AGREEMENT AND PLAN OF MERGER dated as of March 26, 2021 by and between PEOPLES BANCORP INC. and Premier Financial Bancorp, Inc.
dated as of
March 26, 2021
by and between
and
Premier Financial Bancorp, Inc.
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TABLE OF CONTENTS
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EXHIBIT A Form of Support Agreement
EXHIBIT B Form of Bank Merger Agreement (Citizens)
EXHIBIT C Form of Bank Merger Agreement (Premier)
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THIS AGREEMENT AND PLAN OF MERGER, dated as of March 26, 2021 (this “Agreement”), by and between Peoples Bancorp Inc., an Ohio corporation (“Peoples”), and Premier Financial Bancorp, Inc., a Kentucky corporation (“Premier Financial”).
WITNESSETH
WHEREAS, Peoples is a registered financial holding company under the Bank Holding Company Act of 1956, as amended (“BHCA”) and owns all of the outstanding shares of Peoples Bank, an Ohio chartered commercial bank (“Peoples Bank”);
WHEREAS, Premier Financial is a registered financial holding company under the BHCA and owns all of the outstanding shares of Citizens Deposit Bank and Trust, Inc., a Kentucky banking corporation (“Citizens Bank”), and Premier Bank, Inc., a West Virginia corporation (“Premier Bank”);
WHEREAS, the Boards of Directors of Peoples and Premier Financial believe that the merger of Premier Financial with and into Peoples, followed by the subsidiary bank mergers of Citizens Bank and Premier Bank with and into Peoples Bank, each in accordance with the terms and subject to the conditions of this Agreement, would be in the best interests of the shareholders of Peoples and Premier Financial;
WHEREAS, the Boards of Directors of Peoples and Premier Financial have each approved this Agreement and the transactions contemplated hereby;
WHEREAS the parties intend this merger to qualify as a “reorganization” within the meaning of Section 368(a)(1)(A) of the Internal Revenue Code of 1986, as amended (the “Code”), and that this Agreement is intended to be and is adopted as a “plan of reorganization” for purposes of Sections 354 and 361 of the Code;
WHEREAS, as an inducement for Peoples to enter into this Agreement, certain directors and officers of Premier Financial have entered into Support Agreements with Peoples (the “Support Agreements”), each dated as of the date of this Agreement, in the form attached to this Agreement as Exhibit A, pursuant to which such directors and officers have agreed, among other matters, to vote all of the shares of Premier Financial Common Stock beneficially owned by such individuals in favor of the Merger upon the terms and subject to the conditions set forth in the Support Agreements; and
WHEREAS, the parties also desire to provide in this Agreement for certain undertakings, conditions, representations, warranties and covenants in connection with the transactions contemplated by this Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual covenants, representations, warranties and agreements contained herein, Peoples and Premier Financial, intending to be legally bound, hereby agree as follows:
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ARTICLE I
Certain Definitions
1.01 Certain Definitions. The following terms are used in this Agreement with the meanings set forth below:
“Acceptance of Superior Proposal” has the meaning set forth in Section 6.06(d).
“Acquisition Proposal” has the meaning set forth in Section 6.06(f)(ii).
“Acquisition Transaction” has the meaning set forth in Section 6.06(f)(iii).
“Affiliate” or “Affiliates” has the meaning set forth in Rule 12b-2 under the Exchange Act.
“Agreement” means this Agreement, as amended or modified from time to time in accordance with Section 9.02.
“Amended Related Party Agreements” has the meaning set forth in Section 6.26.
“Associate” has the meaning set forth in Rule 12b-2 under the Exchange Act.
“Bank Merger Agreements” has the meaning set forth in Section 2.05(b).
“BHCA” has the meaning set forth in the Recitals to this Agreement.
“CARES Act Modified Loan” has the meaning set forth in Section 5.01(u)(vii).
“CARES Act” has the meaning set forth in Section 5.01(u)(vii).
“Centurion” has the meaning set forth in Section 6.24.
“Centurion Divestiture” has the meaning set forth in Section 6.24.
“Chosen Courts” has the meaning set forth in Section 9.06.
“Citizens Bank” has the meaning set forth in the Recitals to this Agreement
“Citizens Bank Merger” has the meaning set forth in Section 2.05(a).
“Citizens Bank Merger Agreement” has the meaning set forth in Section 2.05(a).
“Closing” has the meaning set forth in Section 2.04.
“COBRA” means the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended.
“Code” has the meaning set forth in the Recitals to this Agreement.
“Compensation and Benefit Plans” has the meaning set forth in Section 5.01(l)(i).
“Consultants” has the meaning set forth in Section 5.01(l)(i).
“Data Conversion” has the meaning set forth in Section 6.12.
“Debenture” has the meaning set forth in Section 5.01(b)(iii).
“Determination Date” has the meaning set forth in Section 8.01(g).
“Determination Letter” has the meaning set forth in Section 6.10(c).
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“Directors” has the meaning set forth in Section 5.01(l)(i).
“Dissenting Shares” has the meaning set forth in Section 3.01(d).
“Effective Date” means the date on which the Effective Time occurs.
“Effective Time” means the effective time of the Parent Merger, as provided for in Section 2.03.
“Employees” has the meaning set forth in Section 5.01(l)(i).
“Environmental Laws” means all applicable local, state and federal environmental, health and safety laws and regulations, including, without limitation, the Resource Conservation and Recovery Act, the Comprehensive Environmental Response, Compensation and Liability Act, the Clean Water Act, the Federal Clean Air Act, and the Occupational Safety and Health Act, each as amended, regulations promulgated thereunder, and state counterparts.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
“ERISA Affiliate” has the meaning set forth in Section 5.01(l)(iii).
“ERISA Affiliate Plan” has the meaning set forth in Section 5.01(l)(iii).
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder.
“Exchange Agent” has the meaning set forth in Section 3.02(a).
“Exchange Fund” has the meaning set forth in Section 3.02(a).
“Exchange Ratio” shall mean 0.58.
“FDIA” means the Federal Deposit Insurance Act, as amended.
“FDIC” means the Federal Deposit Insurance Corporation.
“Final Index Price” has the meaning set forth in Section 8.01(g).
“FRB” means the Board of Governors of the Federal Reserve System.
“GAAP” means generally accepted accounting principles in the United States of America, consistently applied.
“Governmental Authority” means any court, arbitration panel, administrative agency or commission or other federal, state or local governmental authority or instrumentality (including, without limitation, any Regulatory Authority).
“Group” has the meaning set forth in Section 13(d) under the Exchange Act.
“Hazardous Materials” means, collectively, (a) any “hazardous substance” as defined by the Comprehensive Environmental Response, Compensation and Liability Act, as amended, and regulations promulgated thereunder, (b) any “hazardous waste” as defined by the Resource Conservation and Recovery Act, as amended through the date hereof, or regulations promulgated thereunder, and (c) any pollutant or contaminant or hazardous, dangerous or toxic
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chemical, material or substance within the meaning of any applicable federal, state or local law relating to or imposing liability or standards of conduct concerning any hazardous, toxic or dangerous waste, substance or material.
“Indenture” has the meaning set forth in Section 5.01(b)(iii).
“Index” has the meaning set forth in Section 8.01(g).
“Index Ratio” has the meaning set forth in Section 8.01(g).
“Information” has the meaning set forth in Section 6.16.
“IRS” has the meaning set forth in Section 5.01(l)(ii).
“Joint Proxy Statement/Prospectus” has the meaning set forth in Section 5.01(d)(i).
“KBCA” means the Kentucky Business Corporation Act, Chapter 271B of the Kentucky Revised Statutes.
“KDFI” means the Kentucky Department of Financial Institutions.
“Knowledge” means, with respect to Peoples, the Knowledge of any officer of Peoples with the title of Chief Executive Officer, President, Executive Vice President of Operations, or Chief Financial Officer, and, with respect to Premier Financial, the Knowledge of any officer of Premier Financial, Citizens Bank or Premier Bank with the title of Chairman, Chief Executive Officer, President, Chief Financial Officer, Chief Operating Officer, Chief Credit Officer, Chief Lending Officer, President of Citizens Bank, Compliance officer for Citizens Bank, the President of Premier Bank, or the Compliance Officer for Premier Bank. An officer of Peoples or Premier Financial shall be deemed to have “Knowledge” of a particular fact or matter if such officer is actually aware of such fact or matter or a prudent individual would be reasonably expected to discover or otherwise become aware of such fact or matter in the course of conducting a reasonably comprehensive investigation concerning the existence of such fact or matter.
“KSS” means Secretary of State of the Commonwealth of Kentucky.
“Lien” means any charge, mortgage, pledge, security interest, restriction, claim, lien, or encumbrance.
“Loan” or “Loans” means any loans, loan commitments, letters of credit, credit facility, credit enhancements or any other extensions of credit (including any amendments, renewals, extensions or modifications thereto).
“Material Adverse Effect” means, with respect to Peoples, or Premier Financial, as the context may require, any effect, change, event, circumstance, condition, occurrence or development that, either individually or in the aggregate (i) has been or would reasonably be likely to be (a) material and adverse to the business, properties, assets, liabilities, results of operations or financial condition of Peoples and its Subsidiaries, taken as a whole, or (b) material and adverse to the business, properties, assets, liabilities, results of operations or financial condition of Premier Financial and its Subsidiaries, taken as a whole, or (ii) would reasonably be likely to materially impair the ability of either Peoples or Premier Financial to perform its
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obligations under this Agreement or otherwise materially threaten or materially impede the consummation of the Merger and the other transactions contemplated by this Agreement; provided, however, that Material Adverse Effect shall not be deemed to include the impact of (a) changes, after the date hereof, in GAAP or applicable bank regulatory accounting requirements; (b) changes, after the date hereof, in laws, rules or regulations (including the Pandemic Measures) of general applicability to companies in the industries in which the party and its Subsidiaries operate, or interpretations thereof by courts or Governmental Authorities; (c) changes, after the date hereof, in global, national or regional political conditions (including the outbreak of war or acts of terrorism) or in economic or market (including equity, credit and debt markets, as well as changes in interest rates) conditions affecting the financial services industry generally and not specifically relating to the party or its Subsidiaries (including any such changes arising out of the Pandemic or any Pandemic Measures); (d) changes, after the date hereof, resulting from hurricanes, earthquakes, tornados, floods or other natural disasters or from any outbreak of any disease or other public health event (including the Pandemic); (e) public disclosure of the execution of this Agreement, or (except in the case of the representations contained in Sections 5.01(c)(ii), 5.01(d), 5.02(d)(ii) and 5.02(e)) consummation of the transactions contemplated hereby (including any effect on a party’s relationships with its customers or employees) or actions expressly required by this Agreement in contemplation of the transactions contemplated hereby; (f) a decline in the trading price of a party’s common stock, in and of itself, or the failure, in and of itself, to meet earnings projections or internal financial forecasts (it being understood that the underlying cause of such decline or failure may be taken into account in determining whether a Material Adverse Effect has occurred), and (g) the occurrence of any natural or man-made disaster; except, with respect to subclauses (a), (b), (c), (d) and (g), to the extent that the effects of the change are materially disproportionately adverse to the business, properties, assets, liabilities, results of operations or financial condition of the party and its Subsidiaries, taken as a whole, as compared to other companies in the industry in which the party and its Subsidiaries operate).
“Material Contracts” has the meaning set forth in Section 5.01(j)(ii).
“Merger” collectively refers to the Parent Merger and the Subsidiary Mergers, as set forth in Sections 2.01 and 2.05.
“Merger Consideration” has the meaning set forth in Section 3.01(a).
“Notifying Party” has the meaning set forth in Section 6.11(a).
“NASDAQ” has the meaning set forth in Section 3.02(b)(v).
“New Certificate” has the meaning set forth in Section 3.02(a).
“Notice Period” has the meaning set forth in Section 6.06(d)(ii).
“Old Certificates” has the meaning set forth in Section 3.01(b).
“OGCL” means the Ohio General Corporation Law.
“OSS” means the Office of the Secretary of State of the State of Ohio.
“Option Cash-Out Amount” has the meaning set forth in Section 3.03(a).
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“Pandemic” means any outbreaks, epidemics or pandemics relating to SARS-CoV-2 or COVID-19, or any evolutions, variants or mutations thereof, or any other viruses (including influenza), and the governmental and other responses thereto.
“Pandemic Measures” means any quarantine, “shelter in place”, “stay at home”, workforce reduction, reduced capacity, social distancing, shut down, closure, sequester or other directives, guidelines, executive orders, mandates or recommendations promulgated by any Governmental Authority, including the Centers for Disease Control and Prevention and the World Health Organization, in each case, in connection with or in response to the Pandemic.
“Parent Merger” has the meaning set forth in Section 2.01(a).
“PBGC” means the Pension Benefit Guaranty Corporation.
“Pension Plan” has the meaning set forth in Section 5.01(l)(ii).
“Peoples” has the meaning set forth in the Preamble to this Agreement.
“Peoples Articles” means the Articles of Incorporation of Peoples, as amended.
“Peoples Bank” has the meaning set forth in the Recitals to this Agreement.
“Peoples Board” means the Board of Directors of Peoples.
“Peoples Board Deferred Compensation Plan” means the Third Amended and Restated Deferred Compensation Plan for Directors of Peoples and its Subsidiaries, as amended.
“Peoples Common Shares” means shares of common stock, without par value, of Peoples.
“Peoples Common Share Closing Price” has the meaning set forth in Section 3.02(b)(v).
“Peoples Disclosure Schedule” has the meaning set forth in Section 5.02.
“Peoples Equity Plan” means the Peoples’ Second Amended and Restated 2006 Equity Plan, as amended.
“Peoples Market Price” has the meaning set forth in Section 8.01(g).
“Peoples Market Value” has the meaning set forth in Section 8.01(g).
“Peoples Meeting” has the meaning set forth in Section 5.01(d)(i).
“Peoples Regulations” means the regulations of Peoples, as amended.
“Peoples’ SEC Reports” has the meaning set forth in Section 5.02(f)(ii).
“Person” means any individual, corporation (including not-for-profit), general or limited partnership, limited liability company, joint venture, estate, trust, association, organization, Governmental Entity or other entity of any kind or nature.
“Phase I” has the meaning set forth in Section 6.19.
“Premier Bank” has the meaning set forth in the Recitals to this Agreement.
“Premier Bank Merger” has the meaning set forth in Section 2.05(b).
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“Premier Bank Merger Agreement” has the meaning set forth in Section 2.05(b).
“Premier Financial” has the meaning set forth in the Preamble to this Agreement.
“Premier Financial 401(k) Plan” has the meaning set forth in Section 6.10(c).
“Premier Financial Articles” means the Amended and Restated Articles of Incorporation of Premier Financial, as amended.
“Premier Financial Board” means the Board of Directors of Premier Financial.
“Premier Financial Bylaws” means the bylaws of Premier Financial, as amended.
“Premier Financial Common Stock” means the shares of common stock, with no par value, of Premier Financial.
“Premier Financial Disclosure Schedule” has the meaning set forth in Section 5.01.
“Premier Financial Group” has the meaning set forth in Section 5.01(p)(vii).
“Premier Financial Insiders” has the meaning set forth in Section 6.20.
“Premier Financial Meeting” has the meaning set forth in Section 5.01(d)(i).
“Premier Financial Options” has the meaning set forth in Section 3.03(a).
“Premier Financial Option Plans” means The Premier Financial Bancorp, Inc 2012 Long Term Incentive Plan and the 2002 Employee Stock Ownership Incentive Plan.
“Premier Financial Preferred Shares” has the meaning set forth in Section 5.01(b)(i).
“Premier Financial Recommendation” has the meaning set forth in in Section 6.02(b).
“Premier Financial Shares” has the meaning set forth in Section 5.01(b)(i).
“Premier Financial’s SEC Reports” has the meaning set forth in Section 5.01(e)(ii).
“Premier Financial’s Territory” means, for purposes of this Agreement, the geographic area comprising the States of West Virginia, Kentucky, Ohio, Virginia, Maryland, and the District of Columbia.
“Premium Cap” has the meaning set forth in Section 6.18(b).
“Registration Statement” has the meaning set forth in Section 5.01(d)(i).
“Regulatory Authorities” or “Regulatory Authority” has the meaning set forth in Section 5.01(h)(i).
“Regulatory Order” has the meaning set forth in Section 5.01(h)(i).
“Related Parties” has the meaning set forth in Section 5.01(bb).
“Related Party Agreements” has the meaning set forth in Section 5.01(bb).
“Related Party Amendments” has the meaning set forth in Section 6.26.
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“Related Party Termination” has the meaning set forth in Section 6.27.
“Representatives” means, with respect to any Person, such Person’s directors, officers, employees, legal or financial advisors or any representatives of such legal or financial advisors.
“Requisite Peoples Vote” has the meaning set forth in Section 5.02(d)(i).
“Requisite Premier Financial Vote” has the meaning set forth in Section 5.01(c)(i).
“Rights” means, with respect to any Person, securities or obligations convertible into or exercisable or exchangeable for, or giving any Person any right to subscribe for or acquire, or any options, calls or commitments relating to, or any stock appreciation right or other instrument the value of which is determined in whole or in part by reference to the market price or value of, shares of capital stock of such Person.
“Xxxxxxxx-Xxxxx Act” has the meaning set forth in Section 5.01(e)(ii).
“SEC” means the United States Securities and Exchange Commission.
“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations thereunder.
“Subsidiary” has the meanings ascribed to it in Section 2(d) of the BHCA.
“Subsidiary Mergers” has the meaning set forth in Section 2.05(b).
“Subsidiary Merger Certificates” has the meaning set forth in Section 2.05(c).
“Superior Proposal” has the meaning set forth in Section 6.06(f)(i).
“Support Agreements” has the meaning set forth in the Recitals to this Agreement.
“Surviving Corporation” has the meaning set forth in Section 2.01(a).
“Takeover Laws” has the meaning set forth in Section 5.01(n).
“Tax” and “Taxes” means all federal, state, local or foreign taxes, charges, fees, levies or other assessments, however denominated, including, without limitation, all net income, gross income, commercial activity, gains, gross receipts, sales, use, ad valorem, goods and services, capital, production, transfer, franchise, windfall profits, license, withholding, payroll, employment, disability, employer health, excise, estimated, severance, stamp, occupation, property, environmental, unemployment and all other taxes, custom duties, fees, assessments or charges of any kind whatsoever, together with any interest and any penalties, additions to tax or additional amounts imposed by any taxing authority whether arising before, on or after the Effective Date and any transferee liability in respect of any such items.
“Tax Returns” means any return, amended return, statement, form, claim for refund or other report (including elections, declarations, disclosures, schedules, estimates and information returns) with respect to any Tax, including any amendments thereof.
“Tail Policy” has the meaning set forth in Section 6.18(b).
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“Termination Fee” has the meaning set forth in Section 8.02(b)(i).
“Terminated Related Party Agreement” has the meaning set forth in Section 6.27.
“Third Party System” has the meaning set forth in Section 5.01(y).
“Treasury” means the United States Department of Treasury.
“Treasury Shares” means Premier Financial Shares held by Premier Financial or any of its Subsidiaries other than in a fiduciary capacity or as a result of debts previously contracted in good faith.
“WVDFI” means the West Virginia Division of Financial Institutions.
ARTICLE II
The Merger
2.01 The Parent Merger.
(a) The Parent Merger. Upon the terms and subject to the conditions of this Agreement, at the Effective Time, Premier Financial shall merge with and into Peoples (the “Parent Merger”), Peoples shall survive the Parent Merger and continue to exist as an Ohio corporation (Peoples, as the surviving corporation in the Parent Merger, is sometimes referred to herein as the “Surviving Corporation”), and the separate corporate existence of Premier Financial shall cease. At the Effective Time:
(i) The Peoples Articles, as in effect immediately prior to the Effective Time, shall be the articles of incorporation of the Surviving Corporation until amended in accordance with the OGCL;
(ii) The Peoples Regulations, as in effect immediately prior to the Effective Time, shall be the regulations of the Surviving Corporation until amended in accordance with the OGCL; and
(iii) Subject to Section 6.25, Each individual serving as a director of Peoples immediately prior to the Effective Time shall remain a director of the Surviving Corporation for the balance of the term for which such individual was elected and shall serve as such until his or her successor is duly elected and qualified in the manner provided for in the Peoples Articles and the Peoples Regulations or as otherwise provided by the OGCL or until his or her earlier death, resignation or removal in the manner provided in the Peoples Articles or the Peoples Regulations or as otherwise provided by the OGCL.
(iii) At and after the Effective Time, each share of Peoples Common Shares issued and outstanding immediately prior to the Effective Time shall remain issued and outstanding and shall not be affected by the Parent Merger.
(b) Option to Change Method of Merger. Peoples may at any time prior to the Effective Time change the method of effecting the Parent Merger and/or the Subsidiary Merger
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(including, without limitation, changing the provisions of this Article II), if and to the extent Peoples deems such change to be necessary, appropriate or desirable; provided, however, that no such change shall:
(i) Alter or change the amount or kind of consideration to which the holders of Premier Financial Common Stock are entitled in accordance with the terms and subject to the conditions of this Agreement;
(ii) Materially impede or delay consummation of the transactions contemplated by this Agreement; or
(iii) Cause the Merger to fail to qualify as a “reorganization” under Code Section 368(a)(1)(A) of the Code.
Premier Financial, if requested by Peoples, shall enter into one or more amendments to this Agreement in order to effect any such change.
2.02 Effectiveness of Parent Merger. Subject to the satisfaction or waiver of the conditions set forth in Article VII of this Agreement, the Parent Merger shall become effective upon the later to occur of the following: (i) the filing of the certificate of merger with the OSS and the articles of merger with the KSS; or (ii) such later date and time as may be set forth in such certificate of merger. The Parent Merger shall have the effects prescribed in the OGCL and KBCA.
2.03 Effective Date and Effective Time. Subject to the satisfaction or waiver of the conditions set forth in Article VII of this Agreement, Peoples and Premier Financial shall cause the effective date of the Parent Merger (the “Effective Date”) to occur as soon as practicable after the last of the conditions set forth in Article VII shall have been satisfied or waived in accordance with the terms of this Agreement; provided, however, that the Effective Date shall not fall after the date specified in Section 8.01(c) or after the date or dates on which any Regulatory Authority approval or any extension thereof expires. The time on the Effective Date when the Parent Merger shall become effective is referred to herein as the “Effective Time”.
2.04 Closing. Subject to the terms and conditions of this Agreement, the closing of the Merger (the “Closing”) will occur by electronic exchange of documents at 10:00 am, Columbus, Ohio time, on a date which is no later than three (3) business days after the satisfaction or waiver (subject to applicable law) of the latest to occur of the conditions set forth in Article VII hereof (other than those conditions that by their nature can be satisfied only at the Closing, but subject to the satisfaction or waiver of all conditions at the Closing), unless extended by mutual agreement of the parties hereto.
2.05 The Subsidiary Mergers.
(a) Immediately following the Parent Merger, or at such later time as Peoples may determine, Citizens Bank will merge with and into Peoples Bank (the “Citizens Bank Merger”). Peoples Bank shall be the surviving entity in the Citizens Bank Merger and, following the Citizens Bank Merger, the separate corporate existence of Citizens Bank shall cease and Peoples Bank shall survive and continue to exist as an Ohio-chartered commercial bank.
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Promptly after the date of this Agreement, Peoples Bank and Citizens Bank shall enter into an agreement and plan of merger in substantially the form attached hereto as Exhibit B (the “Citizens Bank Merger Agreement”).
(b) Immediately following the Citizens Bank Merger, or at such later time as Peoples may determine, Premier Bank will merge with and into Peoples Bank (the “Premier Bank Merger”, and together with the Citizens Bank Merger, the “Subsidiary Mergers”). Peoples Bank shall be the surviving entity in the Premier Bank Merger and, following the Premier Bank Merger, the separate corporate existence of Premier Bank shall cease and Peoples Bank shall survive and continue to exist as an Ohio-chartered commercial bank. Promptly after the date of this Agreement, Peoples Bank and Premier Bank shall enter into an agreement and plan of merger in substantially the form attached hereto as Exhibit C (the “Premier Bank Merger Agreement”, and together with the Citizens Bank Merger Agreement, the “Bank Merger Agreements”).
