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AGREEMENT AND PLAN OF MERGER
dated as of December 14, 2000
by and among
CKF BANCORP, INC.
and
CENTRAL KENTUCKY FEDERAL SAVINGS BANK
and
FIRST LANCASTER BANCSHARES, INC.
and
FIRST LANCASTER FEDERAL SAVINGS BANK
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TABLE OF CONTENTS
Page
AGREEMENT AND PLAN OF MERGER............................................. 1
RECITALS................................................................. 1
AGREEMENT................................................................ 2
ARTICLE 1
DEFINITIONS
1.1 Definitions...................................................... 2
ARTICLE 2
THE MERGER AND RELATED MATTERS
2.1 Merger........................................................... 5
(a) Surviving Corporation....................................... 5
(b) Certificate of Incorporation and Bylaws..................... 6
(c) Directors and Officers of the Surviving Corporation......... 6
(d) Effects of the Merger....................................... 6
(e) Transfer of Assets.......................................... 6
(f) Assumption of Liabilities................................... 6
2.2 Effective Time................................................... 6
2.3 Conversion of First Lancaster Common Stock....................... 6
2.4 Merger Sub Common Stock.......................................... 7
2.5 Dissenting Shares................................................ 7
2.6 Stock Options/Restricted Stock................................... 7
2.7 Voting Agreement................................................. 8
2.8 Exchange of First Lancaster Common Stock......................... 8
2.9 Closing.......................................................... 9
2.10 Bank Merger...................................................... 9
2.11 Reservation of Right to Revise Transaction....................... 9
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF CKF BANCORP
3.1 Organization and Corporate Authority of CKF Bancorp.............. 10
3.2 Organization and Qualification of Central Kentucky
Federal and Merger Sub......................................... 10
3.3 Authorization, Execution and Delivery; Merger Agreement
Not in Breach.................................................. 11
3.4 No Legal Bar..................................................... 11
3.5 Government Approvals............................................. 11
3.6 Community Reinvestment Act Compliance............................ 12
3.7 Disclosure....................................................... 12
3.8 CKF Bancorp Financial Statements................................. 12
3.9 Consideration.................................................... 12
3.10 Litigation....................................................... 12
3.11 Absence of Regulatory Actions.................................... 12
3.12 Statements True and Correct...................................... 13
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF FIRST LANCASTER AND THE BANK
4.1 Organization and Qualification of First Lancaster and
Subsidiaries................................................... 13
4.2 Organization and Qualification of the Bank....................... 13
4.3 Authorization, Execution and Delivery; Merger Agreement Not in
Breach......................................................... 14
4.4 No Legal Bar..................................................... 14
4.5 Government and Other Approvals................................... 14
4.6 Compliance With Law.............................................. 15
4.7 Charter Documents................................................ 15
4.8 First Lancaster Financial Statements............................. 15
4.9 Absence of Certain Changes ...................................... 16
4.10 Deposits......................................................... 17
4.11 Properties....................................................... 17
4.12 First Lancaster Subsidiaries..................................... 17
4.13 Condition of Fixed Assets and Equipment.......................... 18
4.14 Tax Matters...................................................... 18
4.15 Litigation....................................................... 18
4.16 Hazardous Materials.............................................. 19
4.17 Insurance........................................................ 21
4.18 Labor and Employment Matters..................................... 21
4.19 Records and Documents............................................ 22
4.20 Capitalization of First Lancaster................................ 22
4.21 Capitalization of the Bank....................................... 22
4.22 Sole Agreement................................................... 22
4.23 Disclosure....................................................... 23
4.24 Absence of Undisclosed Liabilities............................... 23
4.25 Allowance for Loan Losses ....................................... 23
4.26 Compliance with Laws............................................. 24
4.27 Absence of Regulatory Actions.................................... 24
4.28 Employee Benefit Plans........................................... 24
4.29 Material Contracts............................................... 28
4.30 Material Contract Defaults....................................... 30
4.31 Reports.......................................................... 30
4.32 Statements True and Correct...................................... 30
4.33 Brokers and Finders.............................................. 30
4.34 Derivatives Contracts; Structured Notes, Etc..................... 30
4.35 Loans............................................................ 31
4.36 Anti-takeover Provisions Inapplicable............................ 31
4.37 Expenses......................................................... 31
ARTICLE 5
COVENANTS OF CKF BANCORP
5.1 Regulatory Approvals............................................. 31
5.2 Preparation of First Lancaster Proxy Statement................... 31
5.3 Employees........................................................ 32
5.4 Addition to Board of Directors................................... 33
5.5 Reasonable Efforts to Close...................................... 33
5.6 Indemnification.................................................. 33
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ARTICLE 6
COVENANTS OF FIRST LANCASTER AND THE BANK
6.1 Proxy Statement; First Lancaster Shareholder Approval............ 34
6.2 Conduct of Business -- Affirmative Covenants..................... 35
6.3 Conduct of Business -- Negative Covenants ....................... 38
6.4 Conduct of Business -- Certain Actions........................... 40
6.5 Accruals and Reserves............................................ 40
6.6 Access; Information.............................................. 41
ARTICLE 7
CONDITIONS TO CLOSING
7.1 Conditions to the Obligations of First Lancaster and the Bank.... 41
(a) Performance................................................. 41
(b) Representations and Warranties.............................. 41
(c) Documents................................................... 41
(d) Consideration .............................................. 42
(e) Opinion of CKF Bancorp's Counsel............................ 42
7.2 Conditions to the Obligations of CKF Bancorp..................... 43
(a) Performance ................................................ 43
(b) Representations and Warranties.............................. 43
(c) Documents................................................... 43
(d) Destruction of Property..................................... 44
(e) No Material Adverse Change.................................. 44
(f) Opinion of First Lancaster's and the Bank's Counsel......... 44
(g) Other Business Combinations, Etc............................ 46
(h) Maintenance of Certain Covenants, Etc....................... 46
(i) Dissenting Shares........................................... 46
(j) Accruals and Reserves....................................... 46
(k) Consultant Agreement........................................ 46
(l) Non-competition Agreement................................... 46
7.3 Conditions to Obligations of All Parties......................... 47
(a) No Pending or Threatened Claims............................. 47
(b) Stockholder Approval........................................ 47
(c) Government Approvals and Acquiescence Obtained.............. 47
ARTICLE 8
TERMINATION
8.1 Termination...................................................... 47
8.2 Effect of Termination............................................ 48
8.3 Termination Fee.................................................. 48
8.4 CKF Bancorp Fee.................................................. 49
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ARTICLE 9
GENERAL PROVISIONS
9.1 Notices.......................................................... 49
9.2 Assignability and Parties in Interest............................ 50
9.3 Governing Law.................................................... 50
9.4 Counterparts..................................................... 50
9.5 Publicity........................................................ 50
9.6 Entire Agreement................................................. 51
9.7 Severability .................................................... 51
9.8 Modifications, Amendments and Waivers............................ 51
9.9 Interpretation................................................... 51
9.10 Payment of Expenses ............................................. 51
9.11 Equitable Remedies............................................... 51
9.12 Attorneys' Fees ................................................. 52
9.13 No Waiver ....................................................... 52
9.14 Remedies Cumulative.............................................. 52
9.15 Non-Survival of Representations and Warranties................... 52
Exhibit A Agreement of Company Merger
Exhibit B Plan of Complete Liquidation and Dissolution
Exhibit C Plan of Bank Merger
Exhibit D Voting Agreement
Exhibit E Consultant Agreement
Exhibit F Non-competition Agreement
Exhibit G Directors Agreement
iv
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Merger Agreement") is made and
entered into this 14th day of December 2000, by and between CKF BANCORP, INC.
("CKF Bancorp"), a corporation chartered and existing under the laws of the
State of Delaware, CENTRAL KENTUCKY FEDERAL SAVINGS BANK ("Central Kentucky
Federal"), a federal savings bank chartered and existing under the laws of the
United States of America, FIRST LANCASTER BANCSHARES, INC. ("First
Lancaster"), a corporation chartered and existing under the laws of the State
of Delaware and FIRST LANCASTER FEDERAL SAVINGS BANK (the "Bank"), a federal
savings bank chartered and existing under the laws of the United States of
America.
RECITALS
A. CKF Bancorp, Central Kentucky Federal, First Lancaster and the Bank,
on the terms and conditions hereinafter set forth, desire to effect an
acquisition transaction pursuant to which Central Kentucky Federal will
acquire for cash all of the shares of First Lancaster Common Stock (as
hereinafter defined) outstanding at the Effective Time (as hereinafter
defined) at a purchase price per share equal to the amount set forth in
Section 2.3(a) hereof.
B. To effect the acquisition, (i) Central Kentucky Federal shall
incorporate a corporation organized under the laws of the State of Delaware
("Merger Sub"), which shall be merged with and into First Lancaster (the
"Merger") pursuant to the Agreement of Company Merger substantially in the
form attached hereto as Exhibit A, and in connection therewith, and subject to
the rights of dissenting stockholders which have been asserted and duly
perfected in accordance with the provisions of Section 262 of the DGCL, each
share of First Lancaster Common Stock and each option to purchase such stock
granted as of the date of this Merger Agreement pursuant to the First
Lancaster Option Plan, outstanding immediately prior to the Closing Date shall
be canceled in exchange for the right to receive the cash payments specified
herein; (ii) immediately after (i), First Lancaster shall be liquidated
pursuant to the Plan of Complete Liquidation and Dissolution substantially in
the form attached hereto as Exhibit B, with the result that Central Kentucky
Federal will acquire all the assets and liabilities of First Lancaster and
First Lancaster shall cease to exist, and (iii) the Bank shall merge with and
into Central Kentucky Federal pursuant to the Plan of Bank Merger
substantially in the form attached hereto as Exhibit C, with Central Kentucky
Federal surviving the merger with the result that Central Kentucky Federal
will acquire all the assets and liabilities of the Bank and the Bank shall
cease to exist (the transactions are sometimes collectively referred to as the
"Merger").
C. The parties hereto desire to make certain representations,
warranties, covenants and agreements in connection with the Merger and also to
prescribe various conditions to the Merger.
D. Concurrently with the execution and delivery of this Merger
Agreement, and as an inducement to CKF Bancorp's willingness to enter into
this Merger Agreement, each member of the board of directors of First
Lancaster has entered into an agreement with CKF Bancorp pursuant to which,
among other things, they have agreed to vote in favor of approval of the
transactions contemplated by this Merger Agreement at the Shareholders Meeting
(as hereinafter defined).
E. The respective Boards of Directors of CKF Bancorp, First Lancaster
and the Bank have duly approved this Merger Agreement and have duly authorized
its execution and delivery.
NOW THEREFORE, in consideration of the foregoing premises and the mutual
representations, warranties, covenants and agreements herein contained and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the Parties (as hereinafter defined) agree as follows:
AGREEMENT AND PLAN OF MERGER - Page 1
AGREEMENT
ARTICLE 1
DEFINITIONS
1.1 Definitions. As used in this Merger Agreement, the following
terms have the definitions indicated:
"Affiliate" of a party means any person, partnership, corporation,
association or other legal entity directly or indirectly controlling,
controlled by or under common control, with that party.
"Agreement of Company Merger" shall mean the Agreement of Company
Merger substantially in the form of Exhibit A hereto to be executed by
authorized representatives of First Lancaster and Merger Sub and filed with
the Secretary of State of the State of Delaware and providing for the Merger
of Merger Sub with and into First Lancaster, as contemplated by Section 2.1 of
this Merger Agreement.
"Applicable Environmental Laws" shall have the meaning assigned to
such term in Section 4.16(a) of this Merger Agreement.
"Acquisition Proposal" shall have the meaning assigned to such term
in Section 6.4 of this Merger Agreement.
"Balance Sheet Date" shall have the meaning assigned to such term in
Section 4.9 of this Merger Agreement.
"Bank" means First Lancaster Federal Savings Bank, a federal savings
bank chartered and existing under the laws of the United States of America.
"Bank Merger" means the merger of the Bank into Central Kentucky
Federal as contemplated by Section 2.10 of this Merger Agreement.
"Bank Common Stock" has the meaning assigned to such term in Section
4.21 of this Merger Agreement.
"CKF Bancorp" shall mean CKF Bancorp, Inc., a Delaware-chartered
savings and loan holding company having its principal place of business in
Danville, Kentucky.
"CKF Bancorp Fee" shall have the meaning assigned to such term in
Section 8.4 of this Merger Agreement.
"Central Kentucky Federal" means Central Kentucky Federal Savings
Bank, Danville, Kentucky, a federal savings bank chartered and existing under
the laws of the United States of America and the wholly owned subsidiary of
CKF Bancorp.
"CERCLA" shall have the meaning set forth in Section 4.16(a) of this
Merger Agreement.
"Certificate" shall have the meaning assigned to such term in
Section 2.8(a) of this Merger Agreement.
AGREEMENT AND PLAN OF MERGER - Page 2
"Closing" shall have the meaning assigned to such term in Section
2.9 of this Merger Agreement.
"Closing Date" shall have the meaning assigned to such term in
Section 2.9 of this Merger Agreement.
"DGCL" shall mean the Delaware General Corporation Law.
"Consideration" shall mean the value to be received by the First
Lancaster Shareholders in exchange for their First Lancaster Common Stock,
such value to be determined as provided in Section 2.3(a) of this Merger
Agreement.
"Deposits" shall mean all deposits (including, but not limited to,
certificates of deposit, savings accounts, NOW accounts and checking accounts)
of the Bank.
"Dissenting Shares" shall have the meaning assigned to such term in
Section 2.5 of this Merger Agreement.
"Effective Date of the Merger" shall mean that date on which the
Effective Time shall have occurred.
"Effective Time" shall have the meaning assigned in Section 2.2 of
this Merger Agreement.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"FDIC" means the Federal Deposit Insurance Corporation, or any
successor thereto.
"First Lancaster Common Stock" has the meaning assigned to such
terms in Section 2.3(a) of this Merger Agreement.
"First Lancaster Financial Statements" shall have the meaning
assigned to such term in Section 4.8 of this Merger Agreement.
"First Lancaster Option" means an option to acquire shares of First
Lancaster Common Stock.
"First Lancaster Option Plan" means the First Lancaster Bancshares,
Inc. 1996 Stock Option and Incentive Plan.
"First Lancaster Shareholders" means the holders of the First
Lancaster Common Stock.
"GAAP" shall mean generally accepted accounting principles,
consistently applied.
"Government Approvals" shall have the meaning assigned to such term
in Section 3.5 of this Merger Agreement.
"Hazardous Substances" shall have the meaning set forth in Section
4.16(a) of this Merger Agreement.
"Internal Revenue Code" shall mean the Internal Revenue Code of
1986, as amended.
AGREEMENT AND PLAN OF MERGER - Page 3
"Loan Property" shall have the meaning assigned to such term in
Section 4.16(a) of this Merger Agreement.
"Merger" shall, as described in Section 2.1 of this Merger
Agreement, mean the merger of Merger Sub with and into First Lancaster, with
First Lancaster surviving the Merger as the Surviving Corporation.
"Merger Agreement" means this Agreement and Plan of Merger together
with all Exhibits and Schedules annexed to, and incorporated by specific
reference as a part of, this Merger Agreement.
"Officer" shall have the meaning set forth in Section 4.9(k) of this
Merger Agreement.
"OTS" shall mean the Office of Thrift Supervision.
"Parties" shall mean First Lancaster, the Bank, CKF Bancorp and
Central Kentucky Federal collectively; First Lancaster or the Bank on the one
hand, or CKF Bancorp and Central Kentucky Federal on the other hand, may
sometimes be referred to as a "Party."
"Paying Agent" shall have the meaning assigned to such term in
Section 2.8(a) of this Merger Agreement.
"Pension Plan" shall mean any employee pension benefit plan as such
term is defined in Section 3(2) of ERISA which is maintained by the referenced
Party.
"Person" shall mean any natural person, fiduciary, corporation,
partnership, joint venture, association, business trust or any other entity of
any kind.
"Plan of Bank Merger" shall mean the Plan of Bank Merger
substantially in the form of Exhibit C hereto to be executed by authorized
representatives of the Bank and Central Kentucky Federal and filed with the
OTS and providing for the merger of the Bank with and into Central Kentucky
Federal as contemplated by Section 2.10 of this Merger Agreement.
"Plan of Complete Liquidation and Dissolution" shall mean the Plan
of Complete Liquidation and Dissolution substantially in the form of Exhibit B
hereto to be executed by authorized representatives of First Lancaster and
filed with the Secretary of State of the State of Delaware providing for the
liquidation and dissolution of First Lancaster, as contemplated by Section 2.1
of this Merger Agreement.
"Property" shall have the meaning assigned to such term in Section
4.16(a) of this Merger Agreement.
"Proxy Statement" shall mean the proxy statement to be used by First
Lancaster to solicit proxies with a view to securing the approval of the First
Lancaster Shareholders of this Merger Agreement.
"Realty" means the real property of the Bank owned or leased by the
Bank or any Subsidiary of the Bank.
"Records" means all available records, minutes of meetings of the
Board of Directors, committees and shareholders of First Lancaster and the
Bank, original instruments and other documentation, pertaining to First
Lancaster and the Bank, First Lancaster's and the Bank's assets (including
plans and specifications relating to the Realty), and liabilities, the First
Lancaster Common Stock, the Deposits and the loans, and all other business and
AGREEMENT AND PLAN OF MERGER - Page 4
financial records which are necessary or customary for use in the conduct of
First Lancaster's and the Bank's business by CKF Bancorp and Central Kentucky
Federal on and after the Effective Time as it was conducted prior to the
Closing Date.
"Regulatory Authorities" shall mean, collectively, the Department of
Justice, the FDIC, the SEC, the OTS, or any other state or federal
governmental or quasi-governmental entity which has, or may hereafter have,
jurisdiction over any of the transactions described in this Merger Agreement.
"Release" shall have the meaning assigned to such term in Section
4.16(b)(i) of this Merger Agreement.
"SEC" shall mean the Securities and Exchange Commission, or any
successor thereto.
"SEC Documents" shall mean all reports, proxy statements and
registration statements filed, or required to be filed, by a Party or any of
its Subsidiaries pursuant to the Securities Laws, whether filed, or required
to be filed, with the SEC, the OTS, or with any other Regulatory Authority
pursuant to the Securities Laws.
"Securities Laws" shall mean the Securities Act of 1933, as amended,
the Securities Exchange Act of 1934, as amended, ("1934 Act"), the Investment
Company Act of 1940, as amended, the Investment Advisers Act of 1940, as
amended, the Trust Indenture Act of 1939, as amended, and the rules and
regulations of the SEC promulgated thereunder, as well as any similar state
securities laws and any similar rules and regulations promulgated by the
applicable federal bank Regulatory Authorities.
"Shareholders Meeting" shall mean the special meeting of First
Lancaster Shareholders to be held pursuant to Section 6.1 of this Merger
Agreement, including any adjournment or adjournments thereof.
"Subsidiaries" shall mean all of those corporations, or other
entities of which the entity in question owns or controls 5% or more of the
outstanding voting equity securities either directly or through an unbroken
chain of entities as to each of which 5% or more of the outstanding equity
securities is owned directly or indirectly by its parent.
"Surviving Corporation" shall mean First Lancaster as the
corporation resulting from the consummation of the Merger as set forth in
Section 2.1 of this Merger Agreement.
"Voting Agreement" shall mean the Voting Agreement substantially in
the form of Exhibit D hereto to be signed by each director of First Lancaster
as contemplated by Section 2.7 of this Merger Agreement.
ARTICLE 2
THE MERGER AND RELATED MATTERS
2.1 Merger. Subject to the terms and conditions of this Merger
Agreement, and pursuant to the provisions of the DGCL, the Home Owners Loan
Act, as amended ("HOLA"), and the rules and regulations promulgated
thereunder, at the Effective Time (as hereinafter defined):
(a) Surviving Corporation. Merger Sub shall be merged with
and into First Lancaster pursuant to the terms and conditions set forth herein
and pursuant to the Agreement of Company Merger attached hereto as Exhibit A.
Upon consummation of the Merger, the separate existence of the Merger Sub
shall cease and First Lancaster shall continue as the Surviving Corporation in
the Merger and be a wholly owned subsidiary of Central
AGREEMENT AND PLAN OF MERGER - Page 5
Kentucky Federal; and all of the property (real, personal and mixed), rights,
powers and duties and obligations of Merger Sub shall be taken and deemed to
be transferred to and vested in First Lancaster, as the Surviving Corporation
in the Merger, without further act or deed.
(b) Certificate of Incorporation and Bylaws. The certificate
of incorporation and bylaws of First Lancaster as in effect on the Effective
Time shall continue in full force and effect following the Effective Time as
the certificate and bylaws of the Surviving Corporation.
(c) Directors and Officers of the Surviving Corporation.
From and after the Effective Time, the directors and officers of the Surviving
Corporation shall consist of the directors and officers of Merger Sub serving
immediately prior to the Effective Time, each to hold office in accordance
with the certificate of incorporation and bylaws of the Surviving Corporation
until their respective successors are duly elected or appointed and qualified.
(d) Effects of the Merger. The separate existence of Merger
Sub shall cease, and Merger Sub shall be merged with and into First Lancaster
which, with First Lancaster as the Surviving Corporation, shall thereupon and
thereafter possess all of the assets, rights, privileges, appointments,
powers, licenses, permits and franchises of the two merged corporations,
whether of a public or a private nature, and shall be subject to all of the
liabilities, restrictions, disabilities and duties of both Merger Sub and
First Lancaster.
(e) Transfer of Assets. All rights, assets, licenses,
permits, franchises and interests of Merger Sub and First Lancaster in and to
every type of property, whether real, personal, or mixed, whether tangible or
intangible, and to choses in action shall be deemed to be vested in First
Lancaster as the Surviving Corporation by virtue of the Merger becoming
effective and without any deed or other instrument or act of transfer
whatsoever.
(f) Assumption of Liabilities. The Surviving Corporation
shall become and be liable for all debts, liabilities, obligations and
contracts of Merger Sub as well as those of First Lancaster, whether the same
shall be matured or unmatured; whether accrued, absolute, contingent or
otherwise; and whether or not reflected or reserved against in the balance
sheets, other financial statements, books of account or records of Merger Sub
or First Lancaster.
2.2 Effective Time. As soon as practicable after each of the
conditions set forth in Article 7 hereof have been satisfied or waived, the
Parties will file, or cause to be filed, with the Secretary of State of the
State of Delaware such articles of merger as they may deem necessary or
appropriate for the Merger which articles of merger shall be in the form
required by and executed in accordance with the applicable provisions of the
DGCL. The Merger shall become effective at the time the articles of merger
for the Merger are filed with the Secretary of State of the State of Delaware
or at such time as may be specified therein (the "Effective Time").
2.3 Conversion of First Lancaster Common Stock. At the Effective
Time:
(a) Each share of common stock of the First Lancaster, $.01
par value per share ("First Lancaster Common Stock"), issued and outstanding
immediately prior thereto (except for Dissenting Shares, as defined herein)
including all outstanding options as provided in Section 2.6, shall, by virtue
of the Merger and without any action on the part of the holder thereof, be
converted into the right to receive from Central Kentucky Federal in cash,
without any interest thereon from the Effective Time until the time of
payment, an amount equal to $16.27 (the "Consideration").
