EXHIBIT 2
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (hereinafter referred to as the
"AGREEMENT"), made and entered into this 10th day of August, 2004, by and among
Croghan Bancshares, Inc., a bank holding company incorporated under the laws of
Ohio (hereinafter referred to as "CBI"); The Xxxxxxx Colonial Bank, a bank
incorporated under the laws of Ohio (hereinafter referred to as "CCB"); Croghan
Interim Bank, an interim bank to be incorporated under the laws of Ohio
(hereinafter referred to as "INTERIM"); and The Custar State Bank, a bank
incorporated under the laws of Ohio (hereinafter referred to as "CUSTAR");
WITNESSETH:
WHEREAS, the authorized capital of CBI consists of 3,000,000 common
shares, $12.50 par value per share, 1,898,128 of which are issued and
outstanding;
WHEREAS, the authorized capital of CCB consists of 160,232 common shares,
$12.50 par value per share, 160,232 of which are issued and outstanding and are
owned of record by CBI;
WHEREAS, the authorized capital of INTERIM will consist of 1,500 common
shares, $12.50 par value per share, one of which will be issued and outstanding
and owned of record by CCB;
WHEREAS, the authorized capital of CUSTAR consists of 187,498 common
shares, $10.00 par value per share, all of which are issued and outstanding and
held of record by approximately 380 shareholders;
WHEREAS, the Boards of Directors of CBI, CCB and CUSTAR believe that it is
in the best interests of each of them and their shareholders for INTERIM to
merge with and into CUSTAR (hereinafter referred to as the "MERGER");
WHEREAS, as a result of the MERGER and in accordance with the terms of
this Agreement, INTERIM will cease to have a separate corporate existence, CCB
will acquire all of the issued and outstanding shares of CUSTAR as the surviving
corporation and shareholders of CUSTAR will receive from CBI, in exchange for
each common share of CUSTAR, $74.10 in cash; and
WHEREAS, promptly following the MERGER, CUSTAR, as the surviving
corporation in the MERGER, will merge with and into CCB;
NOW THEREFORE, in consideration of the premises and the mutual covenants
and agreements hereinafter set forth, the parties hereto, each intending to be
legally bound, hereby agree as follows:
ARTICLE ONE
THE MERGER
SECTION 1.01. MERGER OF INTERIM and CUSTAR. In accordance with the terms
and subject to the conditions of this AGREEMENT and Chapters 1115 and 1701 of
the Ohio Revised Code (hereinafter referred to as the "ORC"), INTERIM shall
merge with and into CUSTAR at the EFFECTIVE TIME (hereinafter defined); CUSTAR
shall be the continuing, surviving and resulting corporation in the MERGER;
CUSTAR shall continue to exist as a bank incorporated under Ohio law; and CUSTAR
shall be the only one of CUSTAR and INTERIM to continue its separate corporate
existence after the EFFECTIVE TIME.
SECTION 1.02. The name of the SURVIVING CORPORATION in the MERGER of
INTERIM with and into CUSTAR shall be "The Custar State Bank."
SECTION 1.03. The purposes for which the SURVIVING CORPORATION shall be
formed shall be identical to the purposes for which CUSTAR was formed.
SECTION 1.04. The capital of the SURVIVING CORPORATION shall consist of
187,498 common shares, $10.00 par value per share.
SECTION 1.05. The Articles of Incorporation of CUSTAR, as amended, a copy
of which is attached hereto as Exhibit A, shall be the Articles of Incorporation
of the SURVIVING CORPORATION until amended in accordance with law.
SECTION 1.06. The Code of Regulations of CUSTAR, as amended, shall be the
Code of Regulations of the SURVIVING CORPORATION, except that Article III,
Section 1 of the Code of Regulations of CUSTAR, as amended, shall be amended as
of the EFFECTIVE TIME to read as follows:
SECTION 1. Number of Directors: The number of directors of the
Corporation shall be five (5), until changed in accordance with the
provisions of these Regulations. The number of directors may be
fixed or changed at a meeting of the shareholders called for the
purpose of electing directors at which a quorum is present, only by
the affirmative vote of the holders of not less than a majority of
the voting shares which are represented at the meeting, in person or
by proxy, and entitled to vote on such proposal
SECTION 1.07. At and after the EFFECTIVE TIME and until changed in
accordance with law, the principal place of business of the SURVIVING
CORPORATION shall be 00000 Xxxxxxxx Xxxx, Xxxxxx, Xxxx 00000.
SECTION 1.08. At and after the EFFECTIVE TIME and until changed in
accordance with law, the number of directors of the SURVIVING CORPORATION shall
be five, the names and residence addresses of whom are as follows:
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NAMES RESIDENCE ADDRESS
----------------- ----------------------
Xxxxxx X. Xxxxxxx 000 Xxxxxxxxxx Xxxxxx
Xxxxxxx, Xxxx 00000
Xxxx X. Xxxxxx 0000 XxXxxxxxx Xxxx.
Xxxxxxx, Xxxx 00000
Xxxxxx X. Lease 0000 Xxxx Xxxxx Xxxxxx
Xxxxxxx, Xxxx 00000
Xxxxx X. Xxxxxx 0000 Xxxxxxxxx Xxxx
Xxxxxxx, Xxxx 00000
J. Xxxxxxxx Xxxxx 0000 XxXxxxxxx Xxxx.
Xxxxxxx, Xxxx 00000
SECTION 1.09. At and after the EFFECTIVE TIME and until changed in
accordance with law, each individual who is an officer of INTERIM immediately
prior to the EFFECTIVE TIME shall be an officer of the SURVIVING CORPORATION
holding the same office as held with INTERIM immediately prior to the EFFECTIVE
TIME.
SECTION 1.10. CLOSING. (a) The closing of the transactions contemplated by
this AGREEMENT (hereinafter referred to as the "CLOSING") shall take place at a
time and on a date selected by CBI within thirty (30) days after the
satisfaction or waiver of the last of the conditions set forth in Article Eight
of this AGREEMENT to be satisfied or waived.
(b) On the day of the CLOSING, INTERIM and CUSTAR shall cause (i)
a Certificate of Merger in respect of the MERGER to be filed by the
Superintendent of the Division of Financial Institutions of the Ohio Department
of Commerce (hereinafter referred to as the "DIVISION") in the Office of the
Ohio Secretary of State in accordance with Chapters 1115 and 1701 of the ORC.
The MERGER shall become effective at 11:58 p.m. on the date of such filing
(herein referred to as the "EFFECTIVE TIME").
ARTICLE TWO
CONVERSION AND CANCELLATION OF
SHARES IN THE MERGER
SECTION 2.01. CONVERSION AND CANCELLATION OF SHARES IN THE MERGER. At the
EFFECTIVE TIME and as a result of the MERGER, automatically and without further
act of CBI, CCB, INTERIM, CUSTAR, or the holders of INTERIM or CUSTAR shares,
the following shall occur:
(a) Each CUSTAR common share shall be cancelled and extinguished
and, in substitution and exchange therefor, the holders
thereof shall be entitled,
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subject to and upon compliance with Section 2.02 of this
AGREEMENT, to receive from CBI $74.10 in cash (the "PER SHARE
PURCHASE PRICE");
(b) The issued and outstanding common shares of INTERIM before the
EFFECTIVE TIME shall remain issued and outstanding after the
EFFECTIVE TIME and shall be and constitute the issued and
outstanding shares of SURVIVING CORPORATION; and
(c) The issued and outstanding common shares of CCB and CBI before
the EFFECTIVE TIME shall remain issued and outstanding after
the EFFECTIVE TIME and shall be unaffected by the MERGER.
SECTION 2.02. SHARE CERTIFICATES IN THE MERGER. (a) Not later than three
(3) business days after the EFFECTIVE TIME, CBI shall mail to each holder of
record of CUSTAR common shares a form letter of transmittal and instructions for
use in effecting the surrender for exchange of the certificates evidencing the
CUSTAR common shares cancelled and extinguished as a result of the MERGER
(hereinafter referred to, collectively, as the "CERTIFICATES" and, individually,
as a "CERTIFICATE"). At the EFFECTIVE TIME, CBI shall deposit in a designated
account at CBI for the benefit of the former holders of CUSTAR common shares an
amount of cash sufficient to pay the PER SHARE PURCHASE PRICE for each
outstanding CUSTAR common share. Upon surrender of a CERTIFICATE for
cancellation, together with such letter of transmittal, duly executed, the
holder of such CERTIFICATE shall be entitled to receive in exchange therefor the
PER SHARE PURCHASE PRICE for each share evidenced by such CERTIFICATE in
accordance with the provisions of this AGREEMENT, and the CERTIFICATE so
surrendered shall thereafter be cancelled forthwith.
(b) In the event that any holder of CUSTAR common shares cancelled
and extinguished in accordance with this AGREEMENT is unable to deliver the
CERTIFICATE which evidences such shares of the holder, CBI, in the absence of
actual notice that any shares theretofore evidenced by any such CERTIFICATE have
been acquired by a bona fide purchaser, shall deliver to such holder the amount
to which such holder is entitled in accordance with the provisions of this
AGREEMENT upon the presentation of all of the following:
(i) Evidence to the reasonable satisfaction of CBI that any
such CERTIFICATE has been lost, wrongfully taken or
destroyed;
(ii) Such security or indemnity as may be reasonably
requested by CBI to indemnify and hold CBI harmless; and
(iii) Evidence to the reasonable satisfaction of CBI that such
person is the owner of the shares theretofore
represented by each CERTIFICATE claimed by such person
to be lost, wrongfully taken or destroyed and that such
person is the person who would be entitled to present
each such CERTIFICATE for exchange pursuant to this
AGREEMENT.
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(c) In the event that the payment of the cash consideration in
accordance with this AGREEMENT is to be made to a person other than the person
in whose name the CERTIFICATE surrendered is registered, the CERTIFICATE so
surrendered shall be properly endorsed or otherwise in proper form for transfer
and the person requesting such payment shall pay any transfer or other taxes
required by reason of the payment to a person other than the registered holder
of the CERTIFICATE surrendered or establish to the satisfaction of CBI that such
tax has been paid or is not applicable. Until surrendered in accordance with the
provisions of this Section 2.02, each CERTIFICATE shall represent for all
purposes the right to receive the cash as determined pursuant to this AGREEMENT.
(d) The certificate evidencing the issued and outstanding common
shares of INTERIM before the EFFECTIVE TIME shall evidence the issued and
outstanding common shares of the SURVIVING CORPORATION after the EFFECTIVE TIME.
SECTION 2.03. COMPLIANCE WITH SECTION 2.02. No payment shall be made by
CBI to any former holder of CUSTAR common shares in accordance with this
AGREEMENT until any such holder shall have complied with paragraphs (a) through
(d) of Section 2.02 of this AGREEMENT.
SECTION 2.04. PAYMENT IN SATISFACTION OF RIGHTS. All payments made upon
the surrender of CERTIFICATES pursuant to this Article Two shall be deemed to
have been made in full satisfaction of all rights pertaining to the shares
evidenced by such CERTIFICATES.
SECTION 2.05. NO FURTHER REGISTRATION OF TRANSFER. After the EFFECTIVE
TIME, there shall be no further registration of transfer of CUSTAR common shares
on the stock transfer books of CUSTAR. In the event that, after the EFFECTIVE
TIME, CERTIFICATES evidencing such shares are presented for transfer, they shall
be cancelled and exchanged as provided in this Article Two.
SECTION 2.06. DISSENTING SHARES. Notwithstanding anything in this
AGREEMENT to the contrary, the CUSTAR common shares which are outstanding
immediately before the EFFECTIVE TIME and which are held by shareholders who
shall not have voted such shares in favor of this AGREEMENT, who shall have
delivered to CBI or CUSTAR a written demand for appraisal of such shares in the
manner provided in Section 1701.85 of the ORC and who shall have otherwise
complied fully with all of the requirements of Section 1701.85 of the ORC shall
not be converted into or be exchangeable for the right to receive the
consideration provided in this AGREEMENT; provided, however, that (i) each of
such shares (hereinafter referred to as the "DISSENTING SHARES") shall
nevertheless be cancelled and extinguished in accordance with this AGREEMENT;
(ii) the holder of DISSENTING SHARES, upon full compliance with the requirements
of Section 1701.85 of the ORC, shall be entitled to payment of the fair cash
value of such shares in accordance with the provisions of Section 1701.85 of the
ORC; and (iii) in the event (I) any holder of DISSENTING SHARES shall
subsequently withdraw such holder's demand for appraisal of such shares within
sixty days after the EFFECTIVE TIME or shall fail to establish such holder's
entitlement to appraisal rights in accordance with Section 1701.85 of the ORC or
(II) any holder of DISSENTING SHARES has not filed a petition demanding a
determination of the value of such shares within the period provided in Section
1701.85 of the
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ORC, such holder shall forfeit the right to appraisal of such shares and such
shares shall thereupon be deemed to have been converted into and to have become
exchangeable for the right to receive the consideration provided in this
AGREEMENT.
SECTION 2.07. SEPARATE EXISTENCE. At and after the EFFECTIVE TIME, the
separate existence of INTERIM shall cease; provided, however, that whenever a
conveyance, assignment, transfer, deed or other instrument or act is necessary
to vest property or rights in the SURVIVING CORPORATION, the officers of INTERIM
and CUSTAR shall execute, acknowledge and deliver such instruments and do such
acts.