(c) Each of Peoples and Premier Financial shall approve the Bank Merger Agreements and the Subsidiary Mergers as the sole shareholders of each subsidiary bank, respectively. Prior to the Effective Time, Premier Financial shall cause Citizens Bank and Premier Bank, respectively, and Peoples shall cause Peoples Bank, to execute such certificates or articles of merger and such other documents and certificates as are necessary to effectuate the Subsidiary Mergers (“Subsidiary Merger Certificates”). The Parent Merger and the Subsidiary Mergers shall sometimes collectively be referred to herein as the “Merger.”
ARTICLE III
Merger Consideration
3.01 Conversion of Premier Financial Common Stock.
At the Effective Time, by virtue of the Parent Merger and without any action on the part of Peoples, Premier Financial, or the holder of any of the following securities:
(a) Subject to Section 3.02 and except as otherwise provided by paragraph (b) of this Section 3.01, each share of Premier Financial Common Stock (other than Treasury Shares and Dissenting Shares) issued and outstanding immediately prior to the Effective Time shall be converted into the right to receive without interest a number of Peoples Common Shares equal to the Exchange Ratio (the “Merger Consideration”); and
(b) All of the shares of Premier Financial Common Stock converted into the right to receive the Merger Consideration pursuant to Section 3.03 shall no longer be outstanding and shall automatically be cancelled and shall cease to exist as of the Effective Time, and each certificate (each, an “Old Certificate,” it being understood that any reference herein to “Old Certificate” shall be deemed to include reference to book‑entry account statements relating to the ownership of shares of Premier Financial Common Stock) previously representing any such shares of Premier Financial Common Stock shall thereafter represent only the right to receive (i) the Merger Consideration, (ii) cash in lieu of a fractional share which the shares of Premier Financial Common Stock represented by such Old Certificate have been converted into the right to receive pursuant to Section 3.01(a) and Sections 3.02(b)(v), and (iii) any dividends or distributions which the holder thereof has the right to receive pursuant to Section 3.02, in each
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case without any interest thereon. Old Certificates previously representing shares of Premier Financial Common Stock shall be exchanged for certificates or, at Peoples’ option, evidence of shares in book entry form representing whole shares of Peoples Common Shares as set forth in Section 3.01(a) (together with any dividends or distributions with respect thereto and cash in lieu of fractional shares issued in consideration therefor) upon the surrender of such Old Certificates in accordance with Section 3.02, without any interest thereon. If, between the date of this Agreement and the Effective Time, the outstanding shares of Peoples Common Shares or Premier Financial Common Stock shall have been increased, decreased, changed into or exchanged for a different number or kind of shares or securities, in any such case as a result of a reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split, or other similar change in capitalization, or there shall be any extraordinary dividend or extraordinary distribution, except to the extent that any such increase is due to the exercise of Premier Financial Options, an appropriate and proportionate adjustment shall be made to the Exchange Ratio to give holders of Premier Financial Common Stock the same economic effect as contemplated by this Agreement prior to such event; provided, that nothing in this sentence shall be construed to permit Premier Financial to take any action with respect to its securities that is prohibited by the terms of this Agreement.
(c) Notwithstanding anything in this Agreement to the contrary, at the Effective Time, all shares of Premier Financial Common Stock that are owned by Premier Financial (in each case other than shares (i) held in trust accounts, managed accounts, mutual funds or similar accounts, or otherwise held in a fiduciary or agency capacity that are beneficially owned by third parties, or (ii) held, directly or indirectly, as a result of debts previously contracted) shall be cancelled and cease to exist and no Merger Consideration shall be delivered or exchanged therefor.
(d) Notwithstanding anything in this Agreement to the contrary, shares of Premier Financial Common Stock which are issued and outstanding immediately prior to the Effective Time and which are held by Persons who have properly exercised, and not withdrawn or waived, appraisal rights with respect thereto (“Dissenting Shares”) in accordance with the KBCA will not be converted into the right to receive the Merger Consideration, but will be entitled in lieu thereof to receive payment of the fair value of their Dissenting Shares in accordance with the provisions of the KBCA unless and until the holders fail to perfect or effectively withdraw or lose their rights to appraisal and payment under the KBCA. If, after the Effective Time, any holder fails to perfect or effectively withdraws or loses their rights referred to in the preceding sentence, the applicable holder’s shares of Premier Financial Common Stock will thereupon be treated as if the shares had been converted at the Effective Time into the right to receive the Merger Consideration, without any interest thereon. Premier Financial will give Peoples prompt notice of any notices of intent to demand payment under the KBCA received by Premier Financial with respect to shares of Premier Financial Common Stock. Prior to the Effective Time, Premier Financial will not, except with the prior written consent of Peoples, make any payment with respect to, or settle or offer to settle, any demands referred to in this Section 3.01(d).
3.02 Exchange and Payment Procedures.
(a) Exchange Fund. At or prior to the Effective Time, Peoples shall deposit, or shall cause to be deposited, with Equiniti Trust Company (the “Exchange Agent”), for the
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benefit of the holders of Old Certificates for exchange in accordance with this Article III, (i) certificates or, at Peoples’ option, evidence in book-entry form, representing shares of Peoples Common Shares to be issued to holders of Premier Financial Common Stock (collectively, referred to herein as “New Certificates”), (ii) cash in an amount sufficient to pay cash in lieu of any fractional shares and (iii) cash payment due to holders of the Premier Financial Options pursuant to Section 3.03 (such New Certificates and cash described in the foregoing clauses (i), (ii) and (iii), together with any dividends or distributions with respect thereto payable in accordance with Section 3.02(b)(ii), being hereinafter referred to as the “Exchange Fund”).
(b) Exchange Procedures.
(i) As promptly as practicable after the Effective Time, but in no event later than five (5) business days thereafter, Peoples shall cause the Exchange Agent to mail to each holder of record of one or more Old Certificates representing shares of Premier Financial Common Stock immediately prior to the Effective Time that have been converted at the Effective Time into the right to receive the Merger Consideration, a letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the Old Certificates shall pass, only upon proper delivery of the Old Certificates to the Exchange Agent) and instructions for use in effecting the surrender of the Old Certificates in exchange for certificates representing the number of whole shares of Peoples Common Shares and any cash in lieu of fractional shares, as applicable, which the shares of Premier Financial Common Stock represented by such Old Certificate or Old Certificates shall have been converted into the right to receive pursuant to this Agreement as well as any dividends or distributions to be paid pursuant to Section 3.02(b)(ii). From and after the Effective Time, upon proper surrender of an Old Certificate or Old Certificates for exchange and cancellation to the Exchange Agent, together with such properly completed letter of transmittal, duly executed, the holder of such Old Certificate or Old Certificates shall be entitled to receive in exchange therefor, as applicable, (A)(1) a New Certificate representing that number of whole shares of Peoples Commons Shares to which such holder of Premier Financial Common Stock shall have become entitled pursuant to the provisions of Section 3.01 and (2) a check representing the amount of (x) any cash in lieu of a fractional share which such holder has the right to receive in respect of the Old Certificate or Old Certificates surrendered pursuant to the provisions of this Article III and (y) any dividends or distributions which the holder thereof has the right to receive pursuant to this Section 3.02(b), and the Old Certificate or Old Certificates so surrendered shall forthwith be cancelled. No interest will be paid or accrued on the Peoples Common Shares or any cash in lieu of fractional shares or dividends or distributions payable to holders of Old Certificates. Until surrendered as contemplated by this Section 3.02(b), each Old Certificate shall be deemed at any time after the Effective Time to represent only the right to receive, upon surrender, the number of whole shares of Peoples Common Shares which the shares of Premier Financial Common Stock represented by such Old Certificate have been converted into the right to receive and any cash in lieu of fractional shares or in respect of dividends or distributions as contemplated by this Section 3.02(b).
(ii) No dividends or other distributions declared with respect to Peoples Common Shares shall be paid to the holder of any unsurrendered Old Certificate until the holder thereof shall surrender such Old Certificate in accordance with Section 3.03(b). After the surrender of an Old Certificate in accordance with Section 3.03(b), the record holder thereof shall be entitled to receive any such dividends or other distributions, without any interest thereon,
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which theretofore had become payable with respect to the whole shares of Peoples Common Shares which the shares of Premier Financial Common Stock represented by such Old Certificate have been converted into the right to receive (after giving effect to Section 6.15).
(iii) For any New Certificate representing shares of Peoples Common Shares that is to be issued in a name other than that in which the Old Certificate or Old Certificates surrendered in exchange therefor is or are registered, it shall be a condition of the issuance thereof that the Old Certificate or Old Certificates so surrendered shall be properly endorsed (or accompanied by an appropriate instrument of transfer) and otherwise in proper form for transfer, and that the Person requesting such exchange shall pay to the Exchange Agent in advance any transfer or other similar Taxes required by reason of the issuance of a New Certificate representing shares of Peoples Common Shares in any name other than that of the registered holder of the Old Certificate or Old Certificates surrendered, or required for any other reason, or shall establish to the satisfaction of the Exchange Agent that such Tax has been paid or is not payable.
(iv) After the Effective Time, there shall be no transfers on the stock transfer books of Premier Financial of the shares of Premier Financial Common Stock that were issued and outstanding immediately prior to the Effective Time. If, after the Effective Time, Old Certificates representing such shares are presented for transfer to the Exchange Agent, they shall be cancelled and exchanged for New Certificates representing shares of Peoples Common Shares, cash in lieu of fractional shares and dividends or distributions that the holder presenting such Old Certificates is entitled to, as provided in Article III.
(v) Notwithstanding anything to the contrary contained herein, no New Certificates or scrip representing fractional shares of Peoples Common Shares shall be issued upon the surrender for exchange of Old Certificates or otherwise pursuant to this Agreement, no dividend or distribution with respect Peoples Common Shares shall be payable on or with respect to any fractional share, and fractional share interests shall not entitle the owner thereof to vote or to any other rights of a shareholder of Peoples. In lieu of the issuance of any fractional share, Peoples shall pay to each former shareholder of Premier Financial who otherwise would be entitled to receive such fractional share an amount in cash (rounded to the nearest cent) determined by multiplying (i) the daily volume weighted average of the closing-sale prices of Peoples Common Shares on the NASDAQ Stock Market (the “NASDAQ”) as reported by NASDAQ for the five (5) consecutive full trading days ending on the trading day preceding the Effective Date (the “Peoples Common Share Closing Price”) by (ii) the fraction of a share (rounded to the nearest one-thousandth when expressed in decimal form) of Peoples Common Shares which such holder would otherwise be entitled to receive pursuant to Section 3.01(a). The parties acknowledge that payment of the cash consideration in lieu of issuing fractional shares is not separately bargained-for-consideration, but merely represents a mechanical rounding off for the purposes of avoiding the expense and inconvenience that would otherwise be caused by the issuance of fractional shares.
(vi) Any portion of the Exchange Fund that remains unclaimed by the shareholders of Premier Financial for six months after the Effective Time shall be paid to the Surviving Corporation. Any former holders of Premier Financial Common Stock who have not theretofore exchanged their Old Certificates pursuant to Section 3.02 shall thereafter look only to
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the Surviving Corporation for payment of the shares of Peoples Common Shares and cash in lieu of any fractional shares and any unpaid dividends and distributions on the Peoples Common Stock deliverable in respect of each former share of Premier Financial Common Stock that such holder holds as determined pursuant to this Agreement, in each case, without any interest thereon. Notwithstanding the foregoing, none of Peoples, Premier Financial, the Surviving Corporation, the Exchange Agent or any other Person shall be liable to any former holder of shares of Premier Financial Common Stock for any amount delivered in good faith to a public official pursuant to applicable abandoned property, escheat or similar laws.
(vii) Each of Peoples and the Exchange Agent shall be entitled to deduct and withhold from any Merger Consideration otherwise payable pursuant to this Agreement all amounts required to be deducted and withheld with respect to the making of the Merger Consideration payment under the Code or any provision of state, local or foreign Tax law. To the extent that amounts are so withheld by Peoples or the Exchange Agent, as the case may be, the withheld amounts (i) will be paid over by Peoples or the Exchange Agent to the appropriate governmental authority and (ii) will be treated for all purposes of this Agreement as having been paid to the Person in respect of which the deduction and withholding was made.
(viii) In the event any Old Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming such Old Certificate to be lost, stolen or destroyed and, if required by Peoples, the posting by such Person of a bond in such amount as Peoples or the Exchange Agent may determine is reasonably necessary as indemnity against any claim that may be made against it with respect to such Old Certificate, the Exchange Agent will issue in exchange for such lost, stolen or destroyed Old Certificate the shares of Peoples Common Shares, and any cash in lieu of fractional shares and dividends or distributions deliverable in respect thereof pursuant to this Agreement.
3.03 Premier Financial Options.
(a) At the Effective Time, all rights with respect to options pursuant to the Premier Financial Option Plans (the “Premier Financial Options”) will vest in full and then cease to represent an option to purchase shares of Premier Financial Common Stock and will be converted automatically into the right to receive an amount of cash equal to the product of the Peoples Common Share Closing Price multiplied by the Exchange Ratio less the current exercise price per share of such Premier Financial Stock Option as adjusted for previously declared stock splits and stock dividends subsequent to the issuance of the Premier Financial Stock Option but prior to the date hereof (the “Option Cash-Out Amount”).
(b) Premier Financial shall not make any grants of Premier Financial Options following the execution of this Agreement.
ARTICLE IV
Actions Pending Consummation of Merger
4.01 Forbearances of Premier Financial. From the date hereof until the Effective Time, except as expressly contemplated or permitted by this Agreement, as required by law (including Pandemic Measures) or required by an applicable Regulatory Order, without the prior written consent of Peoples, Premier Financial shall not, and shall cause its Subsidiaries not to:
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(a) Ordinary Course. Conduct the business of Premier Financial and its Subsidiaries other than in the ordinary and usual course or fail to use reasonable efforts to preserve intact their respective business organizations and assets and maintain their respective rights, franchises and existing relations with customers, suppliers, vendors, employees and business associates, or voluntarily take any action which, at the time taken, is reasonably likely to have an adverse effect upon Premier Financial’s ability to perform any of its obligations under this Agreement or prevent or materially delay the consummation of the transactions contemplated by this Agreement, or enter into any new line of business or materially change its lending, investment, underwriting, risk, asset liability management or other banking and operating policies, except adjustments to employee compensation for annual merit and cost of living increases consistent with prior practice of Premier Financial in the ordinary course of business, bonuses which have been expensed in 2020 and are reflected on the financial statements of Premier Financial and any cash bonuses in lieu of stock awards as set forth in Section 4.01(a) of the Premier Financial Disclosure Schedule, or as required by applicable law or policies imposed by any Governmental Authority or by any applicable Regulatory Order.
(b) Capital Stock. (i) Issue, sell or otherwise permit to become outstanding, or authorize the creation of, any additional Premier Financial Common Stock, other capital stock of Premier Financial except upon the exercise or fulfillment of Premier Financial Options issued and outstanding as of the date of this Agreement pursuant to the Premier Financial Option Plans in accordance with their present terms, (ii) enter into any agreement, or amend or modify the Premier Financial Option Plans except as otherwise set forth in this Agreement, (iii) with respect to the foregoing, permit any additional Premier Financial Common Stock to become subject to new grants of Premier Financial Options, other Rights or similar stock-based employee rights, or (iv) effect any recapitalization, reclassification, stock split, or similar change in capitalization.
(c) Dividends; distributions; adjustments. (i) Make, declare, pay or set aside for payment any dividend or distribution on any shares of its capital stock, other than dividends from Citizens Bank and Premier Bank to Premier Financial, except for its normal and customary quarterly cash dividend in the amount of $0.15 per share for each full calendar quarter preceding the Effective Date subject to Section 6.15 or (ii) directly or indirectly adjust, split, combine, redeem, reclassify, purchase or otherwise acquire, any shares of its capital stock.
(d) Compensation; Employment Agreements. Enter into, modify, amend, renew or terminate any employment, consulting, severance, retention, change in control, or similar agreements or arrangements with any director, consultant, officer or employee of Premier Financial or any of its Subsidiaries, hire or engage any full-time employee or consultant, other than as replacements for positions existing on the date hereof, or grant any salary or wage increase or bonus or increase any employee benefit (including incentive or bonus payments), except for (i) changes that are consistent with prior practice of Premier Financial in the ordinary course of business for annual merit and cost of living increases, (ii) bonuses which have been expensed in 2020 and are reflected on the financial statements of Premier Financial, (iii) any cash bonuses in lieu of stock awards as set forth in Section 4.01(a) of the Premier Financial Disclosure Schedule, (iv) the retention agreement with Xxxxxx Xxxxxx pursuant to Section 7.02(j), (v) up to $1 million to be allocated amongst certain Premier Financial or its Subsidiaries employees in such amounts as mutually agreed to between Premier Financial and Peoples, or (vi) required by applicable law.
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(e) Benefit Plans. Enter into, establish, adopt, amend, modify, make any contributions to or terminate (except (i) as may be required by applicable law, (ii) as contemplated by this Agreement, or (iii) pursuant to the regular annual renewal of insurance contracts) the Premier Financial Option Plans or any pension, retirement, phantom stock, stock purchase, savings, profit sharing, deferred compensation, change in control, salary continuation, consulting, bonus, group insurance or other employee benefit, incentive or welfare contract (including related administrative services contracts), plan or arrangement, or any trust agreement (or similar arrangement) related thereto, in respect of any director, consultant, officer or employee of Premier Financial or any of its Subsidiaries, or take any action to accelerate the payment of benefits, the vesting or exercisability of the Premier Financial Options, restricted stock, phantom stock or other compensation or benefits payable thereunder.
(f) Dispositions. Sell, transfer, mortgage, encumber or otherwise dispose of any of its material properties or assets or any business to any Person other than a wholly owned Subsidiary, or cancel, release or assign any indebtedness of any Person other than a wholly owned Subsidiary or any claims against any Person other than a wholly owned Subsidiary, in each case other than in the ordinary course, consistent with past practices, including any debt collection or foreclosure transactions.
(g) Acquisitions. Acquire (other than by way of foreclosures or acquisitions of control in a bona fide fiduciary capacity or in satisfaction of debts previously contracted in good faith, in each case in the ordinary and usual course of business consistent with past practice) all or any portion of the assets, business, deposits or properties of any other Person.
(h) Governing Documents. Amend the Premier Financial Articles, the Premier Financial Bylaws or the organizational and governing documents of its Subsidiaries.
(i) Accounting Methods. Implement or adopt any change in its accounting principles, practices or methods, other than as may be required by GAAP.
(j) Material Contracts. (i) Terminate, amend, or waive any provision of, any Material Contract; (ii) make any change in any instrument or agreement governing the terms of any of its securities, or material lease or any other Material Contract, other than normal renewals of leases and other Material Contracts without material adverse changes of terms with respect to Premier Financial; (iii) enter into any Material Contract that (A) would constitute a Material Contract if it were in effect on the date of this Agreement or (B) that has a term of one year or longer and that requires payments or other obligations by Premier Financial or any Premier Financial Subsidiary of $100,000 or more under the Material Contract; or (iv) enter into any Material Contract if the Material Contract, in the aggregate with all Material Contracts entered into by Premier Financial or any Premier Financial Subsidiary from and after the date of this Agreement, would result in aggregate required payments by Premier Financial or any Premier Financial Subsidiary in excess of $350,000.
(k) Claims. Settle any claim, suit, action or proceeding, except for any claim, action or proceeding against Premier Financial or any Affiliates which does not involve precedent for other material claims, suits, actions or proceedings and which involves solely money damages in an amount, individually not to exceed $150,000 or in the aggregate not to
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exceed $300,000 for all such claims, actions or proceedings or which is liability is fully covered and paid by an insurer (and for which the insurer has not denied coverage after notification).
(l) Adverse Actions. Take any action that is intended or is reasonably likely to result in (i) any of its representations and warranties set forth in this Agreement being or becoming untrue at any time at or prior to the Effective Time, (ii) any of the conditions to the Merger set forth in Article VII not being satisfied, or (iii) a violation of any provision of this Agreement except, in each case, as may be required by applicable law or by any Governmental Authority.
(m) Risk Management. Except pursuant to applicable law or as required by any Governmental Authority, (i) implement or adopt any material change in its interest rate or other risk management policies, procedures or practices, (ii) fail to follow its existing policies or practices with respect to managing its exposure to interest rate and other risk, (iii) fail to use commercially reasonable means to avoid any material increase in its aggregate exposure to interest rate risk, or (iv) fail to follow its existing policies or practices with respect to managing its fiduciary risks.
(n) Borrowings. Other than in the ordinary course, consistent with past practice, assume, guarantee, endorse or otherwise as an accommodation become responsible for the obligations of any other individual, corporation or other entity (it being understood and agreed that incurrence of indebtedness in the ordinary course, consistent with past practices shall include the creation of deposit liabilities, issuance of letters of credit, purchases of federal funds, borrowings from any of the Federal Home Loan Banks, borrowings from the Federal Reserve Bank, advances on existing lines of credit, sales of certificates of deposit, and entry into repurchase agreements).
(o) Indirect Loans; Participations. (i) Except for loans underwritten and originated by a Premier Financial Subsidiary in the ordinary course of business from a broker based referral source, make or purchase any indirect or brokered Loans, or (ii) purchase from or sell to any financial institution or other non-depository lender an interest in a Loan, except for such credit facilities made to borrowers in Premier Financial’s Territory which are secured by collateral located in the Premier Financial’s Territory in the ordinary course and consistent with past practices in excess of $2,000,000.
(p) Capital Expenditures. Make, or commit to make, any capital expenditures that exceed $300,000 in the aggregate.
(q) Lending. (i) Enter into any new line of business, change in any material respect its lending, investment, underwriting, risk and asset liability management and other banking and operating, securitization and servicing policies (including any change in the maximum ratio or similar limits as a percentage of its capital applicable with respect to its loan portfolio or any segment thereof); (ii) make or acquire, or modify, renew or extend any Loan except for Loans made acquired, renewed, or extended in the ordinary course, consistent with past practices and in compliance with its Subsidiaries’ loan policies and underwriting guidelines and standards as in effect as of the date of this Agreement, except for routine policy exceptions made in the normal course of business for loans with a principal amount of $500,000 or less; (iii)
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make or acquire, or modify, renew or extend any Loan (A) in the case of new Loans (other than unsecured Loans), if immediately after making the Loan the Person obtaining the Loan and the Person’s Affiliates would have debt owed to either Citizens Bank or Premier Bank that is, in excess of $1,000,000 or any new Loan that causes the aggregate credit exposure to exceed $2,000,000, (B) in the case of the modification, renewal, or extension of any Loan (other than unsecured Loans) outstanding as of the date of this Agreement, if immediately after the modification, renewal, or extension of the Loan the Person obtaining the modification, renewal, or extension of the Loan and the Person’s Affiliates would have an aggregate credit exposure to Premier Financial or any of its Subsidiaries that is, in excess of $2,000,000, (C) in the case of new unsecured Loans, or the modification, renewal, or extension of any unsecured Loan outstanding as of the date of this Agreement, if immediately after making the new unsecured Loan or immediately after the modification, renewal or extension of the unsecured Loan the Person obtaining the new unsecured Loan or the modification, renewal or extension of the unsecured Loan and the Person’s Affiliates would have unsecured debt owed to Premier Financial or any of its Subsidiaries that is, in the aggregate, in excess of $500,000, or (D) that is in excess of $500,000 and that is classified by either Citizens Bank or Premier Bank as “Other Loans Specially Mentioned,” “Special Mention,” “Substandard,” “Doubtful,” “Loss,” “Classified,” “Criticized,” “Credit Risk Assets,” “Concerned Loans,” “Watch List” or words of similar import, in each case, except pursuant to existing commitments entered into prior to the date hereof; (iv) grant or renew the prior grant of, the deferral of any payments under any Loan or make or agree to make any other modification that would result in the Loan being, or continue the status of the Loan as, a CARES Act Modified Loan, in each case with respect to any Loan that is in an amount in excess of $1,000,000; provided that in the case of each of items (i) – (iv) above Peoples shall be required to respond to any request for a consent to make such Loan, extension of credit, or modification in writing within five (5) business days after the loan package is delivered to Peoples.
