AGREEMENT AND PLAN OF MERGER dated as of January 7, 2008 by and among MUTUALFIRST FINANCIAL, INC. MUTUALFIRST ACQUISITION CORP. and MFB CORP.
Exhibit
10.1
AGREEMENT
AND PLAN OF
MERGER
dated
as of January 7,
2008
by
and among
MUTUALFIRST
FINANCIAL,
INC.
MUTUALFIRST
ACQUISITION
CORP.
and
TABLE
OF
CONTENTS
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Page
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RECITALS
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1
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ARTICLE
I
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CERTAIN
DEFINITIONS
|
2
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1.1
|
Certain
Definitions
|
2
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ARTICLE
II
|
THE
TRANSACTIONS
|
9
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2.1
|
The
Merger
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9
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2.2
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Bank
Merger
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10
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2.3
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Effective
Date
|
10
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2.4
|
Reservation
of Right to Revise Transactions
|
11
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ARTICLE
III
|
CONVERSION
OF SHARES
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11
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3.1
|
Conversion
of MFB Common Stock; Merger Consideration
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11
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3.2
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Election
Procedures
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12
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3.3
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Delivery
of Aggregate Merger Consideration to Exchange Agent; Payment of
Merger
Consideration Relating to Certificates Surrendered at or Prior
to the
Election Deadline.
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15
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3.4
|
Exchange
and Other Procedures Relating to Certificates Surrendered after
the
Election Deadline.
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15
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3.5
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Return
of Exchange Fund.
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16
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3.6
|
Withholding.
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16
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ARTICLE
IV
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ACTIONS
PENDING TRANSACTION
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17
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4.1
|
Forbearances
of MFB and its Subsidiaries.
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17
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4.2
|
Forbearances
of MutualFirst and its Subsidiaries.
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20
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ARTICLE
V
|
REPRESENTATIONS
AND WARRANTIES OF MFB
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22
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5.1
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Standard.
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22
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5.2
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Capitalization.
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22
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5.3
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Organization,
Standing and Authority of MFB.
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23
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5.4
|
MFB
Subsidiaries.
|
23
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5.5
|
Authorized
and Effective Agreement.
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23
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5.6
|
Securities
Documents and Regulatory Reports.
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25
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5.7
|
Material
Adverse Effect.
|
25
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5.8
|
Environmental
Matters.
|
25
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5.9
|
Tax
Matters.
|
26
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5.10
|
Legal
Proceedings.
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27
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5.11
|
Compliance
with Laws.
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27
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5.12
|
Employee
Benefit Plans.
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28
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5.13
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Certain
Contracts.
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29
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5.14
|
Brokers
and Finders.
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29
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5.15
|
Insurance.
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29
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5.16
|
Properties.
|
30
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5.17
|
Labor.
|
30
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5.18
|
Allowance
for Loan Losses.
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30
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5.19
|
Transactions
with Insiders.
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30
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5.20
|
Fairness
Opinion.
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31
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5.21
|
No
Undisclosed Liabilities.
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31
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5.22
|
Indemnification.
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31
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5.23
|
Loan
Portfolio.
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31
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5.24
|
Investment
Portfolio.
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32
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5.25
|
Books
and Records.
|
32
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5.26
|
Defaults.
|
32
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5.27
|
Intellectual
Property.
|
32
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5.28
|
Risk
Management Instruments.
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32
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5.29
|
Trust
Administration.
|
33
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5.30
|
Internal
Controls.
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33
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5.31
|
Takeover
Laws.
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33
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5.32
|
Representations
Not Misleading.
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33
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ARTICLE
VI
|
REPRESENTATIONS
AND WARRANTIES OF MUTUALFIRST
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34
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6.1
|
Standard.
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34
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6.2
|
Capitalization.
|
34
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||
6.3
|
Organization,
Standing and Authority of MutualFirst.
|
34
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6.4
|
MutualFirst
Subsidiaries.
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35
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6.5
|
Authorized
and Effective Agreement.
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35
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6.6
|
Securities
Documents and Regulatory Reports.
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36
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6.7
|
Material
Adverse Effect.
|
36
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6.8
|
37
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6.9
|
Tax
Matters.
|
37
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6.10
|
Legal
Proceedings.
|
38
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6.11
|
Compliance
with Laws.
|
38
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6.12
|
Employee
Benefit Plans.
|
39
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6.13
|
Brokers
and Finders.
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39
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6.14
|
Insurance.
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39
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6.15
|
Properties.
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39
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6.16
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Labor.
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39
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6.17
|
Allowance
for Loan Losses.
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40
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6.18
|
Transactions
with Insiders.
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40
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6.19
|
Fairness
Opinion.
|
40
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6.20
|
No
Undisclosed Liabilities.
|
40
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6.21
|
Indemnification.
|
40
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6.22
|
Loan
Portfolio.
|
41
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6.23
|
Investment
Portfolio.
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41
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6.24
|
Books
and Records.
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41
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6.25
|
Defaults.
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42
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6.26
|
Intellectual
Property.
|
42
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6.27
|
Risk
Management Instruments.
|
42
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||
6.28
|
Trust
Administration.
|
42
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||
6.29
|
Internal
Controls.
|
42
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||
6.30
|
Takeover
Laws.
|
43
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6.31
|
Representations
Not Misleading.
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43
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ARTICLE
VII
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COVENANTS
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43
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7.1
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Reasonable
Best Efforts.
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43
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7.2
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MFB
Shareholder Approval.
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43
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7.3
|
MutualFirst
Shareholder Approval.
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44
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7.4
|
Registration
Statement and Joint Proxy Statement.
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44
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7.5
|
Access;
Information.
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45
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7.6
|
Alternative
Proposal.
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47
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7.7
|
Press
Releases.
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47
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7.8
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Takeover
Laws.
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47
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7.9
|
Conforming
Entries.
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47
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7.10
|
Systems
Integration.
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48
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7.11
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Listing.
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49
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7.12
|
Regulatory
Applications.
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49
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7.13
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Current
Information and Attendance at Board Meetings.
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49
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7.14
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Officers’
and Directors’ Insurance; Indemnification.
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50
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7.15
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Benefit
Plans.
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51
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7.16
|
MFB
Stock Options.
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53
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7.17
|
Notification
of Certain Matters.
|
54
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7.18
|
Litigation
Matters.
|
54
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7.19
|
Section
16(b) Exemption.
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54
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7.20
|
Reservation
of Shares.
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55
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7.21
|
Expansion
of MutualFirst Board and XXXX Board.
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55
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7.22
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Supplemental
Indenture.
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55
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ARTICLE
VIII
|
CONDITIONS
PRECEDENT
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55
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8.1
|
Conditions
Precedent – Parties.
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55
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8.2
|
Conditions
Precedent - MFB.
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56
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8.3
|
Conditions
Precedent - MutualFirst.
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57
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ARTICLE
IX
|
TERMINATION,
WAIVER AND AMENDMENT
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57
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9.1
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Termination.
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57
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9.2
|
Effect
of Termination.
|
60
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9.3
|
Survival
or Non-Survival of Representations, Warranties and
Covenants.
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60
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9.4
|
60
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9.5
|
Amendment
or Supplement.
|
60
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9.6
|
Termination
Fee.
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60
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9.7
|
Relief
for Willful Breach; Specific Performance.
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61
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ARTICLE
X
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MISCELLANEOUS
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61
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10.1
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Expenses.
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61
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10.2
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Entire
Agreement.
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62
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10.3
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No
Assignment.
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62
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10.4
|
Notices.
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62
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10.5
|
Interpretation.
|
63
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10.6
|
Counterparts.
|
63
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10.7
|
Governing
Law.
|
63
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10.8
|
Severability.
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63
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EXHIBITS
Exhibit
A Form
of MFB Voting Agreement
Exhibit
B Form
of MutualFirst Voting Agreement
Exhibit
C Employment
Agreement for Xxxxxxx X. Xxxxxx
AGREEMENT
AND PLAN OF
MERGER
This
AGREEMENT AND PLAN OF
MERGER (this “Agreement”)
is dated
as of January 7, 2008, by and between MutualFirst Financial, Inc.,
a Maryland corporation (“MutualFirst”),
MutualFirst Acquisition Corp., a newly formed Indiana corporation and wholly
owned subsidiary of MutualFirst (“Acquisition Corp.”)
and MFB Corp., an Indiana corporation (“MFB”).
WHEREAS,
the Board of
Directors of each of MutualFirst, Acquisition Corp. and MFB (i) has
determined that this Agreement and the business combination and related
transactions contemplated hereby are in the best interests of their respective
companies and shareholders and (ii) has determined that this Agreement and
the transactions contemplated hereby are consistent with and in furtherance
of
their respective business strategies, and (iii) has adopted a resolution
approving this Agreement and declaring its advisability;
WHEREAS,
in accordance with
the terms of this Agreement, MFB will merge with and into Acquisition Corp.
(the
“Merger”), and
immediately thereafter MFB Financial, a federally chartered savings bank and
wholly owned subsidiary of MFB (“MFB Financial”), will
be merged (the “Bank
Merger”) with and into Mutual Federal Savings Bank, a federally chartered
savings bank and wholly owned subsidiary of MutualFirst (“XXXX”);
WHEREAS,
as a condition to the
willingness of MutualFirst to enter into this Agreement, each of the directors
of MFB has entered into a Voting Agreement, substantially in the form of
Exhibit A hereto, dated as of the date hereof, with MutualFirst (each an
“MFB Voting
Agreement”), pursuant to which each such person has agreed, among other
things, to vote all shares of common stock of MFB owned by such person in favor
of the approval of this Agreement and the transactions contemplated hereby,
upon
the terms and subject to the conditions set forth in such MFB Voting
Agreement;
WHEREAS,
as a condition to the
willingness of MFB to enter into this Agreement, each of the directors of
MutualFirst has entered into a Voting Agreement, substantially in the form
of
Exhibit B hereto, dated as of the date hereof, with MFB (each a “MutualFirst Voting
Agreement”), pursuant to which each such director has agreed, among other
things, to vote all shares of common stock of MutualFirst owned by such person
in favor of the approval of the issuance of MutualFirst common stock as
contemplated by this Agreement, upon the terms and subject to the conditions
set
forth in such MutualFirst Voting Agreement;
WHEREAS,
the parties intend
the Merger to qualify as a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”), and that
this
Agreement be and is hereby adopted as a “plan of reorganization” as such term is
used in Sections 354 and 361 of the Code; and
WHEREAS,
the parties desire to
make certain covenants, representations, warranties, and agreements in
connection with the business transactions described in this Agreement and to
prescribe certain conditions thereto.
1
NOW,
THEREFORE, in
consideration of the mutual covenants, representations, warranties and
agreements herein contained, and of other good and valuable consideration,
the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
CERTAIN
DEFINITIONS
1.1 Certain
Definitions. The
following terms are used in this Agreement with the meanings set forth
below:
“Acquisition
Corp.”
has the meaning set forth in the preamble to this Agreement.
“Additional
Consideration” has the meaning set forth in
Section 9.1(i)(2).
“Agent”
has
the
meaning set forth in Section 3.2(b).
“Aggregate
Merger
Consideration” has the meaning set forth in Section 3.1(d).
“Agreement”
means
this
Agreement, as amended or modified from time to time in accordance with
Section 9.5.
“Alternative
Proposal”
means any proposal to engage in, or a public announcement to engage
in, or a
filing with any Governmental Authority with respect to, any merger or
consolidation with, purchase or lease of substantially all assets of, purchase
of securities representing 20% or more of the voting power of, or any similar
transaction involving, MFB or MFB Financial, but specifically excluding the
transactions contemplated by this Agreement.
“Articles
of Merger”
has the meaning set forth in Section 2.1(b)
“Assumed
Option” has
the meaning set forth in Section 7.16.
“Bank
Merger” has the
meaning set forth in the Recitals to this Agreement.
“Cash
Consideration”
has the meaning set forth in Section 3.1(c)(1).
“Cash
Election” has
the meaning set forth in Section 3.1(c)(1).
“Cash
Election Shares”
has the meaning set forth in Section 3.2(a).
“Certificates”
means
certificates evidencing shares of MFB Common Stock.
“Change
in
Recommendation” has the meaning set forth in
Section 7.2(a).
“Claim”
has
the
meaning set forth in Section 7.14(b).
“COBRA”
has
the
meaning set forth in Section 7.15(c).
“Code”
has
the meaning
set forth in the Recitals to this Agreement.
2
“Competing
Acquisition
Agreement” has the meaning set forth in Section 7.2(c).
“Continuing
Employees”
has the meaning set forth in Section 7.15(b).
“CRA”
means
the
Community Reinvestment Act.
“Defined
Benefit Plan”
means any qualified pension plan constituting a defined benefit plan
within the
meaning of Section 3(35) of ERISA.
“DOJ”
means
the United
States Department of Justice.
“Effective
Date” has
the meaning set forth in Section 2.3.
“Effective
Time” has
the meaning set forth in Section 2.1(b).
“Election
Deadline”
has the meaning set forth in Section 3.2(c).
“Election
Form” has
the meaning set forth in Section 3.2(b).
“Environmental
Claim”
means any written notice from any Governmental Authority or third party
alleging
potential liability (including potential liability for investigatory costs,
cleanup costs, governmental response costs, natural resources, damages, property
damages, personal injuries or penalties) arising out of, based on, or resulting
from the presence, or release into the environment, of any Materials of
Environmental Concern.
“Environmental
Laws”
means any federal, state or local law, statute, ordinance, rule, regulation,
code, license, permit, authorization, approval, consent, order, judgment,
decree, injunction or agreement with any Governmental Authority relating to
(a) the protection, preservation or restoration of the environment
(including air, water vapor, surface water, groundwater, drinking water supply,
surface soil, subsurface soil, plant and animal life or any other natural
resource), and/or (b) the use, storage, recycling, treatment, generation,
transportation, processing, handling, labeling, production, release or disposal
of Materials of Environmental Concern. The term Environmental Law
includes (i) the Comprehensive Environmental Response, Compensation and
Liability Act, as amended, 42 U.S.C. §9601, et seq; the Resource Conservation
and Recovery Act, as amended, 42 U.S.C. §6901, et seq; the Clean Air Act, as
amended, 42 U.S.C. §7401, et seq; the Federal Water Pollution Control Act, as
amended, 33 U.S.C. §1251, et seq; the Toxic Substances Control Act, as amended,
15 U.S.C. §9601, et seq; the Emergency Planning and Community Right to Xxxx Xxx,
00 X.X.X. §0000, et seq; the Safe Drinking Xxxxx Xxx, 00 X.X.X. §000x, et seq;
and all comparable state and local laws, and (ii) any common law (including
common law that may impose strict liability) that may impose liability or
obligations for injuries or damages due to, or threatened as a result of, the
presence of or exposure to any Materials of Environmental Concern.
“Environmental
Studies” has the meaning set forth in Section 7.5(a).
“ERISA”
means
the
Employee Retirement Income Security Act of 1974, as amended.
“ESOP”
means
a
qualified employee stock ownership plan.
3
“Exchange
Act” means
the Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder.
“Exchange
Agent” means
such financial institution mutually agreed upon by the Parties.
“Exchange
Fund” has
the meaning set forth in Section 3.3.
“Exchange
Ratio” has
the meaning set forth in Section 3.1(c)(2).
“Expert’s
Opinion” has
the meaning set forth in Section 7.5(a).
“FDIC”
means
the
Federal Deposit Insurance Corporation.
“FHLB”
means
the
Federal Home Loan Bank of Indianapolis.
“Final
MutualFirst Share
Value” means the arithmetic average of the closing sales prices of
MutualFirst Common Stock reported on the Nasdaq for the five consecutive trading
days immediately preceding but not including the trading day prior to the
Effective Date.
“FINRA”
means
the
Financial Industry Regulatory Authority or any successor thereto.
“GAAP”
means
generally
accepted accounting principles.
“Governmental
Authority” means any court, administrative agency or commission or other
federal, state or local governmental authority or instrumentality.
“IBCL”
means
the
Indiana Business Corporation Law
“include,”
“includes”
and
“including”
shall
be
deemed to be followed by the phrase “without limitation”.
“Independent
Expert”
has the meaning set forth in Section 7.5(a).
“Insurance
Amount” has
the meaning set forth in Section 7.14(a).
“Intellectual
Property” has the meaning set forth in Section 5.27.
“IRS”
means
the
Internal Revenue Service.
“Joint
Proxy
Statement-Prospectus” has the meaning set forth in
Section 7.4(a).
“Knowledge”
as
used
with respect to a Person (including references to such Person being aware of
a
particular matter) means those facts that are actually known by any executive
officer or director of such Person, and includes any facts, matters or
circumstances set forth in any written notice from any Governmental Authority
or
any other material written notice received by that Person.
4
“Lien”
means
any
mortgage, pledge, security interest, lien or encumbrance.
“Material
Adverse
Effect” means, with respect to a Party, any effect that (i) is
material and adverse to the financial position, results of operations, business,
or operations of a Party and its Subsidiaries taken as a whole or
(ii) would materially impair the ability of a Party to perform its
obligations under this Agreement or otherwise materially impede the consummation
of any of the Transactions; provided, however, that a Material Adverse Effect
shall not be deemed to include the impact of (a) changes in thrift and
similar laws of general applicability to depository institutions generally
or
interpretations thereof by Governmental Authorities, or other changes affecting
depository institutions generally, including changes in general economic
conditions and changes in prevailing interest and deposit rates (b) changes
in GAAP or regulatory accounting requirements applicable to thrifts and their
holding companies generally, (c) any modifications or changes to policies,
practices or charges, in each case taken by MFB or any of its Subsidiaries
at
the written request of MutualFirst or taken by a Party or its Subsidiaries
in
accordance with GAAP, (d) the impact of the announcement of this Agreement,
(e) expenses incurred in connection with this Agreement or the Transactions,
(f) actions or omissions of a Party taken with the prior written consent of
the other Party or as permitted by this Agreement, (g) the payment of any
amounts due to, or the provision of any other benefits to, any directors,
officers or employees of MFB and its Subsidiaries under
employment contracts, employee benefit plans, change in control
agreements, severance agreements or other arrangements in existence as of the
date hereof as Previously Disclosed, (h) changes in national or
international political or social conditions including the engagement by the
United States in hostilities whether or not pursuant to the declaration of
a
national emergency or war, or the occurrence of any military or terrorist attack
upon or within the United States, or any of its territories, possession or
diplomatic or consular offices or upon any military installation, equipment
or a
personnel of the United States, unless it uniquely affects either or both of
the
Parties and (i) any change in the value of the securities or loan
portfolio, or any change in value of the deposits or borrowings, of and from
a
change in interest rates generally.
“Materials
of Environmental
Concern” means pollutants, contaminants, wastes, toxic substances,
petroleum, petroleum products and any other materials regulated under
Environmental Laws.
“MFB”
has
the meaning
set forth in the preamble to this Agreement.
“MFB
Advisor” means
Xxxxxx, Xxxxxxxx & Company, Incorporated
“MFB
Articles” means
the Articles of Incorporation of MFB Corp.
“MFB
Board” means the
Board of Directors of MFB Corp.
“MFB
By-Laws” means
the Code of By-Laws of MFB Corp.
“MFB
Common Stock”
means the common stock, without par value, of MFB Corp.
“MFB
Employee Plans”
means all stock option, restricted stock, stock unit, employee stock
purchase,
ownership and stock bonus plans, pension, profit-sharing and retirement plans,
deferred compensation, consultant, bonus and group insurance contracts,
arrangements and agreements, or any trust agreement (or similar arrangement)
related thereto, all other incentive, health, welfare and benefit plans and
arrangements maintained for the benefit of, and any employment, retirement,
or
similar agreement, arrangement or understanding pursuant to which any payment
(whether of severance pay or otherwise) is, will or may become due to, any
present or former directors, employees or consultants of MFB or any of its
Subsidiaries, whether written or oral.
5
“MFB
Financial Change In
Control Agreement” means the Change in Control Agreement between MFB
Financial and Xxxxx X. Xxxxxxx dated September 18, 2007.
