject to, and paid to Executive in accordance with, the terms and
conditions of the Employers annual bonus guidelines as in effect from time to time.
(c) Executive will be entitled to
coverage under such compensation plans, insurance plans and other fringe benefit plans and programs as may from time to time be established for similarly-situated employees of Employer, Wintrust and its Affiliates in accordance with the terms and
conditions of such plans and programs. Executive shall also be eligible to participate in the Wintrust 2007 Stock Incentive Plan or any successor Plan thereto.
3.
Extent of Service
. Executive shall devote Executives entire business time, attention and energies to the business of Employer during the Term of this Agreement; but this shall not be
construed as preventing Executive from (a) investing Executives personal assets in such form or manner as will not require any services on the part of Executive in the operation or the affairs of the corporations, partnerships and other
entities in which such investments are made and in which Executives participation is solely that of an investor (subject to any and all rules and regulations of applicable banking regulators or policies of the Employer governing transactions
with affiliates and ownership interests in customers); (b) engaging (whether or not during normal business hours) in any other business, professional or civic activities provided that the Board of Directors of Employer approves of such
activities and Executives engagement does not result in a violation of Executives covenants under this Section or Sections 4 or 5 hereof; or (c) accepting appointments to the boards of directors of other companies provided that the
Board of Directors of Employer approves of such appointments and Executives performance of Executives duties on such boards does not result in a violation of Executives covenants under this Section or Sections 4 and 5 hereof.
4.
Competition
. Other than in connection with Executives performance of Executives duties hereunder,
during the period in which Executive performs services for Employer and for a period of
one year
after termination of Executives employment with Employer with respect to clauses (a) and (e) of this Section 4, and
18-months
after termination of Executives employment with Employer with respect to clauses (b), (c) and (d) of this Section 4, regardless of the reason for such termination of employment, Executive shall not directly or
indirectly, either alone or in conjunction with any other person, firm, association, company or corporation:
2
(a) serve as an owner, principal, agent, senior manager, employee or in a position
comparable to that held by Executive at any time during Executives employment with Employer, for a bank or other financial institution (or any branch or affiliate thereof) which offers to its customers commercial and community banking and/or
trust and investment services, and which is located within ten miles of the principal office or any branch office of the Employer;
(b) solicit or conduct business which involves commercial and community banking and/or trust and investment services with any person, corporation or other entity which was (i) a customer of the
Employer, Wintrust or any other Affiliate of Wintrust with whom Executive had direct or indirect contact while employed by Employer or about whom Executive obtained Confidential Information during the fifteen months prior to the termination of
Executives employment with Employer, or (ii) a potential customer with whom Employer, Wintrust, or any Affiliate has, at the time of Executives termination of employment with Employer, an outstanding oral or written proposal to
provide commercial and community banking and/or trust and investment services and with whom Executive had direct or indirect contact while employed by Employer;
(c) request, advise or directly or indirectly invite any of the existing customers, suppliers or service providers of Employer, Wintrust or any other Affiliate of Wintrust to withdraw, curtail or cancel
its business with Employer, Wintrust or any other Affiliate of Wintrust, other than through mass mailings or general advertisements not specifically directed at customers of Employer, Wintrust or any Affiliate;
(d) hire, solicit, induce or attempt to solicit or induce any employee, consultant, or agent of Employer, Wintrust or any other Affiliate
of Wintrust (i) to terminate his or her employment or association with Employer or (ii) to become employed by or serve in any capacity by a bank or other financial institution; or
(e) in any way participate in planning or opening a bank or other financial institution which is located or will be located within a ten
mile radius of the principal office or any branch office of the Employer. For the purposes of this Agreement, in the event Executives geographic area of responsibility as specified herein shall change during employment with Employer, or as the
result of performing services for Wintrust or any Affiliate of Wintrust, the Executives obligation stated in Sections 4(a) and 4(e) shall apply to a ten mile radius of Executives revised geographic area of responsibility.
Notwithstanding the foregoing, (a) Executive shall not be prevented from: (i) investing or owning shares of stock of any
corporation engaged in any business provided that such shares are regularly traded on a national securities exchange or any over-the-counter market; (ii) retaining any shares of stock in any corporation which Executive owned prior to the date
of Executives employment with Employer (subject to any and all rules and regulations of applicable banking regulators or policies of the Employer governing transactions with affiliates and ownership interests in customers); or
(iii) investing as a limited partner (without decision-making authority) in any private equity fund, provided that Executives involvement in such investment is solely that of a passive investor (subject to any and all rules and
regulations of applicable banking regulators or policies of the Employer governing transactions with affiliates and ownership interests in customers), and (b) Executive shall not be in violation of Sections 4(a) or 4(e) of this Agreement if,
during the one -year period following termination of employment Executive accepts employment or invests in a bank or other financial institution which is within a ten mile radius of the principal offices or any branch office of Wintrust or any
Affiliate of Wintrust (other than Employer) as long as such facility is not within a ten mile radius of the principal office or any branch office of the Employer.
5.
Confidential Information
. Executive acknowledges that, during Executives employment with Employer, Executive has and will obtain access to Confidential Information of and for Employer,
Wintrust or its Affiliates. For purposes of this Agreement,
Confidential Information
shall mean information not generally known or available without restriction to the trade or industry, including, without limitation, the
following categories of information and documentation: (a) documentation and information relating to lending customers of Employer, Wintrust or any Affiliate, including, but not limited to, lists of lending clients with their addresses and
account
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numbers, credit analysis reports and other credit files, outstanding loan amounts, repayment dates and instructions, information regarding the use of the loan proceeds, and loan maturity and
renewal dates; (b) documentation and information relating to depositors of Employer, Wintrust or any Affiliate, including, but not limited to, lists of depositors with their addresses and account numbers, amounts held on deposit, types of
depository products used and the number of accounts per customer; (c) documentation and information relating to trust customers of Employer, Wintrust or any Affiliate, including, but not limited to, lists of trust customers with their addresses
and account numbers, trust investment management contracts, identity of investment managers, trust corpus amounts, and grantor and beneficiary information; (d) documentation and information relating to investment management clients of Employer,
Wintrust or any Affiliate, including, but not limited to, lists of investors with their addresses, account numbers and beneficiary information, investment management contracts, amount of assets held for management, and the nature of the investment
products used; (e) the identity of actual or potential customers of Employer, Wintrust or any Affiliate, including lists of the same; (f) the identity of suppliers and service providers of Employer, Wintrust or any Affiliate, including
lists of the same and the material terms of any supply or service contracts; (g) marketing materials and information regarding the products and services offered by Employer, Wintrust or any Affiliate and the nature and scope of use of such
marketing materials and product information; (h) policy and procedure manuals and other materials used by Employer, Wintrust or any Affiliate in the training and development of its employees; (i) identity and contents of all computer
systems, programs and software utilized by Employer, Wintrust or any Affiliate to conduct its operations and manuals or other instructions for their use; (j) minutes or other summaries of Board of Directors or other department or committee
meetings held by Employer, Wintrust or any Affiliate; (k) the business and strategic growth plans of Employer, Wintrust or any Affiliate; and (l) confidential communication materials provided for shareholders of Employer, Wintrust or any
Affiliate. Absent prior authorization by Employer or as required in Executives duties for Employer, Executive will not at any time, directly or indirectly, use, permit the use of, disclose or permit the disclosure to any third party of any
such Confidential Information to which Executive will be provided access. These obligations apply both during Executives employment with Employer and shall continue beyond the termination of Executives employment and this Agreement.
6.