(r) Investment Securities Portfolio. Restructure or materially change its investment securities portfolio or its portfolio duration, through purchases, sales or otherwise, or the manner in which the portfolio is classified or reported, or invest in any mortgage-backed or mortgage-related securities which would be considered “high risk” securities under applicable regulatory pronouncements, or otherwise purchase or sell securities in the portfolio individually in that exceed $5,000,000 or in the aggregate that would exceed $75,000,000.
(s) Taxes. (i) Fail to prepare or file or cause to be prepared or filed in a timely manner consistent with past practice all Tax Returns that are required to be filed (with extensions) at or before the Effective Time, (ii) fail to timely pay any Tax due (whether or not required to be shown on any such Tax Returns), or (iii) make, change or revoke any Tax election or Tax accounting method, file any amended Tax Return, settle any Tax claim or assessment or consent to the extension or waiver of any statute of limitations with respect to Taxes (or offer or agree to do any of the foregoing or surrender its rights to do any of the foregoing or to claim any refund of Taxes or file any amended Tax Return).
(t) Offices and Facilities. Except as set forth on Section 4.01(t) of the Premier Financial Disclosure Schedules, (i) open, close or relocate any branch office, ATMS, loan production office or other significant office or operations facility of Premier Financial or its Subsidiaries at which business is conducted, or (ii) fail to use commercially reasonable efforts to
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maintain and keep their respective properties and facilities in their present condition and working order, ordinary wear and tear excepted.
(u) Interest Rates. Increase or decrease the rate of interest paid on time deposits or certificates of deposit, except in a manner consistent with past practices in relation to rates prevailing in the relevant market.
(v) Foreclosures. Foreclose upon or otherwise cause Premier Financial or any of its Subsidiaries to take title to or possession or control of any real property or entity thereon without first obtaining a Phase I thereon which indicates that the property is free of Hazardous Material; provided, however, that no such report shall be required to be obtained with respect to single-family residential real property of one acre or less to be foreclosed upon unless Premier Financial has reason to believe that such real property may contain any such Hazardous Material.
(w) Deposit Liabilities. Cause any material change in the amount or general composition of deposit liabilities that would constitute a Material Adverse Effect.
(x) Section 368(a) Reorganization. Not take, or fail to take, any action that would reasonably be expected to prevent or impede the Merger from qualifying as a “reorganization” within the meaning of Section 368(a) of the Code.
(y) Commitments. Agree or commit to do any of the foregoing.
4.02 Forbearances of Peoples. From the date hereof until the Effective Time, except as expressly contemplated or permitted by this Agreement, as required by law (including Pandemic Measures) or required by an applicable Regulatory Order, without the prior written consent of Premier Financial, Peoples shall not, and shall cause its Subsidiaries not to:
(a) Capital Stock. Effect any recapitalization, reclassification, stock split, or similar change in capitalization.
(b) Governing Documents. Amend the Peoples Articles or the Peoples Regulations in a manner that would materially and adversely affect the holders of Premier Financial Common Stock, or adversely affect the holders of Premier Financial Common Stock relative to holders of Peoples Common Shares.
(c) Adverse Actions. Take any action that is intended or is reasonably likely to result in (i) any of its representations and warranties set forth in this Agreement being or becoming materially inaccurate at any time at or prior to the Effective Time, (ii) any of the conditions to the Merger set forth in Article VII not being satisfied, (iii) a violation of any provision of this Agreement except, in each case, as may be required by applicable law or by any Governmental Authority, or (iv) a delay in the consummation of the transactions contemplated by this Agreement.
(d) Commitments. Agree or commit to do any of the foregoing.
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ARTICLE V
Representations and Warranties
5.01 Representations and Warranties of Premier Financial. Except (a) as disclosed in the disclosure schedule delivered by Premier Financial to Peoples concurrently herewith (the “Premier Financial Disclosure Schedule”); provided that (i) the mere inclusion of an item in the Premier Financial Disclosure Schedule as an exception to a representation or warranty shall not be deemed an admission by Premier Financial that such item represents a material exception or fact, event or circumstance or that such item is reasonably likely to result in a Material Adverse Effect and (ii) any disclosures made with respect to a section of Article V shall be deemed to qualify any other section of Article V specifically referenced or cross-referenced, or (b) as disclosed in any Premier Financial Reports publicly filed with or furnished to the SEC by Premier Financial after January 1, 2020 and prior to the date hereof (but disregarding risk factor disclosures contained under the heading “Risk Factors,” or disclosures of risks set forth in any “forward-looking statements” disclaimer or any other statements that are similarly non-specific or cautionary, predictive or forward-looking in nature), Premier Financial hereby represents and warrants to Peoples as follows:
(a) Organization, Standing and Authority.
(i) Premier Financial is a corporation duly organized, validly existing and in good standing under the laws of the Commonwealth of Kentucky and is a financial holding company duly registered with the FRB under the BHCA. Premier Financial has the corporate power and authority to own or lease all of its properties and assets and to carry on its business as it is now being conducted in all material respects. Premier is duly qualified to do business and is in good standing in any foreign jurisdictions where its ownership or leasing of property or assets or the conduct of its business requires it to be so qualified. Section 5.01(a)(i) of the Premier Financial Disclosure Schedule sets forth the foreign jurisdictions in which Premier Financial conducts business.
(ii) Except, in the case of clauses (B) and (C) only, as would not reasonably be likely to have, individually or in the aggregate, a Material Adverse Effect on Premier Financial, each Subsidiary of Premier Financial (A) is duly organized and validly existing under the laws of its jurisdiction of organization, (B) is duly licensed or qualified to do business and, where such concept is recognized under applicable law, in good standing in all jurisdictions (whether federal, state, local or foreign) where its ownership, leasing or operation of property or the conduct of its business requires it to be so licensed or qualified or in good standing and (C) has all requisite corporate power and authority to own, lease or operate its properties and assets and to carry on its business as now conducted. There are no restrictions on the ability of any Subsidiary of Premier Financial to pay dividends or distributions, except, in the case of a Subsidiary that is an insured depository institution, for restrictions on dividends or distributions generally applicable to all such regulated entities. The deposit accounts of each Subsidiary of Premier Financial that is an insured depository institution are insured by the FDIC through the Deposit Insurance Fund to the fullest extent permitted by law, all premiums and assessments required to be paid in connection therewith have been paid when due, and no proceedings for the termination of such insurance are pending or, to the Knowledge of Premier
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Financial, threatened. Section 5.01(a)(ii) of the Premier Financial Disclosure Schedule sets forth a true and complete list of all Subsidiaries of Premier Financial as of the date hereof.
(b) Capital Structure of Premier Financial.
(i) As of March 25, 2021, the authorized capital stock of Premier Financial consists of 30,000,000 Premier Financial Common Stock, of which 14,706,608 shares are currently issued and outstanding and 1,000,000 shares of preferred stock, with no par value, of which no shares are issued and outstanding (“Premier Financial Preferred Shares”). The Premier Financial Common Stock and Premier Financial Preferred Shares are collectively referred to herein as “Premier Financial Shares.” As of March 25, 2021, there are: (A) no shares of Treasury Shares held by Premier Financial or otherwise owned by Premier Financial or its Subsidiaries; and (B) 528,151 shares of Premier Financial Common Stock reserved for issuance pursuant to the Premier Financial Option Plans (of which, collectively, options to purchase 365,707.5 shares are outstanding at the date hereof). No shares of Premier Financial Preferred Shares are issued and outstanding or reserved for issuance. All of the issued and outstanding Premier Financial Shares have been duly authorized and validly issued and are fully paid, nonassessable and free of preemptive rights, with no personal liability attaching to the ownership thereof. Except for the options, plans and other obligations set forth in this paragraph (i), Premier Financial does not have, and is not bound by, any outstanding or issued Rights with respect to any Premier Financial Shares.
(ii) The Premier Financial Options have been granted in compliance in all material respects with the terms of the applicable Premier Financial Option Plan and all applicable laws. With respect to each Premier Financial Option outstanding as of the date hereof, the name of each optionee, the date of each option to purchase Premier Financial Common Stock granted, the number of shares subject to each such option and the price at which each such option may be exercised are set forth in Section 5.01(b) of the Premier Financial Disclosure Schedule. The exercise price of each Premier Financial Option is no less than the fair market value of a share of Premier Financial Common Stock determined on the date of grant of such stock option (and as of any later modification thereof within the meaning of Section 409A of the Code). Each Premier Financial Option intended to qualify as an “incentive stock option” under Section 422 of the Code has been structured to so qualify.
(iii) Except for the Floating Rate Junior Subordinated Debentures due April 24, 2034 (the “Debentures”) relating to the Indenture, dated February 26, 2004 (the “Indenture”), between Premier Financial and Wilmington Trust Company, as trustee, neither Premier Financial nor any of its Subsidiaries have any authorized, issued, or outstanding bonds, debentures, notes or other indebtedness for which the holders thereof have the right to vote on any matters on which the shareholders have the right to vote. There are no registration rights, and there is no voting trust, proxy, rights agreement, “poison pill” anti-takeover plan or other agreement or understanding to which Premier Financial is a party or by which it is bound with respect to any equity security of any class of Premier Financial or with respect to any equity security, partnership interest or similar ownership interest of any class of any of its Subsidiaries.
(c) Authority; No Violation.
(i) Premier Financial has full corporate power and authority to execute and deliver this Agreement and, subject to the shareholder and other actions described
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below, to consummate the transactions contemplated hereby. The execution and delivery of this Agreement and the consummation of the Merger and the Subsidiary Mergers have been duly and validly approved by the Premier Financial Board. The Premier Financial Board has determined, subject to Section 6.06 of this Agreement, that the Parent Merger, on the terms and conditions set forth in this Agreement, is in the best interests of Premier Financial and its shareholders and has directed that this Agreement and the transactions contemplated hereby be submitted to Premier Financial’s shareholders for approval (with the Premier Financial Board’s recommendation in favor of approval) at a meeting of the shareholders, and has adopted a resolution to the foregoing effect. Except for the approval of this Agreement by the affirmative vote of the holders of a majority of the outstanding shares of Premier Financial Common Stock (the “Requisite Premier Financial Vote”), and the adoption and approval of the Bank Merger Agreements by Premier Financial as sole shareholder of Citizens Bank and Premier Bank, respectively, no other corporate proceedings on the part of Premier Financial are necessary to approve this Agreement or to consummate the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by Premier Financial and (assuming due authorization, execution and delivery by Peoples) constitutes a valid and binding obligation of Premier Financial, enforceable against Premier Financial in accordance with its terms (except in all cases as enforceability may be limited by bankruptcy, insolvency, moratorium, reorganization or similar laws affecting the rights of creditors generally and the availability of equitable remedies).
(ii) Neither the execution and delivery of this Agreement by Premier Financial nor the consummation by Premier Financial of the transactions contemplated hereby, including the Parent Merger and the Subsidiary Mergers, nor compliance by Premier Financial with any of the terms or provisions hereof, will (A) violate any provision of the Premier Financial Articles or Premier Financial Bylaws or (B) assuming that the consents and approvals referred to in Section 5.01(d) are duly obtained, (1) violate any statute, code, ordinance, rule, regulation, judgment, order, writ, decree or injunction applicable to Premier Financial or any Premier Financial Subsidiaries or any of their respective properties or assets or (2) violate, conflict with, result in a breach of any provision of or the loss of any benefit under, constitute a default (or an event which, with notice or lapse of time, or both, would constitute a default) under, result in the termination of or a right of termination or cancellation under, accelerate the performance required by, or payments, rebates, or reimbursements required under, or result in the creation of any Lien upon any of the respective properties or assets of Premier Financial or any Premier Financial Subsidiaries under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or other instrument or obligation to which Premier Financial or any Premier Financial Subsidiary is a party, or by which they or any of their respective properties or assets may be.
(d) Consents and Regulatory Approvals.
(i) No consents or approvals of, or filings or registrations with, any Governmental Authority or with any third party are required to be made or obtained by Premier Financial or any of its Subsidiaries in connection with the execution, delivery or performance by Premier Financial of this Agreement or the consummation of the transactions contemplated hereby, including the Merger, except for (A) the filings of applications, waivers or notices, as applicable, with Regulatory Authorities to approve the transactions contemplated by the Agreement, (B) the filing with the SEC and declaration of effectiveness of a registration statement on Form S-4 (the “Registration Statement”) under the Securities Act including the joint
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proxy statement/prospectus (the “Joint Proxy Statement/Prospectus”) relating to the meetings, including any adjournments or postponements thereof, of Premier Financial shareholders and Peoples shareholders to be held in connection with this Agreement and the Merger (the “Premier Financial Meeting” and the “Peoples Meeting,” as the case may be), (C) Requisite Premier Financial Vote and Requisite Peoples Vote, (D) the filing of the certificate of merger with the OSS pursuant to the OGCL and articles of merger with the KSS pursuant to the KBCA, and filing the Subsidiary Merger Certificates, and (E) the receipt of the approvals set forth in Section 7.01(b).
(ii) As of the date hereof, Premier Financial is not aware of any reason why the approvals set forth in Section 7.01(b) will not be received without the imposition of a condition, restriction or requirement of the type described in Section 7.01(b).
(e) SEC Reports.
(i) Except as set forth in Section 5.01(e)(1) of the Premier Financial Disclosure Schedule, Premier Financial has timely filed all reports, registration statements, proxy statements and other materials, together with any amendments required to be made with respect thereto, that it was required to file with the SEC, and all such reports, registration statements, proxy statements, other materials and amendments have complied in all material respects with all legal requirements relating thereto, and has paid all fees and assessments due and payable in connection therewith.
(ii) An accurate and complete copy of each final registration statement, prospectus, report, schedule and definitive proxy statement filed with or furnished to the SEC by Premier Financial pursuant to the Securities Act or the Exchange Act prior to the date of this Agreement (the “Premier Financial’s SEC Reports”) is publicly available. No such Premier Financial’s SEC Report, at the time filed, furnished or communicated (and, in the case of registration statements and proxy statements, on the dates of effectiveness and the dates of the relevant meetings, respectively), and considering all amendments to any of Premier Financial’s SEC Report filed prior to the date hereof, contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances in which they were made, not misleading, except that information filed as of a later date (but before the date of this Agreement) shall be deemed to modify information as of an earlier date. As of their respective dates, all Premier Financial’s SEC Reports complied as to form in all material respects with the published rules and regulations of the SEC with respect thereto. No executive officer of Premier Financial has failed in any respect to make the certifications required of him or her under Section 302 or 906 of the Xxxxxxxx-Xxxxx Act of 2002 (the “Xxxxxxxx-Xxxxx Act”). As of the date hereof, there are no outstanding comments from or unresolved issues raised by the SEC with respect to any of the Premier Financial’s SEC Reports.
(f) Financial Statements; Material Adverse Effect; Internal Controls.
(i) The financial statements of Premier Financial and its Subsidiaries included (or incorporated by reference) in Premier Financial’s SEC filings (including the related notes, where applicable) (A) have been prepared from, and are in accordance with, the books and records of Premier Financial and its Subsidiaries, (B) fairly present in all material respects the consolidated results of operations, cash flows, changes in shareholders’ equity and consolidated
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financial position of Premier Financial and its Subsidiaries for the respective fiscal periods or as of the respective dates therein set forth (subject in the case of unaudited statements to recurring year-end audit adjustments normal in nature and amount), (C) complied as to form, as of their respective dates of filing with the SEC, in all material respects with applicable accounting requirements and with the published rules and regulations of the SEC with respect thereto, and (D) have been prepared in accordance with GAAP, consistently applied during the periods involved, except, in each case, as indicated in such statements or in the notes thereto. As of the date hereof, the books and records of Premier Financial and its Subsidiaries have been maintained in all material respects in accordance with GAAP and any other applicable legal and accounting requirements and reflect only actual transactions. As of the date hereof, Xxxxx LLP has not resigned (or informed Premier Financial that it intends to resign) or been dismissed as independent public accountants of Premier Financial as a result of or in connection with any disagreements with Premier Financial on a matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure.
(ii) Neither Premier Financial nor any of its Subsidiaries has incurred any liability or obligation of a material nature whatsoever, except for (A) those liabilities that are reflected or reserved against on the consolidated balance sheet of Premier Financial included in its Annual Report on Form 10-K for fiscal year ended December 31, 2020 (including any notes thereto), (B) liabilities incurred in the ordinary course of business consistent in nature and amount with past practice since December 31, 2020 or (C) in connection with this Agreement and the transactions contemplated hereby.
(iii) Since December 31, 2020, except as disclosed in Premier Financial Disclosure Schedule, (A) Premier Financial and its Subsidiaries have conducted their respective businesses in the ordinary and usual course consistent with past practice, and (B) no event has occurred or circumstance arisen that, individually or taken together with all other facts, circumstances and events is reasonably likely to have a Material Adverse Effect with respect to Premier Financial or any of its Subsidiaries.
(iv) Premier Financial and each of its Subsidiaries maintains a system of “disclosure controls and procedures” (as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Exchange Act) reasonably designed and maintained to ensure that all information (both financial and non-financial) required to be disclosed by Premier Financial in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to Premier Financial’s management as appropriate to allow timely decisions regarding required disclosure and to make the certifications of the Chief Executive Officer and Chief Financial Officer of Premier Financial required under the Exchange Act with respect to such reports. Premier Financial has disclosed, based on its most recent evaluation prior to the date of this Agreement, to Premier Financial’s outside auditors and the audit committee of the Premier Financial Board (A) any significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) that would be reasonably likely to adversely affect Premier Financial’s ability to accurately record, process, summarize and report financial information, and (B) any fraud, whether or not material, that involves management or other employees who have a significant role in Premier Financial’s internal controls over financial
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reporting. Since December 31, 2020, neither Premier Financial, its Subsidiaries nor any director, officer, employee, auditor, accountant or representative of Premier Financial or its Subsidiaries has received or otherwise had or obtained Knowledge of any material complaint, allegation, assertion or claim, whether written or oral, regarding the accounting or auditing practices, procedures, methodologies or methods of Premier Financial or its Subsidiaries or their respective internal accounting controls, including any material complaint, allegation, assertion or claim that Premier Financial or its Subsidiaries has engaged in questionable accounting or auditing practices.
(g) Litigation. Except as set forth in Section 5.01(g) of Premier Financial Disclosure Schedule, there is no suit, action, investigation, claim, proceeding or review pending, or to Premier Financial’s Knowledge, threatened against or affecting it or any of its Subsidiaries or any of the current or former directors or executive officers of it or any of its Subsidiaries (and it is not aware of any basis for any such suit, action, investigation, claim, proceeding or review) (i) that involves a Governmental Authority, or (ii) that, individually or in the aggregate, is (A) material to it and its Subsidiaries, taken as a whole, or is reasonably likely to result in a material restriction on its or any of its Subsidiaries’ businesses or, after the Effective Time, the business of Peoples or any of its Affiliates, or (B) reasonably likely to materially prevent or delay it from performing its obligations under, or consummating the transactions contemplated by, this Agreement. There is no injunction, order, award, judgment, settlement, decree or regulatory restriction imposed upon or entered into by Premier Financial, any of its Subsidiaries or the assets of it or any of its Subsidiaries (or that, upon consummation of the Merger, would apply to Peoples or any of its Affiliates) that is or could reasonably be expected to be material to Premier Financial or any of its Subsidiaries.
(h) Regulatory Matters.
(i) Neither Premier Financial nor any of its Subsidiaries nor any of their respective properties is a party to or is subject to any order, decree, formal or informal agreement, memorandum of understanding or similar arrangement with, or a commitment letter, board resolution or similar submission to, or extraordinary supervisory letter (any of the foregoing, a “Regulatory Order”) from any federal or state governmental agency or authority charged with the supervision or regulation of financial institutions (or their holding companies) or issuers of securities or engaged in the insurance of deposits (including, without limitation, the FDIC, the FRB, the KDFI, the WVDFI) or the supervision or regulation of it or any of its Subsidiaries (collectively and along with the ODFI, the “Regulatory Authorities”).
(ii) Neither Premier Financial nor any of its Subsidiaries has been advised by any Regulatory Authority that such Regulatory Authority is contemplating issuing or requesting (or is considering the appropriateness of issuing or requesting) any such order, decree, formal or informal agreement, memorandum of understanding, commitment letter, board resolution, supervisory letter or similar submission.
(i) Compliance with Laws. Premier Financial and each of the Premier Financial Subsidiaries hold, and have held at all times, all licenses, franchises, permits and authorizations necessary for the lawful conduct of their respective businesses and ownership of their respective properties, rights and assets under and pursuant to each (and have paid all fees and assessments due and payable in connection therewith), except where neither the cost of failure to hold nor the
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cost of obtaining and holding the applicable license, franchise, permit or authorization (nor the failure to pay any fees or assessments) would, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Premier Financial, and, to the knowledge of Premier Financial, no suspension or cancellation of any such necessary license, franchise, permit or authorization is threatened. Premier Financial and each of its Subsidiaries have complied in all material respects with and are not in material default or violation under any applicable law, statute, order, rule, regulation, policy and/or guideline of any Governmental Authority relating to Premier Financial or any of the Premier Financial Subsidiaries, including without limitation all laws related to data protection or privacy, the USA PATRIOT Act, the Bank Secrecy Act, the Equal Credit Opportunity Act and Regulation B, the Fair Housing Act, the Community Reinvestment Act, the Fair Credit Reporting Act, the Truth in Lending Act and Regulation Z, the Home Mortgage Disclosure Act, the Fair Debt Collection Practices Act, the Electronic Fund Transfer Act, the Xxxx-Xxxxx Xxxx Street Reform and Consumer Protection Act, any regulations promulgated by the Consumer Financial Protection Bureau, the Interagency Policy Statement on Retail Sales of Nondeposit Investment Products, the SAFE Mortgage Licensing Act of 2008, the Real Estate Settlement Procedures Act and Regulation X, and any other law relating to bank secrecy, discriminatory lending, financing or leasing practices, money laundering prevention, Sections 23A and 23B of the Federal Reserve Act, the Xxxxxxxx-Xxxxx Act, and all agency requirements relating to the origination, sale and servicing of mortgage and consumer Loans.
(j) Material Contracts; Defaults.