“MFB
Financial Director Fee
Continuation Agreements” means the Director Fee Continuation Agreements
between MFB Financial and its directors dated September 18, 2007.
“MFB
Financial Employment
Agreements” means the Amended and Restated Employment Agreements between
MFB Financial and each of Xxxxxxx X. Xxxxxx, Xxxxxx X. Xxxx and Xxxxx X. Xxxxx,
effective January 1, 2005 in the case of Viater and Xxxx and effective January
16, 2007 in the case of Xxxxx.
“MFB
Financial Salary
Continuation Agreement” means the Salary Continuation Agreement between
MFB Financial and Xxxxxxx X. Xxxxxx as adopted on September 18,
2007.
“MFB
Insiders” has the
meaning set forth in Section 5.19.
“MFB
Meeting” has the
meaning set forth in Section 7.2(a).
“MFB
Objection Notice”
has the meaning set forth in Section 7.5(a).
“MFB
Section 16
Information” has the meaning set forth in Section 7.19.
“MFB
Shareholder
Rights” has the meaning set forth in Section 5.2(a).
“MFB
Stock Options”
has the meaning set forth in Section 5.2(b).
“MFB
Stock Option
Plans” means the 1997 MFB Corp. Stock Option Plan, the 2002 MFB Corp.
Stock Option Plan and the 2008 MFB Corp. Stock Option and Incentive
Plan.
“MFB
Voting Agreement”
has the meaning set forth in the Recitals of this Agreement.
“XXXX”
has
the meaning
set forth in the Recitals to this Agreement.
“MutualFirst”
has
the
meaning set forth in the preamble to this Agreement.
“MutualFirst
Advisor”
means Sandler X’Xxxxx & Partners, L.P.
“MutualFirst
Articles”
means the Articles of Incorporation of MutualFirst Financial, Inc.
“MutualFirst
Board”
means the Board of Directors of MutualFirst Financial, Inc.
“MutualFirst
By-Laws”
means the ByLaws of MutualFirst Financial, Inc.
6
“MutualFirst
Common
Stock” means the common stock, par value $0.01 per share, of MutualFirst
Financial, Inc.
“MutualFirst
Insiders”
has the meaning set forth in Section 6.18.
“MutualFirst
Meeting”
has the meaning set forth in Section 7.3.
“MutualFirst
Voting
Agreement” has the meaning set forth in the Recitals of this
Agreement.
“Merger”
has
the
meaning set forth in the Recitals to this Agreement.
“Merger
Consideration”
has the meaning set forth in Section 3.1(d).
“Mixed
Election” has
the meaning set forth in Section 3.1(c)(3).
“Nasdaq”
means
the
Nasdaq Stock Market.
“Non-Election
Shares”
has the meaning set forth in Section 3.2(a).
“OTS”
means
the Office
of Thrift Supervision of the Department of the Treasury.
“Parties”
means
MFB,
MutualFirst and Acquisition Corp.
“Party”
means
MFB,
MutualFirst or Acquisition Corp.
“Person”
means
any
individual, bank, corporation, partnership, joint venture, limited liability
company, association, joint-stock company, business trust or unincorporated
organization.
“Previously
Disclosed”
means disclosed in a Party’s Securities Documents which are publicly available
prior to the date hereof or in a written disclosure schedule delivered on the
date hereof by the disclosing Party to the other Party and describing or listing
in reasonable detail the matters contained therein.
“Registration
Statement” has the meaning set forth in Section 7.4(a).
“Regulatory
Authority”
means any Government Authority charged with the supervision or regulation
of
financial institutions (or their holding companies or subsidiaries) including
the OTS, the FDIC, the DOJ and the FINRA.
“REO”
means
real
estate acquired by an entity in foreclosure or by deed in lieu of
foreclosure.
“Representatives”
means, with respect to any Person, such Person’s directors, officers, employees,
accountants, legal or financial advisors or any representatives of such legal
or
financial advisors.
“Required
Environmental
Expenditures” has the meaning set forth in
Section 7.5(a).
7
“Resolution
Period”
has the meaning set forth in Section 7.5(a).
“Rights”
means
with
respect to any Person, securities or obligations convertible into or exercisable
or exchangeable for, or giving any person any right to subscribe for or acquire,
or any options, calls or commitments relating to, or any stock appreciation
right or other instrument the value of which is determined in whole or in part
by reference to the market price or value of, shares of capital stock or
earnings of such Person.
“Rights
Agreement” has
the meaning set forth in Section 5.2(a).
“Rule
16(b) Insiders”
has the meaning set forth in Section 7.19.
“SEC”
means
the
Securities and Exchange Commission.
“Securities
Act” means
the Securities Act of 1933, as amended.
“Securities
Documents”
means all reports, forms, offering circulars, proxy statements, registration
statements and all similar documents filed, or required to be filed, pursuant
to
the Securities Laws.
“Securities
Laws”
means the Securities Act; the Exchange Act; the Investment Company Act
of 1940,
as amended; the Investment Advisers Act of 1940, as amended; the Trust Indenture
Act of 1939, as amended, and the rules and regulations of the SEC.
“Shortfall
Number” has
the meaning set forth in Section 3.2(f).
“Stock
Consideration”
has the meaning set forth in Section 3.1(c)(2).
“Stock
Conversion
Number” has the meaning set forth in Section 3.2(d).
“Stock
Election” has
the meaning set forth in Section 3.1(c)(2).
“Stock
Election
Shares” has the meaning set forth in Section 3.2(a).
“Stock
Election
Number” has the meaning set forth in Section 3.2(e).
“Subsidiary”
means
any
entity which is required to be consolidated with a Party for financial reporting
purposes.
“Superior
Proposal”
means any bona fide written Alternative Proposal which the MFB Board
determines
in good faith to be more favorable from a financial point of view to its
shareholders than the Merger, (1) after receiving the advice of the MFB
Advisor or such other financial advisor (who shall be a nationally recognized
investment banking firm), (2) after taking into account the likelihood of
consummation of such transaction on the terms set forth therein (as compared
to,
and with due regard for, the terms herein) and (3) after taking into
account all legal (with the advice of outside counsel), financial
(including the financing terms of any such proposal), regulatory and other
aspects of such proposal and any other relevant factors permitted under
applicable law as reasonably determined by the MFB Board; provided however,
for
purposes hereof the reference to “20%” in the definition of Alternative Proposal
shall be deemed to be “50.1%”.
8
“Surviving
Corporation” has the meaning set forth in
Section 2.1(a).
“Takeover
Laws” has
the meaning set forth in Section 5.31.
“Tax”
and
“Taxes”
means
all
federal, state, local or foreign taxes, charges, fees, levies or other
assessments, however denominated, including all net income, gross income, gains,
gross receipts, sales, use, ad valorem, goods and services, capital, production,
transfer, franchise, windfall profits, license, withholding, payroll,
employment, medicare, disability, employer health, excise, estimated, severance,
stamp, occupation, property, environmental, unemployment or other taxes, custom
duties, fees, assessments or charges of any kind whatsoever, together with
any
interest and any penalties, additions to tax or additional amounts, in each
case
imposed by any Governmental Authority.
“Tax
Returns” means
any return, amended return or other report (including elections, declarations,
disclosures, schedules, estimates and information returns) required to be filed
with any Governmental Authority with respect to any Tax.
“Termination
Fee” has
the meaning set forth in Section 9.6.
“Transactions”
means
the Merger and the Bank Merger.
“Treasury
Stock” has
the meaning set forth in Section 3.1(b).
Other
terms used herein are defined elsewhere in this Agreement.
ARTICLE II
THE
TRANSACTIONS
2.1 The
Merger. (a) Constituent
Corporations and
Surviving Corporation. The constituent corporations to the
Merger are MFB and Acquisition Corp. Acquisition Corp. shall be the
surviving corporation (the “Surviving
Corporation”) in the Merger and the corporate existence of MFB shall
cease at the Effective Time. The name of the Surviving Corporation
shall be “MutualFirst
Acquisition Corp.”
(b) Corporate
Law Filings and
Effective Time. Subject to the satisfaction or waiver of the
conditions set forth in Article VIII, the Merger shall become effective
(the “Effective
Time”) upon the filing of articles of merger (the “Articles
of Merger”)
relating to the Merger with the Indiana Secretary in accordance with
Section 23-1-40-5 of the IBCL or such later time as may be agreed to by the
Parties and which is set forth in the Articles of Merger, not to exceed 30
days
after the Articles of Merger are filed with the Indiana Secretary.
(c) Effects
of
Merger. The Merger shall have the effects prescribed in the
IBCL, including Acquisition Corp., as the Surviving Corporation, thereupon
and
thereafter possessing all of the rights, privileges, immunities and franchises,
of a public as well as of a private nature, of each of the corporations so
merged and Acquisition Corp., as the Surviving Corporation, becoming responsible
and liable for all the liabilities, obligations and penalties of each of the
corporations so merged. All rights of creditors and obligors and all
Liens on the property of each of Acquisition Corp. and MFB shall be preserved
unimpaired.
9
(d) Articles
of Incorporation
and By-Laws of Surviving Corporation. The Articles of
Incorporation and By-Laws of the Surviving Corporation immediately after the
Merger shall be those of Acquisition Corp. as in effect immediately prior to
the
Effective Time.
(e) Directors
of the Surviving
Corporation. The directors of the Surviving Corporation
immediately after the Merger shall be the directors of Acquisition Corp.
immediately prior to the Effective Time, until such time as their successors
shall be duly elected and qualified.
(f) Officers
of the Surviving
Corporation. The officers of the Surviving Corporation
immediately after the Merger shall be the officers of Acquisition Corp.
immediately prior to the Effective Time, until such time as their successors
shall be duly elected and qualified.
(g) Short
Form Plan of
Merger. The plan of merger included in this Section 2.1
shall be separately stated in a short form plan of merger to be executed by
the
Parties and such plan of merger shall be separately filed with or incorporated
into the Articles of Merger to be filed with the Indiana Secretary
2.2 Bank
Merger. MFB
shall cause MFB Financial, and MutualFirst shall cause XXXX, to timely take
all
necessary and appropriate action relating to the Bank Merger (including the
execution of documents and instruments), as reasonably and mutually determined
by MutualFirst and MFB including executing a separate agreement relating to
the
Bank Merger, to obtain all approvals and consents from Regulatory Authorities
and third parties relating to the Bank Merger and to enable the Bank Merger
to
be consummated immediately following the Merger.
2.3 Effective
Date. Subject
to the satisfaction or waiver of the conditions set forth in Article VIII,
the Parties shall cause the effective date of the Merger (the “Effective Date”)
to occur (i) not later than the 10th business day after the last of the
conditions set forth in Article VIII to be satisfied prior to the Effective
Date shall have been satisfied or waived in accordance with the terms of this
Agreement, and all regulatory waiting periods and the time periods required
by
Section 9.1(i) have expired; or (ii) on such other date to which the
Parties may agree in writing. The Parties shall take all necessary
action to pre-file the Articles of Merger to enable the Effective Time to occur
on the Effective Date.
2.4 Reservation
of Right to
Revise Transactions. MutualFirst
shall have the right to revise the structure for effecting any of the
Transactions with the consent of MFB, which consent will not be unreasonably
withheld; provided, however, that MutualFirst shall not have the right, without
the prior written approval of the MFB Board, and, if required, the approval
of
the MFB shareholders, to make any revision to the structure of the Transactions,
which (a) changes the value amount or kind of the consideration which the
MFB shareholders are entitled to receive in the Merger, (b) adversely
affects the income Tax treatment of the Merger to the MFB shareholders, or
(c) will materially delay or jeopardize the receipt of any necessary
consents or approvals of Regulatory Authorities or other third parties with
respect to any of the Transactions or otherwise cause any condition to the
Transactions set forth in Article VIII hereof not to be capable of being
fulfilled in a timely manner. MutualFirst may exercise this right of
revision by giving written notice thereof to MFB in the manner provided in
Section 10.4.
10
ARTICLE III
CONVERSION
OF
SHARES
3.1 Conversion
of MFB Common
Stock; Merger Consideration. At
the
Effective Time, by virtue of the Merger and without any action on the part
of
MutualFirst, Acquisition Corp., MFB or the holders of any of the shares of
MFB
Common Stock, the Merger shall be effected in accordance with the following
terms:
(a) Outstanding
MutualFirst and
Acquisition Corp. Common Stock. Each share of MutualFirst
Common Stock and Acquisition Corp. common stock that is issued and outstanding
immediately prior to the Effective Time shall remain issued and outstanding
following the Effective Time and shall be unchanged by the Merger.
(b) Cancellation
of Treasury
Stock, etc. All shares of MFB Common Stock held in the
treasury of MFB (“Treasury Stock”) and
each share of MFB Common Stock owned by MutualFirst or any of its Subsidiaries
immediately prior to the Effective Time (other than shares held in a fiduciary
capacity or in connection with debts previously contracted) shall, at the
Effective Time, cease to exist, and the Certificates for such shares shall
be
canceled as promptly as practicable thereafter, and no payment or distribution
shall be made in consideration therefor.
(c) Outstanding
MFB Common
Stock. Subject to the provisions of this Article III,
each share of MFB Common Stock issued and outstanding immediately prior to
the
Effective Time (other than shares to be canceled pursuant to
Section 3.1(b)) shall become and be converted into, as provided in and
subject to the limitations set forth in this Article III and 9.1(i)(2) if
applicable, the right to receive at the election of the holder thereof as
provided in Section 3.2, the following, without interest:
(1) for
each
share of MFB Common Stock with respect to which an election to
receive cash has been effectively made and not revoked or lost, pursuant to
Section 3.2 (a “Cash Election”), cash
from MutualFirst in the amount of $41.00 (the “Cash
Consideration”);
(2) for
each
share of MFB Common Stock with respect to which an election to receive
MutualFirst Common Stock has been effectively made and not revoked or lost,
pursuant to Section 3.2 (a “Stock Election”),
2.59 shares of MutualFirst Common Stock (the “Exchange Ratio”) (the
“Stock
Consideration”);
(3) a
combination of the Cash Consideration and the Stock Consideration (a “Mixed Election”);
or
(4) for
each
share of MFB Common Stock other than shares as to which a Cash Election, a
Stock
Election or a Mixed Election has been effectively made and not revoked or lost,
pursuant to Section 3.2, such Stock Consideration and/or Cash Consideration
as is determined in accordance with Section 3.2 for Non-Election
Shares.
11
(d) Merger
Consideration. The consideration that any one MFB shareholder
may receive pursuant to Article III is referred to herein as the “Merger Consideration”
and the consideration
that all of the MFB shareholders are entitled to receive
pursuant to Article III is referred to herein as the “Aggregate Merger
Consideration”.
(e) Cancellation
of MFB Common
Stock. After the Effective Time, shares of MFB Common Stock
shall be no longer outstanding and shall be automatically canceled and shall
cease to exist, and shall thereafter by operation of this Section 3.1
represent the right to receive the Merger Consideration and any dividends or
distributions with a record date prior to the Effective Time that were declared
or made by MFB on such shares of MFB Common Stock in accordance with the terms
of this Agreement on or prior to the Effective Time and which remain unpaid
at
the Effective Time.
3.2 Election
Procedures.
(a) General
Provisions. Holders of MFB Common Stock may elect to receive
shares of MutualFirst Common Stock or cash (in either case without interest)
in
exchange for their shares of MFB Common Stock in accordance with the procedures
set forth herein. Shares of MFB Common Stock as to which a Cash Election
(including pursuant to a Mixed Election) has been made are referred to herein
as
“Cash Election
Shares.” Shares of MFB Common Stock as to which a Stock Election has been
made (including pursuant to a Mixed Election) are referred to as “Stock Election
Shares.” Shares of MFB Common Stock as to which no election has been made
(or as to which an Election Form is not returned properly completed) are
referred to herein as “Non- Election
Shares.”
(b) Election
Form and
Transmittal Materials. An election form and other appropriate
and customary transmittal materials (which shall specify that delivery shall
be
effected, and risk of loss and title to Certificates shall pass, only upon
proper delivery of such Certificates to the Exchange Agent), in such form as
MFB
and MutualFirst shall mutually agree (“Election Form”),
shall be mailed to each holder of record of MFB Common Stock as of the record
date of the MFB Meeting at approximately the same time as the Joint Proxy
Statement - Prospectus is mailed to the holders of record of MFB Common
Stock. Each Election Form shall permit such holder, subject to the
allocation and election procedures set forth in this Section 3.2, (i) to
elect to receive the Cash Consideration for all of the shares of MFB Common
Stock held by such holder, (ii) to elect to receive the Stock Consideration
for all of such shares, (iii) to elect to receive the Stock Consideration
for a part of such holder’s MFB Common Stock and the Cash Consideration for the
remaining part of such holder’s MFB Common Stock, or (iv) to indicate that
such record holder has no preference as to the receipt of cash or MutualFirst
Common Stock for such shares. A holder of record of shares of MFB Common Stock
who holds such shares as nominee, trustee or in another representative capacity
(an “Agent”)
may submit multiple Election Forms, provided that each such Election Form covers
all the shares of MFB Common Stock held by such Agent for a particular
beneficial owner. Any shares of MFB Common Stock with respect to which the
holder thereof shall not, as of the Election Deadline, have made an election
by
submission to the Exchange Agent of an effective, properly completed Election
Form shall be deemed Non-Election Shares.
12
(c) Election
Deadline. To be effective, a properly completed Election Form
shall be submitted to the Exchange Agent on or before 5:00 p.m., Central
Time, on the date specified as the election deadline in the Election Form (or
such other time and date as MFB and MutualFirst may mutually agree) (the “Election Deadline”);
provided, however, that the Election Deadline may not occur more than five
(5)
business days prior to the anticipated Effective Date or after the Effective
Date. MFB shall use its reasonable efforts to make available such
additional Election Forms as MutualFirst may permit, to all Persons who become
holders of record of MFB Common Stock between the Election Form Record Date
and
the close of business on the 2nd business day prior to the Election Deadline.
MFB shall provide to the Exchange Agent all information reasonably necessary
for
it to perform as specified herein. An election shall have been
properly made only if the Exchange Agent shall have actually received a properly
completed Election Form by the Election Deadline. An Election Form shall be
deemed properly completed only if accompanied by one or more Certificates (or
customary affidavits and indemnification regarding the loss or destruction
of
such Certificates or the guaranteed delivery of such Certificates) representing
all shares of MFB Common Stock covered by such Election Form, together with
duly
executed transmittal materials included with the Election Form. If an MFB
shareholder either (i) does not submit a properly completed Election Form
in a timely fashion or (ii) revokes its Election Form prior to the Election
Deadline (without later submitting a properly completed Election Form prior
to
the Election Deadline), the shares of MFB Common Stock held by such shareholder
shall be designated as Non-Election Shares. Any Election Form may be
revoked or changed by the Person submitting such Election Form to the Exchange
Agent by written notice to the Exchange Agent only if such notice of revocation
or change is actually received by the Exchange Agent at or prior to the Election
Deadline. MutualFirst shall cause the Certificate or Certificates relating
to
any revoked Election Form to be promptly returned without charge to the Person
submitting the Election Form to the Exchange Agent. Subject to the terms of
this
Agreement and of the Election Form, the Exchange Agent shall have discretion
to
determine when any election, modification or revocation is received and whether
any such election, modification or revocation has been properly made. All
elections shall be revoked automatically if the Exchange Agent is notified
in
writing by MutualFirst or MFB, upon exercise by MutualFirst or MFB of its
respective or their mutual rights to terminate this Agreement to the extent
provided under Section 9.1, that this Agreement has been terminated in
accordance with Section 9.1.
(d) Stock
Conversion
Number. Notwithstanding any other provision contained in this
Agreement, the total number of shares of MFB Common Stock to be converted into
Stock Consideration pursuant to Section 3.1(c)(2) (the “Stock Conversion
Number”) shall be equal to eighty percent (80%) of the number of shares
of MFB Common Stock outstanding immediately prior to the Effective
Time. All of the other shares of MFB Common Stock shall be converted
into Cash Consideration (in each case, excluding shares of MFB Common Stock
to
be canceled as provided in Section 3.1(b)).
