Exhibit 2.1
AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
DATED AS OF MAY 2, 2006
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TABLE OF CONTENTS
ARTICLE I - CERTAIN DEFINITIONS............................................ 1
1.1. CERTAIN DEFINITIONS.............................................. 1
ARTICLE II - THE MERGER.................................................... 7
2.1. MERGER........................................................... 7
2.2. CLOSING; EFFECTIVE TIME.......................................... 7
2.3. ARTICLES OF INCORPORATION AND BYLAWS; NAME....................... 7
2.4. DIRECTORS AND OFFICERS OF SURVIVING CORPORATION.................. 7
2.5. EFFECTS OF THE MERGER............................................ 7
2.6. TAX CONSEQUENCES................................................. 7
2.7. POSSIBLE ALTERNATIVE STRUCTURES.................................. 8
ARTICLE III - CONVERSION OF SHARES......................................... 8
3.1. CONVERSION OF FSSB COMMON STOCK; MERGER CONSIDERATION............ 8
3.2. PROCEDURES FOR EXCHANGE OF FSSB COMMON STOCK..................... 10
3.3. RESERVATION OF SHARES............................................ 11
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF FSSB........................ 12
4.1. REPRESENTATIONS AND WARRANTIES OF FSSB........................... 12
ARTICLE V - REPRESENTATIONS AND WARRANTIES OF FARMERS ..................... 25
5.1. REPRESENTATIONS AND WARRANTIES OF FARMERS........................ 25
ARTICLE VI - COVENANTS OF FSSB............................................. 34
6.1. CONDUCT OF BUSINESS.............................................. 34
6.2. CURRENT INFORMATION.............................................. 37
6.3. ACCESS TO PROPERTIES AND RECORDS................................. 38
6.4. FINANCIAL AND OTHER STATEMENTS................................... 38
6.5. MAINTENANCE OF INSURANCE......................................... 39
6.6. DISCLOSURE SUPPLEMENTS........................................... 39
6.7. CONSENTS AND APPROVALS OF THIRD PARTIES.......................... 39
6.8. ALL REASONABLE EFFORTS........................................... 39
6.9. FAILURE TO FULFILL CONDITIONS.................................... 39
6.10. NO SOLICITATION.................................................. 39
6.11. XXXXXXXX-XXXXX CERTIFICATION OF FINANCIAL STATEMENTS............. 40
6.12 FSSB AUDIT FOR 2005.............................................. 40
ARTICLE VII - COVENANTS OF FARMERS ........................................ 41
7.1. CONDUCT OF BUSINESS.............................................. 41
7.2. DISCLOSURE SUPPLEMENTS........................................... 41
7.3. CONSENTS AND APPROVALS OF THIRD PARTIES.......................... 41
7.4. ALL REASONABLE EFFORTS........................................... 41
7.5. FAILURE TO FULFILL CONDITIONS.................................... 41
7.6. EMPLOYEE BENEFITS................................................ 41
7.7. ACCESS TO PROPERTIES AND RECORDS................................. 42
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7.8. FINANCIAL AND OTHER STATEMENTS................................... 42
7.9. DIRECTORS AND OFFICERS INDEMNIFICATION; INSURANCE................ 43
ARTICLE VIII - REGULATORY AND OTHER MATTERS................................ 44
8.1. MEETINGS OF SHAREHOLDERS......................................... 44
8.2. PROXY STATEMENT--PROSPECTUS; MERGER REGISTRATION STATEMENT....... 44
8.3. REGULATORY APPROVALS............................................. 45
8.4. AFFILIATES....................................................... 46
8.5. EMPLOYMENT AGREEMENT............................................. 46
8.6. POST-CLOSING OPERATIONS.......................................... 46
ARTICLE IX - CLOSING CONDITIONS............................................ 46
9.1. CONDITIONS TO EACH PARTY'S OBLIGATIONS UNDER THIS AGREEMENT...... 46
9.2. CONDITIONS TO THE OBLIGATIONS OF FARMERS UNDER THIS AGREEMENT.... 47
9.3. CONDITIONS TO THE OBLIGATIONS OF FSSB UNDER THIS AGREEMENT....... 48
ARTICLE X - THE CLOSING.................................................... 49
10.1. TIME AND PLACE................................................... 49
10.2. DELIVERIES AT THE CLOSING........................................ 49
ARTICLE XI - TERMINATION, AMENDMENT AND WAIVER............................. 49
11.1. TERMINATION...................................................... 49
11.2. EFFECT OF TERMINATION............................................ 51
11.3. AMENDMENT, EXTENSION AND WAIVER.................................. 51
ARTICLE XII - MISCELLANEOUS................................................ 52
12.1. CONFIDENTIALITY.................................................. 52
12.2. PUBLIC ANNOUNCEMENTS............................................. 52
12.3. SURVIVAL......................................................... 52
12.4. NOTICES.......................................................... 52
12.5. PARTIES IN INTEREST.............................................. 53
12.6. COMPLETE AGREEMENT............................................... 53
12.7. COUNTERPARTS..................................................... 53
12.8. SEVERABILITY..................................................... 54
12.9. GOVERNING LAW.................................................... 54
12.10. INTERPRETATION................................................... 54
12.11. SPECIFIC PERFORMANCE............................................. 54
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AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
This Amended and Restated Agreement and Plan of Merger is dated as of May
2, 2006 (the "Agreement"), by and between Farmers State Bank of Breckenridge, a
Michigan chartered commercial bank ("Farmers"), The Xxxxxxx State Savings Bank,
a Michigan chartered commercial bank ("FSSB") and IBT Bancorp, Inc., a Michigan
financial services holding company ("IBT").
WHEREAS, FSSB and IBT, the parent corporation of Farmers, entered into an
Agreement and Plan of Merger dated December 22, 2005;
WHEREAS, pursuant to Section 2.7 of the Agreement and Plan of Merger dated
December 22, 2005, the parties now desire to modify certain terms and conditions
of the Agreement as more particularly provided in this amended and restated
Agreement, including but not limited to substituting Farmers for IBT as the
acquiring entity;
WHEREAS, the Board of Directors of each of Farmers and FSSB (i) has
determined that this Agreement and the business combination and related
transactions contemplated hereby are in the best interests of their respective
companies and shareholders and (ii) has determined that this Agreement and the
transactions contemplated hereby are consistent with and in furtherance of their
respective business strategies, and (iii) has approved this Agreement at
meetings of each of such Boards of Directors;
WHEREAS, in accordance with the terms of this Agreement, FSSB will merge
with Farmers with Farmers as the surviving entity (the "Merger"). Concurrently,
shareholders of FSSB shall exchange their shares of FSSB for shares of IBT and
cash;
WHEREAS, the parties currently intend that the Merger shall qualify as a
reorganization within the meaning of Section 368(a) of the Internal Revenue Code
of 1986, as amended (the "Code"); and
WHEREAS, the parties desire to make certain representations, warranties and
agreements in connection with the business transactions described in this
Agreement and to prescribe certain conditions thereto.
NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreements herein contained, and of other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I - CERTAIN DEFINITIONS
1.1. Certain Definitions. As used in this Agreement, the following terms
have the following meanings (unless the context otherwise requires, references
to articles and sections refer to articles and sections of this Agreement).
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"Affiliates" means any Person who directly, or indirectly, through one or
more intermediaries, controls, or is controlled by, or is under common control
with, such Person and, without limiting the generality of the foregoing,
includes any executive officer or director of such Person and any Affiliates of
such executive officer or director.
"Agreement" means this agreement, and any amendment hereto.
"Bank Regulator" shall mean any Federal or state banking regulatory agency
with supervisory authority over Farmers, FSSB, IBT, Xxxxxxxx Bank and Trust, or
a subsidiary of any of them.
"Bureau" shall mean the Office of Financial and Insurance Services of the
State of Michigan.
"Certificate" shall mean a certificate evidencing shares of FSSB Common
Stock.
"Closing" shall have the meaning set forth in Section 2.2.
"Closing Date" shall have the meaning set forth in Section 2.2.
"COBRA" shall mean the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Confidentiality Agreements" shall mean the confidentiality agreements
referred to in Section 12.1 of this Agreement.
"Dissenting Shareholder" shall have the meaning set forth in Section
3.1(d).
"Dissenting Shares" shall have the meaning set forth in Section 3.1(d).
"Effective Time" shall mean the date and time specified pursuant to Section
2.2 hereof as the effective time of the Merger.
"Environmental Laws" means any applicable Federal, state or local law,
statute, ordinance, rule, regulation, code, license, permit, authorization,
approval, consent, order, judgment, decree, injunction or agreement with any
governmental entity relating to (1) the protection, preservation or restoration
of the environment (including, without limitation, air, water vapor, surface
water, groundwater, drinking water supply, surface soil, subsurface soil, plant
and animal life or any other natural resource) and/or (2) the use, storage,
recycling, treatment, generation, transportation, processing, handling,
labeling, production, release or disposal of Materials of Environmental Concern.
The term "Environmental Laws" includes without limitation (a) the comprehensive
Environmental Response, Compensation and Liability Act, as amended, 42 U.S.C.
Section 9601, et seq.; the resource Conservation and Recovery Act, as amended,
42 U.S.C. Section 901, et seq.; the Clean Air Act, as amended, 42 U.S.C. Section
7401, et seq.; the Federal Water Pollution Control Act, as amended, 33 U.S.C.
Section 1251, et seq.; the Toxic
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Substances Control Act, as amended, 15 U.S.C. Section 2601, et seq.; the
Emergency Planning and Community Right to Know Act, 42 U.S.C. Section 11001, et
seq.; the Safe Drinking Water Act, 42 U.S.C. Section 300f, et seq.; and all
comparable state and local laws, and (b) any common law (including without
limitation common law that may impose strict liability) that may impose
liability or obligations for injuries or damages due to the presence of or
exposure to any Materials of Environmental Concern.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Exchange Agent" shall mean Xxxxxxxx Bank and Trust, or such other bank or
trust company or other agent designated by Farmers, and reasonably acceptable to
FSSB, which shall act as agent for Farmers in connection with the exchange of
the Certificates for the Merger Consideration.
"Exchange Fund" shall have the meaning set forth in Section 3.2(a).
"Exchange Ratio" shall mean the number of shares IBT Common Stock and the
amount of cash into which one (1) share of FSSB Common Stock shall be converted
at the Effective Time, which shall be as set forth below:
3.0382 shares of IBT Common Stock plus $29.00 in cash for each share
of FSSB Common Stock, provided that the cash portion shall be reduced
by the amount that cash dividends paid by FSSB during 2006 exceed
$3.50 per share and shall be increased by the amount that cash
dividends paid by IBT during 2006 exceed $0.66 per share.
"Farmers" shall mean Farmers State Bank of Breckenridge, with its principal
offices located at 000 Xxxx Xxxxxxx Xxxxxx, Xxxxxxxxxxxx, Xxxxxxxx 00000.
"Farmers Entity Disclosure Schedule" shall mean a written disclosure
schedule delivered by Farmers and IBT to FSSB specifically referring to the
appropriate section of this Agreement.
"Farmers Entity" shall mean any of Farmers, IBT, Xxxxxxxx Bank and Trust,
IBT Title and Insurance Agency, Inc., Financial Group Information Services,
Inc., IB&T Employee Leasing, LLC, and IBT Personnel, LLC.
"FDIC" shall mean the Federal Deposit Insurance Corporation or any
successor thereto.
"FRB" shall mean the Board of Governors of the Federal Reserve System or
any successor thereto.
"FSSB" shall mean The Xxxxxxx State Savings Bank, with its principal
offices located at 000 Xxxx Xxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000.
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"FSSB Common Stock" shall mean the common stock, par value $10.00 per
share, of FSSB.
"FSSB Disclosure Schedule" shall mean a written disclosure schedule
delivered by FSSB to IBT specifically referring to the appropriate section of
this Agreement.
"FSSB Financial Statements" shall mean (i) the audited statements of
financial condition (including related notes and schedules, if any) of FSSB as
of December 31, 2005, 2004 and 2003 and the statements of income, changes in
shareholders' equity and cash flows (including related notes and schedules, if
any) of FSSB for each of the three years ended December 31, 2005, 2004 and 2003,
as set forth in FSSB's annual report for the year ended December 31, 2004 and
(ii) the unaudited interim consolidated financial statements of FSSB as of the
end of the three-month period ended March 31, 2006.
"FSSB Shareholders Meeting" shall have the meaning set forth in Section
8.1.
"FSSB Stock Benefit Plans" shall mean any and all stock-based benefit plans
and amendments thereto of FSSB.
"FSSB Subsidiary" means any corporation or entity, 50% or more of the
equity interest of which is owned, either directly or indirectly, by FSSB,
except any corporation or entity the equity interest of which is held in the
ordinary course of the lending activities of FSSB.
"GAAP" shall mean accounting principles generally applied in the United
States of America.
"Governmental Entity" shall mean any Federal or state court, administrative
agency or commission or other governmental authority or instrumentality.
"IBT" shall mean IBT Bancorp, Inc., a Michigan corporation, with its
principal executive offices located at 000 Xxxx Xxxxxxxx Xxxxxx, Xx. Xxxxxxxx,
Xxxxxxxx, 00000.
"IBT Common Stock" shall mean the common stock, no par value per share, of
IBT.
"IBT Financial Statements" shall mean the (i) the audited consolidated
statements of financial condition (including related notes and schedules) of IBT
as of December 31, 2005, 2004 and 2003 and the consolidated statements of
income, changes in shareholders' equity and cash flows (including related notes
and schedules, if any) of IBT for each of the three years ended December 31,
2005, 2004 and 2003, as set forth in IBT's annual report for the year ended
December 31, 2005, and (ii) the unaudited interim consolidated financial
statement of IBT as of the end of the three-month period ended March 31, 2006,
as filed by IBT in its Securities Documents.
"IBT Stock Benefit Plans" shall mean any and all stock-based benefit plans
and amendments thereto of IBT.
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"IBT Subsidiary" means any corporation or entity, 50% or more of the equity
interest of which is owned, either directly or indirectly, by IBT, Xxxxxxxx Bank
and Trust or Farmers, except any corporation or entity, the equity interest of
which is held in the ordinary course of the lending activities of Xxxxxxxx Bank
and Trust or Farmers.
"IRS" shall mean the United States Internal Revenue Service.
"Knowledge" as used with respect to a Person (including references to such
person being aware of a particular matter) means those facts that are known by
the current executive officers and directors of such Person, and includes any
and all facts, matters or circumstances set forth in any written notice from any
Bank Regulator or any other material written notice received by such executive
officer or director of that Person.
"Loan Property" shall have the meaning set forth in Section 4.1(o).
"Material Adverse Effect" shall mean, with respect to Farmers or FSSB,
respectively, any effect that (i) is material and adverse to the financial
condition, results of operations or business of IBT and its Subsidiaries taken
as a whole, or FSSB and its Subsidiaries taken as a whole, respectively, or (ii)
does or would materially impair the ability of either FSSB, on the one hand, or
Farmers, on the other hand, to perform its obligations under this Agreement or
otherwise materially threaten or materially impede the consummation of the
transactions contemplated by this Agreement; provided that "Material Adverse
Effect" shall not be deemed to include the impact of (a) changes in laws and
regulations affecting banks generally or interpretations thereof by courts or
governmental agencies, (b) changes in GAAP or regulatory accounting principles
generally applicable to financial institutions and their holding companies, (c)
actions and omissions of a party hereto (or any of its Subsidiaries) taken with
the prior written consent of the other party, (d) compliance with this Agreement
on the business, financial condition or results of operations of the parties and
their respective Subsidiaries, including the expenses incurred by the parties
hereto in consummating the transactions contemplated by this Agreement
(consistent with the information included in the Disclosure Schedules) and (e)
any change in the value of the securities portfolio of IBT or FSSB,
respectively, whether held as available for sale or held to maturity, resulting
from a change in interest rates value of the securities portfolio of IBT or
FSSB, respectively, whether held as available for sale or held to maturity,
resulting from a change in interest rates generally.
"Materials of Environmental Concern" means pollutants, contaminants,
wastes, toxic substances, petroleum and petroleum products, and any other
materials regulated under Environmental Laws.
"MBCA" shall mean the Michigan Business Corporation Act, as amended.
"Merger" shall mean the merger of FSSB with and into Farmers pursuant to
the terms hereof.
"Merger Consideration" shall mean the IBT Common Stock and cash, to be paid
by Farmers for each share of FSSB Common Stock, as set forth in Section 3.1.
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"Merger Registration Statement" shall mean the registration statement,
together with all amendments, filed with the SEC under the Securities Act for
the purpose of registering shares of IBT Common Stock to be offered to holders
of FSSB Common Stock in connection with the Merger.
"Michigan Banking Law" shall mean the Michigan Banking Code of 1999, as
amended, and the rules and regulations promulgated thereunder, as amended, as
administered by the Bureau.
"Participation Facility" shall have the meaning set forth in Section
4.1(o).
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any successor
thereto.
"Pension Plan" shall have the meaning set forth in Section 4.1(m).
"Person" shall mean any individual, corporation, limited liability company,
partnership, joint venture, association, trust "group" (as that term is defined
under the Exchange Act) or entity.
"Proxy Statement - Prospectus" shall have the meaning set forth in Section
8.2.
"Regulatory Agreement" shall have the meaning set forth in Section 4.1(l).
"Regulatory Approvals" means the approval of any Bank Regulator that is
necessary in connection with the consummation of the Merger and the related
transactions contemplated by this Agreement.
"Rights" shall mean warrants, options, rights, convertible securities,
stock appreciation rights and other arrangements or commitments which obligate
an entity to issue or dispose of any of its capital stock or other ownership
interests or which provide for compensation based on the equity appreciation of
its capital stock.
"SEC" shall mean the Securities and Exchange Commission or any successor
thereto.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Securities Documents" shall mean all reports, offering circulars, proxy
statements, registration statements and all similar documents filed pursuant to
the Securities Laws.
"Securities Laws" shall mean the Securities Act; the Exchange Act; the
Investment Company Act of 1940, as amended; the Investment Advisers Act of 1940,
as amended; the Trust Indenture Act of 1939, as amended, and the rules and
regulations of the SEC promulgated thereunder.
"Significant Subsidiary" shall have the meaning set forth in Rule 1-02 of
Regulation S-X of the SEC.
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"Surviving Corporation" shall have the meaning set forth in Section 2.1
hereof.
"Termination Date" shall mean December 31, 2006.
Other terms used herein are defined in the preamble and elsewhere in this
Agreement.
ARTICLE II - THE MERGER
2.1. Merger. Subject to the terms and conditions of this Agreement, at the
Effective Time, FSSB shall merge with Farmers, with Farmers as the resulting or
surviving banking corporation (the "Surviving Corporation"). As part of the
Merger, each share of FSSB Common Stock shall be converted into the right to
receive the Merger Consideration pursuant to the terms of Article III hereof.
2.2. Closing; Effective Time. Subject to the satisfaction or waiver of all
conditions to closing contained in Article IX hereof, the Closing shall occur no
later than five (5) business days following the latest to occur of (i) the
receipt of all required Regulatory Approvals, and the expiration of any
applicable waiting periods, (ii) the approval of the Merger by the shareholders
of FSSB, or (iii) at such other date or time upon which Farmers and FSSB
mutually agree (the "Closing"). The Merger shall be effected by the filing of a
certificate of merger with the Bureau on the day of the Closing (the "Closing
Date"), in accordance with Michigan Banking Law. The "Effective Time" means the
date and time upon which the certificate of merger is filed with the Bureau, or
as otherwise stated in the certificate of merger, in accordance with Michigan
Banking Law.
2.3. Articles of Incorporation and Bylaws; Name. The Articles of
Incorporation and Bylaws of Farmers as in effect immediately prior to the
Effective Time shall be the Articles of Incorporation and Bylaws of the
Surviving Corporation, until thereafter amended as provided therein and by
applicable law. The name of the Surviving Corporation shall be FSB.
2.4. Directors and Officers of Surviving Corporation. The board directors
of the Surviving Corporation shall consist of one of the incumbent directors of
each of FSSB and Farmers immediately preceding the Effective Time, the President
and CEO of IBT and two outside directors of IBT, each to hold office in
accordance with the Articles of Incorporation and Bylaws of the Surviving
Corporation. At the Effective Time, IBT shall establish by resolution of the
Board of Directors a regional board to preserve the institutional knowledge of
FSSB immediately before the Merger and to provide advice to the IBT Board of
Directors about business and operations, community and customer needs in the
market area, regional economic conditions and such other advisory
responsibilities as determined by the IBT Board of Directors. The members of the
initial regional board shall consist of all incumbent members of the FSSB board
of directors immediately preceding the Effective Time. Regional board member
compensation shall be the same as that provided by FSSB prior to the Effective
Time provided, however, that IBT may conduct periodic reviews of director
compensation to assess reasonableness and consistency. The officers of the
Surviving Corporation at the Effective Time shall be as set forth in Exhibit F.
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2.5. Effects of the Merger. At and after the Effective Time, the Merger
shall have the effects as set forth in the Michigan Banking Law.
2.6. Tax Consequences. It is intended that the Merger shall constitute a
reorganization within the meaning of Section 368(a) of the Code and that this
Agreement shall constitute a "plan of reorganization" as that term is used in
Sections 354 and 361 of the Code. From and after the date of this Agreement and
until the Closing, each party hereto shall use its reasonable best efforts to
cause the Merger to qualify, and will not knowingly take any action, cause any
action to be taken, fail to take any action or cause any action to fail to be
taken which action or failure to act could prevent the Merger from qualifying as
a reorganization under Section 368(a) of the Code other than is contemplated by
this Agreement. Following the Closing, neither Farmers nor FSSB nor any of their
Affiliates shall knowingly take any action, cause any action to be taken, fail
to take any action or cause any action to fail to be taken, which action or
failure to act could cause the Merger to fail to qualify as a reorganization
under Section 368(a) of the Code.
2.7. Possible Alternative Structures. Notwithstanding anything to the
contrary contained in this Agreement and subject to the satisfaction of the
conditions set forth in Article IX, prior to the Effective Time, Farmers shall,
with the consent of FSSB, which will not be unreasonably withheld, be entitled
to revise the structure of the Merger described in Section 2.1 hereof provided
that (i) there are no adverse Federal or state income tax consequences to FSSB
shareholders as a result of the modification; (ii) the consideration to be paid
to the holders of FSSB Common Stock under this Agreement is not thereby changed
in kind or value (or the composition thereof), or reduced in amount; and (iii)
such modification will not delay materially or jeopardize receipt of any
required Regulatory Approvals or other consents and approvals relating to the
consummation of the Merger. The parties hereto agree to appropriately amend this
Agreement and any related documents in order to reflect any such revised
structure.
ARTICLE III - CONVERSION OF SHARES
3.1. Conversion of FSSB Common Stock; Merger Consideration. At the
Effective Time, by virtue of the Merger and without any action on the part of
Farmers, FSSB or the holders of any of the shares of FSSB Common Stock, the
Merger shall be effected in accordance with the following terms:
(a) Each share of Farmers Common Stock that is issued and outstanding
immediately prior to the Effective Time shall remain issued and outstanding
following the Effective Time and shall be unchanged by the Merger.
(b) All shares of FSSB Common Stock held in the treasury of FSSB and
each share of FSSB Common Stock owned by IBT or any direct or indirect wholly
owned subsidiary of IBT or of FSSB immediately prior to the Effective Time,
shall cease to exist, and the certificates for such shares shall be canceled as
promptly as practicable thereafter, and no payment or distribution shall be made
in consideration therefor.
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(c) Except as set forth above, each share of FSSB Common Stock issued
and outstanding immediately prior to the Effective Time (other than Dissenting
Shares) shall become and be converted into, as provided in and subject to the
limitations set forth in this Agreement, the right to receive shares of IBT
Common Stock and cash based on the Exchange Ratio (the "Merger Consideration").