SECTION 2.08. PROPERTY. At and after the EFFECTIVE TIME, all of the assets
and property of every kind and character, real, personal and mixed, tangible and
intangible, choses in action, rights and credits owned by INTERIM and CUSTAR at
the EFFECTIVE TIME, or which would inure to any of them, shall immediately, by
operation of law and without any conveyance or transfer and without any further
act or deed, be vested in and become the property of the SURVIVING CORPORATION,
which shall have, hold and enjoy the same in its own right as fully and to the
same extent as the same were possessed, held and enjoyed by INTERIM and CUSTAR
before the EFFECTIVE TIME. The SURVIVING CORPORATION shall be deemed to be and
shall be a continuation of the entity and identity of CUSTAR. All of the rights
and obligations of INTERIM or CUSTAR shall not revert or in any way be impaired
by reason of the MERGER. Any claim existing, or action or proceeding pending, by
or against either INTERIM or CUSTAR, may be prosecuted to judgment with right of
appeal as if the MERGER had not taken place or the SURVIVING CORPORATION may be
substituted in its place.
SECTION 2.09. CREDITOR'S RIGHTS. At and after the EFFECTIVE TIME, all the
rights of creditors of each of INTERIM and CUSTAR shall be preserved unimpaired,
and all liens upon the property of INTERIM and CUSTAR shall be preserved
unimpaired on only the property affected by any such lien immediately before the
EFFECTIVE TIME.
ARTICLE THREE
THE BANK MERGER
SECTION 3.01. MERGER OF CCB AND CUSTAR. In accordance with the terms and
subject to the conditions of this AGREEMENT and Chapters 1115 and 1701 of the
ORC, immediately following the MERGER, CUSTAR shall merge with and into CCB
pursuant to an agreement of merger in the form attached hereto as Exhibit B, to
be executed by CCB and CUSTAR (hereinafter referred to as the "BANK MERGER").
CCB shall be the continuing, surviving and resulting corporation in the BANK
MERGER, shall continue to exist as a bank incorporated under Ohio law and shall
be the only one of CUSTAR and CCB to continue its separate corporate existence
after the BANK MERGER.
ARTICLE FOUR
REPRESENTATIONS AND WARRANTIES OF CUSTAR
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CUSTAR represents and warrants to CBI and CCB that each of the following
is true and accurate in all material respects:
SECTION 4.01. ORGANIZATION AND STANDING. CUSTAR is a bank duly organized,
validly existing and in good standing under the laws of Ohio and has the
corporate power and authority to own or hold under lease all of its properties
and assets and to conduct its business and operations as presently conducted.
CUSTAR is a member in the Federal Reserve System, and the savings accounts and
deposits of CUSTAR are insured up to applicable limits by the Federal Deposit
Insurance Corporation (hereinafter referred to as the "FDIC"). Except as set
forth in Section 4.01 of the schedule delivered by CUSTAR to CBI on the date
hereof (hereinafter referred to as the "DISCLOSURE SCHEDULE"), CUSTAR is in
compliance in all material respects with all applicable local, state or federal
laws and regulations, including, without limitation, the regulations of the
FDIC, the DIVISION and the Federal Reserve Board (hereinafter referred to as the
"FRB").
SECTION 4.02. QUALIFICATION. CUSTAR is either duly qualified to do
business and in good standing in each jurisdiction in which such qualification
is required or the failure to so qualify would not have a material adverse
effect on the business of CUSTAR.
SECTION 4.03. AUTHORITY. (a) Subject to the approval of this AGREEMENT and
the transactions contemplated hereby, including the MERGER, by the CUSTAR
shareholders and by the DIVISION and the FRB, (i) CUSTAR has all of the
requisite corporate power and authority to enter into this AGREEMENT and to
perform all of its obligations hereunder; (ii) the execution and delivery of
this AGREEMENT and the consummation of the transactions contemplated hereby have
been duly authorized by all necessary corporate action by CUSTAR; and (iii) this
AGREEMENT is the valid and binding agreement of CUSTAR, enforceable against
CUSTAR in accordance with its terms, (I) subject to applicable bankruptcy,
insolvency, reorganization and moratorium laws and other laws of general
applicability affecting the enforcement of creditors' rights generally and the
effect of rules of law governing specific performance, injunctive relief and
other equitable remedies on the enforceability of such documents and (II) except
to the extent such enforceability may be limited by laws relating to safety and
soundness of insured depository institutions as set forth in 12 U.S.C. Section
1818(b) or by the appointment of a conservator by the FDIC. This AGREEMENT has
been duly executed and delivered by CUSTAR.
(b) The Articles of Incorporation and Code of Regulations of
CUSTAR and the applicable provisions of the ORC require the approval of this
AGREEMENT and the transactions contemplated hereby, including the MERGER, by the
affirmative vote of the holders of sixty-six and two-thirds (66 2/3) percent of
the outstanding common shares of CUSTAR. No other law or regulation requires any
other vote of the holders of CUSTAR shares in respect of this AGREEMENT or the
transactions contemplated hereby.
SECTION 4.04. GOVERNING DOCUMENTS. CUSTAR has made available to CBI true
and accurate copies of its Articles of Incorporation and Code of Regulations and
has granted CBI access to all records of all meetings and other corporate
actions by the shareholders, Board of Directors and committees of the Board of
Directors of CUSTAR; provided however, that CUSTAR has not provided to CBI the
minutes from one meeting of the CUSTAR Board of
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Directors at which meeting the parties, terms and conditions of the potential
transaction for acquisition of CUSTAR were discussed. Except as noted in the
immediately preceding sentence, the minute books of CUSTAR contain, in all
material respects, complete and accurate records of all meetings and other
corporate actions of the CUSTAR shareholders, Board of Directors and committees
of the Board of Directors.
SECTION 4.05. NO CONFLICTS. Except as set forth in Section 4.05 of the
DISCLOSURE SCHEDULE, the execution and delivery of this AGREEMENT, the
consummation of the transactions contemplated hereby, including the MERGER
(subject to the approval of this AGREEMENT and the transactions contemplated
hereby, including the MERGER, by the CUSTAR shareholders, the DIVISION and the
FRB), will not (a) conflict with or violate any provision of or result in the
breach of any provision of the Articles of Incorporation or Bylaws of CUSTAR;
(b) conflict with or violate any provision of or result in the breach or the
acceleration of or entitle any party to accelerate (whether upon or after the
giving of notice of lapse of time or both) any obligation under, or otherwise
materially affect the terms of, any mortgage, lien, lease, agreement, license,
instrument, order, arbitration award, judgment or decree to which CUSTAR is a
party or by which CUSTAR or its property or assets is bound; (c) require the
consent of any party to any agreement or commitment to which CUSTAR is a party
or by which CUSTAR or its property or assets is bound, the failure to obtain
which could, individually or in the aggregate with all the other failures to
obtain required consents, have a material adverse effect on the business,
operations, condition (financial or otherwise) or prospects of CUSTAR; (d)
result in the creation or imposition of any lien, charge, pledge, security
interest or other encumbrance upon any property or assets of CUSTAR or give rise
to any meritorious cause of action against CUSTAR; or (e) violate or conflict
with any applicable law, ordinance, rule or regulation, including, without
limitation, the rules and regulations of the FDIC, the FRB and the DIVISION. The
termination of the data processing agreement dated as of October 1, 2000 between
CUSTAR and Rurbanc Data Services, Inc., in connection with the transactions
contemplated by this AGREEMENT will result in the payment of a termination fee
of less than $60,000.
SECTION 4.06. CONSENTS. No consent, approval, order or authorization of,
or registration, declaration or filing with, any governmental authority is
required by CUSTAR in connection with the execution and delivery of this
AGREEMENT by CUSTAR or the consummation by CUSTAR of the transactions
contemplated hereby, including the MERGER, except for filings, authorizations,
consents or approvals required by the DIVISION and the FRB.
SECTION 4.07. AUTHORIZED CAPITAL. (a) The authorized capital of CUSTAR
consists of 187,498 common shares, $10.00 par value per share, all of which are
issued and outstanding and held of record by approximately 380 shareholders. All
of the outstanding common shares of CUSTAR are duly authorized, validly issued,
fully paid and nonassessable; were issued in full compliance with all applicable
laws and regulations; and were not issued in violation of the preemptive right
of any shareholder of CUSTAR. CUSTAR has no outstanding class of capital stock
other than such common shares. There are no outstanding subscription rights,
options, conversion rights, warrants or other agreements or commitments or
benefit plans of any nature whatsoever (either firm or conditional) obligating
CUSTAR (i) to issue, deliver or sell, cause to be issued, delivered or sold, or
restricting CUSTAR from selling any additional CUSTAR shares, or (ii) to grant,
extend or enter into any such agreement or commitment.
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SECTION 4.08. FINANCIAL STATEMENTS; CALL REPORTS. (a) CUSTAR has delivered
to CBI copies of the Reports of Condition and Income of CUSTAR as of December
31, 2003, March 31, 2004 and June 30, 2004, as filed with the FRB (hereinafter
referred to as the "CALL REPORTS"). The CALL REPORTS have been, and all Reports
of Condition and Income filed by CUSTAR hereafter will be, prepared on a
consistent basis and fairly present the financial position of CUSTAR at such
dates and the results of its operations for such periods.
(b) CUSTAR has timely filed with the FRB all CALL REPORTS required
to be filed since December 31, 2003. As of their respective dates of filing,
such CALL REPORTS (including all financial statements or schedules included or
incorporated by reference therein) complied in all material respects with the
applicable laws and regulations then in effect.
(c) Except as disclosed in the CALL REPORTS and Section 4.08(c) of
the DISCLOSURE SCHEDULE, as of June 30, 2004, CUSTAR had no liabilities or
obligations material to the business condition (financial or otherwise) of
CUSTAR, whether accrued, absolute, contingent or otherwise, and whether due or
to become due.
(d) The CALL REPORTS did not, as of the dates thereof, contain any
untrue statement of a material fact or omit to state any material fact necessary
to make the information contained therein, in light of the circumstances under
which they were made, not misleading.
SECTION 4.09. CONDUCT OF BUSINESSES. Except as set forth in Section 4.09
of the DISCLOSURE SCHEDULE, since December 31, 2003, CUSTAR has conducted its
businesses only in the ordinary and usual course, there have been no material
adverse changes in the financial condition, assets, liabilities, obligations,
properties, business or prospects of CUSTAR and, except as set forth in any of
the CALL REPORTS and Section 4.09 of the DISCLOSURE SCHEDULE, CUSTAR has not:
(a) Authorized the creation or issuance of, issued, sold or
disposed of, or created any obligation to issue, sell or
dispose of, any stock, notes, bonds or other securities or any
obligation convertible into or exchangeable for, any shares of
its capital stock;
(b) Declared, set aside, paid or made any dividend or other
distributions on its capital stock or directly or indirectly
redeemed, purchased or acquired any shares or entered into any
agreement in respect of the foregoing;
(c) Effected any stock split, recapitalization, combination,
exchange of shares, readjustment or other reclassification;
(d) Amended its Articles of Incorporation or Code of Regulations;
(e) Purchased, sold, assigned or transferred any material tangible
asset or any material patent, trademark, trade name,
copyright, license, franchise, design or other intangible
asset or property;
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(f) Mortgaged, pledged or granted or suffered to exist any lien or
other encumbrance or charge on any assets or properties,
tangible or intangible, except for liens for taxes not yet due
and payable and such other liens, encumbrances or charges
which do not materially adversely affect its financial
position;
(g) Waived any rights of material value or cancelled any material
debts or claims;
(h) Incurred any material obligation or liability (absolute or
contingent), including, without limitation, any tax liability,
or paid any material liability or obligation (absolute or
contingent) other than liabilities and obligations incurred in
the ordinary course of business;
(i) Experienced any material change in the amount or general
composition of its deposit liabilities or its loan portfolio;
(j) Entered into or amended any employment contract with any of
its officers, increased the compensation payable to any
officer or director or any family member of any such officer
or director, or become obligated to increase any such
compensation, adopted or amended in any material respect any
employee benefit plans, severance plan or collective
bargaining agreement or made any awards or distributions under
any employee benefit plans not consistent with past practice
or custom;
(k) Incurred any damage, destruction or similar loss, not covered
by insurance, materially affecting its businesses or
properties;
(l) Acquired any stock or other equity interest in any
corporation, partnership, trust, joint venture or other
entity;
(m) Made any (I) material investment (except investments made in
the ordinary course of business) or (II) material capital
expenditure or commitment for any material addition to
property, plant or equipment;
(n) Agreed, whether in writing or otherwise, to take any action
described in this Section 4.09.
SECTION 4.10. PROPERTIES. (a) A description of all personal property and
fixed assets owned by CUSTAR is set forth in Section 4.10(a) of the DISCLOSURE
SCHEDULE (hereinafter referred to as the "PERSONAL PROPERTY"). CUSTAR owns and
has good title to all of the PERSONAL PROPERTY, free and clear of any mortgage,
lien, pledge, charge, claim, conditional sales or other agreement, lease, right
or encumbrance, except (i) as set forth in Section 4.10(a) of the DISCLOSURE
SCHEDULE, (ii) to the extent stated or reserved against in the CALL REPORTS and
(iii) such other exceptions which are not material in character or amount and do
not materially detract from the value of or interfere with the use of the
properties or assets subject thereto or affected thereby.
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(b) Except as set forth in Section 4.10(b) of the DISCLOSURE
SCHEDULE, the documentation (hereinafter referred to as "LOAN DOCUMENTATION")
governing or relating to the loan and credit-related assets (hereinafter
referred to as the "LOAN ASSETS") included within the loan portfolio of CUSTAR
is legally sufficient in all material respects for the purposes intended thereby
and creates enforceable rights in favor of CUSTAR in accordance with the terms
of such LOAN DOCUMENTATION, subject to applicable bankruptcy, insolvency,
reorganization and moratorium laws and other laws of general applicability
affecting the enforcement of creditors' rights generally, and the effect of
rules of law governing specific performance, injunctive relief and other
equitable remedies on the enforceability of such documents. Except as set forth
in Section 4.10(b) of the DISCLOSURE SCHEDULE, to the best knowledge of CUSTAR,
the LOAN DOCUMENTATION is in compliance with, and each of the loans included
within the loan portfolio of CUSTAR has been processed, closed and administered
in conformance with, all applicable federal consumer protection statutes and
regulations, including without limitation, the Truth in Lending Act, the Equal
Credit Opportunity Act and the Real Estate Settlement Procedures Act. Except as
set forth in Section 4.10(b) of the DISCLOSURE SCHEDULE, to the best knowledge
of CUSTAR, no debtor under any of the LOAN DOCUMENTATION has asserted any claim
or defense with respect to the subject matter thereof.