(e) Excess
Stock Election
Shares. If the aggregate number of shares of MFB Common Stock
with respect to which Stock Elections shall have been made (the “Stock Election
Number”) exceeds the Stock Conversion Number, then all Cash Election
Shares and all Non-Election Shares of each holder thereof shall be converted
into the right to receive the Cash Consideration, and Stock Election Shares
of
each holder thereof will be converted into the right to receive the Stock
Consideration in respect of that number of Stock Election Shares equal to the
product obtained by multiplying (x) the number of Stock Election Shares
held by such holder by (y) a fraction, the numerator of which is the Stock
Conversion Number and the denominator of which is the Stock Election Number,
with the remaining number of such holder’s Stock Election Shares being converted
into the right to receive the Cash Consideration.
13
(f) Excess
Cash Election
Shares. If the Stock Election Number is less than the Stock
Conversion Number (the amount by which the Stock Conversion Number exceeds
the
Stock Election Number being referred to herein as the “Shortfall Number”),
then all Stock Election Shares shall be converted into the right to receive
the
Stock Consideration and the Non-Election Shares and Cash Election Shares shall
be treated in the following manner:
(i) If
the Shortfall Number is less than or equal to the number of Non- Election
Shares, then all Cash Election Shares shall be converted into the right to
receive the Cash Consideration and the Non-Election Shares of each holder
thereof shall convert into the right to receive the Stock Consideration in
respect of that number of Non-Election Shares equal to the product obtained
by
multiplying (x) the number of Non-Election Shares held by such holder by
(y) a fraction, the numerator of which is the Shortfall Number and the
denominator of which is the total number of Non-Election Shares, with the
remaining number of such holder’s Non-Election Shares being converted into the
right to receive the Cash Consideration; or
(ii) If
the Shortfall Number exceeds the number of Non-Election Shares, then all
Non-Election Shares shall be converted into the right to receive the Stock
Consideration and Cash Election Shares of each holder thereof shall convert
into
the right to receive the Stock Consideration in respect of that number of Cash
Election Shares equal to the product obtained by multiplying (x) the number
of Cash Election Shares held by such holder by (y) a fraction, the
numerator of which is the amount by which (1) the Shortfall Number exceeds
(2) the total number of Non-Election Shares and the denominator of which is
the total number of Cash Election Shares, with the remaining number of such
holder’s Cash Election Shares being converted into the right to receive the Cash
Consideration.
(g) No
Fractional
Shares. Notwithstanding anything to the contrary contained
herein, no Certificates or scrip representing fractional shares of MutualFirst
Common Stock shall be issued upon the surrender for exchange of Certificates,
no
dividend or distribution with respect to MutualFirst Common Stock shall be
payable on or with respect to any fractional share interest, and such fractional
share interest shall not entitle the owner thereof to vote or to any other
rights of a shareholder of MutualFirst. In lieu of the issuance of any such
fractional share, MutualFirst shall pay to each former holder of MFB Common
Stock who otherwise would be entitled to receive a fractional share of
MutualFirst Common Stock, an amount in cash, rounded to the nearest cent and
without interest, equal to the product of (i) the fraction of a share to
which such holder would otherwise have been entitled and (ii) the Final
MutualFirst Share Value. For purposes of determining any fractional
share interest, all shares of MFB Common Stock owned by a MFB shareholder shall
be combined so as to calculate the maximum number of whole shares of MutualFirst
Common Stock issuable to such MFB shareholder.
14
3.3 Delivery
of Aggregate Merger
Consideration to Exchange Agent; Payment of Merger Consideration Relating to
Certificates Surrendered at or Prior to the Election
Deadline.
At
or prior to the Effective Time, MutualFirst shall deliver to the Exchange Agent
the Aggregate Merger Consideration which shall consist of (i) certificates
for
MutualFirst Common Stock equal to the product of the Stock Conversion Number
and
the Exchange Ratio and (ii) the aggregate Cash Consideration equal to the
product of twenty percent (20%) of the number of shares of MFB Common Stock
outstanding immediately prior to the Effective Time and $41.00 (collectively,
the “Exchange
Fund”). On an “as required” basis, MutualFirst shall promptly
and timely tender to the Exchange Agent additional cash funds required for
the
payment of cash in lieu of fractional shares in the Merger, which amounts when
paid shall constitute a part of the Exchange Fund. As soon as
practicable after the Effective Date, but not later than the 10th business
day
after the Effective Date, the Exchange Agent shall tender to each shareholder
of
MFB, who properly surrendered Certificates to the Exchange Agent with an
Election Form at or prior to the Election Deadline (x) a certificate
representing that number of shares of MutualFirst Common Stock (if any) to
which
such former holder of MFB Common Stock shall have become entitled pursuant
to
the provisions of Section 3.1 or 3.2 hereof, (y) a check representing
that amount of cash (if any) to which such former holder of MFB Common Stock
shall have become entitled pursuant to the provisions of Section 3.1 or 3.2
hereof and (z) a check representing the amount of cash (if any) payable in
lieu of a fractional share of MutualFirst Common Stock, which such former holder
has the right to receive in respect of the Certificates surrendered pursuant
to
the provisions of Section 3.2, and the Certificates so surrendered shall
forthwith be cancelled. No interest will be paid or accrued on the
cash payable in lieu of fractional shares.
3.4 Exchange
and Other
Procedures Relating to Certificates Surrendered after the Election
Deadline.
(a) Transmittal
and
Deliveries. As promptly as practicable after the Effective
Date, but not later than ten (10) business days thereafter, with respect to
MFB
shareholders (i) whose addresses have been furnished to MutualFirst or the
Exchange Agent on or prior to the Effective Date and (ii) who did not
surrender or improperly surrendered their Certificates to the Exchange Agent
by
the Election Deadline, MutualFirst shall cause the Exchange Agent to send to
each such shareholder transmittal materials (which shall specify that risk
of
loss and title to Certificates shall pass only upon acceptance of such
Certificates by MutualFirst or the Exchange Agent) for use in exchanging such
shareholder’s Certificates for the Stock Consideration and/or the Cash
Consideration, whichever is applicable. Upon proper delivery to the
Exchange Agent of Certificates (or indemnity reasonably satisfactory to
MutualFirst and the Exchange Agent, if any of such Certificates are lost, stolen
or destroyed) owned by such shareholder, the Exchange Agent shall promptly
deliver to such shareholder the Stock Consideration and/or Cash Consideration
applicable thereto, and if appropriate, a check for any cash in lieu of a
fractional share interest. No interest will be paid with respect to
any of the foregoing. MutualFirst and the Exchange Agent shall be
entitled to rely upon the stock transfer books of MFB to establish the identity
of those Persons entitled to receive the Merger Consideration pursuant to this
Article III, which books shall be conclusive with respect
thereto. In the event of a dispute with respect to ownership of stock
represented by any Certificate, MutualFirst or the Exchange Agent shall be
entitled to deposit any consideration in respect thereof in escrow with an
independent third party and thereafter be relieved with respect to any claims
thereto.
(b) Restrictions
on the Payment
of Dividends. No dividends or other distributions with respect
to MutualFirst Common Stock to be issued in the Merger with a record date
occurring after the Effective Time shall be paid with respect to any
unsurrendered or improperly surrendered Certificates until the holder thereof
shall be entitled to receive the Stock Consideration in exchange therefor in
accordance with the procedures set forth in this
Section 3.4. After becoming so entitled in accordance with this
Section 3.4, the record holder thereof shall be entitled to receive any
such dividends or other distributions, without any interest thereon, which
theretofore had become payable with respect to shares of MutualFirst Common
Stock such holder had the right to receive upon the proper surrender of the
applicable Certificate.
15
(c) Surrender
by Persons Other
than Record Holders. If the Person surrendering a Certificate
and signing the accompanying letter of transmittal is not the record holder
thereof, then it shall be a condition of the payment of the Merger Consideration
that: (i) such Certificate is properly endorsed to such Person or is
accompanied by appropriate stock powers, in either case signed exactly as the
name of the record holder appears on such Certificate and is otherwise in proper
form for transfer, or is accompanied by appropriate evidence of the authority
of
the Person surrendering such Certificate and signing the letter of transmittal
to do so on behalf of the record holder; and (ii) the Person requesting
such exchange shall pay to the Exchange Agent in advance any transfer or other
taxes required by reason of the payment to a Person other than the registered
holder of the Certificate surrendered, or required for any other reason, or
shall establish to the satisfaction of the Exchange Agent that such tax has
been
paid or is not payable.
(d) Closing
of Transfer
Books. From and after the Effective Time, there shall be no
transfers on the stock transfer books of MFB of the MFB Common Stock that were
outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates representing such shares are presented for transfer
to the Exchange Agent or MutualFirst, they shall be exchanged for the Merger
Consideration and canceled as provided in this Section 3.4.
3.5 Return
of Exchange
Fund.
At
any time following the six (6) month period after the Effective Time,
MutualFirst shall be entitled to require the Exchange Agent to deliver to it
any
portion of the Exchange Fund which had been made available to the Exchange
Agent
and not disbursed to holders of Certificates (including, without limitation,
all
interest and other income received by the Exchange Agent in respect of all
cash
funds made available to it), and thereafter holders of Certificates shall be
entitled to look to MutualFirst (subject to abandoned property, escheat and
other similar laws) with respect to any Merger Consideration that may be payable
upon due surrender of the Certificates held by them. Notwithstanding
the foregoing, neither MutualFirst nor the Exchange Agent shall be liable to
any
holder of a Certificate for any Merger Consideration delivered in respect of
such Certificate to a public official pursuant any abandoned property, escheat
or other similar law.
3.6 Withholding.
MutualFirst or the Exchange Agent will be entitled to deduct and withhold from
the consideration otherwise payable pursuant to this Agreement or the
transactions contemplated hereby to any holder of MFB Common Stock such amounts
as MutualFirst (or any of its affiliates) or the Exchange Agent are required
to
deduct and withhold with respect to the making of such payment under the Code,
or any applicable provision of U.S. federal, state, local or non-U.S. tax
law. To the extent that such amounts are properly withheld by
MutualFirst or the Exchange Agent, such withheld amounts will be treated for
all
purposes of this Agreement as having been paid to the holder of the MFB Common
Stock in respect of whom such deduction and withholding were made by MutualFirst
or the Exchange Agent.
16
ARTICLE IV
ACTIONS
PENDING
TRANSACTION
4.1 Forbearances
of MFB and its
Subsidiaries.
From the date hereof until the Effective Time, except as Previously Disclosed
or
otherwise expressly contemplated by this Agreement, without the prior written
consent of MutualFirst (which consent under subsections (e), (j), (m), (n),
(q),
(r), (s), (w), and (x) shall not be unreasonably withheld or delayed), MFB
will
not, and will cause each of its Subsidiaries not to:
(a) Ordinary
Course. Conduct its business other than in the ordinary and
usual course consistent with past practice or fail to use reasonable best
efforts to (i) preserve intact its business organization, properties, and
assets and (ii) maintain its rights, franchises and existing relations with
customers, suppliers, employees and business associates.
(b) Capital
Stock. (i) Issue, sell or otherwise permit to become
outstanding, or authorize the creation of, any additional shares of its capital
stock, other ownership interests or any Rights, except for the issuance of
MFB
Common Stock upon the exercise of MFB Stock Options; or (ii) enter into any
agreement with respect to the foregoing.
(c) Other
Securities. Issue any other capital securities, including
trust preferred or other similar securities, or other securities, debentures
or
subordinated notes.
(d) Dividends,
Etc. (i) Make, declare, pay or set aside for payment any
dividend or distribution on its capital stock or other ownership interests
(other than (A) regular quarterly cash dividends on MFB Common Stock in an
amount not to exceed $0.19 per share, with record and payment dates consistent
with past practice; provided, however, the declaration of the last quarterly
dividend by MFB prior to the Effective Time and the amount and payment thereof
shall be coordinated with MutualFirst so that no shareholder of MFB Common
Stock
who shall be entitled to receive the Stock Consideration will receive dividends
on both MFB Common Stock and MutualFirst Common Stock to be issued in the Merger
with respect to the same quarterly period, or fail to receive at least one
dividend (which may be with respect to either his MFB Common Stock or
MutualFirst Common Stock to be received in the Merger) with respect to such
quarterly period, and (B) dividends from wholly owned Subsidiaries to MFB
or to another wholly owned Subsidiary of MFB) or (ii) directly or
indirectly adjust, split, combine, redeem, reclassify, purchase or otherwise
acquire, any shares of its capital stock, other ownership interests, or Rights,
except in connection with the exercise of stock options where outstanding shares
of MFB Common Stock are used to pay the exercise price.
(e) Compensation;
Employment,
Etc. (i) Enter into, modify, amend, renew or terminate
any employment, consulting, severance, change in control, or similar agreement
or arrangement with any director, officer or employee of, or independent
contractor with respect to, MFB or any of its Subsidiaries, or grant any salary
or wage increase or increase any employee benefit (including incentive or bonus
payments) other than (A) at will agreements; or (B) normal individual
annual increases in salary to rank and file employees not to exceed three
percent (3%) to any employee, in each case in the ordinary course of business
consistent with past practice; (ii) hire any new officers;
(iii) promote any employee to a rank of vice president or a more senior
position; or (iv) pay aggregate expenses of more than $10,000 for employees
and directors to attend conventions or similar meetings after the date
hereof.
17
(f) Benefit
Plans. Except as required by law, enter into, establish,
adopt, modify, amend, renew, or terminate any MFB Employee Plan, or take any
action to accelerate the vesting of benefits thereunder.
(g) Dispositions. Sell,
transfer, mortgage or encumber any of its assets or properties, except in the
ordinary course of business consistent with past practice, and in the case
of a
sale or transfer, at fair value; or sell or transfer any of its deposit
liabilities.
(h) Leases
or
Licenses. Enter into, modify, amend or renew any lease,
license or maintenance agreement relating to real or personal property or
Intellectual Property other than in the ordinary course of business consistent
with past practice and involving an aggregate amount not in excess of
$50,000.
(i) Acquisitions. Except
as permitted under Section 4.1(r) and (q), acquire (other than by way of
foreclosures or acquisitions of control in a bona fide fiduciary capacity or
in
satisfaction of debts contracted prior to the date hereof in good faith, in
each
case in the ordinary course of business consistent with past practice) all
or
any portion of, the assets, business or properties of any Person.
(j) Loans,
Loan Participations
and Servicing Rights. Sell or acquire any loans (excluding
originations) or loan participations; or sell or acquire any servicing
rights.
(k) Governing
Documents. Amend its certificate or articles of incorporation,
charter or by-laws (or similar governing documents).
(l) Accounting
Methods. Implement or adopt any material change in its
accounting principles, practices or methods, other than as may be required
by
GAAP or any Governmental Authority.
(m) Contracts. Except
to satisfy Previously Disclosed written commitments outstanding on the date
hereof, or to the extent permitted by Section 4.1(h), (q), (r), (s), (t) or
(w), enter into or terminate any material agreement or amend or modify in any
material respect or renew any of its existing material agreements.
(n) Claims. Except
in the ordinary course of business consistent with past practice and involving
an amount not in excess of $25,000 (exclusive of any amounts paid directly
or
reimbursed to MFB or any of its Subsidiaries under any insurance policy
maintained by MFB or any of its Subsidiaries), settle any claim, action or
proceeding against it. Notwithstanding the foregoing, no settlement
shall be made if it involves a precedent for other similar claims, which in
the
aggregate, could be material to MFB and its Subsidiaries, taken as a
whole.
(o) Foreclose. Foreclose
upon or otherwise take title to or possession or control of any real property
without first obtaining a phase one environmental report thereon; provided,
however, that neither MFB nor any of its Subsidiaries shall be required to
obtain such a report with respect to one-to four-family, non-agricultural
residential property of five acres or less to be foreclosed upon unless it
has
reason to believe that such property contains Materials of Environmental Concern
or might be in violation of or require remediation under Environmental
Laws.
18
(p) Deposit
Taking and Other
Bank Activities. In the case of MFB Financial
(i) voluntarily make any material changes in or to its deposit mix;
(ii) increase or decrease the rate of interest paid on time deposits or on
certificates of deposit, except in a manner and pursuant to policies consistent
with past practice and competitive factors in the marketplace; (iii) incur
any liability or obligation relating to retail banking and branch merchandising,
marketing and advertising activities and initiatives except in the ordinary
course of business consistent with past practice; (iv) open any new branch
or deposit taking facility; or (v) close or relocate any existing branch or
other facility.
(q) Investments. Enter
into any securities transaction for its own account or purchase or otherwise
acquire any investment security for its own account except purchases and sales
of securities consistent with past practices to maintain investment portfolios
of MFB and its Subsidiaries that have risk and asset mix characteristics similar
to those as of the date hereof; enter into or acquire any derivatives contract
or structured note; enter into any new, or modify, amend or extend the terms
of
any, existing contracts relating to the purchase or sale of financial or other
futures, or any put or call option relating to cash, securities or commodities
or any interest rate swap agreements or other agreements relating to the hedging
of interest rate risk.
(r) Capital
Expenditures. Purchase any fixed assets (by installment
purchase, capital lease, synthetic lease or otherwise) where the amount
paid or committed thereof is in excess of $25,000 individually or $50,000 in
the
aggregate, except for amounts Previously Disclosed, for emergency repairs or
replacements.
(s) Lending. (i)
Make any material changes in its policies concerning loan underwriting or which
Persons may approve loans or fail to comply with such policies; or (ii) make
or
commit to make any new loan, line or letter of credit, or any new or additional
discretionary advance under any existing loan, line or letter of credit, or
restructure any existing loan, line or letter of credit so that any such loan,
line or letter of credit after such action exceeds $1,000,000 without the prior
written consent of MutualFirst acting through its Chief Executive Officer or
a
Senior Vice President in a written notice to MFB, which approval or rejection
shall be given within five (5) business days after delivery by MFB to such
officer of MutualFirst of information concerning the loan reasonably necessary
for MutualFirst to make a decision.
(t) Joint
Ventures and Real
Estate Development Operations. Except as Previously Disclosed,
engage in any new joint venture, partnership or similar activity; make any
new
or additional investment in any existing joint venture or partnership; or engage
in any new real estate development or construction activity.
(u) Adverse
Actions. Knowingly take, or fail to take, any action that is
intended or is reasonably likely to result in (i) any of MFB’s
representations and warranties set forth in this Agreement being or becoming
untrue in any material respect at or prior to the Effective Date (disregarding
Material Adverse Effect qualifications); (ii) the Merger failing to qualify
as a “reorganization” under Section 368 of the Code; (iii) any of the
conditions to the Transactions set forth in Article VIII not being
satisfied except as expressly permitted by this Agreement; or (iv) a
violation of any provision of this Agreement.
19
(v) Risk
Management. Except as required by applicable law or
regulation, (i) implement or adopt any material change in its interest rate
and other risk management policies, procedures or practices; (ii) fail to
follow its existing policies or practices with respect to managing its exposure
to interest rate and other risk; or (iii) fail to use commercially
reasonable means to avoid any material increase in its aggregate exposure to
interest rate risk.
(w) Indebtedness
and
Guaranties. Incur any indebtedness for borrowed money other
than in the ordinary course of business consistent with past practice with
a
term not in excess of one year; or incur, assume or become subject to, whether
directly or by way of any guarantee or otherwise, any obligations or liabilities
(absolute, accrued, contingent or otherwise) of any other Person, other than
the
issuance of letters of credit in the ordinary course of business and in
accordance with the restrictions set forth in Section 4.1(s).
(x) Charitable
Contributions. Make any charitable or similar contributions in
excess of $1,000 individually or $10,000 in the aggregate.
(y) New
Lines of
Business. Develop, market or implement any new lines of
business.
(z) Performance
of
Obligations. Take any action that is likely to materially
impair MFB’s ability to perform any of its obligations under this
Agreement.
(aa) Commitments. Agree
or commit to do any of the foregoing.
4.2 Forbearances
of MutualFirst
and its Subsidiaries.