Notwithstanding any other provision of this Merger Agreement,
any shares of the First Lancaster Common Stock issued and outstanding
immediately prior to the Effective Time which are then owned beneficially or
of record by CKF Bancorp, First Lancaster or by any direct or indirect
Subsidiary of any of them,
AGREEMENT AND PLAN OF MERGER - Page 6
including shares held by the trust established pursuant to the First Lancaster
Federal Savings Bank Management Recognition Plan (the "First Lancaster MRP")
other than in a fiduciary capacity, or are held in the treasury of First
Lancaster shall, by virtue of the Merger, be canceled without payment of any
consideration therefor and without any conversion thereof.
(b) The holders of Certificates (as hereinafter defined)
representing shares of First Lancaster Common Stock shall cease to have any
rights as stockholders of First Lancaster, except such rights, if any, as they
may have pursuant to the DGCL. Except as provided above, until Certificates
(as hereinafter defined) representing shares of First Lancaster Common Stock
are surrendered for exchange, each such Certificate shall, after the Effective
Time, represent for all purposes only the right to receive the aggregate
amount of Consideration into which their shares of First Lancaster Common
Stock shall have been converted by the Merger as provided above.
(c) The stock transfer books of First Lancaster shall be
closed and no transfer of shares of First Lancaster Common Stock shall be made
thereafter.
2.4 Merger Sub Common Stock. At the Effective Time, the shares of
common stock of Merger Sub issued and outstanding immediately prior to the
Effective Time shall be converted into and exchanged for one share of the
Surviving Corporation.
2.5 Dissenting Shares. Notwithstanding any other provision of this
Merger Agreement to the contrary, shares of First Lancaster Common Stock that
are outstanding immediately prior to the Effective Time and that are held by
stockholders who shall have not voted in favor of the Merger or consented
thereto in writing and who properly shall have delivered to First Lancaster a
written demand for appraisal of such shares in accordance with the DGCL
(collectively, the "Dissenting Shares") shall not be converted into or
represent the right to receive the Consideration. Such stockholders instead
shall be entitled to receive payment of the fair value of such shares held by
them in accordance with the provisions of the DGCL, except that all Dissenting
Shares held by stockholders who shall have failed to perfect or who
effectively shall have withdrawn or otherwise lost their dissenters' rights
under the DGCL shall thereupon be deemed to have been converted into and to
have become exchangeable, as of the Effective Time, for the right to receive,
without any interest thereon, the Consideration upon surrender in the manner
provided in Section 2.3, of the Certificate(s) (as hereinafter defined) of
First Lancaster that, immediately prior to the Effective Time, evidenced such
shares. First Lancaster shall give CKF Bancorp (i) prompt notice of any
written demands for appraisal of the fair value of any shares of First
Lancaster Common Stock, attempted withdrawals of such demands and any other
instruments served pursuant to the DGCL and received by First Lancaster
relating to stockholders' rights of appraisal, and (ii) the opportunity to
direct all negotiations and proceedings with respect to demands for appraisal
under the DGCL, provided that CKF Bancorp shall keep First Lancaster fully
informed as to the substance of all such negotiations and proceedings. First
Lancaster shall not, except with the prior written consent of CKF Bancorp,
voluntarily make any payment with respect to, or settle or offer to settle,
any such demand for appraisal. Notwithstanding any other provision of this
Merger Agreement, any Dissenting Shares shall not, after the Effective Time,
be entitled to vote for any purpose or receive any dividends or other
distributions and shall be entitled only to such rights as are afforded in
respect of Dissenting Shares pursuant to the DGCL.
2.6 Stock Options/Restricted Stock.
(a) Options to acquire 70,950 shares of First Lancaster Common
Stock (each a "First Lancaster Option") have been granted and remain
outstanding pursuant to the First Lancaster Bancshares, Inc. 1996 Stock Option
and Incentive Plan (the "First Lancaster Option Plan"). At the Effective
Time, each First Lancaster Option to acquire shares of First Lancaster Common
Stock granted pursuant to the First Lancaster Option Plan that is then
outstanding and unexercised, whether or not then vested, shall be canceled,
and in lieu thereof the holders of such options shall be paid in cash an
amount equal to the product of (i) the number of shares of First Lancaster
Common Stock subject to such option at the Effective Time and (ii) the amount
by which $16.27 exceeds the exercise
AGREEMENT AND PLAN OF MERGER - Page 7
price per share of such option, net of any cash which must be withheld under
federal and state income and employment tax requirements. In the event that
the exercise price of a First Lancaster Option is greater than the Merger
Consideration, then at the Effective Time such First Lancaster Option shall be
canceled without any payment made in exchange therefor. At the Effective Time
the First Lancaster Option Plan shall be deemed terminated.
(b) At the Effective Time, each holder of an award granted
under the First Lancaster MRP but that has not yet vested shall be entitled to
receive in cash, without any interest thereon from the Effective Time until
the time of payment, the Consideration as provided for in Section 2.3(a) of
this Merger Agreement for each unvested share awarded under the First
Lancaster MRP. Notwithstanding the foregoing, no consideration will be paid
for the 6,573 ungranted restricted stock awards under the First Lancaster MRP.
2.7 Voting Agreement. Simultaneous with the execution and delivery
of this Merger Agreement, each director of First Lancaster will execute and
deliver to CKF Bancorp a Voting Agreement in the form attached hereto as
Exhibit D.
2.8 Exchange of First Lancaster Common Stock
(a) As soon as practicable but not later than five business
days after the Effective Time, holders of record of certificates formerly
representing shares of First Lancaster Common Stock (the "Certificates") shall
be instructed to tender such Certificates to an independent paying agent to be
selected by CKF Bancorp (the "Paying Agent") pursuant to a letter of
transmittal that CKF Bancorp shall deliver or cause to be delivered to such
holders. Such letter of transmittal shall specify that risk of loss and title
to Certificates shall pass only upon acceptance of such Certificates by the
Paying Agent.
(b) After the Effective Time, each holder of a Certificate
that surrenders such Certificate to the Paying Agent will, upon acceptance
thereof by the Paying Agent, be entitled, within five business days after
acceptance, to the aggregate Consideration payable in respect of the shares
represented thereby. At or before Effective Time, CKF Bancorp or Central
Kentucky Federal shall deposit, or cause to be deposited, with the Paying
Agent, for the benefit of the holders of First Lancaster Common Stock, an
amount of cash equal to the product of the number of outstanding shares of
First Lancaster Common Stock (not including any Dissenting Shares) and the
Consideration.
(c) The Paying Agent shall accept Certificates upon compliance
with such reasonable terms and conditions as CKF Bancorp or the Paying Agent
may impose to effect an orderly exchange thereof in accordance with customary
exchange practices. Certificates shall be appropriately endorsed or
accompanied by such instruments of transfer as CKF Bancorp or the Paying Agent
may reasonably require in accordance with customary and prudent exchange
procedures.
(d) Each outstanding Certificate, other than those
representing Dissenting Shares, shall until duly surrendered to CKF Bancorp or
the Paying Agent be deemed to evidence the right to receive the Consideration.
(e) After the Effective Time, holders of Certificates shall
cease to have rights with respect to First Lancaster Common Stock previously
represented by such Certificates, and their sole rights (other than the
holders of Certificates representing Dissenting Shares) shall be to exchange
such Certificates for the Consideration. After the Effective Time, there
shall be no further transfer on the records of First Lancaster of
Certificates, and if such Certificates are presented to First Lancaster for
transfer, they shall be canceled against delivery of the Consideration. CKF
Bancorp shall not be obligated to deliver the Consideration to any holder of
First Lancaster Common Stock until such holder surrenders the Certificates as
provided herein. Any portion of the aggregate Consideration or the proceeds
AGREEMENT AND PLAN OF MERGER - Page 8
of any investments thereof that remains unclaimed by the shareholders of First
Lancaster for twelve (12) months after the Effective Time shall be repaid by
the Paying Agent to CKF Bancorp. Any shareholders of First Lancaster who have
not theretofore complied with this Section 2.8 shall thereafter look only to
CKF Bancorp for payment of their Consideration deliverable in respect of each
share of First Lancaster Common Stock such stockholder holds as determined
pursuant to this Merger Agreement without any interest thereon. If
outstanding Certificates are not surrendered or the payment for them not
claimed prior to the date on which such payments would otherwise escheat to or
become the property of any governmental unit or agency, the unclaimed items
shall, to the extent permitted by abandoned property and any other applicable
law, become the property of CKF Bancorp (and to the extent not in its
possession shall be paid over to it), free and clear of all claims or interest
of any person previously entitled to such claims. Neither the Paying Agent
nor any Party to this Merger Agreement nor any Affiliate thereof shall be
liable to any holder of First Lancaster Common Stock represented by any
Certificate for any consideration paid to a public official pursuant to
applicable abandoned property, escheat or similar laws unless and only to the
extent otherwise required by such abandoned property, escheat or similar laws.
CKF Bancorp and the Paying Agent shall be entitled to rely upon the stock
transfer books of First Lancaster to establish the identity of those persons
entitled to receive the Consideration, which books shall be conclusive with
respect thereto. In the event of a dispute with respect to ownership of stock
represented by any Certificate, CKF Bancorp and the Paying Agent shall be
entitled to deposit any consideration in respect thereof in escrow with an
independent third party and thereafter be relieved with respect to any claims
thereto.
(f) In the event any Certificate shall have been lost, stolen
or destroyed, the Paying Agent shall issue in exchange for such lost, stolen
or destroyed Certificate, upon the making of an affidavit of that fact by the
holder thereof, the consideration as may be required pursuant thereto;
provided, however, that CKF Bancorp may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost, stolen or
destroyed certificate to deliver a bond in such sum as it may reasonably
direct as indemnity against any claim that may be made against CKF Bancorp,
Central Kentucky Federal, the Paying Agent or any other party with respect to
the Certificate alleged to have been lost, stolen or destroyed.
2.9 Closing. Subject to the provisions of Article 7 hereof, the
closing of the transactions contemplated by this Merger Agreement (the
"Closing") shall take place as soon as practicable but no later than thirty
days after satisfaction or waiver of all of the conditions to Closing, and
shall be on such date, time and location as is mutually agreed to by CKF
Bancorp and First Lancaster. At the Closing, the Parties shall use their
respective best efforts to deliver the certificates, letters and opinions
which constitute conditions to effecting the Merger and each Party will
provide the other Parties with such proof or indication of satisfaction of the
conditions to the obligations of such other Parties to consummate the Merger
as such other Parties may reasonably require. If all conditions to the
obligations of each of the Parties shall have been satisfied or lawfully
waived by the Party entitled to the benefits thereof, the Parties shall, at
the Closing, duly execute the Agreement of Company Merger for filing with the
Secretary of State of the State of Delaware and promptly thereafter shall take
all steps necessary or desirable to consummate the Merger in accordance with
all applicable laws, rules and regulations and the Agreement of Company Merger
which is attached hereto as Exhibit A and incorporated by reference as part of
this Merger Agreement. The Parties shall thereupon take such other and
further actions as may be required by law or this Merger Agreement to
consummate the transactions contemplated herein. The date on which the
Closing actually occurs is herein referred to as the "Closing Date".
2.10 Bank Merger. Concurrently with or as soon as practicable
after the execution and delivery of this Agreement, Central Kentucky Federal
and the Bank shall enter into the Plan of Bank Merger, in the form attached
hereto as Exhibit C, pursuant to which the Bank will merge with and into
Central Kentucky Federal (the "Bank Merger"). The parties hereto intend that
the Bank Merger shall become effective on the Effective Date.
2.11 Reservation of Right to Revise Transaction. CKF Bancorp shall
have the unilateral right to revise the method of effecting the Merger in
order to achieve tax benefits or for any other reason which CKF Bancorp may
deem advisable; provided, however, that CKF Bancorp shall not have the right,
without the prior written
AGREEMENT AND PLAN OF MERGER - Page 9
approval of the Board of Directors of First Lancaster, to make any revision to
the structure of the Merger which (i) changes the amount of the Consideration
which the First Lancaster Shareholders are entitled to receive (determined in
the manner provided in Section 2.3 of this Merger Agreement); (ii) would
permit CKF Bancorp to pay the Consideration other than by cash or other
immediately available funds; (iii) materially impede or delay the receipt of
regulatory approval referred to in, or the consummation of the transactions
contemplated by the Merger Agreement or (iv) would result in treatment for
Federal income tax purposes of receipt by a First Lancaster Shareholder of any
portion of the Consideration to be received hereunder as a taxable dividend.
CKF Bancorp may exercise this right of revision by giving written notice
thereof to First Lancaster in the manner provided in Section 9.1 of this
Merger Agreement and this Merger Agreement and any related documents shall be
appropriately amended in order to reflect any such revised structure.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF
CKF BANCORP AND CENTRAL KENTUCKY FEDERAL
CKF Bancorp and Central Kentucky Federal represent and warrant to First
Lancaster and the Bank as follows:
3.1 Organization and Corporate Authority of CKF Bancorp. CKF
Bancorp is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. CKF Bancorp is registered as a
savings and loan holding company with the OTS and engages only in activities
permitted by the HOLA and the rules and regulations promulgated by the OTS
thereunder. CKF Bancorp (i) has the requisite corporate power and authority
to own, operate and lease its material properties and carry on its businesses
as they are currently being conducted; (ii) is in good standing and is duly
qualified to do business in each jurisdiction where the character of its
properties owned or held under lease or the nature of its business makes such
qualification necessary and where the failure to so qualify would individually
or in the aggregate have a material adverse affect on the condition (financial
or otherwise), affairs, business, assets or prospects of CKF Bancorp and
Central Kentucky Federal taken as a whole and; (iii) has in effect all
federal, state, local and foreign governmental authorizations, permits and
licenses necessary for it to own or lease its properties and assets and to
carry on its businesses as they are currently being conducted. The
Certificate of Incorporation and Bylaws of CKF Bancorp, as amended to date,
are in full force and effect as of the date of this Merger Agreement.
3.2 Organization and Qualification of Central Kentucky Federal and
Merger Sub.
(a) Central Kentucky Federal is a federally chartered stock
savings bank, duly organized, validly existing and in good standing under the
laws of the United States and engages only in activities (and holds properties
only of the types) permitted by the rules and regulations promulgated by the
OTS or the FDIC for insured depository institutions. Central Kentucky Federal
(a) has all requisite corporate power and authority to own, operate and lease
its properties and to carry on its business as it is currently being conducted
(including all requisite authority to operate branches in the Commonwealth of
Kentucky) and (b) is in good standing and is duly qualified to do business in
each jurisdiction where the character of its properties owned or held under
lease or the nature of its business makes such qualification necessary and
where the failure to so qualify would individually or in the aggregate have a
material adverse effect on the condition (financial or otherwise), affairs,
business, assets or prospects of Central Kentucky Federal and all CKF Bancorp
Subsidiaries, taken as a whole. Central Kentucky Federal's deposit accounts
are insured by the Savings Association Insurance Fund as administered by the
FDIC to the fullest extent permitted under applicable law. Central Kentucky
Federal is a member in good standing of the Federal Home Loan Bank of
Cincinnati and owns the requisite amount of stock therein.
(b) Merger Sub will be a corporation, duly organized, validly
existing and in good standing under the laws of the State of Delaware, all of
the outstanding capital stock when issued will be, owned
AGREEMENT AND PLAN OF MERGER - Page 10
directly or indirectly by Central Kentucky Federal free and clear of any lien,
charge or other encumbrance. From and after incorporation, Merger Sub has not
and will not engage in any activities other than in connection with or as
contemplated by this Merger Agreement.
3.3 Authorization, Execution and Delivery; Merger Agreement Not in
Breach.
(a) CKF Bancorp and Central Kentucky Federal have all
requisite corporate power and authority to execute and deliver this Merger
Agreement and to consummate the transactions contemplated hereby. Merger Sub,
upon its formation, will have all requisite corporate power and authority to
execute the Agreement of Company Merger and to consummate the transactions
contemplated thereby. This Merger Agreement, and all other agreements and
instruments contemplated to be executed in connection herewith by CKF Bancorp,
Central Kentucky Federal and Merger Sub, have been (or upon execution will
have been) duly executed and delivered by CKF Bancorp, Central Kentucky
Federal and Merger Sub, and have been (or upon execution will have been)
effectively authorized by all necessary action, corporate or otherwise, and no
other corporate proceedings on the part of CKF Bancorp, Central Kentucky
Federal and Merger Sub are (or will be) necessary to authorize such execution
and delivery, and, subject to receipt of any required Government Approvals,
constitute (or upon execution will constitute) legal, valid and enforceable
obligations of CKF Bancorp, Central Kentucky Federal and Merger Sub, subject,
as to enforceability, to applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of creditors' rights
generally, and to the application of equitable principles and judicial
discretion.
(b) The execution and delivery of this Merger Agreement, the
consummation of the transactions contemplated hereby and the fulfillment of
the terms hereof will not result in a breach of any of the terms or provisions
of, or constitute a default under (or an event which, with the passage of time
or the giving of notice or both, would constitute a default under), or
conflict with, or permit the acceleration of any obligation under, (i) any
material mortgage, lease, covenant, agreement, indenture or other instrument
to which CKF Bancorp or Central Kentucky Federal are a party or by which CKF
Bancorp or Central Kentucky Federal or their respective properties or any of
their respective assets are bound, (ii) the certificate of incorporation or
bylaws of CKF Bancorp and the charter and bylaws of Central Kentucky Federal,
(iii) any material judgment, decree, order or award of any court, governmental
body or arbitrator by which CKF Bancorp and Central Kentucky Federal are
bound, or (iv) any material permit, concession, grant, franchise, license,
law, statute, ordinance, rule or regulation applicable to CKF Bancorp or
Central Kentucky Federal or their respective properties; or result in the
creation of any lien, claim, security interest, encumbrance, charge,
restriction or right of any third party of any kind whatsoever upon the
property or assets of CKF Bancorp and Central Kentucky Federal, except that
the Government Approvals shall be required in order for CKF Bancorp and
Central Kentucky Federal to consummate the Merger.
3.4 No Legal Bar. Neither CKF Bancorp nor Central Kentucky Federal
is a party to, subject to or bound by any agreement, judgment, order, letter
of understanding, writ, prohibition, injunction or decree of any court or
other governmental body of competent jurisdiction which would prevent the
execution of this Merger Agreement by CKF Bancorp or Central Kentucky Federal,
its delivery to the First Lancaster or (upon receipt of Governmental
Approvals) the consummation of the transactions contemplated hereby, and no
action or proceeding is pending or threatened against CKF Bancorp or Central
Kentucky Federal in which the validity of this Merger Agreement, any of the
transactions contemplated hereby or any action which has been taken by any of
the Parties in connection herewith or in connection with any of the
transactions contemplated hereby is at issue.
3.5 Government Approvals. No consent, approval, order or
authorization of, or registration, declaration or filing with, any federal,
state or local governmental authority is required to be made or obtained by
CKF Bancorp, Central Kentucky Federal or Merger Sub in connection with the
execution and delivery of this Merger Agreement or the consummation of the
transactions contemplated hereby by CKF Bancorp or Central Kentucky Federal,
except for the prior approval of the SEC, OTS, the FDIC, and such other
agencies as may have jurisdiction (collectively, the "Government Approvals").
CKF Bancorp and Central Kentucky Federal are not aware of any facts,
AGREEMENT AND PLAN OF MERGER - Page 11
circumstances or reasons why such Government Approvals should not be
forthcoming or which would prevent or hinder such approvals from being
obtained.
3.6 Community Reinvestment Act Compliance. Central Kentucky Federal
is in material compliance with the applicable provisions of the Community
Reinvestment Act ("CRA") and the regulations promulgated thereunder, and
Central Kentucky Federal currently has a CRA rating of satisfactory or better.
To the knowledge of Central Kentucky Federal, there is no fact or circumstance
or set of facts or circumstances that would cause Central Kentucky Federal to
fail to comply with such provisions or cause the CRA rating of Central
Kentucky Federal to fall below satisfactory.
3.7 Disclosure. The information concerning, and the
representations or warranties made by CKF Bancorp, Central Kentucky Federal
and Merger Sub as set forth in this Merger Agreement, or in any document,
statement, certificate or other writing furnished or to be furnished by CKF
Bancorp and Central Kentucky Federal to First Lancaster pursuant hereto, do
not and will not contain any untrue statement of a material fact or omit to
state a material fact required to be stated herein or therein which is
necessary to make the statements and facts contained herein or therein, in
light of the circumstances under which they were or are made, not false or
misleading. Copies of all documents heretofore or hereafter delivered or made
available to First Lancaster by CKF Bancorp, Central Kentucky Federal and
Merger Sub pursuant hereto were or will be complete and accurate copies of
such documents.
3.8 CKF Bancorp Financial Statements. Included in Schedule 3.8
hereto are true copies of the consolidated balance sheets of CKF Bancorp as of
December 31, 1999 and 1998, and the related consolidated statements of income
and changes in stockholders' equity and cash flows of CKF Bancorp for the
years ended December 31, 1999 and 1998 and the comparative interim (or annual)
financial statements for any subsequent quarter (or year) ending after
December 31, 1999 and prior to the Closing Date ("CKF Bancorp Financial
Statements"). Such financial statements (i) were (or will be) prepared from
the books and records of CKF Bancorp, which are complete and accurate in all
material respects and have been maintained in accordance with good business
practices; (ii) were (or will be) prepared in accordance with GAAP; (iii)
accurately present (or will present) CKF Bancorp's consolidated financial
condition and the consolidated results of its operations, changes in
stockholders' equity and cash flows as stated including any amendments thereto
at the relevant dates thereof and for the periods covered thereby; (iv) do
contain or reflect (or will contain and reflect) all necessary adjustments and
accruals for an accurate presentation of CKF Bancorp's consolidated financial
condition and the consolidated results of CKF Bancorp's operations and cash
flows for the periods covered by the CKF Bancorp Financial Statements; and (v)
in the opinion of CKF Bancorp management do contain and reflect (or will
contain and reflect) adequate provisions for loan losses, for real estate
owned reserves and for all reasonably anticipatable liabilities for all taxes,
federal, state, local or foreign, with respect to the periods then ended.
3.9 Consideration. At the Effective Time, CKF Bancorp or Central
Kentucky Federal will have deposited the Consideration with the Paying Agent.
3.10 Litigation. Except as set forth in Schedule 3.10 hereto,
there is no action, suit or proceeding pending, or to the best knowledge of
CKF Bancorp and Central Kentucky Federal, threatened against CKF Bancorp or
Central Kentucky Federal before any court or arbitrator or any governmental
body, agency or official, that purports or seeks to enjoin or restrain the
transactions contemplated by this Merger Agreement.
3.11 Absence of Regulatory Actions. Neither CKF Bancorp nor
Central Kentucky Federal is a party to any cease and desist order, written
agreement or memorandum of understanding with, or a party to any commitment
letter or similar undertaking to, or is subject to any order or directive by,
or is a recipient of any extraordinary supervisory letter from, or since
January 1, 1995 has adopted any board resolutions at the request of, federal
or state governmental authorities charged with the supervision or regulation
of depository institutions or depository institution holding companies or
engaged in the insurance of bank and/or savings and loan deposits nor has
AGREEMENT AND PLAN OF MERGER - Page 12
it been advised by any such governmental authority that it is contemplating
issuing or requesting (or is considering the appropriateness of issuing or
requesting) any such order, directive, written agreement, memorandum of
understanding, extraordinary supervisory letter, commitment letter, board
resolutions or similar undertaking.
