Exhibit 1.01
AGREEMENT AND PLAN OF MERGER
AMONG
COMMUNITY BANK SHARES OF INDIANA, INC.
THE BANCSHARES, INC.
and
CBIN SUBSIDIARY, INC.
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement") is made and entered
into as of the 15th day of February, 2006, by and among (i) COMMUNITY BANK
SHARES OF SOUTHERN INDIANA, INC., an Indiana corporation with its principal
executive offices located at 000 Xxxx Xxxxxx Xxxxxx, Xxx Xxxxxx, Xxxxxxx 00000
("Company"), (ii) CBIN SUBSIDIARY, INC., an Indiana corporation with its
principal executive offices located at 000 Xxxx Xxxxxx Xxxxxx, Xxx Xxxxxx,
Xxxxxxx 00000 ("Merger Subsidiary") and (iii) THE BANCSHARES, INC., an Indiana
corporation with its principal executive offices located at 000 Xxxx XxXxxxx
Xxxxxx, Xxxxxxxxxx, Xxxxxxx 00000 ("TBI").
PREAMBLE
The Boards of Directors of the Company, TBI and Merger Subsidiary are of
the opinion that the transactions described herein are in the best interests of
the Parties and their respective shareholders. This Agreement and the Plan of
Merger attached hereto and incorporated by reference at Exhibit A provide for
the acquisition of TBI by the Company pursuant to the merger of TBI with and
into Merger Subsidiary. At the Effective Time, the outstanding shares of the
common stock of TBI shall be converted into the right to receive cash and shares
of Company Common Stock (except as otherwise provided herein) and immediately
before the Effective Time certain outstanding options respecting the common
stock of TBI shall be purchased by TBI for cash. As a result, the shareholders
of TBI shall become shareholders of the Company and Merger Subsidiary (as the
Surviving Corporation) shall continue to conduct its business and operations as
a wholly-owned subsidiary of the Company. The transactions described in this
Agreement are subject to the approvals of the FRB, the Department and other
applicable federal and state regulatory authorities, and the satisfaction of
certain other conditions described in this Agreement. It is the intention of the
Parties that this Agreement for federal income tax purposes shall constitute a
plan of merger and the Merger shall qualify as a "reorganization" within the
meaning of Section 368(a)(1)(A) of the Code.
NOW THEREFORE, in consideration of the premises and the mutual and
dependent covenants and undertakings contained in this Agreement, and for other
good and valuable consideration, the mutuality, receipt and sufficiency of which
is hereby acknowledged, and intending to be legally bound, the parties hereby
agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Certain Defined Terms. The words listed in this Article 1 when used
and capitalized in this Agreement shall have the meanings set forth for each by
this Article 1. Certain other capitalized terms when used in this Agreement
shall have the meanings ascribed to them when first encountered elsewhere in
this Agreement:
(a) "Acquisition Proposal" shall mean with respect to any Party any
bona fide written proposal or offer from any Person relating to any (i) direct
or indirect acquisition or purchase of a business that constitutes 50% or more
of the net revenues, net income or the Assets
of such Party and its Subsidiaries, taken as a whole, (ii) direct or indirect
acquisition or purchase of equity securities of such Party (or, in the case of
TBI, the Bank) representing 50% or more of the combined voting power of such
Party (or, as applicable, the Bank), (iii) any tender offer or exchange offer
that if consummated would result in any Person beneficially owning equity
securities of such Party (or, in the case of TBI, the Bank) representing 50% or
more of the combined voting power of such Party (or, as applicable, the Bank),
or (iv) any merger, consolidation, business combination, recapitalization,
liquidation, dissolution or similar transaction involving such Party (or, in the
case of TBI, the Bank), other than the transactions contemplated by this
Agreement.
(b) "Adverse Consequences" shall mean all Proceedings, charges,
claims, demands, injunctions, Orders, damages, dues, assessments, expenditures,
outlays, awards, penalties, fines, costs, interest, amounts paid in settlement,
liabilities, obligations, payments, premiums, taxes, liens, losses, reduction in
value, loss of use, injuries, expenses and fees of whatever nature, including
without limitation response, restoration, investigative, removal, remedial,
monitoring or inspection costs and court costs and reasonable attorneys' fees
and expenses.
(c) "Affiliate" means, as applied to any Person, (i) any director,
executive officer, or general partner of such Person, (ii) any other Person
directly or indirectly controlling, controlled by or under common control with
or by such Person or (iii) any other Person that directly or indirectly owns or
controls, whether beneficially or as a trustee, guardian or other fiduciary, ten
percent (10%) or more of the equity capital of such Person; provided, however,
that it is the intent of the parties that neither the Company nor Merger
Subsidiary shall be deemed or construed to be an Affiliate of TBI and TBI shall
not be deemed or construed to be an Affiliate of the Company or Merger
Subsidiary. For purposes of this definition, "control" (including the terms
"controlling," "controlled by" and "under common control with") shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities or by Contract or otherwise.
(d) "Affiliate Agreement" shall mean an agreement substantially in
the form of Exhibit B hereto to be delivered to the Company prior to the Closing
by each TBI and Bank Affiliate other than Xxxxxxxx Xxxxxx and Xxxxxxx Xxxxx.
(e) "Agreement" shall mean this Agreement and Plan of Merger and the
Schedules, Exhibits and other certificates or documents delivered pursuant
hereto.
(f) "Anticipated Closing Date" shall have the meaning assigned such
term in Section 2.3 hereof.
(g) "Articles of Merger" shall mean the Articles of Merger to be
executed by the Company, Merger Subsidiary and/or TBI and filed with the
Secretary of State of the State of Indiana relating to the Merger as
contemplated by Section 2.3 hereof.
(h) "Assets" of a Person shall mean all of the assets, properties,
businesses,
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and rights of such Person of every kind, nature, character and description,
whether real, personal or mixed, tangible or intangible, accrued or contingent,
or otherwise, wherever located.
(i) "Bank" shall mean The Xxxxx County State Bank, an Indiana state
banking corporation.
(j) "Bank Employment Agreement" shall mean an employment agreement
between the Bank and certain Bank employees substantially in the form of Exhibit
C hereto.
(k) "Bank Secrecy Act" shall have the meaning assigned such term in
Section 6.28 hereof.
(l) "Bankruptcy Event" shall mean, with respect to a Person, if such
Person shall (i) discontinue business, or cease doing business for more than ten
(10) days; (ii) make a general assignment for the benefit of creditors; (iii)
apply for or consent to the appointment of a custodian, receiver, trustee or
liquidator of all or a substantial part of its assets; (iv) be adjudicated
bankrupt or insolvent; (v) file a voluntary petition in bankruptcy or file a
petition or an answer seeking a composition, reorganization or an arrangement
with creditors or seek to take advantage of any other Law (whether federal or
state) relating to relief for debtors, or admit (by answer, default or
otherwise) the material allegations of any petition filed against it in any
bankruptcy, reorganization, composition, insolvency or other Proceeding (whether
federal or state) relating to relief for debtors; (vi) suffer the filing of any
involuntary petition in any bankruptcy, reorganization, insolvency or other
Proceeding (whether federal or state), if the same is not dismissed within sixty
(60) days after the date of such filing; (vii) suffer or permit to continue any
judgment, decree or order entered by a court which assumes control of its
business or financial affairs or approves a petition seeking a reorganization,
composition or arrangement of its business or financial affairs or any other
judicial modification of the rights of any of its creditors, or appoints a
receiver, trustee or liquidator for it, or for all or a substantial part of any
of its businesses or assets or financial affairs; (viii) be enjoined or
restrained from conducting all or a material part of any of its businesses as
then conducted or as hereafter conducted and the same is not dismissed and
dissolved within thirty (30) days after the entry thereof; (ix) not be paying
its debts generally as they become due; or (x) admits in writing its inability,
or is unable, to pay its debts generally as they become due.
(m) "BHC Act" shall mean the federal Bank Holding Company Act of
1956, as amended, 12 U.S.C. ss. 1841, et. seq..
(n) "Cash Consideration" shall have the meaning assigned such term
in Section 4.1(c)(i)(A) hereof.
(o) "Cash Consideration Percentage" shall have the meaning assigned
such term in Section 4.1(c)(ii) hereof.
(p) "Cash Election Shares" shall have the meaning assigned such term
in Section 4.1(c)(iii) hereof.
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(q) "Certificates" shall have the meaning assigned such term in
Section 5.1(b) hereof.
(r) "Change in Control" shall mean (i) any merger, consolidation,
share exchange or other reorganization or recapitalization to which a Party or
any of its Subsidiaries is a party or subject, (ii) the sale, lease or exchange
following the date of this Agreement (either in one (1) transaction or a series
of transactions) of five percent (5%) or more of the Assets of a Party or any of
its Subsidiaries within a one (1) year period, (iii) the issuance of equity
interests in a Party or any of its Subsidiaries following the date of this
Agreement (either in one (1) transaction or a series of transactions) which
increases by five percent (5%) or more the equity of a Party or any of its
Subsidiaries or (iv) the issuance of voting interests in a Party or any of its
Subsidiaries following the date of this Agreement (either in one (1) transaction
or a series of transactions) equal to five percent (5%) or more of the voting
interests of a Party or any of its Subsidiaries prior to such issuance.
(s) "Claim Notice" shall have the meaning assigned such term in
Section 12.4(a) hereof.
(t) "Closing" shall mean the consummation of the Merger hereunder
and the other transactions contemplated hereunder and the satisfaction of all
other conditions precedent thereto as set forth hereinafter.
(u) "Closing Date" shall mean the date on which the Closing occurs.
(v) "Code" shall mean the Internal Revenue Code of 1986, as amended,
or any successor thereto and all rulings and regulations issued pursuant thereto
or any successor thereto.
(w) "Company" shall mean Community Bank Shares of Indiana, Inc., an
Indiana corporation.
(x) "Company Common Stock" shall mean the common stock, $.10 par
value per share, of the Company.
(y) "Company Disclosure Memorandum" shall mean the written
informational document entitled "Company Disclosure Memorandum" delivered prior
to the date of this Agreement to TBI by the Company describing in reasonable
detail the matters contained therein and, with respect to each disclosure made
therein, specifically referencing each Section of this Agreement under which
such disclosure is being made.
(z) "Company Financial Statements" shall mean (i) the consolidated
balance sheets (including related notes and schedules, if any) of the Company as
of September 30, 2005, and as of December 31, 2004 and 2003, and the related
statements of income, changes in shareholders' equity, and cash flows (including
related notes and schedules, if any) for the nine months ended September 30,
2005, and for each of the three years ended December 31, 2004, 2003 and 2002, as
filed by Company in SEC Documents, and (ii) the consolidated balance sheets
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of the Company (including related notes and schedules, if any) and related
statements of income, changes in shareholders' equity, and cash flows (including
related notes and schedules, if any) included in SEC Documents filed with
respect to periods ended subsequent to September 30, 2005.
(aa) "Company Indemnified Persons" shall have the meaning assigned
such term in Section 12.2 hereof.
(bb) "Company Stock Price" shall mean the average of the daily
closing prices of a share of Company Common Stock as reported on the NASDAQ
Capital Market for the fifteen (15) consecutive days when the stock markets are
open for trading ending on the Company Stock Price Calculation Date; provided,
however, that in the event the aforesaid average of the daily closing prices is
(i) below $20.00, then "Company Stock Price" shall mean $20.00 and (ii) above
$25.00, then "Company Stock Price" shall mean $25.00.
(cc) "Company Stock Price Calculation Date" shall mean the date
which is the fifteenth day prior to the Anticipated Closing Date.
(dd) "Company Subsidiaries" shall mean the Subsidiaries of the
Company and any Person acquired as a Subsidiary of the Company in the future and
owned by Company at the Effective Time.
(ee) "Confidentiality Agreement" shall mean collectively that
Confidentiality Agreement dated November 3, 2005 between TBI and the Company and
the related Reciprocal Confidentiality Agreement dated December 14, 2005 between
TBI and the Company.
(ff) "Consent" shall mean any consent, approval, authorization,
clearance, exemption, waiver or similar affirmation by any Person pursuant to
any Contract, Law, Order or Governmental Authorization.
(gg) "Continuing Indemnified Person" shall have the meaning assigned
such term in Section 9.12(a) hereof.
(hh) "Contract" shall mean any legally binding written or oral
agreement, arrangement, authorization, commitment, contract, indenture,
instrument, lease, obligation, plan, practice, restriction, order, permit,
understanding or undertaking of any kind or character, or other document to
which any Person is a party or that is binding on any Person or its equity
capital, assets or business.
(ii) "Covered Claim" shall have the meaning assigned such term in
Section 12.4(a) hereof.
(jj) "Current Xxxxx Employment Agreement" shall mean that Employment
Agreement dated January 14, 1994 by and among the Bank, TBI and Xxxxx X. Xxxxx.
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(kk) "Default" shall mean (i) any breach or violation of or default
under any Contract, (ii) any occurrence or event that with the passage of time
or the giving of notice or both would constitute a breach or violation of or
default under any Contract or (iii) any occurrence or event that with or without
the passage of time or the giving of notice would give rise to a right to
terminate, revoke, modify, cancel, amend, change the current terms of,
renegotiate, or to accelerate, increase or impose any liability under, any
Contract.
(ll) "Department" shall mean the Indiana Department of Financial
Institutions.
(mm) "Dissenting Shares" shall mean any shares of TBI Common Stock
with respect to which the record or beneficial holder has properly perfected the
holder's rights to dissent under Chapter 44 of the IBCL.
(nn) "Effective Time" shall have the meaning assigned such term in
Section 2.3 hereof.
(oo) "Election Date" shall have the meaning assigned such term in
Section 5.2(b) hereof.
(pp) "Encumbrance" shall mean any claim, lien, security interest (or
other security arrangement), charge, equity, mortgage, pledge, community
property interest, condition, equitable interest, option, right of first
refusal, conditional sale agreement, default of title, hypothecation,
reservation, title retention or encumbrance of any nature whatsoever.
(qq) "Environment" means soil, land surface or subsurface strata,
surface waters (including navigable waters, ocean waters, streams, ponds,
drainage basins and wetlands), groundwaters, drinking water supply, stream
sediments, ambient air (including indoor air), plant and animal life and any
other environmental medium or natural resource.
(rr) "Environmental Laws" means any Laws that require or relate to:
(a) advising appropriate authorities, employees and the public of intended or
actual releases of pollutants or Hazardous Materials, violations of discharge
limits or other prohibitions and of the commencements of activities, such as
resource extraction or construction, that could have significant impact on the
Environment; (b) preventing or reducing to acceptable levels the release of
pollutants or Hazardous Materials into the Environment; (c) reducing the
quantities, preventing the release or minimizing the hazardous characteristics
of wastes that are generated; (d) assuring that products are designed,
formulated, packaged and used so that they do not present unreasonable risks to
human health or the Environment when used or disposed of; (e) protecting
resources, species or ecological amenities; (f) reducing to acceptable levels
the risks inherent in the transportation of Hazardous Materials or other
potentially harmful substances; (g) cleaning up pollutants that have been
released preventing the threat of release or paying the costs of such clean up
or prevention; or (h) making responsible parties pay private parties, or groups
of them, for damages done to their health or the Environment, or permitting
self-appointed representatives of the public interest to recover for injuries
done to public assets. "Environmental Laws" shall include, without limitation,
the Comprehensive Environmental Response Compensation and Liability Act, as
amended, xx.xx. 42 U.S.C. 9601 et seq. ("CERCLA")
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or any successor law, and regulations and rules issued pursuant thereto or any
successor, and the Resource Conservation and Recovery Act, as amended xx.xx. 42
U.S.C. 6901 et seq. ("RCRA") or any successor law, and regulations and rules
issued pursuant thereto or any successor.
(ss) "ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended, or any successor thereto, and regulations and rules issued
pursuant thereto or any successor thereto.
(tt) "ERISA Affiliate" shall mean any trade or business, whether or
not incorporated, that together with the Person under consideration would be
deemed a "single employer" within the meaning of Section 4001(b) of ERISA.
(uu) "Exchange Agent" shall mean Registrar and Transfer Company.
(vv) "Exchange Fund" shall have the meaning assigned such term in
Section 5.1(a) hereof.
(ww) "Exhibits" shall mean the exhibits so marked and attached to
this Agreement, which Exhibits are hereby incorporated herein by reference and
made a part hereof.
(xx) "FDIC" shall mean the Federal Deposit Insurance Corporation.
(yy) "Form of Election" shall have the meaning assigned such term in
Section 5.2(b) hereof.
(zz) "FRB" shall mean the Board of Governors of the Federal Reserve
System.
(aaa) "Funded Debt" shall mean, at any date, all indebtedness for
borrowed money issued, incurred, assumed or guaranteed of or by a Person which
would, in accordance with GAAP, be classified as funded indebtedness, but in any
event "Funded Debt" shall include all indebtedness for borrowed money, whether
secured or unsecured. However, notwithstanding the foregoing, "Funded Debt"
shall not include, with respect to the subject Person, any liability or
obligation of the subject Person incurred in the Ordinary Course of the subject
Person's banking or trust business with respect to (i) any deposits held by the
subject Person or funds collected by the subject Person; (ii) any banker's
acceptance or letter of credit issued by the subject Person; (iii) any check,
note, certificate of deposit, money order, traveler's check, draft or xxxx of
exchange accepted or endorsed by the subject Person; (iv) any lease of real or
personal property, purchase money security agreement or similar instrument not
involving an obligation of the subject Person for borrowed money other than
purchase money indebtedness; (v) any guarantee or similar obligation incurred by
the subject Person in such circumstances as are incidental or usual in carrying
on the banking or trust business; (vi) any transaction in the nature of an
extension of credit, whether in the form of a commitment or otherwise,
undertaken by the subject Person for the account of a third party after the
application by the subject Person of the same banking considerations and legal
lending limits that would otherwise be applicable if the transaction were a loan
to such party; and (vii) any transaction in which the subject Person acts solely
in a fiduciary or agency capacity.
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(bbb) "GAAP" shall mean generally accepted accounting principles
applicable to banks and bank holding companies as set forth in the opinions and
pronouncements of the Accounting Principles Board and the American Institute of
Certified Public Accountants, in statements and pronouncements of the Financial
Accounting Standards Board, or in such other statements by such other Person as
may be approved by a significant segment of the accounting profession, in each
case which are applicable to the circumstances as of the date of determination.
(ccc) "Governmental Authorization" shall mean any approval, Consent,
license, permit, waiver, or other authorization issued, granted, given or
otherwise made available by or under the authority of any Governmental Body or
pursuant to any Law.
(ddd) "Governmental Body" shall mean any: (a) nation, state, county,
city, town, village, district or other jurisdiction of any nature; (b) federal,
state, local, municipal, foreign or other government; (c) governmental or
quasi-governmental authority of any nature (including any self-regulatory
organization, governmental agency, branch, department, official or entity and
any court or other tribunal); (d) multi-national organization or body; or (e)
body exercising, or entitled to exercise, any administrative, executive,
judicial, legislative, police, regulatory or taxing authority or power of any
nature.
(eee) "Hazardous Materials" shall mean any waste or other substance
that is listed, defined, designated or classified as, or otherwise determined to
be, hazardous, radioactive or toxic or a pollutant or a contaminant or otherwise
regulated under or pursuant to any Environmental Law, including any admixture or
solution thereof, and specifically including (without limitation) petroleum and
all derivatives thereof or synthetic substitutes therefor, asbestos or
asbestos-containing materials and polychlorinated biphenyls, substances
containing polychlorinated biphenyls, nitrate, perchloroethylene,
1,1,1-trichloroethane, trichloroethylene, tetrachloroethylene,
1,1-dichloroethane, 0, 0-xxxxxxxxxxxxxx, xxx-0, 0-xxxxxxxxxxxxxx, trans-1,
2-dichloroethene, copper, chromium, zinc, cadmium, lead, mercury, nickel, iron,
magnesium, nitrite and aluminum.
(fff) "IBCL" shall mean the Indiana Business Corporation Law,
Article 1 of Title 23, et. seq., of the Indiana Code.
(ggg) "IIPI" shall have the meaning assigned such term in Section
6.26 hereof.
(hhh) "Indemnified Person" shall have the meaning assigned such term
in Section 12.4(a) hereof.
(iii) "Indication of Interest" shall mean that certain Indication of
Interest respecting TBI dated January 4, 2006 from the Company to Xxxx Xxxxxxx
of Xxxx Xxxxxxxxxx & Co. Investment Banking.
(jjj) "Intellectual Property" shall mean any copyrights (in both
published and unpublished works), patents, trademarks (registered and
unregistered), service marks, service
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names, fictional business names and trade names, technology rights and licenses,
computer software (including any source or object codes therefore or
documentation relating thereto), trade secrets, confidential information,
customer lists, technical information, research and development information and
records, data processing technology, plans, drawings, blueprints, franchises,
know-how, inventions and discoveries (whether or not patentable), any
applications for any of the foregoing and any other intellectual property rights
of whatever nature.
(kkk) "Knowledge:" a Person who is an individual will be deemed to
have "Knowledge" of a particular fact or other matter if: (a) such individual is
actually aware of such fact or other matter; or (b) a prudent individual would
be expected to discover or otherwise become aware of such fact or other matter
in the course of conducting reasonably comprehensive investigation concerning
the existence of such fact or other matter. A Person (other than an individual)
will be deemed to have "Knowledge" of a particular fact or other matter if any
individual who is serving, or who has at any time during the eighteen (18)
months prior to the Effective Time served, as a director, officer, partner,
management employee, executor or trustee of such Person (or in any similar
capacity) has, or at any time had, Knowledge of such fact or other matter.
(lll) "Law" shall mean any code, law, constitution, ordinance,
regulation, principle of common law, reporting or licensing requirement, rule,
treaty or statute applicable to a Person or its Assets, Liabilities or business,
including, without limitation, those promulgated, interpreted or enforced by any
Governmental Body wherever located.
(mmm) "Liability" shall mean any direct or indirect, primary or
secondary, liability, indebtedness, obligation, penalty, cost, or expense
(including costs of investigation, collection, and defense), claim, deficiency,
guaranty, or endorsement of or by any Person (other than endorsements of notes,
bills, checks, and drafts presented for collection or deposit in the ordinary
course of business) of any type, whether accrued, absolute or contingent,
liquidated or unliquidated, matured or unmatured, or otherwise.
(nnn) "Material Adverse Effect" shall mean that the Adverse
Consequences from an event, change, or occurrence, individually or together with
any other event, change or occurrence, have had or can reasonably be expected to
have a material adverse impact (financial or otherwise) on (i) the financial
condition, business, results of operations or properties of the subject Person
or (ii) the ability of the subject Person to perform its obligations under this
Agreement or to consummate other transactions contemplated by this Agreement in
accordance with applicable Law; provided that "Material Adverse Effect" shall
not be deemed to include the impact of (a) changes in banking and similar Laws
of general applicability or interpretations thereof by Governmental Bodies, (b)
changes in GAAP or regulatory accounting principles generally applicable to
banks and their holding companies, (c) actions or omissions of a Party (or any
of its Subsidiaries) taken with the prior written consent of the other Parties
pursuant to Section 12.8 hereof or (d) changes in economic conditions or
interest rates generally affecting financial institutions.
(ooo) "Merger" shall have the meaning assigned such term in Section
2.1 hereof.
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(ppp) "Merger Consideration" shall mean $30,436,200 (consisting of
(i) the aggregate Cash Consideration, (ii) the aggregate Stock Consideration,
(iii) any cash payable in lieu of fractional shares as contemplated by Section
5.1(e) hereof payable to the holders of TBI Common Stock and (iv) the amount
equal to the number of Disssenting Shares times $150.00).
(qqq) "Merger Subsidiary" shall mean CBIN Subsidiary, Inc., a
wholly-owned subsidiary of the Company organized under the Laws of the State of
Indiana.
(rrr) "Merger Subsidiary Common Stock" shall mean the common stock,
no par value per share, of Merger Subsidiary.
(sss) "NASD" shall mean the National Association of Securities
Dealers, Inc.
(ttt) "NASDAQ Capital Market" shall mean the Capital Market of The
NASDAQ Stock Market, Inc.
(uuu) "1933 Act" shall mean the Securities Act of 1933, as amended.
(vvv) "1934 Act" shall mean the Securities Exchange Act of 1934, as
amended.
(www) "New Xxxxx Employment Agreement" shall mean an employment
agreement between the Bank and Xxxxx X. Xxxxx substantially in the form of
Exhibit D hereto.
(xxx) "Notice of Adverse Recommendation" shall have the meaning
assigned such term in Section 9.8(b) hereof.
(yyy) "Operating Property" shall mean any property owned (or
previously owned) by the Party in question or any of its Subsidiaries or in
which the Party in question or any of its Subsidiaries holds (or previously
held) a security interest and, where required by Contract, such term means the
owner or operator of the said property, but only with respect to such property.
(zzz) "Option Spread" shall mean the cash sum, with respect to any
TBI Exercisable Stock Option, equal to $150 less the exercise price of the
subject TBI Exercisable Stock Option.
(aaaa) "Order" shall mean any administrative decision or award,
directive, decree, judgment, order, quasi-judicial decision or award, ruling,
subpoena, injunction, decision, verdict or writ of any court, arbitrator,
mediator, tribunal or Governmental Body.
(bbbb) "Ordinary Course" or "Ordinary Course of Business" - an
action taken by a Person will be deemed to have been taken in the "Ordinary
Course" or the "Ordinary Course of Business" only if: (a) such action is
consistent with the past practices of such Person and is taken in the ordinary
course of the normal day-to-day operations of such Person; (b) such action is
not required to be authorized by the board of directors or the shareholders of
such Person (or
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by any Person or group of Persons exercising similar authority); and (c) such
action is similar in nature and magnitude to actions customarily taken, without
any authorization by the board of directors or the shareholders (or by any
Person or group of Persons exercising similar authority or shareholders), in the
ordinary course of the normal day-to-day operations of other Persons that are in
the same line of business as such Person.
(cccc) "Participation Facility" shall mean any facility or property
in which the Party in question or any of its Subsidiaries participates (or
previously participated) in the management of such facility or property and,
where required by the Contract, such term means the owner or operator of said
facility or property, but only with respect to said facility or property.
(dddd) "Party" shall mean TBI, Merger Subsidiary or the Company and
"Parties" shall mean, collectively, TBI, Merger Subsidiary and the Company.
(eeee) "Permit" shall mean any federal, state, local or foreign
Governmental Authorization, certificate, easement, filing, franchise, license,
notice, permit or right to which any Person is a party or that is or may be
binding upon or inure to the benefit of any Person or its securities, assets or
business.
(ffff) "Person" shall mean any individual, association, corporation
(including, without limitation, any non-profit corporation) estate, general
partnership, limited liability partnership, limited partnership, limited
liability company, joint stock association, joint venture, firm, trust, business
trust, cooperative, executor, administrator, nominee or entity in a
representative capacity, group acting in concert, Governmental Body,
unincorporated association or other legal entity or organization.
(gggg) "Plan of Merger" shall mean the Plan of Merger of even date
herewith entered into by the Company, Merger Subsidiary and TBI, in the form of
Exhibit A hereto.
(hhhh) "Proceeding" shall mean any action, arbitration,
adjudication, case, cause of action, audit claim, litigation, suit, complaint,
citation, criminal prosecution, demand letter, governmental or other examination
or investigation, hearing, inquiry, notice of violation, administrative or other
proceeding of whatever nature, or notice (written or oral) by any Person
alleging potential Liability or requesting information relating to or affecting
any Person, its business, Assets or the transactions contemplated by this
Agreement, but shall not include regular, periodic examinations of depository
institutions and their Affiliates by Regulatory Authorities.
(iiii) "Real Property" shall have the meaning assigned such term in
Section 6.11(b) hereof.
(jjjj) "Registration Statement" shall mean the Registration
Statement on Form S-4, or other appropriate form, including any pre-effective or
post-effective amendments or supplements thereto, filed with the SEC by the
Company under the 1933 Act with respect to the shares of Company Common Stock to
be issued to the shareholders of TBI in connection with
11
the transactions contemplated by this Agreement.
(kkkk) "Regulatory Authorities" shall mean, collectively, the FRB,
the Department, all state regulatory agencies having jurisdiction over any of
the Parties or their respective Subsidiaries, the NASD and the SEC.
(llll) "Representative" shall mean any investment banker, financial
advisor, attorney, accountant, consultant or other representative of a Person.
(mmmm) "Rights" shall mean all arrangements, calls, commitments,
Contracts, options, rights to subscribe to, scrip, options, purchase rights,
warrants or other binding obligations of any character whatsoever by which a
Person is or may be bound to issue additional shares of its capital stock or
other equity interests of whatever nature or other rights, or securities or
rights convertible into or exchangeable for, shares of the capital stock of a
Person or other equity interests of whatever nature, or by which a Person is or
may be bound to repurchase, redeem or otherwise acquire any of its outstanding
shares of capital stock.
(nnnn) "Schedules" shall mean the schedules so marked and attached
to this Agreement, which Schedules are hereby incorporated herein by reference
and made a part hereof.
(oooo) "SEC" shall mean the Securities and Exchange Commission.
(pppp) "SEC Documents" shall mean all forms, proxy statements,
registration statements, reports, schedules, certifications, exhibits and other
documents filed, or required to be filed, by a Party or any of its Subsidiaries
with the SEC pursuant to the Securities Laws.
(qqqq) "Securities Laws" shall mean the 1933 Act, the 1934 Act, the
Investment Company Act of 1940, as amended, the Investment Advisors Act of 1940,
as amended, the Trust Indenture Act of 1939, as amended, and the rules and
regulations of any Regulatory Authority promulgated thereunder.
(rrrr) "Significant Subsidiary" shall have the meaning assigned such
term in Rule 1-02(w) of Regulation S-X promulgated under the Securities Laws.
(ssss) "Stock Consideration" shall have the meaning assigned such
term in Section 4.1(c)(i)(B) hereof.
(tttt) "Stock Consideration Percentage" shall have the meaning
assigned such term in Section 4.1(c)(ii) hereof.
(uuuu) "Stock Election" shall have the meaning assigned such term in
Section 5.2(b) hereof.
(vvvv) "Stock Election Shares" shall have the meaning assigned such
term in
12
Section 4.1(c)(iii) hereof.
(wwww) "Stock Option Consideration" shall have the meaning assigned
such term in Section 4.2.
(xxxx) "Subsidiaries" shall mean all those Persons of which the
entity in question owns or controls 5% or more of the outstanding 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; provided, there shall not be included any such entity
acquired through foreclosure or any such entity the equity securities of which
are owned or controlled in a fiduciary capacity.
(yyyy) "Superior Proposal" shall mean an Acquisition Proposal from
any Person to acquire, directly or indirectly, for consideration consisting of
cash and/or securities, more than 50% of the combined voting power of TBI or the
Bank then outstanding or all or substantially all of the Assets of TBI or the
Bank that the Board of Directors of TBI determines in its good faith judgment,
taking into account all legal, financial, regulatory and other aspects of the
proposal and the Person making the proposal (including, without limitation, any
break-up fees, expense reimbursement provisions, required financing and whether
conditions to consummation are reasonably capable of being completed), would be
more favorable from a financial point of view to the stockholders of TBI than
the transactions contemplated by this Agreement (including any adjustment to the
terms and conditions proposed by the Company in response to such Acquisition
Proposal).
(zzzz) "Surviving Corporation" shall have the meaning assigned such
term in Section 2.1 hereof.
(aaaaa) "Taxes" shall mean all taxes, charges, fees, levies, imposts
or other assessments, including, without limitation, all net income, gross
income, gross receipts, sales, use, goods and services, ad valorem, transfer,
alternative, net worth, value added, franchise, profits, license, withholding,
payroll, employment, employer health, excise, estimated, severance, stamp,
occupation, real property and personal property taxes, and any other taxes,
customs duties, fees, assessments or charges of any kind whatsoever, together
with any interest, fines and penalties, additions to tax or additional amounts
imposed by any Governmental Body and whether disputed or not.
(bbbbb) "Tax Returns" shall mean all returns and reports of or with
respect to any Tax, which are required to be filed by or with respect to the
applicable Person.
(ccccc) "TBI" shall mean The Bancshares, Inc., an Indiana
corporation.
(ddddd) "TBI Adverse Recommendation Change" shall have the meaning
assigned such term in Section 9.8(b) hereof.
(eeeee) "TBI Benefit Plans" shall have the meaning assigned such
term in Section 6.18(a) hereof.
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(fffff) "TBI Common Stock" shall mean the common stock, no par value
per share, of TBI.
(ggggg) "TBI Disclosure Memorandum" shall mean the written
informational document entitled "TBI Disclosure Memorandum" delivered to the
Company by TBI prior to the date of this Agreement describing in reasonable
detail the matters contained therein and, with respect to each disclosure made
therein, specifically referencing each Section of this Agreement under which
such disclosure is being made.
(hhhhh) "TBI ERISA Plan" shall mean any TBI Benefit Plan which is an
"employee pension benefit plan" as defined in Section 3(2) of ERISA.
(iiiii) "TBI Exercisable Stock Options" shall mean all of the TBI
Stock Options which immediately prior to the Effective Time remain unexercised
that, either by their express terms or by virtue of action on the part of the
Board of Directors of TBI accelerating the exercisability thereof, are at such
time exercisable.
(jjjjj) "TBI Financial Statements" shall have the meaning assigned
such term in Section 6.5 hereof.
(kkkkk) "TBI Indemnified Persons" shall have the meaning assigned
such term in Section 12.3 hereof.
(lllll) "TBI Proxy Statement" shall mean the proxy statement used by
TBI to solicit the approval of its shareholders of the transactions contemplated
by this Agreement, which shall include the prospectus of the Company relating to
the issuance of shares of Company Common Stock to holders of TBI Common Stock.