From the date hereof until the Effective Time, except as expressly contemplated
by this Agreement, without the prior written consent of MFB, MutualFirst will
not, and will cause each of its Subsidiaries not to:
(a) Ordinary
Course. Conduct its business other than in the ordinary and
usual course consistent with past practice or fail to use reasonable best
efforts to (i) preserve intact its business organization, properties, and assets
and (ii) maintain its rights, franchises and existing relations with customers,
suppliers, employees and business associates.
(b) Capital
Stock. (i) Issue, sell or otherwise permit to become
outstanding, or authorize the creation of, any additional shares of its capital
stock, other ownership interests or any Rights or (ii) enter into any agreement
with respect to the foregoing, except for the (1) issuance of stock options
and
restricted stock to employees and directors consistent with past practice,
(2)
issuance of MutualFirst Common Stock upon the exercise of stock options, and
(3)
open market repurchases pursuant to its current repurchase plan.
(c) Other
Securities. Issue any other capital securities, including
trust preferred or other similar securities, or other securities, debentures
or
subordinated notes, except in connection with financing the funding of the
payment of the Cash Consideration.
20
(d) Dividends,
Etc. (i) Make, declare, pay or set aside for payment any
dividend or distribution on its capital stock or ownership interests (other
than
(A) regular quarterly cash dividends on MutualFirst Common Stock in an amount
not to exceed $0.16 per share, with record and payment dates consistent with
past practice, and (B) dividends from wholly owned Subsidiaries to MutualFirst
or to another wholly owned Subsidiary of MutualFirst), or (ii) directly or
indirectly adjust, split, combine, redeem, reclassify, purchase or otherwise
acquire, any shares of its capital stock, other ownership interests, or Rights,
except in connection with (1) the exercise of stock options where outstanding
shares of MutualFirst Common Stock are used to pay the exercise price and (2)
open market repurchases pursuant to its current repurchase plan.
(e) Adverse
Actions. Knowingly take, or fail to take, any action that is
intended or is reasonably likely to result in (i) any of MutualFirst’s
representations and warranties set forth in this Agreement being or becoming
untrue in any material respect (disregarding Material Adverse Effect
qualifications); (ii) the Merger failing to qualify as a “reorganization”
under Section 368 of the Code; (iii) any of the conditions to the
Transactions set forth in Article VIII not being satisfied except as
expressly permitted by this Agreement; or (iv) a violation of any provision
of this Agreement;
(f) Governing
Instruments. Take any action or amend the MutualFirst Articles
or MutualFirst By-Laws, the effect of which would be to materially and adversely
affect the rights or powers of shareholders generally;
(g) Regulatory
Approvals. Knowingly take or omit to take any other action
that would materially adversely affect or materially delay the ability of
MutualFirst to obtain or otherwise materially adversely affect MutualFirst’s or
XXXX’x ability to consummate the Transactions; or
(h) Performance
of
Obligations. Take any action that is likely to materially
impair MutualFirst’s ability to perform any of its obligations under this
Agreement.
(i) Commitment. Agree
or commit to do any of the foregoing.
ARTICLE V
REPRESENTATIONS
AND WARRANTIES OF
MFB
MFB
represents and warrants to MutualFirst that the statements contained in this
Article V are correct and complete as of the date of this Agreement and
will be correct and complete as of the Effective Date (as though made then
and
as though the Effective Date were substituted for the date of this Agreement
throughout this Article V), subject to the standard and qualifications set
forth in Section 5.1 and except as Previously Disclosed, and except as to
any representation or warranty which specifically relates to a specified date,
which only need be so correct as of such specified date.
5.1 Standard. No
representation or warranty of MFB contained in this Article V shall be
deemed not complete, untrue or incorrect, and MFB shall not be deemed to have
breached a representation or warranty, as a consequence of the existence of
any
fact, circumstance or event unless such fact, circumstance or event,
individually or taken together with all other facts, circumstances or events,
has had or is reasonably expected to have a Material Adverse Effect on MFB,
disregarding for these purposes (x) any qualification or exception for, or
reference to, materiality in any such representation or warranty and
(y) any use of the terms “material”, “materially”, “in all material
respects”, “Material Adverse Effect” or similar terms or phrases in any such
representation or warranty. The foregoing standard shall not apply
(a) as of the date of this Agreement to the representations and warranties
contained in Sections 5.2, and 5.12(b),(c), (d) and (g), which shall be true
and
correct as all respects, (b) as of the date of this Agreement to any
representation or warranty contained in Section 5.3(a), 5.4, 5.5(b)(i), 5.6(a),
5.7, 5.8(e), 5.9, 5.10, 5.13, 5.16, 5.17, 5.23 or 5.25 that is material to
the
business, condition (financial or otherwise), operating results or operations
of
MFB and its Subsidiaries, taken as a whole, which representation or warranty
shall be true and correct in all material respects, and (c) at any time to
the
representations and warranties under 5.5(a), 5.14, 5.20 and 5.31, which
representations and warranties shall be true and correct in all respects at
all
times.
21
5.2 Capitalization.
(a) The
authorized capital stock of MFB consists of (i) 5,000,000 shares of MFB Common
Stock of which, as of the date hereof, (A) 1,379,671 are issued and outstanding,
together with the Rights (the “MFB Shareholder
Rights”) issued pursuant to the Rights Agreement, dated as of October 2,
2006, between MFB and Registrar and Transfer Company, as Rights Agent (the
“Rights
Agreement”) and (B) 309,746 are held as Treasury Stock; and
(ii) 2,000,000 shares of preferred stock, without par value, of which no
shares are outstanding. All of the issued and outstanding shares of
MFB Common Stock have been duly authorized and validly issued and are fully
paid
and nonassessable. None of the shares of MFB Common Stock has been
issued in violation of the preemptive rights of any Person. All
issuances of securities by MFB have been registered under the applicable
Securities Act and state securities law requirements or were exempt from such
registration requirements.
(b) Options
covering 141,210 shares of MFB Common Stock are outstanding on the date hereof
(the “MFB Stock
Options”) under the MFB Stock Option Plans with an average exercise price
of $25.16 per share. The name of each holder of MFB Stock Options,
together with the date of each award, the number of option shares subject to
each award, the expiration date(s) thereof, and the vesting date(s) of unvested
awards in each case, as of the date hereof, are Previously
Disclosed. Except for the MFB Shareholder Rights or as set forth
above in this subsection (b), there are no Rights issued or outstanding with
respect to MFB capital stock. The MFB Board has taken all necessary
action to exempt MutualFirst and Acquisition Corp. from the definition of an
“Acquiring Person” or “Adverse Person” (as such terms are defined in the Rights
Agreement) and the Transactions from the transactions subject to the MFB
Shareholder Rights including Section 13 of the Rights Agreement so that the
entering into of this Agreement and the consummation of the Transactions
contemplated hereby (individually or in conjunction with any other event) do
not
and will not result in the ability of any Person to exercise any MFB Shareholder
Rights under the Rights Agreement (or receive any other benefits under the
Rights Agreement) or enable or require the MFB Shareholders Rights to separate
from the shares of MFB Common Stock to which they are attached or to be
triggered or become exercisable or redeemable. MFB does not maintain
a dividend reinvestment plan.
22
5.3 Organization,
Standing and
Authority of MFB.
(a) MFB
is a
unitary savings and loan holding company, duly organized and validly existing
under the laws of the State of Indiana, with full corporate power and authority
to own and lease all of its properties and assets and to carry on its business
as now conducted.
(b) MFB
is
duly licensed and qualified to do business and is in good standing in each
jurisdiction in which its ownership or leasing property or the conduct of its
business requires such licensing or qualification. MFB has previously
made available to MutualFirst the MFB Articles and MFB By-Laws.
5.4 MFB
Subsidiaries. MFB has Previously Disclosed the name and
jurisdiction of incorporation or organization of each of its
Subsidiaries. Each Subsidiary of MFB is duly organized and validly
existing under the laws of its place of incorporation or organization, with
full
power and authority to own and lease all of its properties and assets and to
carry on its business, as now conducted, and is duly licensed or qualified
to do
business and is in good standing in each jurisdiction in which its ownership
or
leasing of property or the conduct of its business requires such licensing
or
qualification. MFB or an MFB Subsidiary owns all of the issued and
outstanding shares of capital stock or other ownership interests of each MFB
Subsidiary, free and clear of all Liens. There are no Rights issued
or outstanding with respect to the capital stock or other ownership interests
of
any Subsidiary of MFB. Except for the ownership of the MFB
Subsidiaries, readily marketable securities, securities held-to-maturity in
the
MFB Financial’s investment portfolio and FHLB stock, neither MFB nor any of its
Subsidiaries owns any equity or profit and loss interest in any other
Person. MFB has previously made available to MutualFirst the
certificate or articles of incorporation, charter, bylaws and other governing
documents of each of its Subsidiaries.
5.5 Authorized
and Effective
Agreement.
(a) MFB
has
all requisite power and authority to enter into this Agreement and (subject
to
receipt of all necessary approvals of Regulatory Authorities, the expiration
of
applicable waiting periods, and the approval of this Agreement by the
shareholders of MFB) to perform all of its obligations
hereunder. This Agreement (including the execution, delivery and
performance hereof) and the Transactions have been duly authorized, deemed
advisable, and unanimously approved by the MFB Board and no other corporate
action is required in respect thereof on the part of MFB, except for the
approval of this Agreement by MFB’s shareholders owning a majority of the issued
and outstanding shares of MFB Common Stock. This Agreement has been
duly and validly executed and delivered by MFB and, assuming due authorization,
execution and delivery by MutualFirst and Acquisition Corp., constitutes the
legal, valid and binding obligation of MFB, enforceable against MFB in
accordance with its terms, subject, as to enforceability, to bankruptcy,
insolvency and other laws of general applicability relating to or affecting
creditors’ rights and to general equity principles.
(b) Neither
the execution and delivery of this Agreement nor completion of the Transactions,
nor compliance by MFB or any of its Subsidiaries with any of the provisions
hereof does or will (i) conflict with or result in a breach of any
provisions of the MFB Articles, MFB By-Laws, or the certificate or articles
of
incorporation, charter, bylaws or other governing documents of any of its
Subsidiaries, (ii) violate, conflict with or result in a breach of any
term, condition or provision of, or constitute a default (or an event which,
with notice or lapse of time, or both, would constitute a default) under, or
give rise to any right of termination, cancellation or acceleration with respect
to, or result in the creation of any Lien upon any property or asset of MFB
or
any of its Subsidiaries pursuant to, any note, bond, mortgage, indenture, deed
of trust, license, lease, agreement or other instrument or obligation to which
MFB or any of its Subsidiaries is a party, or by which any of their properties
or assets may be bound or affected, or (iii) subject to receipt of all required
approvals from Regulatory Authorities (and the expiration of applicable waiting
periods) and the shareholders of MFB, violate in any material respect any order,
writ, injunction, decree, statute, rule or regulation applicable to MFB or
any
of its Subsidiaries.
23
(c) Except
for (i) the filing of applications with and the approvals of applicable
Regulatory Authorities relating to the Transactions and the change of ownership
of the MFB Subsidiaries, (ii) the approval of this Agreement by
shareholders at the MFB Meeting and the approval of the stock issuance at the
MutualFirst Meeting, (iii) the filing with and clearance by the SEC of the
Registration Statement and any state securities filings and clearances,
(iv) the filing of the Articles of Merger (and short form plan of merger,
if applicable) with the Indiana Secretary and (v) the filing of documents
with applicable Regulatory Authorities to cause the Bank Merger to become
effective, no consents or approvals of or filings or registrations with any
Governmental Authority or with any third party are necessary on the part of
MFB
or any of its Subsidiaries or, to the Knowledge of MFB, by MutualFirst or any
of
its Subsidiaries, in connection with the completion of the Transactions and
the
change in ownership of the MFB Subsidiaries.
(d) As
of the
date hereof, MFB is not aware of any reasons relating to MFB or any of its
Subsidiaries (including CRA compliance) why all consents and approvals shall
not
be procured from all Regulatory Authorities having jurisdiction over the
Transactions as shall be necessary for the completion of the
Transactions.
5.6 Securities
Documents and
Regulatory Reports.
(a) MFB’s
Securities Documents filed after September 30, 2003, (i) complied in
all material respects with the applicable requirements under the Securities
Act
or the Exchange Act, as the case may be, and (ii) did not contain any
untrue statement of a material fact or omit to state a material fact required
to
be stated therein or necessary to make the statements therein, in light of
the
circumstances under which they were made, not misleading; and each of the
balance sheets contained in or incorporated by reference into any such
Securities Document (including the related notes and schedules thereto) fairly
presents in all material respects the financial position of MFB and its
Subsidiaries as of its date, and each of the statements of income and changes
in
shareholders’ equity and cash flows or equivalent statements in such Securities
Documents (including any notes or schedules thereto) fairly presents, in all
material respects, the results of operations, changes in shareholders’ equity
and cash flows, as the case may be, of MFB and its Subsidiaries for the periods
to which they relate, in each case in accordance with GAAP consistently applied
during the periods involved, except in each case as may be noted therein,
subject to non-material, normal year-end audit adjustments and the absence
of
footnotes in the case of unaudited financial statements.
24
(b) MFB
and
its Subsidiaries have duly and timely filed with all applicable Regulatory
Authorities all reports required to be filed by them under applicable laws
and
regulations and such reports were complete and accurate in all material respects
and in compliance with the requirements of applicable laws and
regulations. In connection with the examinations of MFB Financial
since September 30, 2003 by the OTS, the FDIC or any other Regulatory
Authority, MFB Financial was not required to correct or change any action,
procedure or proceeding which MFB believes has not been corrected or changed
as
required. As of the date hereof, the last examination of MFB
Financial by the OTS was as of June 25, 2007.
5.7 Material
Adverse
Effect. Since September 30, 2007, (a) to the date of
this Agreement, MFB and its Subsidiaries have conducted their businesses only
in
the ordinary and usual course (excluding the entering into of this Agreement
and
the incurrence of expenses in connection with this Agreement and the
Transactions) and (b) no event has occurred or circumstance arisen
(including litigation) that, individually or in the aggregate, has had or is
reasonably likely to have a Material Adverse Effect on MFB.
5.8 Environmental
Matters.
(a) MFB
and
its Subsidiaries are in compliance with all Environmental
Laws. Neither MFB nor any of its Subsidiaries has received any
communication alleging that it or any of its Subsidiaries is not in such
compliance. To the Knowledge of MFB, there are no present
circumstances that would prevent or interfere with the continuation of such
compliance.
(b) None
of
the properties currently owned or operated by MFB or any MFB Subsidiary other
than REO, or to the Knowledge of MFB, no REO of MFB or any MFB Subsidiary or
any
other property previously owned or operated or currently leased by MFB or any
of
its Subsidiaries, has been or is in violation of or subject to liability under
any Environmental Law.
(c) To
the
Knowledge of MFB, there are no past or present actions, activities,
circumstances, conditions, events or incidents that could reasonably form the
basis of any Environmental Claim or other claim or action or governmental
investigation that could result in the imposition of any liability against
or
obligation on the part of MFB or any of its Subsidiaries or any Person whose
liability or obligation for any Environmental Claim MFB or any of its
Subsidiaries has or may have retained or assumed either contractually or by
operation of law.
(d) Neither
MFB nor any MFB Subsidiary (i) has, to the Knowledge of MFB, conducted any
environmental studies during the past five years with respect to any properties
owned by it, or (ii) is aware of any Environmental Law violation, or
remediation obligation for Materials of Environmental Concern relating to any
property securing a loan held by it.
(e) Neither
MFB nor any of its Subsidiaries has any material liability relating to Materials
of Environmental Concern or under any Environmental Law in connection with
any
property leased, owned or formerly owned by it.
25
5.9 Tax
Matters.
(a) MFB
and
its Subsidiaries have timely filed (including applicable extension periods)
all
Tax Returns and have paid, or where payment is not yet required to have been
made, have set up an adequate reserve or accrual for the payment of, all
material Taxes in respect of the periods covered by such Tax Returns and, as
of
the Effective Date, will have paid, or where payment is not required to have
been made will have set up an adequate reserve or accrual for the payment of,
all material Taxes for any subsequent periods ending on or prior to the
Effective Date. Neither MFB nor any of its Subsidiaries will have any
material liability for any such Taxes in excess of the amounts so paid or
reserves or accruals so established. MFB and its Subsidiaries have
timely and properly withheld and paid over all material Taxes to the proper
tax
authority required to be so withheld and paid over in connection with amounts
paid or owing to any employee, independent contractor, creditor, shareholder
or
other third party.
(b) All
Tax
Returns filed by MFB or any of its Subsidiaries are complete and accurate in all
material respects. Neither MFB nor any MFB Subsidiary is delinquent
in the payment of any material Taxes nor has it requested an extension of time
which is currently outstanding within which to file any Tax Return with respect
to any material Taxes. No deficiencies for any Taxes have been
proposed, asserted or assessed (tentatively or otherwise) against MFB or any
of
its Subsidiaries which have not been settled and paid. There are no
agreements in effect with respect to MFB or any of its Subsidiaries to extend
the period of limitations for the assessment or collection of any
Taxes. No audit, examination or deficiency or refund litigation with
respect to any Tax Return or Taxes is pending or, to the Knowledge of MFB,
is
threatened.
(c) None
of
the Tax Returns of MFB or any of its Subsidiaries with respect to income Taxes
have during the past three years been audited or examined by applicable Tax
authorities.
(d) Neither
MFB nor any of its Subsidiaries is a party to a Tax sharing, indemnification
or
similar agreement pursuant to which it or any of its Subsidiaries has any
obligation to any party (other than it or one of its Subsidiaries) with respect
to Taxes. Neither MFB nor any of its Subsidiaries is required (or
will any successor in the Transactions be required) to include in income any
adjustment pursuant to Section 481(a) of the Code as a result of the
consummation of transactions occurring on or prior to the Effective Date or
by
reason of any change in accounting method occurring on or prior to the Effective
Date (nor does MFB have any Knowledge that the IRS has proposed (or will
propose) any such adjustment or change of accounting method).
(e) None
of
MFB and its Subsidiaries (i) has been a member of an affiliated group
filing a consolidated federal income tax return (other than a group the common
parent of which was MFB) or (ii) has any liability for the Taxes of any
Person (other than any of MFB and its Subsidiaries) under Treasury Reg.
Section 1.1502-6 (or any similar provision of state, local, or foreign law)
as a transferee or successor, by contract, or otherwise.
5.10 Legal
Proceedings. There are no material actions, suits, claims or
proceedings (civil, criminal or administrative) pending, or to the Knowledge
of
MFB, any unasserted material possible claim or threatened claim, against MFB
or
any of its Subsidiaries or against any asset, interest or right of MFB or any
of
its Subsidiaries, or against any officer, director or employee of MFB or any
of
its Subsidiaries in such capacity.
26
5.11 Compliance
with
Laws.
(a) MFB
and
its Subsidiaries have all material permits, licenses, certificates of authority,
orders and approvals of, and has made all filings, applications and
registrations with, all Governmental Authorities that are required in order
to
permit them to carry on their businesses as they are presently being conducted;
all such permits, licenses, certificates of authority, orders and approvals
are
in full force and effect and, to the Knowledge of MFB, will not be materially
adversely affected by virtue of the completion of the Transactions or the change
in ownership of any of the MFB Subsidiaries; and to the Knowledge of MFB, no
suspension or cancellation of any of the same is threatened.
(b) MFB
and
its Subsidiaries are (i) in compliance with their respective governing
documents, (ii) in compliance with all applicable laws, ordinances, orders,
rules and regulations of Governmental Authorities (including any regulatory
capital requirements, truth-in-lending, fair lending, bank secrecy, usury,
fair
credit reporting, consumer protection, securities, municipal securities, safety,
health, environmental, zoning, anti-discrimination, antitrust, labor, and wage
and hour laws, ordinances, orders, rules and regulations), (iii) in
compliance with all orders, writs, injunctions and decrees of any court, and
(iv) in compliance with all orders, licenses and demands of Governmental
Authorities. Neither MFB nor any of its Subsidiaries has received any
notice or communication from any Governmental Authority asserting that MFB
or
any of its Subsidiaries is not in compliance with any of the
foregoing. MFB Financial is not subject to any regulatory or
supervisory cease and desist order, assistance agreement, other agreement,
written directive, memorandum of understanding or written commitment (other
than
those of general applicability to thrift institutions issued by applicable
Regulatory Authorities) and has not received any written communication
requesting that it enter into any of the foregoing. Neither MFB nor
MFB Financial has been advised by any Regulatory Authority that such Regulatory
Authority is contemplating issuing or requesting (or is considering the
appropriateness of issuing or requesting) any such order, decree, agreement,
memorandum of understanding, commitment letter, supervisory letter or similar
submission.