(d) Each outstanding share of FSSB Common Stock the holder of which
has perfected his right to dissent under Michigan Banking Law and has not
effectively withdrawn or lost such right as of the Effective Time (the
"Dissenting Shares") shall not be converted into or represent a right to receive
the Merger Consideration hereunder, and the holder thereof shall be entitled
only to such rights as are granted by Michigan Banking Law. FSSB shall give
Farmers prompt notice upon receipt by FSSB of any such demand for payment of the
fair value of such shares of FSSB Common Stock and of withdrawals of such
demands and any other instruments provided pursuant to applicable law (any
shareholder duly making such demand being hereinafter called a "Dissenting
Shareholder"), and Farmers shall have the right to participate in all
negotiations and proceedings with respect to any such demand for payment, or
waive any failure to timely deliver a written demand for appraisal or the taking
of any other action by such Dissenting Shareholder as may be necessary to
perfect appraisal rights under Michigan Banking Law. Any payments made with
respect to Dissenting Shares shall be made by the Surviving Corporation.
(e) If any Dissenting Shareholder shall effectively withdraw or lose
(through failure to perfect or otherwise) his right to payment as a Dissenting
Shareholder at or prior to the Effective Time, such holder's shares of FSSB
Common Stock shall be converted into a right to receive the Merger Consideration
in accordance with the applicable provisions of this Agreement.
(f) At the Effective Time, shares of FSSB Common Stock shall
automatically be canceled and shall no longer be outstanding, and shall be
converted into the right to receive the Merger Consideration.
(g) Notwithstanding anything to the contrary contained herein, no
certificates or script representing fractional shares of IBT Common Stock shall
be issued upon the surrender and exchange of Certificates, no dividend or
distribution with respect to IBT Common Stock shall be payable on or with
respect to any fractional share interest, and such fractional share interests
shall not entitle the owner thereof to vote or to any other rights of a
shareholder of IBT. In lieu of the issuance of any such fractional share,
Farmers shall pay to each former holder of FSSB Common Stock who otherwise would
be entitled to receive a fractional share of IBT Common Stock, an amount in
cash, rounded to the nearest cent and without interest, equal to the product of
(i) the fraction of a share to which such holder would otherwise have been
entitled and (ii) $42.00. For purposes of determining any fractional share
interest, all shares of FSSB Common Stock owned by a FSSB shareholder shall be
combined so as to calculate the maximum number of whole shares of IBT Common
Stock issuable to such FSSB Shareholder.
(h) In the event that, subsequent to the date of this Agreement but
prior to the Effective Time, the outstanding shares of IBT Common Stock and/or
FSSB Common Stock shall
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have been increased, decreased, changed into or exchanged for a different number
or kind of shares or securities through a reorganization, recapitalization,
reclassification, stock dividend, stock split, reverse stock split, or other
similar change in capitalization, or exchanged or converted into shares or
securities of another corporation, then an appropriate, equitable and
proportionate adjustment shall be made to the Exchange Ratio.
3.2. Procedures for Exchange of FSSB Common Stock.
(a) IBT to Make Merger Consideration Available. No later than the
Closing Date, IBT shall deposit, or shall cause to be deposited, in an account
with the Exchange Agent for the benefit of the holders of FSSB Common Stock, for
exchange in accordance with this Section 3.2, certificates representing the
shares of IBT Common Stock and an aggregate amount of cash sufficient to pay the
aggregate amount of cash payable pursuant to this Article III (such cash and
certificates for shares of IBT Common Stock, together with any dividends or
distributions with respect thereto (without any interest thereon) being
hereinafter referred to as the "Exchange Fund").
(b) Exchange of Certificates. IBT shall take any steps necessary to
cause the Exchange Agent, within five (5) business days after the Effective
Time, to mail to each holder of a Certificate or Certificates, a form letter of
transmittal for return to the Exchange Agent and instructions for use in
effecting the surrender of the Certificates in exchange for the Merger
Consideration. The letter of transmittal shall be in customary form and shall
specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Exchange
Agent. Upon proper surrender of a Certificate for exchange and cancellation to
the Exchange Agent, together with a properly completed letter of transmittal,
duly executed, the holder of such Certificate shall be entitled to receive in
exchange therefore the Merger Consideration to which such holder of FSSB Common
Stock shall have become entitled pursuant to Section 3.1(c) and 3.1(g) hereof,
and the Certificate so surrendered shall forthwith be cancelled. No interest
will be paid or accrued on any cash payable hereunder or any unpaid dividends
and distributions, if any, payable to holders of Certificates.
(c) Rights of Certificate Holders After the Effective Time. After the
Effective Time, the holders of the Certificates shall have no rights (excluding
dissenter's rights of those shareholders properly exercising dissenter's rights)
with respect to the shares of FSSB Common Stock formerly represented by those
Certificates except to surrender those Certificates in exchange for the Merger
Consideration as provided in this Agreement. No dividends or other distributions
declared after the Effective Time with respect to IBT Common Stock or interest
with respect to cash that is part of the Exchange Fund shall be paid to the
holder of any Certificate until the holder thereof shall surrender such
Certificate in accordance with this Section 3.2. After the surrender of a
Certificate in accordance with this Section 3.2, the record holder thereof shall
be entitled to receive any dividends or other distributions, without any
interest thereon, that become payable after the Effective Time with respect to
the shares of IBT Common Stock that are part of the Merger Consideration for the
shares of FSSB Common Stock represented by the surrendered Certificate.
12
(d) Surrender by Persons Other than Record Holders. If the Person
surrendering a Certificate and signing the accompanying letter of transmittal is
not the record holder thereof, then it shall be a condition of the payment of
the Merger Consideration that: (i) such Certificate is properly endorsed to such
Person or is accompanied by appropriate stock powers, in either case signed
exactly as the name of the record holder appears on such Certificate, and is
otherwise in proper form for transfer, or is accompanied by appropriate evidence
of the authority of the Person surrendering such Certificate and signing the
letter of transmittal to do so on behalf of the record holder; and (ii) the
person requesting such exchange shall pay to the Exchange Agent in advance any
transfer or other taxes required by reason of the payment to a Person other than
the registered holder of the Certificate 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.
(e) Closing of Transfer Books. From and after the Effective Time,
there shall be no transfers on the stock transfer books of FSSB of the FSSB
Common Stock that were outstanding immediately prior to the Effective Time. If,
after the Effective Time, Certificates representing such shares are presented
for transfer to the Exchange Agent, they shall be exchanged for the Merger
Consideration and canceled as provided in this Section 3.2. Certificates
surrendered for exchange by any person constituting an "Affiliate" of FSSB for
purposes of Rule 145 under the Securities Act shall not be exchanged until
Farmers has received a written agreement from such person as provided in Section
8.4.
(f) Return of Exchange Fund. At any time following the twelve (12)
month period after the Effective Time, IBT shall be entitled to require the
Exchange Agent to deliver to it any portions of the Exchange Fund which has been
made available to the Exchange Agent and not disbursed to holders of
Certificates (including, without limitation, all interest and other income
received by the Exchange Agent in respect of all funds made available to it),
and thereafter such holders shall be entitled to look to IBT (subject to
abandoned property, escheat and other similar laws) with respect to any Merger
Consideration that may be payable upon due surrender of the Certificates held by
them. Notwithstanding the foregoing, neither IBT nor the Exchange Agent shall be
liable to any holder of a Certificate for any Merger Consideration delivered in
respect of such Certificate to a public official pursuant to any abandoned
property, escheat or other similar law.
(g) Lost, Stolen or Destroyed Certificates. In the event any
Certificate shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the person claiming such Certificate to be lost,
stolen or destroyed and, if required by IBT, the posting by such person of a
bond in such amount as IBT may reasonably direct as indemnity against any claim
that may be made against it with respect to such Certificate, the Exchange Agent
will issue in exchange for such lost, stolen or destroyed Certificate, the
Merger Consideration deliverable in respect thereof.
(h) Withholding. IBT or the Exchange Agent will be entitled to deduct
and withhold from the consideration otherwise payable pursuant to this Agreement
or the transactions contemplated hereby to any holder of FSSB Common Stock such
amounts as IBT (or any Affiliate thereof) or the Exchange Agent are required to
deduct and withhold with respect
13
to the making of such payment under the Code, or any applicable provision of
U.S. Federal, state, local or non-U.S. tax law. To the extent that such amounts
are properly withheld by IBT or the Exchange Agent, such withheld amounts will
be treated for all purposes of this Agreement as having been paid to the holder
of the FSSB Common Stock in respect of whom such deduction and withholding were
made and shall be delivered to the applicable taxing authorities.
3.3. Reservation of Shares. IBT shall reserve for issuance a sufficient
number of shares of IBT Common Stock for the purpose of issuing such shares to
FSSB shareholders in accordance with this Article III.
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF FSSB
4.1. Representations and Warranties of FSSB. FSSB represents and warrants
to Farmers that the statements contained in this Article IV are correct as of
the date of this Agreement, except as set forth in the FSSB Disclosure Schedule
delivered by FSSB to Farmers on the date hereof, and except as to any
representation or warranty which specifically relates to an earlier date. FSSB
has made a good faith effort to ensure that the disclosure on each schedule of
the FSSB Disclosure Schedule corresponds to the section referenced herein.
However, for purposes of the FSSB Disclosure Schedule, any item disclosed on any
schedule therein is deemed to be fully disclosed with respect to all schedules
under which such item may be relevant as and to the extent that it is reasonably
apparent that such item applies to such other schedule.
(a) Organization, Standing and Power.
(i) FSSB is a Michigan chartered commercial bank duly organized,
validly existing and in good standing under the laws of the State of Michigan.
FSSB has all requisite power and authority to own, lease and operate its
properties and to carry on its business as now being conducted. The deposits of
FSSB are insured by the FDIC to the fullest extent permitted by law, and all
premiums and assessments required to be paid in connection therewith have been
paid by FSSB when due.
(ii) FSSB Disclosure Schedule 4.1(a)(ii) sets forth each FSSB
Subsidiary. Each FSSB Subsidiary is a corporation, limited liability company or
other legal entity duly organized, validly existing and in good standing under
the laws of its jurisdiction of incorporation or organization.
(iii) The respective minute books of FSSB and each FSSB
Subsidiary accurately records, in all material respects, all material corporate
actions of the respective shareholders and boards of directors (including
committees) since January 1, 2003.
(iv) Prior to the date of this Agreement, FSSB has made available
to Farmers or a Farmers Entity, true and correct copies of the articles of
incorporation or charter and bylaws of FSSB and each FSSB Subsidiary. FSSB
Disclosure Schedule 4.1(a)(iv) sets forth any and all current noncompliance with
FSSB's charter and bylaws. Such noncompliance has not, and will not have, a
Material Adverse Effect on FSSB.
(b) Capital Structure.
14
(i) The authorized capital stock of FSSB consists of 262,500
shares of FSSB Common Stock, of which 262,500 shares are outstanding, validly
issued, fully paid and nonassessable (except for assessments by the Bureau
pursuant to Section 3807 of the Michigan Banking Code of 1999) and free of
preemptive rights. There are no shares of FSSB Common Stock held by FSSB as
treasury stock. FSSB has no outstanding options, warrants or other rights which
are convertible into shares of FSSB Common Stock, except as disclosed on FSSB
Disclosure Schedule 4.1(b)(i). Neither FSSB nor any FSSB Subsidiary has or is
bound by any Rights of any character relating to the purchase, sale or issuance
or voting of, or right to receive dividends or other distributions on any shares
of FSSB Common Stock, or any other security of FSSB or any securities
representing the right to vote, purchase or otherwise receive any shares of FSSB
Common Stock or any other security of FSSB, other than shares issuable under the
FSSB Stock Benefit Plans. FSSB Disclosure Schedule 4.1(b)(i) sets forth: the
name of each holder of an award granted under any FSSB Stock Benefit Plan,
identifying the nature, number of shares, grant and vesting dates of the award.
(ii) Except for the FSSB Subsidiaries and as set forth in FSSB
Disclosure Schedule 4.1(b)(ii), FSSB does not possess, directly or indirectly,
any material equity interest in any corporate entity, except for equity
interests held in the investment portfolios of FSSB or any FSSB Subsidiary,
equity interests held by FSSB in a fiduciary capacity, and equity interests held
in connection with the lending activities of FSSB. FSSB owns each of its
outstanding shares of capital stock of each FSSB Subsidiary free and clear of
all liens, security interests, pledges, charges, encumbrances, agreements and
restrictions of any kind or nature.
(iii) To FSSB's Knowledge, except as set forth on FSSB Disclosure
Schedule 4.1(b)(iii), no Person is the beneficial owner (as defined in Section
13(d) of the Exchange Act) of 5% or more of the outstanding shares of FSSB
Common Stock.
(iv) No bonds, debentures, notes or other indebtedness having the
right to vote on any matters on which FSSB's shareholders may vote has been
issued by FSSB and are outstanding.
(c) Authority.
(i) FSSB has full corporate power and authority to execute and
deliver this Agreement and, subject to the receipt of the Regulatory Approvals
described in Section 8.3 and the approval of this Agreement by FSSB's
shareholders, to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement by FSSB and the completion by FSSB of the
transactions contemplated hereby, up to and including the Merger, have been duly
and validly approved by the Board of Directors of FSSB. This Agreement has been
duly and validly executed and delivered by FSSB, and subject to approval by the
shareholders of FSSB and receipt of the Regulatory Approvals, constitutes the
valid and binding obligation of FSSB, enforceable against FSSB in accordance
with its terms, subject to applicable bankruptcy, insolvency and similar laws
affecting creditors' rights generally, and subject, as to enforceability, to
general principles of equity.
15
(ii) (A) The execution and delivery of this Agreement by FSSB,
(B) subject to receipt of Regulatory Approvals, and FSSB's and Farmers'
compliance with any conditions contained therein, and subject to the receipt of
the approval of the shareholders of FSSB, the consummation of the transactions
contemplated hereby, and (C) compliance by FSSB with any of the terms or
provisions hereof will not (i) conflict with or result in a breach of any
provision of the Articles of Incorporation or Bylaws of FSSB or any FSSB
Subsidiary; (ii) violate any statute, code, ordinance, rule, regulation,
judgment, order, writ, decree or injunction applicable to FSSB or any FSSB
Subsidiary or any of their respective properties or assets; or (iii) except as
set forth in FSSB Disclosure Schedule 4.1(c)(ii), violate, conflict with, result
in a breach of any provisions of, constitute a default (or an event which, with
notice or lapse of time, or both, would constitute a default), under, result in
the termination of, accelerate the performance required by, or result in a right
of termination or acceleration or the creation of any lien, security interest,
charge or other encumbrance upon any of the properties or assets of FSSB or any
FSSB Subsidiary under any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, deed of trust, license, lease, agreement or other
investment or obligation to which FSSB or any FSSB Subsidiary is a party, or by
which they or any of their respective properties or assets may be bound or
affected, except for such violations, conflicts, breaches or defaults under
clause (ii) or (iii) hereof which, either individually or in the aggregate, will
not have a Material Adverse Effect on FSSB and the FSSB Subsidiaries taken as a
whole.
(d) Information Supplied. None of the information supplied or to be
supplied by FSSB or any FSSB Subsidiary for inclusion or incorporation by
reference in (i) the Registration Statement on Form S-4 to be filed with the SEC
by IBT in connection with the issuance of shares of IBT Common Stock in the
Merger (including the Proxy Statement and prospectus constituting a part
thereof, the "S-4") will, at the time the S-4 becomes effective under the
Securities Act, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading, and (ii) the Proxy Statement - Prospectus and
any amendment or supplement thereto will, at the date of mailing to FSSB
shareholders and at the time of the meeting of shareholders of FSSB to be held
in connection with the Merger, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary in
order to make the statements therein not misleading. The Proxy Statement -
Prospectus (except for such portions thereof that relate only to IBT) will
comply in all material respects with the provisions of the Exchange Act and the
rules and regulations thereunder, and the S-4 (except for such portions thereof
that relate only to IBT) will comply in all material respects with the
provisions of the Securities Act and the rules and regulations thereunder.
(e) Consents. Except for the Regulatory Approvals referred to in
Section 8.3 hereof and consents set forth in FSSB Disclosure Schedule 4.1(e) and
compliance with any conditions contained therein, and the approval of this
Agreement by the requisite vote of the shareholders of FSSB, no consents,
waivers or approvals of, or filings or registrations with, any Governmental
Entity or Bank Regulator are necessary, and, to FSSB's Knowledge, no consents,
waivers or approvals of, or filings or registrations with, any other third
parties are necessary, in connection with the execution and delivery of this
Agreement by FSSB, and the completion by FSSB of the Merger. To FSSB's
knowledge, (i) it has not received notice as of the date hereof that any Bank
Regulator intends to disapprove or object to the completion of the transactions
16
contemplated by this Agreement, and (ii) there is no reason to expect that all
Regulatory Approvals required for the consummation of the transactions
contemplated by this Agreement will not be received.
(f) Financial Statements.
(i) FSSB has previously made available to Farmers or a Farmers
Entity the FSSB Financial Statements. Except as disclosed in FSSB Disclosure
Schedule 4.1(f)(i), the FSSB Financial Statements have been prepared in
accordance with GAAP, and (including the related notes where applicable) fairly
present in each case in all material respects (subject to the case of the
unaudited interim statements to normal year-end adjustments) the consolidated
financial position, results of operations and cash flows of FSSB and the FSSB
Subsidiaries on a consolidated basis as of and for the respective periods ending
on the dates thereof, in accordance with GAAP during the periods involved,
except as indicated in the notes thereto.
(ii) Except as disclosed in FSSB Disclosure Schedule 4.1(f)(ii),
at the date of each balance sheet included in the FSSB Financial Statements,
FSSB did not have any liability, obligation or loss contingency of any nature
(whether absolute, accrued, contingent or otherwise) of a type required to be
reflected in such FSSB Financial Statements or in the footnotes thereto which
were not fully reflected or reserved against therein or fully disclosed in a
footnote thereto, except for liabilities, obligations and loss contingencies
which were not material individually or in the aggregate or which are incurred
in the ordinary course of business, consistent with past practice, and except
for liabilities, obligations and loss contingencies which are within the subject
matter of a specific representation and warranty herein and subject, in the case
of any unaudited statements, to normal, recurring audit adjustments and the
absence of footnotes.
(g) Taxes. Except as set forth in FSSB Disclosure Schedule 4.1(g),
FSSB and the FSSB Subsidiaries that are at least 80% owned by FSSB are members
of the same Affiliated group within the meaning of Code Section 1504(a) and (A)
FSSB has duly filed all federal, state and material local tax returns required
to be filed by or with respect to FSSB and each Significant Subsidiary of FSSB
on or prior to the Closing Date, taking into account any extensions (all such
returns, to FSSB's Knowledge, being accurate and correct in all material
respects) and has duly paid or made provisions for the payment of all material
federal, state and local taxes which have been incurred by or are due or claimed
to be due from FSSB and any Significant Subsidiary of FSSB by any taxing
authority or pursuant to any written tax sharing agreement on or prior to the
Closing Date other than taxes or other charges which (i) are not delinquent,
(ii) are being contested in good faith, or (iii) have not yet been fully
determined, (B) as of the date of this Agreement, FSSB has received no written
notice of, and to FSSB's Knowledge there is no audit examination, deficiency
assessment, tax investigation or refund litigation with respect to any taxes of
FSSB or any of its Significant Subsidiaries, and no claim has been made by any
authority in a jurisdiction where FSSB or any of its Significant Subsidiaries do
not file tax returns that FSSB or any such Significant Subsidiary is subject to
taxation in that jurisdiction and (C) FSSB and its Significant Subsidiaries have
not executed an extension or waiver of any statute of limitations on the
assessment or collection of any material tax due that is currently in effect.
FSSB and each of its Significant Subsidiaries has withheld and
17
paid all taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, independent contractor, creditor,
shareholder or other third party, and FSSB and each of its Significant
Subsidiaries, to FSSB's Knowledge, has timely complied with all applicable
information reporting requirements under Part III, Subchapter A of Chapter 61 of
the Code and similar applicable state and local information reporting
requirements.
(h) No Material Adverse Effect. Except as disclosed in FSSB Disclosure
Schedule 4.1(h), FSSB and the FSSB Subsidiaries, taken as a whole, have not
suffered any Material Adverse Effect since December 31, 2004, and, to FSSB's
Knowledge, no event has occurred or circumstance arisen since that date which,
in the aggregate, has had or is reasonably likely to have a Material Adverse
Effect on FSSB and the FSSB Subsidiaries, taken as a whole.
(i) Material Contracts; Leases; Defaults.
(i) Except as set forth in FSSB Disclosure Schedule 4.1(i)(i),
neither FSSB nor any FSSB Subsidiary is a party to or subject to: (i) any
employment, consulting or severance contract with any past or present officer,
director or employee of FSSB or any FSSB Subsidiary, except for "at will"
arrangements; (ii) any plan or contract providing for bonuses, pensions,
options, deferred compensation, retirement payments, profit sharing or similar
material arrangements for or with any past or present officers, directors or
employees of FSSB or any FSSB Subsidiary; (iii) any collective bargaining
agreement with any labor union relating to employees of FSSB or any FSSB
Subsidiary; (iv) any agreement (other than this Agreement) which by its terms
limits the payment of dividends by FSSB or any FSSB Subsidiary; (v) any
instrument evidencing or related to material indebtedness for borrowed money
whether directly or indirectly, by way of purchase money obligation, conditional
sale, lease purchase, guaranty or otherwise, in respect of which FSSB or any
FSSB Subsidiary is an obligor to any person, which instrument evidences or
relates to indebtedness other than deposits, repurchase agreements, bankers'
acceptances, and "treasury tax and loan" accounts established in the ordinary
course of business and transactions in "federal funds" or which contains
financial covenants or other restrictions (other than those relating to the
payment of principal and interest when due) which would be applicable on or
after the Closing Date to Farmers or any Farmers Entity; (vi) any other
agreement, written or oral, that obligates FSSB or any FSSB Subsidiary for the
payment of more than $50,000 annually; or (vii) any agreement (other than this
Agreement), contract, arrangement, commitment or understanding (whether written
or oral) that restricts or limits in any material way the conduct of business by
FSSB or any FSSB Subsidiary (it being understood that any non-compete or similar
provision shall be deemed material).
(ii) Each real estate lease that will require the consent of the
lessor or its agent or the assignment to Surviving Corporation as a result of
the Merger by virtue of the terms of any such lease, is listed in FSSB
Disclosure Schedule 4.1(i)(ii) identifying the section of the lease that
contains such prohibition or restriction. Subject to any consents that may be
required as a result of the transactions contemplated by this Agreement, to its
Knowledge, neither FSSB nor any FSSB Subsidiary is in default in any material
respect under any material contract, agreement, commitment, arrangement, lease,
insurance policy or other instrument to which it is a party, by which its
assets, business, or operations may be bound or affected, or under which it or
18
its assets, business, or operations receive benefits, and there has not occurred
any event that, with the lapse of time or the giving of notice or both, would
constitute such a default.
(iii) True and correct copies of agreements, contracts,
arrangements and instruments referred to in Section 4.1(i)(i) and 4.1(i)(ii)
have been made available to Farmers or its Affiliates on or before the date
hereof, are listed on FSSB Disclosure Schedule 4.1(i)(i) and 4.1(i)(ii) and are
in full force and effect on the date hereof. Except as set forth in FSSB
Disclosure Schedule 4.1(i)(iii), no plan, contract, employment agreement,
termination agreement, or similar agreement or arrangement to which FSSB or any
FSSB Subsidiary is a party or under which FSSB or any FSSB Subsidiary may be
liable contains provisions which permit an employee or independent contractor to
terminate it without cause and continue to accrue future benefits thereunder.
Except as set forth in FSSB Disclosure Schedule 4.1(i)(iii), no such agreement,
plan, contract, or arrangement (x) provides for acceleration in the vesting of
benefits or payments due thereunder upon the occurrence of a change in ownership
or control of FSSB or any FSSB Subsidiary; or (y) requires FSSB or any FSSB
Subsidiary to provide a benefit in the form of FSSB Common Stock or determined
by reference to the value of FSSB Common Stock. FSSB Disclosure Schedule
4.1(i)(iii) sets forth an analysis of FSSB Pension Plan liability including the
amounts that are funded and unfunded.
(j) Ownership of Property; Insurance Coverage.