3.12 Statements True and Correct. None of the information prepared
by, or on behalf of, CKF Bancorp or Central Kentucky Federal regarding CKF
Bancorp or Central Kentucky Federal included in the Proxy Statement mailed to
First Lancaster Shareholders in connection with the Shareholders Meeting, and
any other documents filed with the OTS, the SEC or any other Regulatory
Authority in connection with the transaction contemplated herein (if
applicable), will be, at the respective times such documents are filed, and,
with respect to the Proxy Statement, when first mailed to the First Lancaster
Shareholders, shall not contain any statement which, at the time and in light
of the circumstances under which it is made, is false or misleading with
respect to any material fact, or will omit to state any material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, or, in the case of the Proxy Statement
or any amendment thereof or supplement thereto, at the time of the
Shareholders Meeting, false or misleading with respect to any material fact,
or omit to state any material fact necessary to make any statements therein,
in light of the circumstances under which they were made, not misleading.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF FIRST LANCASTER AND THE BANK
Each of First Lancaster and the Bank hereby represents and warrants to
CKF Bancorp as follows:
4.1 Organization and Qualification of First Lancaster and
Subsidiaries. First Lancaster is a corporation, duly organized, validly
existing and in good standing under the laws of the State of Delaware. First
Lancaster is registered as a savings and loan holding company with the OTS and
engages only in activities permitted by the HOLA and the rules and regulations
promulgated by the OTS thereunder. First Lancaster (i) has all requisite
corporate power and authority to own, operate and lease its properties and to
carry on its business as it is currently being conducted and (ii) is in good
standing and is duly qualified to do business in each jurisdiction where the
character of its properties owned or held under lease or the nature of its
business makes such qualification necessary and where the failure to so
qualify would individually or in the aggregate have a material adverse effect
on the condition (financial or otherwise), affairs, business, assets or
prospects of First Lancaster, the Bank and all First Lancaster Subsidiaries,
taken as a whole. Each First Lancaster Subsidiary is duly organized, validly
existing and in good standing under the laws of the state or jurisdiction of
its organization and (i) has all requisite corporate power and authority to
own, operate and lease its properties and to carry on its business as it is
currently being conducted and (ii) is in good standing and is duly qualified
to do business in each jurisdiction where the character of its properties
owned or held under lease or the nature of its business makes such
qualification necessary and where the failure to so qualify would individually
or in the aggregate have a material adverse effect on the condition (financial
or other), affairs, business, assets or prospects of First Lancaster, the Bank
and the First Lancaster Subsidiaries taken as a whole. The activities of the
First Lancaster Subsidiaries are permitted for subsidiaries of savings and
loan holding companies pursuant to the HOLA.
4.2 Organization and Qualification of the Bank. The Bank is a
federally chartered stock savings bank, duly organized, validly existing and
in good standing under the laws of the United States and engages only in
activities (and holds properties only of the types) permitted by the rules and
regulations promulgated by the OTS or the FDIC for insured depository
institutions. The Bank (a) has all requisite corporate power and authority
to own, operate and lease its properties and to carry on its business as it is
currently being conducted (including all requisite authority to operate
branches in the Commonwealth of Kentucky) and (b) is in good standing and is
duly qualified to do business in each jurisdiction where the character of its
properties owned or held under lease or the nature of its business makes such
qualification necessary and where the failure to so qualify would individually
or in the aggregate
AGREEMENT AND PLAN OF MERGER - Page 13
have a material adverse effect on the condition (financial or otherwise),
affairs, business, assets or prospects of the Bank and all First Lancaster
Subsidiaries, taken as a whole. The Bank's deposit accounts are insured by
the Savings Association Insurance Fund as administered by the FDIC to the
fullest extent permitted under applicable law. The Bank is a member in good
standing of the Federal Home Loan Bank of Cincinnati and owns the requisite
amount of stock therein.
4.3 Authorization, Execution and Delivery; Merger Agreement Not in
Breach.
(a) First Lancaster and the Bank have all requisite corporate
power and authority to execute and deliver this Merger Agreement and to
consummate the transactions contemplated hereby. The execution and delivery
of this Merger Agreement and the consummation of the Merger have been duly
authorized by the Boards of Directors of First Lancaster and the Bank and,
except for the approval of the First Lancaster Shareholders, no other
corporate proceedings on the part of First Lancaster and the Bank are
necessary to authorize the execution and delivery of this Merger Agreement and
the consummation of the transactions contemplated hereby. This Merger
Agreement and all other agreements and instruments herein contemplated to be
executed and delivered by First Lancaster and the Bank have been (or upon
execution and delivery will have been) duly executed and delivered by First
Lancaster and the Bank and (subject to any requisite shareholder approval and
Government Approvals hereof) constitute (or upon execution and delivery will
constitute) legal, valid and enforceable obligations of First Lancaster and
the Bank, subject, as to enforceability, to applicable bankruptcy, insolvency,
receivership, conservatorship, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and to the
application of equitable principles and judicial discretion.
(b) Except as set forth on Schedule 4.3(b) hereto, the
execution and delivery of this Merger Agreement, the consummation of the
transactions contemplated by the Agreement of Company Merger and the Plan of
Bank Merger, and the fulfillment of the terms hereof and thereof will not
result in a violation or breach of any of the terms or provisions of, or
constitute a default under (or an event which, with the passage of time or the
giving of notice, or both, would constitute a default under), or conflict
with, or permit the acceleration of, any obligation under (i) any mortgage,
lease, covenant, agreement, indenture or other instrument to which First
Lancaster, the Bank or any First Lancaster Subsidiary is a party or by which
First Lancaster, the Bank or any First Lancaster Subsidiary is bound, (ii) the
certificate of incorporation or bylaws of First Lancaster and the charter and
bylaws of the Bank, (iii) any judgment, decree, order, regulatory letter of
understanding or award of any court, governmental body, authority or
arbitrator or, (iv) (subject to the receipt of the Government Approvals) any
permit, concession, grant, franchise, license, law, statute, ordinance, rule
or regulation applicable to First Lancaster, the Bank or any First Lancaster
Subsidiary or the properties of any of them; or result in the creation of any
lien, claim, security interest, encumbrance, charge, restriction or right of
any third party of any kind whatsoever upon the properties or assets of First
Lancaster, the Bank or any First Lancaster Subsidiary.
4.4 No Legal Bar. Neither First Lancaster nor the Bank is a party
to, or subject to, or bound by, any agreement or judgment, order, letter of
understanding, writ, prohibition, injunction or decree of any court or other
governmental authority of competent jurisdiction, or any law which would
prevent the execution of this Merger Agreement by First Lancaster or the Bank,
its delivery to CKF Bancorp, or (upon receipt of Government Approvals and the
approval of the First Lancaster Shareholders) the consummation of the
transactions contemplated hereby and thereby, and no action or proceeding is
pending against First Lancaster or the Bank in which the validity of this
Merger Agreement, the transactions contemplated hereby or any action which has
been taken by any of the Parties in connection herewith or in connection with
the transactions contemplated hereby is at issue.
4.5 Government and Other Approvals. Except for the Government
Approvals described in Section 3.5, no consent, approval, order or
authorization of, or registration, declaration or filing with, any federal,
state or local governmental authority is required to be made or obtained by
First Lancaster or the Bank in connection with the execution and delivery of
this Merger Agreement or the consummation of the transactions contemplated by
this
AGREEMENT AND PLAN OF MERGER - Page 14
Merger Agreement nor, except as set forth in Schedule 4.5 hereto, is any
consent or approval required from any landlord, licensor or other
non-governmental party which has granted rights to First Lancaster or the Bank
in order to avoid forfeiture or impairment of such rights. Neither First
Lancaster nor the Bank is aware of any facts, circumstances or reasons why
such Government Approvals should not be forthcoming or which would prevent or
hinder such approvals from being obtained.
4.6 Compliance With Law. First Lancaster, the Bank and all First
Lancaster Subsidiaries hold all licenses, franchises, permits and
authorizations necessary for them to own or lease their respective properties
and assets and for the lawful conduct of their respective businesses, as they
are presently conducted, and First Lancaster and the Bank have complied in all
material respects with all applicable statutes, laws, ordinances, rules and
regulations of all federal, state and local governmental bodies, agencies and
subdivisions having, asserting or claiming jurisdiction over First Lancaster
and the Bank's properties or over any other part of First Lancaster's and the
Bank's assets, liabilities or operations. The benefits of all of such
licenses, franchises, permits and authorizations are in full force and effect
and, to the best knowledge of First Lancaster and the Bank, may continue to be
enjoyed by the successor to First Lancaster and the Bank subsequent to the
Closing of the transactions contemplated herein to the extent permitted by law
and the terms of such licenses, franchises, permits and authorizations without
any consent or approval. Neither First Lancaster, the Bank nor any First
Lancaster Subsidiary has received notice of any proceeding for the suspension
or revocation of any such license, franchise, permit, or authorization and no
such proceeding is pending, or to the best knowledge of First Lancaster and
the Bank, has been threatened by any governmental authority.
4.7 Charter Documents. Included in Schedule 4.7 hereto are true
and correct copies of the Certificate of Incorporation and Bylaws of First
Lancaster and the Charter and Bylaws of the Bank, as such documents are in
effect prior to the amendment referred to in Section 6.2(g) herein. The
Certificate of Incorporation and Bylaws of First Lancaster and the Charter and
Bylaws of the Bank, as amended to date, are in full force and effect.
4.8 First Lancaster Financial Statements.
(a) Included in Schedule 4.8 hereto are true copies of the
consolidated balance sheets of First Lancaster as of June 30, 2000 and 1999,
and the related consolidated statements of income and changes in stockholders'
equity and cash flows of First Lancaster for the years ended June 30, 2000,
1999 and 1998 and the comparative interim (or annual) financial statements for
any subsequent quarter (or year) ending after June 30, 2000 and prior to the
Closing Date ("First Lancaster Financial Statements") where such interim
financial statements have been filed with the SEC on Form 10-QSB. Such
financial statements (i) were (or will be) prepared from the books and records
of First Lancaster, which are complete and accurate in all material respects;
(ii) were (or will be) prepared in accordance with GAAP; (iii) accurately
present (or will present) First Lancaster's consolidated financial condition
and the consolidated results of its operations, changes in stockholders'
equity and cash flows as stated including any amendments thereto at the
relevant dates thereof and for the periods covered thereby; (iv) do contain or
reflect (or will contain and reflect) all necessary adjustments and accruals
for an accurate presentation of First Lancaster's consolidated financial
condition and the consolidated results of First Lancaster's operations and
cash flows for the periods covered by the First Lancaster Financial
Statements; (v) in the opinion of First Lancaster's management do contain and
reflect (or will contain and reflect) adequate provisions for loan losses, for
real estate owned reserves and for all reasonably anticipatable liabilities
for all taxes, federal, state, local or foreign, with respect to the periods
then ended; and (vi) in the opinion of First Lancaster's management do contain
and reflect (or will contain and reflect) adequate provisions for all
reasonably anticipated liabilities for Post Retirement Benefits Other Than
Pensions ("OPEB") pursuant to FASB 106 and 112.
(b) First Lancaster has delivered or made available to CKF
Bancorp (or will deliver, when available, with respect to periods ended after
the date of this Merger Agreement) true, correct and complete copies of (i)
all regulatory reports, including any amendments thereto, filed with any
Regulatory Authorities by First Lancaster and the Bank subsequent to June 30,
1998, (ii) all reports, including any amendments thereto filed with any
AGREEMENT AND PLAN OF MERGER - Page 15
Regulatory Authorities by First Lancaster or the Bank, each for any quarter
ending after June 30, 2000. Such reports (i) were (or will be) prepared from
the books and records of First Lancaster, which are complete and accurate in
all material respects practices; (ii) were (or will be) prepared in accordance
with regulatory accounting principles consistently applied; (iii) accurately
present (or, when prepared, will present) First Lancaster's consolidated
financial condition and the consolidated results of its operations and changes
in stockholders' equity at the relevant dates thereof and for the periods
covered thereby; (iv) do contain or reflect (or, when prepared, will contain
and reflect) all necessary adjustments and accruals for an accurate
presentation of First Lancaster's consolidated financial condition and the
consolidated results of First Lancaster's operations for the periods covered
thereby; (v) in the opinion of First Lancaster's management do contain and
reflect (or, when prepared, will contain and reflect) adequate provisions for
loan losses, for real estate owned reserves and for all reasonably
anticipatable liabilities for all taxes, federal, state, local or foreign,
with respect to the periods then ended; and (vi) in the opinion of First
Lancaster's management do contain and reflect adequate provisions for all
reasonably anticipated liabilities for OPEB pursuant to FASB 106 and 112.
4.9 Absence of Certain Changes. Except as disclosed in Schedule
4.9 or as provided for or contemplated in this Merger Agreement, since June
30, 2000 (the "Balance Sheet Date") there has not been:
(a) any material transaction by First Lancaster or the Bank
not in the ordinary course of business and in conformity with past practice;
(b) except as disclosed on the First Lancaster Financial
Statements any material adverse change in the business, property, assets
(including loan portfolios), liabilities (whether absolute, accrued,
contingent or otherwise), prospects, operations, liquidity, income, condition
(financial or otherwise) or net worth of First Lancaster or the Bank;
(c) any damage, destruction or loss, whether or not covered by
insurance, which has had or may have a material adverse effect on any of the
properties, business or prospects of First Lancaster and the Bank or their
future use and operation by First Lancaster and the Bank;
(d) any acquisition or disposition by First Lancaster or the
Bank of any property or asset of First Lancaster or the Bank, whether real or
personal, having a fair market value, singularly or in the aggregate, in an
amount greater than Ten Thousand Dollars ($10,000), except in the ordinary
course of business and in conformity with past practice;
(e) any mortgage, pledge or subjection to lien, charge or
encumbrance of any kind on any of the respective properties or assets of First
Lancaster or the Bank, except to secure extensions of credit in the ordinary
course of business and in conformity with past practice;
(f) any amendment, modification or termination of any contract
or agreement, relating to First Lancaster or the Bank, to which First
Lancaster or the Bank is a party which would have a material adverse effect
upon the financial condition or operations of First Lancaster and the Bank;
(g) except as disclosed on the First Lancaster Financial
Statements, any increase in, or commitment to increase, the compensation
payable or to become payable to any officer, director, employee or agent of
First Lancaster or the Bank, or any bonus payment or similar arrangement made
to or with any of such officers, directors, employees or agents, other than
routine increases made in the ordinary course of business not exceeding four
percent (4%) per annum;
(h) any incurring of, assumption of, or taking of, by First
Lancaster or the Bank, any property subject to, any liability, except for
liabilities incurred or assumed or property taken subsequent to the Balance
Sheet Date in the ordinary course of business and in conformity with past
practice;
AGREEMENT AND PLAN OF MERGER - Page 16
(i) any material alteration in the manner of keeping the
books, accounts or Records of the Bank, or in the accounting policies or
practices therein reflected;
(j) any release or discharge of any obligation or liability of
any person or entity related to or arising out of any loan made by the Bank of
any nature whatsoever, except in the ordinary course of business and in
conformity with past practice; or
(k) any loan made by the Bank to any Officer, director or more
than 5% shareholder of First Lancaster or any Affiliate of First Lancaster; or
to any member of the immediate family of such Officer, director or more than
5% shareholder of First Lancaster or any Affiliate of First Lancaster; or to
any Person in which such Officer, director or more than 5% shareholder
directly or indirectly owns beneficially or of record ten percent (10%) or
more of any class of equity securities in the case of a corporation, or of any
equity interest, in the case of a partnership or other non-corporate entity;
or to any trust or estate in which such Officer, director or more than 5%
shareholder has a ten percent (10%) or more beneficial interest; or as to
which such Officer, director or more than 5% shareholder serves as a trustee
or in a similar capacity. As used herein, "Officer" shall refer to a person
who holds the title of chairman, president, executive vice president, senior
vice president, controller, chief financial officer, secretary, cashier or
treasurer.
4.10 Deposits. Except as set forth in Schedule 4.10, none of the
Bank Deposits is a "brokered" deposit or subject to any encumbrance, legal
restraint or other legal process and no portion of the Deposits represents a
Deposit by an Affiliate of the Bank or over 5% shareholder of First Lancaster,
except as set forth on Schedule 4.10, which lists such Deposits as of the date
listed thereon.
4.11 Properties. Except as described in Schedule 4.11 hereto or
adequately reserved against in the First Lancaster Financial Statements, First
Lancaster, the Bank and each First Lancaster Subsidiary have good and
marketable title free and clear of all material liens, encumbrances, charges,
defaults, or equities of whatever character to all of its properties, except
for (i) such items shown in the First Lancaster Financial Statements, (ii)
liens for current real estate taxes not yet delinquent, (iii) customary title
exceptions that have no materials adverse effect upon the value of such
property, (iv) property sold or transferred in the ordinary course of business
since the date of such Financial Statements, and (v) pledges or liens incurred
in the ordinary course of business consistent with past practices. All
buildings, and all fixtures, equipment, and other property and assets that are
material to the business of First Lancaster, the Bank and the First Lancaster
Subsidiaries, taken as a whole, held under leases or subleases by First
Lancaster, the Bank or any First Lancaster Subsidiary, are held under valid
instruments enforceable in accordance with their respective terms (except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or other laws affecting the enforcement of
creditors' rights generally, and except that the availability of the equitable
remedy of specific performance or injunctive relief is subject to the
discretion of the court before which any proceedings may be pending).
4.12 First Lancaster Subsidiaries. Schedule 4.12 hereto lists all
of the active and inactive First Lancaster Subsidiaries as of the date of this
Merger Agreement and describes generally the business activities conducted, or
permitted to be conducted, by each First Lancaster Subsidiary. No equity
securities of any of the First Lancaster Subsidiaries are or may become
required to be issued (other than to the Bank) by reason of any options,
warrants, scrip, rights to subscribe to, calls, or commitments of any
character whatsoever relating to, or securities or rights convertible into or
exchangeable for, shares of the capital stock of any First Lancaster
Subsidiary, and there are no contracts, commitments, understandings, or
arrangements by which any First Lancaster Subsidiary is bound to issue (other
than to the Bank) any additional shares of its capital stock or options,
warrants, or rights to purchase or acquire any additional shares of its
capital stock. All of the shares of capital stock of each First Lancaster
Subsidiary held by the Bank or by any First Lancaster Subsidiary are fully
paid and nonassessable and are owned by the Bank or such First Lancaster
Subsidiary free and clear of any claim, lien, or encumbrance of any nature
whatsoever, whether perfected
AGREEMENT AND PLAN OF MERGER - Page 17
or not. Except as set forth on Schedule 4.12, neither the Bank nor any First
Lancaster Subsidiary holds any interest in a partnership or joint venture of
any kind.
4.13 Condition of Fixed Assets and Equipment. Except as disclosed
in Schedule 4.13 hereto, all of First Lancaster's, the Bank's and the First
Lancaster Subsidiaries' buildings, structures and equipment in regular use are
in good and serviceable condition, normal wear and tear excepted. None of the
buildings, structures and equipment of First Lancaster, the Bank or any First
Lancaster Subsidiary violates or fails to comply in any material respect with
any applicable health, fire, environmental, safety, zoning or building laws or
ordinances or any restrictive covenant pertaining thereto.
4.14 Tax Matters. Except as described in Schedule 4.14 hereto:
(a) All federal, state, local, and foreign tax returns and
information returns required to be filed by or on behalf of First Lancaster,
the Bank and each First Lancaster Subsidiary have been timely filed or
requests for extensions have been timely filed, granted, and have not expired
for periods ended on or before the date of this Merger Agreement, and all
returns filed are, and the information contained therein is, complete and
accurate in all material respects. All tax obligations reflected in such
returns have been paid or adequately provided for. As of the date of this
Merger Agreement, to the best knowledge of First Lancaster and the Bank there
is no audit examination, deficiency, or refund litigation or matter in
controversy with respect to any taxes that might result in a determination
materially adverse to First Lancaster, the Bank or any First Lancaster
Subsidiary except as fully reserved for in the First Lancaster Financial
Statements. All taxes, interest, additions, and penalties due with respect to
completed and settled examinations or concluded tax litigation have been paid.
(b) Neither First Lancaster, the Bank nor any First Lancaster
Subsidiary has executed an extension or waiver of any statute of limitations
on the assessment or collection of any tax due that is currently in effect.
(c) Adequate provision for any federal, state, local, or
foreign taxes due or to become due for First Lancaster, the Bank and all First
Lancaster Subsidiaries for all periods through and including June 30, 2000,
has been made and is reflected on the June 30, 2000 financial statements
included in the First Lancaster Financial Statements and has been and will
continue to be made with respect to periods ending after June 30, 2000 and
subsequent periods.
(d) Deferred taxes of First Lancaster, the Bank and each
First Lancaster Subsidiary have been and will be provided for in accordance
with GAAP.
(e) To the best knowledge of First Lancaster and the Bank,
neither the Internal Revenue Service nor any foreign, state, local or other
taxing authority is now asserting or threatening to assert against First
Lancaster, the Bank or any First Lancaster Subsidiary any deficiency or claim
for additional taxes, or interest thereon or penalties in connection
therewith. All income, payroll, withholding, property, excise, sales, use,
franchise and transfer taxes, and all other taxes, charges, fees, levies or
other assessments, imposed upon First Lancaster or the Bank by the United
States or by any state, municipality, subdivision or instrumentality of the
United States or by any other taxing authority, including all interest,
penalties or additions attributable thereto, which are due and payable by
First Lancaster, the Bank or any First Lancaster Subsidiary, either have been
paid in full, or have been properly accrued and reflected in the First
Lancaster Financial Statements.
4.15 Litigation. Except as set forth in Schedule 4.15 hereto,
there is no action, suit or proceeding pending, or to the best knowledge of
First Lancaster and the Bank, threatened against First Lancaster, the Bank or
any First Lancaster Subsidiary before any court or arbitrator or any
governmental body, agency or official, including, but not limited to, any
action, suit or proceeding that (i) has been brought by or on behalf of any
person employed or
AGREEMENT AND PLAN OF MERGER - Page 18
formerly employed by First Lancaster, the Bank or any First Lancaster
Subsidiary or (ii) purports or seeks to enjoin or restrain the transactions
contemplated by this Merger Agreement. Except as set forth on Schedule 4.15
there are no actions, suits, or proceedings pending or, to the best knowledge
of First Lancaster and the Bank, threatened against any Officers or directors
of First Lancaster, the Bank or any First Lancaster Subsidiary by any
stockholder of First Lancaster, the Bank or any First Lancaster Subsidiary (or
by any former stockholder of First Lancaster, the Bank or any First Lancaster
Subsidiary) relating to or arising out of such person's status as a
stockholder.