(mmmmm) "TBI Shareholders' Meeting" shall mean the meeting of the
shareholders of TBI to be held pursuant to Section 9.1 hereof, including any
adjournment or adjournments thereof, at which the Merger and Plan of Merger are
approved by the shareholders of TBI.
(nnnnn) "TBI Stock Options" shall mean the outstanding stock options
as of the date hereof with respect to the purchase of TBI Common Stock as
described in Section 6.3 of the TBI Disclosure Memorandum.
(ooooo) "TBI Subsidiaries" shall mean the Subsidiaries of TBI, which
shall include the TBI Subsidiaries described in Section 6.4 hereof and any
corporation, bank, or other Person acquired as a Subsidiary of TBI in the future
and owned by TBI at the Effective Time.
(ppppp) "Technology Systems" shall have the meaning assigned such
term in Section 6.27(a) hereof.
(qqqqq) "Termination Fee" shall mean the cash sum of $1,200,000.
14
ARTICLE 2
TRANSACTIONS AND TERMS OF MERGER
2.1 Merger. Subject to the terms and conditions of this Agreement and the
Plan of Merger, at the Effective Time, TBI shall be merged with and into Merger
Subsidiary in accordance with the provisions of Indiana Code 23-1-40-1 of the
IBCL, and with the effect provided in Indiana Code 23-1-40-6 of the IBCL (the
"Merger"). Merger Subsidiary shall be the surviving corporation resulting from
the Merger (the "Surviving Corporation") and shall continue to be governed by
the Laws of the State of Indiana. The Merger shall be consummated pursuant to
the terms of this Agreement and the Plan of Merger, which have been approved and
adopted by the respective Boards of Directors of TBI, the Company and Merger
Subsidiary.
2.2 Time and Place of Closing. The Closing will take place at 10:00 A.M.,
local New Albany, Indiana time, on the date on which the Effective Time is to
occur (or the immediately preceding day if the Effective Time is to be earlier
than 10:00 A.M., local New Albany, Indiana time), or at such other time as the
Parties, acting through their authorized officers, may mutually agree. The
Closing shall be held at such place as may be mutually agreed upon by the
Parties.
2.3 Effective Time. The Merger and other transactions contemplated by this
Agreement shall become effective at the time the Articles of Merger reflecting
the Merger shall become effective with the Secretary of State of the State of
Indiana (the "Effective Time"). Subject to the terms and conditions hereof,
including the adjustment of the Anticipated Closing Date pursuant to Section
5.2(b) hereof, unless (i) otherwise mutually agreed upon in writing by the chief
executive officers of each Party, (ii) this Agreement is terminated pursuant to
Article 11 hereof or (iii) the Company in its discretion chooses a later Closing
Date and Effective Time based upon the Company's evaluation of the application
to the Company (if any) of Section 404 of the Xxxxxxxx-Xxxxx Act of 2002, the
Parties shall use their reasonable efforts to cause the Effective Time to occur
as soon as is reasonably practicable on the date (the "Anticipated Closing
Date") five (5) days following the last to occur of (i) the effective date of
the last required Consent of any Regulatory Authority having authority over and
approving or exempting the Merger (taking into account any requisite waiting
period in respect thereto), (ii) the date on which the shareholders of TBI
approve this Agreement, and (iii) the date on which all other conditions
precedent (other than those conditions which relate to actions to be taken at
the Closing) to each Party's obligations hereunder shall have been satisfied or
waived (to the extent waivable by such Party).
2.4 Restructure of Transaction. The Company shall have the right with the
consent of TBI (which consent may not be unreasonably withheld, conditioned or
delayed) to revise the structure of the Merger contemplated by this Agreement in
order to achieve tax benefits or for any other reason which the Company may deem
advisable; provided, however, that the Company shall not have the right, without
the approval of the Board of Directors of TBI and, if required by the IBCL, the
holders of TBI Common Stock, to make any revision to the structure of the Merger
which: (i) changes the amount of the consideration which the holders of shares
of TBI Common Stock are entitled to receive (determined in the manner provided
in Section 4.1 hereof); (ii)
15
changes the intended tax free effects of the Merger with respect to the Stock
Consideration to the Company, TBI or the holders of shares of TBI Common Stock;
(iii) would permit the Company to pay the Stock Consideration other than by
delivery of Company Common Stock registered with the SEC (in the manner
described in Section 5.1 of this Agreement); (iv) would be materially adverse to
the interests of TBI or adverse to the holders of shares of TBI Common Stock; or
(v) would materially impede or delay consummation of the Merger. The Company may
exercise this right of revision by giving written notice to TBI in the manner
provided in Section 13.6 hereof which notice shall be in the form of an
amendment to this Agreement and the Plan of Merger or in the form of an Amended
and Restated Agreement and Plan of Merger.
ARTICLE 3
TERMS OF MERGER
3.1 Articles of Incorporation. The Articles of Incorporation of Merger
Subsidiary in effect immediately prior to the Effective Time shall be the
Articles of Incorporation of the Surviving Corporation until otherwise amended
or repealed.
3.2 Bylaws. The Bylaws of Merger Subsidiary in effect immediately prior to
the Effective Time shall be the Bylaws of the Surviving Corporation until
otherwise amended or repealed.
3.3 Directors and Officers. The directors of Merger Subsidiary in office
immediately prior to the Effective Time, together with such additional persons
as may thereafter be elected, shall serve as the directors of the Surviving
Corporation from and after the Effective Time in accordance with the Bylaws of
the Surviving Corporation. The officers of Merger Subsidiary in office
immediately prior to the Effective Time, together with such additional persons
as may thereafter be elected, shall serve as the officers of the Surviving
Corporation from and after the Effective Time in accordance with the Bylaws of
the Surviving Corporation.
ARTICLE 4
MANNER OF CONVERTING SHARES
4.1 Conversion of Shares. Subject to the provisions of this Article 4 (and
Article 3 of the Plan of Merger), at the Effective Time, by virtue of the Merger
and without any action on the part of the Company, Merger Subsidiary, TBI, or
the shareholders of any of the foregoing, the shares of the constituent Parties
shall be converted as follows:
(a) Each share of Company Common Stock (and any Rights with respect
to Company Common Stock) issued and outstanding immediately prior to the
Effective Time shall remain issued and outstanding from and after the Effective
Time;
(b) Each share of Merger Subsidiary Common Stock issued and
outstanding immediately prior to the Effective Time shall remain issued and
outstanding and shall represent one share of the Surviving Corporation from and
after the Effective Time;
(c) (i) Subject to Sections 4.1(c) (ii), (iii) and (iv) and Section
4.1(d) below,
16
each issued and outstanding share of TBI Common Stock outstanding immediately
prior to the Effective Time shall be converted, subject to the provisions of
this Article 4, into one of the following:
(A) cash in the amount of $150, without interest (the
"Cash Consideration"); or
(B) that number of shares of Company Common Stock,
rounded to the nearest thousandth of a share, equal to
the quotient obtained by dividing $150.00 by the Company
Stock Price (the "Stock Consideration").
(ii) Notwithstanding anything herein to the contrary, in all
events (excluding the portion of the Merger Consideration attributable to shares
cancelled pursuant to Section 4.3 hereof, Dissenting Shares and cash payable in
lieu of fractional shares) the aggregate Cash Consideration shall equal
thirty-five percent (35%) of the Merger Consideration (the "Cash Consideration
Percentage") and the aggregate Stock Consideration shall equal sixty-five
percent (65%) of the Merger Consideration (the "Stock Consideration
Percentage"). Notwithstanding the foregoing, the percentages used in the
preceding definitions are subject to waiver or modification pursuant to Section
4.1(c)(iv) below.
(iii) If, after the results of the Forms of Election are
calculated, the number of shares of TBI Common Stock respecting which a Stock
Election is made would result in aggregate Stock Consideration greater than the
Stock Consideration Percentage, the Company shall cause the Exchange Agent to
determine the number of shares of TBI Common Stock respecting which a Stock
Election was made (the "Stock Election Shares") which must be redesignated as
Cash Election Shares (as defined below) in order to reduce the shares converted
into Stock Consideration to a number of shares such that the aggregate Stock
Consideration equals the Stock Consideration Percentage. In such event, all
holders who have Stock Election Shares shall, on a pro rata basis (based on the
number of Stock Election Shares they hold), have such number of their Stock
Election Shares redesignated as Cash Election Shares so that the Stock
Consideration Percentage is achieved. If, after the results of the Forms of
Election are calculated, the number of shares of Company Common Stock not making
a Stock Election (the "Cash Election Shares") would result in aggregate Cash
Consideration greater than the Cash Consideration Percentage, the Company shall
cause the Exchange Agent to determine the number of Cash Election Shares which
must be redesignated as Stock Election Shares in order to reduce the shares
converted into Cash Consideration to a number of shares such that the aggregate
Cash Consideration equals the Stock Consideration Percentage. In such event, all
holders who have Cash Election Shares shall, on a pro rata basis (based on the
number of Cash Election Shares they hold), have such number of their Cash
Election Shares redesignated as Stock Election Shares so that the Cash
Consideration Percentage is achieved.
(iv) Notwithstanding the foregoing, the Company may, in its
sole discretion, taking into account the actual results of the election process
described in Section 5.2, direct at any time prior to the Effective Time that
the redesignation procedures provided in Section 4.1(c)(iii) above be waived in
whole or in part. In such event, the percentage limits
17
specified in Section 4.1(c)(ii) above for the Cash Consideration Percentage and
the Stock Consideration Percentage, respectively, shall be disregarded and the
procedures provided for in Sections 4.1(c)(ii) and (iii) above shall be applied
substituting such percentage limits as the Company shall designate solely for
the purpose of causing the Cash Consideration Percentage and the Stock
Consideration Percentage to more closely match the results of TBI shareholder
elections than as set forth in Section 4.1(c)(ii) above, provided, however, that
in no event shall such actions adversely affect the Merger from qualifying as a
tax-free reorganization under Section 368(a) of the Code.
(d) Dissenting Shares shall not be converted pursuant to Section 4.1(c)
above in the Merger but, at and after the Effective Time, shall represent only
the right to receive payment in accordance with Chapter 44 of the IBCL. If a
holder of Dissenting Shares becomes ineligible for payment under Chapter 44 of
the IBCL, then such holder's Dissenting Shares shall cease to be Dissenting
Shares and shall be converted in the manner set forth in Section 4.1(c) above
effective as of the Effective Time.
4.2 Redemption of TBI Exercisable Stock Options. Immediately before the
Effective Time each issued and outstanding TBI Exercisable Stock Option shall be
canceled and retired by TBI and shall cease to exist through the payment by TBI
to the holders of such options of that cash sum, without interest, equal to the
Option Spread (collectively, the "Stock Option Consideration").
4.3 Exchange Ratio Adjustment. In the event the Company changes the number
of shares of Company Common Stock issued and outstanding after the date of this
Agreement and prior to the Effective Time as a result of a stock split, stock
dividend, subdivision, reclassification, conversion or similar recapitalization
with respect to such stock and the record date therefor (in the case of a stock
dividend) or the effective date thereof (in the case of a stock split,
subdivision, reclassification, conversion or similar recapitalization for which
a record date is not established) shall be prior to the Effective Time, the
Stock Consideration shall be proportionately adjusted in such fashion as the
Company and TBI may agree, such agreement not to be unreasonably withheld,
conditioned or delayed.
4.4 Shares Held by TBI or the Company. Each of the shares of TBI Common
Stock held by TBI, any TBI Subsidiary, the Company or any Company Subsidiary, in
each case other than in fiduciary capacity or as a result of debts previously
contracted, shall be canceled and retired at the Effective Time and no Merger
Consideration shall be issued in exchange therefor.
ARTICLE 5
EXCHANGE OF SHARES;
ELECTION OF MERGER CONSIDERATION
5.1 Exchange of Certificates.
(a) Exchange Agent. As soon as practicable following the date of this
Agreement and in any event not less than three days prior to dissemination of
the TBI Proxy Statement, the Company shall appoint the Exchange Agent to act as
exchange agent for payment of the Merger
18
Consideration upon surrender of certificates representing TBI Common Stock. The
Exchange Agent shall also act as the agent for the TBI shareholders for the
purpose of receiving and holding their Forms of Election and Certificates and
shall obtain no rights or interests in such shares of TBI Common Stock. Promptly
following the Effective Time, Company shall deposit with the Exchange Agent, for
the benefit of the holders of shares of TBI Common Stock for exchange in
accordance with Article 4 through the Exchange Agent, (i) certificates
representing the number of shares of Company Common Stock issuable and (ii) the
amount of cash consideration payable pursuant to Section 4.1(c) hereof in
exchange for outstanding shares of TBI Common Stock (such shares of Company
Common Stock and cash, together with any dividends or distributions with respect
thereto, being hereinafter referred to as the "Exchange Fund"). For the purposes
of such deposit, the Company shall assume that there will not be any fractional
shares of Company Common Stock. The Company shall make available to the Exchange
Agent, from time to time as needed, cash sufficient to pay cash in lieu of
fractional shares in accordance with Section 5.1(f) hereof. The Exchange Agent
shall, pursuant to irrevocable instructions, deliver Company Common Stock and
cash contemplated to be issued pursuant to Section 4.1(c) hereof out of the
Exchange Fund. The Exchange Fund may not be used for any other purpose.
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, the Exchange Agent shall mail to each holder of record of a
certificate or certificates that immediately prior to the Effective Time
represented outstanding shares of TBI Common Stock (such certificates are
referred to hereinafter collectively as the "Certificates") whose shares or
options were converted into the right to receive Merger Consideration pursuant
to Section 4.1(c) hereof and who did not complete (or have revoked prior to the
Effective Time) a Form of Election pursuant to Section 5.2(b) hereof, (i) a
letter of transmittal (which shall specify that delivery shall be effected, and
risk of loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent and shall be in such form and have such other
provisions as Company may reasonably specify) and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for such Person's
portion of the Merger Consideration. Upon surrender of a Certificate for
cancellation to the Exchange Agent or to such other agent or agents as may be
appointed by Company, together with such letter of transmittal, duly executed,
and such other documents as may reasonably be required by the Exchange Agent,
the Exchange Agent shall effect delivery within five (5) business days to the
holder of such Certificate, in exchange therefor, the amount of cash, if any,
and the number of whole shares of Company Common Stock, if any, into which the
aggregate number of shares of TBI Common Stock previously represented by such
Certificate shall have been converted pursuant to Section 4.1(c) hereof, and the
Certificate so surrendered shall forthwith be canceled. Thereafter, each such
holder who received any Company Common Stock shall be treated as a holder of
Company Common Stock for all purposes under the IBCL and the Company's Articles
of Incorporation and Bylaws, in each case as amended. In the event of a transfer
of ownership of TBI Common Stock that is not registered in the transfer records
of TBI, payment may be made to a Person other than the Person in whose name the
Certificate so surrendered is registered, if such Certificate shall be properly
endorsed or otherwise be in proper form for transfer and the Person requesting
such payment shall pay any transfer or other taxes required by reason of the
payment to a Person other than the registered holder of such Certificate or
establish to the satisfaction of the Company that such tax has been paid or is
not applicable. Until surrendered as contemplated
19
by this Section 5.1(b), each Certificate shall be deemed at any time after the
Effective Time to represent only the right to receive upon such surrender the
portion of the Merger Consideration into which the shares of TBI Common Stock
theretofore represented by such Certificate have been converted pursuant to
Section 4.1(c) hereof. No interest shall be paid or accrued on any cash payable
upon surrender of any Certificate.
(c) Distributions With Respect to Unexchanged Shares. No dividends or
other distributions with respect to Company Common Stock with a record date on
or after the Effective Time shall be paid to the holder of any Certificate
formerly representing TBI Common Stock with respect to the shares of Company
Common Stock issuable upon surrender thereof, and no cash payment in lieu of
fractional shares shall be paid to any such holder pursuant to Section 5.1(e)
hereof, until the surrender of such Certificate in accordance with this Article
5. Subject to applicable Law, following surrender of any such Certificate, there
shall be paid to the holder of the Certificate representing whole shares of
Company Common Stock issued in exchange therefor, without interest, (i) at the
time of such surrender, the amount of any cash payable in lieu of a fractional
share of Company Common Stock to which such holder is entitled pursuant to
Section 5.1(e) hereof and the amount of dividends or other distributions with a
record date after the Effective Time theretofore paid with respect to such whole
shares of Company Common Stock, and (ii) at the appropriate payment date, the
amount of dividends or other distributions with a record date after the
Effective Time but prior to such surrender and a payment date subsequent to such
surrender payable with respect to such whole shares of Company Common Stock.
(d) No Further Ownership Rights in TBI Common Stock. The Merger
Consideration paid and/or issued in accordance with the terms of this Article 5
upon conversion of any shares of TBI Common Stock shall be deemed to have been
paid and/or issued in full satisfaction of all rights pertaining to such shares
of TBI Common Stock, subject, however, to the Surviving Corporation's obligation
to pay any dividends or make any other distributions with a record date prior to
the Effective Time that may have been declared or made by TBI on such shares of
TBI Common Stock in accordance with the terms of this Agreement or prior to the
date of this Agreement and which remain unpaid at the Effective Time, and after
the Effective Time there shall be no further registration of transfers on the
stock transfer books of the Surviving Corporation of shares of TBI Common Stock
that were outstanding immediately prior to the Effective Time. If, after the
Effective Time, any Certificates formerly representing shares of TBI Common
Stock are presented to the Surviving Corporation or the Exchange Agent (or
Option Agreements are presented to the Surviving Corporation or the Company) for
any reason, they shall be canceled and exchanged as provided in this Article 5.
(e) No Fractional Shares.
(1) No certificates or scrip representing fractional shares of
Company Common Stock shall be issued upon the conversion of TBI Common Stock
pursuant to Section 4.1(c), and such fractional share interests shall not
entitle the owner thereof to vote or to any rights of a holder of Company Common
Stock. For purposes of this Section 5.1(e), all fractional shares to which a
single record holder would be entitled shall be aggregated and calculations
shall be rounded to three decimal places.
20
(2) In lieu of any such fractional shares, each holder of TBI Common
Stock who would otherwise be entitled to such fractional shares shall be
entitled to an amount in cash, without interest, rounded to the nearest cent,
equal to the product of (A) the amount of the fractional share interest in a
share of TBI Common Stock to which such holder is entitled under Section 4.1(c)
(or would be entitled but for this Section 5.1(e)) and (B) the Company Stock
Price.
(f) Termination of Exchange Fund. Any portion of the Exchange Fund that
remains undistributed to the holders of TBI Common Stock for three months after
the Effective Time shall be delivered to the Company, upon demand, and any
holder of TBI Common Stock or TBI Exercisable Stock Options who has not
theretofore complied with this Article 5 shall thereafter look only to the
Company and the Surviving Corporation for payment of its claim for a portion of
the Merger Consideration (including any cash in lieu of fractional shares of
Company Common Stock to which such Person is entitled pursuant to Section
5.1(e)) and any applicable dividends or distributions with respect to any
Company Common Stock constituting Merger Consideration as provided in Section
5.1(c), in each case, without any interest thereon.
(g) No Liability. None of TBI, the Merger Subsidiary, the Company or the
Exchange Agent shall be liable to any Person in respect of any cash or any
shares of Company Common Stock (or dividends or distributions with respect
thereto) or Stock Option Consideration delivered to a public official pursuant
to any applicable abandoned property, escheat or similar Law. If any Certificate
has not been surrendered prior to five years after the Effective Time (or
immediately prior to such earlier date on which Merger Consideration in respect
of such Certificate would otherwise escheat to or become the property of any
Governmental Body), any such cash, shares, dividends or distributions in respect
of such Certificate shall, to the extent permitted by applicable Law, become the
property of the Surviving Corporation, free and clear of all claims or interest
of any person previously entitled thereto.
(h) Investment of Exchange Fund. The Exchange Agent shall invest any cash
included in the Exchange Fund, as directed by the Company, in direct obligations
of the U.S. Treasury or otherwise with the consent of TBI (which consent shall
not be unreasonably withheld, conditioned or delayed), on a daily basis. Any
interest and other income resulting from such investments shall be paid to the
Company.
(i) Withholding Rights. The Company and the Exchange Agent shall be
entitled to deduct and withhold from the consideration otherwise payable to any
holder of TBI Common Stock pursuant to this Agreement such amounts as may be
required to be deducted and withheld with respect to the making of such payment
under the Code, or under any provision of state, local or foreign tax Law. To
the extent that amounts are so withheld and paid over to the appropriate taxing
authority, the Surviving Corporation will be treated as though it withheld an
appropriate amount of the type of consideration otherwise payable pursuant to
this Agreement to any holder of TBI Common Stock, sold such consideration for an
amount of cash equal to the fair market value of such consideration at the time
of such deemed sale and paid such cash proceeds to the appropriate taxing
authority.
(j) Income Tax Treatment. It is intended by the Parties that the Merger
qualify as a
21
"reorganization" within the meaning of Section 368(a) of the Code. Subject to
any revision to the structure of the transaction as provided under Section 2.4
hereof, the Parties hereto hereby adopt this Agreement as a "plan of
reorganization" within the meanings of Sections 1.368-2(g) and 1.368-3(a) of the
U.S. Treasury Regulations promulgated under the Code.
5.2 Elections.
(a) Each Person who, on or prior to the Election Date referred to in
Section 5.2(b) below, is a record holder of shares of TBI Common Stock shall be
entitled, with respect to all or any portion of such shares, to make an
unconditional Stock Election on or prior to such Election Date, on the basis
hereinafter set forth.
(b) The Company shall prepare a form of election, which form shall be
subject to the reasonable approval of TBI (the "Form of Election") and shall be
mailed with the TBI Proxy Statement to the record holders of TBI Common Stock as
of the record date for the TBI Shareholders' Meeting, which Form of Election
shall be used by each record holder of shares of TBI Common Stock who wishes to
elect to receive the Stock Consideration pursuant to Section 4.1(c)(i)(B) hereof
for any or all shares of TBI Common Stock held by such holder (a "Stock
Election"). TBI shall use all reasonable efforts to make the Form of Election
and the Proxy Statement available to all Persons who become record holders of
TBI Common Stock during the period between such record date and the Election
Date, including using reasonable efforts to mail a Form of Election to all such
persons who become record holders prior to the seventh business day prior to the
Election Date. Any such holder's election to receive the Stock Consideration
pursuant to Section 4.1(c)(i)(B) hereof shall have been properly made only if
the Exchange Agent shall have received at its designated office, by 5:00 p.m.,
EST, on the business day immediately preceding the Closing Date (the "Election
Date"), a Form of Election properly completed and signed and accompanied by
Certificates for the shares of TBI Common Stock to which such Form of Election
relates, duly endorsed in blank or otherwise in form acceptable for transfer on
the books of TBI (or accompanied by an appropriate guarantee of delivery of such
Certificates as set forth in such Form of Election from a firm which is a member
of a registered national securities exchange or of the NASD or a commercial bank
or trust company having an office or correspondent in the United States,
provided such Certificates are in fact delivered to the Exchange Agent within
three NASDAQ Capital Market trading days after the date of execution of such
guarantee of delivery). Failure to deliver Certificates covered by any guarantee
of delivery within three NASDAQ Capital Market trading days after the date of
execution of such guarantee of delivery shall be deemed to invalidate any
otherwise properly made Stock Election. TBI will announce the Anticipated
Closing Date and Company Stock Price through a letter to its shareholders mailed
two weeks before such Anticipated Closing Date. If the Closing is delayed to a
subsequent date, the Anticipated Closing Date shall be delayed by a like number
of days, the Election Date shall be similarly delayed and the Company will
promptly announce such rescheduled Election Date and Closing.
(c) Any Form of Election may be revoked by the stockholder who submitted
such Form of Election to the Exchange Agent only by written notice received by
the Exchange Agent (i) prior to 5:00 p.m., EST, on the Election Date or (ii)
after such time, if (and only to the extent that) the Exchange Agent is legally
required to permit revocations and only if the Effective Time shall not
22
have occurred prior to such date. In addition, all Forms of Election shall
automatically be revoked if the Exchange Agent is notified in writing by the
Company that this Agreement has been terminated. If a Form of Election is
revoked, the Certificate or Certificates (or guarantees of delivery, as
appropriate) for the shares of TBI Common Stock to which such Form of Election
relates shall be promptly returned to the shareholder submitting the same to the
Exchange Agent and any such shares shall be treated as Cash Election Shares
(unless and until another duly completed Form of Election [accompanied by the
Certificate or Certificates, or guarantees of delivery, as applicable, to which
such Form of Election relates] has been submitted to the Exchange Agent in
accordance with this Agreement).
(d) The determination of the Exchange Agent in its sole discretion shall
be binding as to whether or not elections to receive the Stock Consideration
pursuant to Section 4.1(c)(i)(B) hereof have been properly made or revoked
pursuant to this Section 5.2 with respect to shares of TBI Common Stock and when
elections and revocations were received by it. If no Form of Election is
received with respect to shares of TBI Common Stock, or if the Exchange Agent
determines that any election to receive the Stock Consideration pursuant to
Section 4.1(c)(i)(B) hereof was not properly made with respect to shares of TBI
Common Stock, such shares shall be treated by the Exchange Agent as Cash
Election Shares at the Effective Time, and such shares shall be converted into
the right to receive the Cash Consideration in accordance with Section
4.1(c)(i)(A) hereof (subject to any required pro-ration pursuant to Section
4.1(c)(iii) hereof). The Exchange Agent shall also make all computations as to
the adjustments contemplated by Section 4.1(c)(iii) hereof, and absent manifest
error any such computation shall be conclusive and binding on the holders of
shares of TBI Common Stock. The Exchange Agent may, with the mutual agreement of
the Company and TBI, make such rules as are consistent with this Section 5.2(d)
for the implementation of the elections provided for herein as shall be
necessary or desirable fully to effect such elections.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF TBI
TBI hereby represents and warrants to the Company, except as set forth in
the TBI Disclosure Memorandum, as follows (which representations and warranties
are made as of the date hereof and as of all times throughout the term of this
Agreement):
6.1 Organization, Standing and Power. TBI is a corporation duly organized
and validly existing under the laws of the State of Indiana and has the
corporate power and authority to carry on its business as now conducted and to
own, lease and operate its Assets. TBI is duly qualified or licensed to transact
business as a foreign corporation in good standing in each of the States of the
United States and in each foreign jurisdiction where the character of its assets
or the nature or conduct of its business requires it to be so qualified or
licensed, except for such jurisdictions in which the failure to be so qualified
or licensed is not reasonably likely to have, individually or in the aggregate,
a Material Adverse Effect on TBI.
23
6.2 Authority; No Conflict.
(a) Subject to the approval of the shareholders of TBI, TBI has the
corporate power and authority necessary to execute, deliver and perform its
obligations under this Agreement and all other agreements, documents or
instruments contemplated hereunder and to consummate the transactions
contemplated hereby and thereby. Subject to shareholder approval, the execution,
delivery and performance of this Agreement, and the consummation of the
transactions contemplated herein, have been duly and validly authorized by all
necessary corporate action (including valid authorization and adoption of this
Agreement by TBI's duly constituted Board of Directors) in respect thereof on
the part of TBI and this Agreement constitutes the legal, valid and binding
obligation of TBI, enforceable against TBI in accordance with its terms. TBI has
the absolute and unrestricted right, power, authority and capacity to execute
and deliver this Agreement, and to perform its obligations under this Agreement.
(b) Neither the execution and delivery of this Agreement by TBI nor
the consummation of the transactions contemplated hereby, nor compliance by TBI
with any of the provisions hereof or thereof, will (i) conflict with or result
in a breach of any provision of the Articles of Incorporation or Bylaws of TBI,
(ii) constitute or result in a Default under, or require any Consent apart from
necessary consents from Regulatory Authorities pursuant to, or result in the
creation of any Encumbrance on any Asset of TBI or any of the TBI Subsidiaries
under, any Contract or Governmental Authorization of or applicable to TBI or any
of the TBI Subsidiaries, except for such Defaults and Encumbrances which will
not have, and for such Consents which, if not obtained, will not have,
individually or in the aggregate, a Material Adverse Effect on TBI, or (iii)
subject to receipt of the requisite Consents referred to in Section 10.1(c)
hereof, violate any Law or Order applicable to TBI or any of the TBI
Subsidiaries or any of its material Assets.
(c) Other than notice and filings with the Regulatory Authorities
and the Indiana Secretary of State, no notice to, filing with, or Consent of,
any Governmental Body is necessary for the consummation by TBI of the
transactions contemplated in this Agreement.
6.3 Capital Stock. The authorized capital stock of TBI consists solely of
252,000 shares, no par value per share common stock, of which 202,908 shares are
issued and outstanding as of the date hereof. All issued and outstanding shares
of TBI Common Stock are duly and validly issued and outstanding, are fully paid
and non-assessable under applicable Law and the Articles of Incorporation and
Bylaws of TBI. None of the shares of TBI Common Stock has been issued in
violation of any preemptive rights of any current or past shareholder of TBI.
There are no outstanding Rights with respect to TBI Common Stock apart from the
TBI Stock Options. Since January 1, 2003, TBI has not directly or indirectly
redeemed, purchased or otherwise acquired any of its capital stock.
6.4 Subsidiaries. TBI has disclosed in Schedule 6.4 of the TBI Disclosure
Memorandum all of the TBI Subsidiaries that are corporations (identifying its
jurisdiction of incorporation) and all of the TBI Subsidiaries that are general
or limited partnerships or other non-corporate entities (identifying the Law
under which such entity is organized, and the amount and nature of the ownership
interest therein of TBI Subsidiaries). TBI or one of its wholly-owned
24
Subsidiaries owns all of the issued and outstanding shares of capital stock (or
other equity interests) of each of the TBI Subsidiaries. No capital stock (or
other equity interest) of any TBI Subsidiary is or may become required to be
issued (other than to another TBI Subsidiary) by reason of any Rights, and
(apart from the TBI Stock Options) there are no Contracts by which TBI or any of
the TBI Subsidiaries is bound to issue (other than to TBI or another of the TBI
Subsidiaries) additional shares of its capital stock (or other equity interests)
or Rights or by which TBI or any of the TBI Subsidiaries is or may be bound to
transfer any shares of the capital stock (or other equity interests) of any of
TBI or any of the TBI Subsidiaries (other than to TBI or any of the TBI
Subsidiaries). There are no Contracts relating to the rights of TBI or any TBI
Subsidiary to vote or to dispose of any shares of the capital stock (or other
equity interests) of TBI or any TBI Subsidiary. All of the shares of capital
stock (or other equity interests) of each TBI Subsidiary held by TBI or any TBI
Subsidiary are fully paid and nonassessable under the applicable corporation or
similar Law of the jurisdiction in which such Subsidiary is incorporated or
organized and are owned by TBI or a TBI Subsidiary free and clear of any
Encumbrances. Each TBI Subsidiary is either a bank or a corporation, and each
such Subsidiary is duly organized, validly existing, and (as to corporations) in
good standing under the Laws of the jurisdiction in which it is incorporated or
organized, and has the corporate power and authority necessary for it to own,
lease, and operate its Assets and to carry on its business as now conducted.
Each TBI Subsidiary is duly qualified or licensed to transact business as a
foreign corporation in good standing in each of the states of the United States
and in each foreign jurisdiction where the character of its Assets or the nature
or conduct of its business requires it to be so qualified or licensed, except
for such jurisdictions in which the failure to be so qualified or licensed is
not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on TBI. The only TBI Subsidiary that is a depository institution
is the Bank. The Bank is an "insured depository institution" as defined in
Section 3(c)(2) of the Federal Deposit Insurance Act and applicable regulations
thereunder, the deposits in which are insured by the FDIC to the maximum extent
permitted by the Federal Deposit Insurance Act, as amended, and applicable
regulations thereunder and the Bank is a member in good standing with the FDIC.
The Bank is a member of the Bank Insurance Fund. The minute books and other
organizational documents (and all amendments thereto) for TBI, the Bank and each
other TBI Subsidiary that would qualify as a "Significant Subsidiary" (as such
term is defined in Rule 1.02(w) of Regulation S-X promulgated under the
Securities Laws) of TBI have been or will be made available to the Company for
its review, and are true and complete in all material respects as in effect as
of the date of this Agreement.
6.5 Financial Statements. TBI has delivered to the Company (or will
deliver, when available, with respect to periods ended after the date of this
Agreement) complete copies of (i) the audited consolidated balance sheets
(including related notes and schedules, if any) of TBI as of December 31, 2004
and 2003, and the related statements of operations, stockholders' equity, and
cash flows (including related notes and schedules, if any) for the fiscal years
ended December 31, 2004, 2003 and 2002, (ii) the unaudited consolidated balance
sheets of TBI (including related notes and schedules, if any) as of and for
September 30, 2005, and related statements of operations and stockholders'
equity (including related notes and schedules, if any) for the nine months ended
September 30, 2005 and 2004, (iii) the consolidated statements of financial
position of TBI (including related notes and schedules, if any) and related
statements of operations and stockholders' equity (including related notes and
schedules, if any) with respect
25
to any period ending subsequent to September 30, 2005, and prior to the Closing
Date (audited if for a fiscal year end) and (iv) all Consolidated Reports of
Condition and Income (or similar reports, regardless of name), including any
amendments thereto, filed with any Regulatory Authorities by TBI and the Bank
for the years ended December 31, 2004, 2003, and 2002, and for the period ended
September 30, 2005, and with respect to any period ending subsequent to
September 30, 2005, together with any correspondence with any Regulatory
Authorities concerning any of the aforesaid financial statements and reports
(collectively, the "TBI Financial Statements"). Such TBI Financial Statements
(i) were (or will be) prepared from the records of TBI and/or each TBI
Subsidiary; (ii) were (or will be) prepared in all material respects in
accordance with GAAP (or, where applicable, regulatory accounting principles)
consistently applied; (iii) accurately present (or, when prepared, will
present), in all material respects, TBI's and each TBI Subsidiary's financial
condition and the results of its operations, changes in stockholders' equity and
cash flows at the relevant dates thereof and for the periods covered thereby,
except that the unaudited interim Financial Statements were or are subject to
normal and recurring year-end adjustments which were not expected to be material
in amount or effect; (iv) do contain or reflect (or, when prepared, will contain
and reflect) all necessary adjustments and accruals for an accurate presentation
of TBI's and each TBI Subsidiary's financial condition and the results of TBI's
and each TBI Subsidiary's operations and cash flows for the periods covered by
such financial statements; (v) do contain and reflect (or, when prepared, will
contain and reflect) adequate provisions or allowances, as reasonably determined
by TBI management, for loan losses, for OREO reserves, and for all reasonably
anticipatable liabilities and Taxes, with respect to the periods then ended;
(vi) do contain and reflect (or, when prepared, will contain and reflect)
adequate provisions for all reasonably anticipated liabilities for Post
Retirement Benefits Other Than Pensions pursuant to SFAS Nos. 106 and 112, (vii)
do not (or will not) contain any of items of special or nonrecurring income or
any other income not earned in the Ordinary Course of Business and (viii) do not
(or, when prepared, will not) contain any untrue statement of a material fact or
omit to state a fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading.