(i) Except as set forth in the Premier Financial Disclosure Schedule listed under Section 5.01(j)(i), neither Premier Financial nor any of its Subsidiaries is a party to or is bound by any contract or agreement (whether written or verbal) of the following types as of the date of this Agreement, and no such contract or agreement is presently being negotiated or discussed:
(A) any contract involving commitments to others to make capital expenditures or purchases or sales in excess of $25,000 in any one case or $75,000 in the aggregate in any period of 12 consecutive months;
(B) except for deposit accounts maintained in the ordinary course of business, any contract relating to any direct or indirect indebtedness of Premier Financial or any of its Subsidiaries for borrowed money (including loan agreements, lease purchase arrangements, guarantees, agreements to purchase goods or services or to supply funds or other undertakings relating to the extension of credit), or any conditional sales contracts, equipment lease agreements and other security arrangements with respect to personal property with an obligation in excess of $[100,000] in any one case or $[300,000] in the aggregate in any period of 12 consecutive months;
(C) any employment, severance, consulting or management services contract or any confidentiality or nondisclosure contract with any director, officer, employee or consultant of Premier Financial or any of its Subsidiaries;
(D) any contract containing covenants limiting the freedom of Premier Financial or any of its Subsidiaries to compete in any line of business or with any Person or in any area or territory;
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(E) any partnership, joint venture, limited liability company arrangement or other similar agreement;
(F) any profit sharing, phantom stock award, stock option, stock purchase, stock appreciation, deferred compensation, issuance, or other plan or arrangement for the benefit of Premier Financial’s or any of its Subsidiaries’ current or former directors, officers, employees or consultants;
(G) any license agreement, either as licensor or licensee, or any other contract of any type relating to any intellectual property, except for license agreements relating to off-the-shelf software or software components pursuant to a non-negotiable standard form or “shrink wrap” license agreement;
(H) any contract with any insider of Premier Financial or any of its Subsidiaries or any arrangement under which Premier Financial or any of its Subsidiaries has advanced or loaned any amount to any of their respective insiders or immediate family member of any insider (the terms “insider” and “immediate family member” have the meanings given to them under Regulation O (12 C.F.R. Part 215) as promulgated by the FRB);
(I) any contract, whether exclusive or otherwise, with any sales agent, representative, franchisee or distributor;
(J) other than this Agreement and any ancillary agreements being executed in connection with this Agreement, any contract providing for the acquisition or disposition of any portion of the assets, properties or securities of Premier Financial or any of its Subsidiaries;
(K) any contract that requires the payment of royalties;
(L) any contract pursuant to which Premier Financial or any of its Subsidiaries has any obligation to share revenues or profits derived from Premier Financial or any of its Subsidiaries with any other Person;
(M) any contract between (i) Premier Financial or any of its Subsidiaries, on the one hand, and any officer, director, employee or consultant of Premier Financial or any of its Subsidiaries, on the other hand, and (ii) Premier Financial or any of its Subsidiaries, on the one hand, and any Associate or other Affiliate of any director, officer, employee or consultant of Premier Financial or any of its Subsidiaries, on the other hand; and
(N) any contract that is a “material contract” (as defined in Item 601(b)(10) of Regulation S-K of the SEC);
(O) except for deposit accounts maintained in the ordinary course of business any other legally binding contract not of the type covered by any of the other items of this Section 5.01(j) involving money or property and having an obligation in excess of
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$[100,000] in the aggregate in any period of 12 consecutive months or which is otherwise not in the ordinary and usual course of business.
(ii) “Material Contracts” shall mean those contracts on the Premier Financial Disclosure Schedule listed under Section 5.01(j)(i). True, complete and correct copies of all of the Material Contracts have been made available to Peoples. All of the Material Contracts are in full force and effect and are legal, valid, binding and enforceable in accordance with their terms (A) as to Premier Financial or any of its Subsidiaries, as the case may be, and (B) to the Knowledge of Premier Financial, as to the other parties to such Material Contracts. Except as disclosed in the Premier Financial Disclosure Schedule, Premier Financial and/or its Subsidiaries, as applicable, and to the Knowledge of Premier Financial, each other party to the Material Contracts, has performed and is performing all material obligations, conditions and covenants required to be performed by it under the Material Contracts. Neither Premier Financial nor its Subsidiaries, and to the Knowledge of Premier Financial, no other party, is in violation, breach or default of any material obligation, condition or covenant under any of the Material Contracts, and neither Premier Financial nor its Subsidiaries, and to the Knowledge of Premier Financial, no other party, has received any notice that any of the Material Contracts will be terminated or will not be renewed. Neither Premier Financial nor any of its Subsidiaries has received from or given to any other Person any notice of default or other violation under any of the Material Contracts, nor, to the Knowledge of Premier Financial, does any condition exist or has any event occurred which with notice or lapse of time or both would constitute a default under any of the Material Contracts.
(k) Brokerage and Finder’s Fees. Except as set forth in Section 5.01(k) of Premier Financial Disclosure Schedule, neither Premier Financial nor any of its Subsidiaries has engaged or employed any broker, finder, or agent, or agreed to pay or incurred any brokerage fee, finder’s fee, commission or other similar form of compensation (including any break-up or termination fee) in connection with this Agreement or the transactions contemplated hereby.
(l) Employee Benefit Plans; Employee Matters.
(i) Section 5.01(l) of Premier Financial Disclosure Schedule contains a complete and accurate list of all bonus, incentive, deferred compensation, pension, retirement, profit-sharing, thrift, savings, employee stock ownership, stock bonus, stock purchase, restricted stock, stock option, severance, welfare and fringe benefit plans, employment, retention, change in control, severance agreements, and all similar practices, policies and arrangements, whether written or unwritten, that are currently effective or were in effect at any time in the previous five years, including each “employee benefit plan” within the meaning of Section 3(3) of ERISA, whether or not tax-qualified and whether or not subject to ERISA, in which any employee or former employee (the “Employees”), consultant or former consultant (the “Consultants”) or director or former director (the “Directors”) of Premier Financial or any of its Subsidiaries or any ERISA Affiliate participates, sponsors or contributes, or to which any such Employees, Consultants or Directors are a party or under which Premier Financial or its Subsidiaries or any ERISA Affiliate has any present or future liability (the “Compensation and Benefit Plans”). Neither Premier Financial nor any of its Subsidiaries nor any ERISA Affiliate has any commitment to create any additional Compensation and Benefit Plan or to modify or change any existing Compensation and Benefit Plan. No Compensation and Benefit Plan holds any Premier Financial Common Stock.
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(ii) Each Compensation and Benefit Plan has been operated and administered in all material respects in accordance with its terms and with applicable law, including, but not limited to, ERISA, the Code, the Securities Act, the Exchange Act, the Age Discrimination in Employment Act, or any regulations or rules promulgated thereunder, and all filings, disclosures and notices required by ERISA, the Code, the Securities Act, the Exchange Act, the Age Discrimination in Employment Act and any other applicable law have been timely made. Each Compensation and Benefit Plan which is an “employee pension benefit plan” within the meaning of Section 3(2) of ERISA (a “Pension Plan”) and which is intended to be qualified under Section 401(a) of the Code has either received a favorable determination letter from the Internal Revenue Service (“IRS”) or with respect to a prototype plan or volume submitter plan, can rely on an opinion letter from the IRS to the prototype plan or volume submitter plan sponsor, to the effect that such Pension Plan is so qualified and the Pension Plan and the trust related thereto are exempt from federal income taxes under Sections 401(a) and 501(a) of the Code, respectively, and nothing has occurred and no circumstances exist that would reasonably be expected to adversely affect the qualified status of such Pension Plan. There is no pending or, to the Knowledge of Premier Financial, threatened legal action, suit or claim relating to the Compensation and Benefit Plans. Neither Premier Financial nor any of its Subsidiaries nor any ERISA Affiliate has engaged in a transaction, or omitted to take any action, with respect to any Compensation and Benefit Plan that would reasonably be expected to subject Premier Financial or any of its Subsidiaries or any ERISA Affiliate to a tax or penalty imposed by either Sections 4975 or 4980H of the Code or Section 502 of ERISA. No event has occurred or circumstance exists that could result in a material increase in premium cost of a Compensation and Benefit Plan that is insured, or a material increase in benefit cost of such Compensation and Benefit Plans that are self-insured.
(iii) None of the Compensation and Benefit Plans is subject to Title IV of ERISA. No liability under Title IV of ERISA has been or is expected to be incurred by Premier Financial or any of its Subsidiaries with respect to any terminated “single-employer plan”, within the meaning of Section 4001(a)(15) of ERISA, formerly maintained by any of them, or any single-employer plan of any entity (an “ERISA Affiliate”) which is considered one employer with Premier Financial under Section 4001(a)(14) of ERISA or Section 414(b) or (c) of the Code (an “ERISA Affiliate Plan”). None of Premier Financial, its Subsidiaries or any ERISA Affiliate has contributed, or has been obligated to contribute, to either a defined benefit pension plan subject to Title IV of ERISA or to a multiemployer plan under Subtitle E of Title IV of ERISA. No notice of a “reportable event,” within the meaning of Section 4043 of ERISA, has been required to be filed for any Compensation and Benefit Plan or by any ERISA Affiliate Plan. To the Knowledge of Premier Financial, there is no pending investigation or enforcement action by the U.S. Department of Labor or the IRS or any other Governmental Authority with respect to any Compensation and Benefit Plan. No Compensation and Benefit Plan has been the subject of an application or filing under or is a participant in, an amnesty, voluntary compliance, self-correction or similar program sponsored by any Governmental Authority.
(iv) All contributions required to be made under the terms of any Compensation and Benefit Plan or ERISA Affiliate Plan or any employee benefit arrangements under any collective bargaining agreement to which Premier Financial or any of its Subsidiaries
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was or is a party have been timely made or have been reflected on financial statements in Premier Financial SEC Reports.
(v) As otherwise provided under Section 6.10(c), neither Premier Financial nor any of its Subsidiaries has any obligations to provide retiree health and life insurance or other retiree death benefits under any Compensation and Benefit Plan, other than benefits mandated by Section 4980B of the Code, and each such Compensation and Benefit Plan may be amended or terminated without incurring liability thereunder. There has been no communication to Employees by Premier Financial or its Subsidiaries that would reasonably be expected to promise or guarantee such Employees’ retiree health or life insurance or other retiree death benefits on a permanent basis.
(vi) Neither Premier Financial, any of its Subsidiaries nor any ERISA Affiliate maintain any Compensation and Benefit Plans covering leased or foreign (i.e., non-United States) Employees, independent contractors or non-employees.
(vii) With respect to each Compensation and Benefit Plan, Premier Financial has provided or made available to Peoples, true and complete copies of existing (A) Compensation and Benefit Plan documents and amendments thereto, including a written description of any Compensation and Benefit Plan or any other employee benefit obligation that is not otherwise in writing, and all board actions approving the same, (B) trust instruments and insurance contracts, including renewal notices, (C) the three most recent Forms 5500 filed with the IRS (including all schedules thereto and the opinions of independent accountants), (D) the most recent actuarial report and financial statement, (E) the most recent summary plan description or wrap document and summaries of material modifications, summaries of benefits and coverage, COBRA communications, employee handbooks and any other written communications (or a description of any oral communications) relating to any Compensation and Benefit Plan, (F) notices or forms filed with the PBGC (other than for premium payments), (G) in the case of any Compensation and Benefit Plan that is intended to be qualified under Section 401(a) of the Code, the most recent determination, opinion or advisory letter issued by the IRS and any legal opinions issued thereafter with respect to such Compensation and Benefit Plan’s continued qualification, (H) any Form 5310 or Form 5330 filed with the IRS, (I) the most recent nondiscrimination tests performed under ERISA and the Code (including 401(k) and 401(m) tests), (J) copies of any material notices, letters or other correspondence from the IRS, U.S. Department of Labor, U.S. Department of Health and Human Services, PBGC or other Governmental Authority relating to any Compensation and Benefit Plan, and (K) all contracts with third party administrators, actuaries, investment managers, compensation consultants and other independent contractors that relate to a Compensation and Benefit Plan.
(viii) The consummation of the transactions contemplated by this Agreement would not, directly or indirectly (including, without limitation, as a result of any termination of employment prior to or following the Effective Time) reasonably be expected to (A) entitle any Employee, Consultant or Director to any payment (including severance pay or similar compensation) or any increase in compensation, (B) result in the vesting or acceleration of any benefits under any Compensation and Benefit Plan, or (C) result in any material increase in benefits payable under any Compensation and Benefit Plan, or (D) limit or restrict the right of Peoples to merge, amend, or terminate any Compensation and Benefit Plan.
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(ix) Neither Premier Financial nor any of its Subsidiaries or any ERISA Affiliate maintains any compensation plans, programs or arrangements the payments under which would not reasonably be expected to be deductible as a result of the limitations under Section 162(m) of the Code and the Treasury regulations issued thereunder.
(x) As a result, directly or indirectly, of the transactions contemplated by this Agreement (including, without limitation, as a result of any termination of employment prior to or following the Effective Time), none of Peoples, Premier Financial or the Surviving Corporation, or any of their respective Subsidiaries will be obligated to make a payment that would be characterized as an “excess parachute payment” to an individual who is a “disqualified individual” (as such terms are defined in Section 280G of the Code and applicable regulations thereunder) of Premier Financial on a consolidated basis or which would violate 12 U.S.C. Section 1828(k) or regulations thereunder.
(xi) Each Compensation and Benefit Plan that is subject to Section 409A of the Code has been administered in compliance with its terms and operational and documentary requirements of Section 409A of the Code and all applicable regulatory guidance (including notices, rulings and proposed and final regulations) thereunder. Neither Premier Financial nor any of its Subsidiaries has any obligation to gross up, indemnify or otherwise reimburse any individual for any excise taxes, interest or penalties incurred pursuant to Section 409A of the Code.
(xi) Premier Financial and each of its Subsidiaries are and have been in compliance with all applicable federal, state and local laws, regulations, ordinances and rulings respectingii employment and employment practices, terms and conditions of employment, and wages and hours, including, without limitation, any such laws respecting employment discrimination and occupational safety and health requirements, and (i) none of Premier Financial or any of its Subsidiaries are engaged in any unfair labor practice or other employment and/or wage-related policy, practice or action in violation of any federal, state or local law, regulation, ordinance or ruling, including without limitation those related to wages and hours under the Fair Labor Standards Act (FLSA), and (ii) there is no unfair labor practice or employment-related complaint against Premier Financial or any of its Subsidiaries pending or, to the knowledge of Premier Financial, threatened before any state or federal court, the National Labor Relations Board, the Equal Employment Opportunity Commission (EEOC) or any other federal, state or local administrative body relating to employment or employment-related policies, practices or conditions.
(m) Labor Matters. Neither Premier Financial nor any of its Subsidiaries is a party to or is bound by any collective bargaining agreement, contract or other agreement or understanding with a labor union or labor organization, nor is Premier Financial or any of its Subsidiaries the subject of a proceeding asserting that it or any such Subsidiary has committed an unfair labor practice (within the meaning of the National Labor Relations Act) or seeking to compel Premier Financial or any such Subsidiary to bargain with any labor organization as to wages or conditions of employment, nor is there any strike or other labor dispute involving it or any of its Subsidiaries pending or, to Premier Financial’s Knowledge, threatened, nor is Premier Financial aware of any activity involving its or any of its Subsidiaries’ employees seeking to
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certify a collective bargaining unit or engaging in other organizational activity. Premier Financial and its Subsidiaries are in compliance with all applicable laws respecting employment and employment practices, terms and conditions of employment and wages and hours.
(n) Takeover Laws. Premier Financial has taken all action required to be taken by Premier Financial in order to exempt this Agreement, the Support Agreements and the transactions contemplated hereby and thereby from, and this Agreement, the Support Agreements and the transactions contemplated hereby and thereby are exempt from, (i) the requirements of any “moratorium,” “control share,” “fair price,” “affiliate transaction,” “business combination” or other anti-takeover laws and regulations of the Commonwealth of Kentucky including Sections 271B.12-200 through 271B.12-220 of the KBCA (“Takeover Laws”), and (ii) any applicable provisions of the Premier Financial Articles, the Premier Financial Bylaws and/or the governing documents of any Premier Financial Subsidiary.
(o) Environmental Matters. Neither the conduct nor the operation of Premier Financial or any of its Subsidiaries nor any condition of any property presently or previously owned, leased or operated by any of them (including, without limitation, in a fiduciary or agency capacity), , violates or violated Environmental Laws and to Premier Financial’s Knowledge, no condition exists or has existed or event has occurred with respect to any of them or any such property that is reasonably likely to result in liability under Environmental Laws. Neither Premier Financial nor any of its Subsidiaries has received any notice from any Person that Premier Financial or its Subsidiaries or the operation or condition of any property ever owned, leased, operated, or held as collateral or in a fiduciary capacity by any of them are or were in violation of or otherwise are alleged to have liability under any Environmental Law, including, but not limited to, responsibility (or potential responsibility) for the cleanup or other remediation of any Hazardous Materials at, on, beneath, or originating from any such property.
(p) Tax Matters.
(i) (A) All Tax Returns that were or are required to be filed by or with respect to Premier Financial and its Subsidiaries have been duly and timely filed, or an appropriate extension has been granted, and all such Tax Returns are true, correct and complete in all material respects, (B) all Taxes due (whether or not required to be shown to be due on the Tax Returns referred to in clause (i)(A) of this Section 5.01(p)) have been paid in full, and (C) no unexpired waivers of statutes of limitation have been given by or requested with respect to any Taxes of Premier Financial or its Subsidiaries. Premier Financial has made available to Peoples true and correct copies of the United States federal income Tax Returns filed by Premier Financial and its Subsidiaries for each of the three most recent fiscal years. Neither Premier Financial nor any of its Subsidiaries has any material liability with respect to any Taxes in excess of the amounts accrued with respect thereto that are reflected in the financial statements in Premier Financial SEC Reports or that have arisen in the ordinary and usual course of business since December 31, 2017. The accruals and reserves for Taxes reflected in financial statements in Premier Financial SEC Reports are adequate for the periods covered. There are no Liens for Taxes upon the assets of Premier Financial or any of its Subsidiaries other than Liens for current Taxes not yet due and payable.
(ii) No Tax is required to be withheld pursuant to Section 1445 of the Code as a result of the transactions contemplated by this Agreement.
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(iii) Premier Financial and its Subsidiaries have withheld or collected and paid over to the appropriate Governmental Authorities, or are properly holding for such payment, all Taxes required by law to be withheld or collected.
(iv) No claim has ever been made by any Governmental Authority in a jurisdiction where Premier Financial or any of its Subsidiaries do not file Tax Returns that Premier Financial or any of its Subsidiaries is or may be subject to taxation by that jurisdiction.
(v) Neither Premier Financial nor any of its Subsidiaries has applied for any ruling from any Governmental Authority with respect to Taxes nor entered into a closing agreement (or similar arrangement) with any Governmental Authority.
(vi) Except as provided in the Premier Financial Disclosure Schedules neither Premier Financial nor any of its Subsidiaries has been audited by any Governmental Authority for taxable years ending on or subsequent to December 31, 2015. No Tax audit or administrative or judicial Tax proceedings of any Governmental Authority are pending or being conducted with respect to Premier Financial or any of its Subsidiaries and, to the Knowledge of Premier Financial, no such audit or other proceeding has been threatened. No Governmental Authority has asserted, is now asserting, or, to the Knowledge of Premier Financial, is threatening to assert against Premier Financial or any of its Subsidiaries any deficiency or claim for additional Taxes.
(vii) Except for internal tax allocation agreements among the Premier Financial Group, neither Premier Financial nor any of its Subsidiaries (A) is a party to any Tax allocation or sharing agreement, (B) has ever been a member of an affiliated group of corporations, within the meaning of Section 1504 of the Code, other than an affiliated group of which Premier Financial is or was the common parent corporation (the “Premier Financial Group”), or (C) has any liability for the Taxes of any Person (other than members of the Premier Financial Group) as a transferee or successor, by contract, or otherwise.
(viii) Neither Premier Financial nor any of its Subsidiaries has agreed to any extension of time with respect to any Tax Return or a Tax assessment or deficiency, and no such extension of time has been requested.
(ix) Except as set forth on Section 5.01(p) of the Premier Financial Disclosure Schedule, neither Premier Financial nor any of its Subsidiaries has agreed, nor is it required, to make any adjustment under Section 481(a) of the Code by reason of a change in accounting method or otherwise that will affect its liability for Taxes.
(x) Except for Centurion, there are no joint ventures, partnerships, limited liability companies, or other arrangements or contracts to which Premier Financial or its Subsidiaries is a party that could be treated as a partnership for Tax purposes.
(xi) Except as set forth on Section 5.01(p) of the Premier Financial Disclosure Schedule, neither Premier Financial nor any of its Subsidiaries is a party to any agreement, contract, arrangement or plan that has resulted, or could result, individually or in the
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aggregate, in the payment of “excess parachute payments” within the meaning of Section 280G of the Code.
(xii) Except as set forth on Section 5.01(p) of the Premier Financial Disclosure Schedule, none of the assets of Premier Financial or any of its Subsidiaries are “tax exempt use property” or “tax exempt bond financed property” within the meaning of Section 168 of the Code and the Bank is not a party to a “long-term contract” within the meaning of Section 460 of the Code.
(xiii) Premier Financial has not taken any action and is not aware of any fact or circumstance that would reasonably be expected to prevent the Merger from qualifying as a “reorganization” within the meaning of Section 368(a) of the Code.
(q) Risk Management Instruments. Neither Premier Financial nor any of its Subsidiaries is a party to or otherwise bound by any interest rate swaps, option agreements, futures or forward contracts or other similar risk management arrangements.
(r) Books and Records. Except as redacted, the books of account, minute books, stock record books, and other records of Premier Financial and its Subsidiaries, all of which have been made available to Peoples, are complete and correct in all material respects and have been maintained in accordance with sound business practices and, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of Premier Financial and its Subsidiaries, including the maintenance of an adequate system of internal controls that is sufficient to provide reasonable assurances that transactions are executed in accordance with management’s authorization, that transactions are recorded as necessary, that access to assets is permitted only in accordance with management’s authorization, and that the recorded accountability for assets is compared at reasonable intervals and appropriate action is taken with respect to any differences. The minute books of Premier Financial and its Subsidiaries contain accurate and complete records of all meetings held of, and corporate action taken by, the shareholders, the Premier Financial Board and the governing bodies of its Subsidiaries, and committees of the Premier Financial Board and the governing bodies of its Subsidiaries, and except for meetings held in executive session and the bi-annual meetings of independent directors, no meeting of any such shareholders, Premier Financial Board and the governing bodies of its Subsidiaries, or committees thereof has been held for which minutes have been prepared and are not contained in such minute books.
(s) Insurance. Section 5.01(s) of the Premier Financial Disclosure Schedule sets forth all of the insurance policies, binders, or bonds maintained by Premier Financial or its Subsidiaries. Premier Financial and its Subsidiaries are insured with reputable insurers against such risks and in such amounts as is prudent in accordance with safe and sound industry practices. All such insurance policies are in full force and effect; Premier Financial and its Subsidiaries are not in material default thereunder, all claims thereunder have been filed in due and timely fashion and Premier Financial and its Subsidiaries will cause to be filed in due and timely fashion any claims that have not yet been filed as of the date of this Agreement or which arise before the Effective Time of the Merger.
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(t) Title to Real Property and Assets.
(i) Section 5.01(t) of the Premier Financial Disclosure Schedule lists and describes all real property, and any leasehold interest in real property, owned or held by Premier Financial or its Subsidiaries. Premier Financial and its Subsidiaries have good and marketable title, free and clear of all Liens, to all of the properties and assets, real and personal, reflected on the financial statements in Premier Financial SEC Reports as being owned by Premier Financial as of December 31, 2020, or acquired after such date, except (A) statutory Liens for amounts not yet due and payable, (B) pledges to secure deposits and other Liens incurred in the ordinary course of banking business, (C) with respect to real property, such imperfections of title, easements, encumbrances, Liens, charges, defaults or equitable interests, if any, as do not affect the use of properties or assets subject thereto or affected thereby or otherwise materially impair business operations at such properties, and (D) dispositions and encumbrances in the ordinary course of business. Except as set forth in Section 5.01(f)(i) of the Premier Financial Disclosure Schedule, no portion of any real property owned by Premier Financial or its Subsidiaries is (A) operated as a nonconforming use under applicable zoning codes, (B) located in either a “Special Flood Hazard Area” pursuant to the Federal Insurance Rate Maps created by the Federal Emergency Management Agency or an area which is inundated by a “100 year” flood as provided by any Governmental Authority.
(ii) Each lease agreement set forth on Section 5.01(t) of the Premier Financial Disclosure Schedule is valid, legally binding, in full force and effect, and enforceable in accordance with its terms. There is not under any such lease agreements any default by Premier Financial or its Subsidiaries, or to the Knowledge of Premier Financial, to the other party under any such lease agreement which with notice or lapse of time, or both, would constitute a default. The consummation of the transactions contemplated hereby will not result in a breach or default under any such lease agreements. Neither Premier Financial nor any of its Subsidiaries has received written notice that the landlord under such lease agreements, as applicable, would refuse to renew such lease agreement upon expiration of the period thereof upon substantially the same terms, except for rent increases consistent with past experience or market rentals.