(i) FSSB and each FSSB Subsidiary has good and, as to real
property, marketable title to all material assets and properties owned by FSSB
or each FSSB Subsidiary in the conduct of its businesses, whether such assets
and properties are real or personal, tangible or intangible, including assets
and property reflected in the balance sheet contained in the most recent FSSB
Financial Statements or acquired subsequent thereto (except to the extent that
such assets and properties have been disposed of in the ordinary course of
business, since the date of such balance sheet), subject to no material
encumbrances, liens, mortgages, security interests or pledges, except (i) those
items which secure liabilities for public or statutory obligations or any
discount with, borrowing from or other obligations to FHLB, inter-bank credit
facilities or any transaction by FSSB acting in a fiduciary capacity, and (ii)
statutory liens for amounts not yet delinquent or which are being contested in
good faith. FSSB and the FSSB Subsidiaries, as lessee, have the right under
valid and existing leases of real and personal properties used by FSSB and the
FSSB Subsidiaries in the conduct of their businesses to occupy or use all such
properties as presently occupied and used by each of them. Such existing leases
and commitments to lease constitute or will constitute operating leases for both
tax and financial accounting purposes and the lease expense and minimum rental
commitments with respect to such leases and lease commitments are as disclosed
in all material respects in the notes to the FSSB Financial Statements.
(ii) FSSB and each Significant Subsidiary of FSSB currently
maintain insurance considered by each of them to be reasonable for their
respective operations. Neither FSSB nor any Significant Subsidiary of FSSB has
received notice from any insurance carrier that (i) such insurance will be
canceled or that coverage thereunder will be reduced or eliminated, or (ii)
premium costs with respect to such policies of insurance will be substantially
increased. There are presently no material claims pending under such policies of
insurance and no notices
19
of material claims have been given by FSSB or any Significant Subsidiary of FSSB
under such policies. All such insurance is valid and enforceable and in full
force and effect, and within the last three (3) years FSSB and each Significant
Subsidiary of FSSB has received each type of insurance coverage for which it has
applied and during such periods has not been denied indemnification for any
material claims submitted under any of its insurance policies. FSSB Disclosure
Schedule 4.1(j) (ii) identifies all policies of insurance maintained by FSSB and
each Significant Subsidiary of FSSB.
(k) Legal Proceedings. Except as set forth in FSSB Disclosure Schedule
4.1(k), neither FSSB nor any FSSB Subsidiary is a party to any, and there are no
pending or, to FSSB's Knowledge, threatened legal, administrative, arbitration
or other proceedings, claims (whether asserted or unasserted), actions or
governmental investigations or inquiries of any nature (i) against FSSB or any
FSSB Subsidiary, (ii) to which FSSB or any FSSB Subsidiary's assets are or may
be subject, (iii) challenging the validity or propriety of any of the
transactions contemplated by this Agreement, or (iv) which could adversely
affect the ability of FSSB to perform under this Agreement, except for any
proceeding, claim, action, investigation or inquiry referred to in clauses (i)
and (ii) which, individually or in the aggregate, would not be reasonably
expected to have a Material Adverse Effect.
(l) Compliance With Applicable Law.
(i) Except as set forth in FSSB Disclosure Schedule 4.1(l)(i), to
FSSB's Knowledge, each of FSSB and each FSSB Subsidiary is in compliance in all
material respects with all applicable federal, state, and local statutes, laws,
regulations, ordinances, rules, judgments, orders or decrees applicable to it,
its properties, assets and deposits, its business, and its conduct of business
and its relationship with its employees, including, without limitation, the USA
PATRIOT Act, the Bank Secrecy Act, the Equal Credit Opportunity Act, the Fair
Housing Act, the Community Reinvestment Act of 1977 ("CRA"), the Home Mortgage
Disclosure Act, and all other applicable fair lending laws and other laws
relating to discriminatory business practices and neither FSSB nor any FSSB
Subsidiary has received any written notice to the contrary.
(ii) Each of FSSB and each FSSB Subsidiary has all material
permits, licenses, authorizations orders and approvals of, and has made all
filings, applications and registrations with, all Bank Regulators that are
required in order to permit it to own or lease its properties and to conduct its
business as presently conducted; all such permits, licenses, certificates of
authority, orders and approvals are in full force and effect and, to the
Knowledge of FSSB, no suspension or cancellation of any such permit, license,
certificate, order or approval is threatened or will result from the
consummation of the transactions contemplated by this Agreement, subject to
obtaining the approvals set forth in Section 8.3.
(iii) Except as set forth in FSSB Disclosure Schedule 4.1(l)(iii)
for the period beginning January 1, 2003, neither FSSB nor any FSSB Subsidiary
has received any written notification or, to FSSB's Knowledge, any other
communication from any Bank Regulator (i) asserting that FSSB or any FSSB
Subsidiary is not in material compliance with any of the statutes, regulations
or ordinances which such Bank Regulator enforces; (ii) threatening to
20
revoke any license, franchise, permit or governmental authorization which is
material to FSSB or any FSSB Subsidiary; (iii) requiring or threatening to
require FSSB or any FSSB Subsidiary, or indicating that FSSB or any FSSB
Subsidiary may be required, to enter into a cease and desist order, agreement or
memorandum of understanding or any other agreement with any federal or state
governmental agency or authority which is charged with the supervision or
regulation of banks or engages in the insurance of bank deposits restricting or
limiting, or purporting to restrict or limit, in any material respect the
operations of FSSB or any FSSB Subsidiary, including without limitation any
restriction on the payment of dividends; or (iv) directing, restricting or
limiting, or purporting to direct, restrict or limit, in any material manner the
operations of FSSB or any FSSB Subsidiary (any such notice, communication,
memorandum, agreement or order described in this sentence is hereinafter
referred to as a "Regulatory Agreement"). Except as set forth in FSSB Disclosure
Schedule 4.1(l)(iii), neither FSSB nor any FSSB Subsidiary has consented to or
entered into any Regulatory Agreement that is currently in effect. Any such
Regulatory Agreement and all correspondence relating thereto is set forth in
FSSB Disclosure Schedule 4.1(l)(iii). The most recent regulatory rating given to
FSSB as to compliance with the CRA is "Satisfactory" or better.
(m) Employee Benefit Plans.
(i) FSSB Disclosure Schedule 4.1(m)(i) includes a descriptive
list of all existing bonus, incentive, deferred compensation, pension,
retirement, profit-sharing, thrift, savings, employee stock ownership, stock
bonus, stock purchase, restricted stock, stock option, stock appreciation,
phantom stock, severance, welfare benefit plans, fringe benefit plans,
employment, severance and change in control agreements and all other material
benefit practices, policies and arrangements maintained by FSSB or any FSSB
Subsidiary in which any employee or former employee, consultant or former
consultant or director or former director of FSSB or any FSSB Subsidiary
participates or to which any such employee, consultant or director is a party or
is otherwise entitled to receive benefits (the "Compensation and Benefit
Plans"). Except as set forth in FSSB Disclosure Schedule 4.1(m)(i), neither FSSB
nor any of its Subsidiaries has any commitment to create any additional
Compensation and Benefit Plan or to materially modify, change or renew any
existing Compensation and Benefit Plan (any modification or change that
increases the cost of such plans would be deemed material), except as required
to maintain the qualified status thereof. FSSB has made available to Farmers or
a Farmers Entity true and correct copies of the Compensation and Benefit Plans.
There are no outstanding unvested or unexercised awards under any FSSB benefit
plans and there are no awards available for issuance under any such plan.
(ii) Except as disclosed in FSSB Disclosure Schedule 4.1(m)(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, COBRA, the Health Insurance
Portability and Accountability Act and any regulations or rules promulgated
thereunder, and all material 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 or any
interest, fines, penalties or other impositions for late filings have been paid
in full. Each Compensation and Benefit Plan which is an
21
"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 received a favorable determination letter from the IRS, and FSSB is
not aware of any circumstances which are reasonably likely to result in
revocation of any such favorable determination letter. There is no material
pending or, to the Knowledge of FSSB, threatened action, suit or claim relating
to any of the Compensation and Benefit Plans (other than routine claims for
benefits). Neither FSSB nor any FSSB Subsidiary 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 FSSB or any FSSB Subsidiary to an
unpaid tax or penalty imposed by either Section 4975 of the Code or Section 502
of ERISA.
(iii) Except as set forth in FSSB Disclosure Schedule
4.1(m)(iii), no liability, other than PBGC premiums arising in the ordinary
course of business, has been or is expected by FSSB or any of its Subsidiaries
to be incurred with respect to any FSSB Compensation and Benefit Plan which is a
defined benefit plan subject to Title IV of ERISA ("FSSB Defined Benefit Plan"),
or with respect to any "single-employer plan" (as defined in Section 4001(a) of
ERISA) currently or formerly maintained by FSSB or any entity which is
considered one employer with FSSB under Section 4001(b)(1) of ERISA or Section
414 of the Code (an "ERISA Affiliate") (such plan hereinafter referred to as an
"ERISA Affiliate Plan"). To the Knowledge of FSSB and any FSSB Subsidiary,
except as set forth in FSSB Disclosure Schedule 4.1(m)(iii), no FSSB Defined
Benefit Plan had an "accumulated funding deficiency" (as defined in Section 302
of ERISA), whether or not waived, as of the last day of the end of the most
recent plan year ending prior to the date hereof. Except as set forth in FSSB
Disclosure Schedule 4.1(m)(iii), the fair market value of the assets of each
FSSB Defined Benefit Plan exceeds the present value of the benefits guaranteed
under Section 4022 of ERISA under such FSSB Defined Benefit Plan as of the end
of the most recent plan year with respect to the respective FSSB Defined Benefit
Plan ending prior to the date hereof, calculated on the basis of the actuarial
assumptions used in the most recent actuarial valuation for such FSSB Defined
Benefit Plan as of the date hereof; and no notice of a "reportable event" (as
defined in Section 4043 of ERISA) for which the 30-day reporting requirement has
not been waived has been required to be filed for any FSSB Defined Benefit Plan
within the 12-month period ending on the date hereof. Except as set forth in
FSSB Disclosure Schedule 4.1(m)(iii), neither FSSB nor any of its Subsidiaries
has provided, or is required to provide, security to any FSSB Defined Benefit
Plan or to any single-employer plan of an ERISA Affiliate pursuant to Section
401(a)(29) of the Code or has taken any action, or omitted to take any action,
that has resulted, or would reasonably be expected to result in the imposition
of a lien under Section 412(n) of the Code or pursuant to ERISA. To the
Knowledge of FSSB, and except as set forth in FSSB Disclosure Schedule
4.1(m)(iii), there is no pending investigation or enforcement action by any Bank
Regulator with respect to any Compensation and Benefit Plan or any ERISA
Affiliate Plan.
(iv) With respect to any FSSB Defined Benefit Plan that is a
"multi-employer plan" as such term is defined in Section 3(37) of ERISA,
covering employees of FSSB or any ERISA Affiliate, (i) neither FSSB nor any
ERISA Affiliate has made or suffered a "complete withdrawal" or "partial
withdrawal," as such terms are respectively defined in Sections 4203 and 4205 of
ERISA, (ii) no event has occurred, and no circumstances exist, that alone or
with the passage of time present a material risk of a complete or partial
withdrawal, and
22
(iii) neither FSSB or any ERISA Affiliate has any contingent liability under
Section 4204 of ERISA and no circumstances exist that present a material risk
that any such plan will go into reorganization. FSSB Disclosure Schedule
4.1(m)(iv) lists FSSB's best estimate of the amount of withdrawal liability that
would be incurred if FSSB and each ERISA Affiliate were to make a complete
withdrawal from such plan as of the Effective Time and also states the aggregate
withdrawal liability of FSSB and the ERISA Affiliate. There are no "unfunded
vested benefits" (within the meaning of Section 4211 of ERISA) as of the end of
the most recently completed plan year and as of the date of this Agreement.
(v) All material contributions required to be made under the terms of
any Compensation and Benefit Plan or ERISA Affiliate Plan or any employee
benefit arrangements to which FSSB or any FSSB Subsidiary is a party or a
sponsor have been timely made, and all anticipated contributions and funding
obligations are accrued on FSSB's consolidated financial statements to the
extent required by GAAP. FSSB or its Subsidiaries have expensed and accrued as a
liability the present value of future benefits under each applicable
Compensation and Benefit Plan for financial reporting purposes as required by
GAAP.
(vi) Neither FSSB nor any FSSB Subsidiary has any obligations to
provide retiree health, life insurance, disability insurance, or other retiree
death benefits under any Compensation and Benefit Plan, other than benefits
mandated by Section 4980B of the Code. Except as set forth in FSSB Disclosure
Schedule 4.1(m)(vi), there has been no communication to employees by FSSB or any
FSSB Subsidiary that would reasonably be expected to promise or guarantee such
employees retiree health, life insurance, disability insurance, or other retiree
death benefits.
(vii) Except as set forth in FSSB Disclosure Schedule 4.1(m)(vii),
FSSB and its Subsidiaries do not maintain any Compensation and Benefit Plans
covering employees who are not United States residents.
(viii) Except as set forth in FSSB Disclosure Schedule 4.1(m)(viii),
with respect to each Compensation and Benefit Plan, if applicable, FSSB has
provided or made available to Farmers or a Farmers Entity copies of the: (A)
trust instruments and insurance contracts, (B) two (2) most recent Forms 5500
filed with the IRS, (C) two (2) most recent actuarial reports and financial
statements; (D) most recent summary plan description, (E) most recent
determination letter issued by the IRS; (F) any Form 5310 or Form 5330 filed
with the IRS within the last two years, and (G) most recent nondiscrimination
tests performed under ERISA and the Code (including 401(k) and 401(m) tests), if
applicable.
(ix) Except as set forth in FSSB Disclosure Schedule 4.1(m)(ix), the
consummation of the Merger will not, directly or indirectly (including, without
limitation, as a result of any termination of employment or service at any time
prior to or following the Effective Time) (A) entitle any employee, consultant
or director to any payment or benefit (including severance pay, change in
control benefit, 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.
23
(x) Neither FSSB nor any FSSB Subsidiary maintains any
compensation plans, programs or arrangements under which any payment is
reasonably likely to become non-deductible, in whole or in part, for tax
reporting purposes as a result of the limitations under Section 162(m) of the
Code and the regulations issued thereunder.
(xi) To the Knowledge of FSSB, the consummation of the Merger
will not, directly or indirectly (including without limitation, as a result of
any termination of employment or service at any time prior to or following the
Effective Time), entitle any current or former employee, director or independent
contractor of FSSB or any FSSB Subsidiary to any actual or deemed payment (or
benefit) which could constitute a "parachute payment" (as such term is defined
in Section 280G of the Code).
(xii) There are no stock appreciation or similar rights, earned
dividends or dividend equivalents, or shares of restricted stock, outstanding
under any of the Compensation and Benefit Plans or otherwise as of the date
hereof and none will be granted, awarded, or credited after the date hereof.
(n) Brokers, Finders and Financial Advisors. Except as set forth in
FSSB Disclosure Schedule 4.1(n), neither FSSB nor any FSSB Subsidiary, nor any
of their respective officers, directors, employees or agents, has employed any
broker, finder or financial advisor other than Austin Associates, LLC in
connection with the transactions contemplated by this Agreement, or incurred any
liability or commitment for any fees or commissions to any such person other
than Austin Associates, LLC in connection with the transactions contemplated by
this Agreement.
(o) Environmental Matters.
(i) Except as may be set forth in FSSB Disclosure Schedule 4.1(o)
and any Phase I Environmental Report identified therein, with respect to FSSB
and each FSSB Subsidiary:
(A) Each of FSSB and the FSSB Subsidiaries and, to FSSB's
Knowledge, the Participation Facilities and Loan Properties are, and have been,
in substantial compliance with, and are not liable under, any Environmental
Laws;
(B) FSSB has received no written notice that there is any
suit, claim, action, demand, executive or administrative order, directive,
investigation or proceeding pending and, to FSSB's Knowledge, no such action is
threatened, before any court, governmental agency or other forum against it or
any of the FSSB Subsidiaries or any Participation Facility (x) for alleged
noncompliance (including by any predecessor) with, or liability under, any
Environmental Law or (y) relating to the presence of or release into the
environment of any Materials of Environmental Concern, whether or not occurring
at or on a site owned, leased or operated by it or any of the FSSB Subsidiaries
or any Participation Facility;
(C) FSSB has received no notice that there is any suit,
claim, action, demand, executive or administrative order, directive,
investigation or proceeding pending and, to FSSB's Knowledge no such action is
threatened, before any court, governmental agency
24
or other forum relating to or against any Loan Property (or FSSB or any of the
FSSB Subsidiaries in respect of such Loan Property) (x) relating to alleged
noncompliance (including by any predecessor) with, or liability under, any
Environmental Law or (y) relating to the presence of or release into the
environment of any Materials of Environmental Concern, whether or not occurring
at or on a site owned, leased or operated by a Loan Property;
(D) To FSSB's Knowledge, the properties currently owned or
operated by FSSB or any FSSB Subsidiary (including, without limitation, soil,
groundwater or surface water on, or under the properties, and buildings thereon)
are not contaminated with and do not otherwise contain any Materials of
Environmental Concern other than as permitted under applicable Environmental
Law;
(E) neither FSSB nor any FSSB Subsidiary has received any
written notice, demand letter, executive or administrative order, directive or
request for information from any federal, state, local or foreign governmental
entity or any third party indicating that it may be in violation of, or liable
under, any Environmental Law;
(F) To FSSB's Knowledge, there are no underground storage
tanks on, in or under any properties owned or operated by FSSB or any of the
FSSB Subsidiaries or any Participation Facility, and to FSSB's Knowledge, no
underground storage tanks have been closed or removed from any properties owned
or operated by FSSB or any of the FSSB Subsidiaries or any Participation
Facility; and
(G) To FSSB's Knowledge, during the period of (s) FSSB's or
any of the FSSB Subsidiaries' ownership or operation of any of their respective
current properties or (t) FSSB's or any of the FSSB Subsidiaries' participation
in the management of any Participation Facility, there has been no contamination
by or release of Materials of Environmental Concerns in, on, under or affecting
such properties that could reasonably be expected to result in material
liability under the Environmental Laws. To FSSB's Knowledge, prior to the period
of (x) FSSB's or any of the FSSB Subsidiaries' ownership or operation of any of
their respective current properties or (y) FSSB's or any of the FSSB
Subsidiaries' participation in the management of any Participation Facility,
there was no contamination by or release of Materials of Environmental Concern
in, on, under or affecting such properties that could reasonably be expected to
result in material liability under the Environmental Laws.
(ii) "Loan Property" means any property in which the applicable
party (or a Subsidiary of it) holds a security interest, and, where required by
the context, includes the owner or operator of such property, but only with
respect to such property. "Participation Facility" means any facility in which
the applicable party (or a Subsidiary of it) participates in the management
(including all property held as trustee or in any other fiduciary capacity) and,
where required by the context, includes the owner or operator of such property,
but only with respect to such property.
(p) Loan Portfolio.
25
(i) To FSSB's Knowledge, the allowance for loan losses reflected
in the notes to FSSB's audited consolidated statement of financial condition at
December 31, 2004 was, and the allowance for loan losses shown in the notes to
the FSSB's unaudited consolidated financial statements for periods ending after
December 31, 2004 were, or will be, adequate, as of the dates thereof, under
GAAP.
(ii) FSSB Disclosure Schedule 4.1(p)(ii) sets forth a listing, as
of the most recently available date, by account, of: (A) each borrower, customer
or other party which has notified FSSB or any FSSB Subsidiary during the past
twelve months of, or has asserted against FSSB or any FSSB Subsidiary, in each
case in writing, any "lender liability" or similar claim, and, to the Knowledge
of FSSB, each borrower, customer or other party which has given FSSB or any FSSB
Subsidiary any oral notification of, or orally asserted to or against FSSB or
any FSSB Subsidiary, any such claim; and (B) all loans, (1) that are
contractually past due 90 days or more in the payment of principal and/or
interest, (2) that are on non-accrual status, (3) that as of the date of this
Agreement are classified as "Other Loans Specifically Mentioned", "Special
Mention", "Substandard", "Doubtful", "Loss", "Classified", "Criticized", "Watch
list" or words of similar import, together with the principal amount of and
accrued and unpaid interest on each such loan and the identity of the obligor
thereunder, (4) where the interest rate terms have been reduced and/or the
maturity dates have been extended subsequent to the agreement under which the
loan was originally created due to concerns regarding the borrower's ability to
pay in accordance with such initial terms, or (5) where a specific reserve
allocation exists in connection therewith; and (C) all other assets classified
by FSSB or any FSSB Subsidiary as real estate acquired through foreclosure or in
lieu of foreclosure, including in-substance foreclosures, and all other assets
currently held that were acquired through foreclosure or in lieu of foreclosure.
(iii) All loans receivable (including discounts) and accrued
interest entered on the books of FSSB and the FSSB Subsidiaries arose out of
bona fide arm's-length transactions, were made for good and valuable
consideration in the ordinary course of FSSB's or the appropriate FSSB
Subsidiary's respective business, and the notes or other evidences of
indebtedness with respect to such loans (including discounts) are true and
genuine and are what they purport to be, except as set forth in FSSB Disclosure
Schedule 4.1(p)(iii). To the Knowledge of FSSB, the loans, discounts and the
accrued interest reflected on the books of FSSB and the FSSB Subsidiaries are
subject to no defenses, set-offs or counterclaims (including, without
limitation, those afforded by usury or truth-in-lending laws), except as may be
provided by bankruptcy, insolvency or similar laws affecting creditors' rights
generally or by general principles of equity. Except as set forth in FSSB
Disclosure Schedule 4.1(p)(iii), all such loans are owned by FSSB or the
appropriate FSSB Subsidiary free and clear of any liens.
(iv) The notes and other evidences of indebtedness evidencing the
loans described above, and all pledges, mortgages, deeds of trust and other
collateral documents or security instruments relating thereto are, in all
material respects, valid, true and genuine, and what they purport to be.
(q) Related Party Transactions. Except as set forth in FSSB Disclosure
Schedule 4.1(q), neither FSSB nor any FSSB Subsidiary is a party to any
transaction (including
26
any loan or other credit accommodation) with any Affiliate of FSSB or any FSSB
Subsidiary. All such transactions (a) were made in the ordinary course of
business, (b) were made on substantially the same terms, including interest
rates and collateral, as those prevailing at the time for comparable
transactions with other Persons, and (c) did not involve more than the normal
risk of collectibility or present other unfavorable features. No loan or credit
accommodation to any Affiliate of FSSB or any FSSB Subsidiary is presently in
default or, during the three (3) year period prior to the date of this
Agreement, has been in default or has been restructured, modified or extended
except for rate or other modifications pursuant to FSSB's loan modification
policy that is applicable to all Persons. Neither FSSB nor any FSSB Subsidiary
has been notified that principal and interest with respect to any such loan or
other accommodation will not be paid when due or that the loan grade
classification accorded such loan or credit accommodation by FSSB is
inappropriate.
(r) Deposits. Except as disclosed in FSSB Disclosure Schedule 4.1(f),
none of the deposits of FSSB is a "brokered deposit" as defined in 12 C.F.R.
Section 337.6(a)(2).
(s) Required Vote. The affirmative vote of not less than 2/3rds of the
issued and outstanding shares of FSSB Common Stock is required to approve this
Agreement and the Merger under FSSB's Articles of Incorporation and Michigan
law.
(t) Intellectual Property. FSSB and each Significant Subsidiary of
FSSB owns or, to FSSB's Knowledge, possesses valid and binding licenses and
other rights to use all patents, copyrights, trade secrets, trade names,
servicemarks and trademarks used in their business, each without payment, and
neither FSSB nor any Significant Subsidiary of FSSB has received any notice of
conflict with respect thereto that asserts the rights of others. FSSB and each
Significant Subsidiary of FSSB have performed all the obligations required to be
performed, and are not in default in any respect, under any contract, agreement,
arrangement or commitment relating to any of the foregoing.