Inventions
. All discoveries, designs, improvements, ideas, and inventions, whether patentable or not, relating to
(or suggested by or resulting from) products, services, or other technology of Employer, Wintrust or any Affiliate or relating to (or suggested by or resulting from) methods or processes used or usable in connection with the business of Employer,
Wintrust or any Affiliate that may be conceived, developed, or made by Executive during employment with Employer (hereinafter
Inventions
), either solely or jointly with others, shall automatically become the sole property of
Employer, Wintrust or an Affiliate. Executive shall immediately disclose to Employer all such Inventions and shall, without additional compensation, execute all assignments and other documents deemed necessary to perfect the property rights of
Employer, Wintrust or any Affiliate therein. These obligations shall continue beyond the termination of Executives employment with respect to Inventions conceived, developed, or made by Executive during employment with Employer. The provisions
of this Section 6 shall not apply to any Invention for which no equipment, supplies, facility, or trade secret information of Employer, Wintrust or any Affiliate is used by Executive and which is developed entirely on Executives own time,
unless (a) such Invention relates (i) to the business of Employer, Wintrust or an Affiliate or (ii) to the actual or demonstrably anticipated research or development of Employer, Wintrust or an Affiliate, or (b) such Invention
results from work performed by Executive for Employer.
7.
Remedies
. Executive acknowledges that compliance with the
terms of this Agreement is necessary to protect the Confidential Information and goodwill of Employer, Wintrust and its Affiliates and that any breach by Executive of this Agreement will cause continuing and irreparable injury to Employer, Wintrust
and its Affiliates for which money damages would not be an adequate remedy. Executive acknowledges that Wintrust and all other Affiliates are and are intended to be third party beneficiaries of this Agreement. Executive acknowledges that Employer,
Wintrust and any Affiliate shall, in addition to any other rights or remedies they may have, be entitled to injunctive relief for any breach by Executive of any part of this Agreement. This Agreement shall not in any way limit the remedies in law or
equity otherwise available to Employer, Wintrust and its Affiliates.
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8.
Term of Agreement
. Unless terminated sooner as provided in Section 9, the
initial term of Executives employment pursuant to this Agreement (
Initial Term
) shall be
two (2) years
, commencing on the Effective Date;
provided
,
however
, that in the event the Merger Agreement is
terminated for any reason without the Closing (as defined in the Merger Agreement) of the merger contemplated thereby, this Agreement shall simultaneously terminate without further obligation or liability on the part of any party hereto. After such
Initial Term, this Agreement shall be extended automatically for successive one-year terms, unless either Executive or Employer gives contrary written notice not less than 60 days in advance of the expiration of the Initial Term or any succeeding
term of this Agreement or unless terminated sooner as provided in Section 9. Notwithstanding the foregoing, if at any time during the Initial Term or any successive one-year term there is a Change in Control of Employer (as defined in
Section 9(d)), then upon the first occurrence of such a Change in Control, the Initial Term or the successive one-year term of this Agreement (whichever is in effect as of the date of the Change in Control) shall automatically extend for the
greater of: (a) the amount of time remaining on Executives Initial Term of employment if such first occurrence of a Change in Control occurs during the Initial Term, or (b) two (2) years from the date of such first occurrence of
a Change in Control. In the event that Executives Initial Term or successive one-year term is extended due to such a Change in Control, such extension shall further be extended automatically for successive one-year terms unless either
Executive or Employer gives contrary written notice not less than 60 days in advance of the expiration of the extension of this Agreement or unless terminated sooner as provided in Section 9. The Initial Term, together with any extension
thereof in accordance with this Section 8, shall be referred to herein as the
Term
.
9.
Termination
of Employment
.
(a)
General Provisions
. Executives employment may be terminated by Employer at any time for
any reason, with or without cause, and, except as otherwise provided in this Section 9, any and all of Employers obligations under this Agreement shall terminate, other than Employers obligation to pay Executive, within 30 days of
Executives termination of employment, the full amount of any earned but unpaid base salary and accrued but unpaid vacation pay earned by Executive pursuant to this Agreement through and including the date of termination and to observe the
terms and conditions of any plan or benefit arrangement which, by its terms, survives such termination of Executives employment. The payments to be made under this Section 9(a) shall be made to Executive, or in the event of
Executives death, to such beneficiary as Executive may designate in writing to Employer for that purpose, or if Executive has not so designated, then to the spouse of Executive, or if none is surviving, then to the estate of Executive.
Notwithstanding the foregoing, termination of employment shall not affect the obligations of Executive that, pursuant to the express provisions of this Agreement, continue in effect.
(b)
Termination Without Cause
.
(i)
Payment.
In the event Executives employment is terminated without Cause (as such term is defined in Section 9(f) hereof) by Employer during the Term of this Agreement, other than
upon the expiration of the Term of this Agreement, Employer shall pay Severance Pay to Executive. Severance Pay under this Section 9(b)(i) shall mean the sum of (A) an amount equal to Executives then current Annual Base Salary, plus
(B) an amount equal to the target Incentive Bonus as set forth on Schedule A hereto. Notwithstanding anything herein to the contrary, annual incentive compensation shall not include any equity-based award or cash award with a vesting period of
greater than one-year. Severance Pay under this Section 9(b) shall be paid ratably over a 12-month period beginning on the first payroll period following such termination and on each payroll period thereafter during such Severance Pay period.
(ii)
Reduction of Payment Due To Earned Income.
The amount of Severance Pay under this Section 9(b) shall also
be reduced by any income earned by Executive, whether paid to Executive immediately or deferred until a later date, during the applicable Severance Pay period from employment of any sort, including without limitation full, part time or temporary
employment or work as an independent contractor or as a consultant;
provided
that, if Executive was a member of the board of directors of another company at the time of
5
Executives termination, the amount of Severance Pay under this Section 9(b) shall not be reduced by any income earned by Executive during the applicable Severance Pay period due to
Executives continued service in such capacity. Notwithstanding the foregoing, Executives Severance Pay to be paid under this Section 9(b) shall not be less than an amount to provide Executive with a gross monthly payment of
$8,333.34 during the 12-month Severance Pay period. Executive agrees to promptly notify Employer if Executive obtains employment of any sort during the applicable Severance Pay period and to provide Employer with a copy of his earnings statements or
other payroll or income records for each calendar month during the 12-month Severance Pay period and a summary of any contributions received under any deferred compensation arrangement for each calendar month during the 12-month Severance Pay
period. In addition, no later than 45 days following the expiration of each calendar year during the 12-month Severance Pay period, Executive shall deliver to the Employer all W-2 and 1099 forms received during such calendar year.
(iii)
Company-Paid Health Insurance.
In the event of Executives termination pursuant to this Section 9(b), from the
termination date through the earliest of (A) the expiration of the maximum period of COBRA coverage, (B) the date on which Executive becomes eligible for coverage under another group health insurance plan with no pre-existing condition
limitation or exclusion, or (C) the date on which Executive becomes entitled to benefits under Medicare, Executive (and any qualified dependents) shall be entitled to group health insurance coverage under the Employers group health
insurance plan for employees (as such plan is then in effect and as it may be amended at any time and from time to time during the period of coverage) in which Executive was participating immediately prior to termination, at Employers expense,
subject to any normal employee contributions, if any. The period during which Executive is being provided with health insurance under this Agreement shall be credited against Executives period of COBRA coverage, if any. Executive shall
promptly notify Employer if, prior to the expiration of the maximum period of COBRA coverage, Executive becomes eligible for coverage under another group health plan with no pre-existing condition limitation or exclusion or Executive becomes
entitled to benefits under Medicare.
(c)
Constructive Termination
.
(i)
Payment
. If Executive suffers a Constructive Termination during the Term of this Agreement, other than upon the expiration of
the Term of this Agreement, Employer shall pay Severance Pay to Executive in the amounts and at the times described in Section 9(b) hereof. For purposes of this Agreement,
Constructive Termination
means (A) a material
reduction by Employer in the duties and responsibilities of Executive or (B) a reduction by Employer of Executives Adjusted Total Compensation (as hereinafter defined) to (1) less than seventy-five percent (75%) of
the Adjusted Total Compensation of Executive for the twelve-month period ending as of the last day of the month immediately preceding the month in which the Constructive Termination occurs; or (2) less than seventy-five percent (75%) of
the Executives Adjusted Total Compensation for the twelve-month period ending as of the last day of the month preceding the Effective Date, whichever is greater;
provided
,
however
, that with respect to either (1) or (2), if
Executive is employed by Employer or any Affiliate of Employer for less than twelve months, Adjusted Total Compensation shall be calculated based on the initial annual base salary and value of perquisites, determined by the Employer as of the date
Executive commences employment with the Employer or such Affiliate. A Constructive Termination does not include termination for Cause as defined in Section 9(f), termination without Cause as defined in Section 9(b), termination due to
death, or termination due to a permanent disability (as hereinafter defined).