(iii) The real property owned or leased by Premier Financial or its Subsidiaries complies in all material respects with all applicable private agreements, zoning codes, ordinances and requirements and other governmental laws and regulations relating thereto and there are no litigation or condemnation proceedings pending or, to Premier Financial’s Knowledge, threatened with respect to any such real property. All licenses and permits necessary for the occupancy and use of the real property owned or leased by Premier Financial or its Subsidiaries, as used in the ordinary course, consistent with past practices of Premier Financial and its Subsidiaries, have been obtained and are in full force and effect. All buildings, structures and improvements located on, fixtures contained in, and appurtenances attached to the real property owned or leased by Premier Financial or its Subsidiaries are in good condition and repair, subject to normal wear and tear, and no condition exists which materially interferes with the economic value or use thereof.
(iv) All leases pursuant to which Premier Financial or its Subsidiaries, as lessee, leases personal property (except for leases that have expired by their terms or that
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Premier Financial or its Subsidiaries has agreed to terminate since the date hereof) are valid without default thereunder by the lessee or to Knowledge of Premier Financial, the lessor.
(u) Loans.
(i) The allowance for loan and lease losses as reflected on Premier Financial’s most recent financial statements filed with the SEC was, in the reasonable opinion of Premier Financial’s management, (A) adequate to meet all reasonably anticipated loan and lease losses, net of recoveries related to loans previously charged off as of those dates, (B) consistent with GAAP and reasonable and sound banking practices and (C) in conformance with recommendations and comments in reports of examination in all material respects.
(ii) Each loan, loan agreement, note or borrowing arrangement (including leases, credit enhancements, commitments, guarantees and interest-bearing assets) (collectively, “Loans”) of Premier Financial and Premier Financial Subsidiaries (A) is evidenced by notes, agreements or other evidences of indebtedness that are true, genuine and what they purport to be, (B) to the extent carried on the books and records of Premier Financial and Premier Financial Subsidiaries as a secured Loan, has been secured by valid charges, mortgages, pledges, security interests, restrictions, claims, liens or encumbrances, as applicable, which have been perfected and (C) is the legal, valid and binding obligation of the obligor named therein, enforceable in accordance with its terms, subject to enforceability as may be limited by bankruptcy, insolvency, moratorium, reorganization or similar laws affecting the rights of creditors generally and the availability of equitable remedies. Section 5.01(u) of the Premier Financial Disclosure Schedule lists each Loan that has as of the date hereof an outstanding balance of $250,000 or more and that (A) is over 90 days or more delinquent in payment of principal or interest, (B) is classified by Premier Financial or its Subsidiaries as “Other Loans Specially Mentioned,” “Special Mention,” “Substandard,” “Doubtful,” “Loss,” “Classified,” “Criticized,” “Credit Risk Assets,” “Concerned Loans,” or “Watch List,” or words of similar import, (C) has undergone troubled debt restructuring, or (D) is entirely or predominantly unsecured.
(iii) Each outstanding Loan of Premier Financial and the Premier Financial Subsidiaries (including Loans held for resale to investors) was solicited and originated, and is and has been administered and, where applicable, serviced, and the relevant Loan files are being maintained, in all material respects in accordance with the relevant notes or other credit or security documents, the written underwriting standards of Premier Financial and the Premier Financial Subsidiaries (and, in the case of Loans held for resale to investors, the underwriting standards, if any, of the applicable investors) and with all applicable federal, state and local laws, regulations and rules.
(iv) None of the agreements pursuant to which Premier Financial or any of the Premier Financial Subsidiaries has sold Loans or pools of Loans, or participations in Loans or pools of Loans, contains any obligation to repurchase the Loans or interests therein solely on account of a payment default by the obligor on the Loan (other than first payment defaults and other than mortgage Loans sold to government sponsored entities).
(v) There are no outstanding Loans made by Premier Financial or any of the Premier Financial Subsidiaries to any “executive officer” or other “insider” (as each term is
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defined in Regulation O promulgated by the FRB) of Premier Financial or the Premier Financial Subsidiaries, other than Loans that are subject to and that were made and continue to be in compliance with Regulation O or that are exempt therefrom, which are listed in Section 5.01(u) of the Premier Financial Disclosure Schedule.
(vi) Neither Premier Financial nor any of the Premier Financial Subsidiaries is (A) now nor has it ever been since January 1, 2018, subject to any fine, suspension, settlement or other contract or other administrative agreement or sanction by, or any reduction in any loan purchase commitment from, any Governmental Authority or Regulatory Authority relating to the origination, sale or servicing of mortgage or consumer Loans, and (B) aware of any actual or threatened claim, proceeding or investigation with respect thereto by any Person.
(vii) Without limitation of the foregoing, Premier Financial and each of its Subsidiaries have complied in all material respects with and are not in material default or violation under any applicable provision of, or any applicable regulation, policy and/or guideline of any Governmental Authority promulgated under or relating to, the CARES Act. Section 5.01(u) of the Premier Financial Disclosure Schedule lists (A) each Loan of Premier Financial or any Premier Financial Subsidiary as of the date of this Agreement that was made in connection with the Paycheck Protection Program established under the CARES Act, and (B) each Loan of Premier Financial and the Premier Financial Subsidiaries that is subject to payment deferral or otherwise has undergone troubled debt restructuring under the CARES Act as of the date of this Agreement (including all outstanding amounts and the expiration date for any deferral or other modification) (each Loan referred to in (B) a “CARES Act Modified Loan”). For purposes of this Agreement, “CARES Act” means, collectively, the Coronavirus Aid, Relief, and Economic Security Act, as amended, any extension thereof, and any other economic stimulus or other laws, rules, and regulations related to the Pandemic.
(v) Repurchase Agreements. With respect to all agreements pursuant to which Premier Financial or its Subsidiaries has purchased securities subject to an agreement to resell, if any, Premier Financial or any of its Subsidiaries, as the case may be, has a valid, perfected first Lien in or evidence of ownership in book entry form of the government securities or other collateral securing the repurchase agreement, and the value of such collateral equals or exceeds the amount of the debt secured thereby.
(w) Investment Securities Portfolio. All investment securities held by Premier Financial or its Subsidiaries, as reflected in the financial statements in Premier Financial SEC Reports, are carried in accordance with GAAP consistent with the applicable guidelines issued by the Regulatory Authorities. Premier Financial or any of its Subsidiaries, as applicable, have good, valid and marketable title to all securities held by them, respectively, except securities held in any fiduciary or agency capacity, free and clear of any Lien, except as set forth in the financial statements in Premier Financial SEC Reports and except to the extent any such securities are pledged in the ordinary course of business consistent with prudent banking practices to secure obligations of Premier Financial or its Subsidiaries.
(x) Deposit Insurance. All of the deposits held by Premier Financial or any Premier Financial Subsidiary (including the records and documentation pertaining to the held
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deposits) have been established and are held in compliance in all material respects with (i) all applicable policies, practices and procedures of Premier Financial or the Premier Financial Subsidiary, as applicable and (ii) all applicable laws. The deposit accounts of Premier Financial and any Premier Financial Subsidiary are insured by the FDIC through the Deposit Insurance Fund to the fullest extent permitted by law, all premiums and assessments required to be paid in connection therewith have been paid when due, and no proceedings for the termination or revocation of the insurance are pending or, to Premier Financial’s Knowledge, threatened.
(y) Information Security. Except as set forth in Section 5.01(y) of the Premier Financial Disclosure Schedule, to Premier Financial’s Knowledge, no third party has gained unauthorized access to any information systems or networks controlled by or material to the operation of the business of Premier Financial and the Premier Financial Subsidiaries (including without limitation any information system or networks owned or controlled by any third party (a “Third Party System”)), and, to Premier Financial’s Knowledge, there are no data security or other technological vulnerabilities with respect to its information technology systems or networks or any Third Party System material to the operation of the business of Premier Financial and the Premier Financial Subsidiaries, in each case that, individually or in the aggregate, would reasonably be expected to be material to Premier Financial. Premier Financial maintains an information privacy and security program that maintains reasonable measures designed to protect the privacy, confidentiality and security of all data or information that constitutes personal data or personal information under applicable law against any (i) loss or misuse of the data, (ii) unauthorized or unlawful operations performed upon the data, or (iii) other act or omission that compromises the security or confidentiality of the data.
(z) Bank Secrecy Act, Anti-Money Laundering and OFAC and Customer Information. Premier Financial has no Knowledge that any facts or circumstances exist, which would cause Premier Financial or any of its Subsidiaries to be deemed (i) to be operating in violation of the Bank Secrecy Act, the Patriot Act, any order issued with respect to anti-money laundering by the Treasury’s Office of Foreign Assets Control, or any other applicable anti-money laundering law, or (ii) not to be in satisfactory compliance in any material respect with the applicable privacy and customer information requirements contained in any federal and state privacy laws, including without limitation, in Title V of the Xxxxx-Xxxxx-Xxxxxx Act. Except as disclosed in the Premier Financial Disclosure Schedule, Premier Financial has no Knowledge that would cause Premier Financial to believe that any non-public customer information has been disclosed to or accessed by an unauthorized third party in a manner that would cause Premier Financial or any of its Subsidiaries to undertake any material remedial action. The Premier Financial Board (or, where appropriate, the governing bodies of its Subsidiaries) has adopted and implemented an anti-money laundering program that contains adequate and appropriate customer identification verification procedures that materially comply with the Patriot Act and such anti-money laundering program meets the requirements of the Patriot Act and the regulations thereunder, and Premier Financial (or its Subsidiaries) has complied in all material respects with any requirements to file reports and other necessary documents as required by the Patriot Act and the regulations thereunder.
(aa) CRA Compliance. Neither Premier Financial nor any of its Subsidiaries has received any notice of non-compliance with the applicable provisions of the Community Reinvestment Act and the regulations promulgated thereunder, and each of Citizens Bank and
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Premier Bank has received a CRA rating of satisfactory or better as a result of its most recent CRA examination. Neither Premier Financial nor any of its Subsidiaries has Knowledge of any fact or circumstance or set of facts or circumstances which could cause Premier Financial or any of its Subsidiaries to receive notice of non-compliance with such provisions or cause the CRA rating of any Premier Financial Subsidiary to fall below “satisfactory.”
(bb) Related Party Transactions. Except as disclosed in Premier Financial Disclosure Schedule, neither Premier Financial nor any of its Subsidiaries has entered into any transactions with any Affiliate of Premier Financial or its Subsidiaries or any Affiliate of any director or officer of Premier Financial or its Subsidiaries (collectively, the “Related Parties”). None of the Related Parties presently (i) owns, directly or indirectly, any interest in (excepting not more than 5% stock holdings for investment purposes in securities of publicly held and traded companies), or is an officer, director, employee or consultant of, any Person which is, or is engaged in business as, a competitor, lessor, lessee, customer, distributor, sales agent, or supplier of Premier Financial or any of its Affiliates, (ii) owns, directly or indirectly, in whole or in part, any tangible or intangible property that Premier Financial or any of its Subsidiaries uses or the use of which is necessary for conduct of their business, (iii) has brought any action against, or owes any amount to, Premier Financial or its Subsidiaries, or (iv) on behalf of Premier Financial or any of its Subsidiaries, has made any payment or commitment to pay any commission, fee or other amount to, or purchase or obtain or otherwise contract to purchase or obtain any goods or services from, any other Person of which any officer or director of Premier Financial or its Subsidiaries, is a partner or stockholder (excepting stock holdings solely for investment purposes in securities of publicly held and traded companies). Section 5.01(bb) of the Premier Financial Disclosure Schedule contains a complete list of all contracts between Premier Financial, its Subsidiaries and any Related Party (collectively, the “Related Party Agreements”) entered into on or prior to the date of this Agreement or contemplated under this Agreement to be entered into before the Effective Date (other than those contracts entered into after the date of this Agreement for which Peoples has given its prior written consent). Neither Premier Financial nor its Subsidiaries is party to any transaction with any Related Party on other than arm’s-length terms.
(cc) Prohibited Payments. None of Premier Financial, or the Premier Financial Subsidiaries, or to the Knowledge of Premier Financial, any director, officer, employee, agent or other Person acting on behalf of Premier Financial or any of the Premier Financial Subsidiaries has, directly or indirectly, (i) used any funds of Premier Financial or any of the Premier Financial Subsidiaries for unlawful contributions, unlawful gifts, unlawful entertainment or other expenses relating to political activity, (ii) made any unlawful payment to foreign or domestic governmental officials or employees or to foreign or domestic political parties or campaigns from funds of Premier Financial or any of the Premier Financial Subsidiaries, (iii) violated any provision that would result in the violation of the Foreign Corrupt Practices Act of 1977, as amended, or any similar law, (iv) established or maintained any unlawful fund of monies or other assets of Premier Financial or any of the Premier Financial Subsidiaries, (v) made any fraudulent entry on the books or records of Premier Financial or any of the Premier Financial Subsidiaries, or (vi) made any unlawful bribe, unlawful rebate, unlawful payoff, unlawful influence payment, unlawful kickback or other unlawful payment to any Person, private or public, regardless of form, whether in money, property or services, to obtain favorable treatment in securing business to obtain special concessions for Premier Financial or any of the Premier Financial Subsidiaries, to pay for favorable treatment for business secured or
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to pay for special concessions already obtained for Premier Financial or any of the Premier Financial Subsidiaries, or is currently subject to any United States sanctions administered by the Office of Foreign Assets Control of the United States Treasury Department.
(dd) Fairness Opinion. The Premier Financial Board has received the written opinion of Xxxxx Xxxxxxx, to the effect that, as of the date hereof, the Merger Consideration to be received by the Premier Financial shareholders in the Parent Merger is fair to the holders of Premier Financial Common Stock from a financial point of view.
(ee) Absence of Undisclosed Liabilities. Neither Premier Financial nor any of its Subsidiaries has any liability (whether accrued, absolute, contingent or otherwise) that, either individually or when combined with all liabilities as to similar matters, would have a Material Adverse Effect on Premier Financial on a consolidated basis, except as disclosed in the financial statements in Premier Financial SEC Reports.
(ff) Material Adverse Effect. Premier Financial has not, on a consolidated basis, suffered a change in its business, financial condition or results of operations since December 31, 2020, that has had or could reasonably be expected to have a Material Adverse Effect on Premier Financial or any of its Subsidiaries.
(gg) Tax Treatment of Merger. As of the date of this Agreement, Premier Financial is not aware of any fact or state of affairs relating to Premier Financial that could cause the Merger not to be treated as a “reorganization” under Section 368(a) of the Code
(hh) Premier Financial Information. The information provided in writing by Premier Financial relating to Premier Financial and its Subsidiaries that is to be contained in the Registration Statement, the Joint Proxy Statement/Prospectus, any filings or approvals under applicable state securities laws, any filing pursuant to Rule 165 or Rule 425 under the Securities Act or Rule 14a-12 under the Exchange Act, or in any other document filed with any other Governmental Authorities in connection herewith, will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances in which they are made, not misleading and will comply in all material respects with the provisions of the Securities Act, the Exchange Act, the rules and regulations thereunder, and any other governing laws or regulations, as applicable. No representation or warranty by Premier Financial, and no statement by Premier Financial in any certificate, agreement, schedule or other document furnished or to be furnished in connection with the transactions contemplated by this Agreement, was or will be inaccurate, incomplete or incorrect in any material respect as of the date furnished or contains or will contain any untrue statement of a material fact or omits or will omit to state any material fact necessary to make such representation, warranty or statement not misleading to Peoples.
5.02 Representations and Warranties of Peoples. Except (a) as disclosed in the disclosure schedule delivered by Peoples to Premier Financial concurrently herewith to the extent applicable (the “Peoples Disclosure Schedule”); provided that (i) the mere inclusion of an item in the Peoples Disclosure Schedule as an exception to a representation or warranty shall not be deemed an admission by Peoples that such item represents a material exception or fact, event or circumstance or that such item is reasonably likely to result in a Material Adverse Effect and
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(ii) any disclosures made with respect to a section of Article V shall be deemed to qualify any other section of Article V specifically referenced or cross-referenced, or (b) as disclosed in any Peoples’ SEC Reports publicly filed with or furnished to the SEC by Peoples after January 1, 2021 and prior to the date hereof (but disregarding risk factor disclosures contained under the heading “Risk Factors,” or disclosures of risks set forth in any “forward-looking statements” disclaimer or any other statements that are similarly non-specific or cautionary, predictive or forward-looking in nature), Peoples hereby represents and warrants to Premier Financial as follows:
(a) Organization, Standing and Authority.
(i) Peoples is a corporation duly organized, validly existing and in good standing under the laws of the State of Ohio and is a financial holding company duly registered with the FRB under the BHCA. Peoples has the corporate power and authority to own or lease all of its properties and assets and to carry on its business as it is now being conducted in all material respects. Peoples is duly qualified to do business and is in good standing in any foreign jurisdictions where its ownership or leasing of property or assets or the conduct of its business requires it to be so qualified.
(ii) Except, in the case of clauses (B) and (C) only, as would not reasonably be likely to have, individually or in the aggregate, a Material Adverse Effect on Peoples, each Subsidiary of Peoples (A) is duly organized and validly existing under the laws of its jurisdiction of organization, (B) is duly licensed or qualified to do business and, where such concept is recognized under applicable law, in good standing in all jurisdictions (whether federal, state, local or foreign) where its ownership, leasing or operation of property or the conduct of its business requires it to be so licensed or qualified or in good standing and (C) has all requisite corporate power and authority to own, lease or operate its properties and assets and to carry on its business as now conducted. There are no restrictions on the ability of any Subsidiary of Peoples to pay dividends or distributions, except, in the case of a Subsidiary that is an insured depository institution, for restrictions on dividends or distributions generally applicable to all such regulated entities. The deposit accounts of Peoples Bank are insured by the FDIC through the Deposit Insurance Fund to the fullest extent permitted by law, all premiums and assessments required to be paid in connection therewith have been paid when due, and no proceedings for the termination of such insurance are pending or, to the knowledge of Peoples, threatened.
(b) Capital Structure of Peoples. As of March 25, 2021, the authorized capital stock of Peoples consists of 24,000,000 Peoples Common Shares, of which 19,624,187 shares are outstanding and 50,000 shares of preferred stock, without par value, none of which are outstanding. The outstanding Peoples Common Shares have been duly authorized, are validly issued and outstanding, fully paid and nonassessable, and were not issued in violation of any preemptive rights. As of the Agreement Date, Peoples has available the following number of Peoples Common Shares for issuance (i) 600,016 for the Peoples Equity Plan, (ii) 464,603 for its dividend reinvestment plan, (iii) 49,013 for the Peoples Board Deferred Compensation Plan, and (iv) 214,797 for the Peoples Employee Stock Purchase Plan. As As of March 25, 2021, 1,634,974 Peoples Common Shares were held in treasury by Peoples.
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(c) Ownership of Premier Financial Common Stock. As of the date of this Agreement, Peoples and its Subsidiaries do not beneficially own any of the outstanding Premier Financial Common Stock.
(d) Authority; No Violation.
(i) Peoples has full corporate power and authority to execute and deliver this Agreement and, subject to the shareholder and other actions described below, to consummate the transactions contemplated hereby. The execution and delivery of this Agreement and the consummation of the Parent Merger and the Subsidiary Mergers have been duly and validly approved by the Board of Directors of Peoples. The Board of Directors Peoples has determined that the Parent Merger, on the terms and conditions set forth in this Agreement, is in the best interests of Peoples and its shareholders and has adopted a resolution to the foregoing effect. Except for the approval of this Agreement, and the transactions contemplated herein, including but not limited to the authorization of such additional Peoples Common Shares as are necessary to consummate the transactions contemplated hereby, by the affirmative vote of the holders of a majority of the outstanding shares of Peoples Common Shares (the “Requisite Peoples Vote”), and the adoption and approval of the Bank Merger Agreements by Peoples, as Peoples Bank sole shareholder, no other corporate proceedings on the part of Peoples are necessary to approve this Agreement or to consummate the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by Peoples and (assuming due authorization, execution and delivery by Peoples) constitutes a valid and binding obligation of Peoples, enforceable against Peoples in accordance with its terms (except in all cases as enforceability may be limited by bankruptcy, insolvency, moratorium, reorganization). The Peoples Common Shares to be issued in the Merger have been validly authorized and, when issued, will be validly issued, fully paid and nonassessable, and no current or past shareholder of Peoples will have any preemptive right or similar rights in respect thereof.
(ii) Neither the execution and delivery of this Agreement by Peoples, nor the consummation by Peoples of the transactions contemplated hereby, including the Merger and the Subsidiary Mergers, nor compliance by Peoples with any of the terms or provisions hereof, will (A) violate any provision of the Peoples Articles or the Peoples Regulations, or (B) assuming that the consents and approvals referred to in Section 5.02(e) are duly obtained, (1) violate any statute, code, ordinance, rule, regulation, judgment, order, writ, decree or injunction applicable to Peoples, any of the Peoples Subsidiaries or any of their respective properties or assets or (2) violate, conflict with, result in a breach of any provision of or the loss of any benefit under, constitute a default (or an event which, with notice or lapse of time, or both, would constitute a default) under, result in the termination of or a right of termination or cancellation under, accelerate the performance required by, or result in the creation of any Lien upon any of the respective properties or assets of Peoples or any of the Peoples Subsidiaries under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or other instrument or obligation to which Peoples or any of the Peoples Subsidiaries is a party, or by which they or any of their respective properties or assets may be bound, except (in the case of clause (2) above) for such violations, conflicts, breaches or defaults which would not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Peoples.
(e) Consents and Regulatory Approvals.
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(i) No consents or approvals of, or filings or registrations with, any Governmental Authority or with any third party are required to be made or obtained by Peoples or any of its Subsidiaries in connection with the execution, delivery or performance by Peoples of this Agreement or the consummation of the transactions contemplated hereby, including the Merger, except for (A) the filings of applications, waivers or notices, as applicable, with Regulatory Authorities to approve the transactions contemplated by the Agreement, (B) the filing of the Registration Statement, (C) Requisite Premier Financial Vote and Requisite Peoples Vote, (D) the filing of the certificate of merger with the OSS pursuant to the OGCL and articles of merger with the KSS pursuant to the KBCA, and filing the Subsidiary Merger Certificates, (E) any approvals and notices required with respect to the Peoples Common Shares to be issued as part of the Merger Consideration under the rules of NASDAQ and (f) the receipt of the approvals set forth in Section 7.01(b).
(ii) As of the date hereof, Peoples is not aware of any reason why the approvals set forth in Section 7.01(b) will not be received without the imposition of a condition, restriction or requirement of the type described in Section 7.01(b).
(f) SEC Reports.
(i) Peoples has timely filed all reports, registration statements, proxy statements and other materials, together with any amendments required to be made with respect thereto, that it was required to file with the SEC, and all such reports, registration statements, proxy statements, other materials and amendments have complied in all material respects with all legal requirements relating thereto, and has paid all fees and assessments due and payable in connection therewith.
(ii) An accurate and complete copy of each final registration statement, prospectus, report, schedule and definitive proxy statement filed with or furnished to the SEC by Peoples pursuant to the Securities Act or the Exchange Act prior to the date of this Agreement (the “Peoples’ SEC Reports”) is publicly available. No such SEC Report, at the time filed, furnished or communicated (and, in the case of registration statements and proxy statements, on the dates of effectiveness and the dates of the relevant meetings, respectively), and considering all amendments to any Peoples’ SEC Report filed prior to the date hereof, contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances in which they were made, not misleading, except that information filed as of a later date (but before the date of this Agreement) shall be deemed to modify information as of an earlier date. As of their respective dates, all Peoples’ SEC Reports complied as to form in all material respects with the published rules and regulations of the SEC with respect thereto.