(c) To
the
Knowledge of MFB, no investigation or review by any Governmental Authority
with
respect to MFB or any of its Subsidiaries is pending or threatened, nor has
any
Governmental Authority indicated to MFB or any of its Subsidiaries an intention
to conduct the same, other than normal or routine regulatory
examinations.
(d) MFB
Financial has a CRA rating of “satisfactory” or better.
5.12 Employee
Benefit
Plans.
(a) MFB
has
Previously Disclosed all MFB Employee Plans and has heretofore delivered or
made
available to MutualFirst accurate and complete copies of each (including
amendments and agreements relating thereto) together with, in the case of
qualified plans, (i) the most recent financial reports prepared with
respect thereto, (ii) the most recent annual reports filed with any
Governmental Authority with respect thereto, and (iii) the most recent
rulings and determination letters and any open requests for rulings or letters
that pertain thereto.
27
(b) Neither
MFB nor any of its Subsidiaries currently maintains or sponsors any Defined
Benefit Plan or ESOP. Any Defined Benefit Plan or ESOP previously
maintained or sponsored by MFB or any of its Subsidiaries has been terminated
and neither MFB nor any of its Subsidiaries has any liability with respect
to
any previously terminated Defined Benefit Plan or ESOP.
(c) To
the
Knowledge of MFB, neither MFB nor any of its Subsidiaries participates in or
has
incurred any liability under Section 4201 of ERISA for a complete or
partial withdrawal from a multi-employer plan (as such term is defined in
ERISA).
(d) To
the
Knowledge of MFB, no transaction prohibited by Section 406 of ERISA (and
not exempt under Section 408 of ERISA or Section 4975 of the Code) has
occurred with respect to any MFB Employee Plan which could result in the
imposition, directly or indirectly, of an excise tax under Section 4975 of
the Code.
(e) The
MFB
Employee Plans have been maintained and operated in compliance in all material
respects with the applicable provisions of ERISA, the Code, all regulations,
rulings and announcements promulgated or issued thereunder and all other
applicable governmental laws and regulations. All contributions
required to be made to the MFB Employee Plans at the date hereof have been
made,
and all contributions required to be made to the MFB Employee Plans prior to
the
Effective Time will have been made. There are no unaccrued
obligations or liabilities of MFB or any of the MFB Subsidiaries under any
of
the MFB Employee Plans.
(f) To
the
Knowledge of MFB, there are no pending or threatened claims (other than routine
claims for benefits) by, on behalf of or against any of the MFB Employee Plans
or any trust related thereto or any fiduciary thereof.
(g) Neither
MFB nor any of its Subsidiaries has made any payments, or is a party to any
agreement or any MFB Employee Plan, that under any circumstances could obligate
it or its successor to make payments or deemed payments that, when made, would
not be deductible because of Sections 162(m) or 280G of the
Code.
(h) Except
as
required by COBRA, neither MFB nor any of its Subsidiaries has any obligation
to
provide retiree welfare benefits (including health benefits) or post-termination
welfare benefits (including health benefits) to any current or former employees,
directors, advisory directors, independent contractors or agents.
5.13 Certain
Contracts.
Neither MFB nor any of its Subsidiaries is a party to, bound or affected by,
or
obligated to pay benefits under (a) any agreement, indenture or other
instrument relating to the borrowing of money (other than in the case of FHLB
borrowings) or the guarantee of any material obligation by it, (b) any
agreement, arrangement or commitment relating to the election or retention
in
office of any present or former director, advisory director, officer or employee
of MFB or any of its Subsidiaries, (c) any agreement, arrangement or
understanding (other than as provided in the certificate or articles of
incorporation, charter or bylaws of MFB or its Subsidiaries) pursuant to which
MFB or any of its Subsidiaries is obligated to indemnify any present or former
director, advisory director, officer, employee or agent of MFB or any of its
Subsidiaries; (d) any agreement, arrangement or understanding to which MFB
or any of its Subsidiaries is a party or by which it is bound which limits
the
freedom of MFB or any of its Subsidiaries to compete in any line of business
or
with any Person; (e) any agreement pursuant to which loans or servicing
rights have been sold by MFB or any of its Subsidiaries, which impose any
potential recourse obligations (by representation, warranty, covenant or other
contractual terms) upon MFB or any of its Subsidiaries, other than in the
ordinary course of business; or (f) any other material agreement,
commitment or understanding. For purposes of subsection
(f) above and Section 4.1(m), a material agreement, commitment or
understanding shall not include any deposit account liability, any arrangement
which is terminable by MFB or a Subsidiary of MFB on 90 days or less advance
written notice without penalty, premium or monetary obligation of MFB or any
of
its Subsidiaries which involves the payment by MFB or its Subsidiaries of less
than $75,000 annually or $100,000 in the aggregate.
28
5.14 Brokers
and
Finders. Neither MFB nor any of its Subsidiaries or any of
their respective directors, officers or employees, has employed any broker
or
finder or incurred any liability for any broker or finder fees or commissions
in
connection with this Agreement or the Transactions, except for the MFB
Advisor. MFB has made available to MutualFirst a true and correct
copy of its agreement with the MFB Advisor.
5.15 Insurance. MFB
and its Subsidiaries maintain the insurance required by contract and applicable
laws and regulations. Neither MFB nor any of its Subsidiaries has,
during the past five years, had an insurance policy canceled or non-renewed
or
been denied any insurance coverage for which it has applied. All
material insurance policies maintained by MFB or any MFB Subsidiary are
Previously Disclosed.
5.16 Properties. All
real and personal property owned by MFB or any of its Subsidiaries or presently
used in its business is sufficient to carry on the businesses of MFB and its
Subsidiaries in the ordinary course of business consistent with past
practice. MFB and its Subsidiaries have good and marketable title
free and clear of all Liens to all of their properties and assets, real and
personal, except (i) Liens for current taxes not yet due or payable,
(ii) pledges to secure deposits, (iii) non-monetary Liens affecting
real property, if any, which do not adversely affect the value or use of such
real property, and (iv) monetary Liens, if any, reflected in the MFB
consolidated financial statements as of September 30, 2007 which are included
in MFB’s Securities Documents. All real and personal
property the loss of which would be material to the business of MFB or any
of
its Subsidiaries that is leased or licensed by it is held pursuant to leases
or
licenses which are valid and enforceable in accordance with their respective
terms and such leases and licenses will not terminate or lapse prior to the
Effective Time or thereafter by reason of completion of the
Transactions. All improved real property owned or leased by MFB or
any of its Subsidiaries is in compliance with all applicable laws including
zoning laws and the Americans With Disabilities Act. No expressed or
implied representation or warranty is made by MFB with respect to the physical
condition of the fixed assets of MFB or any of its Subsidiaries, it being the
understanding of the Parties that such fixed assets shall be accepted by
MutualFirst in “as is” condition.
29
5.17 Labor. No
work stoppage involving MFB or any of its Subsidiaries is pending or, to
the Knowledge of MFB, threatened. Neither MFB nor any of its
Subsidiaries is involved in or, to the Knowledge of MFB, threatened with or
affected by, any material labor dispute, discrimination or sexual harassment
claim, arbitration, lawsuit or administrative proceeding involving any of its
employees. There are no groups of employees of MFB or any of its
Subsidiaries who are members of a union relating to their employment with MFB
or
any of its Subsidiaries.
5.18 Allowance
for Loan
Losses. The allowance for loan losses reflected on MFB’s
consolidated balance sheet as of September 30, 2007 included in the MFB
Securities Documents is, and will be in the case of MFB consolidated balance
sheets included in the MFB Securities Documents filed after the date hereof,
adequate, in the reasonable judgment of the management of MFB and the MFB Board,
as of their respective dates under GAAP and the requirements of all applicable
Regulatory Authorities.
5.19 Transactions
with
Insiders. Since September 30, 2003, all transactions in
which any of the executive officers or directors of MFB or any of its
Subsidiaries or members of the “immediate family” or “related interests” (as
such terms are defined in Regulation O) of any such executive officers or
directors (collectively, “MFB Insiders”), directly or indirectly, either
individually or through any corporation, limited liability company, partnership,
association or other entity, has borrowed from, loaned to,
supplied or provided goods to, purchased assets from, sold assets to,
or done business in any manner with, MFB or any of its Subsidiaries are in
compliance with applicable laws, rules and regulations. No MFB
Insider has any direct or indirect interest in any property, assets, business
or
right which is owned, leased, held or used by MFB or any of its Subsidiaries
or
in any liability, obligation or indebtedness of MFB or any of its Subsidiaries,
except for deposits of MFB Financial.
5.20 Fairness
Opinion. The MFB Board has received the opinion of MFB Advisor
dated the date hereof to the effect that, as of such date, the Aggregate Merger
Consideration pursuant to this Agreement is fair, from a financial point of
view, to the shareholders of MFB.
5.21 No
Undisclosed
Liabilities. Neither MFB nor any of its
Subsidiaries has any liability or obligation, whether known or
unknown, whether asserted or unasserted, whether absolute or contingent, whether
accrued or unaccrued, whether liquidated or unliquidated, and whether due or
to
become due, including any liability for Taxes (and there is no past or present
fact, situation, circumstance, condition or other basis for any present or
future action, suit or proceeding, hearing, charge, complaint, claim or demand
against MFB or any of its Subsidiaries giving rise to any such liability or
obligation) required in accordance with GAAP to be reflected in an audited
consolidated balance sheet of MFB and its Subsidiaries or the notes thereto,
except for (a) liabilities set forth or reserved against in the MFB audited
consolidated financial statements as of September 30, 2007 or the notes
thereto which are included in MFB’s Securities Documents, and
(b) liabilities occurring in the ordinary course of business since
September 30, 2007 or relating to this Agreement, the Transactions or the
change in ownership of the MFB Subsidiaries.
5.22 Indemnification. To
the Knowledge of MFB, no action or failure to take action by any present or
former director, advisory director, officer, employee or agent of MFB or any
of
its Subsidiaries has occurred which would give rise to a material claim by
any
such Person for indemnification from MFB or any of its
Subsidiaries.
30
5.23 Loan
Portfolio. Each loan reflected as an asset on the MFB
consolidated financial statements as of September 30, 2007 which is included
in
MFB’s Securities Documents, and each loan originated or acquired by MFB or any
of its Subsidiaries thereafter, is (or will be) evidenced by appropriate and
sufficient documentation and constitutes (or will constitute) the legal, valid
and binding obligation of the obligor named therein, enforceable in accordance
with its terms, except to the extent that the enforceability thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
or
equitable principles or doctrines. All such loans are, and the loans
held at the Effective Date will be, free and clear of any Lien (other than
the
Lien of the FHLB to secure FHLB borrowings). All loan files are
complete in all material respects and contain all notes, leases and other
evidences of indebtedness, lease agreements, certificates, security agreements,
mortgages, deeds of trust, guarantees, UCC financing statements, and similar
documents evidencing collateral or other financial accommodations relating
to
the loans. None of the obligations represented by the loan documents
have been modified, altered, forgiven, discharged or otherwise disposed of,
except as indicated in the loan file or as a result of bankruptcy or other
debtor relief laws of general application. The collateral securing
each loan was in existence at the time funds were advanced or an interest was
taken in such collateral as reflected in the loan file. All security
interests granted in favor of the lender of each loan as reflected in the loan
documents have been properly perfected. None of the loans are, and
none of the loans held at the Effective Date will be, subject to any offset,
claims of offset or claims of other material liability on the part of MFB or
any
of its Subsidiaries. Neither MFB nor any of its Subsidiaries has
notice or Knowledge of, and has consented to, the sale, loss, destruction or
other disposition of any collateral securing a loan, except where the proceeds
thereof have been or are to be applied to the loan indebtedness.
5.24 Investment
Portfolio. Except for pledges to secure public and trust
deposits or otherwise made in the ordinary course of business, and for FHLB
stock, none of the investment securities reflected in the MFB consolidated
financial statements as of September 30, 2007 which are included in MFB’s
Securities Documents and none of the investment securities since acquired by
MFB
or any of its Subsidiaries is subject to any restriction, whether contractual
or
statutory, which impairs the ability of MFB or any of its Subsidiaries to freely
dispose of such investment at any time, other than those restrictions imposed
on
securities held to maturity under GAAP and restrictions imposed after the date
of this Agreement in connection with future borrowings permitted under this
Agreement.
5.25 Books
and
Records. The corporate record books (other than stock ledgers
and stock records) of MFB and its Subsidiaries are complete and accurate and
reflect all meetings, consents and other actions of the boards of directors
and
shareholders of MFB and its Subsidiaries. The stock ledgers and stock
records of MFB and its Subsidiaries are complete and accurate and reflect all
transactions in their capital stock. The accounting books and records
of MFB and its Subsidiaries are being maintained in compliance with applicable
legal and accounting requirements, and such books and records accurately reflect
in all material respects all dealings and transactions in respect of the
business, assets, liabilities and affairs of MFB and its
Subsidiaries.
31
5.26 Defaults. Neither
MFB nor any of its Subsidiaries is in default of any obligation to be performed
by it under any agreement or commitment in effect as of the date
hereof. To the Knowledge of MFB, no other party to any such agreement
or commitment is in default in any obligation to be performed by such
party.
5.27 Intellectual
Property. MFB and its Subsidiaries own, lease or license all
patents, patent rights, trademarks, trademark rights, trade names, trade name
rights, domain names, domain name rights, service marks, service xxxx rights,
copyrights and other proprietary intellectual property rights and computer
programs (other than commercially available, off-the-shelf software)
(collectively, “Intellectual
Property”) which are material to the conduct of the businesses of MFB and
its Subsidiaries free and clear of all Liens. To the Knowledge of
MFB, none of the Intellectual Property of MFB and its Subsidiaries infringes
on
the rights of any other Person, and no Person is infringing on the rights of
MFB
or any of its Subsidiaries with respect to any Intellectual Property of MFB
or
any of its Subsidiaries. The Intellectual Property of MFB and its
Subsidiaries will not be limited or otherwise adversely affected by virtue
of
the consummation of the Transactions.
5.28 Risk
Management
Instruments. All interest rate swaps, caps, floors, option
agreements, futures and forward contracts and other similar risk management
arrangements, whether entered into for MFB’s own account, or for the account of
one or more of its Subsidiaries or their customers, were entered into
(a) in accordance with prudent business practices and in compliance with
all applicable laws, rules, regulations and regulatory policies and
(b) with counter parties believed to be financially responsible at the
time; and each of them constitutes the valid and legally binding obligation
of
MFB or one of its Subsidiaries, enforceable in accordance with its terms (except
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar laws of general
applicability relating to or affecting creditors’ rights or by general equity
principles), and is in full force and effect. Neither MFB nor any of
its Subsidiaries, nor to the Knowledge of MFB, any other party thereto, is
in
breach of any of its obligations under any such agreement or arrangement in
any
material respect.
5.29 Trust
Administration. To the Knowledge of MFB, each MFB Subsidiary
that acts in a fiduciary capacity has properly administered in all material
respects all accounts for which it acts as a fiduciary or agent, including
but
not limited to accounts for which it serves as a trustee, agent, custodian,
personal representative, guardian, conservator or investment advisor, in
accordance with the terms of the governing documents and applicable state and
federal law and regulation and common law. To the Knowledge of MFB,
neither MFB, any MFB Subsidiary, nor any director, officer, or employee of
MFB
or any of its Subsidiaries acting on behalf of MFB or any of its Subsidiaries,
has committed any material breach of trust with respect to any such fiduciary
or
agency account, and the accountings for each such fiduciary or agency account
are true and correct in all material respects and accurately reflect the assets
of such fiduciary or agency account. There is no investigation or
inquiry by any Governmental Authority pending, or to the Knowledge of MFB,
threatened, against or affecting MFB or any of its Subsidiaries relating to
the
compliance by MFB or any such Subsidiary with sound fiduciary principles and
applicable regulations.
32
5.30 Internal
Controls. None of MFB or its Subsidiaries’ records, systems,
controls, data or information are recorded, stored, maintained, operated or
otherwise wholly or partly dependent on or held by any means (including any
electronic, mechanical or photographic process, whether computerized or not)
which (including all means of access thereto and therefrom) are not under the
exclusive ownership and direct control of MFB or its Subsidiaries or accountants
except as would not reasonably be expected to have a materially adverse effect
on the system of internal accounting controls described in the next
sentence. MFB and its Subsidiaries have devised and maintain a system
of internal accounting controls sufficient to provide reasonable assurances
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with GAAP.
5.31 Takeover
Laws. MFB has taken or will take all necessary actions so that
this Agreement and the Transactions are not subject to the requirements of
any
“moratorium,” “control share”, “fair price”, “affiliate transactions”, “business
combination” or other antitakeover laws and regulations of any state, including
the provisions of the IBCL (“Takeover Laws”) applicable to MFB or any MFB
Subsidiary.
5.32 Representations
Not
Misleading. No representation or warranty by MFB in this
Agreement, or in any schedule furnished to MutualFirst or its Subsidiaries
under and pursuant to this Agreement, contains or will contain any untrue
statement of a material fact or omit to state a material fact necessary to
make
the statements contained herein or therein, in light of the circumstances in
which they were made, not misleading.
ARTICLE VI
REPRESENTATIONS
AND WARRANTIES OF
MUTUALFIRST
MutualFirst
represents and warrants to MFB that the statements contained in this
Article VI are correct and complete as of the date of this Agreement and
will be correct and complete as of the Effective Date (as though made then
and
as though the Effective Date were substituted for the date of this Agreement
throughout this Article VI), subject to the standard and qualifications set
forth in Section 6.1 and except as Previously Disclosed, and except as to
any representation or warranty which specifically relates to a specified date,
which only need be so correct as of such specified date.
6.1 Standard. No
representation or warranty of MutualFirst contained in this Article VI
shall be deemed not complete, untrue or incorrect, and MutualFirst shall not
be
deemed to have breached a representation or warranty, as a consequence of the
existence of any fact, circumstance or event unless such fact, circumstance
or
event, individually or taken together with all other facts, circumstances or
events has had or is reasonable expected to have a Material Adverse Effect
on
MutualFirst, disregarding for these purposes (x) any qualification or
exception for, or reference to, materiality in any such representation or
warranty and (y) any use of the terms “material”, “materially”, “in all
material respects”, “Material Adverse Effect” or similar terms or phrases in any
such representation or warranty. The foregoing standard shall not
apply (a) as of the date of this Agreement to the representations and warranties
contained in Section 6.2, which shall be true and correct in all respects,
(b)
as of the date of this Agreement to any representation or warranty in Section
6.3(a), 6.4, 6.7, 6.8(e), 6.9, 6.10, 6.15, 6.16, 6.22 or 6.24 that is material
to the business, condition (financial or otherwise), operating results or
operations of MutualFirst and its Subsidiaries, taken as a whole, which
representation or warranty shall be true and correct in all material respects
and (c) at any time to the representations and warranties under Sections 6.5(a),
6.13, 6.19 and 6.30, which representations and warranties shall be true and
correct in all respects at all times.