(u) Administration of Trust Accounts. FSSB and each FSSB Subsidiary
has properly administered in all material respects and which could reasonably be
excepted to be material to the financial condition of FSSB and the FSSB
Subsidiaries taken as a whole, all accounts for which it acts as a fiduciary,
including but not limited to accounts for which it serves as a trustee, agent,
custodian, personal representative, guardian, conservator or investment advisor,
in accordance with the terms of the governing documents and applicable state and
federal law and regulations and common law. To the Knowledge of FSSB, neither
FSSB, any FSSB Subsidiary, nor any director, officer or employee of FSSB or any
FSSB Subsidiary has committed any breach of trust with respect to any such
fiduciary account which is material to or could reasonably be expected to be
material to the financial condition of FSSB and the FSSB Subsidiaries taken as a
whole, and the accountings for each such fiduciary account are true and correct
in all material respects and accurately reflect the assets of such fiduciary
account.
ARTICLE V - REPRESENTATIONS AND WARRANTIES OF FARMERS
5.1. Representations and Warranties of Farmers. Farmers and IBT represent
and warrant to FSSB that the statements contained in this Article V are correct
as of the date of this
27
Agreement, except as set forth in the Farmers Entity Disclosure Schedule
delivered by Farmers and IBT to FSSB on the date hereof. Farmers and IBT have
made a good faith effort to ensure that the disclosure on each schedule of the
Farmers Entity Disclosure Schedule corresponds to the section referenced herein.
However, for purposes of the Farmers Entity Disclosure Schedule, any item
disclosed on any schedule therein is deemed to be fully disclosed with respect
to all schedules under which such item may be relevant as and to the extent that
it is reasonably apparent that such item applies to such other schedule.
(a) Organization, Standing and Power.
(i) IBT is a corporation duly organized, validly existing and in
good standing under the laws of the State of Michigan, and is duly registered as
a financial services holding company under the Bank Holding Company Act of 1956,
as amended. IBT has all requisite power and authority to own, lease and operate
its properties and to carry on its business as now conducted and is duly
licensed or qualified to do business in the states of the United States and
foreign jurisdictions where its ownership or leasing of property or the conduct
of its business requires such qualification.
(ii) Xxxxxxxx Bank and Trust is a state chartered bank duly
organized, validly existing and in good standing under the laws of the State of
Michigan. The deposits of Xxxxxxxx Bank and Trust are insured by the FDIC to the
fullest extent permitted by law, and all premiums and assessments required to be
paid in connection therewith have been paid when due.
(iii) Farmers is a state chartered bank duly organized, validly
existing and in good standing under the laws of the State of Michigan. The
deposits of Farmers are insured by the FDIC to the fullest extent permitted by
law, and all premiums and assessments required to be paid in connection
therewith have been paid when due.
(iv) Farmers Entity Disclosure Schedule 5.1(a)(iv) sets forth
each IBT Subsidiary. Each IBT Subsidiary (other than Xxxxxxxx Bank and Trust and
Farmers) is a corporation or limited liability company duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation or organization.
(b) Capital Structure.
(i) The authorized capital stock of IBT consists of 10,000,000
shares of IBT Common Stock, of which 4,949,515 shares are outstanding, validly
issued, fully paid and nonassessable and free of preemptive rights. Neither IBT
nor any IBT Entity has or is bound by any Rights of any character relating to
the purchase, sale or issuance or voting of, or right to receive dividends or
other distributions on any shares of IBT Common Stock, or any other security of
IBT or any securities representing the right to vote, purchase or otherwise
receive any shares of IBT Common Stock or any other security of IBT, other than
shares issuable under the IBT Stock Benefit Plans.
(ii) IBT owns all the outstanding shares of the capital stock of
Xxxxxxxx Bank and Trust and of Farmers. Either IBT, Xxxxxxxx Bank and Trust or
Farmers owns all the outstanding shares of the capital stock or all the equity
interest of each IBT Subsidiary.
28
(iii) Except as set forth in Farmers Entity Disclosure Schedule
5.1(b)(iii), or as is set forth in the IBT proxy statement, to the Knowledge of
IBT or Farmers, no Person is the beneficial owner (as defined in Section 13(d)
of the Exchange Act) of 5% or more of the outstanding shares of IBT Common
Stock.
(iv) No bonds, debentures, notes or other indebtedness having the
right to vote on any matters on which IBT's shareholders may vote has been
issued by IBT and are outstanding.
(c) Authority.
(i) Farmers and IBT each have full corporate power and authority
to execute and deliver this Agreement and, subject to receipt of the required
Regulatory Approvals, to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement by Farmers and IBT and the completion
by Farmers and IBT of the transactions contemplated hereby, up to and including
the Merger, have been duly and validly approved by each of the Board of
Directors of Farmers and IBT, and no other corporate proceedings on the part of
Farmers or IBT are necessary to complete the transactions contemplated hereby,
up to and including the Merger. This Agreement has been duly and validly
executed and delivered by Farmers and IBT, and subject to the receipt of the
Regulatory Approvals described in Section 8.3 hereof constitutes the valid and
binding obligations of Farmers and IBT enforceable against Farmers and IBT in
accordance with its terms, subject to applicable bankruptcy, insolvency and
similar laws affecting creditors' rights generally, and subject, as to
enforceability, to general principles of equity.
(ii) (A) The execution and delivery of this Agreement by Farmers
and IBT, (B) subject to receipt of the Regulatory Approvals, and FSSB's and
Farmers' compliance with any conditions contained therein, and subject to the
receipt of the approval of the shareholders of FSSB, the consummation of the
transactions contemplated hereby, and (C) compliance by Farmers and IBT with any
of the terms or provisions hereof will not (i) conflict with or result in a
breach of any provision of the Articles of Incorporation or Bylaws of Farmers or
any Farmers Entity; (ii) violate any statute, code, ordinance, rule, regulation,
judgment, order, writ, decree or injunction applicable to Farmers or any Farmers
Entity or any of their respective properties or assets; or (iii) violate,
conflict with, result in a breach of any provisions of, constitute a default (or
an event which, with notice or lapse of time, or both, would constitute a
default), under, result in the termination of, accelerate the performance
required by, or result in a right of termination or acceleration or the creation
of any lien, security interest, charge or other encumbrance upon any of the
properties or assets of Farmers or any Farmers Entity under any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, deed of trust,
license, lease, agreement or other investment or obligation to which any of them
is a party, or by which they or any of their respective properties or assets may
be bound or affected, except for such violations, conflicts, breaches or
defaults under clause (ii) or (iii) hereof which, either individually or in the
aggregate, will not have a Material Adverse Effect on Farmers and the Farmers
Entities taken as a whole.
29
(d) Consents. Except for the Regulatory Approvals referred to in
Section 8.3 hereof and compliance with any conditions contained therein, and the
approval of this Agreement by the requisite vote of the shareholders of FSSB, no
consents, waivers or approvals of, or filings or registrations with, any
Governmental Entity or Bank Regulator are necessary, and, to the Knowledge of
Farmers and IBT, no consents, waivers or approvals of, or filings or
registrations with, any other third parties are necessary, in connection with
the execution and delivery of this Agreement by Farmers or IBT and the
completion by Farmers and IBT of the Merger. To Farmers' and IBT's knowledge,
(i) they have not received notice as of the date hereof that any Bank Regulator
intends to disapprove or object to the completion of the transactions
contemplated by this Agreement, and (ii) there is no reason to expect that all
Regulatory Approvals required for the consummation of the transactions
contemplated by this Agreement will not be received.
(e) Financial Statements.
(i) Farmers or a Farmers Entity has previously made available to
FSSB the IBT Financial Statements. The IBT Financial Statements have been
prepared in accordance with GAAP, and (including the related notes where
applicable) fairly present in each case in all material respects (subject in the
case of the unaudited interim statements to normal year-end adjustments) the
consolidated financial position, results of operations and cash flows of Farmers
and the Farmers Entities on a consolidated basis as of and for the respective
periods ending on the dates thereof, in accordance with GAAP during the periods
involved, except as indicated in the notes thereto, or in the case of unaudited
statements, as permitted by Form 10-Q.
(ii) At the date of each balance sheet included in the IBT
Financial Statements, neither Farmers nor any Farmers Entity had any liability,
obligation or loss contingency of any nature (whether absolute, accrued,
contingent or otherwise) of a type required to be reflected in such IBT
Financial Statements or in the footnotes thereto which were not fully reflected
or reserved against therein or fully disclosed in a footnote thereto, except for
liabilities, obligations and loss contingencies which were not material
individually or in the aggregate or which are incurred in the ordinary course of
business, consistent with past practice, and except for liabilities, obligations
and loss contingencies which are within the subject matter of a specific
representation and warranty herein and subject, in the case of any unaudited
statements, to normal, recurring audit adjustments and the absence of footnotes.
(f) Taxes. Farmers, IBT and the IBT Subsidiaries that are at least 80
percent owned by IBT are members of the same Affiliated group within the meaning
of Code Section 1504(a). IBT has duly filed all federal, state and material
local tax returns required to be filed by or with respect to Farmers and each
Farmers Entity on or prior to the Closing Date, taking into account any
extensions (all such returns, to the Knowledge of Farmers, being accurate and
correct in all material respects) and has duly paid or made provisions for the
payment of all material federal, state and local taxes which have been incurred
by or are due or claimed to be due from Farmers, IBT and any Significant
Subsidiary of IBT by any taxing authority or pursuant to any written tax sharing
agreement on or prior to the Closing Date other than taxes or other charges
which (i) are not delinquent, (ii) are being contested in good faith, or (iii)
have not yet been fully determined. As of the date of this Agreement, neither
Farmers nor any Farmers
30
Entity has received notice of, and to the Knowledge of Farmers, there is no
audit examination, deficiency assessment, tax investigation or refund litigation
with respect to any taxes of Farmers, IBT or any of its Significant
Subsidiaries, and no claim has been made by any authority in a jurisdiction
where Farmers, IBT or any of its Significant Subsidiaries do not file tax
returns that Farmers, IBT or any such Significant Subsidiary is subject to
taxation in that jurisdiction. Except as set forth in Farmers Entity Disclosure
Schedule 5.1(f), Farmers, IBT and its Significant Subsidiaries have not executed
an extension or waiver of any statute of limitations on the assessment or
collection of any material tax due that is currently in effect. Farmers, IBT and
each of its Significant Subsidiaries has withheld and paid all taxes required to
have been withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, shareholder or other third party,
and Farmers, IBT and each of its Significant Subsidiaries, to the Knowledge of
Farmers, has timely complied with all applicable information reporting
requirements under Part III, Subchapter A of Chapter 61 of the Code and similar
applicable state and local information reporting requirements.
(g) No Material Adverse Effect. Except as disclosed in IBT's
Securities Documents filed on or prior to the date hereof, Farmers and the
Farmers Entities, taken as a whole, have not suffered any Material Adverse
Effect since December 31, 2004 and to Farmers' Knowledge, no event has occurred
or circumstance arisen since that date which, in the aggregate, has had or is
reasonably likely to have a Material Adverse Effect on Farmers and the Farmers
Entities, taken as a whole.
(h) Ownership of Property; Insurance Coverage.
(i) Farmers and each Farmers Entity has good and, as to real
property, marketable title to all material assets and properties owned by
Farmers or any Farmers Entity in the conduct of its businesses, whether such
assets and properties are real or personal, tangible or intangible, including
assets and property reflected in the balance sheet contained in the most recent
IBT Financial Statements or acquired subsequent thereto (except to the extent
that such assets and properties have been disposed of in the ordinary course of
business, since the date of such balance sheet), subject to no material
encumbrances, liens, mortgages, security interests or pledges, except (i) those
items which secure liabilities for public or statutory obligations or any
discount with, borrowing from or other obligations to FHLB, inter-bank credit
facilities or any transaction by Farmers or IBT acting in a fiduciary capacity,
and (ii) statutory liens for amounts not yet delinquent or which are being
contested in good faith. Farmers and each Farmers Entity, as lessee, have the
right under valid and existing leases of real and personal properties used by
Farmers and each Farmers Entity in the conduct of their businesses to occupy or
use all such properties as presently occupied and used by each of them. Such
existing leases and commitments to lease constitute or will constitute operating
leases for both tax and financial accounting purposes and the lease expense and
minimum rental commitments with respect to such leases and lease commitments are
as disclosed in all material respects in the notes to the IBT Financial
Statements.
(ii) Farmers and each Farmers Entity currently maintain insurance
considered by each of them to be reasonable for their respective operations.
Neither Farmers nor any Farmers Entity has received notice from any insurance
carrier that (i) such insurance will be
31
canceled or that coverage thereunder will be reduced or eliminated, or (ii)
premium costs with respect to such policies of insurance will be substantially
increased. There are presently no material claims pending under such policies of
insurance and no notices of material claims have been given by Farmers, or any
Farmers Entity under such policies. All such insurance is valid and enforceable
and in full force and effect, and within the last three (3) years Farmers and
each Farmers Entity has received each type of insurance coverage for which it
has applied and during such periods has not been denied indemnification for any
material claims submitted under any of its insurance policies. Farmers Entity
Disclosure Schedule 5.1(h) (ii) identifies all policies of insurance maintained
by Farmers and each Farmers Entity.
(i) Legal Proceedings. Except as disclosed in Farmers Entity
Disclosure Schedule 5.1(i), neither Farmers nor any Farmers Entity is a party to
any, and there are no pending or, to Farmers' and IBT's Knowledge, threatened
legal, administrative, arbitration or other proceedings, claims (whether
asserted or unasserted), actions or governmental investigations or inquiries of
any nature (i) against Farmers or any Farmers Entity, (ii) to which Farmers or
any Farmers Entity's assets are or may be subject, (iii) challenging the
validity or propriety of any of the transactions contemplated by this Agreement,
or (iv) which could adversely affect the ability of Farmers or any Farmers
Entity to perform under this Agreement, except for any proceeding, claim,
action, investigation or inquiry referred to in clauses (i) and (ii) which,
individually or in the aggregate, would not be reasonably expected to have a
Material Adverse Effect.
(j) Compliance with Applicable Law.
(i) To the Knowledge of Farmers and IBT, each of Farmers and each
Farmers Entity is in compliance in all material respects with all applicable
federal, state, local and foreign statutes, laws, regulations, ordinances,
rules, judgments, orders or decrees applicable to it, its properties, assets and
deposits, its business, and its conduct of business and its relationship with
its employees, including, without limitation, the USA PATRIOT Act, the Bank
Secrecy Act, the Equal Credit Opportunity Act, the Fair Housing Act, the CRA,
the Home Mortgage Disclosure Act, and all other applicable fair lending laws and
other laws relating to discriminatory business practices and neither Farmers nor
any Farmers Entity has received any written notice to the contrary.
(ii) Each of Farmers and each Farmers Entity has all material
permits, licenses, authorizations, orders and approvals of, and has made all
filings, applications and registrations with, all Bank Regulators that are
required in order to permit it to own or lease its properties and to conduct its
business as presently conducted; all such permits, licenses, certificates of
authority, orders and approvals are in full force and effect and, to the
Knowledge of Farmers, no suspension or cancellation of any such permit, license,
certificate, order or approval is threatened or will result from the
consummation of the transactions contemplated by this Agreement, subject to
obtaining the approvals set forth in Section 8.3.
(iii) For the period beginning January 1, 2003, neither Farmers
nor any Farmers Entity has received any written notification or, to the
Knowledge of Farmers, any other communication from any Bank Regulator (i)
asserting that Farmers or any Farmers Entity is not
32
in material compliance with any of the statutes, regulations or ordinances which
such Bank Regulator enforces; (ii) threatening to revoke any license, franchise,
permit or governmental authorization which is material to Farmers or any Farmers
Entity; (iii) requiring or threatening to require Farmers or any Farmers Entity,
or indicating that Farmers or any Farmers Entity may be required, to enter into
a cease and desist order, agreement or memorandum of understanding or any other
agreement with any federal or state governmental agency or authority which is
charged with the supervision or regulation of banks or engages in the insurance
of bank deposits restricting or limiting, or purporting to restrict or limit, in
any material respect the operations of Farmers or any Farmers Entity, including
without limitation any restriction on the payment of dividends; or (iv)
directing, restricting or limiting, or purporting to direct, restrict or limit,
in any manner the operations of Farmers or any Farmers Entity, including without
limitation any restriction on the payment of dividends (any such notice,
communication, memorandum, agreement or order described in this sentence is
hereinafter referred to as a "Regulatory Agreement"). Neither Farmers nor any
Farmers Entity has consented to or entered into any currently effective
Regulatory Agreement. The most recent regulatory ratings given to Xxxxxxxx Bank
and Trust and Farmers as to compliance with the CRA is satisfactory or better.
(k) IBT Common Stock. The shares of IBT Common Stock to be issued
pursuant to this Agreement, when issued in accordance with the terms of this
Agreement, will be duly authorized, validly issued, fully paid and
non-assessable and subject to no preemptive rights.
(l) Material Contracts; Leases, Defaults. Neither Farmers nor any
Farmers Entity is a party to or subject to: (i) any collective bargaining
agreement with any labor union relating to employees of Farmers or any Farmers
Entity; nor (ii) any agreement which by its terms limits the payment of
dividends by Farmers or any Farmers Entity.
(m) Securities Documents. IBT has made available to FSSB copies of its
(i) annual reports on Form 10-K for the years ended December 31, 2004, 2003 and
2002, (ii) quarterly reports on Form 10-Q for the quarters ended March 31, 2005,
June 30 2005 and September 30, 2005, and (iii) proxy materials used or for use
in connection with its meetings of shareholders held in 2005, 2004 and 2003.
Such reports and proxy materials complied, at the time filed with the SEC, in
all material respects, with the Securities Laws.
(n) Reorganization. Farmers and IBT have no knowledge of any reason
why the Merger would fail to qualify as a reorganization under Section 368(a) of
the Code.
(o) Information Supplied. None of the information supplied or to be
supplied by Farmers or any Farmers Entity for inclusion or incorporation by
reference in (i) the S-4 will, at the time the S-4 becomes effective under the
Securities Act, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading and (ii) the Proxy Statement and any amendment
or supplement thereto will, at the date of mailing to FSSB shareholders and at
the time of the meeting of shareholders of FSSB to be held in connection with
the Merger, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein not misleading. The Proxy Statement (except
33
for such portions thereof that relate only to FSSB) will comply in all material
respects with the provisions of the Exchange Act and the rules and regulations
thereunder, and the S-4 (except for such portions thereof that relate only to
FSSB) will comply in all material respects with the provisions of the Securities
Act and the rules and regulations thereunder.
(p) Required Vote. Only the vote of the sole stockholder of Farmers is
required by law, by Xxxxxx'x Articles of Incorporation or Bylaws, or otherwise
to approve this Agreement and the Merger on behalf of the Farmers Entities.
(q) Merger Consideration. As of the Closing Date and subject to
Article IX, IBT will have cash and authorized shares of IBT Common Stock in the
aggregate amount of the Merger Consideration available for deposit with the
Exchange Agent.
(r) Pro Forma Capital Requirements. Farmers is, and on a pro forma
basis giving effect for the transactions contemplated by this Agreement and any
financing or capital injection contemplated by IBT, will be "adequately
capitalized" as defined for purposes of the Federal Deposit Insurance Act and
applicable regulations.
(s) Brokers, Finders and Financial Advisors. Neither IBT, Farmers nor
any Farmers Entity, nor any of their respective officers, directors, employees
or agents, has employed any broker, finder or financial advisor other than
Austin Associates, LLC in connection with the transactions contemplated by this
Agreement, or incurred any liability or commitment for any fees or commissions
to any such person other than Austin Associates, LLC in connection with the
transactions contemplated by this Agreement.
(t) Employee Benefit Plans.
(i) Except as disclosed in Farmers Entity Disclosure Schedule
5.1(t)(i), each bonus, incentive, deferred compensation, pension, retirement,
profit-sharing, thrift, savings, employee stock ownership, stock bonus, stock
purchase, restricted stock, stock option, stock appreciation, phantom stock,
severance, welfare benefit plans, fringe benefit plans, employment, severance
and change in control agreements and all other material benefit practices,
policies and arrangements maintained by Farmers or any Farmers Entity (the
"Farmers Entity Plans") 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, COBRA, the Health Insurance Portability and
Accountability Act and any regulations or rules promulgated thereunder, and all
material 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 or any interest, fines, penalties
or other impositions for late filings have been paid in full. Each Farmers
Entity 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 received a favorable determination letter
from the IRS, and Farmers is not aware of any circumstances which are reasonably
likely to result in revocation of any such favorable determination letter. There
is no material pending or, to the Knowledge of Farmers or IBT, threatened
action, suit or claim relating to any of the Compensation and Benefit Plans
(other than
34
routine claims for benefits). Neither Farmers nor any Farmers Entity 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
Farmers or any Farmers Entity to an unpaid tax or penalty imposed by either
Section 4975 of the Code or Section 502 of ERISA.
(ii) Except as set forth in Farmers Entity Disclosure Schedule
5.1(t)(ii), no liability, other than PBGC premiums arising in the ordinary
course of business, has been or is expected by Farmers or any Farmers Entity to
be incurred with respect to any Farmers Entity Plan which is a defined benefit
plan subject to Title IV of ERISA ("Farmers Entity Defined Benefit Plan"), or
with respect to any "single-employer plan" (as defined in Section 4001(a) of
ERISA) currently or formerly maintained by Farmers, any Farmers Entity or any
entity which is considered one employer with Farmers under Section 4001(b)(1) of
ERISA or Section 414 of the Code (a "Farmers Entity ERISA Affiliate") (such plan
hereinafter referred to as a "Farmers Entity ERISA Affiliate Plan"). To the
Knowledge of Farmers and IBT, except as set forth in Farmers Entity Disclosure
Schedule 5.1(t)(ii), no Farmers Entity Defined Benefit Plan had an "accumulated
funding deficiency" (as defined in Section 302 of ERISA), whether or not waived,
as of the last day of the end of the most recent plan year ending prior to the
date hereof. Except as set forth in Farmers Entity Disclosure Schedule
5.1(t)(ii), the fair market value of the assets of each Farmers Entity Defined
Benefit Plan exceeds the present value of the benefits guaranteed under Section
4022 of ERISA under such Farmers Entity Defined Benefit Plan as of the end of
the most recent plan year with respect to the respective Farmers Entity Defined
Benefit Plan ending prior to the date hereof, calculated on the basis of the
actuarial assumptions used in the most recent actuarial valuation for such
Farmers Entity Defined Benefit Plan as of the date hereof; and no notice of a
"reportable event" (as defined in Section 4043 of ERISA) for which the 30-day
reporting requirement has not been waived has been required to be filed for any
Farmers Entity Defined Benefit Plan within the 12-month period ending on the
date hereof. Except as set forth in Farmers Entity Disclosure Schedule
5.1(t)(ii), neither Farmers nor any Farmers Entity has provided, or is required
to provide, security to any Farmers Entity Defined Benefit Plan or to any
single-employer plan of a Farmers Entity ERISA Affiliate pursuant to Section
401(a)(29) of the Code or has taken any action, or omitted to take any action,
that has resulted, or would reasonably be expected to result in the imposition
of a lien under Section 412(n) of the Code or pursuant to ERISA. To the
Knowledge of Farmers and IBT, and except as set forth in Farmers Entity
Disclosure Schedule 5.1(t)(ii), there is no pending investigation or enforcement
action by any Bank Regulator with respect to any Farmers Plan or any Farmers
Entity ERISA Affiliate Plan.
(iii) With respect to any Farmers Entity Defined Benefit Plan
that is a "multi-employer plan" as such term is defined in Section 3(37) of
ERISA, covering employees of Farmers, any Farmers Entity or any Farmers Entity
ERISA Affiliate, (i) neither Farmers, any Farmers Entity, nor any Farmers Entity
ERISA Affiliate has made or suffered a "complete withdrawal" or "partial
withdrawal," as such terms are respectively defined in Sections 4203 and 4205 of
ERISA, (ii) no event has occurred, and no circumstances exist, that alone or
with the passage of time present a material risk of a complete or partial
withdrawal, and (iii) neither Farmers, any Farmers Entity, or any Farmers Entity
ERISA Affiliate has any contingent liability under Section 4204 of ERISA and no
circumstances exist that present a material risk that any such plan will go into
reorganization. Farmers Entity Disclosure Schedule 5.1(t)(iii) lists IBT's
35
best estimate of the amount of withdrawal liability that would be incurred if
Farmers, each Farmers Entity and each Farmers Entity ERISA Affiliate were to
make a complete withdrawal from such plan as of the Effective Time and also
states the aggregate withdrawal liability of Farmers, the Farmers Entities and
the Farmers Entity ERISA Affiliates. There are no "unfunded vested benefits"
(within the meaning of Section 4211 of ERISA) as of the end of the most recently
completed plan year and as of the date of this Agreement.