(c) A description of each parcel of real property owned by CUSTAR
is set forth in Section 4.10(c) of the DISCLOSURE SCHEDULE (hereinafter referred
to individually as a "PARCEL" and collectively as the "REAL PROPERTIES"). CUSTAR
is the owner of each PARCEL in fee simple and has good and marketable title to
each such PARCEL, free and clear of any liens, claims, charges, encumbrances or
security interests of any kind, except (i) as set forth in Section 4.10(c) of
the DISCLOSURE SCHEDULE, (ii) liens for real estate taxes and assessments not
yet delinquent and (iii) utility, access and other easements, rights of way,
restrictions and exceptions, none of which impair the REAL PROPERTIES for the
use and business being conducted thereon.
(d) CUSTAR does not lease any real property to or from any person
or entity. CUSTAR has not received notification from any governmental entity
within the two year period immediately preceding the date hereof of contemplated
improvements to the REAL PROPERTIES or surrounding area or community by public
authority, the costs of which are to be assessed as special taxes against the
REAL PROPERTIES in the future.
(e) A description of all personal property leased by CUSTAR is set
forth in Section 4.10(e) of the DISCLOSURE SCHEDULE (hereinafter referred to as
the "LEASED PERSONAL PROPERTY"). True and correct copies of the leases in
respect of the LEASED PERSONAL PROPERTY (hereinafter referred to as the
"PERSONAL PROPERTY LEASES") and all attachments, amendments and addendums
thereto have been delivered to CBI. Except as set forth in Section 4.10(e) of
the DISCLOSURE SCHEDULE, the PERSONAL PROPERTY LEASES create, in accordance with
their terms, valid, binding and assignable leasehold interests of CUSTAR in all
of the LEASED PERSONAL PROPERTY, free and clear of all liens, claims, charges,
encumbrances or security interests of any kind. CUSTAR has complied in all
material respects with all of the provisions under the PERSONAL PROPERTY LEASES
required on its
11
part to be complied with and is not in default with respect to any of its
obligations (including payment obligations) under any of the PERSONAL PROPERTY
LEASES.
(f) Section 4.10(f) of the DISCLOSURE SCHEDULE contains a complete
list of all contracts (hereinafter referred to as the "LOAN SALE CONTRACTS")
pursuant to which CUSTAR has sold loans to third party investors at any time
within the last twenty-four months. Except as otherwise set forth in Section
4.10(f) of the DISCLOSURE SCHEDULE, (i) no purchaser under any LOAN SALE
CONTRACT has requested, or notified CUSTAR that it may be requesting, that
CUSTAR repurchase any loan pursuant to the terms of the LOAN SALE CONTRACT and
(ii) no facts exist that would require CUSTAR to repurchase any loans previously
sold under any LOAN SALE CONTRACT.
SECTION 4.11. ALLOWANCE FOR LOAN LOSSES. Except as set forth in Section
4.11 of the DISCLOSURE SCHEDULE, there is no loan which was made by CUSTAR and
which is reflected as an asset of CUSTAR in the CALL REPORTS that (i) is sixty
(60) days or more delinquent or (ii) has been classified by examiners
(regulatory or internal) as "Substandard," "Doubtful" or "Loss." The allowance
for loan losses reflected in the CALL REPORTS was, as of each respective date,
determined in accordance with all rules and regulations applicable to CUSTAR
and, in the opinion of management of CUSTAR, was adequate in all material
respects to provide for reasonably anticipated losses on outstanding loans, net
of recoveries.
SECTION 4.12. INVESTMENTS. (a) Section 4.12(a) of the DISCLOSURE SCHEDULE
contains (i) a true, accurate and complete list of all investments, other than
investments in the LOAN ASSETS and REAL PROPERTIES, owned by CUSTAR (hereinafter
referred to as the "INVESTMENTS") as of the date hereof, the name of the
registered holder thereof, the location of the certificates therefor or other
evidence thereof and any stock powers or other authority for transfer granted
with respect thereto and (ii) a true, accurate and complete list of the names of
each bank or other depository in which CUSTAR has an account or safe deposit box
and the names of all persons authorized to draw thereon or to have access
thereto. Except as set forth in Section 4.12(a) of the DISCLOSURE SCHEDULE, the
INVESTMENTS, other than any such INVESTMENTS disposed of in the ordinary course
of business prior to the date hereof, are owned by CUSTAR, free and clear of all
liens, pledges, claims, security interests, encumbrances, charges or
restrictions of any kind and may be freely disposed of by CUSTAR at any time.
CUSTAR is not a party to and has no interest in any repurchase agreement,
reverse repurchase agreement, collateralized mortgage obligation or any other
derivative security.
(b) CUSTAR does not own of record or beneficially the outstanding
shares of, or any equity interest in, any corporation or other business entity.
SECTION 4.13. REPORTS AND RECORDS. CUSTAR has filed all reports required
to be filed by it under various rules and regulations of the DIVISION, the FRB
and the FDIC. All such reports complied in all material respects with applicable
requirements of law and regulations in effect at the time of filing such reports
and contained in all material respects the information required to be stated
therein. None of such reports, when filed, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in
12
order to make the statements therein, in light of the circumstances under which
they were made, not misleading.
SECTION 4.14. TAXES. Except as set forth in Section 4.14 of the DISCLOSURE
SCHEDULE, CUSTAR has timely filed all returns, statements, reports and forms
(including, without limitation, elections, declarations, disclosures, schedules,
estimates and information returns) (collectively, the "TAX RETURNS") with
respect to all federal, state, local and foreign income, gross income, gross
receipts, gains, premium, sales, use, ad valorem, transfer, franchise, profits,
withholding, payroll, employment, excise, severance, stamp, occupancy, license,
lease, environmental, customs, duties, property, windfall profits and all other
taxes (including, without limitation, any interest, penalties or additions to
tax with respect thereto, individually a "TAX," and collectively, "TAXES")
required to be filed with the appropriate tax authority. Such TAX RETURNS were
true, correct and complete in all material respects. CUSTAR has paid and
discharged all TAXES due (whether reflected on such TAX RETURNS or otherwise),
other than such TAXES that are adequately reserved as shown on the CALL REPORTS
(excluding any reserve for deferred TAXES established to reflect timing
differences between book and TAX income) or have arisen in the ordinary course
of business since June 30, 2004. Except as set forth in Section 4.14 of the
DISCLOSURE SCHEDULE, neither the Internal Revenue Service (the "IRS") nor any
other taxing agency or authority, domestic or foreign, has asserted, is now
asserting or, to the knowledge of CUSTAR, is threatening to assert against
CUSTAR any deficiency or claim for additional TAXES. There are no unexpired
waivers by CUSTAR of any statute of limitations with respect to TAXES. No
extension of time within which to file any TAX RETURN (for a period with respect
to which the statute of limitations has not expired) has been filed, or has been
requested or granted. The accruals and reserves for TAXES reflected in the CALL
REPORTS (excluding any reserve for deferred TAXES established to reflect timing
differences between book and TAX income) are adequate for the periods covered.
CUSTAR has withheld or collected and paid over to the appropriate governmental
authorities or are properly holding for such payment all TAXES required by law
to be withheld or collected. There are no liens for TAXES upon the assets of
CUSTAR, other than liens for current TAXES not yet due and payable. CUSTAR has
not agreed to make, nor is it required to make, any adjustment under Section
481(a) of the Internal Revenue Code of 1986, as amended (hereinafter referred to
as the "CODE"). Except as set forth in Section 4.14 of the DISCLOSURE SCHEDULE,
CUSTAR is not a party to any agreement, contract, arrangement or plan that has
resulted, or could result, individually or in the aggregate, in the payment of
"excess parachute payments" within the meaning of Section 280G of the CODE.
CUSTAR has never been a member of an affiliated group of corporations, within
the meaning of Section 1504 of the CODE, other than an affiliated group of which
CUSTAR is or was the common parent corporation. CUSTAR does not have any
liability for the TAXES of any other person or entity under Treasury Department
Regulation Section 1.1502-6 (or any similar provision of state, local or foreign
law), as a transferee or successor, by contract or otherwise. None of the assets
of CUSTAR is property which CUSTAR is required to treat as being owned by any
other person pursuant to the so-called "safe harbor lease" provisions of former
Section 168(f)(8) of the CODE. None of the assets of CUSTAR directly or
indirectly secures any debt the interest on which is tax-exempt under Section
103(a) of the CODE. None of the assets of CUSTAR is "tax-exempt use property"
within the meaning of Section 168(h) of the CODE. CUSTAR is not, and has not
been, a United States real property
13
holding corporation (as defined in Section 897(c)(2) of the CODE) during the
applicable period specified in Section 897(c)(1)(A)(ii) of the CODE. No TAX is
required to be withheld pursuant to Section 1445 of the Code as a result of the
transactions contemplated by this AGREEMENT. CUSTAR is not a party to any joint
venture, partnership or other entity, agreement or contract that could be
treated as a partnership for federal income tax purposes. CUSTAR has not made,
nor is it bound by, any election under Section 197 of the CODE. CUSTAR has
disclosed on its federal income TAX RETURNS all positions taken therein that
could give rise to a substantial understatement of federal income tax within the
meaning of Section 6662 of the CODE.
SECTION 4.15. MATERIAL CONTRACTS. (a) Except as set forth in Section
4.15(a) of the DISCLOSURE SCHEDULE, CUSTAR is not a party to or bound by any
written or oral (i) contract or commitment for capital expenditures in excess of
$5,000 for any one project or $10,000 in the aggregate; (ii) contract or
commitment made in the ordinary course of business for the purchase of materials
or supplies or for the performance of services involving payments to or by
CUSTAR of an amount exceeding $5,000 in the aggregate or extending for more than
six (6) months from the date hereof; (iii) contract or option for the purchase
of any property, real or personal; (iv) letter of credit or indemnity calling
for payment, upon the conditions stated therein, of more than $10,000; (v)
guarantee agreement; (vi) instrument granting any person authority to transact
business on behalf of CUSTAR; (vii) contracts or commitments relating to
outstanding loans and/or commitments to make loans (including unfunded
commitments and lines of credit) to any one person (together with "affiliates"
of that person) in excess of $150,000 in the aggregate; (viii) employment,
management, consulting, deferred compensation, severance or other similar
contract with any director, officer or employee of CUSTAR; (ix) note, debenture
or loan agreement pursuant to which CUSTAR has incurred indebtedness; (x) loan
participation agreement; (xi) loan servicing agreement; (xii) contract or
commitment relating to a real estate development project consisting of the
development of more than one single family dwelling; (xiii) commitment to make
any acquisition, development or construction loan; (xiv) commitment or agreement
to do any of the foregoing; or (xv) other contract, agreement or commitment made
outside the ordinary course of business (contracts set forth in Section 4.15 of
the DISCLOSURE SCHEDULE are hereinafter collectively referred to as the
"CONTRACTS"). CUSTAR previously delivered to CBI (i) all of the CONTRACTS and
(ii) all form lending agreements and deposit forms used by CUSTAR in the
ordinary course of business.
(b) CUSTAR is not in material default under any of the CONTRACTS and
no claim of such default by any party has been made or is now threatened. There
does not exist any event which, with notice or the passing of time or both,
would constitute a material default under, or would excuse performance by any
party thereto from, any CONTRACT to which CUSTAR is a party.
SECTION 4.16. INSURANCE. CUSTAR has delivered to CBI copies of all
policies of insurance currently maintained by CUSTAR. Section 4.16 of the
DISCLOSURE SCHEDULE contains a listing of all such insurance policies.
SECTION 4.17. ACTIONS AND SUITS. Except as set forth in Section 4.17 of
the DISCLOSURE SCHEDULE, there are no actions, suits or proceedings or
investigations pending or, to the knowledge of CUSTAR, threatened against or
affecting the business, operations or
14
financial condition of CUSTAR in any court or before any federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality, and management of CUSTAR has no knowledge of any basis for any
such action, suit, proceeding or investigation. Except as set forth in Section
4.17 of the DISCLOSURE SCHEDULE, CUSTAR is not in default in respect of any
judgment, order, writ, injunction or decree of any court or any federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality.
SECTION 4.18. PERMITS AND LICENSES. CUSTAR has all material permits,
licenses, orders and approvals of all federal, state or local governmental or
regulatory bodies required for CUSTAR to conduct its business as presently
conducted, and all such material permits, licenses, orders and approvals are in
full force and effect, without the threat of suspension or cancellation. None of
such permits, licenses, orders or approvals will be adversely affected by the
consummation of the transactions contemplated by this AGREEMENT.
SECTION 4.19. EMPLOYEE BENEFIT PLANS; ERISA. (a) Section 4.19 of the
DISCLOSURE SCHEDULE contains a true and complete list of all qualified pension
or profit-sharing plans, deferred compensation, consulting, bonus, group
insurance plans or agreements and all other incentive, welfare or employee
benefit plans or agreements maintained for the benefit of employees or former
employees of CUSTAR (hereinafter collectively referred to as the "PLANS").
Copies of such PLANS, together with copies of (i) the most recent actuarial and
financial reports prepared with respect to any PLANS which provide benefits by
means other than through insurance contracts, (ii) the most recent annual
reports filed with any governmental agency, (iii) any summary plan description
or other summaries of PLAN benefits and (iv) all rulings and determination
letters and any open requests for rulings or letters that pertain to any
qualified plan, have been delivered to CBI.