6.6 Absence of Undisclosed Liabilities. None of TBI or any of the TBI
Subsidiaries has any Liabilities that are reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on TBI, except
Liabilities which are accrued or reserved against in the consolidated balance
sheets of TBI as of September 30, 2005, included in the TBI Financial Statements
made available prior to the date of this Agreement or reflected in the notes
thereto. Neither TBI nor any of the TBI Subsidiaries has incurred or paid any
Liability since September 30, 2005, except for such Liabilities (i) incurred or
paid in the Ordinary Course of Business consistent with past business practice
or (ii) which are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on TBI.
6.7 Regulatory Reports; Corporate Records. TBI has delivered or made
available to the Company true and complete copies of (i) any and all material
reports which TBI or the Bank has filed with any Governmental Body since January
1, 2000, (ii) the Articles of Incorporation and Bylaws of TBI and the Bank and
(iii) stock transfer records and corporate minutes for the past five (5) years
of TBI and the Bank. All of the foregoing are current, complete and correct in
all material requests.
26
6.8 Loans; Allowance for Loan and Lease Losses.
(a) Each of the allowances for possible loan and lease losses and
any allowance for real estate owned shown on the TBI Financial Statements is
adequate (i) to provide for all known and (to the Knowledge of TBI) potential
losses of TBI and/or the Bank as of the respective dates of the TBI Financial
Statements, and (ii) under the requirements of GAAP and standard banking
practice to provide for possible losses, net of recoveries relating to loans and
leases previously charged off, on loans outstanding, lease receivables or real
estate owned by TBI and/or the Bank (including, without limitation, accrued
interest receivable).
(b) All outstanding TBI or Bank loans, discounts and lease
financings (as well as those reflected on the TBI Financial Statements) have
been (a) made for good, valuable and adequate consideration in the Ordinary
Course of Business and (b) evidenced by notes or other evidences of indebtedness
which are true, genuine, what they purport to be and enforceable in accordance
with their terms. No Bank loan, discount or lease financing is subject to any
defense with respect to the enforceability of same (except in all cases as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar Law 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 proceeding may be brought). The signature of any
party appearing on any note or instrument evidencing any Bank loan, discount or
lease financing, or on any instrument evidencing any security therefor, is valid
and the balances for the Bank loans, discounts or lease financings, as reflected
on the books and records of the Bank, are accurate.
(c) The Bank is not a party to any written or oral loan agreement,
note or borrowing arrangement, including any loan guaranty, that was, as of the
most recent month-end (i) delinquent by more than 30 days in the payment of
principal or interest, (ii) known by the Bank to be otherwise in Default for
more than 30 days, (iii) classified as "substandard," "doubtful," "loss," "other
assets especially mentioned" or any comparable classification by the Bank, the
FDIC or the Department, or (iv) an obligation of any director, executive officer
or 10% shareholder of TBI or the Bank who is subject to Regulation O of the
Federal Reserve Board (12 C.F.R. Part 215), or any Person controlling,
controlled by or under common control with any of the foregoing.
(d) Any Bank loan made under, or in conjunction with, any
Governmental Body program (including, without limitation, the Farm Services
Administration) was made, and has been serviced and administered, in compliance
with any applicable requirements of Law. Any Bank loan which has been assigned
by the Bank (including, without limitation, Bank loans assigned to the secondary
market) was made in accordance with applicable Law and in accordance with the
requirements (including, without limitation, underwriting standards and
documentation requirements) of the subject assignee and no such assignment is
subject to any defense with respect to the enforceability of same or subject to
revocation by the assignee whereby the assignee could require the Bank to
repurchase any subject loan.
27
(e) Except for such secured loans the default of which would not
have, individually or in the aggregate, a Material Adverse Effect on the Bank,
(i) each of the Bank's secured loans is secured with the collateral and priority
indicated on the books and records of the Bank and (ii) each such Encumbrance is
evidenced by a security agreement or mortgage that is true, genuine and
enforceable in accordance with its terms (except in all cases as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar Law 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 proceeding may be brought). There are no material
uncured violations or violations with respect to which material refunds or
restitution may be required with respect to Bank loans that have been cited in
any compliance report to the Bank as a result of examination by any Governmental
Body and the loan documentation with respect to all Bank loans, discounts or
lease financings, complies in all material respects with applicable Law.
(f) No borrower or obligor under any Bank loan has requested, and
the Bank has not allowed, any relief pursuant to the Soldiers and Sailors Civil
Relief Act of 1940.
6.9 Repurchase Agreements. With respect to all repurchase agreements to
which the Bank is a party, (i) where the Bank has the obligation to sell
securities, it has a valid, perfected first Encumbrance in the government
securities or other collateral securing the repurchase agreement, and the value
of the collateral securing each such repurchase agreement equals or exceeds the
amount of the debt secured by such collateral under such agreement, and (ii)
where the Bank has the obligation to buy securities, the value of the collateral
securing such obligation does not materially exceed the amount of the
obligation.
6.10 Absence of Changes. Since December 31, 2004, the business of TBI and
each TBI Subsidiary has been conducted in the Ordinary Course and none of TBI or
any of the TBI Subsidiaries has otherwise:
(a) experienced or suffered any change constituting a Material
Adverse Effect or events or transactions reasonably likely to result in a
Material Adverse Effect;
(b) incurred any Funded Debt or incurred, or become subject to, any
other absolute or contingent obligation or liability, or guaranteed any
liabilities or obligations of any other Person;
(c) created or suffered any Encumbrance with respect to its
properties, business or assets;
(d) sold, pledged, transferred or otherwise disposed of, or agreed
to sell, transfer or otherwise dispose of any portion of its assets, properties
or rights, except in the Ordinary Course of Business and not exceeding in the
aggregate $25,000;
(e) conveyed or agreed to convey any property to any Affiliate or
entered into any non-arm's length transaction with any Affiliate;
28
(f) experienced any general work stoppage, labor dispute or other
employee disturbance;
(g) incurred or become subject to any claim or liability for any
damages which could have a Material Adverse Effect on it, for negligence or any
other tort, or for breach of Contract;
(h) entered into any Contract, or otherwise operated its business,
other than in the Ordinary Course of Business;
(i) committed any act or omitted to do any act which would cause a
Default under any Contract to which it is a party or by which it is bound on the
date hereof, which Default is reasonably likely to result in a Material Adverse
Effect on the Bank;
(j) issued, sold, purchased or redeemed any stock, bonds,
debentures, notes, or other securities of TBI or the Bank, or issued, sold or
granted any Right in respect thereof;
(k) waived, released or canceled any debts owed to it, claims, rights of
value or suffered any extraordinary loss, or paid any of its non-current
obligations or liabilities, or written down the value of any assets or
written down or off any receivable except for loan charge-offs and
writedowns in other real estate owned in the Ordinary Course of Business;
(l) declared, set aside or paid any dividend or distributions on any
shares of TBI Common Stock;
(m) made any capital expenditures or capital additions or betterments (or
commitment therefor) in excess of $10,000 for any single item or in excess
of $20,000 in the aggregate;
(n) suffered any casualty, damage, destruction or loss to any of its
assets not covered by insurance in excess of $5,000 for any one event or
in excess of $10,000 in the aggregate;
29
(o) terminated, placed on probation, disciplined, warned, or experienced
any resignation of (other than resignations for retirement) any employee;
(p) paid or obligated itself to pay any bonuses, extra compensation or
extraordinary compensation to, pensions or severance pay, or made any
increase (except increases in the Ordinary Course of Business) in the
compensation payable (or to become payable by it) to, any present or
former officer, director or employee, or entered into any contract of
employment;
(q) terminated or amended or suffered the termination or amendment of (i)
any lease, bids, Contracts, commitments or other agreements, or (ii) any
Permits, licenses, concessions, Governmental Authorizations, franchises
and similar rights granted to or held by it, which are necessary or
related to its operations;
(r) failed to use reasonable efforts to preserve its business or preserve
the goodwill of its customers and others with which it has business
relations;
(s) taken (or failed to take) any action which action or failure if taken
after the date of this Agreement, would represent or result in a breach or
violation of Sections 8.1 or 8.2 hereof;
(t) experienced any material adverse change in Asset concentrations as to
customers or industries or in the nature and source of its Liabilities or
in the mix of interest-bearing versus noninterest-bearing deposits; or
30
(u) entered into any Contract to do any of the foregoing.
6.11 Assets. (a) Except as disclosed or reserved against in the TBI
Financial Statements made available prior to the date of this Agreement, TBI and
the TBI Subsidiaries have good, marketable and indefeasible title, free and
clear of all Encumbrances, to all of their respective Assets. All tangible
properties used in the businesses of TBI and the TBI Subsidiaries are in good
condition, reasonable wear and tear excepted, and are usable in the Ordinary
Course of Business of TBI and the TBI Subsidiaries, except for instances in
which the failure to be in such condition is not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on TBI. All Assets
which are material to TBI's business on a consolidated basis, held under leases
or subleases by TBI or any of the TBI Subsidiaries, are held under valid
Contracts enforceable in accordance with their respective terms, assuming the
enforceability with respect to third parties to such Contracts, of which TBI has
no reason to believe that any such Contracts are not enforceable against any
such third party thereto (except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, or other Laws (including
provisions of the U.S. and Indiana Constitutions) affecting the enforcement of
creditors' rights generally and except that the availability of equitable
remedies is subject to the discretion of the court before which any proceedings
may be brought), and each such Contract is in full force and effect.
(b) Schedule 6.11(b) of the TBI Disclosure Memorandum contains a
complete list of all real property, leaseholds or other interests in real
property (other than mortgage interests held by the Bank with respect to its
borrowers) owned by TBI or a TBI Subsidiary (collectively, the "Real Property").
With respect to each lease of any real property or personal property to which
TBI or any TBI Subsidiary is a party (whether as lessee or lessor), except for
financing leases in which TBI or any TBI Subsidiary is lessor, (i) such lease is
in full force and effect in accordance with its terms against TBI or any TBI
Subsidiary; (ii) all rents and other monetary amounts that have become due and
payable thereunder have been paid by TBI or any TBI Subsidiary; (iii) there
exists no Default under such lease by TBI or any TBI Subsidiary; and (iv) upon
receipt of the consents described in Section 6.11(b) of the TBI Disclosure
Memorandum, the Merger will not constitute a Default or a cause for termination
or modification of such lease.
(c) Apart from any noncompliances which in the aggregate could have
a Material Adverse Effect on TBI, the improvements on the Real Property fully
comply with all (and none of TBI or any TBI Subsidiary has received an uncured
notice from any Governmental Body respecting any violation of any) Laws
including, without limitation, all applicable zoning, building, fire, health,
safety, handicapped persons, environmental, pollution, and use laws, codes and
ordinances and any and all requirements imposed in connection with the zoning or
rezoning of the Real Property (including, without limitation, requirements with
respect to on-site storm water detention or retention). Certificates of
Occupancy and all other required Governmental Authorizations have been issued
for each building or structure constituting a portion of the Real Property
improvements and for all leased or leasable areas of such improvements and all
fees and other expenses required to be paid in connection with any zoning or
rezoning of the Real Property and all obligations to be performed by or on
behalf of TBI or any TBI Subsidiary with
31
respect to any such zoning or rezoning have been paid and performed in full. The
Real Property is zoned in a manner which permits TBI or any TBI Subsidiary to
use the Real Property for the purpose and in the manner as the Real Property is
currently being used. There are no Contracts with Governmental Bodies with
respect to the Real Property which would bind the Real Property following the
Closing.
(d) There are no Proceedings pending or, to the Knowledge of TBI,
threatened against or relating to the Real Property (including, without
limitation, any Proceeding for the taking or condemnation of all or any portion
of the Real Property) which, if successful, would affect TBI or the Real
Property or restrict or prevent the continued operation of the Real Property in
the same manner as that in which it is being operated and maintained as of the
date hereof.
(e) There are no outstanding construction accounts payable or
mechanics' liens or rights to claim a mechanics' lien in favor of any
contractor, materialman or laborer or any other Person in connection with
construction on any portion of the Real Property.
(f) The Real Property is not located within an area which has been
designated by any Governmental Body as having, or being subject to, special
flood hazards or wetlands restrictions.
(g) There are, to the Knowledge of TBI, no encroachments from or
upon property adjoining the Real Property or upon any easements located on the
Real Property.
(h) The structures on the Real Property and the improvements thereon
(including, without limitation, (i) the walls, ceilings and other structural
elements of any improvements erected thereon and (ii) the building systems, such
as heating, plumbing, ventilation, air conditioning and electrical systems,
related thereto) constitute all of the real property currently used in relation
to the business of TBI and the aforesaid building systems located on such
properties are in good working order, repair and operating condition, ordinary
wear and tear expected.
(i) There are no items of maintenance scheduled by TBI or any TBI
Subsidiary for completion during the past six months that have been deferred
with respect to any building system located on the Real Property or with respect
to the structural soundness of the improvements comprising part of such premises
in excess of $20,000 in the aggregate.
(j) None of TBI or any TBI Subsidiary has received any notice from
any insurance company or insurance broker or underwriter of any material defects
or inadequacies in respect of the Real Property that could reasonably be
expected to affect the insurability of such property.
6.12 Intellectual Property. All of the Intellectual Property rights of TBI
and each of the TBI Subsidiaries are in full force and effect and, if
applicable, constitute legal, valid, and binding obligations of the respective
parties thereto, and there have not been, and, to the Knowledge of TBI, there
currently are not, any material Defaults thereunder by TBI or any TBI
Subsidiary. TBI and each TBI Subsidiary (as applicable) owns, is the valid
licensee of, or otherwise has the right
32
to use in the manner in which it is or has been used, all such Intellectual
Property rights free and clear of all Encumbrances or (to the Knowledge of TBI)
claims of infringement. To the Knowledge of TBI, none of TBI or any of the TBI
Subsidiaries, nor any of their respective predecessors, has infringed the
Intellectual Property rights of others (except to the extent any such
infringement will not have a Material Adverse Effect on TBI) and, to the
Knowledge of TBI, none of the Intellectual Property rights as used in the
business conducted by TBI or the TBI Subsidiaries infringes upon or otherwise
violates the rights of any Person, nor has any Person asserted a claim of such
infringement. None of TBI or the TBI Subsidiaries is obligated to pay any
royalties to any Person with respect to any such Intellectual Property. TBI or a
TBI Subsidiary owns or has the valid right to use all of the Intellectual
Property rights which it is presently using. To the Knowledge of TBI, no
officer, director, or employee of TBI or the TBI Subsidiaries is party to any
Contract which requires such officer, director, or employee to assign any
interest in any Intellectual Property or keep confidential any trade secrets,
proprietary data, customer information, or other business information or which
restricts or prohibits such officer, director, or employee from engaging in
activities competitive with any Person, including TBI or any of the TBI
Subsidiaries, except any such Contracts which are not reasonably likely to have,
individually, or in the aggregate, a Material Adverse Effect on TBI.
6.13 Insurance. TBI and each TBI Subsidiary currently maintains insurance
pursuant to the policies disclosed on Schedule 6.13 of the TBI Disclosure
Memorandum in amounts, scope, and coverage which are adequate for the operations
of TBI and the TBI Subsidiaries and consistent with the insurance carried by
prudent Persons similarly situated. All amounts due and payable under any of
such insurance policies have been paid. None of TBI or any of the TBI
Subsidiaries is liable for any material, retroactive premium adjustments
respecting any of its insurance policies. None of such insurance policies is
subject to any special or unusual terms or restrictions or provides for a
premium in excess of the stipulated normal rate. None of TBI or any of the TBI
Subsidiaries has received notice from any insurance carrier that (i) any of such
insurance will be canceled or that coverage thereunder will be reduced or
eliminated, or (ii) premium costs with respect to such policies of insurance
will be materially increased. There are presently no claims pending under any
such policies of insurance and no notices have been given by TBI or any TBI
Subsidiary under such policies. To the Knowledge of TBI, none of TBI or any of
the TBI Subsidiaries has failed to make a timely claim or file a timely notice
with respect to any matter giving rise to a material (or potentially material)
claim under its insurance policies and bonds. None of TBI or any of the TBI
Subsidiaries has, during the past five (5) years, been denied or had revoked or
rescinded any policy of insurance.
6.14 Tax Matters. All Tax Returns required to be filed by or on behalf of
TBI or any TBI Subsidiary have been timely filed for periods ended on or before
the date hereof and all such Tax Returns are true, complete and accurate in all
respects. All Taxes shown on each filed Tax Return of TBI or any TBI Subsidiary
have been paid. There is no audit examination, deficiency or refund Proceeding
respecting TBI or any TBI Subsidiary pending (or, to the Knowledge of TBI,
threatened) with respect to any Taxes. No presently pending assessments of
deficiencies in respect of Taxes have been made against TBI or any TBI
Subsidiary or with respect to the income, receipts or net worth of TBI or any
TBI Subsidiary, and no extensions of time are in effect for the assessment of
deficiencies against TBI or any TBI Subsidiary. None of TBI or any TBI
Subsidiary has executed any extension or waiver of any statute of limitations on
the
33
assessment or collection of any Tax due (excluding such statutes that relate to
years currently under examination by the Internal Revenue Service or other
applicable taxing authorities) that is currently in effect. Deferred Taxes of
TBI or any TBI Subsidiary have been provided for in accordance with GAAP under
the TBI Financial Statements. Each of TBI and each TBI Subsidiary is in material
compliance with, and the records of TBI or any TBI Subsidiary contain all
information and documents (including, without limitation, properly completed
Internal Revenue Service Forms W-9) necessary to comply in all respects with,
all applicable information reporting and Tax withholding requirements under
federal, state, and local Tax Laws, and such records identify with specificity
all accounts subject to backup withholding under Section 3406 of the Code. None
of TBI or any TBI Subsidiary has made any payments, is obligated to make any
payments, or is a party to any Contract that could obligate it to make any
payments that would be disallowed as a deduction under Section 280G or 162(m) of
the Code. There has not been an ownership change, as defined in Code Section
382(g), of TBI or any TBI Subsidiary that occurred during or after any taxable
period in which TBI or any TBI Subsidiary incurred a net operating loss that
carries over to any taxable period ending after December 31, 2000, except in
connection with the transactions contemplated pursuant to this Agreement. None
of TBI or any TBI Subsidiary is a party to any tax allocation or sharing
agreement nor does TBI or any TBI Subsidiary have any material liability for
taxes of any Person under Treasury Regulation Section 1.1502-6 (or any similar
provision of state, local or foreign Law) as a transferee or successor or by
Contract or otherwise. None of TBI or any TBI Subsidiary has received notice of
any claim by any Governmental Body that TBI or any TBI Subsidiary or the income,
receipts or net worth of TBI or any TBI Subsidiary may be subject to Taxes. All
Taxes and other liabilities due with respect to completed and settled
examinations or concluded Proceedings related to Tax Return and/or Taxes of TBI
or any TBI Subsidiary have been paid. There are no Encumbrances with respect to
Taxes upon any of the assets of TBI or any TBI Subsidiary.
6.15 Environmental Matters.
(a) Each of TBI and each TBI Subsidiary and their respective Participation
Facilities and Operating Properties are, and have been (or, in the case of
Operating Properties in which TBI or any TBI Subsidiary holds or has held
a security interest, to TBI's Knowledge are and have been), in compliance
with all Environmental Laws, except for violations which could not have,
individually or in the aggregate, a Material Adverse Effect on TBI or any
TBI Subsidiary.
(b) There is no Proceeding pending or threatened before any Governmental
Body or other forum in which TBI or any TBI Subsidiary or any of their
respective Operating Properties or Participation Facilities has been or,
with respect to threatened Proceedings, may be named as
34
a defendant (i) for alleged noncompliance (including by any predecessor)
with any Environmental Law or (ii) relating to the release into the
environment of any Hazardous Material, whether or not occurring at, on,
under, adjacent to, or affecting (or potentially affecting) a site owned,
leased, or operated by TBI or any TBI Subsidiary or any respective
Operating Properties or Participation Facilities.
(c) During the period of (i) TBI or any TBI Subsidiary's ownership or
operation of any of their respective current properties, (ii) TBI or any
TBI Subsidiary's participation in the management of any Participation
Facility, or (iii) TBI or any TBI Subsidiary's holding of a security
interest in an Operating Property, there have been (or, in the case of an
Operating Property in which TBI or any TBI Subsidiary holds or has held a
security interest, there have to the Knowledge of TBI been) no releases of
Hazardous Material in, on, under, adjacent to, or affecting (or
potentially affecting) such properties, except such as are not reasonably
likely to have, individually or in the aggregate, a Material Adverse
Effect on TBI or any TBI Subsidiary. Prior to the period of (i) TBI's or
any TBI Subsidiary's ownership or operation of any of its current
properties, (ii) TBI's or any TBI Subsidiary's participation in the
management of any Participation Facility or (iii) TBI's or any TBI
Subsidiary's holding of a security interest in an Operating Property,
there were to the Knowledge of TBI no releases of Hazardous Material in,
on, under, or affecting any such property, Participation Facility or
Operating Property, except such as are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on TBI.
6.16 Compliance With Laws. TBI is duly registered as a bank holding
company under the BHC Act. Each of TBI and each of the TBI Subsidiaries has in
effect all Permits necessary for it to own, lease or operate its Assets and to
carry on its business as now conducted. None of TBI or any of the TBI
Subsidiaries is (or has been) in violation of any Laws, Orders or Permits
35
applicable to its business or employees conducting its business, except for such
violations, which could not have, individually, or in the aggregate, a Material
Adverse Effect on TBI. None of TBI or any of the TBI Subsidiaries has received
notification or communication from any Governmental Body or the staff thereof
(i) asserting that TBI or any TBI Subsidiary is in violation of any of the Laws
or Orders which such Governmental Body enforces (excluding violations which
would not be reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on TBI), (ii) threatening to revoke any Permits or (iii)
requiring TBI or any TBI Subsidiary to enter into or consent to the issuance of
a cease and desist order, formal agreement, directive, commitment or memorandum
of understanding, or to adopt any Board of Directors resolution or similar
undertaking, which restricts the conduct of its business, or in any manner
relates to its capital adequacy, its credit or reserve policies, its management
or the payment of dividends. No event has occurred or circumstance exists that
(with or without notice or lapse of time) may constitute or result in a
violation by TBI or any of the TBI Subsidiaries of, or a failure on the part of
TBI or any of the TBI Subsidiaries to comply with, any Laws, Orders or
Governmental Authorizations, the failure with which to comply could give rise to
any obligation on the part of TBI or any of the TBI Subsidiaries to undertake,
or to bear all or any portion of the cost of, any remedial action of any nature.
6.17 Labor Relations. None of TBI or any of the TBI Subsidiaries is the
subject of any Proceeding asserting that TBI or any of the TBI Subsidiaries has
committed an unfair labor practice (within the meaning of the National Labor
Relations Act or comparable state Law) or seeking to compel TBI or any of the
TBI Subsidiaries to bargain with any labor organization as to wages or
conditions of employment, nor is there any strike or other labor dispute
involving TBI or any of the TBI Subsidiaries pending or, to the Knowledge of
TBI, threatened, nor to the Knowledge of TBI, is there any activity involving
the employees of TBI or any of the TBI Subsidiaries seeking to certify a
collective bargaining unit or engaging in any other collective bargaining
organizational activity.
6.18 Employee Benefit Plans.
(a) TBI has disclosed in Schedule 6.18 of the TBI Disclosure
Memorandum and has delivered or made available to the Company prior to the
execution of this Agreement true and complete copies of all pension, retirement,
profit sharing, deferred compensation, stock option, employee stock ownership,
severance pay, vacation, bonus or other material incentive plans, all other
written employee programs, arrangements or agreements, all medical, vision,
dental or other health plans, all life insurance plans, and all other material
employee benefit or fringe benefit plans, including "employee benefit plans" as
that term is defined in Section 3(3) of ERISA, currently adopted, maintained by,
sponsored in whole or in part by, or contributed to by TBI or any of the TBI
Subsidiaries or any ERISA Affiliate thereof for the benefit of employees,
retirees, dependents, spouses, directors, independent contractors or other
beneficiaries of TBI or any of the TBI Subsidiaries and under which employees,
retirees, dependents, spouses, directors, independent contractors or other
beneficiaries of TBI or any of the TBI Subsidiaries are eligible to participate
(collectively, the "TBI Benefit Plans"). No TBI ERISA Plan is or has been a
multiemployer plan within the meaning of Section 3(37) of ERISA.
36
(b) All TBI Benefit Plans are in compliance with (and have been managed
and administrated in accordance with) the applicable terms of ERISA, the
Code and any other applicable Laws, apart from noncompliances not
reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on TBI. Each TBI ERISA Plan that is intended to be
qualified under Section 401(a) of the Code has either received a favorable
determination letter from the Internal Revenue Service (and TBI has no
Knowledge of any circumstances likely to result in revocation of any such
favorable determination letter) or timely application has been made
therefor. None of TBI or any of the TBI Subsidiaries is subject to a Tax
imposed by Section 4975 of the Code or a civil penalty imposed by Section
502(i) of ERISA. TBI has no Knowledge of any fact which would adversely
affect the qualification of any of the TBI Benefit Plans, or of any
threatened or pending claim against any of the TBI Benefit Plans or their
fiduciaries by any participant, beneficiary or Governmental Body.
(c) No "defined benefit plan" (as defined in Section 414(j) of the
Code) or any "single-employer plan," within the meaning of Section 4001(a)(15)
of ERISA, maintained at any time by TBI or any of the TBI Subsidiaries, or the
single-employer plan of any entity which is considered one employer with TBI or
any of the TBI Subsidiaries under Section 4001 of ERISA or Section 414 of the
Code or Section 302 of ERISA (whether or not waived) (an "ERISA Affiliate"), has
an "accumulated funding deficiency" within the meaning of Section 412 of the
Code or Section 302 of ERISA. With respect to any TBI Benefit Plans which are
"employee benefit pension plans," TBI has timely made or accrued on the TBI
Financial Statements all contributions required by Law (including, without
limitation, the funding standards described in Section 412 of the Code and Title
I, Subtitle B, Part 3 of ERISA) or required under the terms of the subject TBI
Benefit Plan. With respect to any defined benefit plan included among the TBI
Benefit Plans, the actuarial present value of all vested accrued benefits and
unvested accrued benefits are, on a termination basis, using applicable
actuarial assumptions and interest rates, not more than the fair market value of
the assets of such plan. None of TBI or any of the TBI Subsidiaries has
provided, or, to TBI's Knowledge, is required to provide, security to any
single- employer plan of an ERISA Affiliate pursuant to Section 401 (a)(29) of
the Code.
(d) Within the six year period preceding the Effective Time, no
liability under Subtitle C or D of Title IV of ERISA has been incurred by TBI or
any of the TBI Subsidiaries with respect to any current, frozen, or terminated
single-employer plan or the single-employer
37
plan of any ERISA Affiliate. None of TBI or any of the TBI Subsidiaries has
incurred any withdrawal liability with respect to a multiemployer plan under
Subtitle E of Title IV of ERISA (regardless of whether based on contributions of
an ERISA Affiliate). No notice of a "reportable event," within the meaning of
Section 4043 of ERISA for which the 30 day reporting requirement has not been
waived, has been required to be filed for any TBI Benefit Plan or by any ERISA
Affiliate within the 12 month period ending on the date hereof.
(e) Each of TBI or any of the TBI Subsidiaries has complied in all
material respects with the notice and continuation requirements of Parts 6
and 7 of Subtitle B of Title I of ERISA and Section 4980B of the Code, and
the proposed regulations thereunder, whether proposed or final. All
reports, statements, returns and other information required to be
furnished or filed with respect to the TBI Benefit Plans have been timely
furnished, filed or both in accordance with Sections 101 through 105 of
ERISA and Sections 6057 through 6059 of the Code, and they are true,
correct and complete in all material respects. Records with respect to the
TBI Benefit Plans have been maintained in material compliance with Section
107 of ERISA. None of TBI or any of the TBI Subsidiaries nor any other
fiduciary (as that term is defined in Section 3(21) of ERISA) with respect
to any of the TBI Benefit Plans has any material liability for any breach
of any fiduciary duties under Sections 404, 405 or 409 of ERISA.
(f) None of TBI or any of the TBI Subsidiaries has, with respect to any of
the TBI Benefit Plans, nor has any administrator of any of the TBI Benefit
Plans, the related trusts or any trustee thereof, engaged in any
prohibited transaction (within the meaning of Section 406 of ERISA and
Section 4975(c) of the Code) which would subject TBI or any of the TBI
Subsidiaries, any of the TBI Benefit Plans, any administrator or trustee
or any party dealing with any of the TBI Benefit Plans or any such trusts,
to a Tax or any Adverse Consequences on prohibited transactions imposed by
ERISA, Section 4975 of the Code, or to any other liability under ERISA.
38
(g) None of TBI or any of the TBI Subsidiaries has any liability for
retiree health and life benefits under any of the TBI Benefit Plans except
as required by Law.
(h) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) result in
any payment (including severance, unemployment compensation or golden
parachute) becoming due to any director or any employee of TBI or any of
the TBI Subsidiaries under any TBI Benefit Plan or otherwise, (ii)
materially increase any benefits otherwise payable under any TBI Benefit
Plan or (iii) result in any acceleration of the time of payment or vesting
of any such benefit.
(i) The actuarial present values of all accrued deferred compensation
entitlements (including entitlements under any executive compensation,
supplemental retirement, or employment agreement) of employees and former
employees of TBI or any of the TBI Subsidiaries and their respective
beneficiaries, other than entitlements accrued pursuant to funded
retirement plans subject to the provisions of Section 412 of the Code or
Section 302 of ERISA, have been fully reflected on the TBI Financial
Statements to the extent required by and in accordance with GAAP.
(j) TBI has delivered to the Company (i) copies of the most recent Forms
5500 for any TBI Benefit Plan required by Law to file such form and (ii)
copies of the latest actuarial report with respect to any TBI Benefit Plan
which is a defined benefit or retiree plan.
6.19 Material Contracts. None of TBI, any TBI Subsidiary or any of their
respective Assets, businesses or operations is a party to, is bound or affected
by, or receives benefits under,
39
(i) any employment, severance, termination, consulting or retirement Contract,
(ii) any Contract relating to the borrowing of money by TBI or any of the TBI
Subsidiaries or the guarantee by TBI or any of the TBI Subsidiaries of any such
obligation (other than Contracts evidencing deposit liabilities, purchases of
federal funds, fully-secured repurchase agreements, Federal Home Loan Bank
advances, trade payables and Contracts relating to borrowings or guarantees made
in the Ordinary Course of Business), (iii) any Contracts which prohibit or
restrict TBI or any of the TBI Subsidiaries from engaging in any business
activities in any geographic area, line of business or otherwise in competition
with any other Person, (iv) any exchange-traded or over-the-counter swap,
forward, future, option, cap, floor, or collar financial Contract, or any other
interest rate or foreign currency protection Contract which is a financial
derivative Contract (including various combinations thereof), (v) any Contract
not made in the Ordinary Course of Business, (vi) any Contract relating to
capital expenditures and involving future payments which (either alone or when
combined with other like Contracts) exceed $20,000, (vii) apart from this
Agreement, any Contract involving an Acquisition Proposal, (viii) any Contract
involving Intellectual Property, (ix) any Contract involving the provision of
data processing or other technical services, or (x) any Contract which (A) will
not be performed within sixty (60) days of the date of this Agreement, (B)
involves future payments by TBI or any TBI Subsidiary (whether during the term
of any such Contract or in connection with its termination or expiration) in
excess of $5,000 or (C) is not cancelable by TBI or any TBI Subsidiary without
penalty on no more than 30 days' notice. With respect to each TBI Contract: (i)
the Contract is valid and in full force and effect in accordance with its terms;
(ii) none of TBI or any TBI Subsidiary is in Default thereunder; (iii) none of
TBI or any TBI Subsidiary has repudiated or waived any material provision of any
such Contract; (iv) no other party to any such Contract is, to the Knowledge of
TBI, in Default in any respect or has repudiated or waived any material
provision thereunder; (v) no event or condition has occurred or exists (or is
alleged to have occurred or existed) which constitutes (or with the lapse of
time might constitute) a Default; and (vi) the Contract may be assigned by TBI
or any TBI Subsidiary (or a Change in Control with respect to TBI may occur)
without the consent of the other party or parties thereto.