(ii)
Reduction of Payment Due To Earned
Income.
The amount of Severance Pay under this Section 9(c) shall be reduced by any income earned by Executive, whether paid to Executive immediately or deferred until a later date, during such Severance Pay period from employment of any
sort, including without limitation full, part time or temporary employment or work as an independent contractor or as a consultant;
provided
that, if Executive was a member of the board of directors of another company at the time of
Executives termination, the amount of Severance Pay under this Section 9(c) shall not be reduced by any income earned by Executive during the applicable Severance Pay period due to Executives continued service in such capacity.
Notwithstanding the foregoing, Executives Severance Pay to be paid under this Section 9(c) shall not be less
6
than an amount to provide Executive with a gross monthly payment of $8,333.34 during the 12-month Severance Pay period. Executive agrees to promptly notify Employer if Executive obtains
employment of any sort during the applicable Severance Pay period and to provide Employer with a copy of his earnings statements or other payroll or income records for each calendar month during the 12-month Severance Pay period and a summary of any
contributions received under any deferred compensation arrangement for each calendar month during the 12-month Severance Pay period. In addition, no later than 45 days following the expiration of each calendar year during the 12-month Severance Pay
period, Executive shall deliver to the Employer all W-2 and 1099 forms received during such calendar year.
(iii)
Company-Paid Health Insurance.
In the event of Executives termination pursuant to this Section 9(c), from the termination date through the earliest of (A) the expiration of the maximum period of COBRA coverage, (B) the
date on which Executive becomes eligible for coverage under another group health insurance plan with no pre-existing condition limitation or exclusion, or (C) the date on which Executive becomes entitled to benefits under Medicare, Executive
(and any qualified dependents) shall be entitled to group health insurance coverage under the Employers group health insurance plan for employees (as such plan is then in effect and as it may be amended at any time and from time to time during
the period of coverage) in which Executive was participating immediately prior to termination, at Employers expense, subject to any normal employee contributions, if any. The period during which Executive is being provided with health
insurance under this Agreement shall be credited against Executives period of COBRA coverage, if any. Executive shall promptly notify Employer if, prior to the expiration of the maximum period of COBRA coverage, Executive becomes eligible for
coverage under another group health plan with no pre-existing condition limitation or exclusion or Executive becomes entitled to benefits under Medicare.
(iv) Definitions.
(A) For the purposes of this Agreement,
Adjusted
Total Compensation
means the aggregate base salary earned by the Executive plus the dollar value of all perquisites (i.e. Employer provided car, club dues and supplemental life insurance) as estimated by Employer. Adjusted Total
Compensation shall exclude any bonus payments, annual or long-term cash incentive compensation or equity-based compensation paid to, awarded to or earned by the Executive. For the purposes of this Section 9(c), the Executive will not be deemed
to have incurred a reduction by Employer of Executives Adjusted Total Compensation if there is a general reduction in base salaries and/or perquisites applicable to the President, Chief Executive Officer and all Vice Presidents of Employer.
(B) For the purposes of this Agreement,
permanent disability
means any mental or physical illness,
disability or incapacity that renders Executive unable to perform Executives duties hereunder where (x) such permanent disability has been determined to exist by a physician selected by Employer or (y) Employer has reasonably
determined, based on such physicians advice, that such disability will continue for 180 days or more within any 365-day period, of which at least 90 days are consecutive. Executive shall cooperate in all respects with Employer if a question
arises as to whether he has become disabled (including, without limitation, submitting to an examination by a physician or other health care specialist selected by Employer and authorizing such physician or other health care specialist to discuss
Executives condition with Employer).
(d)
Termination Upon Change In Control
.
(i)
Payment.
In the event that within eighteen months after a Change in Control (as defined below) of Employer or Wintrust
(A) Executives employment is terminated without Cause (as such term is defined in Section 9(f) hereof) prior to the expiration of the Term of this Agreement or (B) Executive suffers a Constructive Termination prior to the
expiration of the Term of this Agreement, Employer (or the successor thereto) shall pay Severance Pay to Executive in the amount that is equivalent to the amount described in Section 9(b) hereof in a lump sum within 30 days following the date
of Executives termination or Constructive Termination;
provided
,
7
however
, that if such Change in Control is not a change in control event, within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the
Code), then such Severance Pay shall be paid at the same time and in the same form as set forth in Section 9(b)(i).
(ii) For the purposes of this Agreement, a
Change in Control
of Employer or Wintrust shall have the same meaning as provided in Section 12(c) of the Wintrust 2007 Stock Incentive
Plan;
provided that
both Employer and Wintrust shall be deemed to be the Corporation (or any successor term) in the application of such definition.
(iii)
Section 280G
. Notwithstanding the foregoing, if the payment required to be paid under this Section 9(d), when considered either alone or with other payments paid or imputed to the
Executive from Employer, Wintrust or an Affiliate that would be deemed excess parachute payments under Section 280G(b)(1) of the Code is deemed by Employer to be a parachute payment under Section 280G(b)(2) of the
Code, then the amount of Severance Pay required to be paid under this Section 9(d) shall be automatically reduced in order of scheduled payments to an amount equal to $1.00 less than three times (3x) the base amount (as defined
in Section 280G(3) of the Code) (the Reduced Amount).
Provided
,
however
, the preceding sentence shall not apply if the sum of (A) the amount of Severance Pay described in this Section 9(d) less (B) the
amount of excise tax payable by the Executive under Section 4999 of the Code with respect to the amount of such Severance Pay and any other payments paid or imputed to the Executive from Employer, Wintrust or an Affiliate that would be deemed
to be excess parachute payments under Section 280G(b)(1) of the Code, as further adjusted for payment of taxes by the Executive is greater than the Reduced Amount, as further adjusted for payment of taxes by the Executive. The
decision of Employer (based upon the recommendations of its tax counsel and accountants) as to the characterization of payments as parachute payments, the value of parachute payments, the amount of excess parachute payments, the determination of any
adjustments related to payment of taxes by the Executive and the payment of the Reduced Amount shall be final.
(iv)
Company-Paid Health Insurance.
In the event Executive becomes entitled to payments under this Section 9(d), from the termination date through the earliest of (A) the expiration of the maximum period of COBRA coverage, (B) the
date on which Executive becomes eligible for coverage under another group health insurance plan with no pre-existing condition limitation or exclusion, or (C) the date on which Executive becomes entitled to benefits under Medicare, Executive
(and any qualified dependents) shall be entitled to group health insurance coverage under the Employers group health insurance plan for employees (as such plan is then in effect and as it may be amended at any time and from time to time during
the period of coverage) in which Executive was participating immediately prior to termination, at Employers expense, subject to any normal employee contributions, if any. The period during which Executive is being provided with health
insurance under this Agreement shall be credited against Executives period of COBRA coverage, if any. Executive shall promptly notify Employer if, prior to the expiration of the maximum period of COBRA coverage, Executive becomes eligible for
coverage under another group health plan with no pre-existing condition limitation or exclusion or Executive becomes entitled to benefits under Medicare.
(v)
Definitions.