4.16 Hazardous Materials.
(a) To the best knowledge of First Lancaster and the Bank,
First Lancaster, the Bank and all the First Lancaster Subsidiaries have
obtained all material permits, licenses and other authorizations which are
required to be obtained by them with respect to the Property (as defined
herein) under all Applicable Environmental Laws (as defined herein). All
Property (as defined herein) controlled, directly or indirectly, by First
Lancaster, the Bank or any First Lancaster Subsidiary is in compliance with
the terms and conditions of all of such permits, licenses and authorizations,
and, to the best of knowledge of First Lancaster and the Bank, is also in
material compliance with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules and timetables
contained in any Applicable Environmental Laws (as defined herein) or in any
regulation, code, plan, order, decree, judgment, injunction, notice or demand
letter issued, entered, promulgated or approved thereunder, except as
described in detail in Schedule 4.16 hereto, except for failures to comply
which would not, in the aggregate, have a material adverse effect on First
Lancaster and the Bank taken as a whole. For purposes hereof, the following
terms shall have the following meanings:
"Applicable Environmental Laws" shall mean all federal,
state, local and municipal environmental laws, rules or regulations to the
extent applicable to the Property, including, but not limited to, (a) the
Comprehensive Environmental Response, Compensation and Liability Act, 42
U.S.C. Section 9601 et seq. ("CERCLA"); (b) the Resource Conservation and
Recovery Act, 42 U.S.C. Section 6901 et seq. "RCRA"; (c) the Federal Water
Pollution Control Act, 33 U.S.C. Section 1251 et seq.; (d) the Clean Air Act,
42 U.S.C. Section 7401 et seq.; (e) the Hazardous Materials Transportation
Act, 49 U.S.C. Section 1471 et seq.; (f) the Toxic Substances Control Act, 15
U.S.C. Section 2601 et seq.; (g) the Emergency Planning and Community
Right-to-Know Act, 42 U.S.C. Section 11001 et seq.; (h) the National
Environmental Policy Act, 42 U.S.C. Section 4321 et seq.; (i) the Rivers and
Harbours Act of 1899, 33 U.S.C. Section 401 et seq.; (j) the Safe Drinking
Water Act, 42 U.S.C. Section 300(f) et seq.; (k) the Oil Pollution Act of
1990, 33 U.S.C. Section 2701 et seq.; and (l) any rule, regulation, order,
injunction, judgment, declaration or decree implementing or interpreting any
of the foregoing Acts, as amended.
"Hazardous Substances" shall mean any substance, material,
waste, or pollutant that is now (or prior to the Closing) listed, defined,
characterized or regulated as hazardous, toxic or dangerous under or pursuant
to any statute, law, ordinance, rule or regulation of any federal, state,
regional, county or local governmental authority having jurisdiction over the
Property of First Lancaster, the Bank or any First Lancaster Subsidiary or its
use or operation, including, without limitation, (a) any substance, material,
element, compound, mixture, solution, waste, chemical or pollutant listed,
defined, characterized or regulated as hazardous, toxic or dangerous under any
Applicable Environmental Laws, (b) petroleum, petroleum derivatives or
by-products, and other hydrocarbons, (c) polychlorinated biphenyls (PCBs) in
regulated concentrations, asbestos and urea formaldehyde, and (d) radioactive
substances, materials or waste.
"Loan Property" means any property in which First
Lancaster, the Bank or a First Lancaster Subsidiary holds a security interest.
"Property" means any real property owned, controlled,
leased or held by First Lancaster, the Bank or a First Lancaster Subsidiary,
in whole or in part, solely or in a joint venture or other business
AGREEMENT AND PLAN OF MERGER - Page 19
arrangement, either for operational or investment purposes, and whether
assigned, purchased, or obtained through foreclosure (or similar action) or in
satisfaction of debts previously contracted.
(b) In addition, except as set forth in Schedule 4.16(b)
hereto:
(i) No notice, notification, demand, request for
information, citation, summons or order has been received by First
Lancaster or the Bank, no complaint has been filed and served
on the Bank, no penalty has been assessed on First Lancaster or the Bank
and to the best knowledge of First Lancaster and the Bank no
investigation or review is pending by any governmental or other entity
with respect to any alleged failure by First Lancaster, the Bank or any
First Lancaster Subsidiary to have any permit, license or authorization
required in connection with the conduct of the business of First
Lancaster, the Bank or any First Lancaster Subsidiary with respect to
any generation, treatment, storage, recycling, transportation,
release or disposal, or any release as defined in 42 U.S.C. Section
9601(22) ("Release"), of any Hazardous Substances at any Property or any
Loan Property;
(ii) To the best of knowledge of First Lancaster and the
Bank, no Property or Loan Property has received or held any Hazardous
Substances in such amount and in such manner as to constitute a
violation of the Applicable Environmental Laws, except where such
violations in the aggregate would not have a material adverse effect on
First Lancaster and the Bank taken as a whole, and no Hazardous
Substances have been Released or disposed of on, in or under any of the
Property during or prior to First Lancaster's, the Bank's or any First
Lancaster Subsidiary's occupancy thereof, or during or prior to the
occupancy thereof by any assignee or sublessee of the Bank or any First
Lancaster Subsidiary, except in compliance with all Applicable
Environmental Laws; and
(iii) To the best knowledge of First Lancaster and the
Bank, there are no underground storage tanks for Hazardous Substances,
active or abandoned, at any Property, which are in violation of any
Applicable Environmental Laws.
(c) Neither First Lancaster, the Bank nor any Affiliate of
First Lancaster has knowingly transported or arranged for the transportation
of any Hazardous Substances to any location which is listed on the National
Priorities List under CERCLA, or on any similar state list or which is the
subject of federal, state or local enforcement actions or other investigations
which may lead to claims against the owner of the Property for clean-up costs,
remedial work, damages to natural resources or for personal injury claims,
including, but not limited to, claims under CERCLA.
(d) No Hazardous Substances have been knowingly generated,
recycled, treated, stored, disposed of or Released by, First Lancaster, the
Bank or any Affiliate of First Lancaster in violation of Applicable
Environmental Laws.
(e) To the best knowledge of First Lancaster and the Bank, no
oral or written notification of a Release of Hazardous Substances has been
given or filed by or on behalf of First Lancaster, the Bank or any Affiliate
of First Lancaster relating to any Property and no Property is listed or
proposed for listing on the National Priority List promulgated pursuant to
CERCLA.
(f) To the best knowledge of First Lancaster and the Bank,
there are no liens arising under or pursuant to any Applicable Environmental
Laws on any Property, and no government actions have been taken or, to the
best knowledge of First Lancaster and the Bank, threatened, or are in process
which could subject any Property to such liens and none of the Property would
be required to place any notice or restriction relating to the presence of
Hazardous Substances at any Property in any deed to such Property.
AGREEMENT AND PLAN OF MERGER - Page 20
(g) There have been no environmental investigations, studies,
audits, tests, reviews or other analyses conducted by or which are in the
possession of First Lancaster, the Bank or any Affiliate of First Lancaster
and the Bank in relation to any Property, which have not been made available
to CKF Bancorp.
(h) Neither First Lancaster nor the Bank is aware of any facts
which might suggest that First Lancaster, the Bank or any First Lancaster
Subsidiary has engaged in any management practice with respect to any of its
past or existing borrowers which could reasonably be expected to subject First
Lancaster, the Bank or any First Lancaster Subsidiary or any Property or Loan
Property to any material liability under any Applicable Environmental Laws.
4.17 Insurance. First Lancaster, the Bank and all of First
Lancaster's and the Bank's material assets, businesses, real property and
other material properties are insured against fire, casualty, theft,
liability, loss, interruption, title and such other events against which it is
customary in the banking industry to insure, all such insurance policies being
in amounts that are adequate and consistent with past practice and experience.
Set forth on Schedule 4.17 is a list of all insurance policies (excluding
policies maintained on one- to four-family residential properties acquired
through foreclosure) maintained by or for the benefit of First Lancaster, the
Bank or any of the First Lancaster Subsidiaries or their respective directors,
Officers, employees or agents. All such insurance policies are in full force
and effect. Each of First Lancaster, the Bank and the First Lancaster
Subsidiaries has taken or will take all requisite action (including without
limitation the making of claims and the giving of notices) pursuant to its
directors' and officers' liability insurance policy or policies in order to
preserve all rights thereunder with respect to all matters (other than matters
arising in connection with this Merger Agreement and the transactions
contemplated hereby) occurring prior to the Effective Time that are known to
First Lancaster or the Bank. To the best knowledge of First Lancaster and the
Bank, since July 1, 1995, neither First Lancaster, the Bank nor any of the
First Lancaster Subsidiaries has had an insurance policy canceled or been
denied insurance coverage for which any of such companies has applied. The
fidelity bonds in effect as to which the Bank is a named insured are believed
by First Lancaster and the Bank to be sufficient.
4.18 Labor and Employment Matters. Except as reflected in Schedule
4.18 hereto, there is no (i) collective bargaining agreement or other labor
agreement to which First Lancaster, the Bank or any First Lancaster Subsidiary
is a party or by which any of them is bound; (ii) employment, profit sharing,
deferred compensation, bonus, stock option, purchase, retainer, consulting,
retirement, welfare or incentive plan or contract to which First Lancaster,
the Bank or any First Lancaster Subsidiary is a party or by which it is bound;
or (iii) plan or agreement under which "fringe benefits" (including, but not
limited to, vacation plans or programs, sick leave plans or programs and
related benefits) are afforded any of the employees of First Lancaster, the
Bank or any First Lancaster Subsidiary. Neither First Lancaster nor the Bank
has received any notice that any party to any such agreement, plan or contract
is in default with respect to any material term or condition thereof, nor has
any event occurred which, through the passage of time or the giving of notice,
or both, would constitute a default thereunder or would cause the acceleration
of any obligation of any party thereto. Neither First Lancaster, the Bank nor
any First Lancaster Subsidiary has received notice from any governmental
agency of any alleged violation of applicable laws that remains unresolved
respecting employment and employment practices, terms and conditions of
employment and wages and hours. First Lancaster, the Bank and each First
Lancaster Subsidiary have complied in all material respects with all
applicable laws, rules and regulations relating to the employment of labor,
including those related to its employment practices, employee disabilities,
wages, hours, collective bargaining and the payment and withholding of taxes
and other sums as required by the appropriate governmental authorities, and
First Lancaster, the Bank and each First Lancaster Subsidiary have withheld
and paid to the appropriate governmental authorities or are holding for
payment not yet due to such authorities, all amounts required to be withheld
from the employees of First Lancaster, the Bank and each First Lancaster
Subsidiary and are not liable for any arrears of wages, taxes, penalties or
other sums for failure to comply with any of the foregoing. Except as set
forth in Schedule 4.18, there is no: unfair labor practice complaint against
First Lancaster, the Bank or any First Lancaster Subsidiary pending before the
National Labor Relations Board or any state or local agency; pending labor
strike or, to the best of knowledge of First Lancaster and the Bank, other
labor trouble affecting First Lancaster,
AGREEMENT AND PLAN OF MERGER - Page 21
the Bank or any First Lancaster Subsidiary; labor grievance pending against
First Lancaster, the Bank or any First Lancaster Subsidiary; to the best
knowledge of First Lancaster and the Bank, pending representation question
respecting the employees of First Lancaster, the Bank or any First Lancaster
Subsidiary; pending arbitration proceedings arising out of or under any
collective bargaining agreement to which First Lancaster, the Bank or any
First Lancaster Subsidiary is a party, or to the best knowledge of First
Lancaster and the Bank, any basis for which a claim may be made under any
collective bargaining agreement to which First Lancaster, the Bank or any
First Lancaster Subsidiary is a party.
4.19 Records and Documents. The Records of First Lancaster and the
Bank are and will be sufficient to enable the Bank to continue conducting its
business as a federal savings bank under similar standards as First Lancaster
and the Bank has heretofore conducted such business.
4.20 Capitalization of First Lancaster. The authorized capital
stock of First Lancaster consists of 3,000,000 shares of Common Stock having a
par value of $.01 per share and 500,000 shares of preferred stock having a par
value of $.01 per share. As of the date of this Merger Agreement, 840,328
shares of the First Lancaster Common Stock were issued and outstanding,
118,484 shares of the First Lancaster Common Stock were held by First
Lancaster as treasury stock and no shares of the preferred stock were issued
and outstanding. All of the outstanding First Lancaster Common Stock is
validly issued, fully-paid and nonassessable and has not been issued in
violation of any preemptive rights of any First Lancaster Shareholder. Except
as described on Schedule 4.20 hereto, as of the date hereof, there are no
outstanding securities or other obligations which are convertible into First
Lancaster Common Stock or into any other equity or debt security of First
Lancaster, and there are no outstanding options, warrants, rights, scrip,
rights to subscribe to, calls or other commitments of any nature which would
entitle the holder, upon exercise thereof, to be issued First Lancaster Common
Stock or any other equity or debt security of First Lancaster. Accordingly,
immediately prior to the Effective Time, there will be not more than 833,755
shares of First Lancaster Common Stock issued and outstanding, which includes
the shares of First Lancaster Common Stock awarded under the First Lancaster
MRP but excludes shares issued subsequent to the date of this Merger Agreement
pursuant to the exercise of First Lancaster Options under the First Lancaster
Option Plan. The foregoing does not include, however, the 6,573 ungranted
MRP shares that are outstanding and held in the trust created under the First
Lancaster MRP.
4.21 Capitalization of the Bank. The authorized capital stock of
the Bank consists of 3,000,000 shares of common stock having a par value of
$.01 per share (the "Bank Common Stock") and 500,000 shares of preferred stock
having a par value of $.01 per share. As of the date of this Merger
Agreement, 100,000 shares of the Bank Common Stock were issued and
outstanding, no shares of the Bank Common Stock were held by the Bank as
treasury stock and no shares of the preferred stock were issued and
outstanding. Except as set forth in Schedule 4.21, all of the outstanding
Bank Common Stock is held beneficially and of record by First Lancaster, free
and clear of any lien, claim, security interest, encumbrance, charge,
restriction or right of any third party of any kind whatsoever. All of the
outstanding Bank Common Stock is validly issued, fully-paid and nonassessable
and has not been issued in violation of any preemptive rights of any Bank
Shareholder. As of the date hereof, there are no outstanding securities or
other obligations which are convertible into the Bank Common Stock or into any
other equity or debt security of the Bank, and there are no outstanding
options, warrants, rights, scrip, rights to subscribe to, calls or other
commitments of any nature which would entitle the holder, upon exercise
thereof, to be issued the Bank Common Stock or any other equity or debt
security of the Bank.
4.22 Sole Agreement. With the exception of this Merger Agreement,
neither First Lancaster, the Bank nor any First Lancaster Subsidiary has been
or will become a party to any letter of intent or agreement to sell or
purchase assets (other than in the normal course of its business). Except as
described in Schedule 4.22 hereto, there are no (nor will there be at the
Effective Time any) shares of capital stock or other equity securities of the
Bank outstanding, except for shares of the Bank Common Stock presently issued
and outstanding, and there are no (nor will there be at the Effective Time
any) outstanding options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into or exchangeable for, shares of the capital
AGREEMENT AND PLAN OF MERGER - Page 22
stock of the Bank, or contracts, commitments, understandings, or arrangements
by which the Bank is or may be bound to issue additional shares of their
capital stock or options, warrants, or rights to purchase or acquire any
additional shares of their capital stock. There are no (nor will there be at
the Effective Time any) contracts, commitments, understandings, or
arrangements by which the Bank or any First Lancaster Subsidiary is or may be
bound to transfer or issue to any third party any shares of the capital stock
of any First Lancaster Subsidiary, and there are no (nor will there be at the
Effective Time any) contracts, agreements, understandings or commitments
relating to the right of the Bank to vote or to dispose of any such shares.
4.23 Disclosure. The information concerning, and representations
and warranties made by, First Lancaster and the Bank set forth in this Merger
Agreement, or in the Schedules of First Lancaster and the Bank hereto, or in
any document, statement, certificate or other writing furnished or to be
furnished by First Lancaster and the Bank to CKF Bancorp pursuant hereto, does
not and will not contain any untrue statement of a material fact or omit to
state a material fact required to be stated herein or therein necessary to
make the statements and facts contained herein, in light of the circumstances
in which they were or are made, not false or misleading. Copies of all
documents heretofore or hereafter delivered or made available to CKF Bancorp
by First Lancaster and the Bank pursuant hereto were or will be complete and
accurate copies of such documents.
4.24 Absence of Undisclosed Liabilities. Except as described in
Schedule 4.24 hereto, neither First Lancaster, the Bank nor any First
Lancaster Subsidiary has any obligation or liability (contingent or otherwise)
that is material to the financial condition or operations of First Lancaster,
the Bank or any First Lancaster Subsidiary, or that, when combined with all
similar obligations or liabilities, would be material to the financial
condition or operations of First Lancaster, the Bank or any First Lancaster
Subsidiary (i) except as disclosed in the First Lancaster Financial Statements
or (ii) except obligations or liabilities incurred in the ordinary course of
its business consistent with past practices or (iii) except as contemplated
under this Merger Agreement. Since June 30, 2000, neither First Lancaster,
the Bank nor any First Lancaster Subsidiary has incurred or paid any
obligation or liability which would be material to the financial condition or
operations of First Lancaster, the Bank or such First Lancaster Subsidiary,
except for obligations paid by the Bank under the terms of this Merger
Agreement (all such obligations or payments are fully described by the Bank in
Schedule 4.24 hereto) or in connection with transactions made by it in the
ordinary course of its business consistent with past practices, laws and
regulations applicable to the Bank or any First Lancaster Subsidiary.
4.25 Allowance for Loan Losses. The allowance for loan losses shown
on the First Lancaster Financial Statements is (with respect to periods ended
on or before June 30, 2000) or will be (with respect to periods ending
subsequent to June 30, 2000) adequate in the opinion of management of First
Lancaster and the Bank in all respects to provide for anticipated losses
inherent in loans outstanding or for commitments to extend credit or similar
off-balance sheet items (including accrued interest receivable) as of the
dates thereof and is in compliance with the requirements of GAAP. Except as
disclosed in Schedule 4.25 hereto, as of the date thereof, the Bank does not
have any loan which has been criticized or classified by bank examiners
representing any Regulatory Authority as "Special Mention," "Substandard,"
"Doubtful" or "Loss" or as a "Potential Problem Loan."
The allowance for possible losses on real estate owned ("REO") shown on
the First Lancaster Financial Statements is (with respect to periods ended on
or before June 30, 2000) or will be (with respect to periods ending subsequent
to June 30, 2000) in the opinion of management of First Lancaster and the Bank
adequate in all respects to provide for anticipated losses inherent in REO or
held by First Lancaster or any First Lancaster Subsidiary and the net book
value of REO on the Balance Sheet of the First Lancaster Financial Statements
is the fair value of the REO in accordance with Statement of Position 92-3.
AGREEMENT AND PLAN OF MERGER - Page 23
4.26 Compliance with Laws. First Lancaster, the Bank and each First
Lancaster Subsidiary:
(a) Is in compliance with all laws, rules, regulations,
reporting and licensing requirements, and orders applicable to its business or
employees conducting its business (including, but not limited to, those
relating to consumer disclosure and currency transaction reporting) the breach
or violation of which would or could reasonably be expected to have a material
adverse effect on the financial condition or operations of First Lancaster,
the Bank or any First Lancaster Subsidiary, or which would or could reasonably
be expected to subject First Lancaster, the Bank or any First Lancaster
Subsidiary or any of its directors or officers to civil money penalties;
(b) Has received no notification or communication from any
agency or department of federal, state, or local government or any of the
Regulatory Authorities, or the staff thereof (i) asserting that First
Lancaster, the Bank or any First Lancaster Subsidiary is or may not be in
compliance with any of the statutes, rules, regulations, or ordinances which
such governmental authority or Regulatory Authority enforces, which, as a
result of such noncompliance, would result in a material adverse impact on
First Lancaster, the Bank or any First Lancaster Subsidiary, (ii) threatening
to revoke any license, franchise, permit, or governmental authorization which
is material to the financial condition or operations of First Lancaster, the
Bank or any First Lancaster Subsidiary, or (iii) requiring First Lancaster,
the Bank or any First Lancaster Subsidiary to enter into a cease and desist
order, consent, agreement, or memorandum of understanding; and
(c) Is in material compliance with the applicable provisions
of the CRA and the regulations promulgated thereunder, and the Bank currently
has a CRA rating of satisfactory or better. To the best knowledge of First
Lancaster and the Bank, there is no fact or circumstance or set of facts or
circumstances which would cause the Bank to fail to comply with such
provisions or cause the CRA rating of the Bank to fall below satisfactory.
4.27 Absence of Regulatory Actions. Neither First Lancaster, the
Bank nor any of the First Lancaster Subsidiaries is a party to any cease and
desist order, written agreement or memorandum of understanding with, or a
party to any commitment letter or similar undertaking to, or is subject to any
written order or directive by, or is a recipient of any extraordinary
supervisory letter from, or, since July 1, 1995, has adopted any board
resolutions at the request of, federal or state governmental authorities
charged with the supervision or regulation of depository institutions or
depository institution holding companies or engaged in the insurance of bank
and/or savings and loan deposits nor has it been advised by any such
governmental authority that it is contemplating issuing or requesting (or is
considering the appropriateness of issuing or requesting) any such order,
directive, written agreement, memorandum of understanding, extraordinary
supervisory letter, commitment letter, board resolutions or similar
undertaking.
4.28 Employee Benefit Plans.
(a) First Lancaster and the Bank have previously provided to
CKF Bancorp true and complete copies of each "employee pension benefit plan,"
as defined in Section 3(2) of ERISA which is subject to any provision of ERISA
and covers any employee, whether active or retired, of First Lancaster, the
Bank or any First Lancaster Subsidiary or any other entity which is a member
of a controlled group or is under common control with First Lancaster, the
Bank or any First Lancaster Subsidiary in the manner defined and further
described in Section 414(b), (c), (m), or (o) of the Internal Revenue Code.
Such plans are hereinafter referred to collectively as the "Employee Pension
Benefit Plans", and each such Employee Pension Benefit Plan is listed in
Schedule 4.28(a) hereto. First Lancaster and the Bank have also provided to
CKF Bancorp true and complete copies of all trust agreements, collective
bargaining agreements, and insurance contracts related to such Employee
Pension Benefit Plans.
To the best knowledge of First Lancaster and the Bank, each
Employee Pension Benefit Plan which is intended to be qualified under Section
401(a) of the Internal Revenue Code is so qualified and each trust forming a
part thereof is exempt from tax pursuant to Section 501(a) of the Internal
Revenue Code. Copies of the latest
AGREEMENT AND PLAN OF MERGER - Page 24
determination letters concerning the qualified status of each Employee Pension
Benefit Plan which is intended to be qualified under Section 401(a) of the
Internal Revenue Code have been provided to CKF Bancorp.
Each of the Employee Pension Benefit Plans has been operated in
material conformity with the written provisions of the applicable plan
documents which have been delivered to CKF Bancorp and in material compliance
with the requirements prescribed by all statutes, orders, rules, and
regulations including, but not limited to, ERISA and the Internal Revenue
Code, which are applicable to such Employee Pension Benefit Plans. To the
extent that the operation of an Employee Pension Benefit Plan by First
Lancaster or the Bank has deviated from the written provisions of the plan,
such material operational deviations have been disclosed in Schedule 4.28(a)
hereto.
With respect to Employee Pension Benefit Plans which are
subject to the annual report requirement of ERISA or to the annual return
requirements of the Internal Revenue Code, all required annual reports and
annual returns, or such other documents as may have been required as
alternative means of compliance with the annual report requirement, have been
completely and timely filed. Copies of all such annual returns/reports,
including all attachments and Schedules, for the three (3) plan years
immediately preceding the current date have been delivered to CKF Bancorp.
With respect to Employee Pension Benefit Plans which complied with the annual
return requirement by satisfaction of an alternate compliance method, any
documents required to be filed with the Department of Labor in satisfaction of
such requirements have been provided to CKF Bancorp.
With respect to all Employee Pension Benefit Plans which are
subject to the summary plan description requirement of ERISA Section 102, all
such summary plan descriptions as were required to be filed with the
Department of Labor and distributed to participants and beneficiaries have
been filed and timely distributed. Copies of all such summary plan
descriptions have been delivered to CKF Bancorp. No Employee Pension Benefit
Plan constitutes a "multi-employer plan" as defined in Section 4001(a)(3) of
ERISA.