6.20 Legal Proceedings. There is no Proceeding instituted or pending, or,
to the Knowledge of TBI, threatened (or unasserted but considered probable of
assertion and which if asserted would have at least a reasonable probability of
an unfavorable outcome) against TBI or any TBI Subsidiary, or against any asset,
employee benefit plan, interest or right of TBI or any TBI Subsidiary nor are
there any Orders of any Governmental Body outstanding against TBI or any TBI
Subsidiary. There is no Proceeding instituted or pending, or to the Knowledge of
TBI, threatened (or unasserted but considered probable of assertion) against any
officer, director or employee of TBI or any TBI Subsidiary arising in connection
with actions taken (or omitted to be taken) by such officer, director or
employee in his capacity as an officer, director or employee. Schedule 6.20 of
the TBI Disclosure Memorandum hereto includes a summary report of all
Proceedings as of the date of this Agreement to which TBI or any TBI Subsidiary
is a party.
6.21 Reports. Since January 1, 2003, TBI and each TBI Subsidiary has
timely filed all reports and statements, together with any amendments required
to be made with respect thereto, that it was required to file with any
Governmental Body. As of its respective date (or, if amended or superseded by a
filing prior to the date of this Agreement, then on the date of such
40
filing), each of such reports and documents, including the financial statements,
exhibits and schedules thereto, complied with all applicable Laws. As of its
respective date (or, if amended or superseded by a filing prior to the date of
this Agreement, then on the date of such filing), none of such documents so
filed contained any untrue statement of a material fact, omitted to state a
material fact required to be stated therein, or intentionally omitted to state a
material fact necessary to make the statements made therein, in light of the
circumstances under which they were made, not misleading. Copies of all reports,
correspondence, notices and other documents relating to any inspection,
examination, audit, monitoring or other form of review or enforcement action by
a Regulatory Authority has been made available to the Company.
6.22 Deposits. The deposit records of the Bank accurately reflect the
Bank's deposit accounts and are and shall be sufficient to enable the Company to
conduct a banking business with respect to the Bank. There are no material
uncured violations or violations with respect to which material refunds or
restitution may be required with respect to the Bank deposit liabilities and the
terms and conditions and other documentation with respect to the Bank deposit
liabilities comply in all material respects with all applicable Laws and have
been provided to the Company. Bank deposit liabilities are insured by the FDIC
to the full extent provided by Law. The Bank is in material compliance with all
terms and conditions and other documentation applicable to Bank deposit
liabilities. To the Knowledge of TBI, there are not (and have not been within
the past three years) any "kiting" schemes associated with any of the Bank's
deposit liabilities.
6.23 Books and Records. The books of account, general ledger and records
of TBI and each TBI Subsidiary fairly and accurately in all material respects
reflect the assets and liabilities of TBI and each TBI Subsidiary in accordance
with GAAP consistently applied. The books of account, general ledger and records
of TBI and each TBI Subsidiary (i) are maintained by each such Person
substantially in accordance with applicable legal and accounting requirements
and (ii) reflect only actual transactions. The records and other information
provided in accordance with this Agreement by TBI will accurately reflect in all
material respects the book value of the assets and liabilities referred to
therein as of their respective dates, recorded at their historical cost and
depreciated or otherwise adjusted in accordance with the subject Person's
historical accounting policies, all in accordance with GAAP consistently
applied.
6.24 Safe Deposit Boxes. The Bank is in compliance in all material
respects with the terms and conditions of the applicable leases or other
agreements relating to the safe deposit boxes currently offered or maintained in
connection with the safe deposit business conducted by the Bank.
6.25 Community Reinvestment Act. The Bank has complied in all material
respects with the provisions of the Community Reinvestment Act ("CRA") and the
rules and regulations thereunder, has a CRA rating of not less than
"satisfactory," has received no material criticism from regulators with respect
to discriminatory lending practices, and has no Knowledge of any conditions or
circumstances that are likely to result in a CRA rating of less than
"satisfactory" or material criticism from regulators with respect to
discriminatory lending practices.
6.26 Privacy of Customer Information. (a) The Bank is the sole owner or,
in the case of participated loans, a co-owner with the other participant(s), of
all individually identifiable
41
personal information ("IIPI") relating to customers, former customers and
prospective customers that will be transferred to the Company and/or Merger
Subsidiary pursuant to this Agreement, the Plan of Merger and the other
transactions contemplated hereby. For purposes of this Section 6.26, "IIPI"
shall include any information relating to an identified or identifiable natural
person.
(b) The collection and use of such IIPI by the Bank, the transfer of
such IIPI to the Company and/or Merger Subsidiary and the use of such IIPI by
the Company and/or Merger Subsidiary as contemplated by this Agreement complies
with all applicable privacy policies, the Fair Credit Reporting Act, the
Xxxxx-Xxxxx-Xxxxxx Act and all other applicable state, federal and foreign
privacy Law, and any Contract or industry standard relating to privacy.
6.27 Technology Systems. (a) No action will be necessary as a result of
the transactions contemplated by this Agreement to enable use of the electronic
data processing, information, record keeping, communications,
telecommunications, hardware, third party software, networks, peripherals,
portfolio trading and computer systems, including, without limitation, any
outsourced systems and processes, and any Intellectual Property that is used by
TBI or the Bank (collectively, the "Technology Systems"), following the
Effective Time.
(b) The Technology Systems (for a period of 18 months prior to the
Effective Date) have not suffered unplanned disruption causing a Material
Adverse Effect. Except for ongoing payments due under relevant third party
agreements, the Technology Systems are free from any Encumbrances. Access to
business critical parts of the Technology Systems is not shared with any third
party.
(c) Details of the Bank's disaster recovery and business continuity
arrangements have been provided or made available to the Company with the TBI
Disclosure Memorandum.
(d) Neither TBI nor the Bank has received notice of, nor is either
aware of any material circumstances including, without limitation, the execution
of this Agreement, that would enable any third party to terminate any agreements
or arrangements relating to the Technology Systems (including maintenance and
support).
6.28 Bank Secrecy Act Compliance. The Bank is and has been in compliance
in all material respects with the provisions of the Bank Secrecy Act of 1970, as
amended (the "Bank Secrecy Act"), and all regulations promulgated thereunder
including, but not limited to, those provisions of the Bank Secrecy Act that
address suspicious activity reports and compliance programs. The Bank has
implemented a Bank Secrecy Act compliance program that adequately covers all of
the required program elements as required by 12 C.F.R. ss. 326.8.
42
6.29 Statements True and Correct.
(a) Neither this Agreement, nor any Exhibit, Schedule or document
delivered by TBI to the Company in connection with this Agreement or any of the
transactions contemplated hereby contains or shall contain an untrue statement
of a material fact or omits or shall omit to state a material fact necessary to
make the statements contained herein or therein, in light of the circumstances
in which they are made, not misleading.
(b) All of the information supplied or to be supplied by TBI expressly for
inclusion in any filing with any Governmental Body in connection with the
transactions contemplated hereby will be true, correct and complete and
will comply as to form in all material respects with the provisions of
applicable Law.
6.30 Regulatory Matters. TBI has no Knowledge of any fact or circumstance
that is reasonably likely to materially impede or delay receipt of any Consents
of Governmental Bodies referred to in Section 10.1(c) of this Agreement.
6.31 Brokers' or Finders' Fees. No agent, broker or other Person acting on
behalf of TBI or under its authority is or shall be entitled to any commission,
broker's or finder's fee in connection with any of the transactions contemplated
by this Agreement.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
The Company hereby represents and warrants to TBI, except as set forth in
the Company Disclosure Memorandum, as follows (which representations and
warranties are made as of the date hereof and as of all times throughout the
term of this Agreement):
7.1 Organization, Standing and Power. Each of the Company, the Company
Subsidiaries and Merger Subsidiary is a corporation duly organized, validly
existing, and in good standing under the Laws of the States of Indiana or
Nevada, as applicable, and has the corporate power and authority to carry on its
business as now conducted and to own, lease and operate its assets. Each of the
Company and Merger Subsidiary is duly qualified or licensed to transact
43
business as a foreign corporation in good standing in each of the States of the
United States and in each foreign jurisdiction where the character of its assets
or the nature or conduct of its business requires it to be so qualified or
licensed, except for such jurisdictions in which the failure to be so qualified
or licensed is not reasonably likely to have, individually or in the aggregate,
a Material Adverse Effect on the Company.
7.2 Authority; No Breach by Agreement.
(a) Each of the Company and Merger Subsidiary has the corporate power and
authority necessary to execute, deliver and perform its obligations under
this Agreement and to consummate the transactions contemplated hereby and
thereby. The execution, delivery and performance of this Agreement by each
of the Company and Merger Subsidiary and the consummation of the
transactions contemplated herein and therein, have been duly and validly
authorized by all necessary corporate action in respect thereof on the
part of each of the Company and Merger Subsidiary. Subject to the receipt
of all Consents required from Governmental Bodies and the expiration of
all mandatory waiting periods, assuming the due authorization, execution
and delivery of this Agreement by TBI, this Agreement each represents a
legal, valid and binding obligation of each of the Company and Merger
Subsidiary, enforceable against each in accordance with its terms.
(b) Neither the execution and delivery of this Agreement by the Company or
Merger Subsidiary, nor the consummation by Company or Merger Subsidiary of
the transactions contemplated hereby or thereby, nor compliance by the
Company or Merger Subsidiary with any of the provisions hereof or thereof
will (i) conflict with or result in a breach of any provision of the
Company's, any Company Subsidiary's or Merger Subsidiary's Articles of
Incorporation or Bylaws or (as applicable) Articles of Organization or
Operating Agreement, (ii) constitute or result in a Default under, or
require any Consent (excluding Consents required by Law or Order) pursuant
to, or result in the creation of any Encumbrance on any
44
material asset of the Company or any Company Subsidiary under, any
Contract or Governmental Authorization of or applicable to the Company,
any Company Subsidiary or Merger Subsidiary except for such Defaults and
Encumbrances which will not, and for such Consents which, if not obtained,
will not have, individually or in the aggregate, a Material Adverse Effect
on the Company, any Company Subsidiary or Merger Subsidiary, or (iii)
subject to receipt of the requisite Consents referred to in Section
10.1(c) hereof, violate any Law or Order applicable to the Company, any
Company Subsidiary or Merger Subsidiary or any of their material assets.
(c) Other than (i) Consents required from Governmental Bodies, and
(ii) Consents, filings or notifications which, if not obtained or made, are not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on the Company, no notice to, filing with, or Consent of, any
Governmental Body is necessary for the consummation by the Company or Merger
Subsidiary of the transactions contemplated in this Agreement.
7.3 Capital Stock. The authorized capital stock of the Company consists
solely of (i) 5,000,000 shares of preferred stock, of which none are
outstanding, and (ii) 10,000,000 shares of Company Common Stock, of which
approximately 2,605,544 shares were issued and outstanding as of December 31,
2005. All of the issued and outstanding shares of Company Common Stock are, and
all of the shares of Company Common Stock to be issued in exchange for shares of
TBI Common Stock upon consummation of the Merger, when issued in exchange for
shares of TBI Common Stock upon consummation of the Merger and in accordance
with the terms of this Agreement, will be, duly and validly authorized, issued
and outstanding, and fully paid and nonassessable under the IBCL and the
Company's Articles of Incorporation and Bylaws. None of the outstanding shares
of Company Common Stock has been, and none of the shares of Company Common Stock
to be issued in exchange for shares of Company Common Stock upon consummation of
the Merger will be, issued in violation of any preemptive rights of any Person.
7.4 Company Subsidiaries. The Company owns all of the issued and
outstanding capital stock of Merger Subsidiary, and the Company or one of the
Company Subsidiaries owns all of the issued and outstanding shares of capital
stock (or other equity interests) of each of the other Company Subsidiaries
which would qualify as a "Significant Subsidiary" (as such term is defined in
Rule 1.02(w) of Regulation S-X promulgated under the Securities Laws) of the
Company. No capital stock (or other equity interest) of any Company Subsidiary
which would qualify as a Significant Subsidiary of the Company, is or may become
required to be issued (other than to another Company Subsidiary) by reason of
any Rights, and there are no Contracts by which the Company or any of the
Company Subsidiaries which is a Significant Subsidiary of the Company, is bound
to issue (other than to the Company or any of the Company Subsidiaries)
45
additional shares of its capital stock (or other equity interests) or Rights or
by which the Company or any of the Company Subsidiaries is or may be bound to
transfer any shares of the capital stock (or other equity interests) of any of
the Company or any of the Company Subsidiaries (other than to the Company or any
of the Company Subsidiaries). There are no Contracts relating to the rights of
the Company or any Company Subsidiary which is wholly-owned by the Company or
which would qualify as a Significant Subsidiary of the Company, to vote or to
dispose of any shares of the capital stock (or other equity interests) of any of
the Company Subsidiaries. All of the shares of capital stock (or other equity
interests) of each Company Subsidiary which would qualify as a Significant
Subsidiary of the Company and held by the Company or any Company Subsidiary have
been duly and validly authorized and issued and are fully paid and nonassessable
under the applicable corporation or similar Law of the jurisdiction in which
such Subsidiary is incorporated or organized and are owned by the Company or a
Company Subsidiary free and clear of any Liens. None of the issued and
outstanding shares of capital stock of Merger Subsidiary, and none of the issued
and outstanding stock of any other Company Subsidiary which qualifies as a
Significant Subsidiary of the Company, has been issued in violation of any
preemptive rights of any Person. Each Company Subsidiary is either a bank,
partnership, limited liability company or a corporation, and each such Company
Subsidiary which qualifies as a Significant Subsidiary of the Company is duly
organized, validly existing and (as to corporations) in good standing under the
Laws of the jurisdiction in which it is incorporated or organized, and has the
corporate power and authority necessary for it to own, lease, and operate its
Assets and to carry on its business as now conducted. Each Company Subsidiary
which qualifies as a Significant Subsidiary of the Company is duly qualified or
licensed to transact business as a foreign corporation in good standing in each
of the States of the United States and in each foreign jurisdiction where the
character of its Assets or the nature or conduct of its business requires it to
be so qualified or licensed, except for such jurisdictions in which the failure
to be so qualified or licensed is not reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on the Company. The minute book and
other organizational documents (and all amendments thereto) for each of the
Company, Merger Subsidiary and each Company Subsidiary that qualifies as a
Significant Subsidiary of the Company, have been made available to TBI for its
review, and are true and complete in all material respects as in effect as of
the date of this Agreement. A true, accurate and complete list of each Company
Subsidiary is included in Section 7.4 of the Company Disclosure Memorandum.
7.5 Financial Statements. Each of the Company Financial Statements
(including, in each case, any related notes) contained in the Company SEC
Documents, including any Company SEC Document filed after the date of this
Agreement until the Effective Time, complied, or will comply, as to form in all
material respects with the applicable published rules and regulations of the SEC
with respect thereto, was prepared, or will be prepared, in accordance with GAAP
applied on a consistent basis throughout the periods involved (except as may be
indicated in the notes to such financial statements or, in the case of unaudited
interim statements, as permitted by Regulation S-X promulgated under the
Securities Laws), and fairly presented, or will fairly present, in all material
respects the consolidated financial position of the Company and the Company
Subsidiaries as at the respective dates and the consolidated results of its
operations and cash flows for the periods indicated, except that the unaudited
interim financial statements were or are subject to normal and recurring
year-end adjustments which were not or
46
are not expected to be material in amount or effect.
7.6 Absence of Certain Changes or Events. Since December 31, 2004, except
as disclosed in the Company SEC Documents made available prior to the date of
this Agreement, there have been no events, changes, or occurrences which have
had, or are reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on the Company.
7.7 Compliance With Laws. The Company is duly registered as a bank holding
company under the BHC Act. Each of the Company and the Company Subsidiaries has
in effect all Permits necessary for it to own, lease, or operate its material
Assets and to carry on its business as now conducted, except where the failure
to hold such permits would not be reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on the Company. None of the Company or
any of the Company Subsidiaries:
(a) is in violation of any Laws, Orders, or Permits applicable to
its business or employees conducting its business, except for such violations
which would not be reasonably likely to have, individually or in the aggregate,
a Material Adverse Effect on the Company; or
(b) has received any notification or communication from any
Governmental Body or the staff thereof (i) asserting that the Company or any
Company Subsidiary is in violation of any of the Laws or Orders which such
Governmental Body enforces (excluding violations which would not be reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
the Company), (ii) threatening to revoke any Permits, or (iii) requiring the
Company or any Company Subsidiary to enter into or consent to the issuance of a
cease and desist order, formal agreement, directive, commitment or memorandum of
understanding, or to adopt any Board of Directors resolution or similar
undertaking, which restricts materially the conduct of its business, or in any
manner relates to its capital adequacy, its credit or reserve policies, its
management, or the payment of dividends. No event has occurred or circumstance
exists that (with or without notice or lapse of time) may constitute or result
in a violation by the Company or any of the Company Subsidiaries of, or a
failure on the part of the Company or any of the Company Subsidiaries to comply
with, any Laws, Orders or Governmental Authorizations, the failure with which to
comply could give rise to any obligation on the part of the Company or any of
the Company Subsidiaries to undertake, or to bear all or any portion of the cost
of, any remedial action of any nature.
7.8 Legal Proceedings. There is no Proceeding instituted or pending, or,
to the Knowledge of the Company, threatened (or unasserted but considered
probable of assertion and which if asserted would have at least a reasonable
probability of an unfavorable outcome) against the Company or any Company
Subsidiary, or against any Asset, employee benefit plan, interest, or right of
any of them, that is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on the Company, nor are there any Orders of
any Regulatory Authorities, other governmental authorities, or arbitrators
outstanding against the Company or any Company Subsidiary.
7.9 Brokers' or Finders' Fees. No agent, broker or other Person acting on
behalf of the Company or under its authority is or shall be entitled to any
commission, broker's or finder's
47
fee in connection with any of the transactions contemplated by this Agreement.
7.10 No TBI Common Stock Owned. None of the Company or any Company
Subsidiary owns any shares of TBI Common Stock.
7.11 Accuracy of SEC Information. None of the information supplied or to
be supplied by the Company expressly for inclusion in the Registration Statement
to be filed by the Company with the SEC, will, when the Registration Statement
becomes effective, be false or misleading with respect to any material fact, or
omit to state any material fact necessary to make the statements therein not
misleading. None of the information supplied or to be supplied by the Company
expressly for inclusion in the TBI Proxy Statement to be mailed to TBI's
shareholders in connection with the TBI Shareholders' Meeting, and any other
documents to be filed by the Company or any Company Subsidiary with the SEC or
any other Regulatory Authority in connection with the transactions contemplated
hereby, will, at the respective time such documents are filed, and with respect
to the TBI Proxy Statement, when first mailed to the shareholders of TBI, be
false or misleading with respect to any material fact, or 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
TBI Proxy Statement or any amendment thereof or supplement thereto, at the time
of the TBI Shareholders' Meeting, be false or misleading with respect to any
material fact, or omit to state any material fact necessary to correct any
statement made by the Company in any earlier communication with respect to the
solicitation of any proxy for the TBI Shareholders' Meeting. All documents that
the Company or any Company Subsidiary is responsible for filing with any
Regulatory Authority in connection with the transactions contemplated hereby
will comply as to form in all material respects with the provisions of
applicable Law.
7.12 SEC Documents. The Company has been in compliance in all material
respects with the Securities Laws and/or filed all SEC Documents and the Company
will be in compliance in all material respects with the Securities Laws and will
file all SEC Documents between the date hereof and the Effective Time.
7.13 Statements True and Correct.
(a) Neither this Agreement, nor any Exhibit, Schedule or document
delivered by the Company to TBI in connection with this Agreement or any of the
transactions contemplated hereby contains or shall contain an untrue statement
of a material fact or omits or shall omit to state a material fact necessary to
make the statements contained herein or therein, in light of the circumstances
in which they are made, not misleading.
(b) All of the information supplied or to be supplied by the Company
expressly for inclusion in any filing with any Governmental Body in
connection with the transactions contemplated hereby will be true, correct
and complete and will comply as to form in all material respects with the
provisions of applicable Law.
48
ARTICLE 8
CONDUCT OF BUSINESS PENDING CONSUMMATION
8.1 Affirmative Covenants of TBI. From the date of this Agreement until
the earlier of the Effective Time or the termination of this Agreement, TBI
shall (and shall cause each TBI Subsidiary to) (i) operate its business only in
the Ordinary Course, (ii) use reasonable efforts to preserve intact its business
organization and assets and maintain its rights and franchises, and (iii) take
no action which would (a) materially adversely affect the ability of any Party
to obtain any Consents required for the transactions contemplated hereby, or (b)
materially adversely affect the ability of any Party to perform its covenants
and agreements under this Agreement.
8.2 Negative Covenants of TBI. Except as specifically permitted by this
Agreement, from the date of this Agreement until the earlier of the Effective
Time or the termination of this Agreement, TBI covenants and agrees that it will
not permit, do or agree or commit to do (and covenants and agrees that it will
not permit any TBI Subsidiary to do) any of the following without the prior
written consent of the chief executive officer of the Company, which consent may
be withheld for any reason or no reason:
(a) amend its Articles of Incorporation, Bylaws or other governing
instruments;
(b) (i) incur any Funded Debt, (ii) impose, or suffer the imposition
of, on any material Asset (or Assets) any Encumbrances in excess of $50,000 in
the aggregate or permit any such Encumbrance to exist (other than in connection
with deposits, repurchase agreements, bankers acceptances, "treasury tax and
loan" accounts established in the Ordinary Course of Business and the
satisfaction of legal requirements in the exercise of trust powers), or (iii)
guarantee or become a surety or otherwise contingently liable for any
obligations of others;
(c) repurchase, redeem or otherwise acquire or exchange (other than
exchanges in the ordinary course under employee benefit plans), directly or
indirectly, any shares of TBI Common Stock or declare, set aside or pay any
dividend or make any other distribution in respect of TBI Common Stock apart
from the following:
(i) with respect to TBI dividends, in the event the Closing
Date occurs prior to June 30, 2006, that percentage of $.90 per share of TBI
Common Stock equal to the ratio that the number of days that have elapsed from
January 1, 2006 through the Closing Date bears to 181;
(ii) with respect to TBI dividends, in the event the Closing
Date occurs after June 30, 2006, an amount per share of TBI Common Stock equal
to the sum of (i) $.90 and (ii) that percentage of $.90 equal to the ratio that
the number of days that have elapsed from July 1, 2006 through the Closing Date
bears to 184; and
49
(iii) with respect to Bank dividends, the sums required to
enable TBI to pay the dividends prescribed by clauses (i) and (ii) above.
(d) except for the issuance of shares of TBI Common Stock by virtue
of the proper exercise of TBI Stock Options, issue, sell, pledge, encumber,
authorize the issuance of, enter into any Contract to issue capital stock, sell,
pledge, encumber, or authorize the issuance of, or otherwise permit to become
outstanding, any additional shares of capital stock, or any other Right to
acquire any such stock, or any security convertible into any such stock;
(e) adjust, split, combine or reclassify any capital stock or issue
or authorize the issuance of any other securities in respect of or in
substitution for shares of capital stock, or sell, lease or transfer in any
fashion Assets having in the aggregate a book value in excess of $5,000 other
than in the Ordinary Course of Business for reasonable and adequate
consideration;
(f) except for purchases of investment securities acquired in the
Ordinary Course of Business, purchase any securities or make any investment,
either by purchase of stock or securities, contributions to capital, asset
transfers, or purchase of any assets, in any Person or otherwise acquire direct
or indirect control over any Person, other than in connection with (i)
foreclosures in the Ordinary Course of Business, or (ii) acquisitions of control
in its fiduciary capacity;
(g) grant any increase in compensation or benefits to its employees,
directors or officers or pay any severance or termination pay or any bonus other
than pursuant to written policies or written Contracts in effect on the date of
this Agreement; enter into or amend any severance agreements with officers;
grant any increase in fees or other increases in compensation or other benefits
to directors; or voluntarily accelerate the vesting of any employee benefits;
(h) enter into any employment Contract with any Person;
(i) adopt any new employee benefit plan of or terminate or withdraw from,
or make any material change in or to, any existing employee benefit plans,
other than any such 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, nor make any distributions from such employee benefit
plans, except as required by Law, by the terms of such plans, or in a
manner consistent with past practices with respect to the applicable plan;
(j) make any change in any Tax or accounting methods or systems of
internal accounting controls, except as may be appropriate to conform to changes
in Tax Laws, regulatory accounting requirements or GAAP;
50
(k) commence any Proceeding other than in the Ordinary Course of
Business or settle any Proceeding involving any Liability for material money
damages or restrictions upon its operations;
(l) experience a Change in Control other than in accordance with the
provisions of this Agreement;
(m) encourage or solicit any Bank customer or depositor to replace
or diminish his relationship with the Bank including, without limitation,
through entering into (or enhancing) a relationship with an Affiliate of the
Bank or TBI;
(n) enter into a loan, discount or lease financing in an original
principal amount greater than $350,000 or increase a current loan, discount or
lease financing by an amount greater than $350,000; or
(o) except in the ordinary course consistent with past practice,
enter into, modify, amend, or terminate any material Contract (excluding any
loan Contract) or waive, release, compromise, or assign any material rights or
claims.
8.3 Covenants of the Company. From the date of this Agreement until the
earlier of the Effective Time or the termination of this Agreement, the Company
covenants and agrees that it shall (i) continue to conduct its business and the
business of the Company Subsidiaries in a manner designed in its reasonable
judgment to enhance the long-term value of the Company Common Stock and the
business prospects of Company and the Company Subsidiaries, (ii) take no action
which would (a) materially and adversely affect the ability of any Party to
obtain any Consent required for the transactions contemplated hereby without
imposition of a condition or restriction of the type referred to in the last
sentence of Section 10.1(d) of this Agreement or prevent the transactions
contemplated hereby, including the Merger, from qualifying as a reorganization
within the meaning of Section 368(a) of the Code, or (b) materially and
adversely affect the ability of any Party to perform its covenants and
agreements under this Agreement and (iii) cause to be voted all of the shares of
Merger Subsidiary Common Stock it owns in favor of the Merger.
8.4 Adverse Changes in Condition. Each Party agrees to give written notice
promptly to the other Parties upon becoming aware of the occurrence or impending
occurrence of any event or circumstance relating to it which (i) could have,
individually or in the aggregate, a Material Adverse Effect on it or (ii) would
cause or constitute a breach of any of its representations, warranties, or
covenants contained herein or which would prevent the satisfaction of any
condition precedent set forth in Article 10 of this Agreement, and to use its
reasonable efforts to prevent or promptly to remedy the same.
8.5 Reports. Each Party and its Subsidiaries shall file all reports
required to be filed by it with Governmental Bodies between the date of this
Agreement and the Effective Time and, to the extent permitted by Law, shall
deliver to the other Parties copies of all such reports promptly after the same
are filed. If financial statements are contained in any such reports, such
financial statements will fairly present the consolidated financial position of
the Person filing
51
such statements as of the dates indicated and the consolidated results of
operations, changes in shareholders' equity, and cash flows of such Person for
the periods then ended in accordance with GAAP (subject in the case of interim
financial statements to normal recurring year end adjustments that are not
material). As of their respective dates, such reports will comply in all
material respects with the Securities Laws and will not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. TBI shall deliver
to the Company not less than monthly a list of all of the Bank's paid-off loans,
loan reductions, new loans or increases in existing loans to customers setting
forth the amounts of such loans, the collateral securing such loans, and any
other matters or information concerning such loans as the Company shall
reasonably request.
ARTICLE 9
ADDITIONAL AGREEMENTS
9.1 Registration Statement; Proxy Statement; Shareholder Approval. The
Company shall prepare and file the Registration Statement, of which the TBI
Proxy Statement shall form a part, with the SEC, and use its reasonable efforts
to cause the Registration Statement to become effective under the 1933 Act and
take any action required to be taken under the applicable state Blue Sky or
securities Laws in connection with the issuance of the shares of Company Common
Stock constituting the Stock Consideration upon consummation of the Merger. TBI
shall furnish all information concerning it and the holders of its capital stock
as Company may reasonably request in connection with such action. Subject to
Section 9.8 hereof, TBI shall call the TBI Shareholders' Meeting, to be held as
soon as reasonably practicable after the Registration Statement is declared
effective by the SEC, for the purpose of voting upon approval of this Agreement
and the Plan of Merger and such other related matters as it deems appropriate.
In connection with the TBI Shareholders' Meeting, (i) the Board of Directors of
TBI shall recommend (subject to Section 9.8 hereof) to its shareholders the
approval of the Merger, and (ii) the Board of Directors and officers of TBI
(subject to Section 9.8 hereof) shall use their reasonable efforts to obtain
shareholder approval of the Merger.
9.2 Exchange Listing. Company shall use its reasonable efforts to list,
prior to the Effective Time, on the NASDAQ Capital Market, subject to official
notice of issuance, the shares of Company Common Stock to be issued to the
holders of TBI Common Stock pursuant to the Merger, and Company shall give all
notices and make all filings with the NASDAQ Capital Market required in
connection with the transactions contemplated herein.
9.3 Applications. Company shall prepare and file, and TBI shall cooperate
in the preparation and, where appropriate, filing of, applications with all
Regulatory Authorities having jurisdiction over the transactions contemplated by
this Agreement seeking the requisite Consents necessary to consummate the
transactions contemplated by this Agreement. At least five days prior to each
filing, Company shall provide TBI and its counsel with copies of such
applications. Each of the Parties shall deliver to each of the other Parties
copies of all filings, correspondence and orders sent by such Party to and
copies of all filings, correspondence and orders received by such Party from all
Regulatory Authorities in connection with the transactions contemplated hereby
as soon as practicable upon their becoming available.
52
9.4 Filings with State Offices. Upon the terms and subject to the
conditions of this Agreement, the Company, Merger Subsidiary and TBI each agree
to execute if necessary and file Articles of Merger with the Secretary of State
of the State of Indiana in connection with the Closing.
9.5 Agreement as to Efforts to Consummate. Subject to the terms and
conditions of this Agreement, each Party agrees to use, and to cause its
Subsidiaries to use, its reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary, proper, or
advisable under applicable Laws to consummate and make effective, as soon as
practicable after the date of this Agreement, the transactions contemplated by
this Agreement, including, without being limited to, using its reasonable
efforts to lift or rescind any Order adversely affecting its ability to
consummate the transactions contemplated herein and to cause to be satisfied the
conditions referred to in Article 10 of this Agreement. Each Party shall use,
and shall cause each of its Subsidiaries to use, its reasonable efforts to
obtain all Consents necessary or desirable for the consummation of the
transactions contemplated by this Agreement.
9.6 Investigation and Confidentiality. (a) Prior to the Effective Time,
each Party shall keep the other Parties advised of all material developments
relevant to its business and to consummation of the Merger and shall permit the
other Parties to make or cause to be made such investigation of the business and
properties of it and its Subsidiaries and of their respective financial and
legal conditions as any other Party reasonably requests, provided that such
investigation shall be reasonably related to the transactions contemplated
hereby and shall not interfere unnecessarily with normal operations. No Party
shall be required to provide access to or to disclose information where such
access or disclosure would violate or prejudice the rights of such Party's
customers, jeopardize any attorney-client privilege or contravene any Law, rule,
regulation, Order, judgment, decree, fiduciary duty or binding agreement entered
into prior to the date of this Agreement. The Parties will make appropriate
substitute disclosure arrangements under circumstances in which the restrictions
of the preceding sentence apply. No investigation by a Party or its respective
Representatives shall affect the representations and warranties of any other
Party.
(b) Each Party will hold, and will cause its respective Affiliates
and their respective officers, directors, employees, agents and Representatives
to hold, in strict confidence, unless compelled to disclose by judicial or
administrative process (including without limitation in connection with
obtaining the necessary Consents of Regulatory Authorities) or by other
requirements of Law, all confidential documents and confidential or proprietary
information concerning the other Parties gathered from the other Parties, or
their respective officers, directors, employees, agents or Representatives,
pursuant to this Agreement, except to the extent that such documents or
information can be shown to have been (a) previously lawfully known by the Party
receiving such documents or information, (b) in the public domain through no
fault of such receiving Party, or (c) later acquired by the receiving Party from
other sources not themselves bound by, and in breach of, a confidentiality
agreement. Except as required by Law, no Party will disclose or otherwise
provide any such confidential or proprietary documents or information to any
other Person, except to the Party's auditors, Representatives and other
consultants and advisors who need such documents or information in connection
with this
53
Agreement and the transactions contemplated hereby, and the Parties agree to
cause each of the foregoing to be subject to and bound by the confidentiality
provisions hereof. Any such confidential or proprietary information will be used
only in connection with an analysis of the transactions contemplated by this
Agreement.
9.7 Press Releases. Prior to the Effective Time, TBI and the Company shall
consult with each other as to the form and substance of any press release or
other public disclosure materially related to this Agreement or any other
transaction contemplated hereby; provided, that nothing in this Section 9.7
shall be deemed to prohibit any Party from making any disclosure which its
counsel deems necessary or advisable in order to satisfy such Party's disclosure
obligations imposed by Law.
9.8 Acquisition Proposals. (a) (a) From and after the date of this
Agreement, TBI shall, and shall cause the TBI Subsidiaries to, and it shall use
its reasonable best efforts to cause any of its and their Representatives to,
immediately cease and cause to be terminated immediately all existing
activities, discussions and negotiations with any Persons conducted heretofore
with respect to any Acquisition Proposal. From and after the date of this
Agreement until the earlier of the Effective Time or the termination hereof and
except as permitted by the following provisions, TBI shall not, and it shall
cause the TBI Subsidiaries and each of its and their respective Representatives
not to, directly or indirectly, (i) solicit, initiate or knowingly encourage the
making of an Acquisition Proposal, (ii) except in accordance with Section
11.1(d), enter into any Contract or letter of intent with respect to any
Acquisition Proposal (other than a confidentiality agreement entered into in
accordance with the provisions of this Section 9.8(a)) or (iii) other than
informing Persons of the existence of the provisions contained in this Section
9.8, participate in any discussions or negotiations regarding, or furnish or
disclose to any Person (other than a party to this Agreement) any non-public
information with respect to TBI or the Bank in connection with any inquiries or
the making of any proposal that constitutes, or is reasonably likely to lead to,
any Acquisition Proposal; provided, however, that, at any time prior to the TBI
Shareholders' Meeting, in response to an unsolicited Acquisition Proposal that
the Board of Directors of TBI determines in good faith is reasonably likely to
lead to a Superior Proposal, and which Acquisition Proposal was made after the
date hereof and did not result from a material breach of this Section 9.8, TBI
may (i) furnish information with respect to TBI and its Subsidiaries to the
Person making such Acquisition Proposal (and its Representatives) pursuant to a
customary confidentiality agreement not less restrictive of such Person than the
Confidentiality Agreement; provided, however, that all such information has
previously been, or is, in substance, provided to the Company contemporaneously
as it is provided to such Person, and (ii) participate in discussions or
negotiations with the Person making such Acquisition Proposal, and its officers,
directors, employees, Representatives and agents regarding such Acquisition
Proposal.