For the purposes of this Section 9(d), the term Constructive Termination shall have the same meaning as such term is defined in Section 9(c) with the
following modifications:
(A) A Constructive Termination shall be deemed to have occurred if after a Change in Control, the
Executives Adjusted Total Compensation is reduced to less than (1) 100% of the Adjusted Total Compensation of Executive for the twelve-month period ending as of the last day of the month immediately preceding the month in which the
Constructive Termination occurs or (2) 100% percent of the Executives Adjusted Total Compensation for the twelve-month period ending as of the last day of the month preceding the Effective Date, whichever is greater;
provided
,
however
, that with respect to either (1) or (2), if Executive is employed by Employer or any Affiliate of Employer for less than twelve months, Adjusted Total Compensation shall be calculated based on the initial annual base salary and
value of perquisites, determined by the Employer as of the date Executive commences employment with the Employer or such Affiliate.
8
(B) A Constructive Termination shall also be deemed to have occurred if after a Change in
Control, Employer (or the successor thereto) delivers written notice to Executive that it will continue to employ Executive but will reject this Agreement (other than due to the expiration of the Term of this Agreement).
(C) The last sentence of subsection 9(c)(iv)(A) shall not be applicable to a Constructive Termination following a Change in Control.
(e)
Voluntary Termination
. Executive may voluntarily terminate employment during the Term of this Agreement by a
delivery to Employer of a written notice at least 60 days in advance of the termination date. If Executive voluntarily terminates employment prior to the expiration of the Term of this Agreement, any and all of the Employers obligations under
this Agreement shall terminate immediately except for the Employers obligations contained in Section 9(a) hereof. Notwithstanding the foregoing, termination of employment shall not affect the obligations of Executive that, pursuant to the
express provisions of this Agreement, continue in effect following Executives termination of employment including, without limitation, Sections 4, 5 and 6 of this Agreement.
(f)
Termination For Cause
. If Executive is terminated for Cause as determined by the written resolution of Employers Board
of Directors or any committee thereof designated by Employers Board of Directors, all obligations of the Employer shall terminate immediately except for Employers obligations described in Section 9(a) hereof. Notwithstanding the
foregoing, termination of employment shall not affect the obligations of Executive that, pursuant to the express provisions of this Agreement, continue in effect. For purposes of this Agreement, termination for
Cause
means:
(i) Executives failure or refusal, after written notice thereof and after reasonable opportunity to cure, to perform
specific directives approved by a majority of the Employers or Wintrusts Board of Directors which are consistent with the scope and nature of Executives duties and responsibilities as provided in Section 1 of this Agreement;
(ii) Habitual drunkenness or illegal use of drugs which interferes with the performance of Executives duties and
obligations under this Agreement;
(iii) Executives conviction of a felony;
(iv) Any defalcation or acts of gross or willful misconduct of Executive resulting in or potentially resulting in economic loss to
Employer or Wintrust or substantial damage to Employers or Wintrusts reputation;
(v) Any breach of
Executives covenants contained in Sections 4 through 6 hereof;
(vi) A written order requiring termination of Executive
from Executives position with Employer by any regulatory agency or body; or
(vii) Executives engagement, during
the performance of Executives duties hereunder, in acts or omissions constituting fraud, intentional breach of fiduciary obligation, intentional wrongdoing or malfeasance, or intentional and material violation of applicable banking laws,
rules, or regulations.
(g) Executives right to the Severance Pay per Sections 9(b) through 9(d) hereof shall be
contingent upon (i) Executive having executed and delivered to Employer a release in such form as provided by the Employer not later than the date set forth in the release (but in no event more than 45 days after the date of termination) (the
Consideration Period
), (ii) Executive not revoking such release in accordance with the terms of the release and (ii) Executive not violating any of Executives on-going obligations under this Agreement;
provided
,
however
, that Employer has the discretion to pay to Executive the Severance Pay per Sections 9(b)
9
through 9(d), as applicable, prior to Employers receipt of the release and/or the expiration of the release revocation period;
provided further
that if Executive does not execute and
deliver a release to Employer prior to the expiration of the Consideration Period or if Executive revokes the release in accordance with its terms, Executive shall pay to Employer within 10 days following the expiration of the Consideration Period
or the date such release was revoked, a lump sum payment of all Severance Pay received by Executive to date.
(h) The payment
of Severance Pay to Executive pursuant to Sections 9(b) through 9(d) hereof shall be for and in full satisfaction of any and all claims Executive may have relating to or arising out of Executives employment and termination of employment by
Employer, any and all claims Executive may have relating to or arising out of this Agreement and the termination thereof and any and all claims Executive may have arising under any statute, ordinance or regulation or under common law. Executive
expressly acknowledges and agrees that, except for whatever claim Executive may have to Severance Pay, Executive shall not have any claim for damages or other relief of any sort relating to or arising out of Executives employment or
termination of employment by Employer or relating to or arising out of this Agreement and the termination thereof.
(i) Upon
termination of employment with Employer for any reason, Executive shall promptly deliver to Employer all writings, records, data, memoranda, contracts, orders, sales literature, price lists, client lists, data processing materials, and other
documents, whether or not obtained from Employer, Wintrust or any Affiliate, which pertain to or were used by Executive in connection with Executives employment by Employer or which pertain to Wintrust or any other Affiliate, including, but
not limited to, Confidential Information, as well as any automobiles, computers or other equipment which were purchased or leased by Employer for Executive.
10.
Resolution of Disputes
. Except as otherwise provided herein, any disputes arising under or in connection with this Agreement or in any way arising out of, relating to or associated with the
Executives employment with Employer or the termination of such employment (
Claims
), that Executive may have against Employer, Wintrust or any Affiliate of Wintrust, or the officers, directors, employees or agents of
Employer, Wintrust, or any Affiliate of Wintrust in their capacity as such or otherwise, or that Employer, Wintrust, or any Affiliate of Wintrust may have against Executive, shall be resolved by binding arbitration, to be held in Chicago, Illinois,
in accordance with the rules and procedures of the National Rules for the Resolution of Employment Disputes of the American Arbitration Association (
AAA
) and the parties hereby agree to expedite such arbitration proceedings to the
extent permitted by AAA. Judgment upon the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof. The Claims covered by this Agreement include, but are not limited to: claims for wages or other compensation due;
claims for breach of any contract or covenant, express or implied; tort claims; claims for discrimination, including but not limited to discrimination based on race, sex, sexual orientation, religion, national origin, age, marital status, handicap,
disability or medical condition or harassment on any of the foregoing bases; claims for benefits, except as excluded in the following paragraph; and claims for violation of any federal, state or other governmental constitution, statute, ordinance,
regulation, or public policy. The Claims covered by this Agreement do not include claims for workers compensation benefits or compensation; claims for unemployment compensation benefits; claims based upon an employee pension or benefit plan,
the terms of which contain an arbitration or other non-judicial resolution procedure, in which case the provisions of such plan shall apply; and claims made by either Employer or the Executive for injunctive and/or other equitable relief regarding
the covenants set forth in Sections 3, 4, 5 and 6 of this Agreement. Each party shall initially bear their own costs of the arbitration or litigation, except that, if Employer is found to have violated any material terms of this Agreement, Employer
shall reimburse Executive for the entire amount of reasonable attorneys fees incurred by Executive as a result of the dispute hereunder in addition to the payment of any damages awarded to Executive.
11.
General Provisions
.
(a) All provisions of this Agreement are intended to be interpreted and construed in a manner to make such provisions valid, legal, and enforceable. To the extent that any Section of this Agreement or any
word, phrase, clause, or sentence hereof shall be deemed by any court to be illegal or unenforceable, such word, clause,
10
phrase, sentence, or Section shall be deemed modified, restricted, or omitted to the extent necessary to make this Agreement enforceable. Without limiting the generality of the foregoing, if the
scope of any covenant in this Agreement is too broad to permit enforcement to its full extent, such covenant shall be enforced to the maximum extent provided by law; and Executive agrees that such scope may be judicially modified accordingly.
(b) This Agreement may be assigned by Employer. This Agreement and the covenants set forth herein shall inure to the benefit
of and shall be binding upon the successors and assigns of Employer and Wintrust.