33
6.2 Capitalization. As
of the date hereof, the authorized capital stock of MutualFirst consisted of
(a) 20,000,000 shares of MutualFirst Common Stock, of which [4,226,638]
shares were issued and outstanding, and no shares were held in treasury, and
(b) 5,000,000 shares of preferred stock, $0.01 par value per share, of
which none were issued and outstanding. As of the date hereof,
MutualFirst does not have any Rights issued or outstanding with respect to
MutualFirst Common Stock and MutualFirst does not have any commitment to
authorize, issue or sell any MutualFirst Common Stock or Rights, other than
pursuant to (i) this Agreement and (ii) outstanding stock options and
restricted stock. The issued and outstanding shares of MutualFirst Common Stock
have been duly authorized and are validly issued and outstanding, fully paid
and
nonassessable, and subject to no preemptive rights (and were not issued in
violation of any preemptive rights). The shares of MutualFirst Common
Stock to be issued in the Merger, when issued in accordance with the terms
of
this Agreement, will be duly authorized, validly issued, fully paid and
nonassessable and subject to no preemptive rights. All issuances of
securities by MutualFirst have been registered under the Securities Act and
state securities law requirements or were exempt from such registration
requirements.
6.3 Organization,
Standing and
Authority of MutualFirst.
(a) MutualFirst
is a unitary savings and loan holding company, duly organized and validly
existing under the laws of the State of Maryland, with full corporate power
and
authority to own and lease all of its properties and assets and to carry on
its
business as now conducted.
(b) MutualFirst
is duly licensed or qualified to do business and is in good standing in each
jurisdiction in which its ownership or leasing of property or the conduct of
its
business requires such licensing or qualification.
6.4 MutualFirst
Subsidiaries. Each Subsidiary of MutualFirst is duly organized
and validly existing under the laws of the place of its incorporation or
organization, with full power and authority to own and lease all of its
properties and assets and to carry on its business, as now conducted, and is
duly licensed or qualified to do business and is in good standing in each
jurisdiction in which its ownership or leasing of property or the conduct of
its
business requires such licensing or qualification. In the case of
Acquisition Corp., it was formed to facilitate the Merger and has not engaged
in
any business activity.
6.5 Authorized
and Effective
Agreement.
(a) Each
of
MutualFirst and Acquisition Corp. has all requisite power and authority to
enter
into this Agreement and (subject to receipt of all necessary approvals of
Regulatory Authorities, the expiration of applicable waiting periods and the
approval of the issuance of MutualFirst Common Stock as contemplated by this
Agreement by the shareholders of MutualFirst) to perform all of its obligations
hereunder. This Agreement (including the execution, delivery and
performance hereof) and the Transactions have been duly authorized, deemed
advisable, and unanimously approved by the members of the MutualFirst Board
in
attendance at the meeting to consider and vote upon this Agreement and the
Transactions and the Board of Directors of Acquisition Corp. and no other
corporate action is required in respect thereof on the part of MutualFirst
or
Acquisition Corp., except for the approval by the holders of a majority of
the
votes present or represented by proxy at the MutualFirst Meeting of the issuance
of MutualFirst Common Stock as contemplated by this Agreement. This
Agreement has been duly and validly executed and delivered by each of
MutualFirst and Acquisition Corp. and, assuming due authorization, execution
and
delivery by MFB, constitutes the legal, valid and binding obligation of each
of
MutualFirst and Acquisition Corp., enforceable against it in accordance with
its
terms, subject, as to enforceability, to bankruptcy, insolvency and other laws
of general applicability relating to or affecting creditors’ rights and to
general equity principles.
34
(b) Neither
the execution and delivery of this Agreement, nor completion of the
Transactions, nor compliance by MutualFirst or any of its Subsidiaries with
any
of the provisions hereof does or will (i) conflict with or result in a
breach of any provisions of the MutualFirst Articles, MutualFirst By-Laws,
or
the certificate or articles of incorporation, charter, bylaws or other governing
documents of any of its Subsidiaries, (ii) violate, conflict with or result
in a breach of any term, condition or provision of, or constitute a default
(or
an event which, with notice or lapse of time, or both, would constitute a
default) under, or give rise to any right of termination, cancellation or
acceleration with respect to, or result in the creation of any Lien upon any
property or asset of MutualFirst or any of its Subsidiaries pursuant to, any
note, bond, mortgage, indenture, deed of trust, license, lease, agreement or
other instrument or obligation to which MutualFirst or any of its Subsidiaries
is a party, or by which any of their properties or assets may be bound or
affected, or (iii) subject to receipt of all required approvals from
Regulatory Authorities (and the expiration of applicable waiting periods) and
the shareholders of MutualFirst, violate in any material respect any order,
writ, injunction, decree, statute, rule or regulation applicable to MutualFirst
or any of its Subsidiaries.
(c) Except
for the filings and approvals contemplated by Section 5.5(c), no consents
or approvals of or filings or registrations with any Governmental Authority
or
with any third party are necessary on the part of MutualFirst or any of its
Subsidiaries, or to the Knowledge of MutualFirst, by MFB or any of its
Subsidiaries, in connection with the completion of the
Transactions.
(d) As
of the
date hereof, MutualFirst is not aware of any reasons relating to MutualFirst
or
any of its Subsidiaries (including CRA compliance) why all consents and
approvals shall not be procured from all Regulatory Authorities having
jurisdiction over the Transactions as shall be necessary for the completion
of
the Transactions.
6.6 Securities
Documents and
Regulatory Reports.
(a) MutualFirst’s
Securities Documents filed after December 31, 2003, (i) complied in
all material respects with the applicable requirements under the Securities
Act
or the Exchange Act, as the case may be, and (ii) did not contain any
untrue statement of a material fact or omit to state a material fact required
to
be stated therein or necessary to make the statements therein, in light of
the
circumstances under which they were made, not misleading; and each of the
balance sheets contained in or incorporated by reference into any such
Securities Document (including the related notes and schedules thereto) fairly
presents, in all material respects, the financial position of MutualFirst and
its Subsidiaries as of its date, and each of the statements of income and
changes in shareholders’ equity and cash flows or equivalent statements in such
Securities Documents (including any notes or schedules thereto) fairly presents,
in all material respects, the results of operations, changes in shareholders’
equity and cash flows, as the case may be, of MutualFirst and its Subsidiaries
for the periods to which they relate, in each case in accordance with GAAP
consistently applied during the periods involved, except in each case as may
be
noted therein, subject to non-material, normal year-end audit adjustments and
the absence of footnotes in the case of unaudited financial
statements.
35
(b) MutualFirst
and its Subsidiaries have duly and timely filed with all applicable Regulatory
Authorities all reports required to be filed by them under applicable laws
and
regulations and such reports were complete and accurate in all material respects
and in compliance with the requirements of applicable laws and
regulations. In connection with the examinations of XXXX since
December 31, 2003 by the OTS, the FDIC or any other Regulatory Authority,
XXXX was not required to correct or change any action, procedure or proceeding
which MutualFirst believes has not been corrected or changed as
required.
6.7 Material
Adverse
Effect. Since December 31, 2006, (a) to the date of
this Agreement, MutualFirst and its Subsidiaries have conducted their business
only in the ordinary and usual course (excluding the entering into this
Agreement and the incurrence of expenses in connection with this Agreement
and
the Transactions) and (b) no event has occurred or circumstance arisen
(including litigation) that, individually or in the aggregate, has had or
is reasonably likely to have a Material Adverse Effect on
MutualFirst.
6.8 Environmental
Matters.
(a) MutualFirst
and its Subsidiaries are in compliance with all Environmental
Laws. Neither MutualFirst nor any of its Subsidiaries has received
any communication alleging that it or any of its Subsidiaries is not in such
compliance. To the Knowledge of MutualFirst, there are no present
circumstances that would prevent or interfere with the continuation of such
compliance.
(b) None
of
the properties currently owned or operated by MutualFirst or any MutualFirst
Subsidiary other than REO, or to the Knowledge of MutualFirst, no REO of
MutualFirst or any MutualFirst Subsidiary or any other property previously
owned
or operated or currently leased by MutualFirst or any of its Subsidiaries,
has
been or is in violation of or subject to liability under any Environmental
Law.
(c) To
the
Knowledge of MutualFirst, there are no past or present actions, activities,
circumstances, conditions, events or incidents that could reasonably form the
basis of any Environmental Claim or other claim or action or governmental
investigation that could result in the imposition of any liability against
or
obligation on the part of MutualFirst or any of its Subsidiaries or any Person
whose liability or obligation for any Environmental Claim MutualFirst or any
of
its Subsidiaries has or may have retained or assumed either contractually or
by
operation of law.
36
(d) Neither
MutualFirst nor any MutualFirst Subsidiary is aware of any Environmental Law
violation or remediation obligation for Materials of Environmental Concern
relating to any property securing a loan held by it.
(e) Neither
MutualFirst nor any of its Subsidiaries has any material liability relating
to
Materials of Environmental Concern or under any Environmental Law in connection
with any property leased, owned or formerly owned by it.
6.9 Tax
Matters.
(a) MutualFirst
and its Subsidiaries have timely filed (including applicable extension periods)
all Tax Returns and have paid, or where payment is not yet required to have
been
made, have set up an adequate reserve or accrual for the payment of, all
material Taxes in respect of the periods covered by such Tax Returns and, as
of
the Effective Date, will have paid, or where payment is not required to have
been made will have set up an adequate reserve or accrual for the payment of,
all material Taxes for any subsequent periods ending on or prior to the
Effective Date. Neither MutualFirst nor any of its Subsidiaries will
have any material liability for any such Taxes in excess of the amounts so
paid
or reserves or accruals so established. MutualFirst and its
Subsidiaries have timely and properly withheld and paid over all Taxes to the
proper tax authority required to be so withheld and paid over in connection
with
amounts paid or owing to any employee, independent contractor, creditor,
shareholder or other third party.
(b) All
Tax
Returns filed by MutualFirst or any of its Subsidiaries are complete and
accurate in all material respects. Neither MutualFirst nor any
MutualFirst Subsidiary is delinquent in the payment of any Taxes nor has it
requested an extension of time which is currently outstanding within which
to
file any Tax Return with respect to any material Taxes. No
deficiencies for any Taxes have been proposed, asserted or assessed (tentatively
or otherwise) against MutualFirst or any of its Subsidiaries which have not
been
settled and paid. There are currently no agreements in effect with
respect to MutualFirst or any of its Subsidiaries to extend the period of
limitations for the assessment or collection of any Taxes. No audit,
examination or deficiency or refund litigation with respect to any Tax Return
or
Taxes is pending or, to the Knowledge of MutualFirst, is
threatened.
(c) None
of
the Tax Returns of MutualFirst or any of its Subsidiaries with respect to income
Taxes have during the past three years been audited or examined by applicable
Tax authorities.
6.10 Legal
Proceedings. There are no material actions, suits, claims or
proceedings (civil, criminal or administrative) pending or, to the Knowledge
of
MutualFirst, any unasserted material possible claim or threatened claim, against
MutualFirst or any of its Subsidiaries or against any asset, interest or right
of MutualFirst or any of its Subsidiaries, or against any officer, director
or
employee of MutualFirst or any of its Subsidiaries in such
capacity.
6.11 Compliance
with
Laws.
(a) MutualFirst
and its Subsidiaries have all permits, licenses, certificates of authority,
orders and approvals of, and has made all filings, applications and
registrations with, all Governmental Authorities that are required in order
to
permit them to carry on their businesses as they are presently being conducted;
all such permits, licenses, certificates of authority, orders and approvals
are
in full force and effect and, to the Knowledge of MutualFirst, will not be
adversely affected by virtue of the completion of the Transactions; and to
the
Knowledge of MutualFirst, no suspension or cancellation of any of the same
is
threatened.
37
(b) MutualFirst
and its Subsidiaries are (i) in compliance with their respective governing
documents, (ii) in compliance in with all applicable laws, ordinances,
orders, rules and regulations of Governmental Authorities (including any
regulatory capital requirements, truth-in-lending, fair lending, bank secrecy,
usury, fair credit reporting, consumer protection, securities, municipal
securities, safety, health, environmental, zoning, anti-discrimination,
antitrust, and wage and hour laws, ordinances, orders, rules and regulations),
(iii) in compliance with all orders, writs, injunctions and decrees of any
court, and (iv) in compliance with all orders, licenses and demands of
Governmental Authorities. Neither MutualFirst nor any of its
Subsidiaries has received any notice or communication from any Governmental
Authority asserting that MutualFirst or any of its Subsidiaries is not in
compliance with any of the foregoing. No financial institution
Subsidiary of MutualFirst is subject to any regulatory or supervisory cease
and
desist order, assistance agreement, other agreement, written directive,
memorandum of understanding or written commitment (other than those of general
applicability to commercial banks issued by applicable Regulatory Authorities)
and has not received any written communication requesting that it enter into
any
of the foregoing. Neither MutualFirst nor any financial institution
Subsidiary of MutualFirst has been advised by any Regulatory Authority that
such
Regulatory Authority is contemplating issuing or requesting (or is considering
the appropriateness of issuing or requesting) any such order, decree, agreement,
memorandum of understanding, commitment letter, supervisory letter or similar
submission.
(c) To
the
Knowledge of MutualFirst, no investigation or review by any Governmental
Authority which is material to the business or financial condition of
MutualFirst or any MutualFirst Subsidiary is pending or threatened, nor has
any
Governmental Authority indicated to MutualFirst or any MutualFirst Subsidiary
an
intention to conduct the same, other than normal or routine regulatory
examinations.
(d) XXXX
has
a CRA rating of “satisfactory” or better.
6.12 Employee
Benefit
Plans. Each employee benefit plan, program, policy or
arrangement (including each employee benefit plan (as defined in
Section 3(3) of ERISA) which MutualFirst or any of its Subsidiaries
maintains or contributes to for the benefit of its current or former employees
complies, and has been administered in form and in operation, with all
applicable requirements of law and no notice has been issued by any Governmental
Authority questioning or challenging such compliance.
6.13 Brokers
and
Finders. Neither MutualFirst nor any of its Subsidiaries or
any of their respective directors, officers or employees, has employed any
broker or finder or incurred any liability for any broker or finder fees or
commissions in connection with this Agreement or the Transactions, except for
the MutualFirst Advisor.
38
6.14 Insurance. MutualFirst
and its Subsidiaries maintain the insurance required by contract and applicable
laws and regulations.
6.15 Properties. All
real and personal property owned by MutualFirst or any of its Subsidiaries
or
presently used in its business is sufficient to carry on the businesses of
MutualFirst and its Subsidiaries in the ordinary course of business consistent
with past practice. MutualFirst and its Subsidiaries have good and
marketable title free and clear of all Liens to all of their properties and
assets, real and personal, except (i) Liens for current taxes not yet due
or payable, (ii) pledges to secure deposits, (iii) non-monetary Liens
affecting real property, if any, which do not adversely affect the value or
use
of such real property, and (iv) monetary Liens, if any, reflected in the
MutualFirst consolidated financial statements as of September 30, 2007 which
are
included in MutualFirst’s Securities Documents. All real
and personal property the loss of which would be material to the business of
MutualFirst or any of its Subsidiaries that is leased or licensed by it is
held
pursuant to leases or licenses which are valid and enforceable in all material
respects in accordance with their respective terms and such leases and licenses
will not terminate or lapse prior to the Effective Time or thereafter by reason
of completion of the Transactions. All improved real property owned
or leased by MutualFirst or any of its Subsidiaries is in compliance with all
applicable laws including zoning laws and the Americans With Disabilities
Act. No expressed or implied representation or warranty is made by
MutualFirst with respect to the physical condition of the fixed assets of
MutualFirst or any of its Subsidiaries.
6.16 Labor. No
work stoppage involving MutualFirst or any of its Subsidiaries is pending
or, to the Knowledge of MutualFirst, threatened. Neither MutualFirst
nor any of its Subsidiaries is involved in or, to the Knowledge of MutualFirst,
threatened with or affected by, any material labor dispute, discrimination
or
sexual harassment claim, arbitration, lawsuit or administrative proceeding
involving any of its employees which is material to the business or financial
condition of MutualFirst or any of its Subsidiaries. There are no
groups of employees of MutualFirst or any of its Subsidiaries who are members
of
a union relating to their employment with MutualFirst or any of its
Subsidiaries.
6.17 Allowance
for Loan
Losses. The allowance for loan losses reflected on
MutualFirst’s consolidated balance sheet as of December 31, 2006 included
in the MutualFirst Securities Documents is, and will be in the case of
MutualFirst consolidated balance sheets included in the MutualFirst Securities
Documents filed after the date hereof, adequate, in the reasonable judgment
of
the management of MutualFirst and the MutualFirst Board, as of their respective
dates under GAAP and the requirements of all applicable Regulatory
Authorities.
6.18 Transactions
with
Insiders. Since December 31, 2003, all transactions in
which any of the senior executive officers or directors of MutualFirst or any
of
its Subsidiaries or member of the “immediate family” or “related interests” (as
such terms are defined in Regulation O) of any such senior executive officers
or
directors (collectively, “MutualFirst
Insiders”), directly or indirectly, either individually or through any
corporation, limited liability company, partnership, association or other
entity, has borrowed from, loaned to, supplied or provided goods to, purchased
assets from, sold assets to, or done business in any manner with, MutualFirst
or
any of its Subsidiaries are in compliance with applicable laws, rules and
regulations. No MutualFirst Insider has any direct or indirect
interest in any property, assets, business or right which is owned, leased,
held
or used by MutualFirst or any of its Subsidiaries or in any liability,
obligation or indebtedness of MutualFirst or any of its Subsidiaries, except
for
deposits of XXXX.
39
6.19 Fairness
Opinion. The MutualFirst Board has received an opinion of
MutualFirst Advisor dated the date hereof, to the effect that the Aggregate
Merger Consideration to be paid pursuant to this Agreement is fair, from a
financial point of view, to MutualFirst.
6.20 No
Undisclosed
Liabilities. Neither MutualFirst nor any of its Subsidiaries
has any liability or obligation, whether known or unknown, whether asserted
or
unasserted, whether absolute or contingent, whether accrued or unaccrued,
whether liquidated or unliquidated, and whether due or to become due, including
any liability for Taxes (and there is no past or present fact, situation,
circumstance, condition or other basis for any present or future action, suit
or
proceeding, hearing, charge, complaint, claim or demand against MutualFirst
or
any of its Subsidiaries giving rise to any such liability or obligation)
required in accordance with GAAP to be reflected in an audited consolidated
balance sheet of MutualFirst and its Subsidiaries or the notes thereto, except
(i) for liabilities set forth or reserved against in the MutualFirst
audited consolidated financial statements as of December 31, 2006 or the
notes thereto which are included in MutualFirst’s Securities Documents and
(ii) liabilities and obligations occurring since December 31,
2006.
6.21 Indemnification. To
the Knowledge of MutualFirst, no action or failure to take action by any present
or former director, advisory director, officer, employee or agent of MutualFirst
or any of its Subsidiaries has occurred which would give rise to a material
claim by any such Person for indemnification from MutualFirst or any of its
Subsidiaries.
6.22 Loan
Portfolio. Each loan reflected as an asset on the MutualFirst
consolidated financial statements as of September 30, 2007 which are included
in
MutualFirst’s Securities Documents, and each loan originated or acquired by
MutualFirst or any of its Subsidiaries thereafter, is (or will be) evidenced
by
appropriate and sufficient documentation and constitutes (or will constitute)
the legal, valid and binding obligation of the obligor named therein,
enforceable in accordance with its terms, except to the extent that the
enforceability thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws or equitable principles or doctrines. All
such loans are, and the loans held at the Effective Date will be, free and
clear
of any Lien (other than the Lien of the FHLB to secure FHLB borrowings and
loans
pledged for customer repurchases). All loan files are complete in all
material respects and contain all notes, leases and other evidences of
indebtedness, lease agreements, certificates, security agreements, mortgages,
deeds of trust, guarantees, UCC financing statements, and similar documents
evidencing collateral or other financial accommodations relating to the
loans. None of the obligations represented by the loan documents have
been modified, altered, forgiven, discharged or otherwise disposed of, except
as
indicated in the loan file or as a result of bankruptcy or other debtor relief
laws of general application. The collateral securing each loan was in
existence at the time funds were advanced or an interest was taken in such
collateral as reflected in the loan file. All security interests
granted in favor of the lender of each loan as reflected in the loan documents
have been property perfected. None of the loans are, and none of the
loans held at the Effective Date will be, subject to any offset, claims of
offset or claims of other material liability on the part of MutualFirst or
any
of its Subsidiaries. Neither MutualFirst nor any of its Subsidiaries
has notice or Knowledge of, or has consented to, the sale, loss, destruction
or
other disposition of any collateral securing a loan, except where the proceeds
thereof have been or are to be applied to the loan indebtedness.