(iv) All material contributions required to be made under the
terms of any Farmers Plan or Farmers Entity ERISA Affiliate Plan or any employee
benefit arrangements to which Farmers or any Farmers Entity is a party or a
sponsor have been timely made, and all anticipated contributions and funding
obligations are accrued on IBT's consolidated financial statements to the extent
required by GAAP. Farmers or any Farmers Entity have expensed and accrued as a
liability the present value of future benefits under each applicable Farmers
Entity Plan for financial reporting purposes as required by GAAP.
(v) Neither Farmers nor any Farmers Entity has any obligations to
provide retiree health, life insurance, disability insurance, or other retiree
death benefits under any Farmers Entity Plan, other than benefits mandated by
Section 4980B of the Code.
(u) Loan Portfolio.
(i) To IBT's Knowledge, the allowance for loan losses reflected
in the notes to IBT's audited consolidated statement of financial condition at
December 31, 2004 was, and the allowance for loan losses shown in the notes to
the IBT's unaudited consolidated financial statements for periods ending after
December 31, 2004 were, or will be, adequate, as of the dates thereof, under
GAAP.
(ii) Farmers Entity Disclosure Schedule 5.1(u) sets forth a
listing, as of the most recently available date, by account, of all loans having
a principal balance in excess of $750,000 (1) that are contractually past due 90
days or more in the payment of principal and/or interest, (2) that are on
non-accrual status, (3) that as of the date of this Agreement are classified as
"Other Loans Specifically Mentioned", "Special Mention", "Substandard",
"Doubtful", "Loss", "Classified", "Criticized", "Watch list" or words of similar
import, together with the principal amount of and accrued and unpaid interest on
each such loan and the identity of the obligor thereunder, (4) where the
interest rate terms have been reduced and/or the maturity dates have been
extended subsequent to the agreement under which the loan was originally created
due to concerns regarding the borrower's ability to pay in accordance with such
initial terms, or (5) where a specific reserve allocation exists in connection
therewith.
(iii) All loans receivable (including discounts) and accrued
interest entered on the books of Farmers and the Farmers Entities arose out of
bona fide arm's-length transactions, were made for good and valuable
consideration in the ordinary course of Farmers' or the appropriate Farmers
Entity's respective business, and the notes or other evidences of indebtedness
with respect to such loans (including discounts) are true and genuine and are
what they purport to be, other than loans as to which the failure to satisfy the
foregoing standards would not have a Material Adverse Effect on Farmers or any
of the Farmers Entities.
36
ARTICLE VI - COVENANTS OF FSSB
6.1. Conduct of Business.
(a) Affirmative Covenants. During the period from the date of this
Agreement to the Effective Time, except with the written consent of Farmers,
which consent will not be unreasonably withheld, conditioned or delayed, FSSB
will, and will cause each FSSB Subsidiary to: operate its business only in the
usual, regular and ordinary course of business; use reasonable efforts to
preserve intact its business organization and assets and maintain its rights and
franchises; and voluntarily take no action which would: (i) adversely affect the
ability of the parties to obtain the Regulatory Approvals or materially increase
the period of time necessary to obtain such approvals, or (ii) adversely affect
its ability to perform its covenants and agreements under this Agreement.
(b) Negative Covenants. FSSB agrees that from the date of this
Agreement to the Effective Time, except as otherwise specifically permitted or
required by this Agreement, set forth in FSSB Disclosure Schedule 6.1(b), or
consented to by Farmers in writing (which consent shall not be unreasonably
withheld, conditioned or delayed), it will not, and it will cause each of the
FSSB Subsidiaries not to:
(i) change or waive any provision of its Articles of
Incorporation, Charter or Bylaws, except as required by law;
(ii) change the number of authorized or issued shares of its
capital stock, issue any shares of FSSB Common Stock that are held as "treasury
shares" as of the date of this Agreement, or issue or grant any Right or
agreement of any character relating to its authorized or issued capital stock or
any securities convertible into shares of such stock, make any grant or award
under any FSSB Stock Benefit Plan, or split, combine or reclassify any shares of
capital stock, or declare, set aside or pay any dividend or other distribution
in respect of capital stock other than dividends issued consistent with the past
practice of FSSB, or redeem or otherwise acquire any shares of capital stock;
(iii) enter into, amend in any material respect or terminate any
material contract or agreement (including without limitation any settlement
agreement with respect to litigation) except in the ordinary course of business;
(iv) make application for the opening or closing of any, or open
or close any, branch or automated banking facility, except as required by any
Bank Regulator;
(v) except as agreed to or incurred prior to the date of this
Merger Agreement, grant or agree to pay any bonus, severance or termination to,
or enter into, renew or amend any employment agreement, severance agreement
and/or supplemental executive agreement with, or increase in any manner the
compensation or fringe benefits of, any of its directors, officers or employees
except that FSSB may (A) authorize compensation increases including bonuses to
officers in the ordinary course of business not to exceed $10,000 in the
aggregate, after the execution of this Agreement through December 31, 2005, and
(B) hire at-
37
will, non-officer employees to fill vacancies that may from time to time arise
in the ordinary course of business;
(vi) enter into or, except as may be required by law, materially
modify any pension, retirement, stock option, stock purchase, stock appreciation
right, stock grant, savings, profit sharing, deferred compensation, supplemental
retirement, consulting, bonus, group insurance or other employee benefit,
incentive or welfare contract, plan or arrangement, or any trust agreement
related thereto, in respect of any of its directors, officers or employees; or
make any contributions to any defined contribution or defined benefit plan other
than regularly scheduled contributions consistent with past practice, without
the prior consent of Farmers;
(vii) merge or consolidate FSSB or any FSSB Subsidiary with any
other corporation; sell or lease all or any substantial portion of the assets or
business of FSSB or any FSSB Subsidiary; make any acquisition of all or any
substantial portion of the business or assets of any other Person other than in
connection with foreclosures, settlements in lieu of foreclosure, troubled loan
or debt restructuring, or the collection of any loan or credit arrangement
between FSSB, or any FSSB Subsidiary, and any other Person; enter into a
purchase and assumption transaction with respect to deposits and liabilities;
permit the revocation or surrender by any FSSB Subsidiary of its certificate of
authority to maintain, or file an application for the relocation of, any
existing branch office, or file an application for a certificate of authority to
establish a new branch office;
(viii) sell or otherwise dispose of the capital stock of FSSB or
sell or otherwise dispose of any asset of FSSB or of any FSSB Subsidiary other
than in the ordinary course of business consistent with past practice; except
for transactions with the FHLB, subject any asset of FSSB or of any FSSB
Subsidiary to a lien, pledge, security interest or other encumbrance (other than
in connection with deposits, repurchase agreements, bankers acceptances,
"treasury tax and loan" accounts established in the ordinary course of business
and transactions in "federal funds" and the satisfaction of legal requirements
in the exercise of trust powers) other than in the ordinary course of business
consistent with past practice; incur any indebtedness for borrowed money (or
guarantee any indebtedness for borrowed money), except in the ordinary course of
business consistent with past practice;
(ix) take any action which would result in any of the
representations and warranties of FSSB set forth in this Agreement becoming
untrue as of any date after the date hereof or in any of the conditions set
forth in Article IX hereof not being satisfied, except in each case as may be
required by applicable law;
(x) change any method, practice or principle of accounting,
except as may be required from time to time by GAAP (without regard to any
optional early adoption date) or any Bank Regulator responsible for regulating
FSSB;
(xi) waive, release, grant or transfer any material rights of
value or modify or change in any material respect any existing material
agreement or indebtedness to which FSSB or any FSSB Subsidiary is a party, other
than in the ordinary course of business, consistent with past practice;
38
(xii) purchase any equity securities, or purchase any security
for its investment portfolio inconsistent with FSSB's or any FSSB Subsidiary's
current investment policy;
(xiii) except for commitments issued prior to the date of this
Agreement which have not yet expired and which have been disclosed on the FSSB
Disclosure Schedule 6.1(b)(xiii), and the renewal of existing lines of credit,
make any new loan or other credit facility commitment (including without
limitation, lines of credit and letters of credit) in an amount in excess of
$500,000 for a commercial real estate loan, $250,000 for a construction loan,
$250,000 for a commercial business loan, or in excess of $500,000 for a
residential loan, except that if Farmers does not object within 24 hours after
confirmation of receipt of notification from FSSB of an intent to originate a
loan in excess of the amounts set forth in this paragraph, consent shall be
deemed to have been given by Farmers. Notwithstanding Section 12.4, notice under
this Section 6.1(b)(xiii) may also be provided by facsimile or electronic mail;
(xiv) except as set forth on the FSSB Disclosure Schedule
6.1(b)(xiv), enter into, renew, extend or modify any other transaction (other
than a deposit transaction) with any Affiliates other than pursuant to FSSB's
existing insider loan policy;
(xv) enter into any futures contract, option, interest rate caps,
interest rate floors, interest rate exchange agreement or other agreement or
take any other action for purposes of hedging the exposure of its
interest-earning assets and interest-bearing liabilities to changes in market
rates of interest except in the ordinary course of business consistent with past
practice;
(xvi) except for the execution of this Agreement, and actions
taken or which will be taken in accordance with this Agreement and performance
thereunder, take any action that would give rise to a right of payment to any
individual under any employment agreement;
(xvii) make any change in policies in existence on the date of
this Agreement with regard to: the extension of credit, or the establishment of
reserves with respect to the possible loss thereon or the charge off of losses
incurred thereon; investments; asset/liability management; or other material
banking policies in any material respect except as may be required by changes in
applicable law or regulations, by a Bank Regulator, or in the discretion of the
FSSB board of directors, consistent with prudent banking practice, in which case
FSSB shall give prior notice to Farmers;
(xviii) except for the execution of this Agreement, and the
transactions contemplated herein, take any action that would give rise to an
acceleration of the right to payment to any individual under any FSSB
Compensation and Benefit Plan;
(xix) except as set forth in FSSB Disclosure Schedule
6.1(b)(xix), make any capital expenditures in excess of $25,000 individually and
in the aggregate, other than pursuant to binding commitments existing on the
date hereof and other than expenditures necessary to maintain existing assets in
good repair;
39
(xx) except as set forth in FSSB Disclosure Schedule 6.1(b)(xx),
purchase or otherwise acquire, or sell or otherwise dispose of, any assets or
incur any liabilities other than in the ordinary course of business consistent
with past practices and policies and other than the sale or disposal or worn,
surplus or replaced equipment;
(xxi) sell any participation interest in any loan (other than
sales of loans secured by one- to four-family real estate that are consistent
with past practice) unless Farmers has been given prior written notice of any
loan participation being sold;
(xxii) undertake or enter into any lease, contract or other
commitment for its account, other than in the normal course of banking business;
(xxiii) pay, discharge, settle or compromise any claim, action,
litigation, arbitration or proceeding in an amount exceeding $10,000; or
(xxiv) agree to do any of the foregoing.
6.2. Current Information.
(a) Subject to Section 12.1 hereof, during the period from the date of
this Agreement to the Effective Time, FSSB will cause one or more of its
representatives to confer with representatives of Farmers or a designated
Farmers Entity and report the general status of its ongoing operations at such
times as Farmers or a designated Farmers Entity may reasonably request. FSSB
will promptly notify Farmers or a designated Farmers Entity of any material
change in the normal course of its business or in the operation of its
properties and, to the extent permitted by applicable law, of any governmental
complaints, investigations or hearings (or communications indicating that the
same may be contemplated), or the institution or the threat of material
litigation involving FSSB or any FSSB Subsidiary.
(b) Subject to Section 12.1 hereof, FSSB shall provide Farmers or a
designated Farmers Entity, within thirty (30) days after the end of each month,
a written list of (i) nonperforming assets (the term "nonperforming assets" for
purposes of this subsection, means loans that are "troubled debt restructuring"
as defined in Statement of Financial Accounting Standards No. 15, "Accounting by
Debtors and Creditors for Troubled Debt Restructuring,"), (ii) loans on
nonaccrual, (iii) real estate owned, (iv) all loans ninety (90) days or more
past due as of the end of such month, and (v) impaired loans. On a monthly
basis, FSSB shall provide Farmers or a designated Farmers Entity with a schedule
of all loan approvals, which schedule shall indicate the loan amount, loan type
and other material features of the loan.
(c) FSSB shall promptly inform Farmers or a designated Farmers Entity
upon receiving notice of any legal, administrative, arbitration or other
proceedings, demands, notices, audits or investigations (by any federal, state
or local commission, agency or board) relating to the alleged liability of FSSB
or any FSSB Subsidiary under any labor or employment law.
6.3. Access to Properties and Records. Subject to Section 12.1 hereof, FSSB
shall permit Farmers or a designated Farmers Entity access upon reasonable
notice to its properties and those of the FSSB Subsidiaries, and shall disclose
and make available to Farmers or a
40
designated Farmers Entity to the extent permitted by applicable law during
normal business hours all of its books, papers and records relating to the
assets, properties, operations, obligations and liabilities, including, but not
limited to, all books of account (including the general ledger), tax records,
minute books of directors' (other than minutes that discuss any of the
transactions contemplated by this Agreement or any other subject matter FSSB
reasonably determines should be treated as confidential or privileged) and
shareholders' meetings, organizational documents, bylaws, material contracts and
agreements, filings with any regulatory authority, litigation files (to the
extent not resulting in waiver of attorney-client privilege), plans affecting
employees, and any other business activities or prospects in which Farmers may
have a reasonable interest. FSSB shall provide and shall request its auditors to
provide Farmers or a designated Farmers Entity with such historical financial
information regarding it (and related audit reports and consents) as Farmers or
a designated Farmers Entity may request for securities disclosure purposes. FSSB
and each FSSB Subsidiary shall permit, upon reasonable notice, Farmers or a
designated Farmers Entity at its own expense to cause a "phase I environmental
audit" and a "phase II environmental audit" to be performed at any physical
location owned or occupied by FSSB or any FSSB Subsidiary. Farmers shall
indemnify and hold harmless FSSB for any claim, suit, liability, cost, expense
or damages whatsoever arising out of or related to such environmental audits or
any other inspection or due diligence activity conducted on FSSB's premises.
6.4. Financial and Other Statements.
(a) Promptly upon receipt thereof, FSSB will furnish to Farmers copies
of each annual, interim or special audit of the books of FSSB and the FSSB
Subsidiaries made by its independent accountants and copies of all internal
control reports submitted to FSSB by such accountants in connection with each
annual, interim or special audit of the books of FSSB and the FSSB Subsidiaries
made by such accountants.
(b) Promptly after FSSB's board meeting but no later than thirty (30)
days after the end of each month, FSSB will deliver to Farmers a consolidated
balance sheet and a consolidated statement of operations, without related notes,
for such month prepared in accordance with current financial reporting
practices.
(c) FSSB will advise Farmers promptly of the receipt of any
examination report of any Bank Regulator with respect to the condition or
activities of FSSB or any of the FSSB Subsidiaries.
(d) With reasonable promptness, FSSB will furnish to Farmers such
additional financial data that FSSB possesses and as Farmers may reasonably
request, including without limitation, detailed monthly financial statements and
loan reports.
6.5. Maintenance of Insurance. FSSB shall maintain and cause the FSSB
Subsidiaries to maintain, insurance in such amounts as are reasonable to cover
such risks as are customary in relation to the character and location of its
properties and the nature of its business.
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6.6. Disclosure Supplements. From time to time prior to the Effective Time,
FSSB will promptly supplement or amend the FSSB Disclosure Schedule delivered in
connection herewith with respect to any matter hereafter arising which, if
existing, occurring or known at the date of this Agreement, would have been
required to be set forth or described in such FSSB Disclosure Schedule or which
is necessary to correct any information in such FSSB Disclosure Schedule which
has been rendered materially inaccurate thereby.
6.7. Consents and Approvals of Third Parties. FSSB shall use all
commercially reasonable efforts, and shall cause each FSSB Subsidiary to use all
commercially reasonable efforts to obtain as soon as practicable all consents
and approvals of any other Persons necessary or desirable for the consummation
of the transactions contemplated by this Agreement.
6.8. All Reasonable Efforts. Subject to the terms and conditions herein
provided, FSSB agrees to use all commercially reasonable efforts to take, or
cause to be taken, all action and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement,
except to the extent that such action, in the good faith determination of the
board of directors of FSSB after consultation with legal counsel, may result in
a breach of fiduciary duty by the FSSB board of directors.
6.9. Failure to Fulfill Conditions. In the event that FSSB determines that
a condition to its obligation to complete the Merger cannot be fulfilled and
that it will not waive that condition, it will promptly notify Farmers.
6.10. No Solicitation. From and after the date hereof until the termination
of this Agreement, neither FSSB, nor any FSSB Subsidiary, nor any of their
respective officers, directors, employees, representatives, agents and
Affiliates (including, without limitation, any investment banker, attorney or
accountant retained by FSSB or any of the FSSB Subsidiaries), will, directly or
indirectly, initiate, solicit or knowingly encourage (including by way of
furnishing non-public information or assistance) any inquiries or the making of
any proposal that constitutes, or may reasonably be expected to lead to, any
Acquisition Proposal (as defined below), or enter into or maintain or continue
discussions or negotiate with any Person in furtherance of such inquiries or to
obtain an Acquisition Proposal or agree to or endorse any Acquisition Proposal,
or authorize or permit any of its officers, directors, or employees or any of
its Subsidiaries or any investment banker, financial advisor, attorney,
accountant or other representative retained by any of its Subsidiaries to take
any such action, and FSSB shall notify Farmers orally (within one business day)
and in writing (as promptly as practicable) of all of the relevant details
relating to all inquiries and proposals which it or any of its Subsidiaries or
any such officer, director or employee, or, to FSSB's Knowledge, investment
banker, financial advisor, attorney, accountant or other representative of FSSB
may receive relating to any of such matters, provided, however, that nothing
contained in this Section 6.10 shall prohibit the Board of Directors of FSSB
from (i) complying with its disclosure obligations under federal or state law;
or (ii) furnishing information to, or entering into discussions or negotiations
with, any person or entity that makes an unsolicited Acquisition Proposal, if,
and only to the extent that, (A) the Board of Directors of FSSB determines in
good faith (after consultation with its financial and legal advisors), taking
into account all legal, financial and regulatory aspects of the proposal
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and the Person making the proposal, that such proposal, if consummated, is
reasonably likely to result in a transaction more favorable to FSSB's
shareholders from a financial point of view than the Merger; (B) the Board of
Directors of FSSB determines in good faith (after consultation with its
financial and legal advisors) that the failure to furnish information to or
enter into discussions with such Person would likely cause the Board of
Directors to breach its fiduciary duties to shareholders under applicable law
(such proposal that satisfies clause (A) and (B) being referred to herein as a
"Superior Proposal"); and (C) FSSB promptly notifies Farmers of such inquiries,
proposals or offers received by, any such information requested from, or any
such discussions or negotiations sought to be initiated or continued with FSSB
or any of its representatives indicating, in connection with such notice, the
name of such Person and the material terms and conditions of any inquiries,
proposals or offers, and receives from such Person an executed confidentiality
agreement in form and substance identical in all material respects to the
confidentiality agreements that FSSB and IBT entered into. For purposes of this
Agreement, "Acquisition Proposal" shall mean any proposal or offer as to any of
the following (other than the transactions contemplated hereunder) involving
FSSB or any of its Subsidiaries: (i) any merger, consolidation, share exchange,
business combination, or other similar transactions; (ii) any sale, lease,
exchange, mortgage, pledge, transfer or other disposition of 25% or more of the
assets of FSSB and the FSSB Subsidiaries, taken as a whole, in a single
transaction or series of transactions; (iii) any sale or tender offer or
exchange offer for 25% or more of the outstanding shares of capital stock of
FSSB or the filing of a registration statement under the Securities Act in
connection therewith; or (iv) any public announcement of a proposal, plan or
intention to do any of the foregoing or any agreement to engage in any of the
foregoing.
6.11. Xxxxxxxx-Xxxxx Certification of Financial Statements. The Chief
Executive Officer and the Chief Financial Officer of FSSB shall certify the FSSB
Financial Statements in the form attached as Exhibit A.
6.12. FSSB Audit for 2005. FSSB's external audit for the year ending
December 31, 2005 shall be conducted by an auditor that is independent from FSSB
in accordance with Section 201 of the Xxxxxxxx-Xxxxx Act of 2002 and the
regulations promulgated thereunder.
ARTICLE VII - COVENANTS OF FARMERS
7.1. Conduct of Business. During the period from the date of this Agreement
to the Effective Time, except with the written consent of FSSB, which consent
will not be unreasonably withheld, conditioned or delayed, Farmers and IBT will,
and they will cause each Farmers Entity to: conduct its business only in the
usual, regular and ordinary course consistent with past practices; use
reasonable efforts to preserve intact its business organization and assets and
maintain its rights and franchises; and voluntarily take no action that would:
(i) adversely affect the ability of the parties to obtain the Regulatory
Approvals or materially increase the period of time necessary to obtain such
approvals; (ii) adversely affect its ability to perform its covenants and
agreements under this Agreement; (iii) result in the representations and
warranties contained in Article V of this Agreement not being true and correct
on the date of this Agreement or at any future date on or prior to the Closing
Date or in any of the conditions set forth in Article IX hereof not being
satisfied; (iv) change or waive any provision of its Articles of Incorporation,
except as required by law; or (v) change any method, practice or principle of
43
accounting, except as may be required from time to time by GAAP (without regard
to any optional early adoption date) or any Bank Regulator responsible for
regulating IBT, Xxxxxxxx Bank and Trust or Farmers. Additionally, IBT will not
declare an extraordinary dividend or distribution on shares of IBT Common Stock.
7.2. Disclosure Supplements. From time to time prior to the Effective Time,
Farmers and IBT will promptly supplement or amend the Farmers Entity Disclosure
Schedule delivered in connection herewith with respect to any matter hereafter
arising which, if existing, occurring or known at the date of this Agreement,
would have been required to be set forth or described in such Farmers Entity
Disclosure Schedule or which is necessary to correct any information in such
Farmers Entity Disclosure Schedule which has been rendered inaccurate thereby.
7.3. Consents and Approvals of Third Parties. Farmers shall use all
commercially reasonable efforts to obtain as soon as practicable all consents
and approvals of any other Persons necessary or desirable for the consummation
of the transactions contemplated by this Agreement.
7.4. All Reasonable Efforts. Subject to the terms and conditions herein
provided, Farmers agrees to use all commercially reasonable efforts to take, or
cause to be taken, all action and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement.
7.5. Failure to Fulfill Conditions. In the event that Farmers determines
that a condition to its obligation to complete the Merger cannot be fulfilled
and that it will not waive that condition, it will notify FSSB.
7.6. Employee Benefits. Farmers and IBT shall, from and after the Effective
Time until January 1, 2008, continue the defined contribution plan of FSSB in
effect immediately preceding the Effective Time. Effective January 1, 2008, or
as required by ERISA, Farmers and IBT shall cause the employee pension benefit
plans of IBT (as defined under ERISA) to be adopted by Farmers for all FSSB
employees who were employed as of the Effective Time (the "Former FSSB
Employees"). All Former FSSB Employees who become participants in an IBT
employee pension benefit plan covered under ERISA shall, for purposes of
determining eligibility for and for any applicable vesting periods of such
employee benefits only (and not for benefit accrual purposes) be given credit
for meeting eligibility and vesting requirements in such plans for service as an
employee of FSSB or any predecessor thereto prior to the Effective Time. All
Former FSSB Employees who become participants in the plans of IBT shall receive
aggregate annual employer contributions of 15% of salary into such plans. To the
extent said contributions do not equal at least 15% of salary, said shortfall
shall be made up as additional salary or pursuant to a contribution to a
non-qualified plan for affected employees, as determined in the sole discretion
of Farmers. This Agreement shall not be construed to limit the ability of
Farmers or the Farmers Entities to terminate the employment of any employee or
to review employee pension benefits programs from time to time and to make such
changes as it may deem appropriate. Farmers and IBT shall, from and after the
Effective Time, continue in effect any material welfare benefit plan, life
insurance, group health plan or disability plan in which the
44
employees of FSSB participated immediately prior to the Effective Time (or an
arrangement providing substantially similar benefits). Farmers and the Farmers
Entities shall not take any action which would adversely affect the employees of
FSSB participation in or materially reduce any benefits under any such plan or
arrangement. Nothing contained in this subsection shall limit Farmers' or any
Farmers Entity's right to amend or terminate any plan or arrangement to conform
such plan or arrangement to statutory or regulatory requirements applicable to
such plan or arrangement.