(b) Neither the Board of Directors of TBI nor any committee thereof
shall (i) (A) withdraw (or modify in a manner adverse to the Company), or
publicly propose to withdraw (or modify in a manner adverse to the Company), the
approval recommendation or declaration of advisability by such Board of
Directors or any such committee thereof of this Agreement, the Merger or the
other transactions contemplated by this Agreement or (B) recommend, adopt or
approve, or propose publicly to recommend, adopt or approve, any Acquisition
Proposal (any action described in this clause (i) being referred to as a "TBI
Adverse Recommendation
54
Change") or (ii) approve or recommend, or allow TBI or any of the TBI
Subsidiaries to execute or enter into, any Contract, letter of intent,
memorandum of understanding, agreement in principle, merger agreement,
acquisition agreement, option agreement, joint venture agreement, partnership
agreement or other similar agreement constituting or related to any Acquisition
Proposal (other than one or more of the confidentiality agreements referred to
in Section 9.8(a) hereof). Notwithstanding the foregoing, if, before the TBI
Shareholders' Meeting, (x) TBI receives an Acquisition Proposal, (y) the Board
of Directors of TBI shall have determined in good faith after consultation with
outside counsel that the failure to take such action is reasonably likely to
result in a breach of its fiduciary duties under applicable Law, and (z) TBI
provides written notice (a "Notice of Adverse Recommendation") advising the
Company that the Board of Directors of TBI has made the determination described
in clause (y) above, then the Board of Directors of TBI may take either or both
of the following actions: (A) make a TBI Adverse Recommendation Change and (B)
upon termination of this Agreement in accordance with Section 11.1(d), approve
and enter into a Contract relating to an Acquisition Proposal that constitutes a
Superior Proposal.
(c) From and after the date of this Agreement, unless the Board of
Directors of TBI shall have determined reasonably and in good faith that taking
such action is reasonably likely to result in a breach of its fiduciary duties
under applicable Law, TBI shall promptly (but in any event within twenty-four
hours) advise the Company of the receipt of any inquiries, requests, proposals
or offers relating to an Acquisition Proposal, or any request for nonpublic
information relating to TBI or any of its Subsidiaries by any Person that
informs TBI or any TBI Representative that such Person is considering making, or
has made, an Acquisition Proposal. Any such notice shall be made in writing,
shall indicate the material terms and conditions thereof and the identity of the
other party or parties involved, and shall include a copy of any such written
inquiry, request, proposal or offer. TBI agrees that it shall keep the Company
informed on a current basis of the status and terms of any Acquisition Proposal.
(d) Nothing contained in this Section 9.8 shall prohibit TBI from
making any disclosure to the stockholders of TBI if, in the good faith judgment
of the Board of Directors, failure so to disclose would be reasonably likely to
result in a breach of its fiduciary duties or any other obligations under
applicable Law.
9.9 Tax Treatment. Each of the Parties undertakes and agrees to use its
reasonable efforts to cause the Merger, and to take no action which would cause
the Merger not, to qualify for treatment as a "reorganization" within the
meaning of Section 368(a) of the Code for federal income tax purposes.
9.10 Agreement of Affiliates. TBI has disclosed in Schedule 9.10 of the
TBI Disclosure Memorandum each Person whom it reasonably believes is an
Affiliate of TBI or the Bank as of the date of this Agreement for purposes of
Rule 145 under the 1933 Act. TBI shall use its reasonable efforts to cause each
such Person other than Xxxxxxxx Xxxxxx and Xxxxxxx Xxxxx to deliver to Company
not later than 30 days after the date hereof, an Affiliate Agreement (provided,
however, that the Affiliate Agreement executed by Xxxxx X. Xxxxx will not
include Sections 5 and 6 of the Affiliate Agreement).
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9.11 Employee Benefits. (a) Following the Effective Time, the Company
shall generally provide to officers and employees of TBI and any TBI Subsidiary,
employee benefits under employee benefit and welfare plans of the Company or the
Company Subsidiaries on terms and conditions which when taken as a whole are
substantially similar to those currently provided and made available by the
Company or a Company Subsidiary to their similarly situated officers and
employees (it being acknowledged in this regard that (i) the Company's defined
benefit plan has been frozen and participation therein by Persons not currently
participating in such plans is not permitted and (ii) the benefits in said
defined benefit plan held by employees of the Company or Company Subsidiaries
shall not be considered in a determination of "substantially similar" benefits
under this Section 9.11). The service of the employees of TBI and any TBI
Subsidiary prior to the Effective Time shall be treated as service with the
Company or a Company Subsidiary for purposes of participation, vesting and
benefit accrual in any such employee benefit plans of the Company or any Company
Subsidiary in which officers and employees of TBI or any TBI Subsidiary may be
permitted to participate.
(b) At the Closing the Bank shall enter into the New Xxxxx
Employment Agreement.
(c) At the Closing the Bank shall enter into the Bank Employment
Agreement with each of Xxxxxxx Xxxxx, Xxxxx Xxxx, Xxxxxxxx Xxxxxx, Xxxxxx
Xxxxxx, Xxxxx Xxxxx, Xxx Xxxxx and Xxxxxx Xxxxxx.
9.12 Indemnification. (a) For four years after the Effective Time, the
Company shall, with respect to the present and former directors, officers,
employees, and agents of TBI or any TBI Subsidiary (each, a "Continuing
Indemnified Person") (including any person who becomes a director, officer,
employee, or agent prior to the Effective Time), (i) honor any indemnification
obligation of TBI as of the Effective Time under the Articles of Incorporation
or Bylaws of TBI and (ii) indemnify, defend and hold harmless any such
Continuing Indemnified Person against all Adverse Consequences based on, or
arising out of the fact that such Continuing Indemnified Person is or was a
director, officer, employee or agent of TBI or any of its Subsidiaries or is or
was serving at the request of TBI or any of its Subsidiaries as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, in each case to the extent that any such Adverse
Consequences pertain to any matter or fact arising, existing or occurring prior
to or at the Effective Time, regardless of whether such Adverse Consequences are
asserted or claimed prior to, at or after the Effective Time, to the fullest
extent permitted by the TBI Articles of Incorporation or Bylaws (though subject
to any restrictions or limitations imposed by Law), including provisions
relating to advancement of expenses incurred in the defense of any such Adverse
Consequences. Without limiting the foregoing, in any case in which approval by
the Company is required to effectuate any indemnification, the Company shall
direct, at the election of the Continuing Indemnified Person, that the
determination of any such approval shall be made by independent counsel mutually
agreed upon between Company and the Continuing Indemnified Person.
(b) Any Continuing Indemnified Person wishing to claim
indemnification under paragraph (a) of this Section 9.12, upon learning of any
such Liability or Proceeding, shall promptly notify Company thereof, provided
that the failure so to notify shall not affect the
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obligations of Company under this Section 9.12 unless and to the extent such
failure materially increases Company's Liability under this Section 9.12. In the
event of any such Proceeding (whether arising before or after the Effective
Time), (i) Company or the Surviving Corporation shall have the right to assume
the defense thereof and Company shall not be liable to such Continuing
Indemnified Persons for any legal expenses of other counsel or any other
expenses subsequently incurred by such Continuing Indemnified Persons in
connection with the defense thereof, except that if Company or the Surviving
Corporation elects not to assume such defense or counsel for the Continuing
Indemnified Person advises that there are substantive issues which raise
conflicts of interest between Company or the Surviving Corporation and the
Indemnified Person or between the Continuing Indemnified Person, the Continuing
Indemnified Person may retain counsel satisfactory to them, and Company or the
Surviving Corporation shall pay all reasonable fees and expenses of such counsel
for the Continuing Indemnified Person promptly as statements therefor are
received; provided, that Company shall be obligated pursuant to this paragraph
(b) to pay for only one firm of counsel for all Continuing Indemnified Person in
any jurisdiction, (ii) the Continuing Indemnified Person will cooperate in the
defense of any such Litigation, and (iii) neither Company nor the Surviving
Corporation shall be liable for any settlement effected without its prior
written consent or have any obligation hereunder to any Continuing Indemnified
Person when and if a court of competent jurisdiction shall determine, and such
determination shall have become final, that the indemnification of such
Continuing Indemnified Person in the manner contemplated hereby is prohibited by
applicable Law.
(c) If Company or any of its successors or assigns shall consolidate
with or merge into any other Person and shall not be the continuing or surviving
Person of such consolidation or merger, or shall transfer all or substantially
all of its Assets to any Person, then and in each case, proper provision shall
be made so that the successors and assigns of Company shall assume the
obligations set forth in this Section 9.12.
(d) The Company shall maintain, at no expense to the beneficiaries,
in effect for two years from the Effective Time the current directors' and
officers' liability insurance policies maintained by TBI (provided that the
Company may (i) substitute therefor policies of at least the same coverage
containing terms and conditions which are, in the aggregate, no less
advantageous to any beneficiary thereof or (ii) arrange for "tail" coverage for
such two year period under TBI's current directors' and officers' liability
insurance policies) with respect to matters existing or occurring at or prior to
the Effective Time and the proper subject of indemnification under Section
9.12(a) hereof.
9.13 Bank Directors' Fees. Upon the Effective Time, the Company shall not
effect a decrease in the fees currently payable to individuals serving on the
Board of Directors of the Bank for their services in such capacity.
ARTICLE 10
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
10.1 Conditions to Obligations of Each Party. The respective obligations
of each Party to perform this Agreement and consummate the Merger and the other
transactions contemplated hereby are subject to the satisfaction of the
following conditions, unless waived by both Parties
57
pursuant to Section 12.8 of this Agreement:
(a) TBI Shareholder Approval. The shareholders of TBI shall have
approved this Agreement and the consummation of the transactions contemplated
hereby and thereby, including the Merger, as and to the extent required by Law,
or by the provisions of any governing instruments (without regard to any shares
which are voted pursuant to irrevocable proxies, the validity of which has been
contested by the underlying owner, unless the underlying owner has given written
instructions with respect to the voting of such shares in connection with this
Agreement).
(b) Merger Subsidiary Shareholder Approval. The Company, as the
shareholder of Merger Subsidiary, shall have approved this Agreement and the
consummation of the transactions contemplated hereby and thereby, including the
Merger, as and to the extent required by Law, or by the provisions of any
governing instruments (without regard to any shares which are voted pursuant to
irrevocable proxies, the validity of which has been contested by the underlying
owner, unless the underlying owner has given written instructions with respect
to the voting of such shares in connection with this Agreement).
(c) Regulatory Approvals. All Consents of, filings and registrations
with, and notifications to, all Regulatory Authorities required for consummation
of the Merger shall have been obtained or made and shall be in full force and
effect and all waiting periods required by Law shall have expired. No Consent
obtained from any Regulatory Authority which is necessary to consummate the
transactions contemplated hereby shall be conditioned or restricted in any
manner deemed to be unreasonable by the Company.
(d) Consents and Approvals. Each Party shall have obtained any and
all Consents required for consummation of the Merger (other than those referred
to in Section 10.1(c)) or for the preventing of any Default under any Contract
or Permit of such Party which, if not obtained or made, is reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on any such
Party. No Consent so obtained which is necessary to consummate the transactions
contemplated hereby shall be conditioned or restricted in a manner which in the
reasonable judgment of the Board of Directors of the Company would so materially
adversely impact the economic or business benefits of the transactions
contemplated by this Agreement that, had such condition or requirement been
known, such Party would not, in its reasonable judgment, have entered into this
Agreement.
(e) Legal Proceedings. No Governmental Body of competent
jurisdiction shall have enacted, issued, promulgated, enforced, or entered by
Law or Order (whether temporary, preliminary, or permanent) or taken any other
action which prohibits, restricts, or makes illegal consummation of the
transactions contemplated by this Agreement.
(f) Registration Statement. The Registration Statement shall be
effective under the 1933 Act, no stop orders suspending the effectiveness of the
Registration Statement shall have been issued, no action, suit, proceeding, or
investigation by the SEC to suspend the effectiveness thereof shall have been
initiated and be continuing, and all necessary approvals under state securities
Laws or the 1933 Act or 1934 Act relating to the issuance or trading of the
58
shares of Company Common Stock issuable pursuant to the Merger shall have been
received.
(g) NASDAQ Listing. The shares of Company Common Stock issuable
pursuant to the Merger shall have been approved for listing on the NASDAQ
Capital Market, subject to official notice of issuance.
(h) Tax Matters. The Company and TBI shall have received a written
opinion of counsel from Xxxxx XxXxxxx LLP, in form and substance reasonably
satisfactory to the Company and TBI, substantially to the effect that (i) the
Merger will constitute a reorganization within the meaning of Section 368(a) of
the Code, (ii) the Company, Merger Subsidiary and TBI will each be "a party to a
reorganization" within the meaning of Section 368(a) of the Code and (iii) the
exchange under the Merger of TBI Common Stock for Company Common Stock will not
give rise to gain or loss to the shareholders of TBI with respect to such
exchange (except to the extent of any cash received).
10.2 Conditions to Obligations of Company. The obligations of Company to
perform this Agreement and consummate the Merger and the other transactions
contemplated hereby are subject to the satisfaction of the following conditions,
unless waived by Company pursuant to Section 12.8(a) of this Agreement:
(a) Representations and Warranties. For purposes of this Section
10.2(a), the accuracy of the representations and warranties of TBI set forth in
this Agreement shall be assessed as of the date of this Agreement and as of the
Effective Time with the same effect as though all such representations and
warranties had been made immediately prior to the Effective Time (provided that
representations and warranties which are confined to a specific date shall speak
only as of such date). The representations and warranties of TBI set forth
herein shall each be true and correct in all material respects as of the date of
this Agreement and as of the Effective Time. In addition, as of the Effective
Time, there shall not exist inaccuracies in the representations and warranties
of TBI set forth in this Agreement such that the aggregate effect of such
inaccuracies has, or is reasonably likely to have, a Material Adverse Effect on
TBI, provided that, for purposes of this sentence only, those representations
and warranties which are qualified by references to "material" or "Material
Adverse Effect" shall be deemed not to include such qualifications.
(b) Performance of Agreements and Covenants. Each and all of the
agreements and covenants of TBI to be performed and complied with pursuant to
this Agreement and the other agreements contemplated hereby prior to the
Effective Time shall have been duly performed and complied with in all material
respects.
(c) Certificates. TBI shall have delivered to Company (i) a
certificate, dated as of the Effective Time and signed on its behalf by its
chief executive officer and its chief financial officer or treasurer, to the
effect that the conditions of its obligations set forth in Sections 10.2(a) and
10.2(b) of this Agreement have been satisfied, and (ii) certified copies of
resolutions duly adopted by TBI's Board of Directors and shareholders evidencing
the taking of all corporate action necessary to authorize the execution,
delivery, and performance of this Agreement, and the consummation of the
transactions contemplated hereby, all in such reasonable detail as
59
Company shall request.
(d) Consents and Approvals. TBI shall have obtained any and all
Consents required for consummation of the Merger (other than those set forth in
Section 10.1(c) of this Agreement) or for the preventing of any Default under
any Contract or Permit of such Party which, if not obtained or made, is
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on TBI or the Company.
(e) Legal Opinion. TBI shall have delivered to the Company an
opinion of Xxxxx XxXxxxx LLP, counsel to TBI, dated as of the Closing Date,
covering those matters set forth in Exhibit E hereto.
(f) Affiliate Agreements. Each Affiliate of TBI and of the Bank
other than Xxxxxxxx Xxxxxx and Xxxxxxx Xxxxx shall have executed an Affiliate
Agreement.
(g) Bank Deposits. The total deposits of the Bank as of the Closing
Date shall not be less than an amount $5,000,000 below the Bank's total deposits
as of September 30, 2005.
(h) Redemption of TBI Exercisable Stock Options. All TBI Exercisable
Stock Options shall have been redeemed by TBI in exchange for the Stock Option
Consideration.
(i) Xxxxx Employment Agreements. The Current Xxxxx Employment
Agreement shall have been terminated and the New Xxxxx Employment Agreement
shall have been executed by Xxxxx, the Company, TBI and the Bank
(j) No Material Adverse Effect. Without intending to limit in any
manner the provisions of Section 10.2(a) hereof, there shall have been no
events, changes or occurrences after the date of this Agreement which have had,
individually or in the aggregate, a Material Adverse Effect on TBI.
10.3 Conditions to Obligations of TBI. The obligations of TBI to perform
this Agreement and consummate the Merger and the other transactions contemplated
hereby are subject to the satisfaction of the following conditions, unless
waived by TBI pursuant to Section 12.8(b) of this Agreement:
(a) Representations and Warranties. For purposes of this Section
10.3(a), the accuracy of the representations and warranties of Company set forth
in this Agreement shall be assessed as of the date of this Agreement and as of
the Effective Time with the same effect as though all such representations and
warranties had been made immediately prior to the Effective Time (provided that
representations and warranties which are confined to a specified date shall
speak only as of such date). The representations and warranties of the Company
shall be true and correct in all material respects as of the date of this
Agreement and as of the Effective Time. In addition, as of the Effective Time
there shall not exist inaccuracies in the representations and warranties of
Company set forth in this Agreement such that the aggregate effect of such
inaccuracies has, or is reasonably likely to have, a Material Adverse Effect on
the Company;
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provided that, for purposes of this sentence only, those representations and
warranties which are qualified by references to "material" or "Material Adverse
Effect" shall be deemed not to include such qualifications.
(b) Performance of Agreements and Covenants. Each and all of the
agreements and covenants of the Company and/or Merger Subsidiary to be performed
and complied with by the Company and/or Merger Subsidiary pursuant to this
Agreement and the other agreements contemplated hereby prior to the Effective
Time shall have been duly performed and complied with in all material respects.
(c) Certificates. The Company shall have delivered to TBI (i) a
certificate, dated as of the Effective Time and signed on its behalf by its
chief executive officer and its chief financial officer or treasurer, to the
effect that the conditions of its obligations set forth in Sections 10.3(a) and
10.3(b) of this Agreement have been satisfied, and (ii) certified copies of
resolutions duly adopted by the Company's and Merger Subsidiary's Boards of
Directors evidencing the taking of all corporate action necessary to authorize
the execution, delivery and performance of this Agreement, and the consummation
of the transactions contemplated hereby, including, but not limited to, actions
of the Company as sole shareholder of Merger Subsidiary approving the Merger,
all in such reasonable detail as TBI shall request.
(d) Consents and Approvals. The Company and/or Merger Subsidiary
shall have obtained any and all Consents required for consummation of the Merger
(other than those set forth in Section 10.1(c) of this Agreement) or for the
preventing of any Default under any Contract or Permit of such Party which, if
not obtained or made, is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Company.
(e) Lega1 Opinion. Company and Merger Subsidiary shall have
delivered to TBI an opinion of Xxxxx Xxxxxx Xxxxx PLLC, counsel to the Company,
dated as of the Closing Date, covering those matters set forth in Exhibit F
hereto.
(f) Opinion of TBI Financial Advisor. TBI shall have received as of
the date of this Agreement an opinion from Xxxx Xxxxxxxxxx & Co. Investment
Banking, LP that the Merger Consideration is fair, from a financial viewpoint,
to the holders of TBI Common Stock.
(g) Employment Agreements. The Bank Employment Agreements and the
New Xxxxx Employment Agreement shall have been entered into by the Bank and the
respective Bank employees.
(h) No Material Adverse Effect. Without intending to limit in any
manner the provisions of Section 10.3(a) hereof, there shall have been no
events, changes or occurrences after the date of this Agreement which have had
individually or in the aggregate, a Material Adverse Effect on the Company.
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ARTICLE 11
TERMINATION
11.1 Termination. Notwithstanding any other provision of this Agreement,
and notwithstanding the approval of this Agreement by the shareholders of TBI,
this Agreement may be terminated and the Merger abandoned at any time prior to
the Effective Time:
(a) By mutual consent of the Board of Directors of the Company and
the Board of Directors of TBI;
(b) By the Board of Directors of the Company or the Board of
Directors of TBI (provided that the terminating Party is not then in breach of
any representation or warranty contained in this Agreement under the applicable
standard set forth in Section 10.2(a) of this Agreement in the case of TBI and
Section 10.3(a) in the case of the Company or in material breach of any covenant
or other agreement contained in this Agreement) in the event of an inaccuracy of
any representation or warranty of the other Party contained in this Agreement
which cannot be or has not been cured within thirty (30) days after the giving
of written notice to the breaching Party of such inaccuracy and which inaccuracy
would provide the terminating Party the ability to refuse to consummate the
Merger under the applicable standard set forth in Section 10.2(a) of this
Agreement in the case of the Company and Section 10.3(a) of this Agreement in
the case of TBI;
(c) By the Board of Directors of the Company or the Board of
Directors of TBI (provided that the terminating Party is not then in breach of
any representation or warranty contained in this Agreement under the applicable
standard set forth in Section 10.2(a) of this Agreement in the case of TBI and
Section 10.3(a) in the case of Company or in material breach of any covenant or
other agreement contained in this Agreement) in the event of a material breach
by the other Party of any covenant or agreement contained in this Agreement
which cannot be or has not been cured within thirty (30) days after the giving
of written notice to the breaching Party of such breach;
(d) By the Board of Directors of TBI, prior to the approval of the
Merger at the TBI Shareholders' Meeting, in order to concurrently enter into a
Contract respecting an Acquisition Proposal that (i) has been received by TBI
and the Board of Directors of TBI in compliance with Section 9.8 hereof and (ii)
the Board of Directors of TBI has concluded in good faith, in consultation with
its financial and legal advisors, is a Superior Proposal; provided, however,
that this Agreement may be terminated by TBI pursuant to this Section 11.1(d)
only after the fifteenth calendar day following TBI's provision of written
notice to the Company advising the Company that the Board of Directors is
prepared to accept a Superior Proposal and setting forth the material terms and
conditions of any such Superior Proposal, including the amount of consideration
per share of TBI Common Stock the stockholders of TBI will receive (valuing any
non-cash consideration at what the Board of Directors of TBI determines in good
faith, after consultation with its independent financial advisor, to be the fair
value of the non-cash consideration) and only if (i) during such
fifteen-calendar day period, TBI has caused its financial and legal advisors to
negotiate with the Company in good faith to make such adjustments in the terms
and conditions of this Agreement such that such Acquisition Proposal would no
longer constitute a Superior Proposal and (ii) the Board of Directors of TBI has
considered such adjustments in the terms and conditions of this Agreement
resulting from such negotiations and has concluded in good faith, based upon
consultation with its financial and legal
62
advisers, that such Acquisition Proposal remains a Superior Proposal even after
giving effect to the adjustments proposed by the Company and provided further
that such termination shall not be effective until TBI pays the Termination Fee
in accordance with Section 11.2(b) hereof;
(e) By the Board of Directors of the Company if, prior to the
approval of the Merger at the TBI Shareholders' Meeting, the Board of Directors
of TBI shall have failed to make its approval recommendation of this Merger or
shall have effected a TBI Adverse Recommendation Change;
(f) By the Board of Directors of TBI if the Company has entered into
a Contract with respect to an Acquisition Proposal which would result in a
Change of Control of the Company;
(g) By the Board of Directors of Company or the Board of Directors
of TBI in the event (i) any Consent of any Regulatory Authority required for
consummation of the Merger and the other transactions contemplated hereby shall
have been denied by final non-appealable action of such authority or if any
action taken by such authority is not appealed within the time limit for appeal,
or (ii) the shareholders of TBI fail to vote their approval of this Agreement
and the transactions contemplated hereby as required by the IBCL and this
Agreement at the TBI Shareholders' Meeting where the transactions were presented
to such shareholders for approval and voted upon; or
(h) By the Board of Directors of Company or the Board of Directors
of TBI in the event that the Merger shall not have been consummated by December
31, 2006, if the failure to consummate the transactions contemplated hereby on
or before such date is not caused by any willful breach of this Agreement by the
Party electing to terminate pursuant to this Section 11.1(h) (provided, however,
that should the failure to consummate by that date be due to or arising out of
Proceeding with respect to any Acquisition Proposal to which the Parties, or any
of them, are a Party, then such date shall be extended until 45 days after the
final termination or resolution of such Proceeding).
11.2 Effect of Termination. (a) In the event of the termination and
abandonment of this Agreement pursuant to Section 11.1 of this Agreement, this
Agreement and the Plan of Merger shall become void and have no effect, and,
subject to Section 11.2(b) below, none of the Company, Merger Subsidiary or TBI
or any of the officers or directors of any of them shall have any liability of
any nature whatsoever under this Agreement, except that the provisions of this
Section 11.2, Section 9.6(b), Section 12.1, Section 12.2, Section 12.3, Section
12.4 and Section 12.5 of this Agreement shall survive any such termination and
abandonment.
(b) If (i) an Acquisition Proposal respecting TBI shall have been
publicly announced and not withdrawn, (ii) thereafter this Agreement is
terminated by either the Company or TBI pursuant to Section 11.1(d) or (e),
respectively, and at the time of such termination the Company is not in breach
in any material respect of any of its representations, warranties or covenants
in this Agreement and (iii) on or before June 30, 2007, TBI or any of its
Subsidiaries enters into a Contract with respect to, or consummates, any
Acquisition Proposal, then TBI shall pay the Company the Termination Fee in
immediately available funds by wire-
63
transfer to an account designated by the Company, on or prior to the earlier of
the date on which the Contract with respect to the Acquisition Proposal is
executed and the date on which the Acquisition Proposal is consummated.
Notwithstanding anything to the contrary contained in this Agreement, any
payment of the Termination Fee pursuant to this Section 11.2(b) shall represent
the sole remedy for any termination of this Agreement requiring such payment and
TBI and its Subsidiaries shall have no further liability under this Agreement.
ARTICLE 12
MISCELLANEOUS
12.1 Survival. Except as expressly provided in this Agreement (including,
without limitation, Section 11.2 hereof), all representations, warranties,
covenants, agreements and indemnification obligations made and incurred
hereunder or pursuant hereto or in connection with the transactions contemplated
hereby shall terminate as of the Effective Time.
12.2 Company Indemnification. TBI hereby agrees to indemnify and defend
and hold harmless the Company and its Affiliates, directors, officers,
employees, managers, members and agents and their successors and assigns
(collectively, the "Company Indemnified Persons") against and in respect of any
and all Adverse Consequences incurred, suffered, sustained or required to be
paid by a Company Indemnified Person resulting or arising from or incurred in
connection with: (i) any intentional non-fulfillment or non-performance of any
agreement, covenant or condition on the part of TBI made herein or to be
performed, complied with or fulfilled under this Agreement; or (ii) any
Proceeding incident to any of the foregoing. This indemnity obligation on the
part of TBI shall survive the termination, expiration or cancellation of this
Agreement for any reason whatsoever for a period of one (1) year after such
termination, expiration or cancellation.
12.3 TBI Indemnification. The Company hereby agrees, to indemnify and
defend and hold harmless TBI and its Affiliates, directors, officers, employees,
managers, members and agents and their successors and assigns (collectively, the
"TBI Indemnified Persons") against and in respect of any and all Adverse
Consequences incurred, suffered, sustained or required to be paid by a TBI
Indemnified Person resulting or arising from or incurred in connection with: (i)
any intentional non-fulfillment or non-performance of any agreement, covenant or
condition on the part of the Company made herein or to be performed, complied
with or fulfilled under this Agreement; or (ii) any Proceeding incident to any
of the foregoing. This indemnity obligation on the part of Company shall survive
the termination, expiration or cancellation of this Agreement for any reason
whatsoever for a period of one (1) year after such termination, expiration or
cancellation.
12.4 Indemnification Procedures.
(a) Whenever a Company Indemnified Person or TBI Indemnified Person
(an "Indemnified Person") becomes aware that it has a claim for indemnity under
Section 12.2 or
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12.3 hereof or that any claim is threatened or asserted against it that would
occasion the indemnification described in Section 12.2 or 12.3 (a "Covered
Claim"), such Indemnified Person shall promptly provide the indemnifying Party
with a notice (a "Claim Notice") of such Covered Claim pursuant to the
provisions of Section 12.10 hereof. Each Claim Notice shall describe in
reasonable detail the Indemnified Person's understanding of (and basis for) the
Covered Claim, the Person threatening or asserting it, the relief sought and the
basis for indemnification hereunder with respect thereto.
(b) In connection with any Covered Claim the indemnifying Party,
provided that it shall have acknowledged in writing its obligation to provide
indemnification in respect of such Covered Claim, shall have the right (without
prejudice to the right of any Indemnified Person to participate at its expense
through counsel of its own choosing) to defend or prosecute such Covered Claim
at its expense and through counsel of its own choosing if it gives written
notice of its intention to do so not later than twenty days following receipt by
it of a Claim Notice or such shorter time period as required so that the
interests of the Indemnified Person would not be materially prejudiced as a
result of its failure to have received such notice; provided, however, that if
the defendants in any action shall include both the indemnifying Party and an
Indemnified Person and the Indemnified Person shall have reasonably concluded
that counsel selected by the indemnifying Party has a conflict of interest
because of the availability of different or additional defenses to the
Indemnified Person, the Indemnified Person shall have the right to select
separate counsel to participate in the defense of such action on its behalf, at
the expense of the indemnifying Party. If the indemnifying Party does not choose
to defend or prosecute any such claim asserted by a Person for which any
Indemnified Person would be entitled to indemnification hereunder, then the
Indemnified Person shall be entitled to recover from the indemnifying Party, on
a monthly basis, all of its attorneys' fees and other costs and expenses of
litigation of any nature whatsoever incurred in the defense of such claim. If
the indemnifying Party assumes the defense of any such claim, the indemnifying
Party will hold the Indemnified Person harmless from and against any and all
Adverse Consequences arising out of any settlement approved by indemnifying
Party or any Order in connection with such Covered Claim or Proceeding.
Notwithstanding the assumption of the defense of any Covered Claim by the
Indemnified Person pursuant to this Section 12.4(b) the indemnifying Party shall
have the right to approve the terms of any settlement of a claim (which approval
shall not be unreasonably withheld). The indemnifying party shall be subrogated
to the rights that the Indemnified Person has against third parties with respect
to any subject Covered Claim.
(c) The indemnifying Party and the Indemnified Person shall
cooperate in furnishing evidence and testimony and in any other manner which the
other may reasonably request, and shall in all other respects have an obligation
of good faith dealing, one to the other, so as not to unreasonably expose the
other to an undue risk of loss. The Indemnified Person shall be entitled to
reimbursement for out-of-pocket expenses reasonably incurred by it in connection
with such cooperation. Except for Adverse Consequences for which indemnification
is provided pursuant to this Section 12.4 hereof, as the case may be, and as
provided in the preceding sentence, each party shall bear its own fees and
expenses incurred pursuant to this Section 12.4(c).
65
(d) It is not a condition precedent to recovery under this Article
12 for an Indemnified Person to first seek a contractual, statutory or common
law remedy against any indemnifying Party in order to provide a Claim Notice. No
Indemnified Person is under any obligation to pursue any claims against an
indemnifying Party.
12.5 Expenses.
(a) Each of the Parties shall bear and pay all direct costs and
expenses incurred by it or on its behalf in connection with the transactions
contemplated hereunder, including filing, registration and application fees,
printing fees and fees and expenses of its own financial or other consultants,
investment bankers, accountants and counsel.
(b) Nothing contained in this Section 12.5 shall constitute or shall
be deemed to constitute liquidated damages for the willful breach by a Party of
the terms of this Agreement or otherwise limit the rights of the non-breaching
Party.
12.6 Entire Agreement; Benefits of Agreement. This Agreement constitutes
the complete and exclusive agreement between the Parties with respect to the
transactions contemplated hereunder and concedes and supersedes all prior
arrangements or understandings with respect thereto, written or oral, between
the Parties (including, without limitation, the Indication of Interest and the
Confidentiality Agreement). Nothing in this Agreement expressed or implied is
intended or shall be construed to confer upon any Person, other than the Parties
or their respective successors, any rights, remedies, obligations or liabilities
under or by reason of this Agreement.
12.7 Amendments. To the extent permitted by Law, this Agreement may be
amended, only by a subsequent writing signed by each of the Parties, upon the
approval of the Board of Directors of each of the Parties, whether before or
after shareholder approval (if applicable) of this Agreement has been obtained.
12.8 Waivers.
(a) Prior to or at the Effective Time, the Company, acting through its
Board of Directors or Chief Executive Officer, shall have the right to
waive any Default in the performance of any term of this Agreement by TBI,
to waive or extend the time for the compliance or fulfillment by TBI of
any and all of its obligations under this Agreement, and to waive any or
all of the conditions precedent to the obligations of Company under this
Agreement, except any condition which, if not satisfied, would result in
the violation of any Law. No such waiver shall be effective unless in
writing signed by the chief executive officer of the Company.
66
(b) Prior to or at the Effective Time, TBI, acting through its Board of
Directors or Chief Executive Officer, shall have the right to waive any
Default in the performance of any term of this Agreement by the Company,
to waive or extend the time for the compliance or fulfillment by the
Company of any and all of its obligations under this Agreement, and to
waive any or all of the conditions precedent to the obligations of the
Company under this Agreement, except any condition which, if not
satisfied, would result in the violation of any Law. No such waiver shall
be effective unless in writing signed by the chief executive officer of
TBI.