(b) Each PLAN which constitutes an "employee pension plan," as
defined in Section 3(2) of the Employee Retirement Income Security Act of 1974,
as amended (hereinafter referred to as "ERISA"), is and has been administered in
material compliance with its governing documents and the applicable provisions
of ERISA and any such employee pension plan which is intended to be qualified
under the provisions of Section 401(a) of the CODE, is covered by a current
determination letter from the Internal Revenue Service (hereinafter referred to
as the "IRS") and is and has been administered in material compliance with the
applicable provisions of the CODE.
(c) Each PLAN which constitutes an "employee welfare benefit plan,"
as defined in Section 3(1) of ERISA, is and has been administered in material
compliance with its governing documents and the applicable provisions of ERISA
and the CODE, and each PLAN which constitutes a "group health plan," as defined
in Section 5000(b)(1) of the CODE, is and has been administered in material
compliance with the continuation of coverage provisions contained in Section
4980B of the CODE.
(d) Each PLAN which is not an "employee benefit plan," as defined in
Section 3(3) of ERISA, is and has been administered in material compliance with
its governing documents and with any and all state or federal laws applicable to
such PLAN.
15
(e) With respect to any "employee pension plan" (as defined in
Section 3(3) of ERISA) maintained by CUSTAR which is subject to the provisions
of Title IV of ERISA, (i) no liability, other than for minimum funding
contributions with respect to The Custar State Bank Defined Benefit Plan and for
payment of premiums to the Pension Benefit Guaranty Corporation ("PBGC"), which
have been made or will be made on a timely basis, under Title IV of ERISA has
been or is expected to be incurred by CUSTAR; (ii) no notice of a "reportable
event," within the meaning of Section 4043 of ERISA, for which the thirty (30)
day reporting requirement has not been waived, has been required to be filed
within the twelve (12) month period ending on the date hereof, and no such
notice will be required to be filed as a result of the transactions contemplated
by this AGREEMENT; (iii) the PBGC has not instituted termination proceedings
and, to the knowledge of CUSTAR, no condition exists that presents a material
risk that such proceedings will be instituted; (iv) the present value of all
benefit liabilities of the defined benefit plan shall not exceed the value of
the plan's assets, determined as of July 23, 2004 and as if the plan was
terminated on that date under a standard termination pursuant to Title IV of
ERISA, by more than $250,000; and there has been neither an adverse change in
the financial condition of such plan nor any amendment or other change to such
plan that would increase the amount of benefits thereunder which reasonably
could be expected to change such results; (v) no "accumulated funding
deficiency" (whether or not waived) within the meaning of Section 412 of the
CODE or Section 302 of ERISA has been incurred and all required payments to the
PBGC have been made on or before their due dates; and (vi) no action has been
taken nor has any omission occurred 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.
(f) CUSTAR does not maintain any PLAN which provides post-retirement
medical, dental or life insurance benefits to any former employee of CUSTAR and
is not obligated to provide any such benefit to any current employee upon his or
her retirement.
(g) CUSTAR has never been obligated to make contributions to any
"multiemployer plan" as defined in Section 3(37) of ERISA.
(h) Neither CUSTAR, nor any PLAN maintained by CUSTAR, nor any
fiduciary of any such PLAN, has incurred any material liability to any PLAN
participant (other than routine claims for benefits), the Pension Benefit
Guaranty Corporation, the United States Department of Labor or to the IRS with
respect to a PLAN.
(i) No prohibited transaction (which shall mean any transaction
prohibited by Section 406 of ERISA and not exempt under Section 408 of ERISA)
has occurred with respect to any "employee benefit plan" (as defined above)
maintained by CUSTAR (i) which would result in the imposition, directly or
indirectly, of an excise tax under Section 4975 of the CODE or a penalty under
Section 502 of ERISA or (ii) the correction of which would have a material
adverse effect on the financial condition, results of operations or business of
CUSTAR.
(j) Each employee pension plan (as defined above) which is intended
to be an employee stock ownership plan, as defined in Section 4975(e)(7) of the
CODE, is and has been administered in substantial compliance with the applicable
provisions of Sections 4975 and 409 of the CODE and the regulations promulgated
by the IRS thereunder; and, any outstanding loan
16
to which any such employee stock ownership plan is a party constitutes an
"exempt loan," as described in Section 54.4975-7 of the regulations promulgated
by the IRS.
SECTION 4.20. ENVIRONMENTAL PROTECTION. (a) Except as set forth in Section
4.20 of the DISCLOSURE SCHEDULE, to the best knowledge of CUSTAR: (i) each of
CUSTAR, the CUSTAR PROPERTY (hereinafter defined) and the COLLATERAL PROPERTY
(hereinafter defined) is, and has been at all times, in full compliance with all
applicable ENVIRONMENTAL LAWS (hereinafter defined); (ii) no investigations,
inquiries, orders, hearings, actions or other proceedings by or before any court
or governmental agency have been issued, are pending or threatened against
CUSTAR or in connection with the CUSTAR PROPERTY or the COLLATERAL PROPERTY;
(iii) no claims have been made or threatened at any time against CUSTAR or in
connection with the CUSTAR PROPERTY or the COLLATERAL PROPERTY relating to
actual or alleged violation of any ENVIRONMENTAL LAW or relating to damage,
contribution, cost recovery, compensation, loss or injury resulting from any
HAZARDOUS SUBSTANCE (hereinafter defined) and no past or present actions,
activities, conditions, events or incidents, including, without limitation, the
release, emission, discharge or disposal of, or exposure to, any HAZARDOUS
SUBSTANCE have occurred that could reasonably form the basis of any such claims
against CUSTAR or in connection with the CUSTAR PROPERTY or the COLLATERAL
PROPERTY; (iv) no HAZARDOUS SUBSTANCES have been integrated into any CUSTAR
PROPERTY or COLLATERAL PROPERTY or any component thereof in violation of
ENVIRONMENTAL LAWS, or which will in the future require remediation during
renovation or demolition, or in such quantities and manner as may or do pose a
threat to human health; (v) no portion of any CUSTAR PROPERTY or COLLATERAL
PROPERTY is located within 2000 feet of (I) a release of HAZARDOUS SUBSTANCES
which has been reported or is required to be reported under any ENVIRONMENTAL
LAW or (II) the location of any site used, in the past or presently, for the
disposal of any HAZARDOUS SUBSTANCES; (vi) neither the CUSTAR PROPERTY nor the
COLLATERAL PROPERTY has been used for the storage, disposal or treatment of
HAZARDOUS SUBSTANCES, has been contaminated by HAZARDOUS SUBSTANCES, or has been
used for the storage or use of any underground or aboveground storage tanks; and
(vii) all permits, registrations and other authorizations necessary for CUSTAR,
the CUSTAR PROPERTY and the COLLATERAL PROPERTY to operate in full compliance
with all ENVIRONMENTAL LAWS are currently in force and are identified in Section
3.20 of the DISCLOSURE SCHEDULE.
(b) As used in this Section 4.20:
(i) "CUSTAR PROPERTY" means all real and personal property
now or previously owned, leased, occupied or managed by
CUSTAR or any person or entity whose liability for any
matter has or may have been related or assumed by CUSTAR
either contractually or by operation of law.
(ii) "COLLATERAL PROPERTY" means all real and personal
property in which CUSTAR holds a security interest in
connection with a loan or loan participation.
17
(iii) "ENVIRONMENTAL LAWS" means all federal, state, local and
other laws, regulations, rules, standards, ordinances,
orders, decrees, and judgments relating to pollution,
the environment, occupational health and safety, or the
protection of human health, all as may be from time to
time amended.
(iv) "HAZARDOUS SUBSTANCES" means any and all substances or
materials which are classified or considered to be
hazardous or toxic to human health or the environment
under any applicable ENVIRONMENTAL LAWS and shall
include, without limitation, any "hazardous substances"
as defined in Section 101(14) of CERCLA (42 USC Section
9601(14)) or regulations promulgated thereunder, any
"toxic and hazardous substances" as defined in 29 CFR
Part 1910, petroleum and its byproducts, asbestos,
polychlorinated biphenyls, nuclear fuel or materials,
lead and lead-containing substances, and
urea-formaldehyde.
SECTION 4.21. EMPLOYMENT MATTERS. CUSTAR is in compliance with all
federal, state or other applicable laws respecting employment and employment
practices, terms and conditions of employment and wages and hours, including,
but not limited to, Title VII of the Civil Rights Act of 1964 (as amended by the
Equal Employment Opportunity Act of 1972), the Civil Rights Act of 1991, the Age
Discrimination in Employment Act of 1967, the Employee Retirement Income
Security Act, 29 U.S.C. Section 1001 et seq., 42 U.S.C. Section 1981, the Older
Workers Benefit Protection Act, the Americans with Disabilities Act, Ohio
Revised Code Sections 4112.01 et seq., and the Fair Labor Standards Act; and has
not and is not engaged in any unfair labor practice, except where such failure
to comply would not have, or such practice would not have, a material adverse
effect on the financial condition, results of operations, business or prospects
of CUSTAR. No unfair labor practice complaint against CUSTAR is pending before
any governmental agency or court and there is no labor strike, dispute, slowdown
or stoppage actually pending or, to the knowledge of CUSTAR, threatened against
or involving CUSTAR. No representation question exists in respect of the
employees of CUSTAR and no labor grievance which might have a material adverse
effect upon CUSTAR or the conduct of its businesses is pending or, to the
knowledge of CUSTAR, threatened. No arbitration proceeding arising out of or
under any collective bargaining agreement is pending and no claim therefore has
been asserted against CUSTAR. No collective bargaining agreement is currently
being negotiated by CUSTAR. CUSTAR has not experienced any material labor
difficulty during the last three years.
SECTION 4.22. UNTRUE STATEMENTS AND OMISSIONS. The certificates,
statements and other information furnished to CBI in writing by or on behalf of
CUSTAR in connection with the transactions contemplated hereby, including, but
not limited to, disclosures and information set forth in the DISCLOSURE
SCHEDULE, do not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
18
SECTION 4.23. PROXY MATERIALS. None of the information relating to CUSTAR
included in any proxy statement which is to be mailed to the shareholders of
CUSTAR in connection with any meeting of shareholders convened in accordance
with Section 7.02 of this AGREEMENT (hereinafter referred to as the "PROXY
STATEMENT") will, at the time the PROXY STATEMENT is mailed or at the time of
the meeting of shareholders to which the PROXY STATEMENT relates, be false or
misleading with respect to any material fact, or omit to state any material fact
necessary in order to make the statements therein not false or misleading, or at
the time of the meeting of shareholders to which the PROXY STATEMENT relates,
necessary to correct any statement which has become false or misleading. The
legal responsibility for the contents of the PROXY STATEMENT (other than
information supplied by CBI, CCB or INTERIM concerning CBI, CCB or INTERIM)
shall be and remain with CUSTAR.
SECTION 4.24. BROKERS. All negotiations relating to this AGREEMENT and the
transactions contemplated hereby have been carried on without the intervention
of any person, other than Austin Associates, LLC, acting on behalf of CUSTAR in
such manner as to give rise to any valid claim against CUSTAR for any broker's
or finder's fee or similar compensation.
SECTION 4.25. STOCK OWNERSHIP. Neither CUSTAR nor any of its "affiliates"
or "associates", as the terms "affiliates" and "associates" are defined in
Section 1704.01(c)(1) of the ORC, are "beneficial owners", as the term
"beneficial owners" is defined in Section 1704.01(c)(4) of the ORC, of any of
the outstanding shares of any class of shares of CBI.
ARTICLE FIVE
REPRESENTATIONS AND WARRANTIES OF CBI AND CCB
CBI and CCB represent and warrant to CUSTAR that each of the following is
true and accurate in all material respects:
SECTION 5.01. ORGANIZATION AND STANDING. (a) CBI is a corporation duly
organized, validly existing and in good standing under the laws of Ohio and has
the corporate power and authority to conduct its business and operations as
presently conducted. CBI is registered as a bank holding company under the Bank
Holding Company Act of 1956, as amended.
(b) CCB is a bank duly organized, validly existing and in good
standing under the laws of Ohio and has the corporate power and authority to
conduct its business and operations as presently conducted. CCB is a member of
the Federal Reserve System, and the savings accounts and deposits of CCB are
insured up to applicable limits by the FDIC.
(c) Upon formation, INTERIM will be an interim bank duly organized,
validly existing and in good standing under the laws of Ohio. The activities of
INTERIM prior to the EFFECTIVE TIME will be limited to accepting an initial
subscription to its shares and participating in the MERGER contemplated by this
AGREEMENT.
(c) CBI and CCB are in compliance in all material respects with all
applicable local, state or federal laws and regulations, including, without
limitation, the regulations of the DIVISION, the FRB and the FDIC.
19
SECTION 5.02. QUALIFICATION. CBI and CCB are either duly qualified to do
business and in good standing in each jurisdiction in which such qualification
is required or the failure to so qualify would not have a material adverse
effect on the business of CBI and CCB.
SECTION 5.03. AUTHORITY. Subject to the approval of the MERGER by the
DIVISION and the FRB, (a) CBI and CCB have all requisite corporate power and
authority to enter into this AGREEMENT and to perform their obligations
hereunder; (b) the execution and delivery of this AGREEMENT and the consummation
of the transactions contemplated hereby have been duly authorized by all
necessary corporate action by CBI and CCB; and (c) this AGREEMENT is a valid and
binding agreement of CBI and CCB, enforceable against them in accordance with
its terms, (i) subject to applicable bankruptcy, insolvency, reorganization and
moratorium laws and other laws of general applicability affecting the
enforcement of creditors' rights generally, and the effect of rules of law
governing specific performance, injunctive relief and other equitable remedies
on the enforceability of such documents and (ii) except to the extent such
enforceability may be limited by laws relating to safety and soundness of
insured depository institutions as set forth in 12 U.S.C. Section 1818(b) or by
the appointment of a conservator by the FDIC. This AGREEMENT has been duly
executed and delivered by CBI and CCB, and following the formation of INTERIM,
CCB will cause this AGREEMENT to be duly executed and delivered by INTERIM.