(g) Financial Statements; Material Adverse Effect; Internal Controls.
(i) The financial statements of Peoples and its Subsidiaries included (or incorporated by reference) in Peoples’ SEC filings (including the related notes, where applicable) (A) have been prepared from, and are in accordance with, the books and records of Peoples and its Subsidiaries, (B) fairly present in all material respects the consolidated results of operations, cash flows, changes in shareholders’ equity and consolidated financial position of Peoples and its Subsidiaries for the respective fiscal periods or as of the respective dates therein set forth (subject in the case of unaudited statements to recurring year-end audit adjustments
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normal in nature and amount), (C) complied as to form, as of their respective dates of filing with the SEC, in all material respects with applicable accounting requirements and with the published rules and regulations of the SEC with respect thereto, and (D) have been prepared in accordance with GAAP, consistently applied during the periods involved, except, in each case, as indicated in such statements or in the notes thereto. As of the date hereof, the books and records of Peoples and its Subsidiaries have been maintained in all material respects in accordance with GAAP and any other applicable legal and accounting requirements and reflect only actual transactions. As of the date hereof, Ernst & Young LLP has not resigned (or informed Peoples that it intends to resign) or been dismissed as independent public accountants of Peoples as a result of or in connection with any disagreements with Peoples on a matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure.
(ii) Neither Peoples nor any of its Subsidiaries has incurred any material liability or obligation of any nature whatsoever, except for (A) those liabilities that are reflected or reserved against on the consolidated balance sheet of Peoples included in its Annual Report on Form 10-K for the fiscal year ended December 31, 2020 (including any notes thereto), (B) liabilities incurred in the ordinary course of business consistent in nature and amount with past practice since December 31, 2020 or (C) in connection with this Agreement and the transactions contemplated hereby.
(h) Regulatory Matters.
(i) Neither Peoples nor Peoples Bank nor any of their respective properties is a party to or is subject to a Regulatory Order from any Regulatory Authority.
(ii) Neither Peoples nor Peoples Bank has been advised by any Regulatory Authority that such Regulatory Authority is contemplating issuing or requesting (or is considering the appropriateness of issuing or requesting) any such order, decree, formal or informal agreement, memorandum of understanding, commitment letter, board resolution, supervisory letter or similar submission.
(i) Litigation. Except as has not had and would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect on Peoples, no litigation, claim or other proceeding before any court or Governmental Authority is pending against Peoples or Peoples Bank, and, to Peoples’ Knowledge, no such litigation, claim or other proceeding has been threatened, and there is no judgment, decree, injunction, rule or order of any Governmental Authority outstanding against Peoples.
(j) Compliance with Laws. Peoples and each of its Subsidiaries (i) are in compliance in all material respects with all applicable federal, state, local and foreign statutes, laws, regulations, ordinances, rules, judgments, orders or decrees applicable thereto, and (ii) have all licenses, franchises, permits and authorizations which are necessary for the lawful conduct of their respective businesses and ownership of their respective properties, rights and assets under and pursuant to applicable law, except where the failure to hold such license, franchise, permit or authorization or to pay such fees or assessments has not had and would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect on Peoples and, to the Peoples’ Knowledge, no suspension or cancellation of any such necessary license, franchise, permit or authorization has, prior to the date hereof, been threatened in writing, and (iii) has not
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received any notification or communication from any Governmental Authority (A) asserting that Peoples or any of its Subsidiaries are not in compliance with any of the statutes, regulations, or ordinances which such Governmental Authority enforces, or (B) threatening to revoke any license, franchise, permit, or governmental authorization (nor do any grounds for any of the foregoing exist). Peoples and each of its Subsidiaries have complied in all material respects with, and are not in default or violation in any material respect of, any applicable law relating to Peoples or any of its Subsidiaries.
(k) Fairness Opinion. The Peoples Board has received the written opinion of Xxxxxxx Xxxxx & Associates, Inc., as of the date hereof, as to the fairness from a financial point of view to Peoples of the Merger Consideration to be paid by Peoples in the Merger.
(l) Brokerage and Finder’s Fees. Except for Xxxxxxx Xxxxx & Associates, Inc., Peoples has not engaged or employed any broker, finder, or agent, or agreed to pay or incurred any brokerage fee, finder’s fee, commission or other similar form of compensation (including any break-up or termination fee) in connection with this Agreement or the transactions contemplated hereby.
(m) Takeover Laws. Peoples has taken all action required to be taken by Peoples in order to exempt this Agreement, the Support Agreements and the transactions contemplated hereby and thereby from, and this Agreement, the Support Agreements and the transactions contemplated hereby and thereby are exempt from, (i) the requirements of any Takeover Laws, and (ii) any applicable provisions of the Peoples Articles, the Peoples Regulations and/or the governing documents of Peoples Bank.
(n) Tax Treatment of Merger. As of the date of this Agreement, Peoples is not aware of any fact or state of affairs relating to Peoples that could cause the Merger not to be treated as a “reorganization” under Section 368(a) of the Code.
(o) Peoples Information. The information provided in writing by Peoples relating to Peoples and its Subsidiaries that is to be contained in the Registration Statement, the Joint Proxy Statement/Prospectus, any filings or approvals under applicable state securities laws, any filing pursuant to Rule 165 or Rule 425 under the Securities Act or Rule 14a-12 under the Exchange Act, or in any other document filed with any other Governmental Authorities in connection herewith, will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances in which they are made, not misleading and will comply in all material respects with the provisions of the Securities Act, the Exchange Act, the rules and regulations thereunder, and any other governing laws or regulations, as applicable. No representation or warranty by Peoples, and no statement by Peoples in any certificate, agreement, schedule or other document furnished or to be furnished in connection with the transactions contemplated by this Agreement, was or will be inaccurate, incomplete or incorrect in any material respect as of the date furnished or contains or will contain any untrue statement of a material fact or omits or will omit to state any material fact necessary to make such representation, warranty or statement not misleading to Premier Financial.
(p) Material Adverse Effect. Peoples has not, on a consolidated basis, suffered a change in its business, financial condition or results of operations since December 31, 2020, that
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has had or could reasonably be expected to have a Material Adverse Effect on Peoples or any of its Subsidiaries.
ARTICLE VI
Covenants
6.01 Reasonable Best Efforts. Subject to the terms and conditions of this Agreement, each of Premier Financial and Peoples shall use its reasonable best efforts in good faith to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary, proper or advisable under applicable laws, so as to permit consummation of the Merger as promptly as practicable and otherwise to enable consummation of the transactions contemplated hereby and shall cooperate fully with the other party hereto to that end.
6.02 Shareholder Approvals.
(a) Each of Peoples and Premier Financial shall take all action necessary in accordance with applicable law and their respective organizational documents to duly call, give notice of, convene and, as soon as practicable after the Registration Statement is declared effective, hold a meeting of its shareholders and, except as otherwise provided herein, use its reasonable best efforts to take such other actions necessary to obtain the relevant shareholder approvals, in each case as promptly as practicable for the purpose of obtaining the Requisite Peoples Vote and the Requisite Premier Financial Vote. Each party shall cooperate and keep the other party informed on a current basis regarding its solicitation efforts and voting results following the dissemination of the Joint Proxy Statement/Prospectus to the shareholders of each party. Each member of the Premier Financial Board shall have executed and delivered to Peoples a Support Agreement concurrently with the execution of this Agreement.
(b) Except in the case of an Acceptance of Superior Proposal permitted by Section 6.06, Premier Financial shall solicit, and use its reasonable best efforts to obtain, the Requisite Premier Financial Vote at the Premier Financial Meeting. Subject to Section 6.06(d), Premier Financial shall (i) through the Premier Financial Board, recommend to its shareholders adoption of this Agreement (the “Premier Financial Recommendation”), and (ii) include such recommendation in the Joint Proxy Statement/Prospectus. Premier Financial hereby acknowledges its obligation to submit this Agreement to its shareholders at the Premier Financial Meeting as provided in this Section 6.02. If requested by Peoples, Premier Financial will engage a proxy solicitor, reasonably acceptable to Peoples and at Peoples’ expense, to assist in the solicitation of proxies from shareholders relating to the Requisite Premier Financial Vote.
(c) Peoples shall solicit, and use its reasonable best efforts to obtain, the Requisite Peoples Vote at the Peoples Meeting. Peoples shall (i) through the Peoples Board, recommend to its shareholders adoption of this Agreement and approval of the authorization of such additional Peoples Common Shares as are necessary to consummate the transactions contemplated hereby, and (ii) include such recommendation in the Joint Proxy Statement/Prospectus.
6.03 Registration Statement; Joint Proxy Statement/Prospectus.
(a) Upon the execution and delivery of this Agreement, Peoples and Premier Financial shall promptly cause the Registration Statement to be prepared, and Peoples shall cause the Registration Statement to be filed with the SEC. Peoples and Premier Financial shall use their
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commercially reasonable best efforts to have the Registration Statement declared effective by the SEC as soon as practicable after the filing thereof. The parties shall cooperate in responding to and considering any questions or comments from the SEC staff regarding the information contained in the Registration Statement. If at any time after the Registration Statement is filed with the SEC, and prior to the Effective Time, any event relating to Premier Financial or Peoples is discovered by Premier Financial or Peoples, as applicable, which should be set forth in an amendment of, or a supplement to, the Registration Statement, the discovering party shall promptly inform the other party with all relevant information relating to such event, whereupon Peoples shall promptly cause an appropriate amendment to the Registration Statement to be filed with the SEC. Upon the effectiveness of such amendment, each of Premier Financial and Peoples (if prior to the meetings of the shareholders pursuant to Section 6.02 hereof) will take all necessary action as promptly as practicable to permit an appropriate amendment or supplement to be transmitted to the shareholders entitled to vote at such meetings. Peoples shall also use reasonable best efforts to obtain all necessary state securities law or “blue sky” permits and approvals required to carry out the transactions contemplated by this Agreement, and Premier Financial shall furnish all information concerning Premier Financial and the holders of Premier Financial Common Stock as may be reasonably requested in connection with any such action. Premier Financial and Peoples shall each furnish the other with all information concerning each other and its directors, officers and shareholders and such other matters as may be reasonably necessary or advisable in connection with the Registration Statement.
(b) Peoples and Premier Financial each agrees to use its commercially reasonable efforts and to cooperate with the other party in all reasonable respects to prepare the Joint Proxy Statement/Prospectus for filing with the SEC and, when the Registration Statement is effective, for delivery to their respective shareholders.
(c) If either party becomes aware prior to the Effective Time of any information that would cause any of the statements in the Joint Proxy Statement/Prospectus to be false or misleading with respect to any material fact, or to omit to state any material fact necessary to make the statements therein not false or misleading, that party shall promptly inform the other thereof and take the necessary steps to correct the Joint Proxy Statement/Prospectus.
6.04 Public Announcements. Neither Premier Financial nor Peoples shall, and neither Premier Financial nor Peoples shall permit any of their respective Subsidiaries to, issue or cause the publication of any press release or other public announcement with respect to, or otherwise make any public statement, or, except as otherwise specifically provided in this Agreement, any disclosure of nonpublic information to a third party, concerning, the transactions contemplated by this Agreement without the prior consent (which shall not be unreasonably withheld, conditioned or delayed) of Peoples, in the case of a proposed announcement, statement or disclosure by Premier Financial, or Premier Financial, in the case of a proposed announcement, statement or disclosure by Peoples; provided that either Peoples or Premier Financial may, without the prior consent of the other party (but after prior consultation with the other party to the extent practicable under the circumstances) issue or cause the publication of any press release or other public announcement to the extent required by applicable law or by the rules of the SEC.
6.05 Access; Information.
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(a) Upon reasonable notice and subject to applicable laws relating to the exchange of information, Premier Financial shall, and shall cause each of its Subsidiaries to, afford Representatives of Peoples, reasonable access, during normal business hours during the period prior to the Effective Time, to all its properties, books, contracts, commitments and records, and, during such period, Premier Financial shall, and shall cause its Subsidiaries to, make available to Peoples (i) a copy of each report, schedule, registration statement and other documents filed or received by it during such period pursuant to the requirements of federal securities laws or federal or state banking or insurance laws, and (ii) all other information concerning its business, properties and personnel as Peoples may reasonably request, including periodic updates of the information provided in Section 5.01(hh). Premier Financial shall invite one Representative of Peoples selected by Peoples from time to time to attend, solely as observers, all meetings of the Premier Financial Board (and committees thereof) and Citizens Bank and Premier Bank boards after the date of this Agreement; provided, however, that in no event shall such Peoples Representative be invited to or permitted to attend any executive session of Premier Financial’s Board, Citizens Bank’s board or Premier Bank’s board or any meeting at which Premier Financial reasonably determines that such attendance is covered by or subject to the attorney-client privilege, inconsistent with the fiduciary obligations, Regulatory Authority laws and/or guidance or confidentiality requirements of the Premier Financial Board, Citizens Bank board or Premier Bank board, as applicable. Upon the reasonable request of Premier Financial, Peoples shall furnish such reasonable information about it and its business as is relevant to Premier Financial and its shareholders in connection with the transactions contemplated by this Agreement. Neither Premier Financial nor Peoples, nor any of their Subsidiaries shall be required to provide access to or to disclose information where such access or disclosure would jeopardize the attorney-client privilege of such party or its Subsidiaries or contravene any law, judgment, decree, fiduciary duty or binding agreement entered into prior to the date of this Agreement. The parties shall make appropriate substitute disclosure arrangements under circumstances in which the restrictions of the preceding sentence apply.
(b) Neither Premier Financial nor Peoples will, nor shall either party’s Representatives, use any information obtained pursuant to this Section 6.05 (as well as any other information obtained prior to the date hereof in connection with the entering into of this Agreement) for any purpose unrelated to the consummation of the transactions contemplated by this Agreement, and such information will be subject to the confidentiality provisions of Section 6.16.
(c) In the event that this Agreement is terminated or the transactions contemplated by this Agreement shall otherwise fail to be consummated, each party shall promptly cause all copies of documents or extracts thereof containing information and data as to another party hereto to be returned to the party which furnished the same. No investigation by either party of the business and affairs of the other shall affect or be deemed to modify or waive any representation, warranty, covenant or agreement in this Agreement, or the conditions to either party’s obligation to consummate the transactions contemplated by this Agreement.
(d) During the period from the date of this Agreement to the Effective Time, as soon as reasonably practicable after they become available, but in no event more than 30 days after the end of each calendar month ending after the date hereof, Premier Financial will furnish to Peoples (i) consolidated financial statements (including balance sheets, statements of
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operations and stockholders’ equity) of Premier Financial or any of its Subsidiaries (to the extent available) as of and for such month then ended, (ii) internal management reports showing actual financial performance against plan and previous period, and (iii) to the extent permitted by applicable law, any reports provided to the Premier Financial Board or any committee thereof relating to the financial performance and risk management of Premier Financial or any of its Subsidiaries.
6.06 Acquisition Proposal.
(a) From the date of this Agreement through the first to occur of the Effective Time or the termination of this Agreement, Premier Financial shall not, and shall cause any of its Subsidiaries and the officers, directors, employees, advisors and other agents of Premier Financial and its Subsidiaries not to, directly or indirectly (i) solicit, initiate, encourage, facilitate (including by way of providing information) or induce any inquiry, proposal or offer with respect to, or the making or completion of, any Acquisition Proposal, or any inquiry, proposal or offer that is reasonably likely to lead to any Acquisition Proposal, (ii) enter into, continue or otherwise participate in any discussions or negotiations regarding, or furnish to any Person or Group any confidential or nonpublic information with respect to or in connection with, an Acquisition Proposal, (iii) take any other action to facilitate any inquiries or the making of any proposal that constitutes or may reasonably be expected to lead to an Acquisition Proposal, (iv) approve, endorse or recommend, or propose to approve, endorse or recommend any Acquisition Proposal or any agreement related thereto, (v) enter into any agreement contemplating or otherwise relating to any Acquisition Transaction or Acquisition Proposal, (vi) enter into any agreement or agreement in principle requiring, directly or indirectly, Premier Financial to abandon, terminate or fail to consummate the transactions contemplated hereby or breach its obligations hereunder, or (vii) propose or agree to do any of the foregoing.
(b) Notwithstanding anything to the contrary in Section 6.06(a), if Premier Financial or any of its Representatives receives an unsolicited bona fide Acquisition Proposal that did not result from or arise in connection with a breach of Section 6.06(a), Premier Financial and its Representatives may take any action described in Section 6.06(a)(ii), if, and only if, the Premier Financial Board determines in good faith, after consultation with Premier Financial’s outside legal and financial advisors, that (i) such Acquisition Proposal constitutes or is reasonably capable of becoming a Superior Proposal, and (ii) the failure of the Premier Financial Board to take such action would cause the Premier Financial Board to violate its fiduciary duties to the shareholders of Premier Financial under applicable Law; provided, that Premier Financial receives from such Person or Group an executed confidentiality agreement containing terms no less favorable to the disclosing party than the confidentiality terms of this Agreement.
(c) As promptly as practicable (but in no event more than 24 hours) following receipt of any Acquisition Proposal or any request for nonpublic information or inquiry that would reasonably be expected to lead to any Acquisition Proposal, Premier Financial shall (i) advise Peoples in writing of the receipt of any Acquisition Proposal, request or inquiry and the terms and conditions of such Acquisition Proposal, request or inquiry, (ii) shall promptly provide to Peoples a written summary of the material terms of such Acquisition Proposal, request or inquiry including the identity of the Person or Group making the Acquisition Proposal, and (iii) shall keep Peoples promptly apprised of any related developments, discussions and negotiations (including providing Peoples with a copy of all material documentation and correspondence
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relating thereto) on a current basis. Premier Financial agrees that it shall simultaneously provide to Peoples any information concerning Premier Financial that may be provided (pursuant to Section 6.06(b)) to any other Person or Group in connection with any Acquisition Proposal which has not previously been provided to Peoples.
(d) Notwithstanding anything herein to the contrary, at any time prior to the Premier Financial Meeting, Premier Financial may accept or approve a Superior Proposal thereby withdrawing its recommendation of the Agreement (“Acceptance of Superior Proposal”), if and only if (x) from and after the date hereof, Premier Financial has complied with Sections 6.02 and 6.06, and (y) the Premier Financial Board has determined in good faith, after consultation with outside legal counsel, that the failure to take such action would cause it to violate its fiduciary duties under applicable law; provided, that the Premier Financial Board may not effect a Acceptance of Superior Proposal unless:
(i) Premier Financial shall have received an unsolicited bona fide written Acquisition Proposal and the Premier Financial Board shall have concluded in good faith (after consultation with Premier Financial’s financial advisors and outside legal counsel) that such Acquisition Proposal is a Superior Proposal, after taking into account any amendment or modification to this Agreement agreed to or proposed by Peoples;
(ii) Premier Financial shall have provided prior written notice to Peoples at least five business days in advance (the “Notice Period”) of taking such action, which notice shall advise Peoples that the Premier Financial Board has received a Superior Proposal, specifying the material terms and conditions of such Superior Proposal (including the identity of the Person or Group making the Superior Proposal);
(iii) during the Notice Period, Premier Financial shall, and shall cause its financial advisors and outside counsel to, negotiate with Peoples in good faith (to the extent Peoples desires to so negotiate) to make such adjustments to the terms and conditions of this Agreement so that such Superior Proposal ceases to constitute a Superior Proposal; and
(iv) the Premier Financial Board shall have concluded in good faith (after consultation with Premier Financial’s financial advisors and outside legal counsel) that, after considering the results of such negotiations and giving effect to any proposals, amendments or modifications offered or agreed to by Peoples, if any, that such Acquisition Proposal continues to constitute a Superior Proposal.
If during the Notice Period any revisions are made to the Superior Proposal, Premier Financial shall deliver a new written notice to Peoples giving rise to a new five business day Notice Period and shall again comply with the requirements of this Section 6.06(d) with respect to such new written notice.
(e) Nothing contained in this Agreement shall prevent Premier Financial from complying with Rule 14d-9 and Rule 14e-2 under the Exchange Act; provided, however, that any such disclosure relating to an Acquisition Proposal shall be deemed a change in the Premier Financial Recommendation unless the Premier Financial Board reaffirms the Premier Financial Recommendation in such disclosure.
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(f) As used in this Agreement:
(i) “Superior Proposal” means any bona fide written Acquisition Proposal on terms which the Premier Financial Board determines in good faith, after consultation with Premier Financial’s outside legal counsel and independent financial advisors, and taking into account all the legal, financial, regulatory and other aspects of such Acquisition Proposal, including as to certainty and timing of consummation, would, if consummated, result in a transaction that is more favorable to the holders of Premier Financial Common Stock from a financial point of view than the terms of this Agreement (in each case, taking into account any revisions to this Agreement made or proposed by Peoples); provided that for purposes of the definition of “Superior Proposal,” the references to “20% or more” in the definition of Acquisition Proposal or Acquisition Transaction shall be deemed to be references to “50% or more.”
(ii) “Acquisition Proposal” means any proposal, offer, inquiry, or indication of interest (whether binding or non-binding, and whether communicated to Premier Financial or publicly announced to Premier Financial’s shareholders) by any Person or Group (in each case other than Peoples or any of its Affiliates) relating to an Acquisition Transaction involving Premier Financial or any of its present or future consolidated Subsidiaries, or any combination of such Subsidiaries, the purchase assets of which constitute 20% or more of the consolidated assets of Premier Financial as reflected on Premier Financial’s consolidated statement of condition prepared in accordance with GAAP.
(iii) “Acquisition Transaction” means any transaction or series of related transactions (other than the transactions contemplated by this Agreement) involving (A) any acquisition (whether direct or indirect, including by way of merger, share exchange, consolidation, business combination or other similar transaction) or purchase from Premier Financial by any Person or “Group” (as such term is defined in Section 13(d) under the Exchange Act), other than Peoples or any of its Affiliates, of 20% or more in interest of the total outstanding voting securities of Premier Financial or any of its Subsidiaries (measured by voting power), or any tender offer or exchange offer that if consummated would result in any Person or Group, other than Peoples or any of its Affiliates, beneficially owning 20% or more in interest of the total outstanding voting securities of Premier Financial or any of its Subsidiaries (measured by voting power), or any merger, consolidation, share exchange, business combination or similar transaction involving Premier Financial pursuant to which the shareholders of Premier Financial immediately preceding such transaction would hold less than 50% of the equity interests in the surviving or resulting entity of such transaction (or, if applicable, the ultimate parent thereof) (measured by voting power), (B) any sale or lease or exchange, transfer, license, acquisition or disposition of a business, deposits or assets that constitute 20% or more of the consolidated assets, business, revenues, net income, assets or deposits of Premier Financial, or (C) any liquidation or dissolution of Premier Financial or any of its Subsidiaries.
6.07 Takeover Laws. No party hereto shall take any action that would cause the transactions contemplated by this Agreement or the Support Agreements to be subject to requirements imposed by the Takeover Law and each of them shall take all necessary steps within its control to exempt (or ensure the continued exemption of) this Agreement, the Support
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Agreements and the transactions contemplated by this Agreement from or, if necessary, challenge the validity or applicability of, the Takeover Law, as now or hereafter in effect.
6.08 Certain Policies. Before the Effective Time, Premier Financial shall, upon the request of Peoples, (i) modify and change its loan, investment portfolio, asset liability management and real estate valuation policies and practices (including, but not limited to, loan classifications and levels of reserves) so that such policies and practices may be applied on a basis that is consistent with those of Peoples, and (ii) evaluate the need for any reserves including, but not limited to, reserves relating to any outstanding litigation, any Tax audits or any liabilities to be incurred upon cancellation of any contracts as a result of the Merger; provided, however, that Premier Financial shall not be obligated to take any such action pursuant to this Section 6.08 unless and until Peoples acknowledges that all conditions to its obligation to consummate the Merger have been satisfied (including, but not limited to, the receipt of the regulatory approvals required by Section 7.01(b)) and certifies to Premier Financial that Peoples’ representations and warranties, subject to Section 5.02, are true and correct as of such date and that Peoples is otherwise in material compliance with this Agreement; provided further, however, that Premier Financial shall not be obligated to take any such action pursuant to this Section 6.08 if such action would be clearly inconsistent with GAAP. Premier Financial’s representations, warranties and covenants contained in this Agreement shall not be deemed to be untrue or breached in any respect for any purpose as a consequence of any modifications or changes undertaken solely on account of this Section 6.08.