(c) The failure of any Party at any time or times to require performance
of any provision hereof shall in no manner affect the right of such Party
at a later time to enforce the same or any other provision of this
Agreement. No waiver of any condition or of the breach of any term
contained in this Agreement in one or more instances shall be deemed to be
or construed as a further or continuing waiver of such condition or breach
or a waiver of any other condition or of the breach of any other term of
this Agreement.
12.9 Assignment. Neither this Agreement nor any of the rights, interests,
or obligations hereunder shall be assigned by any Party hereto (whether by
operation of Law or otherwise) without the prior written consent of the other
Parties. Subject to the preceding sentence, this Agreement will be binding upon,
inure to the benefit of and be enforceable by the Parties and their respective
successors and assigns.
12.10 Notices. Any deliveries, notices or other communications required or
permitted hereunder shall be deemed to have been duly made or given (i) if
delivered in person, (ii) if sent by registered mail, return receipt requested,
postage prepaid, (iii) if sent by a nationally recognized overnight courier or
(iv) if sent by facsimile transmission, to the following addresses and numbers:
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Company: Community Bank Shares of Indiana, Inc.
Xxxxx X. Xxxxxxx
President and Chief Executive Officer
000 Xxxx Xxxxxx Xxxxxx
Xxx Xxxxxx, XX 00000
Facsimile Number: (000) 000-0000
Merger Subsidiary: CBIN Subsidiary, Inc.
Xxxxx X. Xxxxxxx
President and Chief Executive Officer
000 Xxxx Xxxxxx Xxxxxx
Xxx Xxxxxx, XX 00000
Facsimile Number: (000) 000-0000
Copy to Company
And Merger
Subsidiary Counsel: Xxxxx Xxxxxx Xxxxx PLLC
Attn: J. Xxxxx Xxxxx, Jr.
000 Xxxx Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxx 00000
Facsimile Number: (000) 000-0000
TBI: The Bancshares, Inc.
Xxxxx Xxxxx
President and Chief Executive Officer
000 Xxxx XxXxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Facsimile Number: (000) 000-0000
Copy to TBI
Counsel: Xxxxx XxXxxxx LLP
Attn: Xxxx X. Xxxxxxxx
Xxx Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxxx, Xxxxxxx 00000-0000
Facsimile Number: (000) 000-0000
or, as to each party, at such other address or number as may hereafter be
designated by such party in a written notice to the other party complying as to
delivery with the terms of this Section 12.10. All such notices, requests,
demands and other communications shall be deemed to have been given (i) on the
date received if personally delivered, (ii) two days following the date
deposited in the mail if delivered by mail, (iii) on the date following the date
sent by overnight courier if delivered by overnight courier or (iv) the date
sent by facsimile if delivered by
68
facsimile transmission on or before 2:30 p.m., local New Albany, Indiana time
(if received by facsimile after 2:30 p.m., local New Albany, Indiana time, then
the following day).
12.11 Governing Law. This Agreement shall be governed by, construed and
enforced in accordance with the Laws of the State of Indiana, without regard to
its principles of conflicts of law or choice of law.
12.12 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument. Any such counterpart may
be delivered through facsimile transmission provided the original thereof is
promptly delivered to the Parties hereto.
12.13 Captions. The captions contained in this Agreement are for reference
purposes only and are not part of this Agreement.
12.14 Interpretations. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed or resolved against any Party, whether under
any rule of construction or otherwise. No Party to this Agreement shall be
considered the draftsman. The Parties acknowledge and agree that this Agreement
has been reviewed, negotiated and accepted by all Parties and their attorneys
and shall be construed and interpreted according to the ordinary meaning of the
words used so as fairly to accomplish the purposes and intentions of all Parties
hereto.
12.15 Enforcement of Agreement. The Parties agree that time is of the
essence in the performance of their respective obligations under this Agreement.
The Parties hereto agree that irreparable damage would occur in the event that
any of the provisions of this Agreement were not performed in accordance with
their specific terms or were otherwise breached. It is accordingly agreed that
the Parties shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
hereof in any court of the United States or any state having jurisdiction, this
being in addition to any other remedy to which they are entitled at Law or in
equity.
12.16 Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
12.17 Rights and Remedies Cumulative. The rights and remedies provided by
this Agreement are cumulative and the use of any one right or remedy by any
Party shall not preclude
[signature page follows]
69
or waive the right to use any or all other remedies. Said rights and remedies
are given in addition to any other rights the parties may have by Law, Order, or
otherwise.
12.18 Investigation of Company. Neither the Company's nor Merger
Subsidiary's access to documents and information of TBI or the Bank, nor any
investigation by the Company or Merger Subsidiary, shall affect the right of
Company or Merger Subsidiary to rely on any representations and warranties of
TBI made in this Agreement.
IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be
duly executed on its behalf as of the day and year first above written.
COMMUNITY BANK SHARES OF INDIANA, INC.
By: ____________________________________
Xxxxx X. Xxxxxxx
President and Chief Executive Officer
THE BANCSHARES, INC.
By: ____________________________________
Xxxxx X. Xxxxx
President and Chief Executive Officer
CBIN SUBSIDIARY, INC.
By: ____________________________________
Xxxxx X. Xxxxxxx
President and Chief Executive Officer
70
EXHIBIT "A"
PLAN OF MERGER
OF
THE BANCSHARES, INC.
WITH AND INTO
CBIN SUBSIDIARY, INC.
Pursuant to this Plan of Merger ("Plan of Merger"), dated as of February
15, 2006, The Bancshares, Inc. ("TBI"), a corporation organized and existing
under the laws of the State of Indiana, shall be merged with and into CBIN
Subsidiary, Inc. ("Merger Subsidiary"), a corporation organized and existing
under the laws of the State of Indiana and which is a wholly-owned subsidiary of
Community Bank Shares of Indiana, Inc. ("the Company").
Except as otherwise provided herein, the capitalized terms set forth below
shall have the meanings ascribed thereto in that certain Agreement and Plan of
Merger dated as of February 15, 2006 between the Company, Merger Subsidiary and
TBI (the "Agreement"), of which this Plan of Merger is Exhibit A.
ARTICLE 1
TRANSACTIONS AND TERMS OF MERGER
1.1 Merger. Subject to the terms and conditions of this Plan of Merger and
the Agreement, at the Effective Time, TBI shall be merged with and into Merger
Subsidiary in accordance with the provisions of Indiana Code 23-1-40-1 of the
IBCL, and with the effect provided in Indiana Code 23-1-40-6 of the IBCL (the
"Merger"). Merger Subsidiary shall be the surviving corporation resulting from
the Merger (the "Surviving Corporation") and shall continue to be governed by
the Laws of the State of Indiana. The Merger shall be consummated pursuant to
the terms of this Plan of Merger and the Agreement, which have been approved and
adopted by the respective Boards of Directors of TBI, the Company and Merger
Subsidiary.
1.2 Time and Place of Closing. The Closing will take place at 10:00 A.M.,
local New Albany, Indiana time, on the date on which the Effective Time is to
occur (or the immediately preceding day if the Effective Time is to be earlier
than 10:00 A.M., local New Albany, Indiana time), or at such other time as the
parties, acting through their authorized officers, may mutually agree. The
Closing shall be held at such place as may be mutually agreed upon by the
parties.
1.3 Effective Time. The Merger and other transactions contemplated by this
Plan of Merger shall become effective at the time the Articles of Merger
reflecting the Merger shall become effective with the Secretary of State of the
State of Indiana (the "Effective Time"). Subject to the terms and conditions
hereof, including the adjustment of the Anticipated Closing Date pursuant to
Section 4.2(b) hereof, unless (i) otherwise mutually agreed upon in writing by
the chief executive officers of each party, (ii) this Plan of Merger is
terminated pursuant to Article 11 of the Agreement or (iii) the Company in its
discretion chooses a later Closing Date and Effective Time, the parties shall
use their reasonable efforts to cause the Effective Time to occur as soon as is
reasonably practicable on the date (the "Anticipated Closing Date") five (5)
days following the last to occur of (i) the effective date of the last required
Consent of any Regulatory Authority having authority over and approving or
exempting the Merger (taking into account any requisite waiting period in
respect thereto), (ii) the date on which the shareholders of TBI approve this
Plan of Merger, and (iii) the date on which all other conditions precedent
(other than those conditions which relate to actions to be taken at the Closing)
to each party's obligations hereunder shall have been satisfied or waived (to
the extent waivable by such party).
1.4 Restructure of Transaction. The Company shall have the right with the
consent of TBI (which consent may not be unreasonably withheld, conditioned or
delayed) to revise the structure of the Merger contemplated by this Plan of
Merger in order to achieve tax benefits or for any other reason which the
Company may deem advisable; provided, however, that the Company shall not have
the right, without the approval of the Board of Directors of TBI and, if
required by the IBCL, the holders of the TBI Common Stock, to make any revision
to the structure of the Merger which: (i) changes the amount of the
consideration which the holders of shares of TBI Common Stock are entitled to
receive (determined in the manner provided in Section 3.1 hereof); (ii) changes
the intended tax free effects of the Merger with respect to the Stock
Consideration to the Company, TBI or the holders
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of shares of TBI Common Stock; (iii) would permit the Company to pay the Stock
Consideration other than by delivery of Company Common Stock registered with the
SEC (in the manner described in Section 3.1 hereof); (iv) would be materially
adverse to the interests of TBI or adverse to the holders of shares of TBI
Common Stock; or (v) would materially impede or delay consummation of the
Merger. The Company may exercise this right of revision by giving written notice
to TBI in the manner provided in Section 13.6 of the Agreement which notice
shall be in the form of an amendment to this Plan of Merger or in the form of an
Amended and Restated Plan of Merger.
ARTICLE 2
TERMS OF MERGER
2.1 Articles of Incorporation. The Articles of Incorporation of Merger
Subsidiary in effect immediately prior to the Effective Time shall be the
Articles of Incorporation of the Surviving Corporation until otherwise amended
or repealed.
2.2 Bylaws. The Bylaws of Merger Subsidiary in effect immediately prior to
the Effective Time shall be the Bylaws of the Surviving Corporation until
otherwise amended or repealed.
2.3 Directors and Officers. The directors of Merger Subsidiary in office
immediately prior to the Effective Time, together with such additional persons
as may thereafter be elected, shall serve as the directors of the Surviving
Corporation from and after the Effective Time in accordance with the Bylaws of
the Surviving Corporation. The officers of Merger Subsidiary in office
immediately prior to the Effective Time, together with such additional persons
as may thereafter be elected, shall serve as the officers of the Surviving
Corporation from and after the Effective Time in accordance with the Bylaws of
the Surviving Corporation.
ARTICLE 3
MANNER OF CONVERTING SHARES
3.1 Conversion of Shares. Subject to the provisions of this Article 3, at
the Effective Time, by virtue of the Merger and without any action on the part
of the Company, Merger Subsidiary, TBI, or the shareholders of any of the
foregoing, the shares of the constituent Parties shall be converted as follows:
(a) Each share of Company Common Stock (and any Rights with respect
to Company Common Stock) issued and outstanding immediately prior to the
Effective Time shall remain issued and outstanding from and after the Effective
Time;
(b) Each share of Merger Subsidiary Common Stock issued and
outstanding immediately prior to the Effective Time shall remain issued and
outstanding and shall represent one share of the Surviving Corporation from and
after the Effective Time;
(c) (i) Subject to Sections 3.1(c) (ii), (iii) and (iv) and Section
3.1(d) below, each issued and outstanding share of TBI Common Stock outstanding
immediately prior to the Effective Time shall be converted, subject to the
provisions of this Article 3, into one of the following:
(A) cash in the amount of $150, without interest (the
"Cash Consideration"); or
(B) that number of shares of Company Common Stock,
rounded to the nearest thousandth of a share, equal to
the quotient obtained by dividing the $150.00 by the
Company Stock Price (the "Stock Consideration").
(ii) Notwithstanding anything herein to the contrary, in all
events (excluding the portion of the Merger Consideration attributable to shares
cancelled pursuant to Section 3.3 hereof, Dissenting Shares and cash payable in
lieu of fractional shares) the aggregate Cash Consideration shall equal
thirty-five percent (35%) of the Merger Consideration (the "Cash Consideration
Percentage") and the aggregate Stock Consideration shall equal sixty-five
percent (65%) of the Merger Consideration (the "Stock Consideration
Percentage"). Notwithstanding the
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foregoing, the percentages used in the preceding definitions are subject to
waiver or modification pursuant to Section 3.1(c)(iv) below.
(iii) If, after the results of the Forms of Election are
calculated, the number of shares of TBI Common Stock respecting which a Stock
Election is made would result in aggregate Stock Consideration greater than the
Stock Consideration Percentage, the Company shall cause the Exchange Agent to
determine the number of shares of TBI Common Stock respecting which a Stock
Election was made (the "Stock Election Shares") which must be redesignated as
Cash Election Shares (as defined below) in order to reduce the shares converted
into Stock Consideration to a number of shares such that the aggregate Stock
Consideration equals the Stock Consideration Percentage. In such event, all
holders who have Stock Election Shares shall, on a pro rata basis (based on the
number of Stock Election Shares they hold), have such number of their Stock
Election Shares redesignated as Cash Election Shares so that the Stock
Consideration Percentage is achieved. If, after the results of the Forms of
Election are calculated, the number of shares of Company Common Stock not making
a Stock Election (the "Cash Election Shares") would result in aggregate Cash
Consideration greater than the Cash Consideration Percentage, the Company shall
cause the Exchange Agent to determine the number of Cash Election Shares which
must be redesignated as Stock Election Shares in order to reduce the shares
converted into Cash Consideration to a number of shares such that the aggregate
Cash Consideration equals the Stock Consideration Percentage. In such event, all
holders who have Cash Election Shares shall, on a pro rata basis (based on the
number of Cash Election Shares they hold), have such number of their Cash
Election Shares redesignated as Stock Election Shares so that the Cash
Consideration Percentage is achieved.
(iv) Notwithstanding the foregoing, the Company may, in its
sole discretion, taking into account the actual results of the election process
described in Section 5.2, direct at any time prior to the Effective Time that
the redesignation procedures provided in Section 3.1(c)(iii) above be waived in
whole or in part. In such event, the percentage limits specified in Section
3.1(c)(ii) above for the Cash Consideration Percentage and the Stock
Consideration Percentage, respectively, shall be disregarded and the procedures
provided for in Sections 3.1(c)(ii) and (iii) above shall be applied
substituting such percentage limits as the Company shall designate solely for
the purpose of causing the Cash Consideration Percentage and the Stock
Consideration Percentage to more closely match the results of TBI shareholder
elections than as set forth in Section 3.1(c)(ii) above, provided, however, that
such actions would not adversely affect the Merger from qualifying as a tax-free
reorganization under Section 368(a) of the Code.
(d) Dissenting Shares shall not be converted pursuant to Section
3.1(c) above in the Merger but, at and after the Effective Time, shall represent
only the right to receive payment in accordance with Chapter 44 of the IBCL. If
a holder of Dissenting Shares becomes ineligible for payment under Chapter 44 of
the IBCL, then such holder's Dissenting Shares shall cease to be Dissenting
Shares and shall be converted in the manner set forth in Section 3.1(c) above
effective as of the Effective Time.
3.2 Redemption of TBI Exercisable Stock Options. Immediately before
the Effective Time each issued and outstanding TBI Exercisable Stock Option
shall be canceled and retired by TBI and shall cease to exist through the
payment by TBI to holders of such options of that cash sum, without interest,
equal to the Option Spread (collectively, the "Stock Option Consideration").
3.3 Exchange Ratio Adjustment. In the event the Company changes the
number of shares of Company Common Stock issued and outstanding after the date
of this Agreement and prior to the Effective Time as a result of a stock split,
stock dividend, subdivision, reclassification, conversion or similar
recapitalization with respect to such stock and the record date therefor (in the
case of a stock dividend) or the effective date thereof (in the case of a stock
split, subdivision, reclassification, conversion or similar recapitalization for
which a record date is not established) shall be prior to the Effective Time,
the Stock Consideration shall be proportionately adjusted in such fashion as the
Company and TBI may agree, such agreement not to be unreasonably withheld,
conditioned or delayed.
3.4 Shares Held by TBI or the Company. Each of the shares of TBI
Common Stock held by TBI, any TBI Subsidiary, the Company or any Company
Subsidiary, in each case other than in fiduciary capacity or as a result of
debts previously contracted, shall be canceled and retired at the Effective Time
and no Merger Consideration shall be issued in exchange therefor.
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ARTICLE 4
EXCHANGE OF SHARES;
ELECTION OF MERGER CONSIDERATION
4.1 Exchange of Certificates.
(a) Exchange Agent. As soon as practicable following the date of this Plan
of Merger and in any event not less than three days prior to dissemination of
the TBI Proxy Statement, the Company shall appoint the Exchange Agent to act as
exchange agent for payment of the Merger Consideration upon surrender of
certificates representing TBI Common Stock. The Exchange Agent shall also act as
the agent for the TBI shareholders for the purpose of receiving and holding
their Forms of Election and Certificates and shall obtain no rights or interests
in such shares. Promptly following the Effective Time, Company shall deposit
with the Exchange Agent, for the benefit of the holders of shares of TBI Common
Stock for exchange in accordance with Article 3 through the Exchange Agent, (i)
certificates representing the number of shares of Company Common Stock issuable
and (ii) the amount of cash consideration payable, in each case, pursuant to
Section 3.1(c) hereof in exchange for outstanding shares of TBI Common Stock
(such shares of Company Common Stock and cash, together with any dividends or
distributions with respect thereto, being hereinafter referred to as the
"Exchange Fund"). For the purposes of such deposit, the Company shall assume
that there will not be any fractional shares of Company Common Stock. The
Company shall make available to the Exchange Agent, from time to time as needed,
cash sufficient to pay cash in lieu of fractional shares in accordance with
Section 4.1(e) hereof. The Exchange Agent shall, pursuant to irrevocable
instructions, deliver Company Common Stock and cash contemplated to be issued
pursuant to Sections 3.1(c) hereof out of the Exchange Fund. The Exchange Fund
may not be used for any other purpose.
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, the Exchange Agent shall mail to each holder of record of a
certificate or certificates that immediately prior to the Effective Time
represented outstanding shares of TBI Common Stock (such certificates are
referred to hereinafter collectively as the "Certificates") whose shares or
options were converted into the right to receive Merger Consideration pursuant
to Section 3.1(c) hereof and who did not complete (or have revoked prior to the
Effective Time) a Form of Election pursuant to Section 4.2(b) hereof, (i) a
letter of transmittal (which shall specify that delivery shall be effected, and
risk of loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent and shall be in such form and have such other
provisions as Company may reasonably specify) and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for such Person's
portion of the Merger Consideration. Upon surrender of a Certificate for
cancellation to the Exchange Agent or to such other agent or agents as may be
appointed by Company, together with such letter of transmittal, duly executed,
and such other documents as may reasonably be required by the Exchange Agent,
the Exchange Agent shall effect delivery within five (5) business days to the
holder of such Certificate, in exchange therefor, the amount of cash, if any,
and the number of whole shares of Company Common Stock, if any, into which the
aggregate number of shares of TBI Common Stock previously represented by such
Certificate shall have been converted pursuant to Section 3.1(c) hereof, and the
Certificate so surrendered shall forthwith be canceled. Thereafter, each such
holder who received any Company Common Stock shall be treated as a holder of
Company Common Stock for all purposes under the IBCL and the Company's Articles
of Incorporation and Bylaws, in each case as amended. In the event of a transfer
of ownership of TBI Common Stock that is not registered in the transfer records
of TBI, payment may be made to a Person other than the Person in whose name the
Certificate so surrendered is registered, if such Certificate shall be properly
endorsed or otherwise be in proper form for transfer and the Person requesting
such payment shall pay any transfer or other taxes required by reason of the
payment to a Person other than the registered holder of such Certificate or
establish to the satisfaction of the Company that such tax has been paid or is
not applicable. Until surrendered as contemplated by this Section 4.1(b), each
Certificate shall be deemed at any time after the Effective Time to represent
only the right to receive upon such surrender the portion of the Merger
Consideration into which the shares of TBI Common Stock theretofore represented
by such Certificate have been converted pursuant to Section 3.1(c) hereof. No
interest shall be paid or accrued on any cash payable upon surrender of any
Certificate.
(c) Distributions With Respect to Unexchanged Shares. No dividends or
other distributions with respect to Company Common Stock with a record date on
or after the Effective Time shall be paid to the holder of any
A-4
Certificate formerly representing TBI Common Stock with respect to the shares of
Company Common Stock issuable upon surrender thereof, and no cash payment in
lieu of fractional shares shall be paid to any such holder pursuant to Section
4.1(e) hereof, until the surrender of such Certificate in accordance with this
Article 4. Subject to applicable Law, following surrender of any such
Certificate, there shall be paid to the holder of the Certificate representing
whole shares of Company Common Stock issued in exchange therefor, without
interest, (i) at the time of such surrender, the amount of any cash payable in
lieu of a fractional share of Company Common Stock to which such holder is
entitled pursuant to Section 4.1(e) hereof and the amount of dividends or other
distributions with a record date after the Effective Time theretofore paid with
respect to such whole shares of Company Common Stock, and (ii) at the
appropriate payment date, the amount of dividends or other distributions with a
record date after the Effective Time but prior to such surrender and a payment
date subsequent to such surrender payable with respect to such whole shares of
Company Common Stock.
(d) No Further Ownership Rights in TBI Common Stock. The Merger
Consideration paid and/or issued in accordance with the terms of this Article 4
upon conversion of any shares of TBI Common Stock or TBI Exercisable Stock
Options shall be deemed to have been paid and/or issued in full satisfaction of
all rights pertaining to such shares of TBI Common Stock, subject, however, to
the Surviving Corporation's obligation to pay any dividends or make any other
distributions with a record date prior to the Effective Time that may have been
declared or made by TBI on such shares of TBI Common Stock in accordance with
the terms of this Agreement or prior to the date of this Agreement and which
remain unpaid at the Effective Time, and after the Effective Time there shall be
no further registration of transfers on the stock transfer books of the
Surviving Corporation of shares of TBI Common Stock that were outstanding
immediately prior to the Effective Time. If, after the Effective Time, any
Certificates formerly representing shares of TBI Common Stock are presented to
the Surviving Corporation or the Exchange Agent (or Option Agreements are
presented to the Surviving Corporation or the Company) for any reason, they
shall be canceled and exchanged as provided in this Article 4.
(e) No Fractional Shares.
(1) No certificates or scrip representing fractional shares of
Company Common Stock shall be issued upon the conversion of TBI Common Stock
pursuant to Section 3.1(c), and such fractional share interests shall not
entitle the owner thereof to vote or to any rights of a holder of Company Common
Stock. For purposes of this Section 4.1(e), all fractional shares to which a
single record holder would be entitled shall be aggregated and calculations
shall be rounded to three decimal places.
(2) In lieu of any such fractional shares, each holder of TBI Common
Stock who would otherwise be entitled to such fractional shares shall be
entitled to an amount in cash, without interest, rounded to the nearest cent,
equal to the product of (A) the amount of the fractional share interest in a
share of TBI Common Stock to which such holder is entitled under Section 3.1(c)
(or would be entitled but for this Section 4.1(e)) and (B) the Company Stock
Price.
(f) Termination of Exchange Fund. Any portion of the Exchange Fund that
remains undistributed to the holders of TBI Common Stock for three months after
the Effective Time shall be delivered to the Company, upon demand, and any
holder of TBI Common Stock or TBI Exercisable Stock Options who has not
theretofore complied with this Article 4 shall thereafter look only to the
Company and the Surviving Corporation for payment of its claim for a portion of
the Merger Consideration (including any cash in lieu of fractional shares of
Company Common Stock to which such Person is entitled pursuant to Section
4.1(e)) and any applicable dividends or distributions with respect to any
Company Common Stock constituting Merger Consideration as provided in Section
4.1(c), in each case, without any interest thereon.
(g) No Liability. None of TBI, the Merger Subsidiary, the Company or the
Exchange Agent shall be liable to any Person in respect of any cash or any
shares of Company Common Stock (or dividends or distributions with respect
thereto) or Stock Option Consideration delivered to a public official pursuant
to any applicable abandoned property, escheat or similar Law. If any Certificate
has not been surrendered prior to five years after the Effective Time (or
immediately prior to such earlier date on which Merger Consideration in respect
of such Certificate would otherwise escheat to or become the property of any
Governmental Body), any such cash, shares, dividends or distributions in respect
of such Certificate shall, to the extent permitted by applicable Law, become the
property of the Surviving Corporation, free and clear of all claims or interest
of any person previously entitled thereto.
A-5
(h) Investment of Exchange Fund. The Exchange Agent shall invest any cash
included in the Exchange Fund, as directed by the Company, in direct obligations
of the U.S. Treasury or otherwise with the consent of TBI (which consent shall
not be unreasonably withheld, conditioned or delayed), on a daily basis. Any
interest and other income resulting from such investments shall be paid to the
Company.
(i) Withholding Rights. The Company and the Exchange Agent shall be
entitled to deduct and withhold from the consideration otherwise payable to any
holder of TBI Common Stock pursuant to this Agreement such amounts as may be
required to be deducted and withheld with respect to the making of such payment
under the Code, or under any provision of state, local or foreign tax Law. To
the extent that amounts are so withheld and paid over to the appropriate taxing
authority, the Surviving Corporation will be treated as though it withheld an
appropriate amount of the type of consideration otherwise payable pursuant to
this Agreement to any holder of TBI Common Stock, sold such consideration for an
amount of cash equal to the fair market value of such consideration at the time
of such deemed sale and paid such cash proceeds to the appropriate taxing
authority.
(j) Income Tax Treatment. It is intended by the Parties that the Merger
qualify as a "reorganization" within the meaning of Section 368(a) of the Code.
Subject to any revision to the structure of the transaction as provided under
Section 1.4 hereof, the Parties hereto hereby adopt this Agreement as a "plan of
reorganization" within the meanings of Sections 1.368-2(g) and 1.368-3(a) of the
U.S. Treasury Regulations promulgated under the Code.
4.2 Elections.
(a) Each Person who, on or prior to the Election Date referred to in
Section 5.2(b) below, is a record holder of shares of TBI Common Stock shall be
entitled, with respect to all or any portion of such shares, to make an
unconditional Stock Election on or prior to such Election Date, on the basis
hereinafter set forth.
(b) The Company shall prepare a form of election, which form shall be
subject to the reasonable approval of TBI (the "Form of Election") and shall be
mailed with the TBI Proxy Statement to the record holders of TBI Common Stock as
of the record date for the TBI Shareholders' Meeting, which Form of Election
shall be used by each record holder of shares of TBI Common Stock who wishes to
elect to receive the Stock Consideration pursuant to Section 3.1(c)(i)(B) hereof
for any or all shares of TBI Common Stock held by such holder (a "Stock
Election"). TBI shall use all reasonable efforts to make the Form of Election
and the Proxy Statement available to all Persons who become record holders of
TBI Common Stock during the period between such record date and the Election
Date, including using reasonable efforts to mail a Form of Election to all such
persons who become record holders prior to the seventh business day prior to the
Election Date. Any such holder's election to receive the Stock Consideration
pursuant to Section 3.1(c)(i)(B) hereof shall have been properly made only if
the Exchange Agent shall have received at its designated office, by 5:00 p.m.,
EST, on the business day immediately preceding the Closing Date (the "Election
Date"), a Form of Election properly completed and signed and accompanied by
Certificates for the shares of TBI Common Stock to which such Form of Election
relates, duly endorsed in blank or otherwise in form acceptable for transfer on
the books of TBI (or accompanied by an appropriate guarantee of delivery of such
Certificates as set forth in such Form of Election from a firm which is a member
of a registered national securities exchange or of the NASD or a commercial bank
or trust company having an office or correspondent in the United States,
provided such Certificates are in fact delivered to the Exchange Agent within
three NASDAQ Capital Market trading days after the date of execution of such
guarantee of delivery). Failure to deliver Certificates covered by any guarantee
of delivery within three NASDAQ Capital Market trading days after the date of
execution of such guarantee of delivery shall be deemed to invalidate any
otherwise properly made Stock Election. TBI will announce the Anticipated
Closing Date and Company Stock Price through a letter to its shareholders mailed
at least two weeks before such Anticipated Closing Date. If the Closing is
delayed to a subsequent date, the Anticipated Closing Date shall be delayed by a
like number of days, the Election Date shall be similarly delayed and the
Company will promptly announce such rescheduled Election Date and Closing.
(c) Any Form of Election may be revoked by the stockholder who submitted
such Form of Election to the Exchange Agent only by written notice received by
the Exchange Agent (i) prior to 5:00 p.m., EST, on the Election Date or (ii)
after such time, if (and only to the extent that) the Exchange Agent is legally
required to permit revocations and only if the Effective Time shall not have
occurred prior to such date. In addition, all Forms of Election shall
automatically be revoked if the Exchange Agent is notified in writing by the
Company that this
A-6
Agreement has been terminated. If a Form of Election is revoked, the Certificate
or Certificates (or guarantees of delivery, as appropriate) for the shares of
TBI Common Stock to which such Form of Election relates shall be promptly
returned to the shareholder submitting the same to the Exchange Agent and any
such shares shall be treated as Cash Election Shares (unless and until another
duly completed Form of Election [accompanied by the Certificate or Certificates,
or guarantees of delivery, as applicable, to which such Form of Election
relates] has been submitted to the Exchange Agent in accordance with this
Agreement).
(d) The determination of the Exchange Agent in its sole discretion shall
be binding as to whether or not elections to receive the Stock Consideration
pursuant to Section 3.1(c)(i)(B) hereof have been properly made or revoked
pursuant to this Section 5.2 with respect to shares of TBI Common Stock and when
elections and revocations were received by it. If no Form of Election is
received with respect to shares of TBI Common Stock, or if the Exchange Agent
determines that any election to receive the Stock Consideration pursuant to
Section 3.1(c)(i)(B) hereof was not properly made with respect to shares of TBI
Common Stock, such shares shall be treated by the Exchange Agent as Cash
Election Shares at the Effective Time, and such shares shall be converted into
the right to receive the Cash Consideration in accordance with Section
3.1(c)(i)(A) hereof (subject to pro-ration pursuant to Section 3.1(c)(iii)
hereof). The Exchange Agent shall also make all computations as to the
adjustments contemplated by Section 3.1(c)(iii) and absent manifest error any
such computation shall be conclusive and binding on the holders of shares of TBI
Common Stock. The Exchange Agent may, with the mutual agreement of the Company
and TBI, make such rules as are consistent with this Section 4.2 for the
implementation of the elections provided for herein as shall be necessary or
desirable fully to effect such elections.
ARTICLE 5
MISCELLANEOUS
5.1 Conditions Precedent. Consummation of the Merger by Merger Subsidiary
shall be conditioned on the satisfaction of or waiver by the Company of the
conditions precedent to the Merger set forth in Sections 10.1 and 10.2 of the
Agreement. Consummation of the Merger by TBI shall be conditioned on the
satisfaction of, or waiver by TBI of, of the conditions precedent to the Merger
set forth in Sections 10.1 and 10.3 of the Agreement.
5.2 Termination. This Plan of Merger may be terminated at any time prior
to the Effective Time by the parties hereto as provided in Article 11 of the
Agreement.
5.3 Amendments. To the extent permitted by Law, this Plan of Merger may be
amended by a subsequent writing signed by each of the parties upon the approval
of the Boards of Directors of each of the parties, whether before or after
shareholder approval of the Agreement and this Plan of Merger has been obtained;
provided, that after any such approval by the holders of TBI Common Stock, there
shall be made no amendment that modifies in any material respect the
consideration to be received by the TBI shareholders without the approval of TBI
Shareholders.
5.4 Assignment. Except as expressly contemplated hereby, neither this Plan
of Merger nor the Agreement, nor any of the rights, interests, or obligations
hereunder or thereunder shall be assigned by any party hereto (whether by
operation of Law or otherwise) without the prior written consent of the other
parties. Subject to the preceding sentence, the Agreement and this Plan of
Merger will be binding upon, inure to the benefit of and be enforceable by, the
parties and their respective successors and assigns.
5.5 Governing. This Plan of Merger shall be governed by and construed in
accordance with the Laws of the State of Indiana, without regard to any
applicable conflicts of Laws.
5.6 Counterparts. This Plan of Merger may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same document.
5.7 Captions. The captions contained in this Plan of Merger are for
reference purposes only and are not part of this Plan of Merger.
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IN WITNESS WHEREOF, each of the parties hereto has duly executed and
delivered this Plan of Merger or has caused this Plan of Merger 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.
COMMUNITY BANK SHARES OF INDIANA, INC.
By: ____________________________________
Xxxxx X. Xxxxxxx
President and Chief Executive Officer
THE BANCSHARES, INC.
By: ____________________________________
Xxxxx X. Xxxxx
President and Chief Executive Officer
CBIN SUBSIDIARY, INC.
By: ____________________________________
Xxxxx X. Xxxxxxx
President and Chief Executive Officer
A-8
EXHIBIT "B"
AFFILIATE AGREEMENT
Community Bank Shares of Indiana, Inc.
Attention: Xxxxx X. Xxxxxxx, President and Chief Executive Officer
000 Xxxx Xxxxxx Xxxxxx
Xxx Xxxxxx, Xxxxxxx 00000
Dear Xx. Xxxxxxx:
The undersigned is a shareholder and a director, executive officer and/or
ten percent (10%) or greater shareholders of The Bancshares, Inc. ("TBI"), an
Indiana corporation which is a bank holding company by virtue of its ownership
of The Xxxxx County State Bank (the "Bank"), a state banking corporation
organized under the laws of the State of Indiana. The undersigned will receive
cash and/or shares of common stock of Community Bank Shares of Indiana, Inc.