SECTION 5.04. NO CONFLICTS. The execution and delivery of this AGREEMENT
and, subject to the approval of the MERGER by the DIVISION and the FRB, the
consummation of the transactions contemplated hereby will not (a) conflict with
or violate any provision of or result in the breach of any provision of the
Articles of Incorporation, as amended, or Amended and Restated Code of
Regulations of CBI, the Articles of Incorporation, as amended, or Code of
Regulations, as amended, of CCB, or the Articles of Incorporation or Code of
Regulations of INTERIM; (b) conflict with or violate any provision of or result
in the breach or the acceleration of or entitle any party to accelerate (whether
upon or after the giving of notice of lapse of time or both) any obligation
under, or otherwise materially affect the terms of, any mortgage, lien, lease,
agreement, license, instrument, order, arbitration award, judgment or decree to
which CBI or CCB is a party or by which CBI or CCB or their property or assets
is bound; (c) require the consent of any party to any agreement or commitment to
which CBI or CCB is a party or by which CBI or CCB or their property or assets
is bound, the failure to obtain which could, individually or in the aggregate
with all the other failures to obtain required consents, have a material adverse
effect on the business, operations, condition (financial or otherwise) or
prospects of CBI or CCB; (d) result in the creation or imposition of any lien,
charge, pledge, security interest or other encumbrance upon any property or
assets of CBI or CCB or give rise to any meritorious cause of action against CBI
or CCB; or (e) violate or conflict with any applicable law, ordinance, rule or
regulation, including, without limitation, the rules and regulations of the FRB,
the DIVISION and/or the FDIC.
SECTION 5.05. CONSENTS. No consent, approval, order or authorization of,
or registration, declaration or filing with, any governmental authority is
required in connection with the execution and delivery of this AGREEMENT by CBI,
CCB or INTERIM or the consummation by CBI, CCB or INTERIM of the transactions
contemplated hereby, except for filings,
20
authorizations, consents or approvals required by the Ohio Secretary of State,
the FRB and the DIVISION.
SECTION 5.06. FINANCIAL STATEMENTS. (a) The consolidated balance sheets as
of December 31, 2003 and 2002, of CBI and the related consolidated statements of
operations, stockholders' equity and cash flows for each of the three years then
ended, examined and reported upon by Xxxxxxx Xxxxxxxxx LLP, certified public
accountants, complete copies of which have previously been delivered to CUSTAR
(hereinafter referred to as the "CBI AUDITED FINANCIALS"), have been prepared in
conformity with generally accepted accounting principles applied on a consistent
basis and fairly present the financial position of CBI at such dates and the
results of its operations and cash flows for such periods.
(b) The consolidated balance sheet as of June 30, 2004, of CBI and
the related consolidated statements of operations, stockholders' equity and cash
flows for the six months then ended, complete copies of which have previously
been delivered to CUSTAR (hereinafter referred to as the "CBI INTERIM
FINANCIALS"), fairly present the financial position of CBI at such date and the
results of its operations and cash flows for such period and have been prepared
in accordance with generally accepted accounting principles as applicable to
condensed consolidated financial statements and as applied on a consistent basis
with the CBI AUDITED FINANCIALS. All adjustments which are necessary for a fair
statement of the CBI INTERIM FINANCIALS have been made.
(c) Except as disclosed in the CBI INTERIM FINANCIALS, as of June
30, 2004, CBI had no liabilities or obligations material to the business
condition (financial or otherwise) of CBI taken as a whole, whether accrued,
absolute, contingent or otherwise, and whether due or to become due.
(d) The CBI AUDITED FINANCIALS and the CBI INTERIM FINANCIALS did
not, as of the dates thereof, contain any untrue statement of a material fact or
omit to state any material fact necessary to make the information contained
therein, in light of the circumstances under which they were made, not
misleading.
(e) Subject to Section 8.02(l), CBI has the financial ability to
perform its obligations hereunder, including the payment of the PER SHARE
PURCHASE PRICE.
ARTICLE SIX
COVENANTS
SECTION 6.01. CONDUCT OF BUSINESSES. From the date of this AGREEMENT until
the EFFECTIVE TIME, CUSTAR:
(a) Except with the prior written consent of CBI, will conduct its
business only in the ordinary course, in accordance with past
practices and policies and in compliance with all applicable
statutes, rules and regulations;
(b) Without the prior written consent of CBI, will not:
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(i) Authorize the creation or issuance of, issue, sell or
dispose of, or create any obligation to issue, sell or
dispose of, any stock, notes, bonds or other securities
of which CUSTAR is the issuer or any obligations
convertible into or exchangeable for, any shares of its
capital stock;
(ii) Declare, set aside, pay or make any dividend or other
distribution on capital stock, or directly or indirectly
redeem, purchase or otherwise acquire any shares or
enter into any agreement in respect to the foregoing;
provided, however, that CUSTAR may pay a cash dividend
in the amount of $1.00 per share in the event the
CLOSING does not occur prior to September 30, 2004;
(iii) Effect any stock split, recapitalization, combination,
exchange of shares, readjustment or other
reclassification;
(iv) Amend its Articles of Incorporation or Code of
Regulations;
(v) Purchase, sell, assign or transfer any material tangible
asset or any material patent, trademark, trade name,
copyright, license, franchise, design or other
intangible assets or property;
(vi) Mortgage, pledge or grant or suffer to exist any lien or
other encumbrance or charge on any assets or properties,
tangible or intangible, except for liens for taxes not
yet delinquent and such other liens, encumbrances or
charges which do not materially or adversely affect its
financial position;
(vii) Waive any rights of material value or cancel any
material debts or claims;
(viii) Incur any material obligation or liability (absolute or
contingent), including, without limitation, any tax
liability, or pay any material liability or obligation
(absolute or contingent), other than liabilities and
obligations incurred in the ordinary course of business;
(ix) Cause any material adverse change in the amount or
general composition of its deposit liabilities or its
loan portfolio;
(x) Enter into or amend any employment contract with any of
its officers, increase the compensation payable to any
officer or director or any relative of any such officer
or director, or be obligated to increase any such
compensation, adopt or amend in any material respect any
employee benefit plans, severance plan or collective
bargaining agreement or make awards or distributions
under any employee benefit plans not consistent with
past practice or custom; provided, however, that CUSTAR
may, in the
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discretion of its Board of Directors, pay "stay" bonuses
to employees of CUSTAR not to exceed $10,000 in the
aggregate.
(xi) Acquire any stock or other equity interest in any
corporation, partnership, trust, joint venture or other
entity;
(xii) Make any (I) material investment (except in the ordinary
course of business) or (II) material capital expenditure
or commitment for any material addition to property,
plant, or equipment;
(xiii) increase or decrease the rate of interest paid on time
deposits or certificates of deposits, except in a manner
and pursuant to policies consistent with past practices
in relation to rates prevailing in the relevant CUSTAR
market;
(xiv) decrease the rate of interest offered on new loans by
CUSTAR, except in a manner and pursuant to policies
consistent with past practices in relation to rates
prevailing in the relevant CUSTAR market; or
(xv) Agree, whether in writing or otherwise, to take any
action described in this Section 6.01.
SECTION 6.02. ACQUISITION PROPOSALS. CUSTAR shall not, and shall cause the
officers, directors, employees and other agents of CUSTAR not to, directly or
indirectly, take any action to solicit, initiate, engage or negotiate any
proposals or offers from any person or entity, other than CBI, or discuss or
negotiate with any such person or entity, other than CBI, any acquisition or
purchase of all or a material amount of the assets of, any equity securities of,
or any merger, consolidation or business combination with, CUSTAR (hereinafter
collectively referred to as "ACQUISITION TRANSACTIONS"); provided, however, that
nothing contained in this Section 6.02 shall prohibit CUSTAR from furnishing
information to, or entering into discussions or negotiations with, any person or
entity which makes an unsolicited proposal of an ACQUISITION TRANSACTION if and
to the extent that (a) the Board of Directors of CUSTAR, after consultation with
and based upon the written advice of counsel, determines in good faith that such
action is required to fulfill its fiduciary duties to the shareholders of CUSTAR
under applicable law and (b) before furnishing such information to, or entering
into discussions or negotiations with, such person or entity, CUSTAR provides
immediate written notice to CBI of such action.
SECTION 6.03. ACCOUNTING POLICIES. Immediately prior to the EFFECTIVE TIME
and at the request of CBI, CUSTAR shall promptly establish and take such
reserves and accruals to conform the loan, accrual and reserve policies of
CUSTAR to CCB's policies; shall promptly establish and take such accruals,
reserves and charges in order to implement such policies in respect of excess
facilities and equipment capacity, severance costs, litigation matters,
write-off or write-down of various assets and other appropriate accounting
adjustments; and shall promptly recognize for financial accounting purposes such
expenses of the MERGER and restructuring
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charges related to or to be incurred in connection with the MERGER, to the
extent permitted by law and consistent with generally accepted accounting
principles. Notwithstanding the foregoing, neither CBI nor CCB shall be entitled
to advance any claim that a material adverse change in the business of CUSTAR
under Section 8.02(c) has occurred based upon any changes affecting CUSTAR
requested pursuant to this Section 6.03.
ARTICLE SEVEN
FURTHER AGREEMENTS
SECTION 7.01. APPLICATION FOR APPROVAL OF MERGER. As soon as practicable,
and in no event more that thirty (30) days, after the date of this AGREEMENT,
CBI and CUSTAR shall submit to the FRB and the DIVISION such documents as are
required by the FRB and the DIVISION to be filed in connection with or related
to the MERGER. CBI shall be responsible for the preparation of all such
necessary regulatory applications, provided that CUSTAR shall provide within
five business days of a written request from CBI any information required from
CUSTAR to enable CBI to complete such regulatory applications.
SECTION 7.02. SPECIAL MEETING OF SHAREHOLDERS. Within fifteen (15) days of
the filing of all necessary regulatory applications pursuant to Section 7.01,
CUSTAR shall take all steps necessary to duly call and give notice of a meeting
of its shareholders for the purpose of voting upon the AGREEMENT and the
transactions contemplated hereby, including the MERGER. CUSTAR shall use its
reasonable efforts to hold such meetings as soon as practicable, and in no event
more than forty five days (45) after the filing of all such regulatory
applications. The Board of Directors of CUSTAR shall (i) recommend to the
shareholders in the PROXY STATEMENT the approval of this AGREEMENT and the
transactions contemplated hereby, including the MERGER, and the other matters to
be submitted to the shareholders in connection therewith and (ii) use their best
efforts to obtain the necessary approvals by the shareholders of this AGREEMENT,
any amendments hereto, and the transactions contemplated hereby, including the
MERGER.
SECTION 7.03. ACCESS. Until the EFFECTIVE TIME, CUSTAR shall afford to CBI
and its officers and representatives (including, without limitation, counsel,
financial advisers and independent accountants), reasonable access to CUSTAR's
properties, personnel, books, records and affairs. Each party shall furnish the
other party with such additional financial and operating data and other
information as to its businesses and properties as may be reasonably requested.
Such access shall include, but shall not be limited to, (i) permitting
verification, by audit or otherwise, of any representation or warranty made
hereunder; (ii) authorizing release of any information (including the work
papers of such independent auditors) and financial consultants; (iii) consistent
with applicable regulations or procedures, furnishing regular and special
examination reports since the date of this AGREEMENT to the EFFECTIVE TIME; and
(iv) delivering copies of all documents or reports or correspondence filed and
any correspondence with any federal regulatory or supervisory agency from the
date of this AGREEMENT until the EFFECTIVE TIME.
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SECTION 7.04. CONFIDENTIALITY. CUSTAR, CBI and CCB shall hold confidential
any information obtained hereunder which is not otherwise known to the public or
ascertainable from public information and all non-public documents (including
copies thereof) obtained hereunder by either party from the other party shall be
returned to such party.
SECTION 7.05. PRESS RELEASES. CBI and CUSTAR shall consult with each other
before issuing any press release or otherwise making any public statements with
respect to the MERGER and shall not issue any such press release or make any
such public statement without obtaining the prior consent of the other party,
except as may be required by law or by obligations pursuant to any listing
agreement with any national securities association.
SECTION 7.06. COSTS, EXPENSES AND FEES. (a) Subject to paragraph (b) of
this Section 7.06, whether or not the MERGER is consummated, all costs and
expenses incurred in connection with this AGREEMENT, the PROXY STATEMENT and the
transactions contemplated hereby shall be paid by the party incurring such costs
and expenses.
(b) In the event that CUSTAR receives a proposal for any ACQUISITION
TRANSACTION after the date hereof and prior to the termination of this AGREEMENT
as provided for in Article Nine hereof, and thereafter CUSTAR accepts in any
manner any such proposal for an ACQUISITION TRANSACTION at any time before March
31, 2006, CUSTAR shall pay to CBI a fee of $400,000 in immediately available
federal funds.
SECTION 7.07. REASONABLE EFFORTS. Subject to the terms and conditions
herein provided, each of the parties hereto agrees to use all 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.
SECTION 7.08. NOTIFICATION OF EVENTS. At all times from the date of this
AGREEMENT until the EFFECTIVE TIME, each party shall promptly notify the other
in writing of any adverse business conditions threatening its normal business
operations or of the occurrence of any event or the failure of any event to
occur which might result in a breach of or a failure to comply with any
representation, warranty, covenant, condition or agreement contained in this
AGREEMENT or of the commencement of any action, suit, proceeding, or
investigation against it.