No Employee Pension Benefit Plan subject to Part 3 of Subtitle
B of ERISA or Section 412 of the Internal Revenue Code, or both, has incurred
an "accumulated funding deficiency" within the meaning of Internal Revenue
Code Section 412, whether or not waived. All required contributions to all
Employee Pension Benefit Plans have been timely made. Any penalties or taxes
which have been incurred by First Lancaster, the Bank or any First Lancaster
Subsidiary or by any Employee Pension Benefit Plan with respect to the timing
or amount of payment of any contribution to an Employee Pension Benefit Plan
have been timely paid. The limitations of Internal Revenue Code Section 415
have not been exceeded with respect to any Employee Pension Benefit Plan or
combination of such plans to which such limitations apply.
No "reportable event" (as described in Section 4043(b) of
ERISA) has occurred with respect to any Employee Pension Benefit Plan. To the
best knowledge of First Lancaster and the Bank, no Employee Pension Benefit
Plan or any trust created thereunder, nor any "disqualified person" with
respect to the plan (as defined in Section 4975 of the Internal Revenue Code),
has engaged in a "prohibited transaction", as such term is defined in Section
4975 of the Internal Revenue Code, which could subject such Employee Pension
Benefit Plan, any such trust or any such disqualified person to liability
under Title I of ERISA or to the imposition of any tax under Section 4975 of
the Internal Revenue Code.
No condition exists with regard to any Employee Pension Benefit
Plan which constitutes grounds for the termination of such plan pursuant to
Section 4042 of ERISA.
No tax has been, or is reasonably anticipated to be imposed on
First Lancaster or the Bank under the Internal Revenue Code due to the
operation of an Employee Pension Benefit Plan sponsored by First Lancaster,
the Bank or any First Lancaster Subsidiary which is or is intended to be an
employee stock ownership plan ("ESOP").
AGREEMENT AND PLAN OF MERGER - Page 25
Except as disclosed in Schedule 4.28(a) hereto, all Employee
Pension Benefit Plans were in effect for substantially all of calendar year
2000. Except as disclosed on Schedule 4.28(a) hereto, there has been no
material amendment of any such plans (other than amendments required to comply
with applicable law) or material increase in the cost of maintaining such
plans or providing benefits thereunder on or after the last day of the plan
year which ended in calendar year 2000 for each such Employee Pension Benefit
Plan.
First Lancaster and the Bank have provided to CKF Bancorp
copies of the annual actuarial valuation or allocation report for each
Employee Pension Benefit Plan for the three (3) plan years for such plan
immediately preceding the current date. With regard to Employee Pension
Benefit Plans which are not intended to be qualified under Section 401(a) of
the Internal Revenue Code, copies of financial statements or reports
containing information regarding the expense of maintaining any such Employee
Pension Benefit Plan for the three (3) plan years preceding the current date
have been delivered to CKF Bancorp.
First Lancaster and the Bank have provided to CKF Bancorp
copies of all filings regarding the Employee Pension Benefit Plans which have
been made with the Regulatory Authorities for the three (3) plan years
preceding the current date.
(b) First Lancaster and the Bank have furnished to CKF Bancorp
true and complete copies of each "Employee Welfare Benefit Plan" as defined in
Section 3(1) of ERISA, which is subject to any provision of ERISA and covers
any employee, whether active or retired, of First Lancaster, the Bank or any
First Lancaster Subsidiary or members of a controlled group or entities under
common control with First Lancaster, the Bank or the First Lancaster
Subsidiaries in the manner defined and further described in Section 414(b),
(c), (m), or (o) of the Internal Revenue Code. Such plans are hereinafter
referred to collectively as the "Employee Welfare Benefit Plans", and each
such Employee Welfare Benefit Plan is listed in Schedule 4.28(b) hereto.
First Lancaster and the Bank have also provided to CKF Bancorp
true and complete copies of documents establishing such Employee Welfare
Benefit Plans (including funding instruments), including but not limited to,
trust agreements, cafeteria plans (pursuant to Internal Revenue Code Section
125), and voluntary employee beneficiary associations (pursuant to Internal
Revenue Code Section 501(c)(9)). Each of the Employee Welfare Benefit Plans
has been operated in all material respects by First Lancaster and the Bank in
conformity with the written provisions of the plan documents which have been
delivered to CKF Bancorp and in material compliance with the requirements
prescribed by all statutes, orders, rules, and regulations including, but not
limited to, ERISA and the Internal Revenue Code, which are applicable to such
Employee Welfare Benefit Plans. Any material deviation in the operation of
such plans by First Lancaster or the Bank from the requirements of the plan
documents or of applicable laws have been listed in Schedule 4.28(b) hereto.
First Lancaster and the Bank have provided any notification required by law to
any participant covered under any Employee Welfare Benefit Plan which has
failed to comply with the requirements of any Internal Revenue Code section
which results in the imposition of a tax on benefits provided to such
participants under such plan.
With respect to all Employee Welfare Benefit Plans which are
subject to the annual report requirement of ERISA Section 103 or to the annual
return requirement of Internal Revenue Code Section 6039D, all annual reports
and annual returns as were required to be filed pursuant to such sections have
been timely filed. Copies of all such annual returns/reports, including all
attachments and Schedules, for the three (3) plan years immediately preceding
the current date for all plans subject to such requirements have been
delivered to CKF Bancorp. With respect to all Employee Welfare Benefit Plans
which are subject to the summary plan description requirement of ERISA Section
102, all such summary plan descriptions as were required to be filed with the
Department of Labor and distributed to participants and beneficiaries have
been timely filed and distributed. Copies of all such summary plan
descriptions have been delivered to CKF Bancorp.
AGREEMENT AND PLAN OF MERGER - Page 26
Except as disclosed in Schedule 4.28(b) hereto, all Employee
Welfare Benefit Plans which are in effect were in effect for substantially all
of calendar year 2000. Except as disclosed in Schedule 4.28(b) hereto, there
has been with respect to such Employee Welfare Benefit Plans no material
amendment thereof or material increase in the cost thereof or benefits payable
thereunder on or after January 1, 2000.
To the best knowledge of First Lancaster and the Bank, no
Employee Welfare Benefit Plan or any trust created thereunder, nor any "party
in interest" with respect to the plan (as defined in Section 3(14) of ERISA),
has engaged in a "prohibited transaction," as such term is defined in Section
406 of ERISA, which could subject such Employee Welfare Benefit Plan, any such
trust, or any party in interest to the imposition of a penalty for such
prohibited transaction under Section 502(i) of ERISA. The Department of Labor
has not assessed any such penalty or served notice to First Lancaster, the
Bank or any First Lancaster Subsidiary that such a penalty may be imposed upon
any Employee Welfare Benefit Plan.
Neither First Lancaster, the Bank nor any First Lancaster
Subsidiary has failed to make any contribution to, or pay any amount due and
owing by First Lancaster, the Bank or a First Lancaster Subsidiary under the
terms of, an Employee Welfare Benefit Plan. Except as disclosed in Schedule
4.28(b) hereto, no claims have been incurred with respect to any Employee
Welfare Benefit Plan which may, to the best knowledge of First Lancaster and
the Bank, constitute a liability for First Lancaster, the Bank or any First
Lancaster Subsidiary after the application of any insurance, trust or other
funds which are applicable to the payment of such claims.
Except as disclosed in Schedule 4.28(b) hereto, to the best
knowledge of First Lancaster and the Bank no condition exists that could
subject any Employee Welfare Benefit Plan or any person (other than a person
for whom neither First Lancaster, the Bank nor any First Lancaster Subsidiary
is directly or indirectly responsible) to liabilities, damages, losses, taxes,
or sanctions that arise under Section 4980B of the Internal Revenue Code or
Sections 601 through 609 of ERISA for failure to comply with the continuation
health care coverage requirements of ERISA Sections 601 through 609 and
Internal Revenue Code Section 4980B with respect to any current or former
employee of First Lancaster, the Bank or any First Lancaster Subsidiary, or
the beneficiaries of such employee.
Except as disclosed on Schedule 4.28(b), no Employee Welfare
Benefit Plan provides coverage of, or benefits for, persons who are not actual
employees of First Lancaster or the Bank, other than as required by Section
4980B of the Internal Revenue Code or Sections 601 through 609 of ERISA.
(c) First Lancaster and the Bank have furnished to CKF Bancorp
true and complete copies and/or descriptions of each plan or arrangement
maintained or otherwise contributed to by First Lancaster, the Bank or any
First Lancaster Subsidiary which is not an Employee Pension Benefit Plan and
is not an Employee Welfare Benefit Plan and which (exclusive of base salary
and base wages) provides for any form of current or deferred compensation,
bonus, stock option, profit sharing, retirement, group health or insurance,
welfare benefits, fringe benefits, or similar plan or arrangement for the
benefit of any employee or class of employees, whether active or retired, or
independent contractors of First Lancaster, the Bank or any First Lancaster
Subsidiary. Such plans and arrangements shall collectively be referred to
herein as "Benefit Arrangements" and all such Benefit Arrangements of First
Lancaster, the Bank and the First Lancaster Subsidiaries are listed on
Schedule 4.28(c) hereto. Except as disclosed in Schedule 4.28(c) hereto,
there are no other Benefit Arrangements of First Lancaster and the Bank and
all Benefit Arrangements which are in effect were in effect for substantially
all of calendar year 2000. Except as disclosed in Schedule 4.28(c) hereto,
there has been with respect to Benefit Arrangements no material amendment
thereof or material increase in the cost thereof or benefits payable
thereunder on or after January 1, 2000. There has been no material increase
in the base salary and wage levels of officers and employees of First
Lancaster, the Bank or any First Lancaster Subsidiary and, except in the
ordinary course of business or as contemplated by this Merger Agreement, no
change in the terms or conditions of employment (including severance benefits)
compared, in each case, to those prevailing for substantially all of calendar
year 2000. Except as disclosed in Schedule 4.28(c) hereto, there has been no
material increase in the compensation of, or benefits payable to, any senior
executive employee of First Lancaster,
AGREEMENT AND PLAN OF MERGER - Page 27
the Bank or any First Lancaster Subsidiary on or after January 1, 2000, nor
has any employment, severance, or similar contract been entered into with any
such employee, nor has any amendment to any such contract been made on or
after January 1, 2000.
With respect to all Benefit Arrangements which are subject to
the annual return requirement of Internal Revenue Code Section 6039D, all
annual returns as were required to be filed have been timely filed. Copies of
all such annual returns for the three (3) plan years immediately preceding the
current date have been delivered to CKF Bancorp.
(d) Listed in Schedule 4.28(d) hereto are all Employee Pension
Benefit Plans, Employee Welfare Benefit Plans, and Benefit Arrangements which
provide compensation or benefits which become effective upon a change in
control of First Lancaster, the Bank or any First Lancaster Subsidiary,
including, but not limited to, additional compensation or benefits, or
acceleration in the amount or timing of payment of compensation or benefits
which had become effective prior to the date of such acceleration. Schedule
4.28(d) also includes in reasonable detail, to the extent such benefits can be
calculated as of the date of this Merger Agreement and a description of
benefits that cannot be so calculated, the payments and benefits due at
Closing under First Lancaster's employment agreements, change in control
agreements, supplemental executive retirement plan, directors' retirement plan
and defined benefit plan. Except as disclosed in Schedule 4.28(d) hereto,
there is no Employee Pension Benefit Plan, Employee Welfare Benefit Plan, or
Benefit Arrangement covering any employee of First Lancaster, the Bank or any
First Lancaster Subsidiary which individually or collectively could give rise
to the payment of any amount which would constitute an "excess parachute
payment", as such term is defined in Section 280G of the Internal Revenue Code
and Regulations proposed pursuant to that section.
(e) Except as described in Schedule 4.28(e) hereto, each
Employee Pension Benefit Plan, Employee Welfare Benefit Plan, or Benefit
Arrangement and each personal services contract, fringe benefit, consulting
contract or similar arrangement with or for the benefit of any Officer,
director, employee, or other person may be terminated by First Lancaster or
the Bank within a period of no more than thirty (30) days following the
Effective Time of the Merger, without payment of any amount as a penalty,
bonus, premium, severance pay, or other compensation for such termination. No
limitation on the right to terminate any such plan has been communicated by
First Lancaster, the Bank or any First Lancaster Subsidiary to employees,
former employees, or retirees who are or may be participants in or
beneficiaries of such plans or arrangements.
(f) Except as disclosed in Schedule 4.28(f) hereto, neither
First Lancaster, the Bank nor any First Lancaster Subsidiary has received
notice from any governmental agency regarding an audit, examination or other
inquiry, or of any alleged violation of applicable laws or of any prospective
audit or other investigation for the purpose of reviewing compliance with
applicable laws with respect to any Employee Pension Benefit Plan, Employee
Welfare Benefit Plan or Benefit Arrangement.
Except as disclosed in Schedule 4.28(f) hereto, no suits,
actions, or claims have been filed in any court of law or with any
governmental agency regarding the operation of any Employee Pension Benefit
Plan, Employee Welfare Benefit Plan, or Benefit Arrangement and no such
additional suits, actions, or claims are, to the best knowledge of First
Lancaster and the Bank, anticipated to be filed.
4.29 Material Contracts.
(a) Except as set forth on Schedule 4.29 (and with a true and
correct copy of the document or other item in question attached to such
Schedule), neither First Lancaster, the Bank nor any First Lancaster
Subsidiary is a party or subject to any of the following (whether written or
oral, express or implied):
AGREEMENT AND PLAN OF MERGER - Page 28
(i) any agreement, arrangement or commitment (A) not
made in the ordinary course of business or (B) pursuant to which First
Lancaster, the Bank or any First Lancaster Subsidiary is or may become
obligated to invest in or contribute capital to any First Lancaster
Subsidiary or any other entity;
(ii) any agreement, indenture or other instrument not
disclosed in the First Lancaster Financial Statements relating to the
borrowing of money by First Lancaster, the Bank or any First Lancaster
Subsidiary or the guarantee by First Lancaster, the Bank or any First
Lancaster Subsidiary of any such obligation (other than trade payables
or instruments related to transactions entered into in the ordinary
course of business by any First Lancaster Subsidiary, such as deposits,
Fed Funds borrowings and repurchase\ agreements);
(iii) any contract, agreement or understanding with any
labor union or collective bargaining organization;
(iv) any contract containing covenants which limit the
ability of First Lancaster, the Bank or any First Lancaster Subsidiary
to compete in any line of business or with any person or containing any
restriction of the geographical area in which, or method by which, First
Lancaster, the Bank or any First Lancaster Subsidiary may carry on its
business (other than as may be required by law or any applicable
Regulatory Authority);
(v) any contract or agreement which is a "material
contract" within the meaning of Item 601(b)(10) of Regulation S-K
promulgated by the SEC;
(vi) any lease with annual rental payments aggregating
$10,000 or more;
(vii) consulting agreement (other than data processing,
software programming and licensing contracts entered into in the
ordinary course of business) involving the payment of more than
$10,000 per annum;
(viii) any agreement with any executive officer or other key
employee of First Lancaster, the Bank or any First Lancaster Subsidiary
the benefits of which are contingent, or the terms of which are
materially altered or any payments or rights are accelerated, upon the
occurrence of a transaction involving First Lancaster, the Bank or any
of the First Lancaster Subsidiaries of the nature contemplated by this
Merger Agreement;
(ix) any agreement with respect to any executive officer
of First Lancaster, the Bank or any First Lancaster Subsidiary
providing any term of employment or compensation guarantee extending
for a period longer than one year and for the payment of in excess of
$50,000 per annum; or
(x) any agreement with any director or executive officer
of First Lancaster or the Bank or any First Lancaster Subsidiary
providing for indemnification of such person; or
(xi) agreement or plan, including any stock option plan,
stock appreciation rights plan, restricted stock plan or stock purchase
plan, any of the benefits of which will be increased, or the vesting of
the benefits of which will be accelerated, by the occurrence of any of
the transactions contemplated by this Merger Agreement or the value of
any of the benefits of which will be calculated on the basis of any
of the transactions contemplated by this Merger Agreement.
(b) Except as disclosed on Schedule 4.29, to the best
knowledge of First Lancaster and the Bank, no Officer or director of First
Lancaster, the Bank or any "associate" (as such term is defined in Rule 12b-2
AGREEMENT AND PLAN OF MERGER - Page 29
under the 0000 Xxx) of any such officer or director, has any material interest
in any material contract or property (real or personal), tangible or
intangible, used in or pertaining to the business of First Lancaster, the Bank
or any of the First Lancaster Subsidiaries.
4.30 Material Contract Defaults. Neither First Lancaster, the Bank
nor any First Lancaster Subsidiary is in default in any respect under any
contract, agreement, commitment, arrangement, lease, insurance policy, or
other instrument to which it is a party or by which its respective assets,
business, or operations may be bound or affected or under which it or its
respective assets, business, or operations receives benefits, and which
default is reasonably expected to have either individually or in the aggregate
a material adverse effect on the condition (financial or other) of First
Lancaster, the Bank or any First Lancaster Subsidiary, and there has not
occurred any event that, with the lapse of time or the giving of notice or
both, would constitute such a default.
4.31 Reports. Since January 1, 1995, First Lancaster and the Bank
have filed all reports and statements, together with any amendments required
to be made with respect thereto, that it was required to file with (i) the
SEC; (ii) the OTS; and (iii) any other applicable federal or state securities
or banking authorities. As of their respective dates, each of such reports
and documents, including the financial statements, exhibits, and schedules
thereto, complied in all material respects with all of the requirements of
their respective forms and all of the statutes, rules, and regulations
enforced or promulgated by the Regulatory Authority with which they were
filed. All such reports were true and complete in all material respects and
did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. First Lancaster and the Bank have previously provided to CKF
Bancorp true and correct copies of all such reports and any amendments thereto
filed by First Lancaster or the Bank after January 1, 1995.
4.32 Statements True and Correct. None of the information prepared
by, or on behalf of, First Lancaster, the Bank or any First Lancaster
Subsidiary regarding First Lancaster, the Bank or any First Lancaster
Subsidiary included in the Proxy Statement mailed to First Lancaster's
shareholders in connection with the Shareholders Meeting, and any other
documents filed with the OTS, the SEC or any other Regulatory Authority in
connection with the transaction contemplated herein (if applicable), will be,
at the respective times such documents are filed, and, with respect to the
Proxy Statement, when first mailed to the shareholders of First Lancaster,
shall not contain any statement which, at the time and in light of the
circumstances under which it is made, is false or misleading with respect to
any material fact, or will omit to state any material fact necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading, or, in the case of the Proxy Statement or any amendment
thereof or supplement thereto, at the time of the Shareholders Meeting, false
or misleading with respect to any material fact, or omit to state any material
fact necessary to make any statements therein, in light of the circumstances
under which they were made, not misleading.
4.33 Brokers and Finders. Except as set forth in Schedule 4.33,
neither First Lancaster, the Bank nor any First Lancaster Subsidiary nor any
of their respective officers, directors or employees has employed any broker
or finder or incurred any liability for any financial advisory fees, brokerage
fees, commissions or finder's fees, and no broker or finder has acted directly
or indirectly for First Lancaster, the Bank or any First Lancaster Subsidiary,
in connection with this Merger Agreement or the transactions contemplated
hereby.
4.34 Derivatives Contracts; Structured Notes; Etc. Neither First
Lancaster, the Bank nor any First Lancaster Subsidiary is a party to or has
agreed to enter into an exchange traded or over-the-counter equity, interest
rate, foreign exchange or other swap, forward, future, option, cap, floor or
collar or any other contract that is not included on the balance sheet and is
a derivative contract (including various combinations thereof) (each a
"Derivatives Contract") or owns securities that (1) are referred to
generically as "structured notes," "high risk mortgage derivatives," "capped
floating rate notes" or "capped floating rate mortgage derivatives" or (2) are
likely to have changes in value as a result of interest or exchange rate
changes that significantly exceed normal changes in value attributable to
interest
AGREEMENT AND PLAN OF MERGER - Page 30
or exchange rate changes, except for those Derivatives Contracts and other
instruments legally purchased or entered into in the ordinary course of
business, consistent with safe and sound banking practices and regulatory
guidance, and listed (as of the date hereof) on Schedule 4.34.
4.35 Loans. To the best knowledge of the Bank, with respect to each
loan owned by the Bank in whole or in part: (i) the note and any related
mortgage are each legal, valid and binding obligations of the maker or obligor
thereof, enforceable against such maker or obligor in accordance with their
terms; (ii) neither the Bank nor any prior holder of a loan has modified the
related documents in any material respect or satisfied, canceled or
subordinated such mortgage or note except as otherwise disclosed by documents
in the applicable loan file; (iii) the Bank is the sole holder of legal and
beneficial title to each loan (or the Bank's applicable participation
interest), as applicable and there has not been any assignment or pledge of
any loan; and (iv) the note, mortgage and any other collateral documents,
copies of which are included in the loan files, are true and correct copies of
the documents they purport to be and have not been superseded, amended,
modified, canceled or otherwise changed except as disclosed by documents in
the applicable loan file.
4.36 Anti-takeover Provisions Inapplicable. First Lancaster and
the Bank have taken or prior to the Effective Time, will have taken, all
actions required to exempt CKF Bancorp, Central Kentucky Federal, Merger Sub,
and the transactions contemplated hereby, from any provisions of an
anti-takeover nature contained in their organizational documents, and the
provisions of any federal or state "anti-takeover," "fair price,"
"moratorium," "control share acquisition" or similar laws or regulations.
4.37 Expenses. Schedule 4.37 contains a list of expenses in
individual amounts expected to the knowledge of First Lancaster management to
exceed $5,000, and the aggregate amount of all expenses expected to be less
than $5,000, to be incurred by First Lancaster in connection with the
completion of the transactions contemplated by the Merger Agreement.
ARTICLE 5
COVENANTS OF CKF BANCORP
5.1 Regulatory Approvals. Within a reasonable time after execution
of this Merger Agreement, CKF Bancorp shall file any and all applications with
the appropriate government Regulatory Authorities in order to obtain the
Government Approvals and shall take such other actions as may be reasonably
required to consummate the transactions contemplated in this Merger Agreement
with reasonable promptness. CKF Bancorp shall pay all fees and expenses
arising in connection with such applications for regulatory approval. CKF
Bancorp agrees to provide the appropriate Regulatory Authorities with the
information required by such authorities in connection with CKF Bancorp's
applications for regulatory approval and CKF Bancorp agrees to use its best
efforts to obtain such regulatory approvals, and any other approvals and
consents as may be required for the Closing, as promptly as practicable;
provided, however, that nothing in this Section 5.1 shall be construed to
obligate CKF Bancorp to take any action to meet any condition required to
obtain prior regulatory approval if any such condition differs from conditions
customarily imposed by such Regulatory Authorities in orders approving
acquisitions of the type contemplated by this Merger Agreement, or constitutes
a significant impediment upon CKF Bancorp's ability to carry on its business
(as may be determined in the sole reasonable discretion of CKF Bancorp).
5.2 Preparation of the First Lancaster Proxy Statement. CKF
Bancorp shall cooperate with First Lancaster in the preparation of the Proxy
Statement to be used at the Shareholders Meeting.