(the "Company") pursuant to the transactions described in the Agreement and Plan
of Merger, dated as of February 15, 2006 (the "Agreement"), by and between TBI,
the Company and CBIN Subsidiary, Inc. (the "Merger Subsidiary"). Under the terms
of the Agreement, TBI will be merged into and with the Merger Subsidiary (the
"Merger"), and the shares of the no par value common stock of TBI ("TBI Common
Stock") will be converted into and exchanged for cash and shares of the $.10 par
value common stock of the Company ("Company Common Stock"). This Affiliate
Agreement represents an agreement between the undersigned and the Company
regarding certain rights and obligations of the undersigned in connection with
the Agreement, the Merger and the shares of Company Common Stock (if any) to be
received by the undersigned as a result of the Merger.
In consideration of the benefits the undersigned will receive as a
shareholder of TBI under the Merger and the mutual covenants contained herein,
the undersigned and the Company hereby agree as follows:
0.Xxxx on the Merger. The undersigned agrees to vote all shares of TBI
Common Stock that the undersigned owns beneficially or of record in favor of
approving the Agreement and the Plan of Merger, unless the Company is then in
Default in any material respect as regards any covenant, agreement,
representation or warranty as to it contained in the Agreement; provided,
however, that nothing in this sentence shall be deemed to require the
undersigned to vote any shares of TBI Common Stock over which he has or shares
voting power solely in a fiduciary capacity on behalf of any Person other than
TBI, if the undersigned determines, in good faith after consultation and receipt
of an opinion of counsel, that such a vote would cause a breach of fiduciary
duty to such other Person.
2.Restriction on Transfer. The undersigned further agrees that he will
not, without the prior written consent of the Company (which consent may be
withheld for any reason or no reason), transfer any shares of TBI Common Stock
prior to the Effective Date, except by operation of law, by will, or under the
laws of descent and distribution.
3.Affiliate Status. The undersigned understands and agrees that as to TBI
the undersigned is an "affiliate" (a "TBI Affiliate") under Rule 145(c) as
defined in Rule 405 of the Rules and Regulations of the SEC under the 1933 Act,
and the undersigned anticipates that the undersigned will be such an "affiliate"
at the time of the Merger.
4.Covenants and Warranties of Undersigned Respecting Company Common Stock.
The undersigned represents, warrants and agrees that the Company has informed
the undersigned that any distribution by the undersigned of Company Common Stock
has not been registered under the 1933 Act and that shares of Company Common
Stock received pursuant to the Merger can, for a period of one (1) year after
the Effective Time, only be sold by the undersigned (i) following registration
under the 1933 Act, (ii) in conformity with the volume and other requirements of
Rule 144 (as applicable to the undersigned by virtue of Rule 145(d)) promulgated
by the SEC as the same now exist or may hereafter be amended or (iii) to the
extent some other exemption from registration under the 1933 Act might be
available. The undersigned understands that the Company is under no obligation
to file a registration statement with the SEC covering the disposition of the
shares of Company Common Stock received by the undersigned pursuant to the
Merger.
B-1
5. Confidentiality Agreement.
(a) Confidential Information. The undersigned shall not disclose or
use or otherwise exploit (for his own benefit or the benefit of any other
Person) at any time, any Confidential Information of which the undersigned
became aware while a TBI Affiliate, whether or not any such information was
developed by him. For purposes of this Agreement, "Confidential Information"
shall mean all non-public, proprietary information of or respecting TBI or any
Affiliate, including, without limitation, manner of operations, financial
information and customer lists, records and relationships.
6. Restrictive Covenants.
(a) Acknowledgments. The undersigned acknowledges that (i) his
services as a TBI Affiliate have been of a special, unique and extraordinary
character and that his position with TBI and/or the Bank placed him in a
position of confidence and trust with the customers of TBI and/or the Bank and
allowed him access to Confidential Information, (ii) he will benefit from the
consummation of the transactions contemplated under the Agreement, (iii) he
would not have had significant contact with any TBI and/or the Bank customers if
not for his service as a TBI Affiliate and the name, reputation and goodwill of
TBI and/or the Bank, (iv) the nature and periods of restrictions imposed by the
covenants contained in this Section 6 are fair, reasonable and necessary to
protect and preserve for the Company and the Bank (A) the customer relationships
developed by TBI and/or the Bank through significant time and expense and (B)
the benefits of the undersigned's service as a TBI Affiliate, (v) the Company,
the Bank and their Affiliates would sustain great and irreparable loss and
damage if the undersigned were to breach any of such covenants, (vi) the
Company, the Bank and their Affiliates conduct their business actively in and
throughout the entire Territory (as herein defined) and (vii) the Territory is
reasonably sized.
(b) Covenants. Having acknowledged the foregoing, the undersigned
covenants and agrees with the Company that he will not, directly or indirectly,
from the date hereof through the date two years following the Effective Time,
engage in any of the following:
(i) attempt in any manner to cause or otherwise encourage any
employee of the Bank to leave the employ of the Bank;
(ii) (A) engage in or (B) own, manage, operate, join, control,
assist, participate in or be connected with, directly or indirectly, as an
officer, director, shareholder, member, partner, proprietor, employee, agent,
consultant, independent contractor or otherwise, any Person which is, at the
time, directly or indirectly, engaged in, any portion of the Financial Industry
within the Territory or in competition within the Territory with any aspect of
the business activities of the Company, the Bank or any Affiliate thereof
(provided, however, that the undersigned may own, solely as a passive
investment, securities of any Person which are traded on a national securities
exchange or in the over-the-counter market if the undersigned does not own more
than one percent (1%) of any class of securities of such Person);
(iii) solicit, divert, or take away, or attempt to solicit,
divert or take away, the Financial Industry business or relationship of any of
the customers of the Company, the Bank or any of their Affiliates, or any
prospective customers which were solicited by the Bank while the undersigned was
a TBI Affiliate, for the purpose of selling to or servicing for any such
customer or prospective customer any Financial Industry product or service; or
(iv) cause or attempt to cause any of the foregoing customers
or prospective customers of the Company or the Bank to refrain from maintaining
or acquiring from or through the Company or the Bank (or any of their
Affiliates) any banking product or service, and will not assist any other Person
or Persons to do so.
The undersigned covenants further that, without limitation as
to time, he will not directly or indirectly disclose or use or otherwise exploit
for his own benefit, or the benefit of any other Person, any Confidential
Information.
B-2
(c) Definitions. For purposes of this Agreement,
(i) the "Territory" shall mean that area comprised of all
points in Xxxxx County, Indiana and in all Indiana counties contiguous to Xxxxx
County, Indiana. The undersigned shall be prohibited from maintaining a business
address within such Territory if he is engaged in any of the activities
enumerated in Subsection 6(b)(ii) hereof at such address, and he shall also be
prohibited from engaging in any of the activities enumerated in Subsection
6(b)(ii) hereof within such Territory even if the undersigned maintains a
business or residential address outside said Territory; and
(ii) the "Financial Industry" shall mean the banking, mortgage
banking and/or finance business, and any and all activities and enterprises
incidental or related thereto.
(d) Injunctive Relief; Invalidity of Any Provision. The undersigned
acknowledges that his breach of any covenant contained in this Section 6 will
result in irreparable injury to the Company, the Bank and their Affiliates and
that the Company's, the Bank's and the Affiliates' remedy at Law for such a
breach will be inadequate. Accordingly, the undersigned agrees and consents that
the Company, the Bank or any of their Affiliates, in addition to all other
remedies available to any of them at Law, shall be entitled to seek both
preliminary and permanent injunctions to prevent and/or halt a breach or
threatened breach by the undersigned of any covenant contained in this Section
6. If any provision of this Section 6 is invalid in part or in whole, it shall
be deemed to have been amended, whether as to time, area covered or otherwise,
as and to the extent required for its validity under applicable law and, as so
amended, shall be enforceable. The parties further agree to execute all
documents necessary to evidence such amendment.
(e) Rights Cumulative. The rights and remedies of the Company, the
Bank and their Affiliates under this Section 6 are in addition to, and
cumulative of, any other rights and remedies that the Company, the Bank or any
of their Affiliates may have by Law with respect to this Agreement. The parties
further agree that in the event of a breach by the undersigned of Section 6(b)
hereof, the period set forth in Section 6(b) hereof shall not begin until the
undersigned permanently ceases his breach thereof.
7. Understanding of Restrictions on Dispositions. The undersigned has
carefully read the Agreement and this Affiliate Agreement and discussed their
requirements and impact upon his ability to sell, transfer or otherwise dispose
of the shares of Company Common Stock (if any) received by the undersigned in
connection with the Merger, or to compete with the Company, the Bank or their
Affiliates following the Merger, to the extent he believes necessary, with his
counsel or counsel for TBI.
8.Filing of Reports by the Company. The Company agrees, for a period of
two years after the Effective Time, to file on a timely basis all reports
required to be filed by it pursuant to Section 13 of the 1934 Act, so that the
public information provisions of Rule 144(c) promulgated by the SEC as the same
are presently in effect will be available to the undersigned in the event the
undersigned desires to transfer any shares of Company Common Stock issued to the
undersigned pursuant to the Merger.
9. Entire Agreement; Modification; Waiver. This Affiliate Agreement
constitutes the entire agreement between the parties pertaining to the subject
matter contained in it and supersedes all prior and contemporaneous agreements,
representations, and understandings of the parties, whether written or oral. No
supplements, modification, or amendment of this Affiliate Agreement shall be
binding unless executed in writing by all parties hereto. No waiver of any of
the provisions of this Affiliate Agreement will be deemed, or will constitute, a
waiver of any other provision, whether or not similar, nor will any waiver
constitute a continuing waiver. No waiver will be binding unless executed in
writing by the party making the waiver.
10. Successors and Assigns; Assignment. This Agreement shall be binding
on, and inure to the benefit of, the parties hereto and their respective heirs,
executors, legal representatives, successors and assigns; provided, however,
that this Agreement is intended to be personal to the undersigned and the rights
and obligations of the undersigned hereunder may not be assigned or transferred
by him.
B-3
11. Governing Law. Subject to Section 14 hereof, this Agreement is
executed and delivered in, and shall be governed by, enforced and interpreted in
accordance with the laws of, the State of Indiana without taking into account
provisions regarding choice of Law or conflicts of Law, except to the extent
certain matters may be governed as a matter of law by federal Law.
12. Execution in Counterparts. This Affiliate Agreement may be executed in
multiple counterparts, each of which shall be deemed an original, but all of
which shall together constitute one and the same document.
13. Severability of Provisions. The invalidity or unenforceability of any
particular provision of this Agreement shall not affect the other provisions
hereof and this Agreement shall be construed in all respects as if such invalid
or unenforceable provision were omitted.
14. Arbitration. The undersigned agrees, without in any way impairing the
rights afforded the Company, the Bank or their Affiliates pursuant to Sections
6(d) and 6(e) hereof, that any issue, dispute, controversy, or claim arising out
of, related to or connected in any way with this Agreement which cannot be
otherwise resolved, shall be submitted to arbitration in Louisville, Kentucky,
in accordance with the Commercial Arbitration Rules of The American Arbitration
Association and the ensuing arbitration award may be entered as a final judgment
in any court having jurisdiction. Any dispute as to whether an issue is to be
resolved by arbitration shall be submitted as part of the arbitration
proceeding. As part of the arbitration award, legal costs, attorneys' fees, and
the fees of expert witnesses may be assessed against any Person found to have
acted in bad faith.
15. Third Party Beneficiaries. Each Affiliate of the Company and the Bank
shall be deemed to be a third party beneficiary of the rights of the Company and
the Bank hereunder.
16.Capitalized Terms. All capitalized terms in this Affiliate Agreement
shall have the same meaning as given such terms under the Agreement.
This Affiliate Agreement is executed as of the __ day of __________, 2006.
Very truly yours,
________________________________
Signature
________________________________
Printed Name
________________________________
Address
________________________________
Telephone Number
AGREED TO AND ACCEPTED as of
_____________ __, 2006
COMMUNITY BANK SHARES OF INDIANA, INC.
By: _____________________________________
Xxxxx X. Xxxxxxx
President and Chief Executive Officer
B-4
EXHIBIT C
EMPLOYMENT, CONFIDENTIALITY AND NONCOMPETITION AGREEMENT
THIS EMPLOYMENT AND CONFIDENTIALITY AGREEMENT is entered into on _________
___, 2006 between (i) THE XXXXX COUNTY STATE BANK, an Indiana banking
corporation, with its principal place of business at 000 Xxxx XxXxxxx Xxxxxx,
Xxxxxxxxxx, Xxxxxxx 00000 (the "Bank") and (ii) ________________________________
an individual residing at __________________________________ (the "Employee")
WITNESSETH:
WHEREAS, the Employee is an employee of the Bank;
WHEREAS, Employee's continued employment with the Bank henceforth shall be
governed by the terms and conditions set forth hereinafter, and this Agreement
shall supplant in its entirety any prior agreements representing the employment
of the Employee by the Bank.
NOW, THEREFORE, in consideration of the employment of the Employee
hereunder, the confidentiality and noncompetition covenants hereunder and all
other premises and mutual covenants and agreements hereinafter contained, and
for other good and valuable consideration, the receipt, adequacy and mutuality
of which being herewith acknowledged, the parties hereto agree as follows:
1. Employment. The Bank agrees to employ Employee and Employee agrees to
be employed by the Bank subject to the terms and provisions of this Agreement.
2. Term. Unless sooner terminated as hereinafter provided, the term of
this Agreement shall commence on ______________ ___, 2006, and shall continue
through _________ ___, 2007 (collectively, the "Term"). The parties hereto agree
that, upon the expiration of the Term, the Bank shall be under no obligation
whatsoever to renew or continue the employment of the Employee.
3. Duties. Employee shall serve as ____________________ of the Bank and in
that regard (i) shall perform such duties as are generally performed by
__________ of commercial banking institutions, (ii) shall perform such other
duties and services as may be requested orally and in writing by the Bank Board
of Directors from time to time and (iii) shall comply with all reasonable
employee policies which may be established and/or modified by the Board of
Directors of the Bank from time to time. The Employee agrees that during the
Term he will render his duties hereunder in a diligent and proper manner with
the utmost skill, energy, service, and loyalty and in compliance with all
applicable laws and regulations and the Articles of Incorporation, Bylaws and
rules and policies of the Bank. In fulfilling his duties hereunder, Employee
agrees to conduct himself in a responsible and professional manner, using his
best efforts to advance the best interests of the Bank, and shall devote all of
his working time to the business of the Bank.
4. Compensation and Benefits.
(a) Base Salary. Employee shall be paid a salary (the "Base Salary")
of $__________ per annum. The Base Salary for any given year shall be payable in
accordance with the payroll payment practices from time to time adopted by the
Bank.
(b) Participation in Benefit and Insurance Plans. Employee shall
(assuming the satisfaction by Employee of all eligibility requirements and other
conditions imposed by the relevant program, plan or insurance carrier) be
entitled to participate in (i) any medical, dental, accident, life or other
insurance program, and (ii) any other employee welfare or benefit plan generally
available during the Term to employees of the Bank.
(c) Vacation and Sick Time. Employee shall be entitled to vacation
and sick time as may be determined from time to time by the Board of Directors
of the Bank.
C-1
(d) Withholding of Taxes. If, upon the payment of any compensation
or benefit to Employee under this Agreement, the Board of Directors of the Bank
determines in its discretion that the Bank is required to withhold or provide
for the payment in any manner of taxes, including but not limited to, federal
income or social security taxes, state income taxes, or local income taxes,
Employee agrees that the Bank may satisfy such requirement by:
(i) withholding an amount necessary to satisfy such
withholding requirement from Employee's compensation; or
(ii) conditioning the payment or transfer of such compensation
or benefit upon Employee's payment to the Bank of an amount sufficient to
satisfy such withholding requirement.
5. Termination. The Employee's employment hereunder may be terminated
under this Agreement as follows:
(a) Death. The Employee's employment hereunder shall terminate upon
his death.
(b) Disability. If, as a result of one or more physical or mental
disabilities (resulting from an illness, disease, accident or otherwise),
Employee cannot render or fails to render to the Bank the services required
hereunder for the equivalent of sixty (60) full working days, consecutive or
otherwise, within any one hundred twenty (120)-day period, the Bank may
terminate the Employee's employment hereunder within five (5) calendar days
after written Notice of Termination is given (which may occur at any time after
the ninetieth day when services are not rendered by the Employee).
(c) Resignation. The Employee's employment hereunder shall terminate
upon his resignation.
(d) Cause. The Bank may terminate the Employee's employment
hereunder for Cause. For purposes of this Agreement, the Bank shall have "Cause"
to terminate the Employee's employment because of the Employee's:
(i) willful and knowing dishonesty in communication of any
kind on any material subject for any purpose either to the Bank or to any person
or entity for or on behalf of the Bank;
(ii) obtaining from any Person, other than from the Bank,
anything of value in return for or because of rendering service or advice which,
under the circumstances, might reasonably be construed as part of the duties
expected of Employee hereunder;
(iii) use of more than an insubstantial and quantitatively
small amount of time during normal business hours for activities not calculated
and reasonably designated to further the fortunes and best interests of the
Bank;
(iv) theft, embezzlement, false entries on records,
misapplication of funds or property, misappropriation of any asset, any conduct
resulting in conversion of any kind or any actual or constructive fraud;
(v) imparting Confidential Information (as defined below)
whether proprietary or non-proprietary, to any Person other than (A) an
authorized employee of the Bank, (B) as required by law, or (C) as part of a
privileged communication to an attorney;
(vi) gross neglect of duty, including, but not limited to,
refusal to attend to the duties of employment hereunder;
C-2
(vii) dishonesty, insubordination, or gross negligence in the
performance of his duties hereunder;
(viii) (1) pleading guilty or nolo contendere to, or being
convicted of, a felony, or (2) pleading guilty or nolo contendere to, or being
convicted of, a crime of theft or conversion or a crime of moral turpitude, or
gross or willful misconduct, which materially and adversely affects the Bank's
reputation in the community or which evidences the lack of Employee's fitness or
ability to perform his duties hereunder;
(ix) direct or indirect, individually or in association with
any person or entity, diversion of any Corporate Opportunity to any person or
entity other than the Bank, except as authorized in a writing executed by the
Bank. "Corporate Opportunity" shall mean any business opportunity in the Bank's
lines of business existing at the time such opportunity is discovered by
Employee or in a line of business which the Employee knows at the time such
opportunity is discovered that the Bank is planning to enter;
(x) counseling, advising, assisting, procuring or aiding any
other person in any of the above-recited activities or knowing, or having reason
to know, that a Bank employee has or is about to engage in any of the
above-recited activities and not revealing said knowledge or belief to the Bank;
(xi) abusive use of alcohol or drugs;
(xii) any sexual harassment (in any form) of Bank customers or
employees; or
(xiii) material breach of any provision of this Agreement.
(e) Notice of Termination. Any termination during the Term (other
than termination pursuant to Subsection 5(a) above on account of death or
Subsection 5(c) above on account of the Employee's resignation) shall result
from a determination of the Bank's Board of Directors, acting in good faith,
after the Employee has been informed of the provisions of this Agreement deemed
to have been violated and has been provided an opportunity to appear before the
Bank's Board of Directors in order to respond to such allegations. Any such
termination shall be communicated by written Notice of Termination. For purposes
of this Agreement, a "Notice of Termination" shall mean a notice which shall
indicate the specific termination provision in this Agreement relied upon and
shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Employee's employment under the provision
so indicated.
(f) Date of Termination. The "Date of Termination" shall, for
purposes of this Agreement, mean: (i) if the Employee's employment is terminated
by his death, the date of his death; (ii) if the Employee's employment is
terminated on account of disability pursuant to Subsection 5(b) above, five (5)
days after Notice of Termination is given; (iii) if the Employee's employment is
terminated on account of his resignation pursuant to Subsection 5(c), the date
of such resignation; and (iv) if the Employee's employment is terminated by the
Bank for Cause pursuant to Subsection 5(d) above, the date specified in the
Notice of Termination.
6. Compensation upon Termination or During Disability.
(a) Death. If the Employee's employment shall be terminated by
reason of his death, the Bank shall, within ninety (90) days of the Employee's
death, pay a lump sum death benefit to such person as the Employee shall have
designated in a notice filed with the Bank or, if no such person shall be
designated, to the Employee's estate. The amount of such death benefit shall be
equal to the portion of the Employee's Base Salary earned as of the date of his
death which is due the Employee and which shall, at the date of death, be
unpaid.
(b) Disability. During any period that the Employee is unable, and
fails to perform his duties hereunder as a result of incapacity due to physical
or mental illness, the Employee shall continue to receive his Base Salary until
the Employee's employment is terminated due to disability pursuant to Subsection
5(b) hereof. Upon termination due to death prior to a termination as specified
in the preceding sentence, Subsection 6(a) above shall apply. For periods of
time after termination pursuant to Subsection 5(b) hereof, any disability
payments which
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the Employee may be entitled to receive pursuant to Subsection 4(c) hereof shall
be paid pursuant to the terms of such plan or arrangement.
(c) Resignation. If the Employee's employment shall be terminated by
reason of the Employee's resignation pursuant to Subsection 5(c) hereof, the
Employee shall be entitled to the portion of the Employee's Base Salary earned
as of the date of his resignation which is due the Employee but unpaid.
(d) Cause. If the Employee's employment shall be terminated for
Cause pursuant to Subsection 5(d) hereof, the Bank shall, through the Date of
Termination, continue to pay the Employee his Base Salary at the rate in effect
at the time a Notice of Termination is given.
(e) Termination Without Cause. In the event of a termination of the
Employee's employment by the Bank without Cause, the Bank shall pay the Employee
the portion of the Base Salary not previously paid the Employee.
7. Duties Upon Termination. Upon the Employee's termination of employment
hereunder for any reason whatsoever, the Employee shall immediately return to
the Bank any Confidential Information (as hereinafter defined) and, whether or
not constituting Confidential Information, any technical data, loan or deposit
information, sales or marketing plans, sales or other records, customer lists,
customer records, rolodexes and any manuals, drawings, tape recordings, computer
programs, disks, and any other physical representations of any information
relating to, the Bank or its affiliates or to the Bank's business. The Employee
hereby acknowledges that any and all of such items, physical representations and
information are and shall remain at all times the exclusive property of the
Bank. The Employee also agrees that upon termination of employment hereunder for
any reason whatsoever he shall immediately remove his property and personal
effects from all offices of the Bank.
8. Confidentiality Agreement.
(a) Confidential Information. The Employee shall not disclose or use
or otherwise exploit (for his own benefit or the benefit of any other Person) at
any time, either during or after his association with the Bank, any Confidential
Information of which the Employee becomes aware, whether or not any such
information is developed by him, except to the extent such disclosure or use is
required in the performance of assigned duties for the Bank. The Employee shall
take all appropriate steps to safeguard Confidential Information and to protect
it against disclosure, misuse, espionage, loss or theft. For purposes of this
Agreement, "Confidential Information" shall mean all non-public, proprietary
technical and commercial information of the Bank or any affiliate, including,
without limitation, manner of operations, financial information and lists and
records of Bank borrowers or depositors.
(b) Intellectual Property. In the event that the Employee as part of
his duties on behalf of the Bank generates, authors, or contributes to any
invention, design, new development, device, method or process, whether or not
patentable or reduced to practice or comprising Confidential Information, any
copyright work, whether or not comprising Confidential Information, or any other
Confidential Information, relating to the Bank (hereinafter collectively
referred to as "Intellectual Property") the Employee acknowledges that such
Intellectual Property is the exclusive property of the Bank and hereby assigns
all right, title and interest in and to such Intellectual Property to the Bank.
Any copyrightable work prepared in whole or in part by Employee shall be deemed
"a work made for hire" under Section 201(b) of the 1976 Copyright Act, and the
Bank shall own all of the rights comprised in the copyright therein. The
Employee shall promptly and fully disclose all such Intellectual Property to the
Bank and shall cooperate with the Bank to protect the Bank's interests in such
Intellectual Property, including, without limitation, providing reasonable
assistance in the securing of patent protection and copyright registrations and
signing all documents where reasonably requested by the Board of Directors of
the Bank, even if such request occurs after the Term.
(c) Assignment of Intellectual Property. The Employee further agrees
that:
(i) He will assign to the Bank any Intellectual Property
conceived or reduced to practice by him during the Term and related to the Bank
or any of its affiliates;
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(ii) He will execute all papers and perform all acts that the
Bank deems necessary or advisable for the preparation, prosecution, issuance,
procurement or maintenance of patent applications and patents of the United
States or foreign countries for said Intellectual Property;
(iii) He will execute any and all papers and documents that
shall be required or necessary to vest title in the Bank to said Intellectual
Property; and
(iv) All models, drawings, memoranda and other materials or
records made or used by the Employee in connection with his duties shall be the
property of the Bank and shall be left with the Bank at the expiration or
termination of this Agreement.
(d) Injunctive Relief; Invalidity of Any Provision. The Employee
acknowledges that his breach of any covenant contained in this Section 8 will
result in irreparable injury to the Bank and any of its affiliates and that the
Bank's and the affiliate's remedy at law for such a breach will be inadequate.
Accordingly, the Employee agrees and consents that either the Bank or any of its
affiliates, in addition to all other remedies available to any of them at law
and in equity, shall be entitled to seek both preliminary and permanent
injunctions to prevent and/or halt a breach or threatened breach by the Bank of
any covenant contained in this Section 8. If any provision of this Section 8 is
invalid in part or in whole, it shall be deemed to have been amended, whether as
to time, area covered or otherwise, as and to the extent required for its
validity under applicable law and, as so amended, shall be enforceable. The
parties further agree to execute all documents necessary to evidence such
amendment.
(e) Rights Cumulative. The rights and remedies of the Bank under
this Section 8 are in addition to, and cumulative of, any other rights and
remedies that the Bank may have, whether by law or by equity.
9. Restrictive Covenants.
(a) Acknowledgments. The undersigned acknowledges that (i) his
services as a Bank Employee have been of a special, unique and extraordinary
character and that his position with TBI and/or the Bank placed him in a
position of confidence and trust with the customers of TBI and/or the Bank and
allowed him access to Confidential Information, (ii) he will benefit from the
consummation of the transactions contemplated under the Agreement, (iii) he
would not have had significant contact with any TBI and/or the Bank customers if
not for his service as a Bank Employee and the name, reputation and goodwill of
TBI and/or the Bank, (iv) the nature and periods of restrictions imposed by the
covenants contained in this Section 9 are fair, reasonable and necessary to
protect and preserve for the Company and the Bank (A) the customer relationships
developed by TBI and/or the Bank through significant time and expense and (B)
the benefits of the undersigned's service as a Bank Employee, (v) the Company,
the Bank and their Affiliates would sustain great and irreparable loss and
damage if the undersigned were to breach any of such covenants, (vi) the
Company, the Bank and their Affiliates conduct their business actively in and
throughout the entire Territory (as herein defined) and (vii) the Territory is
reasonably sized.
(b) Covenants. Having acknowledged the foregoing, the undersigned
covenants and agrees with the Company that (except in the event the Employee's
employment hereunder is terminated by the Bank during the Term without Cause) he
will not, directly or indirectly, from the date hereof through the date one year
following the Effective Time, engage in any of the following:
(i) attempt in any manner to cause or otherwise encourage any
employee of the Bank to leave the employ of the Bank;
(ii) (A) engage in or (B) own, manage, operate, join, control,
assist, participate in or be connected with, directly or indirectly, as an
officer, director, shareholder, member, partner, proprietor, employee, agent,
consultant, independent contractor or otherwise, any Person which is, at the
time, directly or indirectly, engaged in, any portion of the Financial Industry
within the Territory or in competition within the Territory with any aspect of
the business activities of the Company, the Bank or any Affiliate thereof
(provided, however, that the
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undersigned may own, solely as a passive investment, securities of any Person
which are traded on a national securities exchange or in the over-the-counter
market if the undersigned does not own more than one percent (1%) of any class
of securities of such Person);
(iii) solicit, divert, or take away, or attempt to solicit,
divert or take away, the Financial Industry business or relationship of any of
the customers of the Company, the Bank or any of their Affiliates, or any
prospective customers which were solicited by the Bank while the undersigned was
a Bank Employee, for the purpose of selling to or servicing for any such
customer or prospective customer any Financial Industry product or service; or
(iv) cause or attempt to cause any of the foregoing customers
or prospective customers of the Company or the Bank to refrain from maintaining
or acquiring from or through the Company or the Bank (or any of their
Affiliates) any banking product or service, and will not assist any other Person
or Persons to do so.
The undersigned covenants further that, without limitation as
to time, he will not directly or indirectly disclose or use or otherwise exploit
for his own benefit, or the benefit of any other Person, any Confidential
Information.
(c) Definitions. For purposes of this Agreement,
(i) the "Territory" shall mean that area comprised of all
points in Xxxxx County, Indiana and in all Indiana counties contiguous to Xxxxx
County, Indiana. The undersigned shall be prohibited from maintaining a business
address within such Territory if he is engaged in any of the activities
enumerated in Subsection 9(b)(ii) hereof at such address, and he shall also be
prohibited from engaging in any of the activities enumerated in Subsection
9(b)(ii) hereof within such Territory even if the undersigned maintains a
business or residential address outside said Territory; and
(ii) the "Financial Industry" shall mean the banking, mortgage
banking and/or finance business, and any and all activities and enterprises
incidental or related thereto.
(d) Injunctive Relief; Invalidity of Any Provision. The undersigned
acknowledges that his breach of any covenant contained in this Section 9 will
result in irreparable injury to the Company, the Bank and their Affiliates and
that the Company's, the Bank's and the Affiliates' remedy at Law for such a
breach will be inadequate. Accordingly, the undersigned agrees and consents that
the Company, the Bank or any of their Affiliates, in addition to all other
remedies available to any of them at Law, shall be entitled to seek both
preliminary and permanent injunctions to prevent and/or halt a breach or
threatened breach by the undersigned of any covenant contained in this Section
9. If any provision of this Section 9 is invalid in part or in whole, it shall
be deemed to have been amended, whether as to time, area covered or otherwise,
as and to the extent required for its validity under applicable law and, as so
amended, shall be enforceable. The parties further agree to execute all
documents necessary to evidence such amendment.
(e) Rights Cumulative. The rights and remedies of the Company, the
Bank and their Affiliates under this Section 9 are in addition to, and
cumulative of, any other rights and remedies that the Company, the Bank or any
of their Affiliates may have by Law with respect to this Agreement. The parties
further agree that in the event of a breach by the undersigned of Section 6(b)
hereof, the period set forth in Section 6(b) hereof shall not begin until the
undersigned permanently ceases his breach thereof.
10. Entire Agreement; Modification; Waiver. This Agreement constitutes the
entire agreement between the parties pertaining to the subject matter contained
in it and supersedes all prior and contemporaneous agreements, representations,
and understandings of the parties, whether written or oral. No provisions of any
employee handbook of the Bank shall be deemed part of this Agreement. No
supplements, modification, or amendment of this Agreement shall be binding
unless executed in writing by all parties hereto. No waiver of any of the
provisions of this Agreement will be deemed, or will constitute, a waiver of any
other provision, whether or not
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similar, nor will any waiver constitute a continuing waiver. No waiver will be
binding unless executed in writing by the party making the waiver.
11. Successors and Assigns; Assignment. This Agreement shall be binding
on, and inure to the benefit of, the parties hereto and their respective heirs,
executors, legal representatives, successors and assigns; provided, however,
that this Agreement is intended to be personal to the Employee and the rights
and obligations of the Employee hereunder may not be assigned or transferred by
him.
12. Notices. Any deliveries, notices or other communications required or
permitted hereunder shall be deemed to have been duly made or given (i) if
delivered in person, (ii) if sent by registered mail, return receipt requested,
postage prepaid, (iii) if sent by a nationally recognized overnight courier, or
(iv) if sent by facsimile transmission, to the addresses or facsimile numbers of
the parties as follows:
Bank: The Xxxxx County State Bank
Attn.: Xxxxx X. Xxxxxxx, Director
000 Xxxx Xxxxxx Xxxxxx
Xxx Xxxxxx, Xxxxxxx 00000
Facsimile No.: (000) 000-0000
With a Copy to: J. Xxxxx Xxxxx, Jr.
Xxxxx Xxxxxx Xxxxx PLLC
000 Xxxx Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxx 00000
Facsimile No.: (000) 000-0000
Employee: ________________________
or to each party, at such other address or facsimile number as may hereafter be
designated by such party in a written notice to the other party complying as to
delivery with the terms of this Section. All such notices, requests, demands and
other communications shall be deemed to have been given (i) on the date received
if personally delivered, (ii) two days following the date deposited in the mail
if delivered by mail, (iii) one day following the date sent by overnight courier
if delivered by overnight courier or (iv) the date sent by facsimile if
delivered by facsimile transmission.
13. Governing Law. Subject to Section 18 hereof, this Agreement is
executed and delivered in, and shall be governed by, enforced and interpreted in
accordance with the laws of, the State of Indiana without taking into account
provisions regarding choice of law or conflicts of law, except to the extent
certain matters may be governed as a matter of law by federal law.
14. Execution in Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which shall
together constitute one and the same document.
15. Severability of Provisions. The invalidity or unenforceability of any
particular provision of this Agreement shall not affect the other provisions
hereof and this Agreement shall be construed in all respects as if such invalid
or unenforceable provision were omitted.
16. Survival. The provisions of Section 8 hereof shall survive the
termination, for any reason, of this Agreement, in accordance with their terms.
17. Right of Setoff. Upon termination of Employee's employment, the Bank
has the right to set off against and deduct from any amounts payable to Employee
hereunder (whether in the form of salary, bonus or otherwise) all and any
amounts owing to the Bank by Employee for any reason and in any capacity.