SECTION 7.09. INDEMNIFICATION. (a) For a period of four (4) years after
the EFFECTIVE TIME, CBI shall indemnify persons who served as directors and
officers of CUSTAR on or before the EFFECTIVE TIME to the fullest extent
permitted under the Articles of Incorporation, as amended, and Amended and
Restated Code of Regulations of CBI and applicable provisions of Ohio law. As a
condition to receiving such indemnification, the party claiming indemnification
shall assign to CBI, by separate writing, all right, title and interest in and
to the proceeds of the claiming party's applicable insurance coverage, if any,
including insurance maintained or provided by CUSTAR or CBI, to the extent of
such indemnity. No person shall be entitled to such indemnification who shall
(i) fail to cooperate in the defense and investigation of any claims as to which
indemnification may be made, (ii) make, or who shall be a general partner,
executive officer, director, trustee, beneficiary or person in control of any
partnership,
25
corporation, trust or other enterprise that shall make, any claim against
CUSTAR, CBI or CCB or any stockholder, director, officer, employee, or agent of
any thereof, in any action, suit or proceeding arising out of or in connection
with this AGREEMENT, the transactions contemplated hereby or the conduct of the
business of CBI, CCB or CUSTAR or (iii) fail to deliver such notices as may be
required under any applicable directors and officers liability insurance policy
to preserve any possible claims of which the claiming party is aware. CUSTAR
may, at the election of its Board of Directors and at the expense of CUSTAR,
purchase "tail coverage" for its current policy of director and officer
liability insurance at a cost not to exceed $15,000, providing for an extension
of such coverage for a period of five (5) years.
SECTION 7.10. EMPLOYEES OF CUSTAR. (a) All employees of CUSTAR who are
offered employment and become employees of CCB (hereinafter referred to as the
"CONTINUING EMPLOYEES") after the EFFECTIVE TIME will be eligible to participate
in CCB's employee benefit and welfare plans, with credit for years of service,
for purposes of eligibility and vesting (but not for the purpose of accrual of
benefits or the allocation of employer contributions) with CUSTAR. CONTINUING
EMPLOYEES will retain accrued or unused sick leave and vacation benefits to the
extent such benefits are consistent with CCB's relevant policies.
(b) Any employee of CUSTAR immediately prior to the EFFECTIVE TIME
who is not covered by a written severance or employment agreement with CUSTAR
who CCB elects not to employ after the EFFECTIVE TIME shall receive: (i) a
severance payment equal to the product of one week of the employee's then
current base salary multiplied by the number of years of service as an employee
of CUSTAR; provided, however, that the maximum severance payment shall not
exceed 12 months of such employee's base salary; and (ii) payment for vacation
that is unused and accrued consistent with the terms of CUSTAR's vacation policy
in effect on the date of this AGREEMENT.
(c) Concurrently with the execution of this AGREEMENT, each of
Xxxxxx Xxxxxx and Xxxxx Xxxxxxxxx shall enter into an employment agreement with
CCB in the form attached hereto as Exhibit C, which employment agreement shall
become effective as of the EFFECTIVE TIME and shall provide for a two-year
employment term and compensation and benefits that are substantially similar to
the compensation and benefits currently provided by CUSTAR.
SECTION 7.11. FORMATION OF INTERIM. Prior to the EFFECTIVE TIME, CBI and
CCB shall take all steps necessary to complete the formation of INTERIM, to
cause this AGREEMENT to be approved by the directors and sole shareholder of
INTERIM and to cause INTERIM to execute and deliver this AGREEMENT to CUSTAR.
ARTICLE EIGHT
CLOSING MATTERS
SECTION 8.01. CONDITIONS TO OBLIGATIONS OF CBI, CCB, INTERIM AND CUSTAR.
Notwithstanding any other provision of this AGREEMENT, the obligations of CBI,
CCB,
26
INTERIM and CUSTAR to effect the MERGER shall be subject to the fulfillment of
each of the following conditions:
(a) This AGREEMENT shall have been validly adopted by the
affirmative vote of the holders of at least the number of
outstanding CUSTAR shares required under Ohio law and the
CUSTAR Articles of Incorporation and Code of Regulations to
adopt such agreements;
(b) All permits, approvals, consents, authorizations, exemptions
or waivers of any federal or state governmental body or agency
necessary or appropriate for consummation of the MERGER shall
have been obtained and all applicable waiting periods shall
have expired;
(c) All waivers, consents and approval of every person, in
addition to those required under subsections (a) and (b) of
this Section 8.01, necessary or appropriate for the
consummation of the MERGER shall have been obtained;
(d) CUSTAR shall have received a written opinion of Austin
Associates, LLC, dated the date of this AGREEMENT, to the
effect that the PER SHARE PURCHASE PRICE be paid to CUSTAR
shareholders in accordance with Section 2.01(a) of this
AGREEMENT is fair to the holders of the CUSTAR common shares
from a financial point of view;
(e) There shall not be in effect any order or decision of a court
of competent jurisdiction which prevents or materially delays
the consummation of the MERGER; and
(f) There shall not be in effect any federal or state law, rule or
regulation which prevents or materially delays consummation of
the MERGER.
SECTION 8.02. CONDITIONS TO OBLIGATIONS OF CBI, CCB AND INTERIM. In
addition to the conditions contained in Section 8.01 of this AGREEMENT, the
obligations of CBI, CCB and INTERIM to effect the MERGER shall also be subject
to the fulfillment of each of the following conditions:
(a) The representations and warranties of CUSTAR contained in
Article Four of this AGREEMENT shall be true in all material
respects at and as of the date hereof and at and as of the
EFFECTIVE TIME as if made at and as of such time;
(b) CUSTAR shall have duly performed and complied in all material
respects with all agreements, covenants and conditions
required by this AGREEMENT to be performed or complied with by
it before or at the EFFECTIVE TIME;
27
(c) There shall not have been a material adverse change in the
financial condition, assets, liabilities, obligations,
properties, business or prospects of CUSTAR after the date of
this AGREEMENT;
(d) CUSTAR shall not have incurred any damage, destruction or
similar loss, not covered by insurance, materially affecting
its businesses or properties;
(e) The shareholders' equity of CUSTAR at the EFFECTIVE TIME and
as calculated on a consistent basis with the calculation of
shareholders' equity in the CALL REPORTS shall not be less
than $9,000,000, exclusive of (i) expenses recognized by
CUSTAR in connection with the MERGER, (ii) reserves, accruals
and charges taken or established by CUSTAR at the request of
CBI in accordance with Section 6.03 of this AGREEMENT and
(iii) net unrealized losses on CUSTAR's securities portfolio.
(f) The holders of not more than 10% of the CUSTAR common shares
shall have delivered a written demand for appraisal of such
shares in the manner provided in Section 2.06 of this
AGREEMENT;
(g) CUSTAR shall have delivered to CBI a certificate dated the
EFFECTIVE TIME and signed by the President and Treasurer of
CUSTAR to the effect set forth in subsections (a), (b), (c),
(d), and (e) of this Section 8.02;
(h) CUSTAR shall have obtained all consents, authorizations or
approvals of, or exemptions or waivers by, any federal or
state governmental body or agency required to be obtained by
it in connection with the MERGER or the taking of any action
contemplated hereby;
(i) There shall not be any action or proceeding commenced by or
before any court or governmental agency or authority in the
United States, or threatened by any governmental agency or
authority in the United States, that challenges or seeks to
prevent or delay the consummation of the MERGER or seeks to
impose material limitations on the ability of CBI or CCB to
exercise full rights of ownership of the assets or business of
CUSTAR;
(j) There shall not have been proposed, nor shall there be in
effect, any federal or state law, rule, regulation, order or
statement of policy, or any condition to any regulatory
approval of the transactions contemplated hereby that, in the
reasonable judgment of CBI, would: (i) prevent or delay the
consummation of the MERGER or interfere with the reasonable
operation of the business of CUSTAR, (ii) materially adversely
affect the ability of CBI to enjoy the economic or other
benefits of the MERGER; or (iii) impose any material adverse
condition, limitation or requirement on CBI in connection with
the MERGER;
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(k) CUSTAR shall have obtained all consents to, or authorizations
or approvals of, the transactions contemplated by this
AGREEMENT of any party to any contract, obligation, lease or
other agreement to which CUSTAR is a party and which requires
such consent, authorization or approval; and
(l) CBI shall have obtained suitable financing from a third party
to consummate the transactions contemplated by this Agreement,
including the payment of the PER SHARE PURCHASE PRICE to
former shareholders of CUSTAR pursuant to Section 2.01. Such
financing shall be on terms and conditions reasonably
satisfactory to CBI; provided, however, that financing of not
less than $8,000,000 with a stated interest rate of no more
than "prime rate" plus 1.00% shall be deemed to be acceptable.
SECTION 8.03. CONDITIONS TO OBLIGATIONS OF CUSTAR. In addition to the
conditions contained in Section 8.01 of this AGREEMENT, the obligation of CUSTAR
to effect the MERGER shall also be subject to the fulfillment of each of the
following conditions:
(a) The representations and warranties of CBI and CCB contained in
Article Five of this AGREEMENT shall be true in all material
respects at and as of the date hereof and as of the EFFECTIVE
TIME as if made at and as of such time, except to the extent
that such representations and warranties are made as of a
specific date;
(b) CBI and CCB shall have duly performed and complied in all
material respects with all agreements, covenants and
conditions required by this AGREEMENT to be performed or
complied with by them before or at the EFFECTIVE TIME;
(c) CBI and CCB shall have delivered to CUSTAR a certificate dated
the EFFECTIVE TIME and signed by the President of CBI, CCB and
INTERIM to the effect set forth in subsections (a) and (b) of
this Section 8.03;
(d) CBI shall have obtained all consents, authorizations or
approvals of, or exemptions or waivers by any federal or state
governmental body or agency required to be obtained by it in
connection with the MERGER or the taking of any action
contemplated thereby;
(e) There shall not be any action or proceeding commenced by or
before any court or governmental agency or authority in the
United States, or threatened by any governmental agency or
authority in the United States, that challenges or seeks to
prevent or delay the consummation of the MERGER; and
29
(f) CBI and CCB shall have delivered to CUSTAR a counterpart of
this AGREEMENT duly executed by INTERIM.
(g) CBI shall have deposited the amount of cash required by
Section 2.02 in a designated account at CBI for the benefit of
the former holders of CUSTAR common shares.
ARTICLE NINE
TERMINATION
SECTION 9.01. TERMINATION. This AGREEMENT may be terminated:
(a) At any time prior to the EFFECTIVE TIME, whether before or after
approval by the shareholders of CUSTAR:
(i) By mutual consent of the Boards of Directors of CUSTAR
and CBI; or
(ii) By the Board of Directors of CUSTAR or CBI if:
(A) The MERGER shall not have been consummated on or
before March 31, 2005; or
(B) Any event occurs which, in the reasonable opinion
of either Board, would preclude satisfaction of
any of the conditions set forth in Section 8.01 of
this AGREEMENT; or
(iii) By the Board of Directors of CBI if any event occurs
which, in the reasonable opinion of such Board, would
preclude compliance with any of the conditions set forth
in Section 8.02 of this AGREEMENT; or
(iv) By the Board of Directors of CUSTAR if any event occurs
which, in the reasonable opinion of such Board, would
preclude compliance with any of the conditions set forth
in Section 8.03 of this AGREEMENT; or
(b) No later than sixty (60) days after the date of this
AGREEMENT, by the Board of Directors of CBI in the event that
the results of any environmental assessment of the REAL
PROPERTIES reveal the presence of any HAZARDOUS SUBSTANCE or
condition which is not in compliance with ENVIRONMENTAL LAWS
and which will require the expenditure of more than $25,000 to
remediate.
SECTION 9.02. WRITTEN NOTICE OF TERMINATION. In order to terminate this
AGREEMENT pursuant to Section 9.01 of this AGREEMENT, the party so acting shall
give
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written notice of such termination to the other party. This AGREEMENT shall
terminate on the date such notice is given.
SECTION 9.03. EFFECT OF TERMINATION. In the event of the termination of
this AGREEMENT, the provisions of this AGREEMENT shall become void and have no
effect; provided, however, that (a) the provisions set forth in Sections 7.04,
7.05 and 7.06 of this AGREEMENT shall survive such termination and shall remain
in full force and effect and (b) a termination of this AGREEMENT shall not
affect the liability of any party for an uncured and material breach of any term
or condition of this AGREEMENT.
SECTION 9.04. AMENDMENT. This AGREEMENT may only be amended by the
unanimous consent of CBI, CCB and CUSTAR by action taken by their respective
Boards of Directors, at any time before or after approval of this AGREEMENT by
the shareholders of CUSTAR, but after such approval no amendment shall be made
which materially and adversely affects the rights of such shareholders without
the further approval of such shareholders. This AGREEMENT may not be amended
except by an instrument in writing signed on behalf of each of the parties
hereto.
SECTION 9.05. WAIVER. Any term or provision of this AGREEMENT (other than
the requirement for shareholder approval) may be waived in writing at any time
by the party which is, or whose shareholders are, entitled to the benefits
thereof.
ARTICLE TEN
MISCELLANEOUS
SECTION 10.01. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations, warranties and covenants in this AGREEMENT shall expire on, and
be terminated and extinguished at, the EFFECTIVE TIME, other than covenants
which by their terms are to survive or be performed after the EFFECTIVE TIME;
provided, however, that no such representations, warranties or covenants shall
be deemed to be terminated or extinguished so as to deprive CBI or CCB (or any
director, officer or controlling person thereof) of any defense in law or equity
which otherwise would be available against the claims of any person, including,
without limitation, any shareholder or former shareholder of either CBI or
CUSTAR.
SECTION 10.02. NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally, delivered
by Federal Express or other overnight carrier guaranteeing next day delivery and
confirmation of receipt, or mailed by registered or certified mail (return
receipt requested) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
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If addressed to CBI, CCB or INTERIM:
Croghan Bancshares, Inc.