(c) This Agreement may not be assigned by
Executive, but shall be binding upon Executives executors, administrators, heirs, and legal representatives.
(d) No
waiver by either party of any breach by the other party of any of the obligations, covenants, or representations under this Agreement shall constitute a waiver of any prior or subsequent breach.
(e) Where in this Agreement the masculine gender is used, it shall include the feminine if the sense so requires.
(f) Employer may withhold from any payment that it is required to make under this Agreement amounts sufficient to satisfy applicable
withholding requirements under any federal, state, or local law.
(g) This instrument constitutes the entire agreement of the
parties with respect to its subject matter. This Agreement may not be changed or amended orally but only by an agreement in writing, signed by the party against whom enforcement of any waiver, change, modification, extension, or discharge is sought.
Any other understandings and agreements, oral or written, respecting the subject matter hereof are hereby superseded and canceled.
(h) The provisions of Sections 4, 5, 6, 7, 9(g), 9(h), 10, 11, and 12 of this Agreement shall survive the termination of Executives employment with Employer and the expiration or termination of this
Agreement;
provided
,
however
, that in the event the Merger Agreement is terminated for any reason without the Closing (as defined in the Merger Agreement) of the merger contemplated thereby, this Agreement shall simultaneously
terminate without further obligation or liability on the part of any party hereto and no provisions of this Agreement shall survive such termination.
12.
Governing Law
. The parties agree that this Agreement shall be construed and governed by the laws of the State of Illinois, excepting its conflict of laws principles. Further, the parties
acknowledge and specifically agree to the jurisdiction of the courts of the State of Illinois in the event of any dispute regarding Sections 3, 4, 5, or 6 of this Agreement.
13.
Notice of Termination
. Subject to the provisions of Section 8, in the event that Employer desires to terminate the employment of the Executive during the Term of this Agreement, Employer
shall deliver to Executive a written notice of termination, stating whether the termination constitutes a termination in accordance with Section 9(b), 9(d), or 9(f). In the event that Executive determines in good faith that Executive has
experienced a Constructive Termination under Section 9(c) or 9(d), Executive shall deliver to Employer a written notice stating the circumstances that constitute such Constructive Termination not later than 90 days after the initial existence
of such circumstances and Employer shall have 30 days after receipt of such notice to remedy the circumstances that constitute Constructive Termination. In the event that the Executive desires to effect a voluntary termination of Executives
employment in accordance with Section 9(e), Executive shall deliver a written notice of such voluntary termination to Employer.
14.
Section 409A
. This Agreement is intended to comply with the requirements of Section 409A of the Code, and shall be interpreted and construed consistently with such intent. The
payments to Executive pursuant to this Agreement are also intended to be exempt from Section 409A of the Code to the maximum extent
11
possible, under either the separation pay exemption pursuant to Treasury regulation §1.409A-1(b)(9)(iii) or as short-term deferrals pursuant to Treasury regulation §1.409A-1(b)(4), and
for purposes of the separation pay exemption, each installment paid to Executive under this Agreement shall be considered a separate payment. In the event the terms of this Agreement would subject Executive to taxes or penalties under
Section 409A of the Code (
409A Penalties
), Employer and Executive shall cooperate diligently to amend the terms of the Agreement to avoid such 409A Penalties, to the extent possible;
provided
that in no event shall
Employer be responsible for any 409A Penalties that arise in connection with any amounts payable under this Agreement. To the extent any amounts under this Agreement are payable by reference to Executives termination of employment
such term and similar terms shall be deemed to refer to Executives separation from service, within the meaning of Section 409A of the Code. Notwithstanding any other provision in this Agreement, if Executive is a
specified employee, as defined in Section 409A of the Code, as of the date of Executives separation from service, then to the extent any amount payable under this Agreement (i) constitutes the payment of nonqualified
deferred compensation, within the meaning of Section 409A of the Code, (ii) is payable upon Executives separation from service and (iii) under the terms of this Agreement would be payable prior to the six-month anniversary of
Executives separation from service, such payment shall be delayed until the earlier to occur of (a) the six-month anniversary of the separation from service or (b) the date of Executives death. Any reimbursement payable to
Executive pursuant to this Agreement shall be conditioned on the submission by Executive of all expense reports reasonably required by Employer under any applicable expense reimbursement policy, and shall be paid to Executive within 30 days
following receipt of such expense reports, but in no event later than the last day of the calendar year following the calendar year in which Executive incurred the reimbursable expense. Any amount of expenses eligible for reimbursement, or in-kind
benefit provided, during a calendar year shall not affect the amount of expenses eligible for reimbursement, or in-kind benefit to be provided, during any other calendar year. The right to any reimbursement or in-kind benefit pursuant to this
Agreement shall not be subject to liquidation or exchange for any other benefit.
12
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of the date
written opposite their signatures.
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HYDE PARK BANK AND TRUST COMPANY
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By:
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Name:
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Title:
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EXECUTIVE
13
EXHIBIT A
Advanced Investment Partners, LLC
Barrington Bank & Trust Company, N.A.
Beverly Bank & Trust Company, N.A.
Crystal Lake Bank & Trust Company, N.A.
First Insurance Funding of Canada
First
Insurance Funding Corporation
Great Lakes Advisors Holdings LLC
Hinsdale Bank & Trust Company
Lake Forest Bank & Trust Company
Libertyville Bank & Trust Company
North Shore Community Bank & Trust
Northbrook Bank & Trust Company
Old
Plank Trail Community Bank, N.A.
Schaumburg Bank & Trust Company, N.A.
St. Charles Bank & Trust Company
State Bank of the Lakes
The Chicago Trust Company, N.A.
Town Bank
Tricom, Inc. of Milwaukee
Village
Bank & Trust
Wayne Hummer Investments, L.L.C.
Wheaton Bank & Trust Company
Wintrust Information Technology Services Company
14
Schedule A - Compensation
1.
Annual Base Salary
. You shall be compensated at an annual rate of $
.
2.
Incentive Bonus.
(a) Your Incentive Bonus shall have an expected target award opportunity of up to
percent (
%) of your Annual Base Salary, subject to the discretion of the Compensation
Committee of Wintrusts Board of Directors as set forth in this Agreement.
(b) For the period from the Effective Date of
this Agreement until March 1, 2014, for purposes of any payment under Section 9 hereof, the target Incentive Bonus shall be $
.
(c) For the period from March 1, 2014 and thereafter, for purposes of any payment under Section 9 hereof, the
target Incentive Bonus shall be an amount equal to any annual incentive compensation paid to Executive during the twelve month period prior to termination under Wintrusts bonus plan applicable to the Executive, as certified by the Compensation
Committee of Wintrusts Board of Directors.
3.
Auto Allowance
. You shall receive an auto allowance paid on a monthly basis in
accordance with the Employers auto allowance policy (currently, the auto allowance is $1,000 per month).
Exhibit F
Form of Opinion of Wintrust Counsel
(a) Wintrust is duly registered as a financial holding company under the Bank Holding Company Act of 1956, as amended, and is a corporation validly existing and in good standing under the laws of the
State of Illinois.
(b) Wintrust has the corporate power and authority to execute, deliver and perform its obligations under
the Merger Agreement, and the execution, delivery and performance thereof by Wintrust have been duly authorized by all necessary corporate action on the part of Wintrust.
(c) Wintrust BHC Merger Co. is a corporation validly existing and in good standing under the laws of the State of Delaware.
(d) Wintrust BHC Merger Co. has the corporate power and authority to execute, deliver and perform its obligations under the Merger Agreement, and the execution, delivery and performance thereof by
Wintrust BHC Merger Co. have been duly authorized by all necessary company action on the part of Wintrust BHC Merger Co.
(e)
The Merger Agreement has been duly executed and delivered by each of Wintrust and Wintrust BHC Merger Co. and constitutes the legal, valid and binding obligation of Wintrust and Wintrust BHC Merger Co., enforceable against Wintrust and Wintrust BHC
Merger Co. in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors generally and to general principles of equity.