6.09 Regulatory Applications.
(a) Peoples and Premier Financial and their respective Subsidiaries shall cooperate and use their respective reasonable best efforts to allow Peoples to prepare, submit and file all applications and requests for regulatory approval, to timely effect all filings and to obtain all consents, approvals and/or authorizations of all the Regulatory Authorities necessary to consummate the transactions contemplated by this Agreement. In exercising the rights under this Section 6.09, each of the parties hereto agrees to act reasonably and as promptly as practicable. Peoples agrees that it will consult with Premier Financial with respect to the obtaining of all material consents, approvals and authorizations from the Regulatory Authorities necessary to consummate the transactions contemplated by this Agreement and to keep Premier Financial apprised of the status of material matters relating to obtainment of such consents, approvals and/or authorizations from the Regulatory Authorities. Premier Financial shall have the right to review in advance, subject to applicable laws relating to the exchange of information, all material written information submitted to the Regulatory Authorities in connection with the transactions contemplated by this Agreement. Notwithstanding the forgoing sentence, Premier Financial shall not have any right to review and/or inspect any competitively sensitive business or other proprietary information submitted by Peoples to any Regulatory Authority, including, but not limited to any business plan and/or financial data or analysis prepared by Peoples in relation to such consents, approvals and/or authorizations from the Regulatory Authorities.
(b) Premier Financial agrees, upon request, to furnish Peoples with all information concerning itself, Citizens Bank and Premier Bank, and their directors, officers and shareholders and such other matters as may be reasonably necessary, advisable and/or required in connection with any filing, notice or application made by or on behalf of Peoples or any of its Subsidiaries to any Regulatory Authority.
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(c) Premier Financial shall use reasonable best efforts to prepare and file all necessary documentation, notices or filings as may be required relative to Section 4.01(t) of the Premier Financial Disclosure Schedule to obtain, if applicable, as promptly as practicable all authorizations of Regulatory Authority which are necessary or advisable or otherwise cause to consummate the transactions contemplated in Section 4.01(t) of the Premier Financial Disclosure Schedule. Premier Financial agrees that it will consult with Peoples with respect to documentation, notices and/or filings required by this subsection and to keep Peoples apprised of the status of material matters relating to such notices and/or filings.
6.10 Employment Matters; Employee Benefits.
(a) It is understood and agreed that nothing in this Section 6.10 or elsewhere in this Agreement shall be deemed to be a contract of employment or be construed to give Premier Financial’s or any of its Subsidiaries’ employees any rights other than as employees at will under applicable law, and Premier Financial’s and its Subsidiaries’ employees shall not be deemed to be third-party beneficiaries of this Agreement. Employees of Premier Financial or any of its Subsidiaries who become employees of Peoples as a result of the Merger shall participate in either Premier Financial’s Compensation and Benefit Plans (for so long as Peoples determines necessary or appropriate) or in the employee benefit plans sponsored by Peoples for Peoples’ employees (with credit for their years of service with Premier Financial or its Subsidiaries for participation and vesting purposes under Peoples’ applicable plans, to the extent such plans permit), including credit for years of service and for seniority under vacation and sick pay plans and programs, but subject to the eligibility and other terms of such plans. In addition, to the extent Premier Financial’s employees participate in Peoples’ group health plan (instead of continued participation in Premier Financial’s group health plan), Peoples agrees to waive all restrictions and limitations for pre-existing conditions under Peoples’ group health plan and applicable insurance policy to the extent that Peoples’ group health plan and insurance policy permit such waiver.
(b) Subject to any applicable regulatory restrictions, Peoples shall pay to each employee of Premier Financial or its Subsidiaries who (i) is not subject to an existing contract providing for severance and/or a change in control payment, (ii) is an employee of Premier Financial or any of its Subsidiaries immediately before the Effective Time, (iii) has been an employee of Premier Financial or any of its Subsidiaries for at least six months prior to the Effective Time, (iv) is not offered continued employment, or is not continually employed for nine months (except for termination for cause) by Peoples or any of its Subsidiaries after the Effective Time, and (v) who sign and deliver Peoples’ standard form of termination and release agreement, a severance amount equal to two weeks of pay, at their base rate of pay in effect at the time of termination, multiplied by the number of whole years of service of such employee with Premier Financial and Peoples or any of their Subsidiaries, less applicable local, state and federal tax withholding; provided, however, that the minimum severance payment shall equal four weeks of base pay, and the maximum severance payment shall not exceed 26 weeks of base pay. Such severance pay shall be paid in a lump sum within 14 days following the employee’s termination, provided that such employee has not been terminated for cause. For any employee of Premier Financial or its Subsidiaries participating in Premier Financial’s group health program at the Effective Time who is entitled to a severance payment, the employee will be able to purchase health insurance coverage at the full premium rate for the entire COBRA period.
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(c) Prior to the Effective Date, but after the receipt of the last to be obtained of either the Requisite Premier Financial Vote and the regulatory approvals required by Section 7.01(b) of this Agreement, the Premier Financial Board shall adopt a resolution approving the termination of its and/or the applicable Subsidiaries’ 401(k) Plan(s) (the “Premier Financial 401(k) Plan”) effective as of a date immediately preceding the Effective Date. In addition, the Premier Financial Board shall approve the adoption of any amendments to the Premier Financial 401(k) Plan sufficient to terminate the Premier Financial 401(k) Plan immediately preceding the Effective Date and to provide for distributions in cash. Following the Effective Date, Peoples, as the successor in interest to Premier Financial, shall begin the process of requesting from the IRS a determination that the termination of the Premier Financial 401(k) Plan is in compliance with Section 401(a) of the Code (the “Determination Letter”) and distributing benefits under the Premier Financial 401(k) Plan to plan participants. Peoples agrees to take all commercially reasonable steps necessary or appropriate to accept roll-overs of benefits from the Premier Financial 401(k) Plan to the Peoples 401(k) plan for employees of Premier Financial and its Subsidiaries who continue as employees of Peoples and its Subsidiaries after the Effective Time, subject to the provisions of the Peoples 401(k) Plan.
(d)
(i) Immediately prior to the Effective Date, Premier Financial shall, or shall cause its Subsidiaries, to pay all employees for any accrued and unused sick leave that was carried over from any prior fiscal year.
(ii) For current 2021 fiscal year, each employee of Premier Financial and its Subsidiaries that continues with Peoples, or any of its Subsidiaries, will at the Effective Time be entitled to the greater of (A) the accrued and unused paid-time-off (whether in the form of sick or vacation leave) such employee has as of the Effective Time, or (B) the accrued and unused paid-time-off (whether in the form of sick or vacation leave) such employee would have for the same period had such employee been under Peoples policies and procedures.
(f) On or after the date hereof, Premier Financial shall have negotiated and executed a mutually agreed upon retention agreement with Xxxxxx X. Xxxxxx in consultation with Peoples.
(g) Immediately prior to the Effective Date, Premier Financial shall accrue any stay or retention bonuses to be payable to employees as permitted by Section 4.01(d) of this Agreement.
(h) On and after the date hereof, any broad-based employee notices or communication materials (including any website posting) to be provided or communicated by Premier Financial with respect to employment, compensation or benefits matters addressed in this Agreement or related, directly or indirectly, to the transactions contemplated by this Agreement shall be subject to the prior prompt review and comment of Peoples, and Premier Financial shall consider in good faith revising such notice or communication to reflect any comments or advice that Peoples timely provides.
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(i) Nothing in this Agreement shall confer upon any employee, director or consultant of Premier Financial or any of the Premier Financial Subsidiaries or affiliates any right to continue in the employ or service of Peoples, or any Peoples Subsidiary or affiliate thereof, or shall interfere with or restrict in any way the rights of Premier Financial, Peoples or any Subsidiary or Affiliate thereof to discharge or terminate the services of any employee, director or consultant of Premier Financial or any of the Premier Subsidiaries or Affiliates at any time for any reason whatsoever, with or without cause (subject to the provisions of Article IV of this Agreement). Without limiting the generality of Section 9.11, nothing in this Agreement, express or implied, is intended to or shall confer upon any Person, including, without limitation, any current or former Employee, Director or Consultant of Premier Financial or any of the Premier Financial Subsidiaries or affiliates, any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.
6.11 Notification of Certain Matters; Disclosure Supplements.
(a) Peoples and Premier Financial (for purposes of this Section 6.11, the “Notifying Party”) shall each promptly advise the other party of any change or event (i) that has had or is reasonably likely to have a Material Adverse Effect on the Notifying Party or (ii) which the Notifying Party believes would or would be reasonably likely to cause or constitute a material breach of any of the Notifying Party’s representations, warranties or covenants contained herein that reasonably could be expected to give rise, either individually or in the aggregate, to the failure of a condition set forth in Article VII; provided that any failure to give notice in accordance with the foregoing with respect to any breach shall not be deemed to constitute a violation of this Section 6.11 or the failure of any condition set forth in Article VII to be satisfied, or otherwise constitute a breach of this Agreement by the party failing to give such notice, in each case unless the underlying breach would independently result in a failure of the conditions set forth in Article VII to be satisfied.
(b) Peoples and Premier Financial shall each as soon as reasonably practical supplement, amend and update, upon the occurrence of any change prior to the Effective Time, and as of the Effective Time, the Peoples Disclosure Schedule and the Premier Financial Disclosure Schedule (as applicable) with respect to any matters or events hereafter arising which, if in existence or having occurred as of the date of this Agreement, would have been required to be set forth or described in the Peoples Disclosure Schedule or the Premier Financial Disclosure Schedule (as applicable) or this Agreement and including, without limitation, any fact which, if existing or known as of the date hereof, would have made any of the representations or warranties of Peoples or Premier Financial (as applicable) contained herein materially incorrect, untrue or misleading. No supplement, amendment or update to the Peoples Disclosure Schedule or Premier Financial Disclosure Schedule (as applicable) shall (i) cure any breach of a representation or warranty existing as of the date of this Agreement or any breach of a covenant in this Agreement after the execution of this Agreement; or (ii) affect a party’s rights with respect to termination under Article VIII of this Agreement.
6.12 Data Conversion. From and after the date hereof, the parties shall use their commercially reasonable efforts to facilitate the integration of Premier Financial with the business of Peoples following consummation of the transactions contemplated hereby, and shall meet on a regular basis to discuss and plan for the conversion of the data processing and related electronic information technology system (the “Data Conversion”) to those used by Peoples. The
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parties agree to use all commercially reasonable efforts to promptly commence preparations for implementation of the Data Conversion, with the goal of effecting the Data Conversion on or about September 2021. The parties agree to cooperate in preparing for the Data Conversion, including by providing reasonable access to data, information systems, and personnel having expertise with their and their respective Subsidiaries’ information and data systems.
6.13 Consents. Premier Financial shall use its commercially reasonable best efforts to obtain any required consents to the transactions contemplated by this Agreement.
6.14 Insurance Coverage. Premier Financial shall cause the policies of insurance listed in the Premier Financial Disclosure Schedule to remain in effect until the Effective Time.
6.15 Dividends. In the calendar quarter in which the Closing occurs, each of Peoples and Premier Financial shall coordinate with the other the declaration of any dividends in respect of Peoples Common Shares and Premier Financial Common Stock and the record dates and payment dates relating thereto, it being the intention of the parties hereto that holders of Premier Financial Common Stock shall not receive two dividends, or fail to receive one dividend, in any quarter with respect to their shares of Premier Financial Common Stock and any shares of Peoples Common Share any such holder receives in exchange therefor in the Merger.
6.16 Confidentiality. Except for the use of information in connection with the Joint Proxy Statement/Prospectus described in Section 6.03 hereof and any other governmental filings required in order to complete the transactions contemplated by this Agreement, all information (collectively, the “Information”) received by each of Premier Financial and Peoples pursuant to the terms of this Agreement shall be kept in strictest confidence and not used for any purpose other than a mutually acceptable transaction contemplated hereby; provided that, subsequent to the mailing of the Joint Proxy Statement/Prospectus to the shareholders of each party, this Section 6.16 shall not apply to Information included in the Joint Proxy Statement/Prospectus to be sent to the shareholders of each party under Section 6.03. Premier Financial and Peoples agree that the Information will be used only for the purpose of completing the transactions contemplated by this Agreement. Premier Financial and Peoples agree to hold the Information in strictest confidence and shall not use such Information for any purpose other than a mutually acceptable transaction contemplated hereby, and shall not disclose directly or indirectly any of such Information except when, after and to the extent such Information (i) is or becomes generally available to the public other than through the failure of Premier Financial or Peoples to fulfill its obligations hereunder, (ii) is demonstrated as already known to the party receiving the Information on a nonconfidential basis prior to the disclosure, or (iii) is subsequently disclosed to the party receiving the Information on a nonconfidential basis by a third party having no obligation of confidentiality to the party disclosing the Information. In the event the transactions contemplated by this Agreement are not consummated, Premier Financial and Peoples agree to return all copies of the Information (including all copies, summaries, memorandum thereof) provided to the other promptly and destroy all electronic copies of such Information.
6.17 Regulatory Matters. Peoples, Premier Financial and each of their Subsidiaries shall cooperate and each of them agrees to use its reasonable best efforts to remediate any order, decree, formal or informal agreement, memorandum of understanding or similar agreement by
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Premier Financial or any Subsidiary with, or a commitment letter, board resolution or similar submission by Premier Financial or any Subsidiary to, or supervisory letter from any Regulatory Authority to Premier Financial or Subsidiary, to the satisfaction of such Regulatory Authority.
6.18 Indemnification.
(a) For a period of six years after the Effective Time, Peoples shall indemnify each Person who served as a director or officer of Premier Financial on or after the date of this Agreement and before the Effective Time, to the fullest extent provided by the Premier Financial Articles and the Premier Financial Bylaws, from and against expenses, including attorneys’ fees, judgments, fines and amounts paid in settlement in connection with any threatened, pending or completed action, suit or proceeding by reason of the fact that such Person was a director or officer of Premier Financial; provided, however, that any such indemnification shall be subject to compliance with the provisions of applicable state and federal laws.
(b) Before the Effective Date, Premier Financial shall procure, at the expense of Peoples, a policy of officers’ and directors’ and company liability insurance with respect to actions, omissions, events, matters or circumstances occurring prior to the Effective Time as currently maintained by Premier Financial (“Tail Policy”) to be effective for a period of up to six years following the Effective Time, on terms no less advantageous than those contained in Premier Financial’s existing directors’ and officers’ and company’s liability insurance policy; provided, however that Peoples shall not be obligated to expend an amount more than 200% of the current annual amount expended by Premier Financial (the “Premium Cap”).
6.19 Environmental Assessments. Premier Financial hereby agrees to permit Peoples to engage, at the expense of Peoples, a qualified consultant, mutually agreeable to Premier Financial and Peoples, to conduct a Phase I Environmental Site Assessment in accordance with the requirements of ASTM E1527-05 “Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Practice (“Phase I”) of each parcel of real estate owned by Premier Financial or any Subsidiary, including real estate acquired by Citizens Bank or Premier Bank upon foreclosure.
6.20 Exemption From Section 16(b) Liability. Premier Financial and Peoples agree that, in order to most effectively compensate and retain those officers and directors of Premier Financial subject to the reporting requirements of Section 16(a) of the Exchange Act (the “Premier Financial Insiders”), both before and after the Effective Time, it is desirable that Premier Financial Insiders not be subject to a risk of liability under Section 16(b) of the Exchange Act to the fullest extent permitted by applicable law in connection with the conversion of shares of Premier Financial Common Stock in the Merger, and for that compensatory and retentive purpose agree to the provisions of this Section 6.20. Premier Financial shall deliver to Peoples in a reasonably timely fashion before the Effective Time accurate information regarding the Premier Financial Insiders, and the Peoples Board and Premier Financial Board, or a committee of non-employee directors thereof (as such term is defined for purposes of Rule 16b-3(d) under the Exchange Act), shall before the Effective Time take all steps as may be necessary or appropriate to cause (a) in the case of Premier Financial, any dispositions of Premier Financial Common Stock by Premier Financial Insiders and (b) in the case of Peoples, any acquisitions of Peoples Common Shares by any Premier Financial Insiders who, immediately following the Merger, will be officers or directors of Peoples subject to the reporting
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requirements of Section 16(a) of the Exchange Act, in each case pursuant to the transactions contemplated by this Agreement, to be exempt from liability pursuant to Rule 16b-3 under the Exchange Act to the fullest extent permitted by applicable law.
6.21 Litigation and Claims. Each of Peoples and Premier Financial shall, to the extent permitted under applicable law and regulation, promptly notify the other party in writing of any action, arbitration, audit, hearing, investigation, litigation, suit, subpoena or summons issued, commenced, brought, conducted or heard by or before, or otherwise involving, any Governmental Authority or arbitrator pending or, to the knowledge of Peoples or Premier Financial, as applicable, threatened against Peoples, Premier Financial or any of their respective Subsidiaries that (a) questions or would reasonably be expected to question the validity of this Agreement, the Subsidiary Merger Agreements or the other agreements contemplated hereby or thereby or any actions taken or to be taken by against Peoples, Premier Financial or their respective Subsidiaries with respect hereto or thereto, or (b) seeks to enjoin or otherwise restrain the transactions contemplated hereby or thereby. Premier Financial shall give Peoples the opportunity to participate at its own expense in the defense or settlement of any shareholder litigation against Premier Financial and/or its directors or Affiliates relating to the transactions contemplated by this Agreement, and no such settlement shall be agreed without Premier Financial’s prior written consent (such consent not to be unreasonably withheld, conditioned or delayed).
6.22 NASDAQ Listing. Peoples shall cause the Peoples Common Shares to be issued in the Merger to be approved for listing on the NASDAQ – Global Select Market® as of the Effective Time.
6.23 Centurion Insurance Services, LLC Premier Financial owns a forty percent (40%) interest in Centurion Insurance Services, LLC, a West Virginia limited liability company and insurance brokerage agency (“Centurion”). On or before the Effective Date, and in all cases subject to applicable law, Premier Financial shall take, or cause to be taken, all such actions necessary to ensure the sale, transfer and divestiture of its interest in Centurion either to other member(s) of Centurion or to Centurion in exchange, pursuant to the Operating Agreement of Centurion, of Premier Financial’s interest in the Centurion and use commercially reasonable efforts to negotiate and obtain the highest valuation and price for its interest in Centurion, (“Centurion Divestiture”). Premier Financial shall change designation of agency on any existing insurance policies of Premier Financial from Centurion to an entity designated by Peoples. Premier Financial agrees it shall consult with Peoples with respect to negotiating the Centurion Divestiture and the obtaining of all permits, consents, approvals and authorizations of all third parties and Governmental Authorities necessary or advisable to consummate the Centurion Divestiture, and Premier Financial will keep Peoples apprised of the status of matters relating to the Centurion Divestiture. Premier Financial shall give Peoples and/or its counsel the opportunity to attend and participate in such meetings and discussions relating to Centurion Divestiture, subject to applicable Law. The form of any and all agreements, certificates and other documentation relating to the Centurion Divestiture shall be subject to the prior approval of Peoples.
6.24 Absence of Control. It is the intent of the parties to this Agreement that Peoples, by reason of this Agreement, shall not be deemed (until consummation of the transactions
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contemplated herein) to control, directly or indirectly, Premier Financial or any of its Subsidiaries and shall not exercise or be deemed to exercise, directly or indirectly, a controlling influence over the management or policies of Premier Financial or any of its Subsidiaries. Prior to the Effective Time, Premier Financial shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over its and its Subsidiaries’ respective operations.
6.25 Board Seat. At or promptly following the Effective Time, Peoples shall increase by one (1) the number of directors constituting the Peoples Board and appoint one (1) member of the Premier Financial Board to the Peoples Board, whom shall be selected by Peoples subject to its standard corporate governance practices, after consultation with Premier Financial and conducting standard director evaluation process. Peoples shall, subject to its standard corporate governance practices, nominate and recommend such appointee for election at the next applicable annual meeting of the shareholders of Peoples to serve for a one-year term.
6.26 Amendments to Related Party Agreements. Before the Effective Time, Premier Financial shall cause each Related Party Agreements identified on Section 5.01(bb) of the Premier Financial Disclosure Schedule (the “Amended Related Party Agreements”) to be amended in writing to reflect terms and provisions reasonably satisfactory to Peoples, in its sole discretion. Premier Financial or its Subsidiaries, as the case may be, shall, and shall cause each counterparty to an Amended Related Party Agreement to, execute and deliver a written amendment with respect to the Amended Related Party Agreement in form and substance satisfactory to Peoples, in its sole discretion (the “Related Party Amendments”).
6.27 Termination of Related Party Agreements. Before the Effective Time, Premier Financial shall cause the Related Party Agreement(s) identified on Section 5.01(bb) of the Premier Financial Disclosure Schedule (the “Terminated Related Party Agreement”) to be terminated in writing and to be of no further force and effect as of the Effective Time. Premier Financial or its Subsidiaries, as the case may be, shall, and shall cause the counterparty to the Terminated Related Party Agreement to, execute and deliver a written termination and unconditional and irrevocable release with respect to the Terminated Related Party Agreement in form and substance satisfactory to Peoples, in its sole discretion (the “Related Party Termination”).
ARTICLE VII
Conditions to Consummation of the Merger; Closing
7.01 Conditions to Each Party’s Obligation to Effect the Merger. The respective obligation of each of Peoples and Premier Financial to consummate the Merger is subject to the fulfillment or written waiver by Peoples and Premier Financial prior to the Effective Time of each of the following conditions:
(a) Shareholder Approval. This Agreement and the Merger shall have been duly adopted and approved by the requisite vote of the shareholders of Premier Financial and Peoples, and the shareholders of Peoples shall have duly adopted and approved the authorization of such additional Peoples Common Shares as are necessary to consummate the transactions contemplated hereby.
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(b) Regulatory Approvals. All regulatory approvals required to consummate the transactions contemplated hereby shall have been obtained and shall remain in full force and effect and all statutory waiting periods in respect thereof shall have expired and no such approvals shall contain (i) any conditions, restrictions or requirements which the Peoples Board reasonably determines would either before or after the Effective Time have a Material Adverse Effect on Peoples and its Subsidiaries taken as a whole after giving effect to the consummation of the Merger, or (ii) any conditions, restrictions or requirements that are not customary and usual for approvals of such type and which the Peoples Board reasonably determines would either before or after the Effective Time be unduly burdensome. For purposes of this Section 7.01(b), any regulatory approval that does not result in the termination of all outstanding Regulatory Orders applicable to Premier Financial and/or its Subsidiaries, if any, prior to or at the Effective Time shall be deemed to have a Material Adverse Effect on Peoples and its Subsidiaries taken as a whole after giving effect to the consummation of the Merger.
(c) No Injunction. No Governmental Authority of competent jurisdiction shall have enacted, issued, promulgated, enforced or entered any statute, rule, regulation, judgment, decree, injunction or other order (whether temporary, preliminary or permanent) which is in effect and prohibits consummation of the transactions contemplated by this Agreement.
(c) Listing of Peoples Common Shares. The Peoples Common Shares to be issued in the Merger shall have been authorized for listing on the NASDAQ – Global Select Market®.
(d) Effectiveness of Registration Statement and Joint Proxy Statement/Prospectus. The Registration Statement and Joint Proxy Statement/Prospectus shall have been declared effective by the SEC and shall not be subject to any stop order or any threatened stop order by the SEC.