000 Xxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxx
With a copy to:
Vorys, Xxxxx, Xxxxxxx and Xxxxx LLP
00 Xxxx Xxx Xxxxxx
Xxxxxxxx, Xxxx 00000
Attention: Xxxx X. Xxxxx
If addressed to CUSTAR:
Xx. Xxxxxxx Xxxxx, Chairman
The Custar State Bank
00000 Xxxxxxxx Xxxx
Xxxxxx, Xxxx 00000
With a copy to:
Xxxxxx X. Xxxxx
Xxxxxx & Blank, LLC
0000 Xxxx Xxxxxxx Xxxxxx
Xxxxxx, Xxxx 00000
SECTION 10.03. ENTIRE AGREEMENT. This AGREEMENT (including the exhibits,
documents and instruments referred to herein or therein) (a) constitutes the
entire agreement and supersedes all other prior agreements and understandings,
both written and oral, among the parties, or any of them, with respect to the
subject matter hereof; (b) is not intended to and shall not confer any rights or
remedies hereunder upon any person other than CBI, CCB, INTERIM or CUSTAR; (c)
shall not be assigned by operation of law or otherwise; and (d) shall be
governed in all respects, including validity, interpretation and effect, by the
laws of the State of Ohio.
SECTION 10.04. EXECUTION IN COUNTERPARTS. This AGREEMENT may be executed
in two or more counterparts which together shall constitute a single AGREEMENT.
SECTION 10.05. HEADINGS. The headings of articles and sections herein are
for convenience of reference only, do not constitute a part of this AGREEMENT
and shall not be deemed to limit or affect any of the provisions hereof.
[signatures follow on next page]
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IN WITNESS WHEREOF, CBI, CCB, INTERIM and CUSTAR have caused this
AGREEMENT to be signed by their respective duly authorized officers on the date
first above written.
ATTEST: CROGHAN BANCSHARES, INC.
/s/ Xx Xxxxxx By /s/ Xxxxxx X. Xxxxxxx
------------------------------ -------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: President & CEO
ATTEST: THE XXXXXXX COLONIAL BANK
/s/ Xx Xxxxxx By /s/ Xxxxxx X. Xxxxxxx
------------------------------ -------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: President & CEO
ATTEST: CROGHAN INTERIM BANK
_____________________________ By_______________________________________
Name:____________________________________
Title:___________________________________
ATTEST: THE CUSTAR STATE BANK
/s/ Xxxxxx X. Xxxxxxxxx By /s/ Xxxxxxx Xxxxx
------------------------------ -------------------------------------
Name: Xxxxxxx Xxxxx
Title: Chairman
33
EXHIBIT A
CERTIFICATE OF ADOPTION OF AMENDED AND RESTATED
ARTICLES OF INCORPORATION OF THE CUSTAR STATE BANK
Xxxxx Xxxxxx, President, and Xxxxxx X. Xxxxxxxxx, Secretary, of The Custar
State Bank, an Ohio corporation with its principal office located in the Village
of Custar, Ohio, do hereby certify that a meeting of its Board of Directors was
duly called and held on the 4th day of December, 1990, at which meeting a quorum
of directors was present, and that by the affirmative vote of all directors
present at the meeting, the following resolution was adopted:
RESOLVED, that the following be and the same hereby are adopted as the
Amended and Restated Articles of Incorporation of The Custar State Bank pursuant
to the authority of Sections 1115.14(B) and 1701.72(B) of the Ohio Revised Code
in order to consolidate the original Articles and all previously adopted
amendments to the Articles that are in force on this date:
AMENDED AND RESTATED ARTICLES
OF INCORPORATION OF THE CUSTAR STATE BANK
FIRST: The name of said corporation shall be The Custar State Bank.
SECOND: Said corporation is to be located at Custar, in Wood County, Ohio,
and its principal business there transacted.
THIRD: The purpose for which the corporation is formed is to conduct the
business of a commercial bank, a savings bank, a special plan bank, or a
combination of two or more, or all of such classes of business, and to let out
safety deposit boxes and other receptacles by lease or otherwise, and to do all
things necessary or incident thereto pursuant to the provisions of the Revised
Code of Ohio and any and all acts amendatory or supplementary thereto.
FOURTH: The maximum number of shares which the corporation is authorized
to have outstanding shall be Seventy Thousand Three Hundred Twelve (70,312)
shares of common stock of the par value of Ten Dollars ($10.00) each.
FIFTH: Purchase of Securities: The corporation, through its Board of
Directors, shall have the right and power to purchase, in accordance with the
Ohio Revised Code and the Ohio Administrative Code, and pursuant to a plan
approved by the Ohio Superintendent of Banks, outstanding shares of the common
stock of the corporation. The Board of directors shall have the right and power
to pay such price as it and the selling shareholders agree. Such shares shall be
re-issued or retired as required by a plan approved by the Ohio Superintendent
of Banks.
SIXTH: These Amended and Restated Articles of Incorporation shall take the
place of and supersede the existing Articles of Incorporation as heretofore in
effect.
IN WITNESS WHEREOF, Xxxxx Xxxxxx, President, and Xxxxxx X. Xxxxxxxxx,
Secretary, of The Custar State Bank, acting for and on behalf of said
corporation have hereunto subscribed there names as officers of said Bank this
4th day of December, 1990.
CUSTAR STATE BANK
Approved this 19th day of December, 1990. By: /s/ Xxxxx Xxxxxx
------------------------------
Xxxxx Xxxxxx, President
/s/ Xxxx X. Xxxxxx By: /s/ Xxxxxx X. Xxxxxxxxx
------------------------------------------ ------------------------------
Xxxx X. Xxxxxx, Superintendent of Xxxxx Xxxxxx X. Xxxxxxxxx, Secretary
CERTIFICATE OF AMENDMENT
TO ARTICLES OF INCORPORATION OF THE CUSTAR STATE BANK, CUSTAR,
OHIO
Xxxxx Xxxxxx, President, and Xxxxxx X. Xxxxxxxxx, Secretary, of The Custar
State Bank, an Ohio corporation, with its principal office location at Custar,
Wood County, Ohio, do hereby certify that a meeting of the holders of the shares
of said corporation entitling them to vote on the proposal to amend the articles
of incorporation thereof, as contained in the following resolution, was duly
called and held on the 11th day of February, 1993, at which meeting a quorum of
such shareholders was present in person or by proxy and that by the affirmative
vote of the holders of not less than two-thirds of the shares of the corporation
on such proposal, the following resolution of amendment was adopted:
FURTHER RESOLVED: That the Articles of Incorporation of The Custar State
Bank be, and the same are, hereby amended so that the FOURTH Article thereof
shall henceforth be and read as follows:
FOURTH: The maximum number of shares which the corporation is authorized
to have outstanding shall be Ninety-Three Thousand Seven Hundred and Forty-Nine
(93,749) shares of common stock of the par value of Ten Dollars ($10.00) each.
FURTHER RESOLVED: That the President and Secretary of this corporation be,
and they are, hereby authorized and directed to file with the Secretary of State
of the State of Ohio, a certificate of the foregoing Amendment.
Approved this 17th day of March, 1993.
/s/ Xxxxxx X. Xxxxx
----------------------------------------
Xxxxxx X. Xxxxx, Superintendent of Banks
IN WITNESS WHEREOF, said Xxxxx Xxxxxx, President, and Xxxxxx X. Xxxxxxxxx,
Secretary, of The Custar State Bank, acting for and on behalf of said
corporation have hereunto subscribed there names and caused the seal of said
corporation to be hereunto affixed this 11th day of February, 1993.
By: /s/ Xxxxx Xxxxxx
---------------------------------
Xxxxx Xxxxxx, President
CORPORATION HAS NO SEAL
By: /s/ Xxxxxx X. Xxxxxxxxx
---------------------------------
Xxxxxx X. Xxxxxxxxx, Secretary
CERTIFICATE OF AMENDMENT
TO ARTICLES OF INCORPORATION OF THE CUSTAR STATE BANK
Xxxxx Xxxxxx, President, and Xxxxxx X. Xxxxxxxxx, Secretary, of The Custar
State Bank, an Ohio corporation, with its principal office located at Custar,
Wood County, Ohio, do hereby certify that a meeting of the holders of the shares
of said corporation entitling them to vote on the proposal to amend the articles
of incorporation thereof, as contained in the following resolution, was duly
called and held on the 13th day of February, 1997, at which meeting a quorum of
such shareholders was present in person or by proxy and that by the affirmative
vote of the holders of not less than two-thirds of the shares of the corporation
on such proposal, the following resolution of amendment was adopted:
FURTHER RESOLVED: That the Articles of Incorporation of The Custar State
Bank be, and the same are, hereby amended so that the FOURTH Article thereof
shall henceforth be and read as follows:
FOURTH: The maximum number of shares which the corporation is authorized
to have outstanding shall be One Hundred Eighty-Seven Thousand Four Hundred
Ninety-Eight (187,498) shares of common stock of the par value of Ten Dollars
($10.00) each.
FURTHER RESOLVED: That the President and Secretary of this corporation be,
and they are, hereby authorized and directed to file with the Secretary of State
of the State of Ohio, a certificate of the foregoing Amendment.
Approved this 6th day of March, 1997.
/s/ W. Xxxxxx Xxxxx
----------------------------------
W. Xxxxxx Xxxxx, Superintendent
Division of Financial Institutions
/s/ Xxxx X. Xxxxxx
----------------------------------
Xxxx X. Xxxxxx
Acting Deputy Superintendent
IN WITNESS WHEREOF, said Xxxxx Xxxxxx, President, and Xxxxxx X. Xxxxxxxxx,
Secretary, of The Custar State Bank, acting for and on behalf of said
corporation have hereunto subscribed there names and caused the seal of said
corporation to be hereunto affixed this 13th day of February, 1997.
By: /s/ Xxxxx Xxxxxx
--------------------------------
Xxxxx Xxxxxx, President
CORPORATION HAS NO SEAL
By: /s/ Xxxxxx X. Xxxxxxxxx
--------------------------------
Xxxxxx X. Xxxxxxxxx, Secretary
EXHIBIT B
AGREEMENT OF MERGER
THIS AGREEMENT OF MERGER (this "Agreement") is entered into as of the ___
day of ___________, 2004, by and between The Xxxxxxx Colonial Bank, a bank
incorporated under the laws of the State of Ohio ("CCB"), and The Custar State
Bank, a bank incorporated under the laws of the State of Ohio ("Custar").
RECITALS:
WHEREAS, the authorized capital of CCB consists of 160,232 common shares,
$12.50 par value per share, all of which are issued and outstanding and are
owned of record by Croghan Bancshares, Inc., an Ohio corporation ("CBI");
WHEREAS, the authorized capital of Custar consists of 1,500 common shares,
$12.50 par value per share, one of which is issued and outstanding and owned of
record by CBI;
WHEREAS, immediately prior to the effective date and time of this
Agreement, Croghan Interim Bank, an Ohio interim bank incorporated under the
laws of the State of Ohio ("Interim"), was merged with and into Custar (the
"Interim Merger") pursuant to the terms of the Agreement and Plan of Merger,
dated August 10, 2004, by and among Custar, CCB, CBI and Interim;
WHEREAS, the Board of Directors of CCB and Custar deem it advisable and in
the best interests of their respective corporations and their shareholders that
Custar be merged with and into CCB upon the terms and subject to the conditions
of this Agreement (the "Merger"); and
WHEREAS, the Boards of Directors of CCB and Custar have each authorized
and approved this Agreement by resolutions duly authorized by them;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements of the parties herein contained, it is hereby agreed by the
parties hereto that the terms of the Merger, and the mode of carrying the Merger
into effect, shall be as follows:
ARTICLE ONE
THE MERGER
Section 1.01. At the Effective Time (as defined in Section 4.01
below), Custar will merge with and into CCB, and CCB will be the continuing and
surviving corporation in the Merger, will continue to exist as a bank under the
laws of the State Ohio and will be the only one of the Constituent Corporations
(as hereinafter defined) to continue its separate corporate existence after the
Effective Time. As used in this Agreement, the term "Constituent Corporations"
refers to CCB and Custar before the Effective Time, and the term "Resulting
Corporation" refers to CCB after the Effective Time.
Section 1.02. The name of the Resulting Corporation shall be "The
Xxxxxxx Colonial Bank."
Section 1.03. The principal office of the Resulting Corporation
shall be located at 000 Xxxxxxx Xxxxxx, Xxxxxxx, Xxxx 00000.
Section 1.04. The purpose or purposes of the Resulting Corporation
shall be as set forth in the Articles of Incorporation of CCB as in effect
immediately before the Effective Time.
Section 1.05. The authorized capital of the Resulting Corporation
shall consist of 160,232 common shares, $12.50 par value per share.
Section 1.06. The Articles of Incorporation, as amended, and Code of
Regulations, as amended, of CCB as in effect immediately before the Effective
Time shall be the Articles of Incorporation and Code of Regulations of the
Resulting Corporation until amended in accordance with law.