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18. Arbitration. The parties agree, without in any way impairing the
rights afforded the Bank pursuant to Section 8(d) or 9(d) hereof, that any
issue, dispute, controversy, or claim arising out of, related to or connected in
any way with this Agreement which cannot be otherwise resolved, shall be
submitted to arbitration in Louisville, Kentucky, in accordance with the
Commercial Arbitration Rules of The American Arbitration Association and the
ensuing arbitration award may be entered as a final judgment in any court having
jurisdiction. Any dispute as to whether an issue is to be resolved by
arbitration shall be submitted as part of the arbitration proceeding. As part of
the arbitration award, legal costs, attorneys' fees, and the fees of expert
witnesses may be assessed against any person found to have acted in bad faith,
but in no event shall any arbitration award include any consequential,
incidental, special, punitive, or exemplary damages of any nature whatsoever.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year set forth above.
THE XXXXX COUNTY STATE BANK
("Bank")
By:__________________________________
XXXXX XXXXX
PRESIDENT
("Employee")
_____________________________________
________________________
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EXHIBIT D
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement"), entered into this _____ day
of ______________, 2006, by and among Community Bank Shares of Indiana, Inc., an
Indiana corporation (the "Company"), The Bancshares, Inc., an Indiana
corporation ("TBI"), The Xxxxx County State Bank, an Indiana corporation (the
"Bank"), and Xxxxx X. Xxxxx (the "Executive").
WITNESSETH
WHEREAS, TBI, the Bank's former parent company, entered into a Definitive
Agreement with the Company on February 15, 2006 which outlined a series of
transactions which resulted contemporaneously herewith in all of the issued and
outstanding stock of TBI being acquired by the Company (the "Merger") and the
payment of certain sums to Xxxxx by virtue of his status as a TBI shareholder
and the holder of certain options with respect to the TBI common stock (the
"Merger Consideration"); and
WHEREAS, pursuant to subsection 11(b)(ii) of the Executive's employment
agreement with the Bank and TBI (the "Employment Agreement"), the Executive is
entitled to terminate employment for "Good Reason" (as defined in subsection
9(c) of the Employment Agreement) following a "Change of Control" (as defined in
subsection 11(b)(ii)) and receive a payment equal to 2.99 times his "annualized
includable compensation for the base period;" and
WHEREAS, pursuant to subsection 11(b)(iii) of the Executive's Employment
Agreement, the Executive is entitled to terminate employment for Good Reason
following a Change of Control and receive three years of continued participation
in each employee welfare benefit plan in which the Executive and his dependents
are entitled to participate prior to a Change of Control (payments under this
recital and the preceding recital are collectively referred to as the "Severance
Benefit"); and
WHEREAS, the Executive, the Bank and the Company agree that the Merger
permitted the Executive to terminate employment for Good Reason under his
Employment Agreement and to receive a payment of his Severance Benefit; and
WHEREAS, the Company desires to terminate the Executive's Employment
Agreement and to continue Executive's employment with the Bank under this
Agreement for the six-month period following the closing date of the Merger; and
WHEREAS, the Bank, TBI and the Executive agree to the termination of the
Employment Agreement (and the acknowledgment of the rights of each party
thereunder and the waiver by the Executive of certain rights thereunder) and the
payment of the Severance Benefit under this Agreement; and
WHEREAS, the Executive agrees to continue as an employee of the Bank for
the six-month period following the closing date of the Merger without
terminating employment for Good Reason due to the Merger; and
WHEREAS, Executive desires to be assured of a secure minimum compensation,
fair and reasonable benefits from the Bank for his services and payment of the
Severance Benefit; and
WHEREAS, the Bank desires reasonable protection of its confidential
business and customer information which it shall develop over the years at
substantial expense and assurance that Executive shall not compete with the Bank
for a reasonable period of time after termination of his employment with the
Bank, except as otherwise provided herein;
NOW, THEREFORE, BE IT RESOLVED, in consideration of the foregoing
premises, the mutual covenants and undertakings herein contained and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties, each intending to be legally bound, covenant and
agree as follows:
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1. Employment. Upon the terms and subject to the conditions set forth in
this Agreement, the Bank employs Executive as the Bank's President and Chief
Executive Officer, and Executive accepts such employment.
2. Positions. (a) Executive agrees to serve as President and Chief
Executive Officer of the Bank and to perform such duties in that office as may
reasonably be assigned to him by the Company's or the Bank's board of directors
and such duties which are of the character as those generally associated with
that office; provided, however, that such duties shall be performed in or from
the principal executive offices of the Bank, located in Scottsburg, Indiana.
Executive shall not be required to be absent from the location of the principal
executive offices of the Bank on travel status or otherwise more than 45 days in
any calendar year. Neither the Company nor the Bank shall, without the written
consent of Executive, relocate or transfer Executive to any other location other
than the principal executive office of the Bank in Scottsburg, Indiana. The
Executive shall devote substantially all his business time and efforts to the
Company's and the Bank's business and shall not engage in other business
activities without the Company's prior consent, whether or not such business
activity is pursued for profit, gain or other pecuniary advantage. The Executive
may invest his assets in such form or manner as shall not require any services
on his part in the operation of the affairs of the enterprises in which the
investments are made. The Executive may use his discretion in fixing his hours
and schedule of work consistent with the proper discharge of his duties.
(b) During the Term, Company agrees to elect Executive as one of the
directors of the Bank.
3. Term. The term of this Agreement shall begin on ______________, 2006
(the "Effective Date") and shall end on the date which is six months following
such date (the "Term"). The parties hereto agree that, upon the expiration of
the Term, the Executive's employment with the Bank shall terminate and the
Executive shall be entitled to a termination payment under Section 8, unless the
Executive and the Bank agree in writing to extend the Term. The Bank shall be
under no obligation whatsoever to renew or continue the employment of the
Executive.
4. Salary. Executive shall receive an annual minimum salary of
[__________________ Thousand Dollars ($_________)] ("Base Compensation") payable
at regular intervals in accordance with the Bank's normal payroll practices in
effect from time to time. The Executive also shall be entitled to receive any
director's fees for his services as a director of the Bank and any committees of
such board of directors which currently is $_______________ per year payable
-----------.
5. Benefit Programs. (a) During the Term, Executive shall be entitled to
participate in or receive benefits under (i) any life, health, hospitalization,
medical, dental, disability or other insurance policy or plan, (ii) pension or
retirement plan, (iii) bonus or profit-sharing plan or program, (iv) deferred
compensation plan or arrangement, and (v) any other executive benefit plan,
program or arrangement, made available by the Bank on the date of this Agreement
and from time to time in the future to the Bank's directors, officers and
employees on a basis consistent with the terms, conditions and overall
administration of the foregoing plans, programs or arrangements and with respect
to which Executive is otherwise eligible to participate or receive benefits.
(b) In addition to the benefits described above, the Bank shall provide to
Executive, at no expense to the Executive, health care coverage for the
Executive and Executive's spouse.
6. General Policies. (a) So long as the Executive is employed by the Bank
pursuant to this Agreement, Executive shall receive reimbursement from the Bank,
as appropriate, for all reasonable business expenses incurred in the course of
his employment by the Bank, upon submission to the Bank of written vouchers and
statements for reimbursement.
(b) So long as Executive is employed by the Bank pursuant to this
Agreement, Executive shall be entitled to office space and working conditions
consistent with his position as President and Chief Executive Officer of the
Bank.
(c) During the Term, the Executive shall be entitled to two weeks of paid
vacation, which shall be utilized at such times when his absence shall not
materially impair the Bank's normal business functions. In
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addition to the vacation described above, Executive also shall be entitled to
all paid holidays customarily given by the Bank to its officers.
(d) During the Term, the Bank shall provide the Executive with an
automobile, either leased or purchased, at no expense to the Executive, and pay
for all maintenance and insurance thereon, for use in connection with
Executive's performance of his duties. The Executive shall account for any
personal use of the automobile in the manner prescribed by the Bank from time to
time, and acknowledges that the value of that personal use shall be reflected as
taxable income on his Form W-2 from the Bank.
(e) All other matters relating to the employment of Executive by the Bank
not specifically addressed in this Agreement shall be subject to the general
policies regarding employees of the Bank in effect from time to time, so long as
such general policies are not inconsistent with any of the provisions of this
Agreement (in which event the provisions of this Agreement shall control).
7. Termination of Employment. Subject to the respective continuing
obligations of the parties, including but not limited to those set forth in
Sections 9 and 10 hereof, Executive's employment by the Bank may be terminated
prior to the expiration of the Term of this Agreement by either the Executive or
the Bank by delivering a Notice of Termination (as defined in Section 11) two
weeks in advance of such termination.
(b) Nothing contained in this Agreement shall impair, affect or change any
requirements otherwise imposed upon the Bank or the Executive by applicable
statute, law, rule, regulation or other legal requirement, including, without
limitation, the Executive's COBRA rights upon termination of employment.
8. Termination Payments. (a) In the event of termination of the
Executive's employment pursuant to Section 3 or Section 7 hereof, compensation
(including Base Compensation) shall continue to be paid, and the Executive shall
continue to participate in the employee benefit, retirement and compensation
plans and other perquisites as provided in Sections 5 and 6 hereof, through the
Date of Termination specified in the Notice of Termination in a manner
consistent with the applicable terms of the governing plan documents. Any
benefits payable under insurance, health, retirement and bonus plans as a result
of the Executive's participation in such plans through such date shall be paid
when due under those plans. In addition, the Executive shall be entitled to
receive a severance payment of _____________ Dollars ($________) in a lump sum
within 30 days of the Date of Termination.
(b) In addition to the payments provided for in this Section, the
Executive and his dependents shall also be entitled to continue participation in
each Employee Welfare Benefit Plan (as defined in Section 3(1) of the Employee
Retirement Income Security Act of 1974, as amended) in which the Executive was a
participant as of the Date of Termination for the three-year period following
the Date of Termination unless a no less favorable benefit is provided by a
subsequent employer of the Executive. If the terms of any Employee Welfare
Benefit Plan or applicable laws do not permit continued participation by the
Executive, Bank shall, at its sole cost and expense, arrange to provide to the
Executive and his dependents a benefit substantially similar to, and no less
favorable than, the benefit they were entitled to receive under such Employee
Welfare Benefit Plan at the end of the period of coverage.
(c) In the event the Executive is a Key Employee on the Date of
Termination, payment of all amounts under subsection 8(a) will be suspended for
six months following the Executive's Separation from Service (as defined below).
The Executive will receive payment on the first day following the six-month
suspension period. If the Executive incurs a Separation from Service due to
death, regardless of whether the Executive meets the definition of a Key
Employee, payment of his benefit will not be suspended. For purposes of this
subsection, "Key Employee" means the Executive is an officer of the Bank having
annual compensation greater than $140,000 (as adjusted in the same manner as
under Section 415(d) of the Internal Revenue Code of 1986, as amended (the
"Code")) except that the base period will be the calendar quarter beginning July
1, 2001, and any increase under this sentence which is not a multiple of $5,000
will be rounded to the next lower multiple of $5,000); a five-percent owner of
the Company; or a one-percent owner of the Company having an annual compensation
greater than $150,000. For purposes of this subsection, "Separation from
Service" means the date on which the Executive dies, retires or otherwise
experiences a Termination of Employment with the Bank. Provided, however, a
Separation
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from Service does not occur if the Executive is on military leave, sick leave,
or other bona fide leave of absence (such as temporary employment by the
government) if the period of such leave does not exceed six months, or if the
leave is for a longer period, so long as the individual's right to reemployment
with the Bank is provided either by statute or by contract. If the period of
leave exceeds six months and the Executive's right to reemployment is not
provided either by statute or contract, there will be a Separation from Service
on the first date immediately following such six-month period. An Executive will
incur a "Termination of Employment" when a termination of employment is incurred
under Proposed Treasury Regulation 1.409A-1(h)(ii) or any final version of such
Proposed Regulation.
(d) In no event will any payments made under this Agreement exceed an
amount which would be subject to an excise tax as an "excess parachute payment"
under Code Section 280G.
9. Confidentiality Covenants. In order to induce the Bank to enter into
this Agreement, the Executive hereby agrees as follows:
(a) Confidential Information. The Executive shall not disclose or use or
otherwise exploit (for his own benefit or the benefit of any other Person) at
any time, either during or after his association with the Bank, any Confidential
Information of which the Executive becomes aware, whether or not any such
information is developed by him, except to the extent such disclosure or use is
required in the performance of assigned duties for the Bank. The Executive shall
take all appropriate steps to safeguard Confidential Information and to protect
it against disclosure, misuse, espionage, loss or theft. For purposes of this
Agreement, "Confidential Information" shall mean all non-public, proprietary
technical and commercial information of the Bank or any affiliate, including,
without limitation, manner of operations, financial information and lists and
records of Bank borrowers or depositors.
(b) Intellectual Property. In the event that the Executive as part of his
duties on behalf of the Bank generates, authors, or contributes to any
invention, design, new development, device, method or process, whether or not
patentable or reduced to practice or comprising Confidential Information, any
copyright work, whether or not comprising Confidential Information, or any other
Confidential Information, relating to the Bank (hereinafter collectively
referred to as "Intellectual Property") the Executive acknowledges that such
Intellectual Property is the exclusive property of the Bank and hereby assigns
all right, title and interest in and to such Intellectual Property to the Bank.
Any copyrightable work prepared in whole or in part by Executive shall be deemed
"a work made for hire" under Section 201(b) of the 1976 Copyright Act, and the
Bank shall own all of the rights comprised in the copyright therein. The
Executive shall promptly and fully disclose all such Intellectual Property to
the Bank and shall cooperate with the Bank to protect the Bank's interests in
such Intellectual Property, including, without limitation, providing reasonable
assistance in the securing of patent protection and copyright registrations and
signing all documents where reasonably requested by the board of directors of
the Bank, even if such request occurs after the Term.
(c) Assignment of Intellectual Property. The Executive further agrees
that:
(i) He will assign to the Bank any Intellectual Property conceived
or reduced to practice by him during the Term and related to the Bank or
any of its affiliates;
(ii) He will execute all papers and perform all acts that the Bank
deems necessary or advisable for the preparation, prosecution, issuance,
procurement or maintenance of patent applications and patents of the
United States or foreign countries for said Intellectual Property;
(iii) He will execute any and all papers and documents that shall be
required or necessary to vest title in the Bank to said Intellectual
Property; and
(iv) All models, drawings, memoranda and other materials or records
made or used by the Executive in connection with his duties shall be the
property of the Bank and shall be left with the Bank at the expiration or
termination of this Agreement.
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(d) Injunctive Relief; Invalidity of Any Provision. The Executive
acknowledges that his breach of any covenant contained in this Section will
result in irreparable injury to the Bank and any of its affiliates and that the
Bank's and the affiliate's remedy at law for such a breach will be inadequate.
Accordingly, the Executive agrees and consents that either the Bank or any of
its affiliates, in addition to all other remedies available to any of them at
law and in equity, shall be entitled to seek both preliminary and permanent
injunctions to prevent and/or halt a breach or threatened breach by the Bank of
any covenant contained in this Section. If any provision of this Section is
invalid in part or in whole, it shall be deemed to have been amended, whether as
to time, area covered or otherwise, as and to the extent required for its
validity under applicable law and, as so amended, shall be enforceable. The
parties further agree to execute all documents necessary to evidence such
amendment.
(e) Rights Cumulative. The rights and remedies of the Bank under this
Section are in addition to, and cumulative of, any other rights and remedies
that the Bank may have, whether by law or by equity.
10. Non-Compete Covenants.
(a) Acknowledgments. The undersigned acknowledges that (i) his services as
a Bank employee have been of a special, unique and extraordinary character and
that his position with the Bank placed him in a position of confidence and trust
with the customers of the Bank and allowed him access to Confidential
Information, (ii) he has benefited from the consummation of the Merger and he
will benefit from the consummation of the transactions contemplated under the
Agreement, (iii) he would not have had significant contact with any Bank
customers if not for his service as a Bank employee and the name, reputation and
goodwill of the Bank, (iv) the nature and periods of restrictions imposed by the
covenants contained in this Section 10 are fair, reasonable and necessary to
protect and preserve for the Bank (A) the customer relationships developed by
the Bank through significant time and expense and (B) the benefits of the
undersigned's service as a Bank employee, (v) the Bank and its affiliates
(including, without limitation, the Company and its subsidiaries) would sustain
great and irreparable loss and damage if the undersigned were to breach any of
such covenants, (vi) the Bank and its affiliates (including, without limitation,
the Company and its subsidiaries) conduct its business actively in and
throughout the entire Territory (as herein defined) and (vii) the Territory is
reasonably sized.
(b) Covenants. Having acknowledged the foregoing, the undersigned
covenants and agrees with the Bank, in consideration of the Merger Consideration
and the benefits to the Executive under this Agreement, that he will not,
directly or indirectly, from the date hereof through the date three years
following the date the Articles of Merger reflecting the Merger shall become
effective with the Secretary of State of the State of Indiana, engage in any of
the following:
(i) attempt in any manner to cause or otherwise encourage any
employee of the Bank to leave the employ of the Bank;
(ii) (A) engage in or (B) own, manage, operate, join, control,
assist, participate in or be connected with, directly or indirectly, as an
officer, director, shareholder, member, partner, proprietor, employee,
agent, consultant, independent contractor or otherwise, any person or
entity which is, at the time, directly or indirectly, engaged in, any
portion of the Financial Industry within the Territory or in competition
within the Territory with any aspect of the business activities of the
Bank or any affiliate thereof (provided, however, that the undersigned may
own, solely as a passive investment, securities of any person which are
traded on a national securities exchange or in the over-the-counter market
if the undersigned does not own more than one percent (1%) of any class of
securities of such person or entity);
(iii) solicit, divert, or take away, or attempt to solicit, divert
or take away, the Financial Industry business or relationship of any of
the customers of the Bank or any of its affiliates, or any prospective
customers which were solicited by the Bank while the undersigned was a
Bank employee, for the purpose of selling to or servicing for any such
customer or prospective customer any Financial Industry product or
service; or
(iv) cause or attempt to cause any of the foregoing customers or
prospective customers of the Bank to refrain from maintaining or acquiring
from or through the Bank (or any of its affiliates) any
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Financial Industry product or service, and will not assist any other
person or persons or entity or entities to do so.
The Executive covenants further that, without limitation as to time,
he will not directly or indirectly disclose or use or otherwise exploit
for his own benefit, or the benefit of any other person, any Confidential
Information.
(c) Definitions. For purposes of this Agreement,
(i) the "Territory" shall mean that area comprised of all points in
Xxxxx County, Indiana and in all Indiana counties contiguous to Xxxxx
County, Indiana. The undersigned shall be prohibited from maintaining a
business address within such Territory if he is engaged in any of the
activities enumerated in subsection 10(b)(ii) hereof at such address, and
he shall also be prohibited from engaging in any of the activities
enumerated in subsection 10(b)(ii) hereof within such Territory even if
the undersigned maintains a business or residential address outside said
Territory; and
(ii) the "Financial Industry" shall mean the banking, mortgage
banking and/or finance business, and any and all activities and
enterprises incidental or related thereto.
(d) Injunctive Relief; Invalidity of Any Provision. The undersigned
acknowledges that his breach of any covenant contained in this Section 10 will
result in irreparable injury to the Company, the Bank and their affiliates and
that the Company's and the Bank's affiliates' remedy at law for such a breach
will be inadequate. Accordingly, the undersigned agrees and consents that the
Company, the Bank or any of their respective affiliates, in addition to all
other remedies available to any of them at law, shall be entitled to seek both
preliminary and permanent injunctions to prevent and/or halt a breach or
threatened breach by the undersigned of any covenant contained in this Section
10. If any provision of this Section is invalid in part or in whole, it shall be
deemed to have been amended, whether as to time, area covered or otherwise, as
and to the extent required for its validity under applicable law and, as so
amended, shall be enforceable. The parties further agree to execute all
documents necessary to evidence such amendment.
(e) Rights Cumulative. The rights and remedies of the Company, the Bank
and their affiliates under this Section are in addition to, and cumulative of,
any other rights and remedies that the Bank or any of its affiliates may have by
law with respect to this Agreement. The parties further agree that in the event
of a breach by the undersigned of subsection 10(b), the period set forth in
subsection 10(b) hereof shall not begin until the undersigned permanently ceases
his breach thereof.
11. Notice of Termination. Any termination of the Executive's employment
with the Bank as contemplated by Section 7 hereof, except in the circumstances
of the Executive's death, shall be communicated by a written "Notice of
Termination" by the terminating party to the other parties hereto.
12. Suspensions. If the Executive is suspended and/or temporarily
prohibited from participating in the conduct of the Bank's or any affiliates'
affairs by a notice served under section 8(e)(3) or (g)(1) of the Federal
Deposit Insurance Act (12 U.S.C. ss. 1818(e)(3) and (g)(1)), the Company's and
Bank's obligations under this Agreement shall be suspended as of the date of
service, unless stayed by appropriate proceedings. If the charges in the notice
are dismissed, the Bank shall (i) pay the Executive all or part of the
compensation withheld while its obligations under this Agreement were suspended
and (ii) reinstate (in whole or in part) any of its obligations which were
suspended.
13. Removal. If the Executive is removed and/or permanently prohibited
from participating in the conduct of the Bank's or any affiliates' affairs by an
order issued under section 8(e)(4) or (g)(1) of the Federal Deposit Insurance
Act (12 U.S.C. ss. 1818(e)(4) or (g)(1)), all obligations of the Bank under this
Agreement shall terminate as of the effective date of the order, but vested
rights of the parties shall not be affected.
14. Regulatory Oversight. (a) All obligations under this Agreement may be
terminated except to the extent determined that the continuation of the
Agreement is necessary for the continued operation of the Bank by
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order of any state or federal banking regulatory agency with supervision of the
Company, the Bank or any of their affiliates, unless stayed by appropriate
proceedings, and the Bank shall not be under any obligation to perform any of
its obligations hereunder if it is informed in writing by any state or federal
banking regulatory agency with supervision of the Company, the Bank or any of
their affiliates that performance of such obligations would constitute an unsafe
or unsound banking practice.
(b) If the Bank is in default (as defined in section 3(x)(1) of the
Federal Deposit Insurance Act), all obligations under this Agreement shall
terminate as of the date of default, but this provision shall not affect any
vested rights of the parties.
(c) Notwithstanding anything herein to the contrary, any payments made to
the Executive pursuant to the Agreement, or otherwise, shall be subject to and
conditional upon compliance with 12 USC ss.1828(k) and any regulation
promulgated thereunder.
15. Legal Fees. If a dispute arises regarding the interpretation or
enforcement of this Agreement and the Executive obtains a final judgment in his
favor in a court of competent jurisdiction, all reasonable legal fees and
expenses incurred by the Executive in contesting or disputing any such
termination or seeking to obtain or enforce any right or benefit provided for in
this Agreement or otherwise pursuing his claim shall be paid by the Bank, to the
extent permitted by law.
16. Death. Should the Executive die after termination of his employment
with Bank while any amounts are payable to him hereunder, this Agreement shall
inure to the benefit of and be enforceable by the Executive's executors,
administrators, heirs, distributees, devisees and legatees and all amounts
payable hereunder shall be paid in accordance with the terms of this Agreement
to the Executive's devisee, legatee or other designee or, if there is no such
designee, to his estate.
17. Notices. For purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been given when delivered or mailed by United States registered or
certified mail, return receipt requested, postage prepaid, addressed as follows:
If to the Executive: Xxxxx X. Xxxxx
_________________________
Xxxxxxxxxx, XX 00000
If to the Company: Community Bank Shares of Indiana, Inc.
Xxxxx X. Xxxxxxx
President and Chief Executive Officer
000 Xxxx Xxxxxx Xxxxxx
Xxx Xxxxxx, XX 00000
Facsimile Number: (000) 000-0000
If to the Bank: The Xxxxx County State Bank
000 Xxxx XxXxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Facsimile No.: (812) _______
With a Copy to: J. Xxxxx Xxxxx, Jr.
Company Counsel Xxxxx Xxxxxx Xxxxx PLLC
000 Xxxx Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxx 00000
Facsimile No.: (000) 000-0000
or to such other address as either party hereto may have furnished to the other
party in writing in accordance herewith, except that notices of change of
address shall be effective only upon receipt.
D-7
18. Governing Law. The validity, interpretation, and performance of this
Agreement shall be governed by the laws of the State of Indiana, without
reference to the choice of law principles or rules thereof, except to the extent
that federal law shall be deemed to apply.
19. Successors and Assigns. The Bank shall require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of the Bank, by agreement in form
and in substance satisfactory to the Executive, in the exercise of his
reasonable judgment, to expressly assume and agree to perform this Agreement in
the same manner and to the same extent that the Bank would be required to
perform it if no such succession had taken place. Failure of the Bank to obtain
such agreement prior to the effectiveness of any such succession shall be a
material intentional breach of this Agreement. As used in this Agreement, "Bank"
shall mean Bank as hereinbefore defined and any successor to its business or
assets as aforesaid.
20. Modification. No provision of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in a
writing signed by the Bank and the Executive. No waiver by any party hereto at
any time of any breach by another party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a wavier of dissimilar provisions or conditions at the same or
any prior subsequent time. No agreements or representation, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by
either party which are not set forth expressly in this Agreement.
21. Validity. The invalidity or unenforceability of any provisions of this
Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement which shall remain in full force and effect.
22. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same agreement.
23. Assignment. This Agreement is personal in nature and no party hereto
shall, without consent of the other parties, assign or transfer this Agreement
or any rights or obligations hereunder except as provided in Section 16 and
Section 19 above.
24. Enforcement. The Executive acknowledges that the restrictions
contained in Section 9 and 10, in view of the nature of the business in which
the Company and the Bank is engaged, are reasonable and necessary in order to
protect the legitimate business interests of the Bank and that any violation of
Section 9 or 10 would result in irreparable injury to the Company and the Bank.
In the event of a breach or a threatened breach by the Executive of Section 9 or
10 of this Agreement, the Company and the Bank shall be entitled to an
injunction restraining the Executive from the commission of such breach, and to
recover their attorneys' fees, costs and expenses related to the breach or
threatened breach. Nothing herein contained shall be construed as prohibiting
the Company and the Bank from pursuing any other remedies available to them for
such breach or threatened breach, including the recovery of money damages. These
covenants and disclosures shall each be construed as independent of any other
provisions in this Agreement, and the existence of any claim or cause of action
by the Executive against the Company and the Bank, whether predicated on this
Agreement or otherwise, shall not constitute a defense to the enforcement by the
Bank of such covenants and agreements. If any provision of this Agreement,
including Section 9 or 10, is invalid in part or in whole, it shall be deemed to
have been amended, whether as to time, area covered or otherwise, as and to the
extent required for its validity under applicable law and, as so amended, shall
be enforceable. The parties shall execute all documents necessary to evidence
such amendment.
25. Arbitration. Any controversy or claim arising out of or relating to
this Agreement, or the breach thereof, shall be settled by arbitration in
accordance with the rules then in effect of the district office of the American
Arbitration Association ("AAA") nearest to the home office of Bank, and judgment
upon the award rendered may be entered in any court having jurisdiction thereof,
except to the extent that the parties may otherwise reach a mutual settlement of
such issue. The Bank shall incur the cost of all fees and expenses associated
with filing a request for arbitration with the AAA, whether such filing is made
on behalf of the Bank or the Executive, and the costs and administrative fees
associated with employing the arbitrator and related administrative expenses
assessed by the AAA. The Bank shall reimburse the Executive for all costs and
expenses, including reasonable attorneys'
D-8
fees, arising from such dispute, proceedings or actions, following the delivery
of the decision of the arbitrator finding in favor of the Executive; provided
that if such finding is not in favor of the Executive then such the Executive
shall reimburse the Bank for the initial filing fee paid by either of them to
the AAA. Further, the settlement of the dispute by the parties to be approved by
the board of directors of the Bank may include a provision for the reimbursement
by the Bank to the Executive for all costs and expenses, including reasonable
attorneys' fees, arising from such dispute, proceedings or actions.
Additionally, the board of directors of the Bank may authorize such
reimbursement of such costs and expenses by separate action upon a written
action and determination of such board of directors following a final
disposition of the matter. Such reimbursement shall be paid within ten days of
the Executive furnishing to the Bank evidence, which may be in the form, among
other things, of a canceled check or receipt, of any costs or expenses incurred
by the Executive.
26. Document Review. The Bank and the Executive hereby acknowledge and
agree that each (i) has read this Agreement in its entirety prior to executing
it, (ii) understands the provisions and effects of this Agreement, (iii) has
consulted with such attorneys, accountants and financial and other advisors as
it or he has deemed appropriate in connection with their respective execution of
this Agreement, and (iv) has executed this Agreement voluntarily and knowingly.
THE EXECUTIVE HEREBY UNDERSTANDS, ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT
HAS BEEN PREPARED BY LEGAL COUNSEL TO THE BANK AND THAT HE HAS NOT RECEIVED ANY
ADVICE, COUNSEL OR RECOMMENDATION WITH RESPECT TO THIS AGREEMENT FROM SUCH
COUNSEL.
27. Entire Agreement This Agreement together with any understanding or
modifications thereof as agreed to in writing by the parties, shall constitute
the entire agreement between the parties hereto.
28. Termination of Employment Agreement; Waiver of Certain Rights. The
parties hereto agree that effective this date the Employment Agreement is
terminated in all respects. Executive further agrees that, in exchange for the
Merger Consideration and the benefits to Executive hereunder, and in
consideration of the fact that any options granted to Executive in 2006 pursuant
to Section 6 of the Employment Agreement may have been without value in light of
the Merger, he hereby waives any and all rights he may have or had had to
receive stock options regarding TBI common stock in 2006 pursuant to Section 6
of the Employment Agreement.
D-9
IN WITNESS WHEREOF, the parties have caused the Agreement to be executed
and delivered as of the ___ day of_______________, 2006.
COMMUNITY BANK SHARES OF INDIANA, INC.
By: __________________________________
THE XXXXX COUNTY STATE BANK
("Bank")
By: __________________________________
THE BANCSHARES, INC.
By: __________________________________
EXECUTIVE
______________________________________
Xxxxx X. Xxxxx
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EXHIBIT "E"
MATTERS AS TO WHICH
XXXXX XXXXXXX LLP WILL OPINE
Capitalized terms used in this Exhibit shall have the respective meanings
set forth in the Agreement.
1. TBI is a bank holding company existing and in good standing under the
Laws of the State of Indiana with corporate power and authority to conduct its
business and to own and use its Assets. The Bank is a state banking corporation
existing and in good standing with the FDIC and under the Laws of the State of
Indiana with corporate power and authority to conduct its business and to own
and use its Assets.
2. TBI's authorized capital stock consists of 252,000 shares of TBI Common
Stock, of which, 202,908 shares were outstanding as of the Closing Date. The
outstanding shares of TBI Common Stock have been duly authorized and validly
issued, were not issued in violation of any statutory preemptive rights of
shareholders, and are fully paid and nonassessable. There are no Rights
obligating TBI to issue or acquire any of its equity securities.
3. The Bank's authorized capital stock consists of ___________ shares of
Bank common stock, of which, ___ shares were outstanding as of the Closing Date.
The outstanding shares of Bank common stock have been duly authorized and
validly issued, were not issued in violation of any statutory preemptive rights
of shareholders, and are fully paid and nonassessable. There are no Rights
obligating the Bank to issue or acquire any of its equity securities.
4. The execution and delivery by TBI of the Agreement do not, and if TBI
were now to perform its obligations under the Agreement, such performance would
not, violate or contravene any provision of the Articles of Incorporation or
Bylaws of TBI or, to our Knowledge, result in any material breach of, or default
or acceleration under, any Contract or Order to which TBI or any TBI Subsidiary
is a party or by which any of such Persons is bound.
5. The Agreement has been duly and validly executed and delivered by TBI
and assuming valid authorization, execution and delivery of the Agreement by the
Company and Merger Subsidiary, constitutes a valid and binding agreement of TBI,
enforceable in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally; provided, however, that we express no opinion as to
the availability of the equitable remedy of specific performance.
E-1
EXHIBIT "F"
MATTERS AS TO WHICH
XXXXX XXXXXX XXXXX PLLC WILL OPINE
Capitalized terms used in this Exhibit shall have the respective meanings
set forth in the Agreement.
1. The Company is a bank holding company existing and in good standing
under the Laws of the State of Indiana with corporate power and authority to
conduct its business and to own and use its Assets. Merger Subsidiary is a
company existing and in good standing under the Laws of the State of Indiana
with the corporate power and authority to conduct its business and to own and
use its Assets.
2. The Company's authorized capital stock consists of 5,000,000 shares of
preferred stock and 10,000,000 shares of Company Common Stock, of which no
shares and ____ shares, respectively, were outstanding as of the Closing Date.
The outstanding shares of Company Common Stock have been duly authorized and
validly issued, were not issued in violation of any statutory preemptive rights
of shareholders and are fully paid and nonassessable.
3. The execution and delivery by the Company and Merger Subsidiary of the
Agreement do not, and if the Company and Merger Subsidiary were now to perform
their respective obligations under the Agreement such performance would not,
violate or contravene any provision of the Articles of Incorporation or Bylaws
of the Company or Merger Subsidiary or, to our Knowledge, result in any material
breach of, or default or acceleration under, any Contract or Order to which
Company, Merger Subsidiary or any Company Subsidiary is a party or by any of
such Persons is bound.
4. The Agreement has been duly and validly executed and delivered by the
Company and Merger Subsidiary, and, assuming valid authorization, execution and
delivery of the Agreement by TBI, constitutes a valid and binding agreement of
the Company and Merger Subsidiary enforceable in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally; provided,
however, that we express no opinion as to the availability of the equitable
remedy of specific performance.
5. The shares of Company Common Stock to be issued to the shareholders of
TBI as contemplated in the Agreement have been registered under the 1933 Act,
and when issued and delivered following consummation of the Merger will be fully
paid and nonassessable under the IBCL.