AGREEMENT AND PLAN OF MERGER - Page 31
5.3 Employees.
(a) All persons who are employees of the Bank immediately
prior to the Effective Time and whose employment is not specifically
terminated at or prior to the Effective Time (a "Continuing Employee") shall,
at the Effective Time, become employees of Central Kentucky Federal; provided,
however, that in no event shall any of the Bank's employees be Officers of
Central Kentucky Federal, or have or exercise any power or duty conferred upon
such an Officer, unless and until duly elected or appointed to such position
in accordance with the bylaws of Central Kentucky Federal. All of the
Continuing Employees shall be employed at the will of Central Kentucky Federal
and no contractual right to employment shall inure to such employees because
of this Agreement, provided, however, and subject to the foregoing, that CKF
Bancorp and Central Kentucky Federal agree not to reduce the salaries of
Continuing Employees below levels existing immediately prior to the Effective
Time for a period of one year following the Effective Time.
(b) As soon as administratively practicable following the
Effective Time, each Continuing Employee shall be eligible to participate in
the CKF Bancorp, Inc. Employee Stock Ownership Plan and the Central Kentucky
Federal Savings Bank 401(k) Plan with full credit for prior service with First
Lancaster and the Bank for purposes of eligibility and vesting (but not for
benefit accrual purposes). As of the Effective Time, CKF Bancorp shall make
available employer-provided health and other employee welfare benefit plans to
each Continuing Employee on the same basis as it provides such coverage to CKF
Bancorp employees except that any pre-existing condition, eligibility waiting
period or other limitations or exclusions otherwise applicable under such
plans to new employees shall not apply to a Continuing Employee or their
covered dependents who were covered under a similar First Lancaster plan on
the Effective Date of the Merger, except that CKF Bancorp shall provide for a
carry-over during 2001 to the replacement CKF Bancorp or Central Kentucky
Federal medical plan of all deductibles and annual out-of-
pocket contributions incurred during the period beginning January 1, 2001
through the Effective Time.
(c) After the Effective Time, each Continuing Employee shall
become subject to CKF Bancorp's and Central Kentucky Federal's policies and
procedures relative to long-term disability, short-term disability and paid
time off, the latter of which is available for both vacation time and sick
time, to the same extent as comparably situated CKF Bancorp and Central
Kentucky Federal employees. Accrued vacation time for each Continuing
Employee shall be converted into paid time off on a one-for-one basis. Those
employees of the Bank not continuing as employees of CKF Bancorp or Central
Kentucky Federal and each Continuing Employee whose employment is terminated
by CKF Bancorp or Central Kentucky Federal without cause within one year after
the Effective Time, other than officers with employment agreements or
severance agreements, shall be compensated (based upon their current rate of
salary) for four (4) weeks of salary and for any accrued vacation time but not
for accrued sick leave.
(d) Except as otherwise provided in this Merger Agreement, CKF
Bancorp agrees to honor in accordance with their terms all plans, contracts,
arrangements, commitments or understandings disclosed in First Lancaster's
Schedules for Section 4.28, including with respect to benefits which vest or
are otherwise accrued or payable as a result of the consummation of the
transactions contemplated by this Merger Agreement, except that no benefits
shall accrue after the Effective Time. Set forth in First Lancaster's
Schedule 4.28(d) in reasonable detail are the payments and benefits due under
First Lancaster's employment agreements, change in control agreements,
supplemental executive retirement plan, directors' retirement plan and the
defined benefit plan. No later than five days after the Effective Time, CKF
Bancorp or Central Kentucky Federal shall contribute to the First Lancaster
Federal Savings Bank Grantor Trust (the "Grantor Trust"), which was
established pursuant to the supplemental executive retirement agreements with
Virginia X. X. Xxxxx and Xxxx X. Xxxxxx, an amount equal to the difference
between $226,257 and the value of the assets held in the Grantor Trust as of
the Effective Time. Not later than five days after the Effective Time, CKF
Bancorp or Central Kentucky Federal shall establish the trust (if it has not
been previously established) which is provided for under the First Lancaster
Federal Savings Bank Directors' Retirement Plan and contribute an amount, as
determined by an independent actuary, that is projected to be sufficient to
pay all benefits that have been accrued under the plan as of the Effective
Time, which amount will in no event exceed $74,956.75. Immediate notice will
be given by First Lancaster to CKF Bancorp if First Lancaster determines that
the present value
AGREEMENT AND PLAN OF MERGER - Page 32
of the obligations payable and owed upon the termination of the supplemental
executive retirement plan and the directors retirement plan and the amount
payable upon withdrawal from participation in defined benefit plan are in
excess of $226,257, $139,506 and $2,940, respectively, or there are any
changes in the amounts to be paid as set forth in Schedule 4.28(d). It is
intended by CKF Bancorp and First Lancaster that the procedures and
methodologies used in preparing such estimates shall be followed in
determining the actual payments or benefits due under such agreements;
provided, however, in no event shall CKF Bancorp or Central Kentucky Federal
be obligated to make any payment or provide any benefits whatsoever to any
Officer or employee of the Bank under any circumstance in which such payments
or benefits, whether due under such agreements or otherwise, is or will not be
deductible by CKF Bancorp or Central Kentucky Federal by reason of Section
280G of the Internal Revenue Code.
5.4 Addition to Board of Directors. As promptly as practicable
following the Effective Time, CKF Bancorp shall take such action as may be
necessary to cause the size of CKF Bancorp's Board of Directors to be
increased by two persons and to cause the appointment of Virginia X.X. Xxxxx
and Xxxx X. Xxxxxx to the Board of Directors of CKF Bancorp and Central
Kentucky Federal should such individuals elect to continue employment with CKF
Bancorp and Central Kentucky Federal, respectively.
5.5 Reasonable Efforts to Close. Subject to the terms and
conditions of this Merger Agreement, CKF Bancorp agrees to use all its best
efforts and to take, or to cause to be taken, all actions, and to do, or to
cause to be done, all things necessary, proper, or advisable under applicable
laws and regulations to consummate and make effective, with reasonable
promptness after the date of this Merger Agreement, the transactions
contemplated by this Merger Agreement, including, without limitation, using
reasonable efforts to lift or rescind any injunction or restraining or other
order adversely affecting the ability of the Parties to consummate the
transaction contemplated by this Merger Agreement; provided, however, that
such efforts do not impose unreasonable expense or obligations on CKF Bancorp.
CKF Bancorp shall use, and shall cause each of its Subsidiaries to use, its
best efforts to obtain consents of all third parties and Regulatory
Authorities necessary or desirable for the consummation of each of the
transactions contemplated by this Merger Agreement.
5.6 Indemnification.
(a) From and after the Effective Time through the third
anniversary of the Effective Date, CKF Bancorp (and any successor) agrees to
indemnify, defend and hold harmless each present and former director and
Officer of First Lancaster and the Bank and each Officer or employee of First
Lancaster and the Bank that is serving or has served as a director or trustee
of another entity expressly at First Lancaster's request or direction (each,
an "Indemnified Party"), against any costs or expenses (including reasonable
attorneys' fees), judgments, fines, amounts paid in settlement, losses,
claims, damages or liabilities (collectively, "Costs") incurred in connection
with any claim, action, suit, proceeding or investigation, whether civil,
criminal, administrative or investigative, arising out of matters existing or
occurring at or prior to the Effective Time (including the transactions
contemplated by this Merger Agreement), whether asserted or claimed prior to,
at or after the Effective Time, and to advance any such Costs to each
Indemnified Party as they are from time to time incurred, in each case to the
fullest extent such Indemnified Party would have been permitted to be
indemnified as a director, Officer or employee of First Lancaster and the Bank
and under the DGCL (as in effect on the Effective Date of the Merger).
(b) Any Indemnified Party wishing to claim indemnification
under this Section 5.6, upon learning of any such claim, action, suit,
proceeding or investigation, shall promptly notify CKF Bancorp thereof, but
the failure to so notify shall not relieve CKF Bancorp of any liability it may
have hereunder to such Indemnified Party if such failure does not materially
and substantially prejudice CKF Bancorp. In the event of any such claim,
action, suit, proceeding or investigation: (i) CKF Bancorp shall have the
right to assume the defense thereof with counsel reasonably acceptable to the
Indemnified Party and CKF Bancorp shall not be liable to such Indemnified
Party for any legal expenses of other counsel subsequently incurred by such
Indemnified Party in connection with the defense thereof, except that if CKF
Bancorp does not elect to assume such defense within a reasonable time or
counsel for the
AGREEMENT AND PLAN OF MERGER - Page 33
Indemnified Party at any time advises in good faith that there are issues
which raise conflicts of interest between CKF Bancorp and the Indemnified
Party, the Indemnified Party may retain counsel satisfactory to such
Indemnified Party, and CKF Bancorp shall remain responsible for the reasonable
fees and expenses of such counsel as set forth above, to be paid promptly as
statements therefor are received; provided, however, that CKF Bancorp shall be
obligated pursuant to this paragraph (b) to pay for only one firm of counsel
for all Indemnified Parties in any one jurisdiction with respect to any given
claim, action, suit, proceeding or investigation unless the use of one counsel
for such Indemnified Parties would present such counsel with a conflict of
interest; (ii) the Indemnified Party will reasonably cooperate in the defense
of any such matter; and (iii) CKF Bancorp shall not be liable for any
settlement effected by an Indemnified Party without its prior written consent,
which consent may not be withheld unless such settlement is unreasonable in
light of such claims, actions, suits, proceedings or investigations against,
or defenses available to, such Indemnified Party.
(c) CKF Bancorp shall pay all reasonable Costs, including
attorneys' fees, that may be incurred by any Indemnified Party in successfully
enforcing the indemnity and other obligations provided for in this Section 5.6
to the fullest extent permitted by law. The rights of each Indemnified Party
hereunder shall be in addition to any other rights such Indemnified Party may
have under applicable law.
(d) Subject to availability and a cost of not greater than
125% of the per annum premiums paid by First Lancaster for the policy year
that includes the date of this Merger Agreement, CKF Bancorp shall permit
First Lancaster and the Bank to purchase and keep in force for a period of at
least three years following the Effective Time, directors' and officers'
liability insurance to provide coverage for acts or omissions of the type and
in the amount currently covered by First Lancaster and the Bank's existing
directors' and officers' liability insurance for acts or omissions occurring
on or prior to the Effective Time.
(e) In the event CKF Bancorp or any of its successors or
assigns (i) consolidates with or merges into any other person or entity and
shall not be the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers or conveys all or substantially all
of its properties and assets to any person or entity, then, and in each such
case, to the extent necessary, proper provision shall be made so that the
successors and assigns of CKF Bancorp assume the obligations set forth in this
Section 5.6.
(f) The provisions of this Section 5.6 are intended to be for
the benefit of, and shall be enforceable by, each Indemnified Party and his or
her representatives.
ARTICLE 6
COVENANTS OF FIRST LANCASTER AND THE BANK
6.1 Proxy Statement; First Lancaster Shareholder Approval. First
Lancaster shall call the Shareholders Meeting to be held as soon as reasonably
practicable after the date of this Merger Agreement and shall use its best
efforts to ensure that such meeting is held not later than March 31, 2001,
unless such date is extended by mutual agreement for the purpose of (i)
approving this Merger Agreement, and (ii) such other related matters as it
deems appropriate. In connection with the Shareholders Meeting, (i) First
Lancaster shall, with CKF Bancorp's assistance, prepare a Proxy Statement;
shall mail or cause to be mailed such Proxy Statement to its shareholders and
shall provide CKF Bancorp the opportunity to review and comment on the Proxy
Statement at least fifteen (15) business days prior to the filing of such
Proxy Statement with the SEC and the mailing of the Proxy Statement to the
First Lancaster Shareholders; (ii) the Board of Directors of First Lancaster
shall recommend (subject to compliance with their legal and fiduciary duties
as advised by counsel) to First Lancaster Shareholders the approval of this
Merger Agreement; and (iii) First Lancaster shall use its best efforts
(subject to compliance with its legal and fiduciary duty as advised by
counsel) to obtain such First Lancaster Shareholders' approvals.
AGREEMENT AND PLAN OF MERGER - Page 34
6.2 Conduct of Business -- Affirmative Covenants. Unless the prior
written consent of CKF Bancorp shall have been obtained, and, except as
otherwise contemplated herein:
(a) First Lancaster and the Bank shall, and shall cause each
First Lancaster Subsidiary to:
(i) Operate its business only in the usual, regular, and
ordinary course;
(ii) Preserve intact its business organizations and assets
and to maintain its rights and franchises;
(iii) Take no action, unless otherwise required by law,
rules or regulation, or except as contemplated by this Merger Agreement,
that would (A) materially adversely affect the ability of any of them or
CKF Bancorp to obtain any necessary approvals of Regulatory Authorities
required to consummate the transactions contemplated by this Merger
Agreement, or (B) adversely affect the ability of such Party to perform
its covenants and agreements under this Merger Agreement;
(iv) Except as they may terminate in accordance with their
terms, keep in full force and effect, and not default in any of their
obligations under, all material contracts;
(v) Keep in full force and effect insurance coverage with
existing or comparable responsible insurance carriers which is reasonably
adequate in coverage and amount for companies the size of the First
Lancaster, the Bank or any First Lancaster Subsidiary and for the
businesses and properties owned by each and in which each is engaged, to
the extent that such insurance is reasonably available;
(vi) Use its best efforts to retain the Bank's present
customer base and to facilitate the retention of such customers after the
Effective Time; and
(vii) Maintain, renew, keep in full force and effect, and
preserve its business organization and material rights and franchises,
permits and licenses, and to use its best efforts to maintain positive
relations with its present employees so that such employees will continue
to perform effectively and will be available to First Lancaster and the
Bank or CKF Bancorp and CKF Bancorp's Subsidiaries at and after the
Effective Time, and to use its best efforts to maintain its existing, or
substantially equivalent, credit arrangements with banks and other
financial institutions and to assure the continuance of the Bank's
customer relationships.
(b) First Lancaster and the Bank agree to use their best
efforts to assist CKF Bancorp in obtaining the Government Approvals necessary
to complete the transactions contemplated hereby, and First Lancaster and the
Bank shall provide to CKF Bancorp or to the appropriate governmental
authorities all information reasonably required to be submitted in connection
with obtaining such approvals.
(c) First Lancaster and the Bank, at their own cost and
expense, shall use their best efforts to secure all consents and releases, if
any, of third parties necessary or desirable for the consummation of the
transactions contemplated by this Merger Agreement and shall comply with all
applicable laws, regulations and rulings in connection with this Merger
Agreement and the consummation of the transactions contemplated hereby.
(d) At all times to and including, and as of, the Closing,
First Lancaster and the Bank shall inform CKF Bancorp in writing of any and
all facts necessary to amend or supplement the representations and warranties
made herein and the Schedules attached hereto as necessary so that the
representations and warranties and
AGREEMENT AND PLAN OF MERGER - Page 35
information provided in the Schedules remain true and correct in all respects;
provided, however, that any such updates to the Schedules shall be required
prior to the Closing only with respect to matters which represent material
changes to the Schedules and the information contained therein; and provided
further, that before such amendment, supplement or update may be deemed to be
a part of this Merger Agreement, CKF Bancorp shall have agreed in writing to
each amendment, supplement or update to the Schedules made subsequent to the
date of this Merger Agreement as an amendment to this Merger Agreement.
(e) At all times to and including, and as of, the Closing,
First Lancaster and the Bank shall give such further assistance to CKF Bancorp
and shall execute, acknowledge and deliver all such documents and instruments
as CKF Bancorp may reasonably request and take such further action as may be
reasonably necessary or appropriate to effectively consummate the transactions
contemplated by this Merger Agreement.
(f) Between the date of this Merger Agreement and the Closing
Date, First Lancaster and the Bank shall afford CKF Bancorp and its authorized
agents and representatives reasonable access during normal business hours to
the properties, operations, books, records, contracts, documents, loan files
and other information of, or relating to First Lancaster and the Bank other
then documents or other materials relating to the transactions contemplated
herein. First Lancaster and the Bank shall provide reasonable assistance to
CKF Bancorp in its investigation of matters relating to First Lancaster and
the Bank.
(g) First Lancaster and the Bank have taken or will take all
steps necessary to exempt the transactions contemplated by this Merger
Agreement from any applicable state anti-takeover or similar law or anti-
takeover or similar provision in the charter documents or bylaws of First
Lancaster and the Bank, including without limitation any provisions of the
Certificate of Incorporation of First Lancaster restricting the ownership or
acquisition of First Lancaster's capital stock or imposing any "fair price" or
supermajority director or stockholder vote requirements, including but not
limited to Articles 14, 15 and 16 of the First Lancaster Certificate of
Incorporation.
(h) Subject to the terms and conditions of this Merger
Agreement, First Lancaster and the Bank agree to use all reasonable efforts
and to take, or to cause to be taken, all actions, and to do, or to cause to
be done, all things necessary, proper, or advisable under applicable laws and
regulations to consummate and make effective, with reasonable promptness after
the date of this Merger Agreement, the transactions contemplated by this
Merger Agreement, including, without limitation, using reasonable efforts to
lift or rescind any injunction or restraining or other order adversely
affecting the ability of the Parties to consummate the transaction
contemplated by this Merger Agreement; provided, however, that such efforts do
not impose unreasonable expense or obligations on First Lancaster and the
Bank.
(i) At the request of CKF Bancorp, First Lancaster and the
Bank shall hire an outside consultant, reasonably acceptable to CKF Bancorp,
to undertake to determine as soon as reasonably practicable but in any event
prior to Closing whether or not there are any underground storage tanks,
asbestos, ureaformaldehyde, polychlorinated biphenyls, solid wastes or hazard
substances, as defined in the Applicable Environmental Laws, present at or on
any of the REO of First Lancaster, the Bank or any First Lancaster Subsidiary
(excluding any one- to four- family residential property with appraised value
less than $100,000) or at or on any of the branch or office facilities owned
by First Lancaster, the Bank or any First Lancaster Subsidiary. Such
investigation shall be conducted in a manner reasonably satisfactory to CKF
Bancorp, and the results of such investigation shall be set forth in a written
report delivered to CKF Bancorp prior to Closing. The scope and detail of
such report shall be reasonably satisfactory to CKF Bancorp. It is understood
that the investigation shall be a "Phase I." The expense of hiring such
consultant shall be paid by CKF Bancorp. The parties agree to keep
confidential the contents and results of such report.
(j) At the request of CKF Bancorp, First Lancaster and the
Bank shall hire an outside appraiser, reasonably acceptable to CKF Bancorp, to
prepare an appraisal prior to Closing of any or all of the REO of
AGREEMENT AND PLAN OF MERGER - Page 36
First Lancaster, the Bank or any First Lancaster Subsidiary. The expense of
hiring such appraiser shall be paid by CKF Bancorp.
(k) First Lancaster and the Bank shall use their best efforts
to assist CKF Bancorp to assume First Lancaster's data processing contract
with Intrieve Incorporated without the imposition of any penalty or
acceleration in payments.
(l) The First Lancaster Bancshares, Inc. Employee Stock
Ownership Plan ("First Lancaster ESOP") shall be terminated as of, or prior
to, the Effective Time. As of the Effective Time, all shares held by the First
Lancaster ESOP shall be converted into the right to receive the Consideration
in respect of each share of First Lancaster Common Stock. As soon as
administratively practicable following the Effective Time, all outstanding
indebtedness of the First Lancaster ESOP shall be repaid in full, in
accordance with Section 17.3 of the First Lancaster ESOP and the balance
remaining with respect to unallocated shares previously held by the First
Lancaster ESOP shall be allocated and distributed to First Lancaster ESOP
participants as provided in the First Lancaster ESOP and in accordance with
applicable law and regulations, subject to receipt of a favorable
determination letter from the Internal Revenue Service and unless otherwise
required by applicable law. Notwithstanding anything in this Section 6.2(l)
to the contrary, distributions may be made from the First Lancaster ESOP to
terminated employees of First Lancaster or the Bank as soon as
administratively practicable after the determination of final allocations and
the receipt of a determination letter from the Internal Revenue Service,
unless CKF Bancorp determines that it is appropriate to make earlier
distributions.
(m) First Lancaster shall use its best efforts to obtain from
each holder of a First Lancaster Option and to deliver to CKF Bancorp at or
before the Closing an agreement to the cancellation of such holder's First
Lancaster Options in exchange for a cash payment as described in Section 2.6.
(n) The existing employment agreements between First Lancaster
and the Bank and Virginia X. X. Xxxxx and Xxxx X. Xxxxxx shall each be
terminated at the Effective Time. CKF Bancorp and Central Kentucky Federal
acknowledge and agree that consummation of the Merger constitutes a change in
control under Xx. Xxxxx'x and Xx. Xxxxxx'x employment agreements, that the
conditions set forth in paragraph (a) of Section 11 of the employment
agreement between each such person and the Bank will exist and, therefore,
each of Xx. Xxxxx and Xx. Xxxxxx will be entitled to payment determined
pursuant to Section 11(a) of such agreements upon consummation of the Merger
subject to Section 280G limitations of the Code. Attached hereto as Schedule
6.2(n) is a schedule of the maximum payments that could be made to Xx. Xxxxx
and Xx. Xxxxxx as of the Closing Date computed pursuant to Section 11(a) of
their agreements, both with and without deductions for deemed parachute
payments pursuant to Section 280G of the Code. First Lancaster shall use its
best efforts to obtain from Xxxx X. Xxxxxx and to deliver to CKF Bancorp as of
the date of this Merger Agreement an executed consultant agreement in the form
attached hereto as Exhibit E. First Lancaster shall use its best efforts to
obtain from Virginia X.X. Xxxxx and to deliver to CKF Bancorp as of the date
of this Merger Agreement an executed non-competition agreement in the form
attached hereto as Exhibit F.
(o) First Lancaster shall use its best efforts to obtain from
each of the directors of First Lancaster and to deliver to CKF Bancorp at or
before the Closing a Directors Agreement in the form attached hereto as
Exhibit G.
(p) Prior to the Effective Time, the Bank shall terminate its
participation in the Financial Institutions Thrift Plan (the "401(k) Plan")
and Defined Benefit Plan (including ceasing benefit accruals, in the case of
the Defined Benefit Plan) by proper action of the Board of Directors of the
Bank; provided, however, the assets of the 401(k) Plan may at the option of
CKF Bancorp and in accordance with the 401(k) Plan, thereafter be transferred
to a comparable plan of CKF Bancorp. Neither CKF Bancorp nor Central Kentucky
Federal shall have any obligation to make contributions to the 401(k) Plan and
the Defined Benefit Plan after the Effective Time.