7.7. Access to Properties and Records. Subject to Section 12.1 hereof,
Farmers and IBT shall permit FSSB access upon reasonable notice to their
properties, and shall disclose and make available to FSSB to the extent
permitted by applicable law during normal business hours all of its books,
papers and records relating to the assets, properties, operations, obligations
and liabilities, including, but not limited to, all books of account (including
the general ledger), tax records, minute books of directors' (other than minutes
that discuss any of the transactions contemplated by this Agreement or any other
subject matter IBT reasonably determines should be treated as confidential or
privileged) and shareholders' meetings, organizational documents, bylaws,
material contracts and agreements, filings with any regulatory authority,
litigation files (to the extent not resulting in waiver of attorney-client
privilege), plans affecting employees, and any other business activities or
prospects in which FSSB may have a reasonable interest. IBT shall provide and
shall request IBT's auditors to provide FSSB with such historical financial
information regarding it (and related audit reports and consents) as FSSB may
request.
7.8. Financial and Other Statements.
(a) Promptly upon receipt thereof, IBT shall furnish to FSSB copies of
each annual, interim or special audit of the books of IBT made by its
independent accountants and copies of all internal control reports submitted to
IBT by such accountants in connection with each annual, interim or special audit
of the books of IBT made by such accountants.
(b) Promptly after IBT's board meeting but no later than thirty (30)
days after the end of each month, Farmers shall cause IBT to deliver to FSSB a
consolidated balance sheet and a consolidated statement of operations, without
related notes, for such month prepared in accordance with current financial
reporting practices.
(c) Farmers and IBT shall advise FSSB promptly of the receipt of any
examination report of any Bank Regulator with respect to the condition or
activities of IBT, Farmers or any IBT Subsidiaries.
(d) With reasonable promptness, IBT shall furnish to FSSB such
additional financial data that IBT possesses and as FSSB may reasonably request,
including without limitation, detailed monthly financial statements and loan
reports.
7.9. Directors and Officers Indemnification; Insurance.
(a) From and after the Effective Time through the fifth anniversary of
the Effective Time, Farmers and the Farmers Entities (collectively the
"Indemnifying Party") shall indemnify and hold harmless each present and former
director, officer and employee of FSSB,
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determined as of the Effective Time (the "Indemnified Parties") against any
costs or expenses (including reasonable attorneys' fees), judgments, fines,
losses, claims, damages or liabilities incurred in connection with any claim,
action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, arising out of matters existing or occurring at
or prior to the Effective Time, whether asserted or claimed prior to, at or
after the Effective Time, arising in whole or in part out of or pertaining to
the fact that he or she was a director, officer, employee, fiduciary or agent of
FSSB or any FSSB Subsidiary or is or was serving at the request of FSSB or any
FSSB Subsidiary as a director, officer, employee, fiduciary or agent of another
corporation, partnership, joint venture, trust or other enterprise, including
without limitation matters related to the negotiation, execution and performance
of this Agreement or the consummation of the Merger, to the fullest extent which
indemnification is permitted under the applicable provisions of the Michigan
Banking Code, MCL 487.13904 through 487.13907, as in effect on the date hereof
or in the event any subsequent amendment thereto expands the permissible scope
of indemnification, then as amended.
(b) Any Indemnified Party wishing to claim indemnification under this
Section 7.9 hereof, upon learning of any such claim, action, suit, proceeding or
investigation, shall promptly notify the Indemnifying Party, but the failure to
so notify shall not relieve the Indemnifying Party of any liability it may have
to such Indemnified Party if such failure does not actually prejudice the
Indemnifying Party. In the event of any such claim, action, suit, proceeding or
investigation (whether arising before or after the Effective Time), (i) the
Indemnifying Party shall have the right to assume the defense thereof and the
Indemnifying Party shall not be liable to such Indemnified Parties for any legal
expenses of other counsel or any other expenses subsequently incurred by such
Indemnified Parties in connection with the defense thereof, except that if the
Indemnifying Party elects not to assume such defense or counsel for the
Indemnified Parties advises that there are issues which raise conflicts of
interest between the Indemnifying Party and the Indemnified Parties, the
Indemnified Parties may retain counsel which is reasonably satisfactory to the
Indemnifying Party, and the Indemnifying Party shall pay, promptly as statements
therefore are received, the reasonable fees and expenses of such counsel for the
Indemnified Parties (which may not exceed one firm in any jurisdiction), (ii)
the Indemnified Parties will cooperate in the defense of any such matter, (iii)
the Indemnifying Party shall not be liable for any settlement effected without
its prior written consent, and (iv) the Indemnifying Party shall have no
obligation hereunder in the event that a federal or state banking agency or a
court of competent jurisdiction shall determine that indemnification of an
Indemnified Party in the manner contemplated hereby is prohibited by applicable
laws and regulations.
(c) Prior to the Effective Time, Farmers shall cause the persons
serving as directors and officers of FSSB and any FSSB Subsidiaries immediately
prior to the Effective Time to be covered by the directors' and officers'
liability insurance policy maintained by FSSB for a period of five years after
the Effective Time (provided that Farmers may substitute therefore policies of
at least the same coverage and amounts containing terms and conditions which are
not materially less advantageous than such policy or single premium tail
coverage with policy limits equal to FSSB's existing coverage limits) with
respect to acts or omissions occurring prior to the Effective Time which were
committed by such directors and officers in their capacities as such.
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(d) If Farmers or any of its successors or assigns shall consolidate
with or merge into any other entity and shall not be the continuing or surviving
entity of such consolidation or merger or shall transfer all or substantially
all of its assets to any other entity, then and in each case, proper provisions
shall be made so that the successors and assigns of Farmers or the surviving
company shall assume the obligations set forth in this Section 7.9 hereof prior
to or simultaneously with the consummation of such transaction.
ARTICLE VIII - REGULATORY AND OTHER MATTERS
8.1. Meetings of Shareholders. FSSB will (i) as promptly as practicable
after the Merger Registration Statement is declared effective by the SEC, take
all steps necessary to duly call, give notice of, convene and hold a meeting of
its shareholders for the purpose of considering this Agreement and the Merger,
and for such other purposes as may be, in FSSB's reasonable judgment, necessary
or desirable (the "FSSB Shareholders Meeting"), (ii) in connection with the
solicitation of proxies with respect to the FSSB Shareholders Meeting, have its
Board of Directors recommend approval of this Agreement to the FSSB Shareholders
unless the Board of Directors shall have determined that such recommendation
would violate its fiduciary duties under applicable law; and (iii) cooperate and
consult with Farmers with respect to each of the foregoing matters.
8.2. Proxy Statement--Prospectus; Merger Registration Statement.
(a) For the purposes (x) of registering IBT Common Stock to be offered
to holders of FSSB Common Stock in connection with the Merger with the SEC under
the Securities Act and (y) of holding the FSSB Shareholders Meeting, Farmers and
the Farmers Entities shall draft and prepare, and FSSB shall cooperate in the
preparation of, the Merger Registration Statement, including a proxy statement
and prospectus satisfying all applicable requirements of applicable state
securities and banking laws, and of the Securities Act and the Exchange Act, and
the rules and regulations thereunder (such proxy statement/prospectus in the
form mailed by FSSB to the FSSB shareholders, together with any and all
amendments or supplements thereto, being herein referred to as the "Proxy
Statement-Prospectus"). Farmers and the Farmers Entities shall provide FSSB and
its counsel with appropriate opportunity to review and comment on the Proxy
Statement-Prospectus prior to the time it is initially filed with the SEC or any
amendments are filed with the SEC. Farmers shall cause IBT to file the Merger
Registration Statement, including the Proxy Statement-Prospectus, with the SEC.
Each of Farmers and the Farmers Entities and FSSB shall use their best efforts
to have the Merger Registration Statement declared effective under the
Securities Act as promptly as practicable after such filing, and FSSB shall
thereafter promptly mail the Proxy Statement-Prospectus to its shareholders.
Farmers and the Farmers Entities shall also use its 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 FSSB shall
furnish all information concerning FSSB and the holders of FSSB Common Stock as
may be reasonably requested in connection with any such action.
(b) Each party acknowledges that time is of the essence in connection
with the preparation and filing of the Merger Registration Statement. Farmers
shall cause IBT to advise
47
FSSB promptly after IBT receives notice of the time when the Merger Registration
Statement has become effective or any supplement or amendment has been filed, of
the issuance of any stop order or the suspension of the qualifications of the
shares of IBT Common Stock issuable pursuant to the Merger Registration
Statement, or the initiation or threat of any proceeding for any such purpose,
or of any request by the SEC for the amendment or supplement of the Merger
Registration Statement, or for additional information, and Farmers shall cause
IBT to provide FSSB with as many copies of such Merger Registration Statement
and all amendments thereto promptly upon the filing thereof as FSSB may
reasonably request.
(c) FSSB and Farmers and the Farmers Entities shall promptly notify
the other party if at any time it becomes aware that the Proxy
Statement-Prospectus or the Merger Registration Statement contains any untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary to make the statements contained therein, in light
of the circumstances under which they were made, not misleading. In such event,
FSSB shall cooperate with IBT in the preparation of a supplement or amendment to
such Proxy Statement-Prospectus that corrects such misstatement or omission, and
Farmers shall cause IBT to file an amended Merger Registration Statement with
the SEC, and each of FSSB and Farmers and the Farmers Entities shall mail an
amended Proxy Statement-Prospectus to FSSB's shareholders.
8.3. Regulatory Approvals. Each of FSSB and Farmers and the Farmers
Entities will cooperate with the other and use all reasonable efforts to
promptly prepare and, within 30 days after the date hereof or as soon thereafter
as practicable, file all necessary documentation to obtain all necessary
permits, consents, waivers, approvals and authorizations of the FRB, FDIC and
the Bureau and any other third parties and governmental bodies necessary to
consummate the transactions contemplated by this Agreement. FSSB and Farmers and
the Farmers Entities shall furnish each other and each other's counsel with all
information concerning themselves, their Subsidiaries, directors, officers and
shareholders and such other matters as may be necessary or advisable in
connection with any application, petition or other statement made by or on
behalf of FSSB or Farmers and the Farmers Entities to any Bank Regulator or
governmental body in connection with the Merger and the other transactions
contemplated by this Agreement. Each party acknowledges that time is of the
essence in connection with the preparation and filing of the documentation
referred to above. FSSB shall have the right to review in advance all
characterizations of the information relating to FSSB and any of its
Subsidiaries which appear in any filing made in connection with the transactions
contemplated by this Agreement with any governmental body.
8.4. Affiliates. FSSB shall use all reasonable efforts to cause each
director, executive officer and other person who is an "affiliate" (for purposes
of Rule 145 under the Securities Act) of FSSB to deliver to Farmers, as soon as
practicable after the date of this Agreement, and at least thirty (30) days
prior to the date of the FSSB Shareholders Meeting, a written agreement, in the
form of Exhibit B hereto, providing that such person will not sell, pledge,
transfer or otherwise dispose of any shares of IBT Common Stock to be received
by such "affiliate" as a result of the Merger otherwise than in compliance with
the applicable provisions of the Securities Act and the rules and regulations
thereunder.
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8.5. Employment Agreements. As of the Closing Date, Surviving Corporation
shall: (i) enter into a two year employment agreement with FSSB's President in
the form attached hereto as Exhibit C; and (ii) enter into employment agreements
with FSSB's then current employees in the form attached hereto as Exhibit G.
8.6. Post-Closing Operations. At and after the Closing Date, Farmers and
FSSB agree that:
(a) Surviving Corporation shall be a state of Michigan chartered
commercial bank.
(b) All banking offices of FSSB will remain open.
(c) There will be no layoffs at FSSB as a result of the Merger.
(d) The deferred compensation plan for directors of FSSB shall be
continued.
(e) The executive supplemental income plan for officers of FSSB shall
be continued.
ARTICLE IX - CLOSING CONDITIONS
9.1. Conditions to Each Party's Obligations Under This Agreement. The
respective obligations of each party under this Agreement shall be subject to
the fulfillment at or prior to the Closing Date of the following conditions,
none of which may be waived:
(a) Shareholder Approval. This Agreement and the transactions
contemplated hereby shall have been approved by the requisite vote of the
shareholders of FSSB.
(b) Injunctions. None of the parties hereto shall be subject to any
order, decree or injunction of a court or agency of competent jurisdiction, and
no statute, rule or regulation shall have been enacted, entered, promulgated,
interpreted, applied or enforced by any Governmental Entity or Bank Regulator,
that enjoins or prohibits the consummation of the transactions contemplated by
this Agreement.
(c) Regulatory Approvals. All required Regulatory Approvals shall have
been obtained and shall remain in full force and effect and all waiting periods
relating thereto shall have expired; and no such Regulatory Approval shall
include any condition or requirement, excluding standard conditions that are
normally imposed by the regulatory authorities in bank merger transactions, that
would, in the good faith reasonable judgment of the Board of Directors of
Farmers, materially and adversely affect the business, operations, financial
condition, property or assets of the combined enterprise of FSSB and Farmers or
otherwise materially impair the value of FSSB to Farmers and the Farmers
Entities.
(d) Effectiveness of Merger Registration Statement. The Merger
Registration Statement shall have become effective under the Securities Act and
no stop order suspending the
49
effectiveness of the Merger Registration Statement shall have been issued, and
no proceedings for that purpose shall have been initiated or threatened by the
SEC and, if the offer and sale of IBT Common Stock in the Merger is subject to
the blue sky laws of any state, shall not be subject to a stop order of any
state securities commissioner.
(e) Fairness Opinion. FSSB and Farmers shall have received an opinion
from Austin Associates, LLC, reasonably acceptable to them, dated as of the date
of this Agreement and renewed as of a date approximately the date of the Proxy
Statement-Prospectus to the effect that the terms of the Merger are fair to
FSSB's shareholders and IBT's shareholders from a financial point of view as of
that date and such opinion shall not have been subsequently withdrawn.
(f) Federal Tax Opinion. FSSB and Farmers shall have received an
opinion of Foster, Swift, Xxxxxxx & Xxxxx, X.X. counsel to Farmers and IBT
("Farmers' Counsel"), in form and substance reasonably satisfactory to both FSSB
and Farmers, substantially to the effect that, on the basis of facts,
representations and assumptions set forth in such opinion which are consistent
with the state of facts existing at the Effective Time, the Merger will be
treated as a reorganization within the meaning of Section 368(a) of the Code. In
rendering such opinion, Farmers' Counsel may require and rely upon
representations and covenants, including those contained in certificates of
officers of FSSB, Farmers, IBT, and others reasonably satisfactory to such
counsel.
(g) No Burdensome Condition. None of the Regulatory Approvals shall
impose any term, condition or restriction upon FSSB, Farmers or any of their
respective Affiliates that FSSB or Farmers, in good faith, reasonably determines
would so materially adversely affect the economic or business benefits of the
transactions contemplated by this Agreement to FSSB or Farmers as to render
inadvisable in the reasonable good faith judgment of FSSB or Farmers, the
consummation of the Merger.
9.2. Conditions to the Obligations of Farmers under this Agreement. The
obligations of Farmers under this Agreement shall be further subject to the
satisfaction of the conditions set forth in Sections 9.2(a) through 9.2(e) at or
prior to the Closing Date, which shall be waiveable by Farmers:
(a) Representations and Warranties. Each of the representations and
warranties of FSSB set forth in this Agreement shall be true and correct as of
the date of this Agreement and upon the Closing Date with the same effect as
though all such representations and warranties had been made at the Closing Date
(except to the extent such representations and warranties speak as of an earlier
date); and FSSB shall have delivered to Farmers a certificate to such effect
signed by the Chief Executive Officer and the Chief Financial Officer of FSSB as
of the Closing.
(b) Agreements and Covenants. FSSB shall have performed in all
material respects all obligations and complied in all material respects with all
agreements or covenants to be performed or complied with by it at or prior to
the Effective Time, and Farmers shall have
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received a certificate signed on behalf of FSSB by the Chief Executive Officer
and Chief Financial Officer of FSSB to such effect dated as of the Effective
Time.
(c) Permits, Authorizations, Etc. FSSB and the FSSB Subsidiaries shall
have obtained any and all material permits, authorizations, consents, waivers,
clearances or approvals required to be obtained by it for the lawful
consummation of the Merger.
(d) Dissenters' Rights. The holders of no more than 10% of the FSSB
Common Stock shall have indicated their intention to seek dissenters' rights of
appraisal.
(e) Legal Opinion. Farmers shall have received the opinion of Xxxxxx
LLP, counsel to FSSB, dated the Closing Date, in substantially the form shown on
Exhibit D.
FSSB will furnish Farmers with such certificates of its officers or others
and such other documents to evidence fulfillment of the conditions set forth in
this Section 9.2 as Farmers may reasonably request.
9.3. Conditions to the Obligations of FSSB under this Agreement. The
obligations of FSSB under this Agreement shall be further subject to the
satisfaction of the conditions set forth in Sections 9.3(a) through 9.3(f) at or
prior to the Closing Date, which shall be waiveable by FSSB:
(a) Representations and Warranties. Each of the representations and
warranties of Farmers and IBT set forth in this Agreement shall be true and
correct as of the date of this Agreement and upon the Closing Date with the same
effect as though all such representations and warranties had been made at the
Closing Date (except to the extent such representations and warranties speak as
of an earlier date); and Farmers shall have delivered to FSSB a certificate to
such effect signed by the Chief Executive Officer and the Chief Financial
Officer of Farmers and IBT as of the Closing.
(b) Agreements and Covenants. Farmers and IBT shall have performed in
all material respects all obligations and complied in all material respects with
all agreements or covenants to be performed or complied with by it at or prior
to the Effective Time, and FSSB shall have received a certificate signed on
behalf of Farmers by the Chief Executive Officer and Chief Financial Officer of
Farmers and IBT to such effect dated as of the Effective Time.
(c) Permits, Authorizations, Etc. Farmers and the Farmers Entities
shall have obtained any and all material permits, authorizations, consents,
waivers, clearances or approvals required to be obtained by it for the lawful
consummation of the Merger.
(d) Payment of Merger Consideration. IBT shall have delivered the
Exchange Fund to the Exchange Agent on or before the Closing Date.
(e) Legal Opinion. FSSB shall have received the opinion of Foster,
Swift, Xxxxxxx & Xxxxx, X.X., counsel to Farmers and IBT, dated the Closing
Date, in substantially the form shown on Exhibit E.
51
(f) Fairness Opinion. FSSB shall have received an opinion from
Xxxxxxxx Xxxxxx and Partners, dated as of the date approximately the date of the
Proxy Statement-Prospectus to the effect that the terms of the Merger are fair
to FSSB's shareholders from a financial point of view as of that date and such
opinion shall not have been subsequently withdrawn.
Farmers will furnish FSSB with such certificates of its officers or others and
such other documents to evidence fulfillment of the conditions set forth in this
Section 9.3 as FSSB may reasonably request.
ARTICLE X - THE CLOSING
10.1. Time and Place. Subject to the provisions of Articles IX and XI
hereof, the Closing of the transactions contemplated hereby shall take place at
the offices of IBT, 000 Xxxx Xxxxxxxx, Xx. Xxxxxxxx, Xxxxxxxx, at 10 a.m., or at
such other place or time upon which Farmers and FSSB mutually agree.
10.2. Deliveries at the Closing. At Closing there shall be delivered to
Farmers and FSSB the certificates and other documents and instruments required
to be delivered at the Closing under Article IX hereof. At or prior to the
Closing, Farmers shall deliver the Merger Consideration as set forth under
Section 9.3(d) hereof.
ARTICLE XI - TERMINATION, AMENDMENT AND WAIVER
11.1. Termination. This Agreement may be terminated at any time prior to
the Closing Date, whether before or after approval of the Merger by the
shareholders of FSSB:
(a) At any time by the mutual written agreement of Farmers and FSSB;
(b) By Farmers or FSSB (provided, that the terminating party is not
then in material breach of any representation, warranty, covenant or other
agreement contained herein) if there shall have been a material breach of any of
the representations or warranties set forth in this Agreement on the part of the
other party, which breach by its nature cannot be cured prior to the Termination
Date or shall not have been cured within 30 days after written notice of such
breach by the terminating party to the other party;
(c) By Farmers or FSSB (provided, that the terminating party is not
then in material breach of any representation, warranty, covenant or other
agreement contained herein) if there shall have been a material failure to
perform or comply with any of the covenants or agreements set forth in this
Agreement on the part of the other party, which failure by its nature cannot be
cured prior to the Termination Date or shall not have been cured within 30 days
after written notice of such failure by the terminating party to the other
party;
(d) By Farmers or FSSB, if the Closing shall not have occurred by the
Termination Date, or such later date as shall have been agreed to in writing by
Farmers and FSSB; provided, that no party may terminate this Agreement pursuant
to this Section 11.1(d) if the failure of the Closing to have occurred on or
before said date was due to such party's material
52
breach of any representation, warranty, covenant or other agreement contained in
this Agreement;
(e) By Farmers or FSSB, if the shareholders of FSSB shall have voted
at the FSSB Shareholders Meeting on the transactions contemplated by this
Agreement and such vote shall not have been sufficient to approve such
transactions;
(f) By Farmers or FSSB, if (i) final action has been taken by a Bank
Regulator whose approval is required in connection with this Agreement and the
transactions contemplated hereby, which final action (x) has become unappealable
and (y) does not approve this Agreement or the transactions contemplated hereby,
(ii) any Bank Regulator whose approval or non-objection is required in
connection with this Agreement and the transactions contemplated hereby has
stated in writing that it will not issue the required approval or nonobjection,
or (iii) any court of competent jurisdiction or other governmental authority
shall have issued an order, decree, ruling or taken any other action
restraining, enjoining or otherwise prohibiting the Merger and such order,
decree, ruling or other action shall have become final and unappealable;
(g) By the Board of Directors of either party (provided, that the
terminating party is not then in material breach of any representation,
warranty, covenant or other agreement contained herein) in the event that any of
the conditions precedent to the obligations of such party to consummate the
Merger cannot be satisfied or fulfilled by the date specified in Section 11.1(d)
of this Agreement;
(h) By the Board of Directors of Farmers if FSSB has received a
Superior Proposal and the Board of Directors of FSSB has entered into an
acquisition agreement with respect to the Superior Proposal, terminated this
Agreement, withdrawn its recommendation of this Agreement, has failed to make
such recommendation or has modified or qualified its recommendation in a manner
adverse to Farmers;
(i) By the Board of Directors of FSSB if FSSB has received a Superior
Proposal and the Board of Directors of FSSB has made a determination to accept
such Superior Proposal; provided that FSSB shall not terminate this Agreement
pursuant to this Section 11.1(i) and enter into a definitive agreement with
respect to the Superior Proposal until the expiration of five (5) business days
following Farmers' receipt of written notice advising Farmers that FSSB has
received a Superior Proposal, specifying the material terms and conditions of
such Superior Proposal (and including a copy thereof with all accompanying
documentation, if in writing) identifying the person making the Superior
Proposal and stating whether FSSB intends to enter into a definitive agreement
with respect to the Superior Proposal. After providing such notice, FSSB shall
provide a reasonable opportunity to Farmers during the five business-day period
to make such adjustments in the terms and conditions of this Agreement as would
enable FSSB to proceed with the Merger on such adjusted terms.