40
6.23 Investment
Portfolio.
Except for pledges to secure public and trust deposits or otherwise made in
the
ordinary course of business, and for FHLB stock, none of the investment
securities reflected in the MutualFirst consolidated financial statements as
of
December 31, 2006 which are included in MutualFirst’s Securities Documents and
none of the investment securities since acquired by MutualFirst or any of its
Subsidiaries is subject to any restriction, whether contractual or statutory,
which impairs the ability of MutualFirst or any of its Subsidiaries to freely
dispose of such investment at any time, other than those restrictions imposed
on
securities held to maturity under GAAP and restrictions imposed after the date
of this Agreement in connection with future borrowings permitted under this
Agreement.
6.24 Books
and
Records. The corporate record books (other than stock ledgers
and stock records) of MutualFirst and its Subsidiaries are complete and accurate
and reflect all meetings, consents and other material actions of the boards
of
directors and shareholders of MutualFirst and its Subsidiaries. The
stock ledgers and stock records of MutualFirst and its Subsidiaries are complete
and accurate and reflect all transactions in their capital stock. The
accounting books and records of MutualFirst and its Subsidiaries are being
maintained in compliance with applicable legal and accounting requirements,
and
such books and records accurately reflect, in all material respects, all
dealings and transactions in respect of the business, assets, liabilities and
affairs of MutualFirst and its Subsidiaries.
6.25 Defaults. Neither
MutualFirst nor any of its Subsidiaries is in default in any obligation to
be
performed by it under any agreement or commitment in effect as of the date
hereof. To the Knowledge of MutualFirst, no other party to any such
agreement or commitment is in default in any obligation to be performed by
such
party.
6.26 Intellectual
Property. MutualFirst and its Subsidiaries own, lease or
license all Intellectual Property which are material to the conduct of the
businesses of MutualFirst and its Subsidiaries free and clear of all
Liens. To the Knowledge of MutualFirst, none of the Intellectual
Property of MutualFirst and its Subsidiaries infringes on the rights of any
other Person, and no Person is infringing on the rights of MutualFirst or any
of
its Subsidiaries with respect to any Intellectual Property of MutualFirst or
any
of its Subsidiaries. The Intellectual Property of MutualFirst and its
Subsidiaries will not be limited or otherwise adversely affected by virtue
of
the consummation of the Transactions.
6.27 Risk
Management
Instruments. All interest rate swaps, caps, floors, option
agreements, futures and forward contracts and other similar risk management
arrangements, whether entered into for MutualFirst’s own account, or for the
account of one or more of its Subsidiaries or their customers, were entered
into
(a) in accordance with prudent business practices and in compliance with
all applicable laws, rules, regulations and regulatory policies and
(b) with counter-parties believed to be financially responsible at the
time; and each of them constitutes the valid and legally binding obligation
of
MutualFirst or one of its Subsidiaries, enforceable in accordance with its
terms
(except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar laws of general
applicability relating to or affecting creditors’ rights or by general equity
principles), and is in full force and effect. Neither MutualFirst nor
any of its Subsidiaries, nor to the Knowledge of MutualFirst, any other party
thereto, is in breach of any of its obligations under any such agreement or
arrangement in any material respect.
41
6.28 Trust
Administration. Each MutualFirst Subsidiary that acts in a
fiduciary capacity has properly administered all accounts for which it acts
as a
fiduciary or agent, including but not limited to accounts for which it serves
as
a trustee, agent, custodian, personal representative, guardian, conservator
or
investment advisor, in accordance with the terms of the governing documents
and
applicable state and federal law and regulation and common
law. Neither MutualFirst, any MutualFirst Subsidiary, nor any
director, officer, or employee of MutualFirst or any of its Subsidiaries acting
on behalf of MutualFirst or any of its Subsidiaries, has committed any material
breach of trust with respect to any such fiduciary or agency account, and the
accountings for each such fiduciary or agency account are true and correct
in
all material respects and accurately reflect the assets of such fiduciary or
agency account. There is no investigation or inquiry by any
Governmental Authority pending, or to the Knowledge of MutualFirst, threatened,
against or affecting MutualFirst or any of its Subsidiaries relating to the
compliance by MutualFirst or any such Subsidiary with sound fiduciary principles
and applicable regulations.
6.29 Internal
Controls. None of the MutualFirst or its Subsidiaries’
records, systems, controls, data or information are recorded, stored,
maintained, operated or otherwise wholly or partly dependent on or held by
any
means (including any electronic, mechanical or photographic process, whether
computerized or not) which (including all means of access thereto and therefrom)
are not under the exclusive ownership and direct control of MutualFirst or
its
Subsidiaries or accountants except as would not reasonably be expected to have
a
materially adverse effect on the system of internal accounting controls
described in the next sentence. MutualFirst and its Subsidiaries have
devised and maintain a system of internal accounting controls sufficient to
provide reasonable assurances regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with GAAP.
6.30 Takeover
Laws. This Agreement and the Transactions are not subject to
the requirements of any Takeover Laws applicable to MutualFirst or any
MutualFirst Subsidiary.
6.31 Representations
Not
Misleading. No representation or warranty by MutualFirst in
this Agreement, or in any schedule furnished to MFB or its Subsidiaries
under and pursuant to this Agreement, contains or will contain any untrue
statement of a material fact or omit to state a material fact necessary to
make
the statements contained herein or therein, in light of the circumstances in
which they were made, not misleading.
ARTICLE VII
COVENANTS
7.1 Reasonable
Best
Efforts. Subject to the terms and conditions of this
Agreement, each Party agrees to use, and shall cause each of its applicable
Subsidiaries to use, its reasonable best efforts in good faith to take, or
cause
to be taken, all actions, and to do, or cause to be done, all things necessary,
proper or desirable, or advisable under applicable laws, so as to permit
consummation of the Transactions (as well as the change in ownership of the
MFB
Subsidiaries) as promptly as practicable and otherwise to enable consummation
of
the Transactions (as well as the change in ownership of the MFB Subsidiaries)
and shall cooperate fully with each other to that end. Such
reasonable best efforts shall include, using reasonable best efforts to obtain
all necessary consents, approvals or waivers from Regulatory Authorities
necessary for the consummation of the Transactions.
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7.2 MFB
Shareholder
Approval.
(a) MFB
agrees to take, in accordance with applicable law, the MFB Articles and the
MFB
By-Laws, all action necessary to convene an appropriate meeting of its
shareholders (including any adjournment or postponement thereof, the “MFB Meeting”) to
consider and vote upon the approval of this Agreement as promptly as practicable
after the Registration Statement is declared effective. The MFB Board
(i) shall unanimously recommend approval of this Agreement by the MFB
shareholders, (ii) shall take all reasonable lawful action to solicit
approval of this Agreement by the MFB shareholders, and (iii) shall not
withdraw, modify or qualify in any manner adverse to MutualFirst such
recommendation (a “Change in
Recommendation”), except as and to the extent expressly permitted by
Section 7.2(b).
(b) Notwithstanding
the foregoing, the MFB Board shall, prior to the MFB Meeting, be permitted
to
effect a Change in Recommendation solely in response to an Alternative Proposal,
if and only to the extent that:
(1) The
MFB
Board, determines in good faith, after the receipt of advice from its outside
counsel, that failure to take such action is inconsistent with its fiduciary
duties under applicable Indiana law, and
(2) Prior
to
effecting a Change in Recommendation: (A) MFB, its Subsidiaries and their
respective Representatives shall have complied in all material respects with
Section 7.6, (B) the MFB Board shall have determined in good faith
that such Alternative Proposal constitutes a Superior Proposal after giving
effect to all of the adjustments which may be offered by MutualFirst pursuant
to
clause (D) below, (C) MFB shall notify MutualFirst, at least three (3)
business days in advance, of its intention to effect a Change in Recommendation
in response to such Superior Proposal, specifying the material terms and
conditions of any such Superior Proposal and furnishing MutualFirst with a
copy
of the documents containing the economic terms of the Superior Proposal, and
(D) MFB shall, and shall cause its financial and legal advisors to, during
the period following MFB’s delivery of the notice referred to in clause
(C) above, negotiate with MutualFirst in good faith (to the extent
MutualFirst desires to negotiate) to make such adjustments in the terms and
conditions of this Agreement so that such Alternative Proposal ceases to
constitute a Superior Proposal.
(c) If
MFB
has made a Change in Recommendation in accordance with the provisions of
Section 7.2(b), it may, prior to the MFB Meeting, subject to the provisions
of Section 9.1(i), enter into an acquisition agreement or similar agreement
(a “Competing
Acquisition Agreement”) with respect to such Superior
Proposal.
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7.3 MutualFirst
Shareholder
Approval. MutualFirst agrees to take, in accordance with
applicable law, the MutualFirst Articles and the MutualFirst By-Laws, all action
necessary to convene an appropriate meeting of its shareholders (including
any
adjournment or postponement thereof, the “MutualFirst Meeting”)
to consider and vote upon the approval of the issuance of the MutualFirst Common
Stock as contemplated by this Agreement as promptly as practicable after the
Registration Statement is declared effective. The MutualFirst Board
(i) shall recommend approval of the issuance of MutualFirst Common Stock as
contemplated by this Agreement by the MutualFirst shareholders, (ii) shall
take all reasonable lawful action to solicit approval of the issuance of
MutualFirst Common Stock as contemplated by this Agreement by the MutualFirst
shareholders, and (iii) shall not withdraw, modify or qualify in any manner
adverse to MFB such recommendation.
7.4 Registration
Statement and
Joint Proxy Statement.
(a) MutualFirst
agrees to promptly prepare a registration statement on Form S-4 (the “Registration
Statement”) which, subject to compliance by MFB with Section 7.4(b),
will comply in all material respects with applicable Securities
Laws. The Registration Statement is to be filed by MutualFirst with
the SEC in connection with the issuance of MutualFirst Common Stock in the
Merger (including a combined proxy statement and prospectus and other proxy
solicitation materials of MutualFirst and MFB constituting a part thereof (the
“Joint Proxy
Statement-Prospectus”) and all related documents). MFB agrees
to cooperate, and to cause its Subsidiaries, its counsel and its accountants
to
cooperate, with MutualFirst, its counsel and its accountants, in the preparation
of the Registration Statement and the Joint Proxy Statement-Prospectus; and
provided that MFB and its Subsidiaries have cooperated as required above,
MutualFirst agrees to file the Registration Statement (or the form of the Joint
Proxy Statement-Prospectus) in preliminary form with the SEC as promptly as
reasonably practicable and shall use reasonable best efforts to cause such
filing to occur within forty-five (45) days after execution of this
Agreement. Each Party agrees to use reasonable best efforts to cause
the Registration Statement to be declared effective under the Securities Act
as
promptly as reasonably practicable after filing thereof. MutualFirst
also agrees to use reasonable best efforts to obtain, prior to the effective
date of the Registration Statement, all necessary state securities law or “Blue
Sky” permits and approvals required for the issuance of MutualFirst Common Stock
in the Merger. MFB agrees to furnish to MutualFirst all information
concerning MFB, its Subsidiaries, officers, directors and shareholders as may
be
reasonably requested in connection with the foregoing.
(b) Each
Party agrees, as to itself and its Subsidiaries, that none of the information
supplied or to be supplied by it for inclusion or incorporation by reference
in
(i) the Registration Statement will, at the time the Registration Statement
and each amendment or supplement thereto, if any, becomes effective under the
Securities Act, contain any untrue statement of a material fact or omit to
state
any material fact required to be stated therein or necessary to make the
statements therein not misleading, and (ii) the Joint Proxy
Statement-Prospectus and any amendment or supplement thereto will, at the date
of mailing to the MFB and MutualFirst shareholders, respectively, and at the
time of the MFB Meeting and the MutualFirst Meeting, respectively, contain
any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not misleading
or any statement which, in the light of the circumstances under which such
statement is made, will be false or misleading with respect to any material
fact, or which will omit to state any material fact necessary in order to make
the statements therein not false or misleading or necessary to correct any
statement in any earlier statement in the Joint Proxy Statement-Prospectus
or
any amendment or supplement thereto. Each Party further agrees that
if it shall become aware prior to the Effective Time of any information
furnished by it that would cause any of the statements in the Joint Proxy
Statement-Prospectus to be false or misleading with respect to any material
fact, or to omit to state any material fact necessary to make the statements
therein not false or misleading, to promptly inform the other Party thereof
and
to take the necessary steps to correct the Joint Proxy Statement -
Prospectus.
44
(c) MutualFirst
agrees to advise MFB, promptly after MutualFirst receives notice thereof, of
the
time when the Registration Statement has become effective or any supplement
or
amendment has been filed, of the issuance of any stop order or the suspension
of
the qualification of MutualFirst Common Stock for offering or sale in any
jurisdiction, of the initiation or threat of any proceeding for any such
purpose, or of any request by the SEC for the amendment or supplement of the
Registration Statement or for additional information.
7.5 Access;
Information.
(a) Each
Party agrees that upon reasonable notice and subject to applicable laws relating
to the exchange of information, it shall afford the other Party and its
Representatives, such access during normal business hours throughout the period
prior to the Effective Time to its and its Subsidiaries’ books, records
(including Tax Returns and work papers of independent auditors), properties,
personnel and to such other information as may be reasonably requested and,
during such period, it shall furnish as promptly as reasonable to the other
Party or its Representatives (i) a copy of each material report, schedule
and other document filed by it or any of its Subsidiaries pursuant to the
requirements of federal or state securities or banking laws, and (ii) all
other information concerning the business, properties and personnel of it and
its Subsidiaries as the other Party or its Representatives may reasonably
request. MFB shall also permit an independent expert environmental
consulting firm, mutually selected by the Parties within twenty (20) days from
the date hereof (the “Independent Expert”),
at the sole expense of MutualFirst, to conduct such phase I and/or phase II
environmental audits, studies and tests (the “Environmental
Studies”) on the real properties owned by MFB or any of its Subsidiaries
as necessary for such Independent Expert to provide its opinion as to the
Required Environmental Expenditures, as defined below (the “Expert’s
Opinion”). The Independent Expert shall deliver to the Parties
the Expert’s Opinion in writing no later than ninety (90) days from the date
hereof. MFB shall have fifteen (15) business days from the date of
receipt of any Expert’s Opinion to review such opinion and deliver notice to the
Independent Expert and MutualFirst of any dissatisfaction with the contents
of
the opinion (each such notice, an “MFB Objection
Notice”). Within fifteen (15) business days thereafter, MFB
and MutualFirst shall use their reasonable best efforts to resolve all
objections contained in an MFB Objection Notice (such fifteen-day period
referred to herein as the “Resolution Period”).
The term “Required Environmental Expenditures” means the Independent Expert’s
good faith estimate, based upon the results of the Environmental Studies, of
the
dollar amount, if any, that MFB and its Subsidiaries would be required to expend
for clean up, remediation and penalties relating to Materials of Environmental
Concern with respect to their own real properties or any adjoining
properties. In the event any subsurface or phase II site
assessments are conducted (which assessments shall be at MutualFirst’s sole
expense), MutualFirst shall indemnify MFB and its Subsidiaries for all costs
and
expenses associated with returning the property to its previous
condition. Time is of the essence relating to the foregoing
environmental matters.
45
(b) Each
Party agrees that it will not, and will cause its Representatives not to, use
any information obtained pursuant to this Section 7.5 (as well as any other
information obtained prior to the date hereof in connection with the entering
into of this Agreement) for any purpose unrelated to the consummation of the
Transactions or the change in ownership of the MFB
Subsidiaries. Subject to the requirements of law, each Party will
keep confidential, and will cause its Representatives to keep confidential,
all
information and documents obtained pursuant to this Section 7.5 (as well as
any other information obtained prior to the date hereof in connection with
the
entering into of this Agreement) unless such information (i) was already
known to it, (ii) becomes available from other sources not known by it to
be bound by a confidentiality obligation, (iii) is disclosed with the prior
written approval of the Party providing the information or (iv) is or
becomes readily ascertainable from published information or trade
sources. In the event that this Agreement is terminated, each Party
shall promptly cause all copies of documents, extracts thereof or notes,
analyses, compilations, studies or other documents containing information and
data as to the other Party and its Subsidiaries to be returned to the other
Party or certify as to their destruction. No investigation by a Party
or its Representatives of the business and affairs of the other Party or its
Subsidiaries shall affect or be deemed to modify or waive any representation,
warranty, covenant or agreement in this Agreement, or any of the conditions
to a
Party’s obligation to consummate any of the Transactions.
(c) Notwithstanding
anything contained herein to the contrary, neither Party nor any of its
Subsidiaries shall be required to provide access or disclose information where
such access or disclosure would violate or prejudice the rights of its
customers, jeopardize the attorney-client privilege of the Person in possession
or control of such information or contravene any law, rule, regulation, order,
judgment, decree, fiduciary duty or binding agreement entered into prior to
the
date of this Agreement or in the ordinary course of business.
7.6 Alternative
Proposal. MFB agrees that it shall not, and shall cause its
Subsidiaries and its and its Representatives and affiliates not to,
(a) initiate, solicit, encourage or knowingly facilitate any inquiries or
proposals with respect to, any Alternative Proposal or (b) engage in any
negotiations concerning, or provide any nonpublic information to, or have any
discussions with, any Person relating to, any Alternative Proposal; provided
that, in the event MFB receives an unsolicited written bona fide Alternative
Proposal and the MFB Board concludes in good faith that such Alternative
Proposal constitutes or may result in a Superior Proposal, MFB may, and may
permit its Subsidiaries and its and their Representatives to, take any action
described in clause (b) above to the extent that the MFB Board determines in
good faith (after the receipt of advice from its outside counsel) that failure
to take such actions would likely result in a violation of its fiduciary duties
under applicable Indiana law. Prior to providing any nonpublic
information permitted to be provided pursuant to this Section, MFB shall have
entered into a confidentiality agreement with such third party on terms
substantially identical in all material respects to the confidentiality
agreement previously entered into by the Parties. MFB will immediately cease
and
cause to be terminated any activities, discussions or negotiations conducted
before the date of this Agreement with any Persons other than MutualFirst with
respect to any Alternative Proposal and will use its reasonable best efforts
to
enforce any confidentiality or similar agreement relating to an Alternative
Proposal. MFB will promptly (within one business day) advise MutualFirst
following receipt of any Alternative Proposal of all of the material terms
thereof (including the identity of the Person making such Alternative Proposal),
and will keep MutualFirst apprised of any related developments, discussions
and
negotiations (including the terms and conditions of the Alternative Proposal)
on
a current basis.
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7.7 Press
Releases. The initial press release announcing the
Transactions will be a joint press release. Each Party agrees that
thereafter it will not, without the prior approval of the other Party, issue
any
press release or written statement for general circulation relating to the
Transactions, except as otherwise required by applicable law or regulation,
FINRA rules, or Nasdaq rules, whichever is applicable, and then only after
making reasonable efforts to first consult with the other Party.
7.8 Takeover
Laws. No Party shall take any action that would cause any of
the Transactions to be subject to requirements imposed by any Takeover Law
and
each of them shall take all necessary steps within its control to exempt (or
ensure the continued exemption of) the Transactions from, or if necessary
challenge the validity or applicability of, any applicable Takeover Law, as
now
or hereafter in effect.
7.9 Conforming
Entries.
(a) MFB
recognizes that MutualFirst and its Subsidiaries may have adopted different
loan
and accounting policies and practices (including loan classifications and levels
of loan loss allowances). Subject to applicable law, from and after
the date hereof MFB shall consult and reasonably cooperate with MutualFirst
with
respect to conforming the loan and accounting policies and practices of MFB
and
its Subsidiaries to those policies and practices of MutualFirst and its
Subsidiaries for financial accounting and/or income Tax reporting purposes,
as
reasonably specified in each case in writing from MutualFirst to MFB, based
upon
such consultation and subject to the conditions in Section 7.9(c); provided
that MFB and its Subsidiaries shall not be required to take any such action
that
is not permitted under GAAP or the Code or regulatory guidance, whichever is
applicable.