AGREEMENT AND PLAN OF MERGER - Page 37
6.3 Conduct of Business -- Negative Covenants. From the date of
this Merger Agreement until the earlier of the Effective Time or the
termination of this Merger Agreement, First Lancaster and the Bank covenant
and agree they will neither do, nor agree or commit to do, nor permit any
First Lancaster Subsidiary to do or commit or agree to do, any of the
following without the prior written consent of the president of CKF Bancorp:
(a) Except as expressly contemplated by this Merger Agreement,
amend its Certificate of Incorporation or Bylaws; or
(b) Impose, or suffer the imposition, on any share of capital
stock held by it or by any of its Subsidiaries of any lien, charge, or
encumbrance, or permit any such lien, charge, or encumbrance to exist; or
(c) (i) Repurchase, redeem, or otherwise acquire or exchange,
directly or indirectly, any shares of its capital stock or other equity
securities or any securities or instruments convertible into any shares of its
capital stock, or any rights or options to acquire any shares of its capital
stock or other equity securities except as expressly permitted by this Merger
Agreement, provided, that, First Lancaster may distribute shares from the
trust created under the First Lancaster MRP to recipients of awards under the
First Lancaster MRP in connection with the vesting of such awards; or (ii)
split or otherwise subdivide its capital stock; or (iii) recapitalize in any
way; or (iv) declare a stock dividend on the First Lancaster Common Stock; or
(v) pay or declare a cash dividend, other than a continuation of First
Lancaster's current $.30 per share semi-annual cash dividend, or make or
declare any other type of distribution on the First Lancaster Common Stock; or
(d) Except as expressly permitted by this Merger Agreement,
acquire direct or indirect control over any corporation, association, firm,
organization or other entity, other than in connection with (i) mergers,
acquisitions, or other transactions approved in writing by CKF Bancorp, (ii)
internal reorganizations or consolidations involving existing Subsidiaries,
(iii) foreclosures in the ordinary course of business and not knowingly
exposing it to liability by reason of Hazardous Substances, (iv) acquisitions
of control in its fiduciary capacity, or (v) the creation of new subsidiaries
organized to conduct or continue activities otherwise permitted by this Merger
Agreement; or
(e) Except as expressly permitted by this Merger Agreement, to
(i) issue, sell, agree to sell, or otherwise dispose of or otherwise permit to
become outstanding any additional shares of First Lancaster Common Stock
(other than issuance of shares upon the exercise of outstanding stock options
and pursuant to the First Lancaster Stock Option Plan) or any other capital
stock of the First Lancaster, the Bank or of any First Lancaster Subsidiary,
or any stock appreciation rights, or any option, warrant, conversion, call,
scrip, or other right to acquire any such stock, or any security convertible
into any such stock, unless any such shares of such stock are directly sold or
otherwise directly transferred to First Lancaster, the Bank or any First
Lancaster Subsidiary, or (ii) sell, agree to sell, or otherwise dispose of any
substantial part of the assets or earning power of First Lancaster, the Bank
or of any First Lancaster Subsidiary; or (iii) sell, agree to sell, or
otherwise dispose of any asset of First Lancaster, the Bank or any First
Lancaster Subsidiary other than in the ordinary course of business for
reasonable and adequate consideration; or (iv) buy, agree to buy or otherwise
acquire a substantial part of the assets or earning power of any other Person
or entity; or
(f) Incur, or permit any First Lancaster Subsidiary to incur,
any additional debt obligation or other obligation for borrowed money except
in the ordinary course of the business of First Lancaster, the Bank or such
First Lancaster Subsidiary consistent with past practices; or
(g) Other than routine increases made in the ordinary course
of business consistent with past practices not exceeding four percent (4%), or
as set forth in Schedule 4.9(g),grant any increase in compensation or benefits
to any of its employees or officers; pay any bonus; enter into any severance
agreements with any of its officers or employees; grant any increase in fees
or other increases in compensation or other benefits to any director
AGREEMENT AND PLAN OF MERGER - Page 38
of First Lancaster, the Bank or of any First Lancaster Subsidiary; or effect
any change in retirement benefits for any class of its employees or officers,
unless such change is required by applicable law; or
(h) Except as contemplated by this Merger Agreement, amend any
existing employment contract or change of control agreement between it and any
person (unless such amendment is required by law); enter into or amend any
indemnification agreement with any person; or enter into any new employment
contract with any person that First Lancaster, the Bank (or its successors)
does not have the unconditional right to terminate without liability (other
than liability for services already rendered), at any time on or after the
Effective Time; or
(i) Except as otherwise contemplated by this Merger Agreement,
adopt any new employee benefit plan or terminate or make any material change
in or to any existing employee benefit plan other than any change that is
required by law or that, in the opinion of counsel, is necessary or advisable
to maintain the tax-qualified status of any such plan; or
(j) Enter into any new service contracts, purchase or sale
agreements or lease agreements that are material to First Lancaster, the Bank
or any First Lancaster Subsidiary, except that the Bank may renew its lease
for the loan production office located in Nicholasville, Kentucky, for a term
not to exceed one year; or
(k) Make any capital expenditure except for ordinary
purchases, repairs, renewals or replacements in an amount less than $10,000
per individual expenditure and $20,000 in the aggregate; or
(l) Other than in the ordinary course of business consistent
with past practice, sell, transfer, mortgage, encumber or otherwise dispose of
any of its properties, leases or assets to any person, or cancel, release or
assign any indebtedness of any person, except pursuant to contracts or
agreements in force at the date of this Merger Agreement; or
(m) Other than as contemplated by this Merger Agreement, enter
into, renew or terminate any material contract or agreement or make any change
in any of its material leases or contracts; or
(n) Settle any claim, action or proceeding involving any
liability of First Lancaster, the Bank or any First Lancaster Subsidiaries for
money damages in excess of $10,000 or agree in connection with any such
settlement to material restrictions upon the operations of First Lancaster,
the Bank or any First Lancaster Subsidiaries; or
(o) Change its method of accounting in effect at June 30,
2000, except as required by changes in GAAP as concurred in by First
Lancaster's independent auditors or as required by regulatory accounting
principles or regulatory requirements; or
(p) Enter into any new activities or lines of business, or
cease to conduct any material activities or lines of business that it conducts
on the date hereof, or conduct any material business activity not consistent
with past practice; or
(q) Except in the ordinary course of business, make,
renegotiate, renew, increase, extend or purchase any loan, lease (credit
equivalent), advance, credit enhancement or other extension of credit, or make
any commitment in respect of any of the foregoing; or
(r) Enter into, renew or purchase any Derivatives Contracts;
or
AGREEMENT AND PLAN OF MERGER - Page 39
(s) Purchase any investment securities not rated "A" or higher
by either Standard & Poor's Corporation or Xxxxx'x Investor Services or
otherwise alter, in any material respect, the mix, maturity, credit or
interest rate risk profile of its portfolio of investment securities or
portfolio of mortgage-backed securities; or
(t) Enter into any transactions other than in the ordinary
course of business consistent with past practices; or
(u) Grant or commit to grant any new extension of credit to
any Officer, director or holder of more than 5% of the outstanding the First
Lancaster Common Stock, or to any corporation, partnership, trust or other
entity controlled by any such person, if such extension of credit, together
with all other credits then outstanding to the same borrower and all
affiliated persons of such borrower, would exceed two percent (2%) of the
capital of the Bank or amend the terms of any such credit outstanding on the
date hereof; or
(v) Agree in writing or otherwise to take any of the foregoing
actions or engage in any activity, enter into any transaction or take or omit
to take any other act which would make any of the representations and
warranties in Article 4 of this Merger Agreement untrue or incorrect in any
material respect if made anew after engaging in such activity, entering into
such transaction, or taking or omitting such other act.
6.4 Conduct of Business -- Certain Actions.
(a) From the date of this Merger Agreement until the earlier
of the Effective Time or the termination of this Merger Agreement, First
Lancaster and the Bank shall not, and shall use their best efforts to ensure
that their directors, Officers, employees, and advisors do not, directly or
indirectly, institute, solicit, or knowingly encourage (including by way of
furnishing any information not legally required to be furnished) any inquiry,
discussion, or proposal, or participate in any discussions or negotiations
with, or, except for actions reasonably considered by the Boards of Directors
of First Lancaster and the Bank in their good faith judgment to be required in
order to fulfill its fiduciary obligations, provide any confidential or
non-public information to or negotiate with, any corporation, partnership,
person or other entity or group (other than to CKF Bancorp or any CKF Bancorp
Subsidiary) concerning any "Acquisition Proposal" (as defined below). First
Lancaster and the Bank shall notify CKF Bancorp immediately if any Acquisition
Proposal has been or should hereafter be received by First Lancaster or the
Bank, such notice to contain, at a minimum, the identity of such persons, and,
subject to disclosure being consistent with the fiduciary obligations of First
Lancaster's and the Bank's Boards of Directors, a copy of any written inquiry,
the terms of any proposal or inquiry, any information requested or discussions
sought to be initiated, and the status of any reports, negotiations or
expressions of interest. For purposes of this Section 6.4, "Acquisition
Proposal" means any tender offer, agreement, understanding or other proposal
of any nature pursuant to which any corporation, partnership, person or other
entity or group, other than CKF Bancorp or any CKF Bancorp Subsidiary, would
directly or indirectly (i) acquire or participate in a merger, share exchange,
consolidation or any other business combination involving First Lancaster or
the Bank; (ii) acquire the right to vote ten percent (10%) or more of the
outstanding First Lancaster Common Stock; (iii) acquire a significant portion
of the assets or earning power of the Bank; or (iv) acquire in excess of ten
percent (10%) of the outstanding First Lancaster Common Stock.
(b) First Lancaster and the Bank shall immediately terminate
all negotiations or discussions concerning any Acquisition Proposal with
parties other than CKF Bancorp and enforce the terms of all confidentiality
agreements with such other parties.
6.5 Accruals and Reserves. At the request of CKF Bancorp no
earlier than the day prior to Closing, First Lancaster and the Bank shall
establish such additional accruals and reserves as may be necessary to conform
First Lancaster's and the Bank's accounting and credit loss reserve practices
and methods to those of CKF Bancorp; provided, however, that First Lancaster
and the Bank shall not be required to take such action until all of the
conditions to the Closing shall have been satisfied or waived and all
Government Approvals shall have been received.
AGREEMENT AND PLAN OF MERGER - Page 40
6.6 Access; Information. Between the date of this Merger Agreement
and the Effective Date, First Lancaster and the Bank shall furnish promptly to
CKF Bancorp (i) a copy of each material report, schedule and other document
filed by First Lancaster, the Bank and the First Lancaster Subsidiaries with
any Regulatory Authority and (ii) all other information concerning the
business, properties and personnel of First Lancaster, the Bank and the First
Lancaster Subsidiaries as CKF Bancorp may reasonably request (other than
documents or other materials relating to the transaction contemplated herein),
provided that no investigation pursuant to this Section 6.6 shall affect or be
deemed to modify or waive any representation or warranty made by First
Lancaster and the Bank in this Merger Agreement or the conditions to the
obligations of First Lancaster and the Bank to consummate the transactions
contemplated by this Merger Agreement. First Lancaster and the Bank shall
permit a representative of CKF Bancorp to attend any meeting of the Board of
Directors of First Lancaster or the Bank, or the executive committees thereof
(provided that neither First Lancaster nor the Bank shall be required to
permit the CKF Bancorp representative to remain present during any
confidential discussion of this Merger Agreement and the transactions
contemplated hereby or any third party proposal to acquire control of First
Lancaster or the Bank).
ARTICLE 7
CONDITIONS TO CLOSING
7.1 Conditions to the Obligations of First Lancaster and the Bank.
Unless waived in writing by First Lancaster and the Bank, the obligations of
First Lancaster and the Bank to consummate the transaction contemplated by
this Merger Agreement are subject to the satisfaction at or prior to the
Closing Date of the following conditions:
(a) Performance. Each of the material acts and undertakings
of CKF Bancorp and Central Kentucky Federal to be performed at or prior to the
Closing Date pursuant to this Merger Agreement shall have been duly performed;
(b) Representations and Warranties. The representations and
warranties of CKF Bancorp and Central Kentucky Federal contained in Article 3
of this Merger Agreement shall be true and correct, in all material respects,
on and as of the Closing Date with the same effect as though made on and as of
the Closing Date;
(c) Documents. In addition to the other deliveries of CKF
Bancorp, Central Kentucky Federal and Merger Sub described elsewhere in this
Merger Agreement, First Lancaster and the Bank shall have received the
following documents and instruments:
(i) a certificate signed by the Secretary or an
assistant secretary of CKF Bancorp and Central Kentucky Federal dated
as of the Closing Date certifying that:
(A) CKF Bancorp's and Central Kentucky Federal's
Board of Directors each have duly adopted resolutions (copies of
which shall be attached to such certificate) approving the
substantive terms of this Merger Agreement (including the Exhibit
thereto) and authorizing the consummation of the transactions
contemplated by this Merger Agreement and certifying that such
resolutions have not been amended or modified and remain in full
force and effect;
(B) each person executing this Merger Agreement on
behalf of CKF Bancorp and Central Kentucky Federal is an officer of
CKF Bancorp and Central Kentucky Federal holding the office or
offices specified therein, with full power and authority to execute
this Merger Agreement and any and all other documents in connection
with the Merger, and that the signature of each person set forth on
such certificate is his or her genuine signature;
AGREEMENT AND PLAN OF MERGER - Page 41
(C) the charter documents of CKF Bancorp and
Central Kentucky Federal attached to such certificate remain in
full force and effect; and
(D) CKF Bancorp and Central Kentucky Federal are in
good standing under their respective corporate charters and bylaws.
(ii) a certificate signed by a duly authorized officer of
CKF Bancorp stating that the conditions set forth in Section 7.1(a) and
Section 7.1(b) of this Merger Agreement have been fulfilled;
(iii) a certificate signed by the Secretary or an
assistant secretary of Merger Sub dated as of the Closing Date
certifying that:
(A) Merger Sub's Board of Directors has duly
adopted resolutions (copies of which shall be attached to such
certificate) approving the substantive terms of the Agreement of
Company Agreement and authorizing the consummation of the
transactions contemplated by the Agreement of Company Merger and
certifying that such resolutions have not been amended or modified
and remain in full force and effect;
(B) each person executing the Agreement of Company
Merger on behalf of Merger Sub is an officer of Merger Sub holding
the office or offices specified therein, with full power and
authority to execute the Agreement of Company Merger and any and
all other documents in connection with the Merger, and that the
signature of each person set forth on such certificate is his or
her genuine signature;
(C) the charter documents of Merger Sub attached to
such certificate remain in full force and effect; and
(D) Merger Sub is in good standing under its
corporate charter and bylaws.
(d) Consideration. First Lancaster and the Bank shall have
received a certificate executed by an authorized officer of CKF Bancorp and
confirmation from the Paying Agent to the effect that the Paying Agent holds
in its possession cash or other immediately available funds sufficient to meet
the obligations of CKF Bancorp to the First Lancaster Shareholders to deliver
the Consideration under this Merger Agreement;
(e) Opinion of CKF Bancorp's Counsel. First Lancaster and
the Bank shall have been furnished with an opinion of counsel to CKF Bancorp,
Central Kentucky Federal and Merger Sub, dated as of the Closing Date,
addressed to and in form and substance satisfactory to First Lancaster and the
Bank, to the effect that:
(i) CKF Bancorp is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware
and is qualified to do business as a foreign corporation in the
Commonwealth of Kentucky.
(ii) Merger Sub is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
(iii) Central Kentucky Federal is a federal stock savings
bank, validly existing under the Home Owners Loan Act.
AGREEMENT AND PLAN OF MERGER - Page 42
(iv) Central Kentucky Federal is an "insured depository
institution" as defined in the Federal Deposit Insurance Act and
applicable regulations thereunder.
(v) The execution and delivery of the Merger Agreement
by CKF Bancorp and Central Kentucky Federal, and the consummation by CKF
Bancorp, Central Kentucky Federal and Merger Sub of the transactions
provided for therein, have been duly authorized by all requisite
corporate action on the part of CKF Bancorp and Central Kentucky
Federal.
(vi) The Merger Agreement has been duly executed and
delivered by CKF Bancorp, Central Kentucky Federal and Merger Sub and is
a valid and binding obligation of CKF Bancorp, Central Kentucky Federal
and Merger Sub enforceable in accordance with its terms, except as the
enforceability thereof may be limited by (1) bankruptcy, insolvency,
moratorium, reorganization, receivership, conservatorship or similar
laws relating to or affecting the enforcement of creditors' rights
generally and (2)general principles of equity, whether applied by a
court of law or equity.
(vii) The execution, delivery and performance of the Merger
Agreement by CKF Bancorp and Central Kentucky Federal and the Agreement
of Company Merger by Merger Sub does not, and the consummation of the
transactions contemplated thereby by CKF Bancorp, Central Kentucky
Federal and Merger Sub does not and will not (i) violate any statutory
law or regulation applicable to CKF Bancorp, Central Kentucky Federal
and Merger Sub, which violation is reasonably likely, individually or in
the aggregate, to have a material adverse effect on the financial
condition and results of operations of CKF Bancorp and CKF Bancorp
Subsidiaries, taken as a whole; or (ii) violate the Certificate of
Incorporation or Bylaws of CKF Bancorp, Merger Sub or the Charter and
Bylaws of Central Kentucky Federal.
(viii) Except for the filing of articles of merger with the
Secretary of State for the State of Delaware, no consent or approval
under any statutory law or regulation applicable to CKF Bancorp, other
than such consents and approvals as have been obtained, is required for
CKF Bancorp to consummate the transactions provided for in the Merger
Agreement.
Such opinion may (i) expressly rely as to matters of fact upon certificates
furnished by appropriate officers of CKF Bancorp and Central Kentucky Federal
or appropriate government officials; (ii) in the case of matters of law
governed by the laws of the states in which they are not licensed, reasonably
rely upon the opinions of legal counsel duly licensed in such states and may
be limited, in any event, to Federal Law and the State of Delaware; and (iii)
incorporate, be guided by, and be interpreted in accordance with, the Legal
Opinion Accord of the ABA Section of Business Law (1991).
7.2 Conditions to the Obligations of CKF Bancorp. Unless waived in
writing by CKF Bancorp, the obligation of CKF Bancorp to consummate the
transactions contemplated by this Merger Agreement is subject to the
satisfaction at or prior to the Closing Date of the following conditions:
(a) Performance. Each of the material acts and undertakings
of First Lancaster and the Bank to be performed at or before the Closing Date
pursuant to this Merger Agreement shall have been duly performed;
(b) Representations and Warranties. The representations and
warranties of First Lancaster and the Bank contained in Article 4 of this
Merger Agreement shall be true and correct, in all material respects, on and
as of the Closing Date with the same effect as though made on and as of the
Closing Date;
(c) Documents. In addition to the documents described
elsewhere in this Merger Agreement, CKF Bancorp shall have received the
following documents and instruments:
AGREEMENT AND PLAN OF MERGER - Page 43
(i) a certificate signed by the Secretary or an
assistant secretary of First Lancaster and the Bank dated as of the
Closing Date certifying that:
(A) First Lancaster's and the Bank's Boards of
Directors and shareholders have duly adopted resolutions (copies of
which shall be attached to such certificate) approving the
substantive terms of this Merger Agreement (including the Exhibits
thereto) and authorizing the consummation of the transactions
contemplated by this Merger Agreement and certifying that such
resolutions have not been amended or modified and remain in full
force and effect;
(B) each person executing this Merger Agreement on
behalf of First Lancaster and the Bank, is an Officer of First
Lancaster or the Bank, as the case may be, holding the office or
offices specified therein, with full power and authority to execute
this Merger Agreement and any and all other documents in connection
with the Merger, and that the signature of each person set forth on
such certificate is his or her genuine signature;
(C) the charter documents of First Lancaster and
the Bank attached to such certificate remain in full force and
effect; and
(D) First Lancaster and the Bank are in good
standing under their respective corporate charter and bylaws; and
(ii) a certificate signed by the President, Chief
Executive Officer or an Executive Vice President of First Lancaster and
the Bank stating that the conditions set forth in Section 7.2(a),
Section 7.2(b) and Section 7.2(f) this Merger Agreement have been
satisfied.
(d) Destruction of Property. Between the date of this Merger
Agreement and the Closing Date, there shall have been no damage to or
destruction of real property, improvements or a material reduction in the
aggregate value of the personal property of First Lancaster and the Bank which
materially reduces the market value of such property, and no zoning or other
order, limitation or restriction imposed against the same that might have a
material adverse impact upon the operations, business or prospects of First
Lancaster, the Bank and the First Lancaster Subsidiaries taken as a whole;
provided, however, that the availability of insurance coverage shall be taken
into account in determining whether there has been such a material adverse
impact or material reduction in market value. In the event of such damage,
destruction, order, limitation or restriction, CKF Bancorp may elect either
(i) to close the contemplated transactions in accordance with the terms of
this Merger Agreement or (ii) to terminate this Merger Agreement without
penalty;
(e) No Material Adverse Change. No material adverse change in
the business, property, assets (including loan portfolios), liabilities
(whether absolute, contingent or otherwise), prospects, operations, liquidity,
income, or condition (financial or otherwise) of First Lancaster and the Bank
taken as a whole shall have occurred since the date of this Merger Agreement
other than any changes attributable to law, regulation or GAAP or
interpretations thereof of general application to the banking and thrift
industries. In the event of such a material adverse change with respect to
First Lancaster and the Bank, CKF Bancorp may elect either (i) to close the
contemplated transactions in accordance with the terms of this Merger
Agreement or (ii) to terminate this Merger Agreement without penalty;
(f) Opinion of First Lancaster's and the Bank's Counsel. CKF
Bancorp shall have been furnished with an opinion of legal counsel to First
Lancaster and the Bank, dated the Closing Date, addressed to and in form and
substance satisfactory to CKF Bancorp, to the effect that:
AGREEMENT AND PLAN OF MERGER - Page 44
(i) First Lancaster is a corporation organized, validly
existing and, as of the date set forth on the good standing certificate
issued by the Secretary of State, in good standing under the laws
of the DGCL and is qualified to do business as a foreign corporation in
the Commonwealth of Kentucky.
(ii) The Bank is a federal stock savings bank organized
and validly existing under the Home Owners' Loan Act.
(iii) The Bank is an "insured depository institution" as
defined in the Federal Deposit Insurance Act and applicable regulations
thereunder.
(iv) The execution and delivery of the Merger Agreement
by First Lancaster and the Bank have been duly authorized by all
requisite corporate action on the part of First Lancaster and the Bank.
(v) The Merger Agreement has been duly executed and
delivered by First Lancaster and the Bank and is a valid and binding
obligation of First Lancaster and the Bank enforceable in accordance
with its terms, except as the enforceability thereof may be limited by
(1) bankruptcy, insolvency, moratorium, reorganization, receivership,
conservatorship or similar laws relating to or affecting the
enforcement of creditors' rights generally or the rights of creditors
of depository institutions whose accounts are insured by the FDIC, and
(2) general principles of equity, whether applied by a court of law or
equity.
(vi) The execution and delivery of the Merger Agreement
by First Lancaster and the Bank did not, and the consummation of the
transactions contemplated thereby by First Lancaster and the Bank does
not and will not (i) violate any statutory law or regulation applicable
to First Lancaster, the Bank or any of the First Lancaster
Subsidiaries, which violation is reasonably likely, individually or in
the aggregate, to have a material adverse effect on the financial
condition and results of operations of First Lancaster, the Bank and
the First Lancaster Subsidiaries, taken as a whole; (ii) constitute a
breach of or default under any agreement or other arrangement that is
listed on Schedule 4.29 to the Merger Agreement, which breach or
default is reasonably likely, individually or in the aggregate, to have
a material adverse effect on the financial condition or results of
operations of First Lancaster, the Bank and the First Lancaster
Subsidiaries, taken as a whole; or (iii) violate the Certificate of
Incorporation, Charter or Bylaws of First Lancaster, the Bank or any of
the First Lancaster Subsidiaries subject to the amendment of the Bank's
Charter to delete Section 8 thereof.