11.2. Effect of Termination.
53
(a) In the event of termination of this Agreement pursuant to any
provision of Section 11.1, this Agreement shall forthwith become void and have
no further force, except that (i) the provisions of Sections 11.2, 12.1, 12.2,
12.6, 12.9, 12.10, and any other Section which, by its terms, relates to
post-termination rights or obligations, shall survive such termination of this
Agreement and remain in full force and effect.
(b) If this Agreement is terminated, expenses and damages of the
parties hereto shall be determined as follows:
(i) Except as provided below, whether or not the Merger is
consummated, all costs and expenses incurred in connection with this Agreement
and the transactions contemplated by this Agreement shall be paid by the party
incurring such expenses; provided, however, if the Merger is not consummated due
to the failure to obtain any necessary Regulatory Approval, Farmers shall
reimburse FSSB for its actual costs and expenses incurred by FSSB after March 9,
2006 in connection with this Agreement and the transactions contemplated by this
Agreement including, without limitation, fees and expenses of its attorneys,
accountants and financial advisors.
(ii) In the event of a termination of this Agreement because of a
willful breach of any representation, warranty, covenant or agreement contained
in this Agreement, the breaching party shall remain liable for any and all
damages, costs and expenses, including all reasonable attorneys' fees, sustained
or incurred by the non-breaching party as a result thereof or in connection
therewith or with respect to the enforcement of its rights hereunder.
11.3. Amendment, Extension and Waiver. Subject to applicable law, at any
time prior to the Effective Time (whether before or after approval thereof by
the shareholders of FSSB), the parties hereto by action of their respective
Boards of Directors, may (a) amend this Agreement, (b) extend the time for the
performance of any of the obligations or other acts of any other party hereto,
(c) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto, or (d) waive compliance
with any of the agreements or conditions contained herein; provided, however,
that after any approval of this Agreement and the transactions contemplated
hereby by the shareholders of FSSB, there may not be, without further approval
of such shareholders, any amendment of this Agreement which reduces the amount
or value, or changes the form of, the Merger Consideration to be delivered to
FSSB's shareholders pursuant to this Agreement. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto. Any agreement on the part of a party hereto to any extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party, but such waiver or failure to insist on strict compliance
with such obligation, covenant, agreement or condition shall not operate as a
waiver of, or estoppel with respect to, any subsequent or other failure. Any
termination of this Agreement pursuant to Article XI may only be effected upon a
vote of a majority of the entire Board of Directors of the terminating party.
ARTICLE XII - MISCELLANEOUS
12.1. Confidentiality. Except as provided below, Farmers and FSSB each
agree:
54
(a) Treatment; Restricted Access. All information furnished to the
other party or its Affiliates pursuant to this Agreement shall be treated as
strictly confidential and shall not be disclosed to any other person, natural or
corporate, except for its employees, attorneys, accountants, regulators, and
financial advisers who are reasonably believed to have a need for such
information in connection with the Merger.
(b) No Other Use. No party shall make any use, other than related to
the Merger, of any information it may come to know as a direct result of a
disclosure by the other party, its subsidiaries, directors, officers, employees,
attorneys, accountants, or advisers or that may come into its possession from
any other confidential source during the course of its investigation.
(c) Excepted Information. The provisions of this section shall not
preclude the parties or their respective subsidiaries, from using or disclosing
information that is readily ascertainable from public information or trade
sources, known by it before the commencement of discussions between the parties
or subsequently developed by it or its subsidiaries independent of any
investigation under this Agreement, received from any other person who is not
Affiliates with a party and who is not under any obligation to keep such
information confidential, or reasonably required to be included in any filing or
application required by any governmental or regulatory agency.
(d) Prohibit Xxxxxxx Xxxxxxx. The parties shall each take reasonable
steps to assure that any person who receives nonpublic information concerning
the Merger or the other party will treat the information confidentially as
provided in this section and not directly or indirectly buy or sell, or advise
or encourage other persons to buy or sell, FSSB Common Stock or IBT Common Stock
until such information is properly disclosed to the public.
12.2. Public Announcements. FSSB and Farmers shall cooperate with each
other in the development and distribution of all news releases and other public
disclosures with respect to this Agreement, and except as may be otherwise
required by law, neither FSSB nor Farmers shall issue any news release, or other
public announcement or communication with respect to this Agreement unless such
news release or other public announcement or communication has been mutually
agreed upon by the parties hereto.
12.3. Survival. All representations, warranties and covenants in this
Agreement or in any instrument delivered pursuant hereto shall expire and be
terminated and extinguished at the Effective Time, except for those covenants
and agreements contained herein which by their terms apply in whole or in part
after the Effective Time.
12.4. Notices. All notices or other communications hereunder shall be in
writing and shall be deemed given if delivered by receipted hand delivery or
mailed by prepaid registered or certified mail (return receipt requested) or by
recognized overnight courier addressed as follows:
55
If to FSSB, to: Xxxxxx Xxxxxxxxx
The Xxxxxxx State Savings Bank
000 Xxxx Xxxx Xxxxxx
Xxxxxxx, XX 00000
With required copies to: Xxxxxx LLP
Attn: Xxxxx X. Xxxxxx
000 Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
If to Farmers, to: Xxxxxx X. Xxxxxx
Chief Executive Officer and President
IBT Bancorp, Inc.
000 Xxxx Xxxxxxxx
Xx. Xxxxxxxx, XX 00000
With required copies to: Foster, Swift, Xxxxxxx & Xxxxx, X.X.
c/o Xxxx X. Xxxxxx, Esq.
000 Xxxxx Xxxxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
or such other address as shall be furnished in writing by any party, and any
such notice or communication shall be deemed to have been given: (a) as of the
date delivered by hand; (b) three (3) business days after being delivered to the
U.S. mail, postage prepaid; or (c) one (1) business day after being delivered to
the overnight courier.
12.5. Parties in Interest. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and
assigns; provided, however, that neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any party hereto without
the prior written consent of the other party, and that (except as provided in
Article III of this Agreement) nothing in this Agreement is intended to confer
upon any other person any rights or remedies under or by reason of this
Agreement.
12.6. Complete Agreement. This Agreement, including the Exhibits and
Disclosure Schedules hereto and the documents and other writings referred to
herein or therein or delivered pursuant hereto, and the Confidentiality
Agreements referred to in Section 12.1, contains the entire agreement and
understanding of the parties with respect to its subject matter. There are no
restrictions, agreements, promises, warranties, covenants or undertakings
between the parties other than those expressly set forth herein or therein. This
Agreement supersedes all prior agreements and understandings (other than the
Confidentiality Agreements referred to in Section 12.1 hereof) between the
parties, both written and oral, with respect to its subject matter.
12.7. Counterparts. This Agreement may be executed in one or more
counterparts all of which shall be considered one and the same agreement and
each of which shall be deemed an original.
56
12.8. Severability. In the event that any one or more provisions of this
Agreement shall for any reason be held invalid, illegal or unenforceable in any
respect, by any court of competent jurisdiction, such invalidity, illegality or
unenforceability shall not affect any other provisions of this Agreement and the
parties shall use their reasonable efforts to substitute a valid, legal and
enforceable provision which, insofar as practical, implements the purposes and
intents of this Agreement.
12.9. Governing Law. This Agreement shall be governed by the laws of
Michigan, without giving effect to its principles of conflicts of laws.
12.10. Interpretation. When a reference is made in this Agreement to
sections or exhibits, such reference shall be to a section of or exhibit to this
Agreement unless otherwise indicated. The recitals hereto constitute an integral
part of this Agreement. References to sections include subsections, which are
part of the related section. The table of contents, index 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 phrases "the date
of this Agreement", "the date hereof" and terms of similar import, unless the
context otherwise requires, shall be deemed to refer to the date set forth in
the Recitals to this Agreement.
12.11. Specific Performance. The parties hereto agree that irreparable
damage would occur in the event that the provisions contained in this Agreement
were not performed in accordance with its specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions thereof in any court of the United States
or any state having jurisdiction, this being in addition to any other remedy to
which they are entitled at law or in equity.
57
IN WITNESS WHEREOF, Farmers, FSSB and IBT have caused this Agreement to be
executed by their duly authorized officers as of the date first set forth above.
Farmers State Bank of Breckenridge
Dated: May 2, 2006 By: /s/ Xxxxxxx X. Xxxxxx
------------------------------------
Xxxxxxx X. Xxxxxx
President and CEO
The Xxxxxxx State Savings Bank
Dated: April 28, 2006 By: /s/ Xxxxxxx X. Xxxxxx
------------------------------------
Xxxxxxx X. Xxxxxx
Chairman of the Board
IBT Bancorp, Inc.
Dated: May 2, 2006 By: /s/ Xxxxxx X. Xxxxxx
------------------------------------
Xxxxxx X. Xxxxxx
President and CEO
58
EXHIBIT A
____________________, President and Chief Executive Officer of The Xxxxxxx State
Savings Bank and ____________________, Senior Vice President and Chief Financial
Officer of The Xxxxxxx State Savings Bank, certify that to the best of their
knowledge that the information contained in the FSSB Financial Statements (as
defined in the Amended and Restated Agreement and Plan of Merger dated as of May
2, 2006) fairly present, in all material respects, the financial condition and
results of operations of The Xxxxxxx State Savings Bank.
Dated: _______________, 2006
----------------------------------------
----------------------------------------
President and Chief Executive Officer
----------------------------------------
----------------------------------------
Senior Vice President and Chief
Financial Officer
59
EXHIBIT B
IBT Bancorp, Inc.
000 X. Xxxxxxxx
Xx. Xxxxxxxx XX 00000
Attn: Secretary
Gentlemen:
I have been advised that I might be considered to be an "affiliate," as that
term is defined for purposes of paragraphs (c) and (d) of Rule 145 ("Rule 145")
promulgated by the Securities and Exchange Commission (the "Commission") under
the Securities Act of 1933, as amended (the "Securities Act") of The Xxxxxxx
State Savings Bank, a Michigan chartered commercial bank ("FSSB").
Pursuant to an Amended and Restated Agreement and Plan of Merger, dated as of
May 2, 2006 (the "Merger Agreement") among FSSB, Farmers State Bank of
Breckenridge ("Farmers") and IBT Bancorp, Inc., a Michigan corporation ("IBT"),
it is contemplated that FSSB will merge with and into Farmers (the "Merger") and
as a result, I will receive in exchange for each share of common stock, _____
par value, of FSSB ("FSSB Common Stock") owned by me immediately prior to the
Effective Time of the Merger (as defined in the Merger Agreement), a number of
shares of common stock, no par value, of IBT ("IBT Common Stock") and cash, as
more specifically set forth in the Merger Agreement.
I hereby agree as follows:
I will not offer to sell, transfer or otherwise dispose of any of the shares of
IBT Common Stock issued to me pursuant to the Merger (the "Stock") except (a) in
compliance with the applicable provisions of Rule 145, (b) in a transaction that
is otherwise exempt from the registration requirements of the Securities Act, or
(c) in an offering registered under the Securities Act.
I consent to the endorsement of the Stock issued to me pursuant to the Merger
with a restrictive legend which will read substantially as follows:
"The shares represented by this certificate were issued in a transaction to
which Rule 145 promulgated under the Securities Act of 1933, as amended (the
"Act"), applies, and may be sold or otherwise transferred only in compliance
with the limitations of such Rule 145, or upon receipt by IBT Bancorp, Inc. of
an opinion of counsel reasonably satisfactory to it that some other exemption
from registration under the Act is available, or pursuant to a registration
statement under the Act."
60
IBT's transfer agent shall be given an appropriate stop transfer order and shall
not be required to register any attempted transfer of the shares of the Stock,
unless the transfer has been effected in compliance with the terms of this
letter agreement.
It is understood and agreed that this letter agreement shall terminate and be of
no further force and effect and the restrictive legend set forth above shall be
removed by delivery of substitute certificates without such legend, and the
related stop transfer restrictions shall be lifted forthwith, if (i) any such
shares of Stock shall have been registered under the Securities Act for sale,
transfer or other disposition by me or on my behalf and are sold, transferred or
otherwise disposed of, or (ii) any such shares of Stock are sold in accordance
with the provisions of paragraphs (c), (e), (f) and (g) of Rule 144 promulgated
under the Securities Act, or (iii) I am not at the time of such disposition an
affiliate of IBT and have been the beneficial owner of the Stock for at least
one year (or such other period as may be prescribed thereunder) and IBT has
filed with the Commission all of the reports it is required to file under the
Securities Exchange Act of 1934, as amended, during the preceding twelve months,
or (iv) I am not and have not been for at least three months an affiliate of IBT
and have been the beneficial owner of the Stock for at least two years (or such
other period as may be prescribed by the Securities Act, and the rules and
regulations promulgated thereunder), or (v) IBT shall have received an opinion
of counsel acceptable to IBT to the effect that the stock transfer restrictions
and the legend are not required.
I have carefully read this letter agreement and the Merger Agreement and have
discussed their requirements and other applicable limitations upon my ability to
offer to sell, transfer or otherwise dispose of shares of Stock to the extent I
felt necessary, with my counsel or counsel for FSSB.
Sincerely,
61
EXHIBIT C
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is entered into as of _____, 2006
by and between Xxxxxx Xxxxxxxxx ("Executive") and FSB (f/k/a Farmers State Bank
of Breckenridge) ("Bank").
WHEREAS, Executive is currently employed by The Xxxxxxx State Savings Bank
("FSSB") as President; and
WHEREAS, FSSB and Bank have signed an Amended and Restated Agreement and
Plan of Merger dated May 2, 2006 whereby FSSB will be merged with and into the
Bank (the "Acquisition"); and
WHEREAS, Executive has substantial knowledge and skill regarding the
marketing, products, customers and goodwill of FSSB as a result of his service
as President; and
WHEREAS, Executive and Bank desire to enter into an agreement defining the
terms and conditions of Executive's employment following the Acquisition.
NOW, THEREFORE, Executive and Bank agree as follows:
1. Effective Date and Term. The Effective Date of this Agreement shall be
the day immediately following the closing date of the Acquisition. The Term of
this Agreement shall be the period beginning the Effective Date and ending on
the second anniversary of the Effective Date unless extended or terminated
earlier, in writing by mutual agreement of both parties.
2. Services and Compensation.
(a) Services. Executive agrees that upon the Effective Date he shall
be employed as an employee and officer of Bank in the position of President of
the Xxxxxxx State Bank Division of the Bank and Vice President of the Bank.
During the Term of this Agreement, Executive shall have the normal duties,
responsibilities and authority that he currently holds as President and CEO of
FSSB. Executive further agrees that he shall use his skills and experiences in
the best interests of Bank in providing services.
(b) Compensation.
(i) Salary. In exchange for these services, Bank shall pay to
Executive an annual salary of One Hundred and Four Thousand Dollars ($104,000),
minus taxes and withholding. These payments shall be made at regular payroll
periods until this Agreement is terminated.
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(ii) Increases. Executive's salary shall be reviewed annually and
salary increases shall be effective as of the anniversary date of the Effective
Date of this Agreement, unless made earlier or more frequently.
(iii) Benefits. Executive shall receive all insurance (health,
life, long-term and short-term disability coverages, etc.) which is provided to
all employees who are officers of the Bank. Executive shall also continue his
participation in the FSSB Executive Supplemental Income Plan. Executive shall
also be provided with an automobile for his full-time use, including expenses
related to the upkeep of the automobile. The Bank shall provide five weeks of
paid vacation for each twelve month period of the Agreement; provided, however,
Executive shall be allowed to "carryover" any accrued unused vacation time he
has with FSSB as of the Effective Date. All other leave time, such as sick time,
bereavement leave, personal leave and so forth, shall be provided under the
general policies of the Bank applicable to officers.
(iv) Termination. In the event that Executive's employment is
terminated pursuant to paragraph 4(a)(ii)(B) or (C), Executive agrees that he
shall not be eligible for any unpaid payments described in this paragraph (other
than salary earned for the applicable regular payroll period that has not been
paid) but specifically agrees that the terms of the Non-Compete described in
paragraph 3 shall be applicable.
(c) Director's Services and Compensation. Executive may serve as a
director of Bank if elected by the shareholder of the Bank, and may be
compensated for such service as other directors are compensated for similar
service.
3. Restrictive Covenants.
(a) Non-Compete. In consideration for this Agreement, and to protect
the business and goodwill purchased by Bank, Executive agrees that for a period
of two years after this Agreement is terminated ("Restrictive Covenant Period")
even if this Agreement is terminated pursuant to paragraph 4(a)(ii)(B) or (C)
prior to the second anniversary of the Effective Date, he will NOT (other than
on behalf of the Bank or IBT Bancorp, Inc. ("IBT"), directly or indirectly own,
manage, operate, join, or control, or participate in the ownership, management,
operation or control of, or be connected as an officer, employee, partner, or
consultant with or otherwise carry on any business similar to that carried on by
the Bank, its affiliates or IBT within the following counties in the State of
Michigan: Gratiot, Xxxxxxxx, Xxxxxxxx, Midland, Mecosta, Osceola, Clare and
Gladwin.
(b) Non-Solicitation of Employees. During the Restrictive Covenant
Period, Executive will not (other than on behalf of the Bank) directly or
indirectly, offer employment to or employ any person for an entity other than
the Bank or IBT, who is or was employed by the Bank or IBT at any time during
the Restrictive Covenant Period. Nothing in this Agreement, however, will
prevent Executive from providing to a third party an oral or written
recommendation for or an evaluation of an employee of the Bank or IBT following
the termination of that employee's employment with the Bank or IBT.
63
(c) Non-Disclosure of Confidential Information. Executive
acknowledges, by reason of his past and future services to the Bank and IBT, he
has had and he will have access to certain confidential information of the Bank
and IBT regarding customer, potential customers, trade secrets, business
operations and plans, business strategies, financial data, costs, prices and
other business marketing information. Executive agrees that during his
employment with the Bank and during the Restrictive Covenant Period, he will not
disclose at any time any such confidential information to any third party,
except to the extent required by his duties to the Bank or IBT or as may be
required by law.
(d) Relief. Executive agrees that if he violates any of the provisions
set forth above in 3.(a), (b) or (c), the Bank or IBT may seek injunctive
relief. Executive further agrees that the Bank and/or IBT would be entitled to
preliminary and permanent injunctive relief if he would violate any of the
restrictive covenants set forth above in 3.(a), (b) or (c) and the Bank's and
IBT's rights would be in addition to any other rights or remedies to which they
may be entitled. Executive further agrees that in the event of any such
violation of the restrictive covenants set forth above, the Bank and/or IBT
would be entitled to commence an action for preliminary and permanent injunctive
relief and other equitable relief in any court of competent jurisdiction.
4. Termination.
(a) This Agreement shall terminate on the earlier of:
(i) The second anniversary of the Effective Date;
(ii) Prior to the end of the Term set forth above, upon:
(A) Executive's death, or disability which causes Executive
to be unable to discharge the essential functions of
his job for a period of more than 180 consecutive
calendar days; or
(B) Receipt by Executive of notice of termination from Bank
arising from gross negligence by Executive, or the
commissions of a fraudulent act or a significant and
substantial dishonest act by Executive which is
job-related, or upon Executive's significant and
substantial violation of written policies or procedures
of Bank or IBT; or
(C) Executive's voluntary resignation.
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(b) Payment. Executive shall be paid all amounts and provided all
benefits described in paragraphs 2. (b) and (c), above, unless his employment is
terminated pursuant to paragraph 4(a)(ii)(B) or (C).
(c) Business Records. Executive acknowledges and agrees that all
files, records, lists, books, products, customer leads, and other materials,
whether owned at the time of employment or developed during the course of
employment, used in connection with the conduct of the business of Bank, or IBT
("Business"), shall at all times remain the property of Bank or IBT. Upon the
termination of this Agreement, Executive shall forthwith return all records,
documents, and other written, printed, photographic, electronic or physical
materials of any type that pertain to the Business, including without limitation
computer print-outs, data, software, lists or documents pertaining to any
current or prospective customer, calculations, proposals, business and financial
information, and all other documents relating to Bank, IBT or the Business, then
in Executive's possession or control, and Executive shall not make or retain any
copies of extracts, including handwritten summations, of any such documents.
5. Confidentiality. The parties thereto agree to keep the terms of this
Agreement confidential; except that Bank shall disclose the terms herein only as
necessary to perform its duties hereunder or as required by law. Executive shall
not disclose any terms herein except to his tax and legal advisors or as
required by law.
6. Waiver. No waiver of any term, condition or provision shall be effective
for any purpose whatsoever unless such waiver is in writing and signed by the
parties.
7. Governing Law and Enforceability. This Agreement shall be governed by
and construed in accordance with the laws of the State of Michigan. In the event
that a court of competent jurisdiction shall determine that any provision set
forth herein is void, invalid, or unenforceable, such void, invalid, or
unenforceable provision shall be deemed to be severable from and shall be
severed from this Agreement, and this Agreement shall be construed and enforced
as if such severed provision has never been a part hereof; except that in the
event the court determines the duration or geographic scope of the Non-Compete
agreement is overly-broad, such provision shall be reformed by the court in such
a way as to be enforceable, and the Non-Compete shall not be severed from this
Agreement and shall be enforced as reformed by the Court.
8. Amendment and Assignment. The parties may not modify or amend this
Agreement unless such amendment is in writing and is signed by the parties. This
Agreement is personal in nature as to Executive and may not be assigned by him,
but will be binding on and inure to the benefit of his heirs and personal
representatives. The terms of this Agreement shall be binding upon and shall
inure to the benefit of Bank, its successors and assigns.
65
9. Merger. This Agreement constitutes the entire agreement between
Executive and Bank regarding the subject matter hereof and any and all prior
oral or written agreements between Executive and Bank.
10. Survival. The remedy provisions of paragraph 3 shall survive the Term
of this Agreement.
11. Notice. Any notice permitted or required under this Agreement shall be
in writing and deemed to be given in the case of: (i) hand delivery or facsimile
transmission, upon receipt; (ii) overnight delivery service on the business day
after timely delivery, of a properly addressed notice with appropriate fees
paid, to a recognized overnight delivery service that guarantees overnight
delivery; and (ii) U.S. mail, upon the third business day after proper deposit
with the U.S. Mail of a properly addressed notice with appropriate postage paid.
Facsimile numbers and addresses for purposes of notice shall be as stated below,
unless changed by written notice duly provided:
If to Executive: Xxxxxx Xxxxxxxxx
__________________________
__________________________
__________________________
If to Bank: IBT Bancorp, Inc.
000 Xxxx Xxxxxxxx
Xx. Xxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
IN WITNESS WHEREOF, the undersigned have set their hands as of the
date first written above.
Individually FSB
"Bank"
By:
------------------------------------- ------------------------------------
Xxxxxx Xxxxxxxxx Its:
-----------------------------------
66
EXHIBIT D
_______________, 2006
**Draft**
PERSONAL AND CONFIDENTIAL
Board of Directors
IBT Bancorp, Inc.
000 Xxxx Xxxxxxxx
Xx. Xxxxxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
We are rendering this opinion to you as counsel for The Xxxxxxx State Savings
Bank ("FSSB"), in connection with the closing today of the merger ("Merger")
whereby FSSB will merge with and into Farmers State Bank of Breckenridge
("Farmers"), a wholly-owned subsidiary of IBT Bancorp, Inc. ("IBT") pursuant to
the Amended and Restated Agreement and Plan of Merger, dated _______________,
2006 ("Agreement"). This opinion is rendered pursuant to Section 9.2(e) of the
Agreement. All terms used herein without definition have the meaning specified
in the Agreement.
In rendering this opinion, except as otherwise specifically indicated herein, we
have relied, as to factual matters, entirely upon the representations of FSSB in
the Agreement, the Officers' Certificate given pursuant to Section 9.2(a)
thereof and the Officers' Certificate, dated ________, 2006 in support of this
opinion, provided to us by certain officers of FSSB, and have made no
independent review or investigation thereof. In addition, for purposes of this
opinion, we have examined copies of the following documents:
(a) Agreement dated _______________, 2006 and all Exhibits and Schedules
thereto;
(b) The form of FIS 1113 to be filed with the Bureau;
(c) Articles of Incorporation and Bylaws of FSSB, as amended;
(d) The Prospectus declared effective by the Securities and Exchange
Commission ("SEC") on _______________, 2006;
(e) The Registration Statement on Form S-4 (including exhibits) and
Amendment No. 1 thereto filed with the SEC on _______________, 2006 and
_______________, 2006, respectively;
(f) Certificate of the Bureau confirming that FSSB is a duly organized
state bank in good standing with the Bureau; and
67
(g) Certificate of the Secretary of FSSB dated _______________, 2006
regarding (i) FSSB's Articles and Bylaws; (ii) the incumbency of the officers of
FSSB; and (iii) all resolutions adopted by the Board of Directors and
shareholders of FSSB in connection with the Merger and the Agreement.