(f) The execution and delivery by Wintrust and Wintrust BHC Merger Co. of the Merger Agreement do not, and the performance by Wintrust
and Wintrust BHC Merger Co. of their respective obligations under the Merger Agreement will not, (i) violate or conflict with the articles or certificate of incorporation or by-laws of Wintrust or Wintrust BHC Merger Co., (ii) violate any
law, rule or regulation applicable to Wintrust or Wintrust BHC Merger Co., (iii) violate any judgment, injunction, order or decree which is listed on the Officers Certificate of Wintrust attached to this opinion letter or (iv) breach
or result in a default under any indenture, mortgage, instrument or agreement which is filed as an Exhibit to Wintrusts latest Annual Report on Form 10-K or to any subsequent Quarterly Report on Form 10-Q or otherwise listed on the
Officers Certificate of Wintrust attached to this opinion letter.
(g) Neither the execution and delivery by Wintrust or
Wintrust BHC Merger Co. of the Merger Agreement nor the performance by Wintrust or Wintrust BHC Merger Co. of its obligations under the Merger Agreement requires any consent or approval from or filing or registration with any Governmental Authority
(as such term is defined in the Merger Agreement), except such as have been obtained or made pursuant to the Merger Agreement.
(h) The shares of Wintrust Common Stock to be issued to the shareholders of HPK Financial Corporation at Closing have been duly
authorized and, when issued in accordance with the Merger Agreement, will be validly issued, fully paid and non-assessable.
In rendering its
opinion, such counsel may rely as to matters of fact upon such certificates of the officers of Wintrust, Wintrust BHC Merger Co., or governmental officials as such counsel deems appropriate.
Annex B
SECTION 262 OF THE GENERAL CORPORATION LAW OF THE STATE OF DELAWARE
§ 262. Appraisal rights.
(a) Any stockholder of a corporation of this State
who holds shares of stock on the date of the making of a demand pursuant to subsection (d) of this section with respect to such shares, who continuously holds such shares through the effective date of the merger or consolidation, who has
otherwise complied with subsection (d) of this section and who has neither voted in favor of the merger or consolidation nor consented thereto in writing pursuant to § 228 of this title shall be entitled to an appraisal by the Court of
Chancery of the fair value of the stockholders shares of stock under the circumstances described in subsections (b) and (c) of this section. As used in this section, the word stockholder means a holder of record of stock
in a corporation; the words stock and share mean and include what is ordinarily meant by those words; and the words depository receipt mean a receipt or other instrument issued by a depository representing an
interest in 1 or more shares, or fractions thereof, solely of stock of a corporation, which stock is deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or series of stock of a constituent corporation in a merger or consolidation to be effected pursuant to § 251 (other than a merger
effected pursuant to § 251(g) of this title), § 252, § 254, § 255, § 256, § 257, § 258, § 263 or § 264 of this title:
(1) Provided, however, that no appraisal rights under this section shall be available for the shares of any class or series of stock, which stock, or depository receipts in respect thereof, at the record
date fixed to determine the stockholders entitled to receive notice of the meeting of stockholders to act upon the agreement of merger or consolidation, were either (i) listed on a national securities exchange or (ii) held of record by
more than 2,000 holders; and further provided that no appraisal rights shall be available for any shares of stock of the constituent corporation surviving a merger if the merger did not require for its approval the vote of the stockholders of the
surviving corporation as provided in § 251(f) of this title.
(2) Notwithstanding paragraph (b)(1) of this section,
appraisal rights under this section shall be available for the shares of any class or series of stock of a constituent corporation if the holders thereof are required by the terms of an agreement of merger or consolidation pursuant to §§
251, 252, 254, 255, 256, 257, 258, 263 and 264 of this title to accept for such stock anything except:
a. Shares of stock of
the corporation surviving or resulting from such merger or consolidation, or depository receipts in respect thereof;
b.
Shares of stock of any other corporation, or depository receipts in respect thereof, which shares of stock (or depository receipts in respect thereof) or depository receipts at the effective date of the merger or consolidation will be either listed
on a national securities exchange or held of record by more than 2,000 holders;
c. Cash in lieu of fractional shares or
fractional depository receipts described in the foregoing paragraphs (b)(2)a. and b. of this section; or
d. Any combination
of the shares of stock, depository receipts and cash in lieu of fractional shares or fractional depository receipts described in the foregoing paragraphs (b)(2)a., b. and c. of this section.
(3) In the event all of the stock of a subsidiary Delaware corporation party to a merger effected under § 253 or § 267 of this
title is not owned by the parent immediately prior to the merger, appraisal rights shall be available for the shares of the subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of incorporation that appraisal rights under this section shall be available for the shares of any class or series of its stock as a result of an
amendment to its certificate of incorporation, any merger or consolidation in which the corporation is a constituent corporation or the sale of all
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or substantially all of the assets of the corporation. If the certificate of incorporation contains such a provision, the procedures of this section, including those set forth in subsections
(d) and (e) of this section, shall apply as nearly as is practicable.
(d) Appraisal rights shall be perfected as
follows:
(1) If a proposed merger or consolidation for which appraisal rights are provided under this section is to be
submitted for approval at a meeting of stockholders, the corporation, not less than 20 days prior to the meeting, shall notify each of its stockholders who was such on the record date for notice of such meeting (or such members who received notice
in accordance with § 255(c) of this title) with respect to shares for which appraisal rights are available pursuant to subsection (b) or (c) of this section that appraisal rights are available for any or all of the shares of the
constituent corporations, and shall include in such notice a copy of this section and, if 1 of the constituent corporations is a nonstock corporation, a copy of § 114 of this title. Each stockholder electing to demand the appraisal of such
stockholders shares shall deliver to the corporation, before the taking of the vote on the merger or consolidation, a written demand for appraisal of such stockholders shares. Such demand will be sufficient if it reasonably informs the
corporation of the identity of the stockholder and that the stockholder intends thereby to demand the appraisal of such stockholders shares. A proxy or vote against the merger or consolidation shall not constitute such a demand. A stockholder
electing to take such action must do so by a separate written demand as herein provided. Within 10 days after the effective date of such merger or consolidation, the surviving or resulting corporation shall notify each stockholder of each
constituent corporation who has complied with this subsection and has not voted in favor of or consented to the merger or consolidation of the date that the merger or consolidation has become effective; or
(2) If the merger or consolidation was approved pursuant to § 228, § 253, or § 267 of this title, then either a
constituent corporation before the effective date of the merger or consolidation or the surviving or resulting corporation within 10 days thereafter shall notify each of the holders of any class or series of stock of such constituent corporation who
are entitled to appraisal rights of the approval of the merger or consolidation and that appraisal rights are available for any or all shares of such class or series of stock of such constituent corporation, and shall include in such notice a copy
of this section and, if 1 of the constituent corporations is a nonstock corporation, a copy of § 114 of this title. Such notice may, and, if given on or after the effective date of the merger or consolidation, shall, also notify such
stockholders of the effective date of the merger or consolidation. Any stockholder entitled to appraisal rights may, within 20 days after the date of mailing of such notice, demand in writing from the surviving or resulting corporation the appraisal
of such holders shares. Such demand will be sufficient if it reasonably informs the corporation of the identity of the stockholder and that the stockholder intends thereby to demand the appraisal of such holders shares. If such notice
did not notify stockholders of the effective date of the merger or consolidation, either (i) each such constituent corporation shall send a second notice before the effective date of the merger or consolidation notifying each of the holders of
any class or series of stock of such constituent corporation that are entitled to appraisal rights of the effective date of the merger or consolidation or (ii) the surviving or resulting corporation shall send such a second notice to all such
holders on or within 10 days after such effective date; provided, however, that if such second notice is sent more than 20 days following the sending of the first notice, such second notice need only be sent to each stockholder who is entitled to
appraisal rights and who has demanded appraisal of such holders shares in accordance with this subsection. An affidavit of the secretary or assistant secretary or of the transfer agent of the corporation that is required to give either notice
that such notice has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein. For purposes of determining the stockholders entitled to receive either notice, each constituent corporation may fix, in advance, a
record date that shall be not more than 10 days prior to the date the notice is given, provided, that if the notice is given on or after the effective date of the merger or consolidation, the record date shall be such effective date. If no record
date is fixed and the notice is given prior to the effective date, the record date shall be the close of business on the day next preceding the day on which the notice is given.