(vii) To the best of such counsel's knowledge: (i) there
is no litigation or proceeding against First Lancaster, the Bank or any
First Lancaster Subsidiary pending before any court or governmental
agency which, individually or in the aggregate, is reasonably likely to
have a material adverse effect on the financial condition or results of
operations of First Lancaster, the Bank and the First Lancaster
Subsidiaries, taken as a whole, or which alleges claims under any fair
lending law or other law relating to discrimination, including, without
limitation, the Equal Credit Opportunity Act, the Fair Housing Act, the
First Lancaster Reinvestment Act and the Home Mortgage Disclosure Act,
and no such litigation or proceeding has been threatened; (ii) neither
First Lancaster, the Bank nor any First Lancaster Subsidiary or any of
its or their properties, Officers, directors, or controlling persons is
a party to or is subject to any order, decree, agreement, memorandum of
understanding or similar arrangement with, or a commitment letter or
similar submission to, any Regulatory Authority; and (iii) neither
First Lancaster, the Bank nor any First Lancaster Subsidiary has been
advised by any such Regulatory Authority that such authority is
contemplating issuing or requesting (or is considering the
appropriateness of issuing or requesting) any such order, decree,
agreement, memorandum of understanding, commitment letter or similar
submission.
AGREEMENT AND PLAN OF MERGER - Page 45
(viii) The Merger has been approved by the requisite vote of
First Lancaster Shareholders.
Such opinion may (i) expressly rely as to matters of fact upon certificates
furnished by appropriate Officers of First Lancaster and the Bank or
appropriate government officials; (ii) in the case of matters of law governed
by the laws of the states in which they are not licensed, reasonably rely upon
the opinions of legal counsel duly licensed in such states and may be limited,
in any event, to the Federal Deposit Insurance Act, HOLA, OTS regulations
thereunder and the DGCL and (iii) incorporate, be guided by, and be
interpreted in accordance with, the Legal Opinion Accord of the ABA Section of
Business Law (1991);
(g) Other Business Combinations, Etc. Other than as
contemplated hereunder, subsequent to the date of this Merger Agreement,
neither First Lancaster nor the Bank shall have entered into any agreement,
letter of intent, understanding or other arrangement pursuant to which First
Lancaster or the Bank would merge; consolidate with; effect a business
combination with; sell any substantial part of First Lancaster's or the Bank's
assets; acquire a significant part of the shares or assets of any other Person
or entity (financial or otherwise); adopt any "poison pill" or other type of
anti-takeover arrangement, any shareholder rights provision, any "golden
parachute" or similar program which would have the effect of materially
decreasing the value of First Lancaster and the Bank or the benefits of
acquiring the First Lancaster Common Stock;
(h) Maintenance of Certain Covenants, Etc. At the time of
Closing (i) neither First Lancaster nor the Bank shall have issued or
repurchased from the date hereof any additional equity or debt securities, or
any rights to purchase or repurchase such securities (therefore, there shall
be not more than 833,755 shares of First Lancaster Common Stock issued and
outstanding at the Effective Time, which includes the shares of First
Lancaster Common Stock awarded under the First Lancaster MRP but excludes
shares received subsequent to the date of this Merger Agreement pursuant to
the exercise of First Lancaster Options under the First Lancaster Option Plan;
the foregoing does not include, however, the 6,573 ungranted MRP shares );
(ii) from June 30, 2000, there shall have been no extraordinary sale of
assets; and (iii) the payments to be made under First Lancaster's and the
Bank's employment agreements, change in control agreements, supplemental
executive retirement plan, directors retirement plan, defined benefit plan,
employee stock ownership plan and other benefit plans shall not exceed the
amounts set forth in Section 5.3(d) and Schedule 4.28(d).
(i) Dissenting Shares. First Lancaster Shareholders holding
or controlling no more than five percent (5%) of the shares of the First
Lancaster Common Stock issued and outstanding immediately prior to the
Effective Time shall have perfected and maintained in perfected status their
dissenters' rights in accordance with the DGCL;
(j) Accruals and Reserves. First Lancaster and the Bank shall
have established the accruals and reserves described in Section 6.5, if any;
and
(k) Consultant Agreement. The Consultant Agreement between
Central Kentucky Federal and Xxxx X. Xxxxxx substantially in the form attached
as Exhibit E shall have been duly executed and delivered by Xxxx X. Xxxxxx as
of the date of this Merger Agreement and shall not have terminated by Xxxx X.
Xxxxxx.
(l) Non-competition Agreement. The Non-competition Agreement
between Central Kentucky Federal and Virginia X.X. Xxxxx substantially in the
form attached as Exhibit F shall have been duly executed and delivered by
Virginia X.X. Xxxxx as of the date of this Merger Agreement and shall not have
terminated by Virginia X.X. Xxxxx.
AGREEMENT AND PLAN OF MERGER - Page 46
7.3 Conditions to Obligations of All Parties. The obligation of
each party to effect the transactions contemplated hereby shall be subject to
the fulfillment, at or prior to the Closing, of the following conditions:
(a) No Pending or Threatened Claims. That no claim, action,
suit, investigation or other proceeding shall be pending, other than
Dissenting Shares, or threatened before any court or governmental agency which
presents a substantial risk of the restraint or prohibition of the
transactions contemplated by this Merger Agreement or the obtaining of damages
that would be material to the combined entity or other relief in connection
therewith;
(b) Stockholder Approval. This Merger Agreement shall have
been approved by the requisite vote of First Lancaster's stockholders in
accordance with applicable laws and regulations.
(c) Government Approvals and Acquiescence Obtained. The
Parties hereto shall have received all applicable Government Approvals for the
consummation of the transactions contemplated herein and all waiting periods
incidental to such approvals or notices given shall have expired.
ARTICLE 8
TERMINATION
8.1 Termination. This Merger Agreement may be terminated at any
time prior to the Closing, as follows:
(a) By mutual consent in writing of the Parties;
(b) By CKF Bancorp, should First Lancaster, the Bank or any
First Lancaster Subsidiary fail to conduct its business pursuant to the
covenants made in Article 6 if such failure cannot be or has not been cured
within thirty (30) days after the giving of written notice to First Lancaster
by CKF Bancorp of such failure;
(c) By CKF Bancorp or First Lancaster and the Bank in the
event the Closing shall not have occurred by September 30, 2001, unless the
failure of the Closing to occur shall be due to the failure of the Party
seeking to terminate this Merger Agreement to perform its obligations
hereunder in a timely manner. If the Closing shall not have occurred solely
because of a delay caused by a government regulatory agency or authority in
its review of the application before it, then First Lancaster and the Bank
shall, upon CKF Bancorp's written request, extend the Closing Date until
November 30, 2001.
(d) By either CKF Bancorp or First Lancaster and the Bank,
upon written notice to the other Party, upon denial of any Governmental
Approval necessary for the consummation of the Merger (or should such approval
contain a condition described in the last sentence of Section 5.1); provided,
however, that either CKF Bancorp or First Lancaster and the Bank may, upon
written notice to the other, extend the term of this Merger Agreement for only
one sixty (60) day period to prosecute diligently and overturn such denial,
provided that such denial has been appealed within ten (10) business days of
the receipt thereof;
(e) By CKF Bancorp in the event the conditions set forth in
Section 7.2 or Section 7.3 are not satisfied in all material respects as of
the Closing Date, or by First Lancaster and the Bank if the conditions set
forth in Section 7.1 or Section 7.3 are not satisfied in all material respects
as of the Closing Date, and such failure has not been waived prior to the
Closing;
AGREEMENT AND PLAN OF MERGER - Page 47
(f) By CKF Bancorp in the event that there shall have been a
material adverse change in the business, property, assets (including loan
portfolios), liabilities (whether absolute, accrued, contingent or otherwise),
prospects, operations, liquidity, income, condition (financial or otherwise)
of First Lancaster and the Bank taken as a whole other than any changes
attributable to law, regulation or GAAP or interpretations thereof of general
application to the banking and thrift industries;
(g) By CKF Bancorp or First Lancaster and the Bank in the
event that there shall have been a material breach of any obligation of the
other Party hereunder and such breach shall not have been remedied within
thirty (30) days after receipt by the breaching Party of written notice from
the other Party specifying the nature of such breach and requesting that it be
remedied;
(h) By CKF Bancorp should First Lancaster, the Bank or any
First Lancaster Subsidiary enter into any letter of intent or agreement with a
view to being acquired by or effecting a business combination with any other
Person; or any agreement to merge, to consolidate, to combine or to sell a
material portion of its assets or to be acquired in any other manner by any
other Person or to acquire a material amount of assets or a material equity
position in any other Person, whether financial or otherwise; or
(i) By CKF Bancorp should First Lancaster, the Bank or any
First Lancaster Subsidiary enter into any formal agreement, letter of
understanding, supervisory agreement, cease and desist order, consent
agreement, memorandum or other similar arrangement with the OTS or any other
bank regulatory agency, which would have a material adverse effect on CKF
Bancorp and Central Kentucky Federal, taken as a whole, if the Merger were to
be consummated.
If a Party should elect to terminate this Merger Agreement pursuant to
subsections (b), (c), (d), (e), (f), (g), (h) or (i) of this Section 8.1, it
shall give notice to the other Party, in writing, of its election in the
manner prescribed in Section 9.1 ("Notices") of this Merger Agreement.
8.2 Effect of Termination. In the event that this Merger Agreement
should be terminated pursuant to Section 8.1 hereof, all further obligations
of the Parties under this Merger Agreement shall terminate without further
liability of any Party to another; provided, however, that a termination under
Section 8.1 hereof shall not relieve any Party of any liability for a breach
of this Merger Agreement or for any misstatement or misrepresentation made
hereunder prior to such termination, or be deemed to constitute a waiver of
any available remedy for any such breach, misstatement or misrepresentation.
8.3 Termination Fee. The parties hereby acknowledge that, in
negotiating and executing this Merger Agreement and in taking the steps
necessary or appropriate to effect the transaction contemplated hereby, the
Parties have incurred and will incur direct and indirect monetary and other
costs (including without limitation attorneys' fees and costs of employee and
management time) and will forego discussions with respect to other potential
acquisitions. To compensate CKF Bancorp for such costs and to induce it to
forego initiating discussions regarding other acquisitions, if (i) this Merger
Agreement terminates because First Lancaster and the Bank do not use their
best efforts to consummate the transactions contemplated by this Merger
Agreement in accordance with the terms of this Merger Agreement (unless a
condition set forth in Section 7.1 is not satisfied and such nonsatisfaction
has not been the result of the failure of First Lancaster and the Bank to use
their best efforts to consummate this Merger Agreement in accordance to the
terms of this Merger Agreement);or (ii) First Lancaster terminates this
Merger Agreement for any reason other than the grounds for termination set out
in Sections 8.1(a), 8.1(c), 8.1(d), 8.1(e) or 8.1(g), then First Lancaster and
the Bank shall be obligated to pay CKF Bancorp on demand (and in no event more
than three days after such demand) in immediately available funds One Hundred
Seventy-Five Thousand and No/100 Dollars ($175,000.00). It is further
understood and agreed that the fee payable under this Section 8.3 shall be due
and owing even though the event or condition which caused the fee to be
payable was the result (in part or in whole) of the directors of First
Lancaster and the Bank complying with their fiduciary duties.
AGREEMENT AND PLAN OF MERGER - Page 48
8.4 CKF Bancorp Fee. First Lancaster and the Bank hereby agree to
pay CKF Bancorp on demand (and in no event more than three days after such
demand) in immediately available funds Six Hundred Thousand and No/100 Dollars
($600,000.00) (the "CKF Bancorp Fee") following termination of this Merger
Agreement after the first to occur of any of the following events (provided
that in the event that the $175,000 termination fee is paid pursuant to
Section 8.3 herein, the CKF Bancorp Fee shall be reduced by such $175,000
termination fee), unless prior to such termination, CKF Bancorp is in breach
of its material obligations under this Merger Agreement that would provide a
basis for First Lancaster's termination of this Merger Agreement, in which
event no such fee will be payable:
(a) After any person other than CKF Bancorp or an affiliate of
CKF Bancorp acquires beneficial ownership of 20% or more of the
then-outstanding First Lancaster Common Stock, either (i) First Lancaster or
the Bank shall have willfully breached any covenant or obligation contained in
this Merger Agreement and such breach would entitle CKF Bancorp to terminate
this Merger Agreement, (ii) the First Lancaster Shareholders shall not have
approved this Merger Agreement at the Shareholders Meeting, the Shareholders
Meeting shall not have been held in a timely manner or shall have been
postponed, delayed or enjoined prior to termination of this Merger Agreement
except as a result of a judicial or administrative proceeding or (iii) First
Lancaster's Board of Directors shall have withdrawn or modified in a manner
materially adverse to CKF Bancorp the recommendation of First Lancaster's
Board of Directors with respect to this Merger Agreement;
(b) First Lancaster or the Bank, without having received CKF
Bancorp's prior written consent, enters into an agreement to engage in an
Acquisition Transaction (as defined below) with any person (the term "person"
for purposes of this Section 8.4 having the meaning assigned thereto in
Sections 3(a)(9) and 13(d)(3) of the 1934 Act and the rules and regulations
thereunder) other than CKF Bancorp or any of its Subsidiaries, or First
Lancaster's Board of Directors recommends that the First Lancaster
Shareholders approve or accept any Acquisition Transaction with any person
other than CKF Bancorp or any of its Subsidiaries. For purposes of this
Section 8.4, "Acquisition Transaction" shall mean (a) a merger or
consolidation, or any similar transaction, involving First Lancaster or the
Bank, (b) a purchase, lease or other acquisition of all or substantially all
of the assets of First Lancaster or the Bank, or (c) a purchase or other
acquisition (including by way of merger, consolidation, share exchange or
otherwise) of securities representing 10% or more of the voting power of First
Lancaster or the Bank; or
(c) A bona fide proposal is made by a third party to First
Lancaster or the Bank to engage in an Acquisition Transaction and after such
proposal is made any of the following events occurs: First Lancaster or the
Bank willfully breaches this Merger Agreement and such breach entitles CKF
Bancorp to terminate this Merger Agreement; the First Lancaster Shareholders
do not approve this Merger Agreement at the Shareholders Meeting; the
Shareholders Meeting is not held in a timely manner or has been postponed,
delayed or enjoined prior to termination of this Merger Agreement except as a
result of a judicial or administrative proceeding; or First Lancaster's Board
of Directors withdraws or modifies in a manner materially adverse to CKF
Bancorp the recommendation of First Lancaster's Board of Directors with
respect to this Merger Agreement.
ARTICLE 9
GENERAL PROVISIONS
9.1 Notices. Any notice, request, demand and other communication
which either Party hereto may desire or may be required hereunder to give
shall be in writing and shall be deemed to be duly given if delivered
personally or mailed by certified or registered mail (postage prepaid, return
receipt requested), air courier or facsimile transmission, addressed or
transmitted to such other Party as follows:
AGREEMENT AND PLAN OF MERGER - Page 49
If to First Lancaster and the Bank: First Lancaster Bancshares, Inc.
000 Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Fax: (000) 000 0000
Attn: Virginia X.X. Xxxxx, President and
Chief Executive Officer
With a copy to: Xxxxxxxx Ronon Housley Kantarian &
Xxxxxxxxx, LLP
Suite 700
0000 00xx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Fax: (000) 000-0000
Attn: Xxxx X. Xxxxxxxxx, Esq.
Xxxx X. Xxxxxxxxx, Esq.
If to CKF Bancorp and Central
Kentucky Federal: CKF Bancorp, Inc.
000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Fax: (000) 000-0000
Attn: Xxxx X. Xxxxxxx, President and
Chief Executive Officer
With a copy to: Breyer & Associates PC
0000 Xxx Xxxx Xxxxxx, X.X.
Xxxxx 000 Xxxx
Xxxxxxxxxx, X.X. 00000
Fax: (000) 000-0000
Attn: Xxxx X. Xxxxxx, Xx., Esq.
or to such other address as any Party hereto may hereafter designate to the
other Parties in writing. Notice shall be deemed to have been given on the
date reflected in the proof or evidence of delivery, or if none, on the date
actually received.
9.2 Assignability and Parties in Interest. This Merger Agreement
shall not be assignable by any of the Parties hereto provided, however, that
CKF Bancorp may assign, set over and transfer all, or any part of its rights
and obligations under this Merger Agreement to any one or more of its present
or future Affiliates. This Merger Agreement shall inure to the benefit of,
and be binding only upon the Parties hereto and their respective successors
and permitted assigns and no other Persons.
9.3 Governing Law. This Merger Agreement shall be governed by, and
construed and enforced in accordance with, the internal laws, and not the laws
pertaining to choice or conflicts of laws, of the State of Delaware, unless
and to the extent that federal law controls.
9.4 Counterparts. This Merger Agreement may be executed
simultaneously in one or more counterparts (any of which may be facsimile
copies), each of which shall be deemed an original, but all of which shall
constitute but one and the same instrument.
9.5 Publicity. The Parties agree that press releases and other
public announcements to be made by any of them with respect to the
transactions contemplated hereby shall be subject to mutual agreement.
AGREEMENT AND PLAN OF MERGER - Page 50
9.6 Entire Agreement. This Merger Agreement, the Schedules,
Exhibits and certificates required to be delivered hereunder and any
amendments or addenda hereafter executed and delivered in accordance with
Section 9.8 hereof constitute the entire agreement of the Parties hereto
pertaining to the transaction contemplated hereby and supersede all prior
written and oral (and all contemporaneous oral) agreements and understandings
of the Parties hereto concerning the subject matter hereof. The schedules,
annexes, exhibits and certificates attached hereto or furnished pursuant to
this Merger Agreement are hereby incorporated as integral parts of this Merger
Agreement. Except as provided herein, by specific language and not by mere
implication, this Merger Agreement is not intended to confer upon any other
person not a Party to this Merger Agreement any rights or remedies hereunder.
9.7 Severability. If any portion or provision of this Merger
Agreement should be determined by a court of competent jurisdiction to be
invalid, illegal or unenforceable in any jurisdiction, such portion or
provision shall be ineffective as to that jurisdiction to the extent of such
invalidity, illegality or unenforceability, without affecting in any way the
validity or enforceability of the remaining portions or provisions hereof in
such jurisdiction or rendering that or any other portions or provisions of
this Merger Agreement invalid, illegal or unenforceable in any other
jurisdiction.
9.8 Modifications, Amendments and Waivers. At any time prior to
the Closing or termination of this Merger Agreement, the Parties may, solely
by written agreement executed by their duly authorized officers:
(a) extend the time for the performance of any of the
obligations or other acts of the other Party hereto;
(b) waive any inaccuracies in the representations and
warranties made by the other Party contained in this Merger Agreement or in
the Schedules or Exhibits hereto or any other document delivered pursuant to
this Merger Agreement;
(c) waive compliance with any of the covenants or agreements
of the other Party contained in this Merger Agreement; and
(d) amend or add to any provision of this Merger Agreement;
provided, however, that no provision of this Merger Agreement may be amended
or added to except by an agreement in writing signed by the Parties hereto or
their respective successors in interest and expressly stating that it is an
amendment to this Merger Agreement.
9.9 Interpretation. The headings contained in this Merger
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Merger Agreement.
9.10 Payment of Expenses. Except as set forth herein, CKF Bancorp
and First Lancaster and the Bank shall each pay its own fees and expenses
(including, without limitation, legal fees and expenses) incurred by it in
connection with the transactions contemplated hereunder.
9.11 Equitable Remedies. The Parties hereto agree that, in the
event of a breach of this Merger Agreement by First Lancaster and the Bank,
CKF Bancorp will be without an adequate remedy at law by reason of the unique
nature of First Lancaster and the Bank. In recognition thereof, in addition
to (and not in lieu of) any remedies at law which may be available to CKF
Bancorp, CKF Bancorp shall be entitled, at its sole discretion, either (i) to
obtain equitable relief, including the remedies of specific performance and
injunction, in the event of a breach of this Merger Agreement by First
Lancaster or the Bank or (ii) if applicable, to receive the payment described
in Section 8.3 hereof. First Lancaster and the Bank covenant that they shall
not contend in any such proceeding that CKF Bancorp is not entitled to a
decree of specific performance by reason of having an adequate remedy at law.
Notwithstanding the foregoing, if First Lancaster and the Bank pay CKF Bancorp
the CKF Bancorp Fee pursuant to Section 8.4 herein, CKF
AGREEMENT AND PLAN OF MERGER - Page 51
Bancorp shall not be entitled to the equitable remedy of specific performance.
No attempt on the part of CKF Bancorp to obtain such equitable relief shall be
deemed to constitute an election of remedies by CKF Bancorp which would
preclude CKF Bancorp from obtaining any remedies at law to which it would
otherwise be entitled.
9.12 Attorneys' Fees. If any Party hereto shall bring an action at
law or in equity to enforce its rights under this Merger Agreement (including
an action based upon a misrepresentation or the breach of any warranty,
covenant, agreement or obligation contained herein), the prevailing Party in
such action shall be entitled to recover from the other Party its reasonable
costs and expenses necessarily incurred in connection with such action
(including fees, disbursements and expenses of attorneys and costs of
investigation).
9.13 No Waiver. No failure, delay or omission of or by any Party in
exercising any right, power or remedy upon any breach or default of any other
Party shall impair any such rights, powers or remedies of the Party not in
breach or default, nor shall it be construed to be a waiver of any such right,
power or remedy, or an acquiescence in any similar breach or default; nor
shall any waiver of any single breach or default be deemed a waiver of any
other breach or default theretofore or thereafter occurring. Any waiver,
permit, consent or approval of any kind or character on the part of any Party
of any provisions of this Merger Agreement must be in writing and must be
executed by the Parties to this Merger Agreement and shall be effective only
to the extent specifically set forth in such writing.
9.14 Remedies Cumulative. All remedies provided in this Merger
Agreement, by law, equity or otherwise, shall be cumulative and not
alternative.
9.15 Non-Survival of Representations and Warranties. No
representations and warranties made by the Parties hereto or in any instrument
or document furnished in connection herewith shall survive the Closing. This
Section 9.15 shall not apply to covenants and agreements which by their terms
are intended to be performed after the Closing or the termination of this
Merger Agreement. Nothing in this Section 9.15 shall limit First Lancaster's
or CKF Bancorp's rights or remedies for misrepresentations, breaches of this
Merger Agreement or any other improper action or inaction by the other Party
hereto prior to its termination.
AGREEMENT AND PLAN OF MERGER - Page 52
IN WITNESS WHEREOF, each of the Parties hereto has duly executed and
delivered this Merger Agreement or has caused this Merger Agreement to be
executed and delivered in its name and on its behalf by its representative
thereunto duly authorized, all as of the date first written above.
Attest: CKF BANCORP, INC.
/s/X. Xxxxxx Xxx By: /s/Xxxx X. Xxxxxxx
---------------------------- --------------------------------------
X. Xxxxxx Xxx Xxxx X. Xxxxxxx
Its: President and Chief Executive Officer
Attest: CENTRAL KENTUCKY FEDERAL SAVINGS BANK
/s/X. Xxxxxx Fox By: /s/Xxxx X. Xxxxxxx
---------------------------- --------------------------------------
X. Xxxxxx Xxx Xxxx X. Xxxxxxx
Its: President and Chief Executive Officer
Attest: FIRST LANCASTER BANCSHARES, INC.
/s/Xxxxx X. Xxx By: /s/Virginia X.X. Xxxxx
---------------------------- --------------------------------------
Xxxxx X. Xxx Virginia X.X. Xxxxx
Its: President and Chief Executive Officer
Attest: FIRST LANCASTER FEDERAL SAVINGS BANK
/s/Xxxxx X. Xxx By: /s/Virginia X.X. Xxxxx
---------------------------- --------------------------------------
Xxxxx X. Xxx Virginia X.X. Xxxxx
Its: President and Chief Executive Officer
AGREEMENT AND PLAN OF MERGER - Page 53