7.02 Conditions to Obligation of Premier Financial. The obligation of Premier Financial to consummate the Merger is also subject to the fulfillment or written waiver by Premier Financial prior to the Effective Time of each of the following conditions:
(a) Representations and Warranties. The representations and warranties of Peoples set forth in this Agreement shall be true and correct, subject to Section 5.02, as of the date of this Agreement and as of the Effective Time as though made on and as of the Effective Time (except that representations and warranties that by their terms speak as of the date of this Agreement or some other date shall be true and correct as of such date), and Premier Financial shall have received a certificate, dated the Effective Date, signed on behalf of Peoples, by the Chief Executive Officer of Peoples to such effect.
(b) Performance of Obligations of Peoples. Peoples shall have performed in all material respects all obligations required to be performed by Peoples under this Agreement at or prior to the Effective Time, and Premier Financial shall have received a certificate, dated the Effective Date, signed on behalf of Peoples by the Chief Executive Officer of Peoples to such effect.
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(c) No Termination. This Agreement has not been terminated by Premier Financial pursuant to Section 8.01(g).
(d) No Material Adverse Effect. From the date of this Agreement, there shall not have occurred any event, circumstance or development that has had or could reasonably be expected to have a Material Adverse Effect on Peoples.
7.03 Conditions to Obligation of Peoples. The obligation of Peoples to consummate the Merger is also subject to the fulfillment or written waiver by Peoples prior to the Effective Time of each of the following conditions:
(a) Representations and Warranties. The representations and warranties of Premier Financial set forth in this Agreement shall be true and correct, subject to Section 5.01, as of the date of this Agreement and as of the Effective Time as though made on and as of the Effective Time (except that representations and warranties that by their terms speak as of the date of this Agreement or some other date shall be true and correct as of such date) and Peoples shall have received a certificate, dated the Effective Date, signed on behalf of Premier Financial, by the Chief Executive Officer of Premier Financial to such effect.
(b) Performance of Obligations of Premier Financial. Premier Financial shall have performed in all material respects all obligations required to be performed by it under this Agreement at or prior to the Effective Time, and Peoples shall have received a certificate, dated the Effective Date, signed on behalf of Premier Financial by the Chief Executive Officer of Premier Financial to such effect.
(c) Consents. Premier Financial shall have obtained the consent or approval of each Person (other than Governmental Authorities) whose consent or approval shall be required in connection with the transactions contemplated hereby under any Loan or credit agreement, note, mortgage, indenture, lease, license or other agreement or instrument, except those for which failure to obtain such consents and approvals would not, individually or in the aggregate, in Peoples’ reasonable estimate have a Material Adverse Effect, after the Effective Time, on the Surviving Corporation.
(d) FIRPTA Certification. Peoples shall have received a statement executed on behalf of Premier Financial, dated as of the Effective Date, satisfying the requirements of Treasury Regulations Section 1.1445-2(c)(3) (in a form reasonably acceptable to Peoples certifying that Premier Financial Common Stock does not represent United States real property interests within the meaning of Section 897 of the Code and the Treasury regulations promulgated thereunder.
(e) Dissenting Shares. The holders of not more than 5% of the outstanding Premier Financial Common Stock shall have perfected their dissenters’ rights in accordance with the KBCA.
(f) Real Estate. There shall have been no condemnation, eminent domain or similar proceedings commenced or threatened in writing by any Government Authority with respect to any real estate owned by Premier Financial or any of its Subsidiaries, including real
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estate acquired in connection with foreclosure. Either (i) the results of each Phase I as reported shall be satisfactory to Peoples, or (ii) any violation or potential violation of the representations and warranties contained in Section 5.01(o) of this Agreement disclosed in a Phase I report shall have been remedied by Premier Financial or any of its Subsidiaries to the reasonable satisfaction of Peoples.
(g) Tail Policy. Premier Financial shall have procured the Tail Policy in accordance with the terms and subject to the conditions of Section 6.18(b).
(h) Centurion Divestiture. The transactions contemplated by the Centurion Divestiture shall have been completed in a manner and pursuant to documentation reasonably acceptable to Peoples.
(i) Estoppel Certificates. Premier Financial shall have delivered to Peoples an estoppel certificate, in such form as is acceptable to Peoples, for each lease agreement set forth in Section 5.01(t) of the Premier Financial Disclosure Schedule from the applicable counterparty.
(j) Retention Agreement. Premier Financial shall have negotiated and executed a mutually agreed upon retention agreement with Xxxxxx X. Xxxxxx as of the Effective Date with the consent of Peoples.
(k) No Material Adverse Effect. From the date of this Agreement, there shall not have occurred any event, circumstance or development that has had or could reasonably be expected to have a Material Adverse Effect on Premier Financial.
(l) Amended Related Party Agreements. Peoples shall have received copies of the Related Party Amendments duly executed by Premier Financial and the counterparties to the Amended Related Party Agreements.
(m) Terminated Related Party Agreement. Peoples shall have received a copy of the Related Party Termination duly executed by Premier Financial and the counterparty to the Terminated Related Party Agreement.
ARTICLE VIII
Termination
8.01 Termination. This Agreement may be terminated, and the Merger may be abandoned:
(a) At any time prior to the Effective Time, by the mutual written consent of Peoples and Premier Financial, if the board of directors of each so determines by vote of a majority of the members of its entire board.
(b) At any time prior to the Effective Time, by Peoples or Premier Financial upon written notice to the other party, if its board of directors so determines by vote of a majority
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of the members of the entire board, in the event of either (i) a breach by the other party of any representation or warranty contained herein, which breach cannot be or has not been cured within 30 days after the giving of written notice to the breaching party of such breach, or (ii) a breach by the other party of any of the covenants or agreements contained herein, which breach cannot be or has not been cured within 30 days after the giving of written notice to the breaching party of such breach; provided that such breach (whether under (i) or (ii)) would be reasonably likely, individually or in the aggregate with other breaches, in the reasonable opinion of the non-breaching party, to result in a Material Adverse Effect.
(c) At any time prior to the Effective Time, by Peoples or Premier Financial upon written notice to the other party, if its board of directors so determines by vote of a majority of the members of its entire board, in the event that the Parent Merger is not consummated by December 31, 2021, except to the extent that the failure of the Parent Merger then to be consummated arises out of or results from the knowing action or inaction of the party seeking to terminate pursuant to this Section 8.01(c).
(d) By Premier Financial or Peoples upon written notice to the other party, if its board of directors so determines by a vote of a majority of the members of its entire board, in the event (i) the approval of any Governmental Authority required for consummation of the Merger and the other transactions contemplated by this Agreement shall have been denied and the denial has become final and nonappealable, (ii) any Governmental Authority whose approval is required for consummation of the Merger and the other transactions contemplated by this Agreement shall have requested, directed or advised Peoples or Premier Financial to withdraw its application for approval of the Merger, or (iii) any Governmental Authority of competent jurisdiction shall have issued a final nonappealable law or order permanently enjoining or otherwise prohibiting or making illegal the consummation of the Parent Merger or the Subsidiary Mergers.
(e) By either Premier Financial or Peoples if the Requisite Premier Financial Vote shall not have been obtained at the Premier Financial Meeting duly convened therefor or at any adjournment or postponement thereof; provided, that no party may terminate this Agreement pursuant to this Section 8.01(e) if the party has breached in any material respect any of its obligations under this Agreement, in each case in a manner that primarily caused the failure to obtain the Requisite Premier Financial Vote at the Premier Financial Meeting or at any adjournment or postponement thereof.
(f) By:
(i) Premier Financial if (A) the Premier Financial Board (or a duly authorized committee thereof) has authorized an Acceptance of Superior Proposal, and (B) Premier Financial has complied in all respects with Section 6.06; provided, that the right of Premier Financial to terminate this Agreement pursuant to this Section 8.01(f) is conditioned on and subject to the prior payment by Premier Financial to Peoples of the Termination Fee in accordance with Section 8.02(b). Any purported termination pursuant to this Section 8.01(f) shall be void and of no force or effect if Premier Financial shall not have paid and Peoples shall not have received the Termination Fee; or
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(ii) Peoples prior to the time the Requisite Premier Financial Vote is obtained, if (A) the Premier Financial Board shall have (1) failed to include the Premier Financial Recommendation in the Joint Proxy Statement/Prospectus, or withdrawn, modified or qualified the Premier Financial Recommendation in a manner adverse to Peoples, or publicly disclosed that it intends to do so, or failed to recommend against acceptance of a tender offer or exchange offer constituting an Acquisition Proposal that has been publicly disclosed within five (5) business days after the commencement of the tender or exchange offer, in any case whether or not permitted by the terms hereof or (2) recommended or endorsed an Acquisition Proposal or publicly disclosed its intention to do so, or failed to issue a press release announcing its unqualified opposition to the Acquisition Proposal within five (5) business days after an Acquisition Proposal is publicly announced, or (B) Premier Financial or its Board of Directors has breached its obligations under Section 6.02 or Section 6.06 in any material respect.
(g) By written notice of Premier Financial to Peoples if, and only if, both of the following conditions are satisfied at any time during the five-day period commencing on the Determination Date, such termination to be effective on the tenth day following the Determination Date:
(i) the Peoples Market Value on the Determination Date is less than the Peoples Market Price multiplied by 0.80; and
(ii) the number obtained by dividing the Peoples Market Value on the Determination Date by the Peoples Market Price shall be less than the Index Ratio minus 0.20;
Subject, however, to the following three sentences: If Premier Financial elects to exercise its termination right pursuant to this Section 8.01(g), it shall give prompt written notice thereof to Peoples. During the five business day period commencing with Peoples’ receipt of such notice, Peoples shall have the option to increase the Exchange Ratio to equal a quotient, the numerator of which is equal to the product of the Peoples Market Price, the Exchange Ratio (as then in effect), and the Index Ratio minus 0.20 and the denominator of which is equal to the Peoples Market Value on the Determination Date. If within such five business day period, Peoples delivers written notice to Premier Financial that it intends to proceed with the Parent Merger by paying such additional consideration as contemplated by the preceding sentence, and notifies Premier Financial of the revised Exchange Ratio, then no termination shall have occurred pursuant to this Section 8.01(g), and this Agreement shall remain in full force and effect in accordance with its terms (except that the Exchange Ratio shall have been so modified).
For purposes of this Section 8.01(g), the following terms shall have the meanings indicated below:
“Determination Date” shall mean any date following the first date on which all regulatory approvals (and waivers, if applicable) necessary for consummation of the Merger have been received (disregarding any waiting period) and prior to the Effective Date.
“Final Index Price” means the average of the daily closing value of the Index for the ten consecutive trading days immediately preceding the Determination Date.
“Index” means the NASDAQ Bank Index or, if such Index is not available, such substitute or similar index as substantially replicates the NASDAQ Bank Index.
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“Index Ratio” means the Final Index Price divided by the Initial Index Price.
“Initial Index Price” means $4,635.05 the closing value of the Index on March 26, 2021.
“Peoples Market Price” shall mean the volume average weighted closing sale price of a Peoples Common Share on The NASDAQ Global Select Market® during the 20 consecutive trading days immediately preceding the date of this Agreement.
“Peoples Market Value” means, as of any specified date, the average of the volume weighted daily closing sales prices of a share of Peoples Common Shares as reported on The NASDAQ Global Select Market® for the ten consecutive trading days immediately preceding such specified date.
8.02 Effect of Termination and Abandonment; Enforcement of Agreement.
(a) In the event of termination of this Agreement pursuant to Section 8.01, no party to this Agreement shall have any liability or further obligation to any other party hereunder except that (i) Section 6.16, this Section 8.02, and Article IX shall survive any termination of this Agreement; and (ii) notwithstanding anything to the contrary contained in this Agreement, neither Peoples nor Premier Financial shall be relieved or released from any liabilities or damages arising out of its fraud or willful and material breach of any provision of this Agreement occurring prior to termination.
(b) In the event that:
(i)(A) after the date of this Agreement and prior to the termination of this Agreement, a bona fide Acquisition Proposal shall have been made known to senior management or the Premier Financial Board or has been made directly to the Premier Financial shareholders generally or any Person shall have publicly announced (and, in each case, not unconditionally withdrawn) an Acquisition Proposal with respect to Premier Financial, and (1) this Agreement is terminated by either Peoples or Premier Financial pursuant to Section 8.01(f), or (2) thereafter this Agreement is terminated by Peoples pursuant to Section 8.01(b) as a result of a willful breach by Premier Financial; and (B) prior to the date that is twelve (12) months after the date of the termination of this Agreement, Premier Financial enters into a definitive agreement or consummates a transaction with respect to an Acquisition Proposal (whether or not the same Acquisition Proposal as that referred to above), then Premier Financial shall, on the earlier of the date it enters into the definitive agreement and the date of consummation of the transaction, pay Peoples, by wire transfer of same day funds (to an account designated in writing by Peoples), a fee equal to $11,000,000 (the “Termination Fee”); and
(ii) this Agreement is terminated by Premier Financial or Peoples pursuant to Section 8.01(f), then Premier Financial shall pay Peoples, by wire transfer of same day funds (to an account designated in writing by Peoples), the Termination Fee no later than two (2) business days after the termination of this Agreement.
(c) Notwithstanding anything to the contrary herein, but without limiting the right of any party to recover liabilities or damages arising out of the other party’s fraud or willful and material breach of any provision of this Agreement, in the event that this Agreement is terminated as provided in Section 8.01 under circumstances where the Termination Fee is payable to Peoples and paid in full by Premier Financial pursuant to this Section 8.02, the
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payment of such Termination Fee shall be the sole and exclusive remedy available to Peoples and the maximum aggregate liability of Premier Financial with respect to this Agreement and the transactions contemplated by this Agreement, and Premier Financial shall have no further liability with respect to this Agreement or the transactions contemplated hereby to Peoples or any of its Affiliates or Representatives.
(d) Premier Financial acknowledges that the agreements contained in Section 8.02 are an integral part of the transactions contemplated by this Agreement, and that, without these agreements, Peoples would not enter into this Agreement; accordingly, if Premier Financial fails promptly to pay Termination Fee, and, in order to obtain the payment Peoples commences a suit which results in a judgment against Premier Financial for payment of any such amount, Premier Financial shall pay the costs and expenses of Peoples (including reasonable attorneys’ fees and expenses) in connection with the suit. In addition, if Premier Financial fails to pay the Termination Fee, then Premier Financial shall pay interest on the overdue amounts (for the period commencing as of the date that the overdue amount was originally required to be paid and ending on the date that the overdue amount is actually paid in full) at a rate per annum equal to the “prime rate” (as published in the Wall Street Journal) in effect on the date on which the payment was required to be made for the period commencing as of the date that the overdue amount was originally required to be paid. The Termination Fee constitutes liquidated damages and not a penalty, and, except in the case of fraud or willful and material breach of this Agreement, shall be (together with the amounts specified in this Section 8.02(d)) the sole monetary remedy of Peoples in the event of a termination of this Agreement specified in the section under circumstances where the Termination Fee is payable and is paid in full.
ARTICLE IX
Miscellaneous
9.01 No Survival. None of the representations, warranties, covenants and agreements in this Agreement or in any instrument delivered pursuant to this Agreement shall survive the Effective Time, other than those covenants and agreements contained herein and therein which by their terms apply in whole or in part after the Effective Time.
9.02 Amendment. Subject to compliance with applicable law, this Agreement may be amended by the parties hereto at any time before or after the receipt of the Requisite Premier Financial Vote or the Requisite Peoples Vote; provided, however, that after the receipt of the Requisite Premier Financial Vote or the Requisite Peoples Vote, there may not be, without further approval of such shareholders of Premier Financial or Peoples, as applicable, any amendment of this Agreement that requires such further approval under applicable law. This Agreement may not be amended, modified or supplemented in any manner, whether by course of conduct or otherwise, except by an instrument in writing signed on behalf of each of the parties.
9.03 Extension; Waiver. At any time prior to the Effective Time, the parties hereto may, to the extent legally allowed, (a) extend the time for the performance of any of the obligations or other acts of the other party hereto, (b) waive any inaccuracies in the representations and warranties of the other party contained herein or in any document delivered by the other party pursuant hereto, and (c) waive compliance with any of the agreements or satisfaction of any conditions for its benefit contained herein; provided, however, that after the
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receipt of the Requisite Premier Financial Vote or the Requisite Peoples Vote, there may not be, without further approval of such shareholders of Premier Financial or Peoples, as applicable, any extension or waiver of this Agreement or any portion thereof that requires such further approval under applicable law. Any agreement on the part of a party hereto to any such extension or waiver shall be valid only if set forth in a written instrument signed on behalf of such party, but such extension or waiver or failure to insist on strict compliance with an obligation, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure.
9.04 Counterparts. This Agreement may be executed in counterparts (including by electronic means), all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each of the parties and delivered to the other parties, it being understood that all parties need not sign the same counterpart.
9.05 Confidential Supervisory Information. Notwithstanding any other provision of this Agreement, no disclosure, representation, or warranty shall be made (or other action taken) pursuant to this Agreement that would involve the disclosure of confidential supervisory information (including “confidential supervisory information” as defined in any regulation or rule adopted or promulgated by a Regulatory Authority) by any party to this Agreement to the extent prohibited by applicable law. To the extent legally permissible, appropriate substitute disclosures or actions shall be made or taken under circumstances in which the limitations of the preceding sentence apply.
9.06 Governing Law; Jurisdiction. This Agreement shall be governed by and construed in accordance with the laws of the State of Ohio, without regard to any applicable conflicts of law principles. Each party agrees that it will bring any action or proceeding in respect of any claim arising out of or related to this Agreement or the transactions contemplated hereby exclusively in any federal or state court located in Columbus, Franklin County, Ohio (the “Chosen Courts”), and, solely in connection with claims arising under this Agreement or the transactions that are the subject of this Agreement, (i) irrevocably submits to the exclusive jurisdiction of the Chosen Courts, (ii) waives any objection to laying venue in any such action or proceeding in the Chosen Courts, (iii) waives any objection that the Chosen Courts are an inconvenient forum or do not have jurisdiction over any party and (iv) agrees that service of process upon such party in any such action or proceeding will be effective if notice is given in accordance with Section 9.06.
9.07 Waiver of Jury Trial. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE EXTENT PERMITTED BY LAW AT THE TIME OF INSTITUTION OF THE APPLICABLE LITIGATION, ANY RIGHT THE PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT: (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
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REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (II) EACH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (III) EACH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (IV) EACH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.07.
9.08 Expenses. Each party hereto will bear all expenses incurred by it in connection with this Agreement and the transactions contemplated hereby.
9.09 Notices. All notices and other communications hereunder shall be in writing and shall be deemed duly given (i) on the date of delivery if delivered personally, or if by email, upon confirmation of receipt, (ii) on the first (1st) business day following the date of dispatch if delivered utilizing a next-day service by a recognized next-day courier or (iii) on the earlier of confirmed receipt or the fifth (5th) business day following the date of mailing if delivered by registered or certified mail, return receipt requested, postage prepaid. All notices hereunder shall be delivered to the addresses set forth below, or pursuant to such other instructions as may be designated in writing by the party to receive such notice:
| If to Premier Financial, to: | Premier Financial Bancorp, Inc. 0000 Xxxxx Xxxxxx Xxxxxxxxxx, Xxxx Xxxxxxxx 00000 Attention: Xxxxxx X. Xxxxxx, President & CEO Email: xxx.xxxxxx@xxxxxx.xxx | ||||
| With a copy to: | Xxxxxxx Xxxxx PLLC 000 Xxx Xxxxxx Xxxxx 0000 Xxxxxxxxxx, Xxxx Xxxxxxxx 00000-0000 Attention: Xxxxxxx Xxxxxx and Xxxx Xxxxxxx Email: xxxxxxx@xxxxxxxxxxxx.xxx | ||||
| If to Peoples, to: | Peoples Bancorp Inc. 000 Xxxxxx Xxxxxx Xxxxxxxx, Xxxx 00000 Attention: Xxxxxxx X. Xxxxxxxxxx, President & CEO Email: xxxxxxxxxxx@xxxx.xxx | ||||
| With a copy to: | Peoples Bancorp Inc. 000 Xxxxxx Xxxxxx Xxxxxxxx, Xxxx 00000 Attention: M. Xxxx Xxxxxxx, Executive Vice President/General Counsel Email: Xxxx.Xxxxxxx@xxxx.xxx | ||||
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9.10 Entire Understanding. This Agreement, the Support Agreements and any separate agreement entered into by the parties on even date herewith represent the entire understanding of the parties hereto with reference to the transactions contemplated hereby and thereby and this Agreement supersedes any and all other oral or written agreements heretofore made (other than such Support Agreements or any such separate agreement).
9.11 Assignment; Third-Party Beneficiaries. 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 party. Any purported assignment in contravention hereof shall be null and void. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of and be enforceable by the parties and their respective successors and assigns. This Agreement (including the documents and instruments referred to herein) is not intended to and does not confer upon any Person other than the parties hereto any rights or remedies hereunder, including the right to rely upon the representations and warranties set forth herein. The representations and warranties in this Agreement are the product of negotiations among the parties hereto and are for the sole benefit of the parties. Any inaccuracies in such representations and warranties are subject to waiver by the parties hereto in accordance herewith without notice or liability to any other person. In some instances, the representations and warranties in this Agreement may represent an allocation among the parties hereto of risks associated with particular matters regardless of the knowledge of any of the parties hereto. Consequently, Persons other than the parties may not rely upon the representations and warranties in this Agreement as characterizations of actual facts or circumstances as of the date of this Agreement or as of any other date. Notwithstanding any other provision in this Agreement to the contrary, no consent, approval or agreement of any third-party beneficiary will be required to amend, modify or waive any provision of this Agreement.
9.12 Interpretation. The parties have participated jointly in negotiating and drafting this Agreement. In the event that an ambiguity or a question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provision of this Agreement. When a reference is made in this Agreement to Articles, Sections, Exhibits or Schedules, such reference shall be to an Article or Section of or Exhibit or Schedule to this Agreement unless otherwise indicated. The table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.” The word “or” shall not be exclusive. References to “the date hereof” shall mean the date of this Agreement.
9.13 Specific Performance. Except as otherwise specifically provided herein, the parties hereto agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with its specific terms or were otherwise breached. Accordingly, the parties shall be entitled to specific performance of the terms of this Agreement, including an injunction or injunctions to prevent breaches of this Agreement or to enforce specifically the performance of the terms and provisions hereof (including the parties’ obligation to consummate
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the Merger), in addition to any other remedy to which they are entitled at law or in equity. Each of the parties hereby further waives (i) any defense in any action for specific performance that a remedy at law would be adequate and (ii) any requirement under any law to post security or a bond as a prerequisite to obtaining equitable relief.
9.14 Severability. Whenever possible, each provision or portion of any provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision or portion of any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or portion of any provision in such jurisdiction, and this Agreement shall be reformed, construed and enforced in such jurisdiction such that the invalid, illegal or unenforceable provision or portion thereof shall be interpreted to be only so broad as is enforceable.
9.15 Delivery by Electronic Transmission. This Agreement and any signed agreement or instrument entered into in connection with this Agreement, and any amendments or waivers hereto or thereto, to the extent signed and delivered by e‑mail delivery of a “.pdf” format data file, shall be treated in all manner and respects as an original agreement or instrument and shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person. No party hereto or to any such agreement or instrument shall raise the use of e‑mail delivery of a “.pdf” format data file to deliver a signature to this Agreement or any amendment hereto or the fact that any signature or agreement or instrument was transmitted or communicated through e‑mail delivery of a “.pdf” format data file as a defense to the formation of a contract and each party hereto forever waives any such defense.
[Remainder of Page Intentionally Left Blank]
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Signature Page
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed in counterparts by their duly authorized officers, all as of the day and year first above written.
PREMIER FINANCIAL BANCORP, INC.
By /s/ XXXXXX X. XXXXXX
Xxxxxx X. Xxxxxx, President and CEO
By /s/ XXXXXXX X. XXXXXXXXXX
Xxxxxxx X. Xxxxxxxxxx, President and CEO
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