(e) Within 120 days after the effective date of the merger or consolidation, the surviving or resulting corporation or any stockholder
who has complied with subsections (a) and (d) of this section hereof and who is
B-2
otherwise entitled to appraisal rights, may commence an appraisal proceeding by filing a petition in the Court of Chancery demanding a determination of the value of the stock of all such
stockholders. Notwithstanding the foregoing, at any time within 60 days after the effective date of the merger or consolidation, any stockholder who has not commenced an appraisal proceeding or joined that proceeding as a named party shall have the
right to withdraw such stockholders demand for appraisal and to accept the terms offered upon the merger or consolidation. Within 120 days after the effective date of the merger or consolidation, any stockholder who has complied with the
requirements of subsections (a) and (d) of this section hereof, upon written request, shall be entitled to receive from the corporation surviving the merger or resulting from the consolidation a statement setting forth the aggregate number
of shares not voted in favor of the merger or consolidation and with respect to which demands for appraisal have been received and the aggregate number of holders of such shares. Such written statement shall be mailed to the stockholder within 10
days after such stockholders written request for such a statement is received by the surviving or resulting corporation or within 10 days after expiration of the period for delivery of demands for appraisal under subsection (d) of this
section hereof, whichever is later. Notwithstanding subsection (a) of this section, a person who is the beneficial owner of shares of such stock held either in a voting trust or by a nominee on behalf of such person may, in such persons
own name, file a petition or request from the corporation the statement described in this subsection.
(f) Upon the filing of
any such petition by a stockholder, service of a copy thereof shall be made upon the surviving or resulting corporation, which shall within 20 days after such service file in the office of the Register in Chancery in which the petition was filed a
duly verified list containing the names and addresses of all stockholders who have demanded payment for their shares and with whom agreements as to the value of their shares have not been reached by the surviving or resulting corporation. If the
petition shall be filed by the surviving or resulting corporation, the petition shall be accompanied by such a duly verified list. The Register in Chancery, if so ordered by the Court, shall give notice of the time and place fixed for the hearing of
such petition by registered or certified mail to the surviving or resulting corporation and to the stockholders shown on the list at the addresses therein stated. Such notice shall also be given by 1 or more publications at least 1 week before the
day of the hearing, in a newspaper of general circulation published in the City of Wilmington, Delaware or such publication as the Court deems advisable. The forms of the notices by mail and by publication shall be approved by the Court, and the
costs thereof shall be borne by the surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall
determine the stockholders who have complied with this section and who have become entitled to appraisal rights. The Court may require the stockholders who have demanded an appraisal for their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery for notation thereon of the pendency of the appraisal proceedings; and if any stockholder fails to comply with such direction, the Court may dismiss the proceedings as to such
stockholder.
(h) After the Court determines the stockholders entitled to an appraisal, the appraisal proceeding shall be
conducted in accordance with the rules of the Court of Chancery, including any rules specifically governing appraisal proceedings. Through such proceeding the Court shall determine the fair value of the shares exclusive of any element of value
arising from the accomplishment or expectation of the merger or consolidation, together with interest, if any, to be paid upon the amount determined to be the fair value. In determining such fair value, the Court shall take into account all relevant
factors. Unless the Court in its discretion determines otherwise for good cause shown, interest from the effective date of the merger through the date of payment of the judgment shall be compounded quarterly and shall accrue at 5% over the Federal
Reserve discount rate (including any surcharge) as established from time to time during the period between the effective date of the merger and the date of payment of the judgment. Upon application by the surviving or resulting corporation or by any
stockholder entitled to participate in the appraisal proceeding, the Court may, in its discretion, proceed to trial upon the appraisal prior to the final determination of the stockholders entitled to an appraisal. Any stockholder whose name appears
on the list filed by the surviving or resulting corporation pursuant to subsection (f) of this section and who has submitted such stockholders certificates of stock to the Register in Chancery, if such is required, may participate fully
in all proceedings until it is finally determined that such stockholder is not entitled to appraisal rights under this section.
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(i) The Court shall direct the payment of the fair value of the shares, together with
interest, if any, by the surviving or resulting corporation to the stockholders entitled thereto. Payment shall be so made to each such stockholder, in the case of holders of uncertificated stock forthwith, and the case of holders of shares
represented by certificates upon the surrender to the corporation of the certificates representing such stock. The Courts decree may be enforced as other decrees in the Court of Chancery may be enforced, whether such surviving or resulting
corporation be a corporation of this State or of any state.
(j) The costs of the proceeding may be determined by the Court
and taxed upon the parties as the Court deems equitable in the circumstances. Upon application of a stockholder, the Court may order all or a portion of the expenses incurred by any stockholder in connection with the appraisal proceeding, including,
without limitation, reasonable attorneys fees and the fees and expenses of experts, to be charged pro rata against the value of all the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no stockholder who has demanded appraisal rights as provided in subsection (d) of this section shall be entitled to vote such
stock for any purpose or to receive payment of dividends or other distributions on the stock (except dividends or other distributions payable to stockholders of record at a date which is prior to the effective date of the merger or consolidation);
provided, however, that if no petition for an appraisal shall be filed within the time provided in subsection (e) of this section, or if such stockholder shall deliver to the surviving or resulting corporation a written withdrawal of such
stockholders demand for an appraisal and an acceptance of the merger or consolidation, either within 60 days after the effective date of the merger or consolidation as provided in subsection (e) of this section or thereafter with the
written approval of the corporation, then the right of such stockholder to an appraisal shall cease. Notwithstanding the foregoing, no appraisal proceeding in the Court of Chancery shall be dismissed as to any stockholder without the approval of the
Court, and such approval may be conditioned upon such terms as the Court deems just; provided, however that this provision shall not affect the right of any stockholder who has not commenced an appraisal proceeding or joined that proceeding as a
named party to withdraw such stockholders demand for appraisal and to accept the terms offered upon the merger or consolidation within 60 days after the effective date of the merger or consolidation, as set forth in subsection (e) of this
section.
(l) The shares of the surviving or resulting corporation to which the shares of such objecting stockholders would
have been converted had they assented to the merger or consolidation shall have the status of authorized and unissued shares of the surviving or resulting corporation.
B-4
Annex C
F
ORM
OF
V
OTING
A
GREEMENT
T
HIS
A
GREEMENT
(
Agreement
) is made and entered into as of the
18
th
day of September, 2012, by and between the
undersigned stockholders (each, a
Stockholder,
and collectively, the
Stockholders
) of HPK F
INANCIAL
C
ORPORATION
, a Delaware corporation (the
C
OMPANY
), and W
INTRUST
F
INANCIAL
C
ORPORATION
, an Illinois corporation (
W
INTRUST
).
W
ITNESSETH
:
W
HEREAS
, the Company and Wintrust, together with Wintrusts wholly owned subsidiary Wintrust BHC Merger Co., have entered into an Agreement and Plan of Merger dated as of the date
hereof (the
Merger Agreement
) (capitalized terms used but not defined in this Agreement shall have the meanings given them in the Merger Agreement);
W
HEREAS
, it is a condition precedent to Wintrusts obligations under the Merger Agreement that each of the Stockholders shall have executed and delivered this Agreement, solely in
their capacities as stockholders of the Company; and
W
HEREAS
, each Stockholder owns and is entitled to vote
the number of issued and outstanding shares of common stock of the Company (the
Company Common Shares
) set forth opposite such Stockholders name on Schedule 1 attached hereto and has agreed to vote such
Stockholders Company Common Shares pursuant to the terms set forth in this Agreement.