Section 1.07. On and after the Effective Time, and until changed in
accordance with law, the number of directors of the Resulting Corporation shall
be eleven (11), each of whom shall serve until the annual meeting of
shareholders of the Resulting Corporation in the year indicated in the table set
forth immediately below. The names and residence addresses of the persons who
shall serve as directors on and after the Effective Time and until changed in
accordance with law are as follows:
Name Residence Address Term Expires
-------------------- ------------------------------ ------------
Xxxxxxx X. Xxxxx Xx. 000 Xxxxxxxx Xxxx 0000
Xxxxxxxx, XX 00000
Xxxxx X. Xxxxxx 000 X. Xxxxxx Xxxxxx 0000
Xxxxxxx, XX 00000
Xxxxxx X. Xxxxxxx 000 Xxxxxxx Xxxxxx 0000
Xxxxxxx, XX 00000
Xxxxxx X. Xxxxxxxx 0000 Xxxxxx XX 00 0000
Xxxxxx, XX 00000
Xxxx X. Xxxxxx 000 X. Xxxx Xxxxxx 0000
Xxxxxxx, XX 00000
Xxxxxxx X. Xxxxxx 000 Xxxxxx Xxxxxx 0000
Xxxxxxxx, XX 00000
Xxxxxx X. Lease 0000 X. Xxxxx Xxxxxx, Xxxxx 0 0000
Xxxxxxx, XX 00000
Xxxxx X. Xxxxxx 000 Xxxxxxx Xxxxxx 0000
Xxxxxxx, XX 00000
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Name Residence Address Term Expires
-------------------- ------------------------------ ------------
J. Xxxxxxxx Xxxxx 0000 XxXxxxxxx Xxxx. 0000
Xxxxxxx, XX 00000
Xxxxxx X. Xxxxx 000 Xxxxxx Xxxxxx 0000
Xxxxxxxx, XX 00000
Xxxx X. Xxxxxxxxx 0000 Xxx Xxxxxx Xxxx 0000
Xxxxxxx, XX 00000
Section 1.08. On and after the Effective Time and until changed in
accordance with law, each individual who is an officer of CCB immediately prior
to the Effective Time shall be an officer of the Resulting Corporation holding
the same office as held with CCB immediately prior to the Effective Time.
ARTICLE TWO
CONVERSION AND CANCELLATION OF SHARES
Section 2.01. At the Effective Time and as a result of the Merger,
automatically and without any further act of CCB, Custar, or the holders of CCB
or Custar shares, the following shall occur:
(a) Each of the issued and outstanding common shares of Custar
shall be cancelled and extinguished; and
(b) The issued and outstanding common shares of CCB before the
Effective Time shall be unaffected by the Merger and shall
remain issued and outstanding after the Effective Time.
ARTICLE THREE
EFFECTS OF THE MERGER
Section 3.01. On and after the Effective Time and as a result of the
Merger, the separate existence of Custar shall cease; provided, however, that
whenever a conveyance, assignment, transfer, deed or other instrument or act is
necessary to vest property or rights in the Resulting Corporation, the officers
of the respective Constituent Corporations shall execute, acknowledge and
deliver such instruments and do such acts.
Section 3.02. The status of CCB as an Ohio state-chartered member
bank shall be unaffected by the Merger. CCB shall continue after the Effective
Time subject to the statutory and administrative controls to which it was
subject before the Effective Time.
Section 3.03. On and after the Effective Time, all of the assets and
property of every kind and character, real, personal and mixed, tangible and
intangible, choses in action, rights and credits, owned by the Constituent
Corporations, or which would inure to any of them,
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shall immediately, by operation of law and without any conveyance or transfer
and without any further act or deed, be vested in and become the property of the
Resulting Corporation, which shall have, hold and enjoy the same in its own
right as fully and to the same extent as the same were possessed, held and
enjoyed by the Constituent Corporations before the Merger, and the Resulting
Corporation shall be deemed to be and shall be a continuation of the entity and
identity of CCB on and after the Effective Time.
Section 3.04. All of the rights and obligations of the Constituent
Corporations shall remain unimpaired, and the Resulting Corporation shall
succeed to all of such rights and obligations and the duties and liabilities
connected therewith. Title to any real estate or any interest therein vested in
any Constituent Corporation shall not revert or in any way be impaired by reason
of the Merger. Any claim existing, or action or proceeding pending, by or
against any Constituent Corporation, may be prosecuted to judgment with right of
appeal, as if the Merger had not taken place, or the Resulting Corporation may
be substituted in its place.
Section 3.05. On and after the Effective Time, all the rights of
creditors of each Constituent Corporation shall be preserved unimpaired, and all
liens on the property of any Constituent Corporation shall be preserved
unimpaired, on only the property affected by any such lien immediately prior to
the Effective Time.
Section 3.06. By way of example of the effect of the provisions of
this Article Three and without limiting the generality of any other provision of
this Article Three, on and after the Effective Time, all deposit accounts of
Custar shall be deemed issued in the name of the Resulting Corporation in
accordance with applicable regulations.
ARTICLE FOUR
EFFECTIVE TIME
Section 4.01. The Merger shall become effective at the date and time
specified in the Certificate of Merger filed with the Ohio Secretary of State
with respect to the Merger (the "Effective Time"); provided, however, that such
filing shall not occur and the Merger shall not be effective until all of the
following events have taken place: (a) the sole shareholder of Custar and CCB
shall have adopted this Agreement; (b) the Merger shall have been approved by
the Federal Reserve Board and the Ohio Division of Financial Institutions (the
"Division"); (c) all applicable regulatory waiting periods shall have expired;
and (d) a Certificate of Merger with respect to the Merger shall have been filed
by the Division with the Ohio Secretary of State.
ARTICLE FIVE
MISCELLANEOUS
Section 5.01. At any time before the Effective Time, this Agreement
may be amended from time to time by an agreement in writing executed in the same
manner as this Agreement of Merger, after authorization of such action by the
Boards of Directors of CCB and Custar.
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Section 5.02. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original and all of such
counterparts shall constitute one and the same instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
to be effective immediately following the effective date and time of the Interim
Merger.
ATTEST: THE XXXXXXX COLONIAL BANK
___________________________ By: __________________________
Name: ________________________
Title: _______________________
ATTEST: THE CUSTAR STATE BANK
___________________________ By: __________________________
Name: ________________________
Title: _______________________
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EXHIBIT C
FORM OF EMPLOYMENT AGREEMENT
FOR
This Employment Agreement is made effective as of August 10, 2004 (the
"Effective Date"), by and between The Xxxxxxx Colonial Bank (the "Company"), a
bank incorporated under the laws of the State of Ohio, and ____________, an
individual resident of the State of Ohio ("Executive").
WHEREAS, the Company, Croghan Bancshares, Inc. and The Custar State
Bank ("Custar") have entered into an Agreement and Plan of Merger, dated as of
August 10, 2004, pursuant to which Interim will merge with and into Custar (the
"Merger") and, immediately thereafter, Custar, as the surviving corporation in
the Merger, will merge with and into the Company; and
WHEREAS, in consideration of Executive's outstanding service to Custar,
and in order to induce Executive to enter into the employ of the Company, the
Company and Executive desire to enter into this Agreement to reflect the terms
of Executive's employment by the Company.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and upon the other terms and conditions hereinafter provided, the
parties hereby agree as follows:
1. Employment and Term. Executive hereby accepts employment by the
Company upon the terms and conditions of this Agreement. The term of Executive's
employment under this Agreement (the "Employment Term") shall commence on the
effective date of the Merger and shall end on the date that is two years after
the effective date of the Merger.
2. Duties of Executive.
(a) General Duties and Responsibilities. During the Employment
Term, Executive shall hold such position as is mutually agreed to by the parties
and shall perform such duties and responsibilities as he may be directed to
perform from time to time by senior management of the Company, in accordance
with the policies established by the Board of Directors of the Company (the
"Board") and all applicable laws and regulations.
(b) Devotion of Time to the Company's Business. During the
Employment Term, except for periods of absence occasioned by illness, reasonable
vacation periods, and reasonable leaves of absence approved by the Board or
senior management of the Company, Executive shall devote substantially all his
business time, attention, skill and efforts to the faithful performance of his
duties hereunder; provided, however, that Executive shall not be precluded from
(i) reasonable participation in community, civic, charitable, or similar
organizations; (ii) the pursuit of personal investments that do not interfere or
conflict with the performance of Executive's duties for the Company; or (iii)
with the approval of the Board, service on boards of directors of other
companies which, in the Board's judgment, will not present any conflict of
interest with the Company, or materially affect the performance of Executive's
duties pursuant to this Agreement.
3. Compensation, Benefits and Reimbursements.
(a) Base Salary. Executive shall receive an annual salary of
not less than $_________ per year ("Base Salary"). Such Base Salary shall be
payable in accordance with the Company's normal payroll practices.
(b) Benefit Plans. During the Employment Term, Executive shall
be entitled to participate in all benefit plans and programs that are generally
available to full-time employees of the Company, including participation in
Company health and medical plans and group life insurance programs (provided
that Executive cooperates with the Company to the extent necessary to obtain
such health or medical coverage). Notwithstanding the foregoing, Executive shall
be entitled to a minimum of $__________ of group life insurance coverage during
the Employment Term.
(c) Vacation. Executive shall be entitled to a minimum of
three (3) weeks paid vacation annually; provided, however, that (i) vacation
time shall be scheduled by Executive in a reasonable manner and consistent with
the Company's vacation policy; and (ii) upon termination of Executive's
employment for any reason other than for Just Cause (as defined in Section 4(a)
below), Executive shall be entitled to receive compensation from the Company for
any unused vacation.
(d) Expenses. In addition to the Base Salary provided for by
paragraph (a) of this Section 3, the Company shall pay or reimburse Executive
for all reasonable travel, entertainment and miscellaneous expenses reasonably
incurred by Executive in performing his obligations under this Agreement,
including participation in industry-related activities. Such reimbursement shall
be made in accordance with the existing policies and procedures of the Company
pertaining to reimbursement of expenses.
4. Termination of Employment.
(a) Termination for Just Cause. In the event that Executive's
employment is terminated during the Employment Term (i) by Executive for other
than Good Reason (as hereinafter defined) or (ii) by the Company because of
Executive's personal dishonesty, willful misconduct, breach of fiduciary duty
involving personal profit, intentional failure or refusal to perform the duties
and responsibilities assigned in this Agreement, willful violation of any law,
rule, regulation or final cease-and-desist order (other than traffic violations
or similar offenses), conviction of a felony or for fraud or embezzlement, or
material breach of any provision of this Agreement (collectively, "Just Cause"),
Executive shall have no right to receive any compensation or other benefits for
any period after such termination.
(b) Termination Before End of Employment Term. In the event
that, before the end of the Employment Term, the Company terminates the
employment of Executive for any reason other than Just Cause or Executive
terminates his employment for Good Reason (as hereinafter defined), the Company
shall be obligated to continue to pay Executive his Base Salary in accordance
with Section 3(a) of this Agreement for the duration of the Employment Term.
-2-
For purposes of this Section 3(b), "Good Reason" shall be
deemed to exist if, without the prior written consent of Executive, any of the
following occur: (i) a material change in Executive's functions, duties, or
responsibilities, which change would cause Executive's position to become one of
lesser responsibility, importance, or scope from the position and attributes
thereof described in Section 2 above; (ii) the relocation of Executive's
principal place of employment by more than 50 miles from Custar, Ohio; (iii) the
liquidation or dissolution of the Company other than liquidations or
dissolutions that are caused by reorganizations that do not affect the status of
Executive; or (iv) a material breach of this Agreement by the Company.
(c) Death of Executive. The Employment Term automatically
terminates upon the death of Executive. In the event of such death, Executive's
estate shall be entitled to receive the compensation due Executive through the
last day of the calendar month in which the death occurred.
5. Confidential Information. Executive acknowledges that during his
employment he has learned, will learn and will have access to confidential
information regarding the Company and its customers and business. Executive
agrees and covenants not to disclose or use for his own benefit or the benefit
of any other person or entity any confidential information, unless or until the
Company consents to such disclosure or use or such information becomes common
knowledge in the industry or is otherwise legally in the public domain.
Executive shall not knowingly disclose or reveal to any unauthorized person any
confidential information relating to the Company, its subsidiaries or
affiliates, and Executive confirms that such information constitutes the
exclusive property of the Company.
6. Nonassignability. Neither this Agreement nor any right or interest
hereunder shall be assignable by Executive, his beneficiaries or legal
representatives without the Company's prior written consent; provided, however,
that nothing in this Section 7 shall preclude (a) Executive from designating a
beneficiary to receive any benefits payable hereunder upon his death or (b) the
executors, administrators or other legal representatives of Executive or his
estate from assigning any rights hereunder to the person or persons entitled
thereto.
7. No Attachment. Except as required by law, no right to receive
payment under this Agreement shall be subject to anticipation, commutation,
alienation, sale, assignment, encumbrance, charge, pledge or hypothecation or to
execution, attachment, levy or similar process of assignment by operation of
law, and any attempt, voluntary or involuntary, to effect any such action shall
be null, void and of no effect.
8. Binding Agreement. This Agreement shall be binding upon, and inure
to the benefit of, Executive and the Company and their respective permitted
successors and assigns.
9. Amendment of Agreement. This Agreement may not be modified or
amended, except by an instrument in writing signed by the parties hereto.
10. Waiver. No term or condition of this Agreement shall be deemed to
have been waived, nor shall there be an estoppel against the enforcement of any
provision of this Agreement, except by written instrument of the party charged
with such waiver or estoppel. No
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such written waiver shall be deemed a continuing waiver, unless specifically
stated therein, and each waiver shall operate only as to the specific term or
condition waived and shall not constitute a waiver of such term or condition for
the future or as to any act other than the act specifically waived.
11. Severability. If, for any reason, any provision of this Agreement
is held invalid, such invalidity shall not affect the other provisions of this
Agreement not held so invalid, and each such other provision shall, to the full
extent consistent with applicable law, continue in full force and effect.
12. Headings. The headings of the sections herein are included solely
for convenience of reference and shall not control the meaning or interpretation
of any of the provisions of this Agreement.
13. Governing Law. This Agreement has been executed and delivered in
the State of Ohio, and its validity, interpretation, performance and enforcement
shall be governed by the laws of the State of Ohio.
14. Effect of Prior Agreements. This Agreement contains the entire
understanding between the parties hereto and supersedes any prior employment
agreement between the Company or any predecessor of the Company and Executive.
15. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original and all of such
counterparts shall constitute one and the same Agreement.
[Remainder of page intentionally left blank]
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SIGNATURES
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officers, and Executive has signed this
Agreement, on the day and year first above written.
ATTEST: THE XXXXXXX COLONIAL BANK
_________________________ By: ________________________________
Secretary Name: ______________________________
Title: _____________________________
WITNESS: EXECUTIVE:
_________________________ By: ________________________________
[Name]
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