We have not, except as specifically mentioned above made any independent review
or investigation of the organization, existence, good standing, assets, business
or affairs of FSSB or of any other matters. In our examination of the aforesaid
books, records, documents and other materials, we have assumed the genuineness
of all signatures; the authenticity of all documents submitted to us as
originals, the conformity with the original documents of all documents submitted
to us as certified, telecopied, photostatic or reproduced copies. We have
assumed the authenticity and accuracy of certifications (of public officials,
government agencies and departments, corporate officers and individuals) and
statements of fact on which we are relying. We have assumed the due execution,
delivery and performance of the Agreement and all obligations thereunder by
Farmers and IBT.
Whenever the phrase "to our knowledge" appears in this opinion, it means that in
the course of the inquiries and investigations described herein, we became aware
of no facts which indicate that the opinion expressed is incorrect, and that
except as otherwise expressly stated in this letter, we have not examined any
public records (including without limitation, the plaintiff or defendant indices
of state and federal courts), or the books and records of FSSB generally
(including but not limited to instruments, contracts, notes and agreements of
all kinds), whether or not examination or investigation might otherwise be
reasonable or prudent, and that we have not undertaken any independent
investigation to determine the existence or non-existence of any facts.
In rendering this opinion, we advise that our firm only requires lawyers to be
qualified to practice law in the State of Michigan and, in rendering the
following opinions, we express no opinion with respect to any laws other than
Michigan and Federal laws. Moreover, we express no opinion as to Federal or
State choice of law or antitrust law matters.
Based upon the foregoing, and in reliance thereon, it is our opinion, subject to
the assumptions, exceptions, and qualifications and limitations set forth herein
that:
(a) FSSB is a state chartered bank, duly organized and validly existing and
in good standing under the laws of the State of Michigan. FSSB has the corporate
power and authority to own or lease all of its properties and assets and to
carry on businesses as it is now being conducted.
(b) FSSB has full corporate power and authority to execute and deliver the
Agreement and to consummate the Merger and to carry out its obligations
thereunder. The execution and delivery of the Agreement and the consummation of
the Merger and the other transactions contemplated thereby, have been duly
authorized by the Board of Directors and shareholders of FSSB and the Agreement
constitutes a valid and binding obligation of FSSB
68
enforceable in accordance with its terms, except as enforceability thereof may
be limited by bankruptcy, insolvency, moratorium, reorganization or similar laws
relating to or affecting the enforcement of creditors' rights generally and
limitations on the availability on specific performance and other equitable
remedies.
(c) None of the execution and delivery of the Agreement by FSSB nor
consummation by FSSB of the transactions contemplated thereby, nor compliance by
FSSB with any of the terms or provisions thereof, will result in any violation
pursuant to, any provision of the Articles of Incorporation or Bylaws of FSSB,
or, subject to obtaining the Regulatory Approvals referred to in Section 8.3 of
the Agreement, to our knowledge be or result in any violation pursuant to any
loan or credit agreement, note, mortgage, indenture, lease, or other agreement,
obligation, instrument, permit, franchise, license, judgment, order, statute,
law, rule or regulation applicable to FSSB or its properties or assets which
violations would in the aggregate have a Material Adverse Effect on FSSB.
(d) Except as disclosed in Schedule 4.1(k) of the FSSB Disclosure Schedule,
to our knowledge there are no actions, suits, proceedings, claims, arbitrations,
or investigations pending or threatened by any person, including without
limitation any governmental or regulatory agency, against FSSB or the assets or
business of FSSB, any of which has had or may have a Material Adverse Effect on
FSSB.
(e) During the course of the preparation and review of the Agreement, we
have participated in conferences with representatives of FSSB in which the
contents of the Agreement and related matters were discussed. While we did not
make any independent investigation or verification of factual information
relating to the representations and warranties of FSSB set forth in Section 4.1
of the Agreement, during the course of our representation of FSSB, nothing has
come to our attention which would give us reason to believe that such
representations and warranties, contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein, not misleading.
(f) During the course of the preparation of the S-4, we have participated
in conferences with representatives of FSSB and its accountants in which the
contents of the S-4 and the Proxy Statement-Prospectus and related matters were
discussed. While we did not make any independent investigation or verification
of factual information relating to FSSB set forth in the S-4 and the Proxy
Statement-Prospectus during the course of our representation of FSSB, nothing
has come to our attention which would give us reason to believe that (i) such
S-4 or Proxy Statement-Prospectus as of the date the S-4 became effective under
the Securities Act insofar as they contained information relating to FSSB,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein,
not misleading and (ii) the Proxy Statement-Prospectus and any amendment or
supplement thereto, will, at the date of mailing to shareholders and at the time
of the meeting of shareholders of FSSB to be held in connection with the Merger,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein not misleading (provided that we do not opine as to any financial
statements or other financial or statistical data included in or
69
incorporated by reference in such S-4 or Proxy Statement-Prospectus or as to any
information provided by or relating to IBT for inclusion in such S-4, or Proxy
Statement-Prospectus).
(g) To our knowledge, no consents, approvals, orders or authorizations of,
or registrations, declarations or filings with, any Governmental Entity, are
required by or with respect to FSSB in connection with (i) the execution and
delivery by FSSB of the Agreement; and (ii) the consummation by FSSB of the
Merger and the other transactions contemplated by the Agreement, the failure of
which to obtain or make would in the aggregate have a Material Adverse Effect on
FSSB or its ability to perform its obligations under the Agreement, other than
those which have been obtained or completed.
This opinion has been prepared solely for your use in connection with the
Closing under the Agreement, it should not be quoted in whole or in part or
otherwise be referred to, nor be filed with or furnished to any governmental
agency or other person or entity, without the prior written consent of this
firm.
Yours very truly,
XXXXXX LLP
70
EXHIBIT E
Writer's Direct Dial (000) 000-0000
_______________, 2006
**Draft**
PERSONAL AND CONFIDENTIAL
Board of Directors
The Xxxxxxx State Savings Bank
000 Xxxx Xxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
We are rendering this opinion to you as counsel for IBT Bancorp, Inc.("IBT") and
Farmers State Bank of Breckenridge ("Farmers"), in connection with the closing
today of the merger ("Merger") whereby The Xxxxxxx State Savings Bank ("FSSB")
will merge with and into Farmers, a wholly-owned subsidiary of IBT pursuant to
the Amended and Restated Agreement and Plan of Merger, dated _______________,
2006 ("Agreement"). This opinion is rendered pursuant to Section 9.3(e) of the
Agreement. All terms used herein without definition have the meaning specified
in the Agreement.
In rendering this opinion, except as otherwise specifically indicated herein, we
have relied, as to factual matters, entirely upon the representations of Farmers
and IBT in the Agreement, the Officers' Certificate given pursuant to Section
9.3(a) thereof and the Officers' Certificate, dated _______________, 2006 in
support of this opinion, provided to us by certain officers of Farmers and IBT,
and have made no independent review or investigation thereof. In addition, for
purposes of this opinion, we have examined copies of the following documents:
(a) Agreement dated _______________, 2006 and all Exhibits and Schedules
thereto;
(b) The form of FIS 1113 to be filed with the Bureau;
(c) Articles of Incorporation and Bylaws of IBT, as amended;
(d) Articles of Incorporation and Bylaws of Xxxxxxxx Bank and Trust, as
amended;
(e) Articles of Incorporation and Bylaws of Farmers, as amended;
(f) Articles of Incorporation and Bylaws of IBT's non-bank Subsidiaries;
(g) The Prospectus declared effective by the Securities and Exchange
Commission ("SEC") on _______________, 2006;
71
(h) FDIC Form _____ and all amendments thereto;
(i) The Registration Statement on Form S-4 (including exhibits) and
Amendment No. 1 thereto filed with the SEC on _______________, 2006 and
_______________, 2006, respectively;
(j) The Order of the SEC dated _______________, 2006 declaring the
Prospectus effective;
(k) Certificate of Good Standing of IBT from the State of Michigan dated
_______________, 2006;
(l) Certificates of the Bureau confirming that Xxxxxxxx Bank and Trust and
Farmers are each a duly organized state bank in good standing with the Bureau;
(m) Certificates of Good Standing from the State of Michigan regarding each
of IBT's non-bank Subsidiaries; and
(n) Certificate of the Secretary of IBT dated _______________, 2006
regarding (i) IBT's Articles and Bylaws; (ii) the incumbency of the officers of
IBT; and (iii) all resolutions adopted by the Board of Directors of IBT in
connection with the Merger and the Agreement.
(o) Certificate of the Secretary of Farmers dated _______________, 2006
regarding (i) Xxxxxx'x Articles and Bylaws; (ii) the incumbency of the officers
of Farmers; and (iii) all resolutions adopted by the Board of Directors of
Farmers in connection with the Merger and the Agreement.
We have not, except as specifically mentioned above made any independent review
or investigation of the organization, existence, good standing, assets, business
or affairs of IBT or of any other matters. In our examination of the aforesaid
books, records, documents and other materials, we have assumed the genuineness
of all signatures; the authenticity of all documents submitted to us as
originals, the conformity with the original documents of all documents submitted
to us as certified, telecopied, photostatic or reproduced copies. We have
assumed the authenticity and accuracy of certifications (of public officials,
government agencies and departments, corporate officers and individuals) and
statements of fact on which we are relying. We have assumed the due execution,
delivery and performance of the Agreement and all obligations thereunder by
FSSB.
72
Whenever the phrase "to our knowledge" appears in this opinion, it means that in
the course of the inquiries and investigations described herein, we became aware
of no facts which indicate that the opinion expressed is incorrect, and that
except as otherwise expressly stated in this letter, we have not examined any
public records (including without limitation, the plaintiff or defendant indices
of state and federal courts), or the books and records of Farmers or IBT or any
Farmers Entity generally (including but not limited to instruments, contracts,
notes and agreements of all kinds), whether or not examination or investigation
might otherwise be reasonable or prudent, and that we have not undertaken any
independent investigation to determine the existence or non-existence of any
facts.
In rendering this opinion, we advise that our firm only requires lawyers to be
qualified to practice law in the State of Michigan and, in rendering the
following opinions, we express no opinion with respect to any laws other than
Michigan and Federal laws. Moreover, we express no opinion as to Federal or
State choice of law or antitrust law matters.
Based upon the foregoing, and in reliance thereon, it is our opinion, subject to
the assumptions, exceptions, and qualifications and limitations set forth herein
that:
(a) IBT is duly organized, validly existing and in good standing under the
laws of the State of Michigan. IBT 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.
(b) Xxxxxxxx Bank and Trust is a state chartered bank, duly organized and
validly existing and in good standing under the laws of the State of Michigan.
Xxxxxxxx Bank and Trust has the corporate power and authority to own or lease
all of its properties and assets and to carry on businesses as it is now being
conducted.
(c) Farmers is a state chartered bank, duly organized and validly existing
and in good standing under the laws of the State of Michigan. Farmers has the
corporate power and authority to own or lease all of its properties and assets
and to carry on businesses as it is now being conducted.
(d) Each of IBT's non-bank Subsidiaries is a corporation, duly organized,
validly existing and in good standing under the laws of the State of Michigan.
Each of IBT's non-bank Subsidiaries has the corporate power and authority to own
or lease all of its respective properties and assets and to carry on its
respective business as it is now being conducted.
(e) Farmers and IBT each has full corporate power and authority to execute
and deliver the Agreement and to consummate the Merger and to carry out its
respective obligations thereunder. The execution and delivery of the Agreement
and the consummation of the Merger and the other transactions contemplated
thereby, have been duly authorized by the Board of Directors of Farmers and IBT
and the Agreement constitutes a valid and binding obligation of Farmers and IBT
enforceable in accordance with its terms, except as enforceability thereof may
be limited by bankruptcy, insolvency, moratorium, reorganization or similar laws
relating to or affecting the enforcement of creditors' rights generally and
limitations on the availability on specific performance and other equitable
remedies.
1
(f) None of the execution and delivery of the Agreement by Farmers or IBT
nor consummation by Farmers or IBT of the transactions contemplated thereby, nor
compliance by Farmers or IBT with any of the terms or provisions thereof, will
result in any violation pursuant to, any provision of the Articles of
Incorporation or Bylaws of Farmers or IBT, or the articles of incorporation,
bylaws or other governing documents of the Farmers Entities or, subject to
obtaining the Regulatory Approvals referred to in Section 8.3 of the Agreement,
to our knowledge be or result in any violation pursuant to any loan or credit
agreement, note, mortgage, indenture, lease, or other agreement, obligation,
instrument, permit, franchise, license, judgment, order, statute, law, rule or
regulation applicable to Farmers, IBT or any Farmers Entity or their respective
properties or assets which violations would in the aggregate have a Material
Adverse Effect on IBT and the IBT Subsidiaries taken as a whole.
(g) Except as disclosed in Schedule 5.1(i) of the Farmers Entity Disclosure
Schedule, to our knowledge there are no actions, suits, proceedings, claims,
arbitrations, or investigations pending or threatened by any person, including
without limitation any governmental or regulatory agency, against Farmers or any
Farmers Entity or the assets or business of Farmers or any Farmers Entity, any
of which has had or may have a Material Adverse Effect on IBT and the IBT
Subsidiaries taken as a whole.
(h) During the course of the preparation and review of the Agreement, we
have participated in conferences with representatives of Farmers and IBT in
which the contents of the Agreement and related matters were discussed. While we
did not make any independent investigation or verification of factual
information relating to the representations and warranties of Farmers and IBT
set forth in Section 5.1 of the Agreement, during the course of our
representation of Farmers and IBT, nothing has come to our attention which would
give us reason to believe that such representations and warranties, contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein, not
misleading.
(i) During the course of the preparation of the S-4, we have participated
in conferences with representatives of IBT and its accountants in which the
contents of the S-4 and the Proxy Statement-Prospectus and related matters were
discussed. While we did not make any independent investigation or verification
of factual information relating to Farmers and IBT set forth in the S-4 and the
Proxy Statement-Prospectus during the course of our representation of Farmers
and IBT, nothing has come to our attention which would give us reason to believe
that (i) such S-4 or Proxy Statement-Prospectus as of the date the S-4 became
effective under the Securities Act insofar as they contained information
relating to IBT or any IBT Subsidiary, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein, not misleading and (ii) the Proxy
Statement-Prospectus and any amendment or supplement thereto, will, at the date
of mailing to shareholders and at the time of the meeting of shareholders of
FSSB to be held in connection with the Merger, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein not misleading (provided
that we do not opine as to any financial statements or other financial or
statistical data included in or incorporated by reference in such S-4 or Proxy
Statement-Prospectus or as to any
2
information provided by or relating to FSSB for inclusion in such S-4, or Proxy
Statement-Prospectus).
(j) To our knowledge, no consents, approvals, orders or authorizations of,
or registrations, declarations or filings with, any Governmental Entity, are
required by or with respect to Farmers or any Farmers Entity in connection with
(i) the execution and delivery by Farmers and IBT of the Agreement; and (ii) the
consummation by Farmers and IBT of the Merger and the other transactions
contemplated by the Agreement, the failure of which to obtain or make would in
the aggregate have a Material Adverse Effect on IBT and the IBT Subsidiaries
taken as a whole or their ability to perform their obligations under the
Agreement, other than those which have been obtained or completed.
This opinion has been prepared solely for your use in connection with the
Closing under the Agreement, it should not be quoted in whole or in part or
otherwise be referred to, nor be filed with or furnished to any governmental
agency or other person or entity, without the prior written consent of this
firm.
Yours very truly,
FOSTER, SWIFT, XXXXXXX & XXXXX, X.X.
3
EXHIBIT F
Officers
Xxxxxx X Xxxxxx
President and CEO
Xxxxxx X. Xxxxxxxxx
Xx. Vice President
Xxxxxxx X. Xxxxxx
Xx. Vice President
4
EXHIBIT G
FORM OF EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is entered into as of _____, 2006
by and between ______________________ ("Staff Member") and FSB ("Bank").
WHEREAS, Staff Member is currently employed by The Xxxxxxx State Savings
Bank ("FSSB"); and
WHEREAS, FSSB and the Bank have signed an Amended and Restated Agreement
and Plan of Merger dated ____________,2006 whereby FSSB will be merged with and
into the Bank (the "Acquisition"); and
WHEREAS, Staff Member and Bank desire to enter into an agreement defining
the terms and conditions of Staff Member's employment following the Acquisition.
NOW, THEREFORE, Staff Member and Bank agree as follows:
1. Effective Date and Term. The Effective Date of this Agreement shall be
the day immediately following the closing date of the Acquisition. The Term of
this Agreement shall be the period beginning on the Effective Date and ending on
the fifth anniversary of the Effective Date. After the Term, Staff Member's
employment with Bank shall be "at will employment" which is the Staff Member's
current employment status with FSSB.
2. Services and Compensation.
(a) Services. Staff Member agrees that upon the Effective Date he
shall continue his or her employment as an employee of Bank in the position set
forth on Exhibit A. Staff Member further agrees that he or she shall use his or
her skills and experiences in the best interests of Bank in providing services.
(b) Compensation.
(i) Regular Compensation. In exchange for these services, Bank
shall pay to Staff Member compensation as set forth on Exhibit B, minus taxes
and withholding. These payments shall be made at regular payroll periods until
this Agreement is terminated and thereafter in accordance with Staff Member's
"at will employment."
(ii) Increases. Staff Member's compensation shall be reviewed
annually and increases shall be effective as of the anniversary date of the
Effective Date of this Agreement, unless made earlier or more frequently.
(iii) Employee Benefits. Bank shall, from and after the Effective
Date until January 1, 2008, continue the defined contribution plan of FSSB in
effect immediately
5
preceding the Effective Date (the "FSSB Plan"), including annual contributions
by the Bank at a rate of 15% of Staff Member's annual compensation. In
accordance with and subject to the terms of the FSSB Plan, all contributions by
FSSB or the Bank to the FSSB Plan, plus or minus the investment results thereon,
shall remain the sole and exclusive asset of the Staff Member. Subject to
applicable eligibility requirements, Bank shall cause the employee pension
benefit plans of IBT Bancorp, Inc. ("IBT") (as defined under the Employee
Retirement Income Security Act of 1974, as amended "ERISA") to be adopted by
Bank for Staff Member on January 1, 2008 or as required by ERISA. If and when
Staff Member becomes a participant in an IBT employee pension benefit plan
covered under ERISA he or she shall, for purposes of determining eligibility for
and for any applicable vesting periods of such employee benefits only (and not
for benefit accrual purposes) be given credit for meeting eligibility and
vesting requirements in such plans for service as an employee of FSSB or any
predecessor thereto prior to the Acquisition. If Staff Member becomes a
participant in the plans of IBT, he or she shall receive aggregate annual
employer contributions of 15% of salary into such plans. To the extent said
contributions do not equal at least 15% of salary, said shortfall shall be made
up as additional salary or pursuant to a contribution to a non-qualified plan
for Staff Member, as determined in the sole discretion of Bank. This Agreement
shall not be construed to limit the ability of Bank to review employee pension
benefits programs from time to time and to make such changes as it may deem
appropriate. Bank shall, from and after the Effective Date of this Agreement,
continue in effect any material welfare benefit plan, life insurance, group
health plan or disability plan in which the employees of FSSB participated
immediately prior to the Acquisition (or an arrangement providing substantially
similar benefits). Bank shall not take any action which would adversely affect
Staff Member's participation in or materially reduce any benefits under any such
plan or arrangement. Nothing contained in this subsection shall limit Bank's or
IBT's right to amend or terminate any plan or arrangement to conform such plan
or arrangement to statutory or regulatory requirements applicable to such plan
or arrangement.
(iv) Termination. In the event that Staff Member's employment is
terminated pursuant to paragraph 3(a)(ii)(B) or (C), Staff Member agrees that he
or she shall not be eligible for any unpaid payments described in this
paragraph.
3. Termination.
(a) This Agreement shall terminate on the earlier of:
(i) The fifth anniversary of the Effective Date, after which date
Staff Member's employment with Bank shall be "at will employment" which is the
Staff Member's current employment status with FSSB;
(ii) Prior to the end of the Term set forth above, upon:
(A) Staff Member's death, or disability which causes Staff
Member to be unable to discharge the essential
functions of his or her job for a period of more than
180 consecutive calendar days; or
6
(B) Receipt by Staff Member of notice of termination from
Bank arising from gross negligence by Staff Member, or
the commissions of a fraudulent act or a significant
and substantial dishonest act by Staff Member which is
job-related, or upon Staff Member's significant and
substantial violation of written policies or procedures
of Bank; or
(C) Staff Member's voluntary resignation.
(b) Payment. Staff Member shall be paid all amounts and provided all
benefits described in paragraph 2. (b) above, unless his or her employment is
terminated pursuant to paragraph 3(a)(ii)(B) or (C).
(c) Business Records. Staff Member acknowledges and agrees that all
files, records, lists, books, products, customer leads, and other materials,
whether owned at the time of employment or developed during the course of
employment, used in connection with the conduct of the business of Bank
("Business"), shall at all times remain the property of Bank. Upon the
termination of employment, for whatever reason. Staff Member shall forthwith
return all records, documents, and other written, printed, photographic,
electronic or physical materials of any type that pertain to the Business,
including without limitation computer print-outs, data, software, lists or
documents pertaining to any current or prospective customer, calculations,
proposals, business and financial information, and all other documents relating
to Bank, or the Business, then in Staff Member's possession or control, and
Staff Member shall not make or retain any copies of extracts, including
handwritten summations, of any such documents.
4. Confidentiality. The parties hereto agree to keep the terms of this
Agreement confidential; except that Bank shall disclose the terms herein only as
necessary to perform its duties hereunder or as required by law. Staff Member
shall not disclose any terms herein except to his or her tax and legal advisors
or as required by law.
5. Waiver. No waiver of any term, condition or provision shall be effective
for any purpose whatsoever unless such waiver is in writing and signed by the
parties.
6. Governing Law and Enforceability. This Agreement shall be governed by
and construed in accordance with the laws of the State of Michigan. In the event
that a court of competent jurisdiction shall determine that any provision set
forth herein is void, invalid, or unenforceable, such void, invalid, or
unenforceable provision shall be deemed to be severable from and shall be
severed from this Agreement, and this Agreement shall be construed and enforced
as if such severed provision has never been a part hereof.
7. Amendment and Assignment. The parties may not modify or amend this
Agreement unless such amendment is in writing and is signed by the parties. This
Agreement is personal in nature as to Staff Member and may not be assigned by
him or her, but will be binding on and inure to the benefit of his or her heirs
and personal representatives. The terms of this Agreement shall be binding upon
and shall inure to the benefit of Bank, its successors and assigns.
7
8. Merger. This Agreement constitutes the entire agreement between Staff
Member and Bank regarding the subject matter hereof and any and all prior oral
or written agreements between Staff Member and Bank.
9. Notice. Any notice permitted or required under this Agreement shall be
in writing and deemed to be given in the case of: (i) hand delivery or facsimile
transmission, upon receipt; (ii) overnight delivery service, on the business day
after timely delivery of a properly addressed notice with appropriate fees paid
to a recognized overnight delivery service that guarantees overnight delivery;
and (iii) U.S. mail, upon the third business day after proper deposit with the
U.S. Mail of a properly addressed notice with appropriate postage paid.
Facsimile numbers and addresses for purposes of notice shall be as stated below,
unless changed by written notice duly provided:
If to Staff Member: _______________________
_______________________
_______________________
_______________________
If to Bank: _______________________
_______________________
_______________________
_______________________
IN WITNESS WHEREOF, the undersigned have set their hands as of the date
first written above.
FSB
By:
------------------------------------
Its:
-----------------------------------
STAFF MEMBER
----------------------------------------
8