N
OW
,
T
HEREFORE
, in consideration of the premises and the respective representations, warranties, covenants and agreements set forth herein, the Stockholders and Wintrust hereby agree as follows:
Section 1. Voting of Shares
.
Each Stockholder hereby agrees that at any meeting of the stockholders of the Company and
in any action by written consent of the stockholders of the Company, such Stockholder shall vote the Company Common Shares which such Stockholder owns and is entitled to vote (a) in favor of the transactions contemplated by the Merger
Agreement, (b) against any action or agreement which would result in a breach of any term of, or any other obligation of the Company under, the Merger Agreement, and (c) against any action or agreement which would impede, interfere with or
attempt to discourage the transactions contemplated by the Merger Agreement;
provided
,
however
, that nothing in this Agreement shall prevent a Stockholder who may also serve as a director of the Company from discharging his or her
fiduciary duties to the Company. Each Stockholder agrees that the Company shall be authorized to include in any proxy or material transmitted to stockholders of the Company, a statement to the effect that the Stockholder is a party to this Agreement
and has committed to vote in favor of the transactions contemplated by the Merger Agreement.
Section 2. Term of
Agreement
. This Agreement shall be effective from the date hereof and shall terminate and be of no further force and effect upon the earlier of (i) the Effective Time (as defined in the Merger Agreement), or (ii) the termination of the
Merger Agreement in accordance with its terms, which includes termination in the event the Company Board determines that its fiduciary duties require it to accept an unsolicited Acquisition Proposal from a third party pursuant to Section 4.12
of the Merger Agreement.
Section 3. Covenants of Stockholders
. Each Stockholder agrees not to: except to the
extent contained in this Agreement, grant any proxies, deposit any Company Common Shares into a voting trust or enter into a voting agreement with respect to any Company Common Shares; or without the prior written approval of Wintrust, solicit,
initiate or encourage any inquiries or proposals for a merger or other business combination involving the Company.
Section 4. Representations and Warranties of Stockholders
. Each Stockholder represents and warrants to Wintrust as follows:
(a) such Stockholder owns, and is entitled to vote in accordance with such Stockholders
C-1
commitments under this Agreement, the number of Company Common Shares set forth opposite his or her name on Schedule 1 hereto, and does not own or have any right to acquire any Company Common
Shares not listed on Schedule 1; (b) such Stockholder has the right, power and authority to execute, deliver and perform under this Agreement; such execution, delivery and performance will not violate, or require any consent, approval, or
notice under any provision of law or result in the breach of any outstanding agreements or instruments to which such Stockholder is a party or is subject; and this Agreement has been duly executed and delivered by such Stockholder and constitutes a
legal, valid and binding agreement of such Stockholder, enforceable in accordance with its terms; (c) except as set forth in the next sentence, such Stockholders Company Common Shares listed as owned on Schedule 1 hereto are now and will
remain owned by such Stockholder, free and clear of all voting trusts, voting agreements, proxies, liens, claims, liabilities, security interests, marital property rights or any other encumbrances whatsoever (other than (i) pledges for loans
entered into in the ordinary course and (ii) rights of Wintrust and encumbrances respecting such Company Common Shares created pursuant to this Agreement or the Merger Agreement); and (d) other than this Agreement and the Merger Agreement,
there are no outstanding options, warrants or rights to purchase or acquire, or agreements related to, such Stockholders Company Common Shares. Notwithstanding anything contained in this Agreement to the contrary, at any time prior to the
Closing, each Stockholder shall be permitted to transfer ownership and voting rights of up to an aggregate of two percent (2%) of such Stockholders Company Common Shares listed as owned on Schedule 1 to a family member of such Stockholder
without obtaining Wintrusts prior consent or approval of such transfer. For purposes of the preceding sentence, family member shall mean any child, step-child, grandchild, parent, step-parent, grandparent, spouse, sibling, nephew,
niece, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law and shall include adoptive relationships.
Section 5. Representations and Warranties of Wintrust
. Wintrust has the right, power and authority to execute and deliver this Agreement; such execution and delivery will not violate, or
require any consent, approval, or notice under any provision of law or result in the breach of any outstanding agreements or instruments to which Wintrust is a party or is subject; and this Agreement has been duly executed and delivered by Wintrust
and constitutes a legal, valid and binding agreement of Wintrust, enforceable in accordance with its terms.
Section 6. Transferability
. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any of the parties hereto (whether by operation of law or otherwise) without the prior written consent of the other parties, except that Wintrust may assign this Agreement to a direct or indirect wholly-owned subsidiary or affiliate of
Wintrust,
provided
that no such assignment shall relieve Wintrust of its obligations hereunder.
Section 7.
Specific Performance
. The parties hereto agree that irreparable damage would occur in the event that any of the provisions of this Agreement was not performed by any of the Stockholders in accordance with its specific terms or was otherwise
breached. It is accordingly agreed that Wintrust shall be entitled to injunctive relief to prevent breaches of this Agreement by the Stockholders and to enforce specifically the terms and provisions hereof in addition to any other remedy to which
Wintrust is entitled at law or in equity.
Section 8. Further Assurances
. Each Stockholder agrees to execute and
deliver all such further documents and instruments and take all such further action as may be necessary or appropriate in order to consummate the transactions contemplated hereby.
Section 9. Entire Agreement and Amendment.
(a) Except for the Merger Agreement and its ancillary agreements and
instruments, this Agreement contains the entire agreement between the parties hereto with respect to the transactions contemplated hereunder and supersedes all prior arrangements or understandings with respect hereto.
(b) This Agreement may not be modified, amended, altered or supplemented except upon the execution and delivery of a written agreement
executed by the parties hereto.
C-2
Section 10. Notices
. Each notice, demand or other communication which may be or
is required to be given under this Agreement shall be in writing and shall be deemed to have been properly given when delivered personally at the address set forth herein for Wintrust or the address on Schedule 1 for each of the Stockholders,
when sent by facsimile or other electronic transmission to the respective facsimile transmission numbers of the parties with telephone confirmation of receipt, or the day after sending by recognized overnight courier or if by the United States
registered or certified mail, return receipt requested, postage prepaid two days after deposit therein.
Section 11.
General Provisions
. This Agreement shall be governed by the laws of the State of Illinois. This Agreement may be executed in counterparts, each of which shall be deemed to be an original. Headings are for convenience only and shall not affect
the meaning of this Agreement. Any term of this Agreement which is invalid or unenforceable shall be ineffective only to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms of this
Agreement.
[S
IGNATURE
P
AGE
F
OLLOWS
]
C-3
I
N
W
ITNESS
W
HEREOF
, the parties hereto have
executed this Agreement as of the day and year first above written.
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W
INTRUST
F
INANCIAL
C
ORPORATION
, an Illinois
Corporation:
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By:
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Its:
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Address for Notices:
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With a copy to
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Wintrust Financial Corporation
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Matthew G. Galo
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9700 W. Higgins Road, Suite 800
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Schiff Hardin LLP
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Rosemont, Illinois 60018
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233 S. Wacker Drive, Suite 6600
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Attn:
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Lisa J. Pattis
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Chicago, Illinois 60606-6473
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Executive Vice President and General Counsel
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S
TOCKHOLDERS
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C-4
S
CHEDULE
1
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N
AME
, A
DDRESS
AND
F
ACSIMILE
N
UMBER
OF
S
TOCKHOLDER
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N
UMBER
OF
C
OMPANY
C
OMMON
S
HARES
O
WNED
BY
S
TOCKHOLDER
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N
UMBER
OF
C
OMPANY
C
OMMON
S
HARES
I
SSUABLE
U
NDER
O
PTIONS
H
ELD
BY
S
TOCKHOLDER
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C-5