(b) Subject
to applicable law, MFB shall consult and reasonably cooperate with MutualFirst
with respect to determining, as reasonably specified in a written notice from
MutualFirst to MFB, based upon such consultation and subject to the conditions
in Section 7.9(c), the amount and the timing for recognizing for financial
accounting and/or income Tax reporting purposes of MFB’s and MFB Financial’s
expenses of the Transactions; provided that MFB and its Subsidiaries shall
not
be required to take any such action that is not permitted under GAAP or the
Code
or regulatory guidance, whichever is applicable.
(c) Subject
to applicable law, MFB and its Subsidiaries shall (i) make such conforming
entries to conform the loan and accounting policies and practices of MFB and
its
Subsidiaries to the policies and practices of MutualFirst and its Subsidiaries
and (ii) recognize MFB’s and MFB Financial’s expenses of the Transactions
for financial accounting and/or income Tax reporting purposes at such times
as
are reasonably requested in writing by MutualFirst, but in no event prior to
the
5th
day
next
preceding the Effective Date; provided, however, that on the date such entries
are made and such charges and expenses are recognized, MutualFirst shall certify
in writing to MFB that (i) all conditions to MutualFirst’s obligations to
consummate the Transactions as set forth in Sections 8.1 and 8.3 hereof
(subject to the receipt of MFB’s officer certificate pursuant to
Section 8.3(d)) have been satisfied or waived, (ii) it is not aware of
any fact or circumstance that would delay or prevent the completion of the
Transactions, and (iii) it proposes the Effective Date to be within five
(5) business days; and provided, further, that, notwithstanding any other
provision of this Section 7.9, MFB and its Subsidiaries shall not be
required to take any action pursuant to this Section 7.9 that is not
permitted under applicable law (including the Code), regulations, GAAP or
regulatory guidance, whichever is applicable. In no event shall MFB
be required to take any actions pursuant to this Section 7.9(c) until all
of the conditions to its obligations in Sections 8.1 and 8.2 shall have
been satisfied.
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(d) No
conforming entries or accruals or charges or expenses recognized at the written
request of MutualFirst in accordance with this Section 7.9 may be a basis
to assert a violation or a breach of a representation, warranty or covenant
of
MFB herein.
7.10 Systems
Integration. Subject to Section 7.5(b) hereof, from and
after the date hereof, MFB and MutualFirst shall cause MFB Financial and XXXX
and their respective directors, officers and employees to, and shall make all
reasonable efforts (without undue disruption to either business) to cause MFB
Financial’s data processing consultants and software providers and XXXX’x data
processing service providers to, reasonably cooperate and assist MFB Financial
or XXXX in connection with an electronic and systematic conversion of all
applicable data of MFB Financial or XXXX, as applicable, to the system selected
by MutualFirst, including the training of MFB Financial employees or XXXX
employees, as applicable, without undue disruption to either business, during
normal business hours and at the expense of MutualFirst (not to include MFB
Financial’s standard employee payroll).
7.11 Listing. MutualFirst
agrees to use its best efforts to list, prior to the Effective Date, on the
Nasdaq, subject to official notice of issuance, the shares of MutualFirst Common
Stock to be issued in the Merger.
7.12 Regulatory
Applications.
(a) Each
Party shall, and shall cause its Subsidiaries to, cooperate and use reasonable
best efforts to promptly prepare all documentation, to effect all filings and
to
obtain all permits, consents, approvals and authorizations of all third parties
and Governmental Authorities necessary to consummate the Transactions and the
change in ownership of the MFB Subsidiaries, and shall use reasonable best
efforts to file within thirty (30) days of the date hereof, the applications
necessary to obtain the permits, consents, approvals and authorizations of
all
Regulatory Authorities necessary to consummate the Transactions. Each
Party shall have the right to review in advance, and to the extent practicable
each will consult with the other Party, in each case subject to applicable
laws
relating to the exchange of information, with respect to, all material written
information submitted to any third party or any Governmental Authority in
connection with the Transactions and the change in ownership of the MFB
Subsidiaries. In exercising the foregoing right, each Party agrees to
act reasonably and as promptly as practicable. Each Party agrees that
it will consult with the other Party with respect to the obtaining of all
material permits, consents, approvals and authorizations of all third parties
and Governmental Authorities necessary or advisable to consummate the
Transactions and the change in ownership of the MFB Subsidiaries, and each
Party
will keep the other Party apprised of the status of material matters relating
to
completion of the Transactions and the change in ownership of the MFB
Subsidiaries.
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(b) Each
Party agrees, upon request, to furnish the other Party with all information
concerning itself, its Subsidiaries, directors, officers and shareholders and
such other matters as may be reasonably necessary or advisable in connection
with any filing, notice or application made by or on behalf of such other Party
or any of its Subsidiaries to any third party or Governmental
Authority.
7.13 Current
Information and
Attendance at Board Meetings.
(a) During
the period from the date hereof to the Effective Date, each Party shall, upon
the request of the other Party, cause one or more of its designated officers
to
confer on a monthly or more frequent basis with officers of the other Party
regarding the financial condition, operations and business of MFB, MutualFirst,
and its Subsidiaries, as the case may be, and matters relating to the completion
of the Transactions and the change in ownership of the MFB
Subsidiaries. As soon as reasonably available, but in no event more
than five (5) business days after filing, each Party will deliver to the other
Party all reports filed by it or any of its Subsidiaries with any Regulatory
Authority subsequent to the date hereof. Each Party will also deliver
to the other Party as soon as practicable all quarterly and annual financial
statements of such Party and its Subsidiaries prepared with respect to periods
ending subsequent to September 30, 2007. As soon as practicable
after the end of each month, each Party will deliver to the other Party in
electronic form (a) the monthly deposit and loan trial balances of such
Party, (b) the monthly analysis of such Party’s investment portfolio, and
(c) monthly balance sheet and income statement of such Party and its
Subsidiaries.
(b) The
Chief
Executive Officer and/or Chief Financial Officer of each Party as well as the
President of MFB Financial and XXXX, as applicable, shall be invited and
entitled to attend all meetings of the board of directors of the other Party
and
the loan committee meetings of MFB Financial and XXXX, respectively; provided
however, such individuals shall be excluded from any portions of board meetings
of the other Party involving discussions relating to an Alternative Proposal
or
discussions relating to matters which are otherwise deemed by the Board of
such
Party to be confidential, including discussions relating to this Agreement
and
the performance thereof. Board and loan committee packages and
notices shall be submitted by each Party to the Chief Executive Officer and
Chief Financial Officer of the other Party simultaneously with their submission
to board members and loan committee members; provided confidential information
may be excluded therefrom.
7.14 Officers’
and
Directors’
Insurance; Indemnification.
(a) For
six
years from and after the Effective Date, MutualFirst shall maintain officers’
and directors’ liability insurance covering the Persons who are presently
covered by MFB’s current officers’ and directors’ liability insurance policy
with respect to actions, omissions, events, matters or circumstances occurring
prior to the Effective Time, on terms which are at least as favorable as the
terms of said current policy, provided that it shall not be required to expend
in the aggregate during the coverage period more than an amount equal to 150%
of
the annual premium most recently paid by MFB (the “Insurance Amount”) to
maintain or procure insurance coverage pursuant hereto, and further provided
that if MutualFirst is unable to maintain or obtain the insurance called for
by
this Section 7.14(a), MutualFirst shall use its reasonable best efforts to
obtain as much comparable insurance as is available for the Insurance Amount
which may be in the form of tail coverage, or may request MFB to obtain such
tail coverage at MFB’s expense prior to the Effective Date; provided, further,
that officers and directors of MFB or its Subsidiaries may be required to make
application and provide customary representations and warranties to
MutualFirst’s insurance carrier for the purpose of obtaining such
insurance.
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(b) In
addition to Section 7.14(a) above, from and after the Effective
Date, MutualFirst shall, and shall cause its Subsidiaries to,
maintain and preserve the rights to indemnification of MFB’s and its
Subsidiaries’ officers, employees, directors and agents to the maximum extent
permitted by any of the MFB Articles, MFB By-Laws and the charter and bylaws
of
MFB Financial and applicable law as in effect on the date hereof with respect
to
indemnification for liabilities and claims arising out of claims, actions,
suits, proceedings or investigations (each, a “Claim”) made,
asserted or arising prior to or within six (6) years after the Effective Time,
if such Claim pertains to any acts, omissions, events, matters or circumstances
occurring or existing at or prior to the Effective Time, including the
Transactions, to the extent such rights to indemnification are not in excess
of
that permitted by applicable state or federal laws or Regulatory
Authorities.
(c) In
connection with the indemnification provided pursuant to Section 7.14(b),
MutualFirst and/or an MutualFirst Subsidiary (i) will advance expenses,
promptly after statements therefor are received, to each such indemnified Person
to the fullest extent permitted by law and Regulatory Authorities, including
the
payment of the fees and expenses of one counsel with respect to a matter, and
one local counsel in each applicable jurisdiction, if necessary or appropriate,
selected by such indemnified Person or multiple indemnified Persons, it being
understood that they collectively shall only be entitled to one counsel and
one
local counsel in each applicable jurisdiction where necessary or appropriate
(unless a conflict shall exist between them in which case they may retain
separate counsel), all such counsel shall be reasonably satisfactory to
MutualFirst and (ii) will cooperate in the defense of any such
matter.
(d) This
Section 7.14 shall survive the Effective Time, is intended to benefit each
indemnified Person (each of whom shall be entitled to enforce this
Section against MutualFirst), and shall be binding on all successors and
assigns of MutualFirst.
(e) In
the
event MutualFirst or any of its successors or assigns (i) consolidates with
or merges into any other Person and shall not be the continuing or surviving
corporation or entity of such consolidation or merger, or (ii) transfers
all or substantially all of its properties and assets to one or more other
Persons, then, and in each such case, proper provision shall be made so that
the
successors and assigns of MutualFirst assume the obligations set forth in this
Section 7.14.
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(f) MutualFirst
shall pay all expenses (including attorneys’ fees) that may be reasonably
incurred by any indemnified Person in enforcing the indemnity and other
obligations provided for in this Section 7.14 if the indemnified Person is
successful in whole or any material part or if any dispute relating thereto
is
settled or compromised.
7.15 Benefit
Plans.
(a) Except
as
otherwise provided in this Agreement, at the Effective Time, MutualFirst or
one
of its Subsidiaries shall be substituted for MFB or a MFB Subsidiary under
the
MFB Employee Plans as Previously Disclosed and in effect immediately prior
to
the Effective Time and MutualFirst or one of its Subsidiaries shall assume
and
be vested with all of the powers, rights, duties, obligations and liabilities
previously vested in MFB or the applicable MFB Subsidiary with respect to each
such MFB Employee Plan. Except as otherwise provided in this
Agreement, each such MFB Employee Plan shall, to the extent permitted thereunder
and by applicable law, be continued in effect by MutualFirst or an applicable
MutualFirst Subsidiary after the Effective Time without a termination or
discontinuance thereof as a result of the Transactions, subject to the power
reserved to MutualFirst and each of its Subsidiaries to subsequently amend
or
terminate any such MFB Employee Plan, which amendment or termination shall
comply with applicable law.
(b) MutualFirst
shall provide, or cause a MutualFirst Subsidiary to provide, to each full time
employee of MFB and its wholly-owned Subsidiaries who continues employment
after
the Effective Date (the “Continuing
Employees”) the opportunity to participate without a waiting period
(except in the case of a qualified plan, participation shall commence on the
next entry date; provided that at no time shall a Continuing Employee not be
eligible to participate in either the qualified plans of MFB or the qualified
plans of MutualFirst) in each employee benefit and welfare plan maintained
by
MutualFirst or a MutualFirst Subsidiary, whichever is applicable, which is
generally available to its similarly-situated employees on a uniform and
non-discriminatory basis; provided that with respect to such plans maintained
by
MutualFirst or an MutualFirst Subsidiary, whichever is applicable, Continuing
Employees shall be given credit for their past service with MFB or a MFB
Subsidiary in determining eligibility for participation and vesting in benefits
thereunder, but not accrual of benefits. Continuing Employees shall not be
subject to any waiting periods under the group health plan of MutualFirst or
any
applicable MutualFirst Subsidiary to the extent that such periods are longer
than the periods imposed under the applicable MFB group health plan and
MutualFirst shall cause its health insurance carrier to cover pre-existing
conditions that were previously covered for a Continuing Employee under the
MFB
health plan. To the extent that the initial period of coverage for
Continuing Employees under any plan of MutualFirst or a MutualFirst Subsidiary,
whichever is applicable, that is an “employee welfare benefit plan” as defined
in Section 3(1) of ERISA is not a full 12-month period of coverage,
Continuing Employees shall be given credit under the applicable welfare plan
for
any deductibles and co-insurance payments made by such Continuing Employees
under the corresponding MFB welfare plan during the balance of such 12-month
period of coverage. Nothing contained herein shall obligate
MutualFirst or any MutualFirst Subsidiary to provide or cause to be provided
any
benefits duplicative to those provided under any benefit or welfare plan
continued pursuant to Section 7.15(a), including extending participation in
any plan which (i) is a qualified plan relative to any period of time with
respect to which allocations are made to Continuing Employees under any
qualified plan maintained or sponsored by MFB or a MFB Subsidiary that is
continued by MutualFirst or an MutualFirst Subsidiary for the benefit of
Continuing Employees or (ii) is an employee welfare benefit plan relative
to any period of time that the MFB group health plan is continued by MutualFirst
or an MutualFirst Subsidiary for the benefit of Continuing
Employees. Nothing herein shall alter the power of MutualFirst or any
MutualFirst Subsidiary to amend or terminate any benefit or welfare plans of
MutualFirst, MFB or their respective Subsidiaries. Moreover, this
Section 7.15(b) shall not confer upon any Continuing Employee any rights or
remedies hereunder and shall not constitute a contract of employment or create
any rights, to be retained or otherwise, in employment at MutualFirst or any
MutualFirst Subsidiary.
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(c) Until
the
Effective Time, MFB or an MFB Subsidiary, whichever is applicable, shall be
liable for all obligations for continued health coverage pursuant to
Section 4980B of the Code and Section 601 through 609 of ERISA (“COBRA”) for eligible
employees who incur a qualifying event before the Effective
Time. MutualFirst or an MutualFirst Subsidiary, whichever is
applicable, shall after the Effective Time be liable for (i) all
obligations for continued health coverage under COBRA with respect to each
qualified beneficiary of MFB or a MFB Subsidiary who incurs a termination on
and
after the Effective Time, and (ii) for continued health coverage under
COBRA from and after the Effective Time for each qualified beneficiary of MFB
or
a MFB Subsidiary who incurs a qualifying event before the Effective
Time.
(d) At
the
Effective Time, MutualFirst shall cause XXXX to honor and assume the MFB
Financial Change in Control Agreement and the MFB Financial Salary Continuation
Agreement; provided, however, that prior to the Effective Time the MFB Financial
Salary Continuation Agreement shall be amended to provide that the Merger does
not constitute a change in control under that agreement. At the
Effective Time, MutualFirst shall, or it shall cause XXXX to, honor and assume
the MFB Financial Director Fee Continuation Agreements. The directors
who do not remain as directors of XXXX following the Effective Date shall be
paid the present value of the benefits to which they are entitled under those
agreements as provided therein, provided that directors with under five years
of
service at the Effective Date shall receive no benefits, and directors with
between 5 to 10 years of service at the Effective Date shall receive the present
value of their benefits otherwise payable over a five-year
period. The affected directors agree to execute said documents as the
parties shall deem necessary to such payments.
(e) At
the
Effective Time, MutualFirst shall, or it shall cause XXXX to, pay out the change
in control benefits set forth in the MFB Financial Employment Agreements based
upon a change in status of the executives who are parties thereto, subject
to
the limitations set forth therein, and further subject to such executives
executing a release in form and substance reasonably satisfactory to
MutualFirst, whereupon such employment agreements shall terminate and have
no
further effect. Each of the executives who are parties to the MFB
Financial Employment Agreements other than Xxxxxxx X. Xxxxxx shall, to the
extent he is a Continuing Employee, be an employee at will.
(f) At
the request of MutualFirst XXXX and Xxxxxxx X. Xxxxxx have entered into an
employment agreement in the form of Exhibit C hereto that will become effective
at the Effective Time.
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(g) With
the exception of the employees who are parties to the MFB Financial Employment
Agreements and the MFB Financial Change in Control Agreement, those employees
of
MFB or MFB Financial who (i) have been employed on a full time basis for at
least one (1) year as of the Effective Time (ii) are terminated by MutualFirst
or a MutualFirst Subsidiary without cause within six months after the Effective
Date, and (iii) sign and deliver a customary termination and release agreement
in the form acceptable to MutualFirst shall be entitled to severance pay equal
to one week of pay, at their rate of pay in effect at the Effective Time, for
each full year of continuous full time employment with MFB or MFB Financial
or
their successors not in excess of 26 years completed prior to the Effective
Time
or, in the case of employees who continue as employees of MutualFirst or its
Subsidiaries after the Effective Time, prior to their termination as
such. Nothing in this Section 7.15(g) shall be deemed to limit or
modify MutualFirst’s or MFB’s at will employment policy.
7.16 MFB
Stock
Options. Immediately prior to the Effective Time, each MFB
Stock Option or portion thereof that is outstanding and unvested shall become
fully vested and exercisable. At the Effective Time, by virtue of the
Merger and without any action on the part of any holder of a MFB Stock Option,
each MFB Stock Option that is outstanding and unexercised immediately prior
to
the Effective Time will be converted into and become an option to purchase
MutualFirst Common Stock (each an “Assumed Option”) on
the same terms and conditions as are in effect with respect to the MFB Stock
Option immediately prior to the Effective Time, except that (a) each such
Assumed Option may be exercised solely for shares of MutualFirst Common Stock,
(b) the number of shares of MutualFirst Common Stock subject to such
Assumed Option will be equal to the number of shares of MFB Common Stock subject
to such MFB Stock Option immediately prior to the Effective Time multiplied
by
the Exchange Ratio, the product being rounded, if necessary, up or down to
the
nearest whole share, and (c) the per share exercise price under each such
Assumed Option will be adjusted by dividing the per share exercise price of
the
MFB Stock Option by the Exchange Ratio, and rounding up or down to the nearest
cent. It is intended that the foregoing assumption shall be
undertaken consistent with and in a manner that will not constitute a
“modification” under Code Section 409A. As soon as practicable
after the Effective Time, MutualFirst shall file an appropriate registration
statement with respect to the shares of MutualFirst Common Stock subject to
Assumed Options and shall use its reasonable best efforts to maintain the
effectiveness of such registration statement or registration statements (and
maintain the current status of the prospectus or prospectuses contained therein)
for so long as such options remain outstanding.
7.17 Notification
of Certain
Matters. Each of MFB and MutualFirst shall give prompt written
notice to the other of any fact, event or circumstance known to it that
(a) is reasonably likely, individually or taken together with all other
facts, events and circumstances known to it, to result in any Material Adverse
Effect with respect to it, or (b) has caused or constituted or is
reasonably likely to cause or constitute, a breach of (i) any of its
representations or warranties as of the date of this Agreement, or (ii) any
of its covenants or agreements contained herein; provided, however, that no
such
notification shall affect the representations, warranties, covenants or
agreements of the Parties (or remedies with respect thereto) or the conditions
to the obligations of the Parties under this Agreement; and provided further
that a failure to comply with this Section 7.17 shall not constitute a
failure to satisfy any condition set forth in Article VIII unless the
underlying untruth, inaccuracy, failure to comply or satisfy, or change or
event
would independently result in a failure to satisfy a condition set forth in
Article VIII.
53
7.18 Litigation
Matters. MFB will consult with MutualFirst about any proposed
settlement, or any disposition of, any material litigation affecting MFB or
any
of its Subsidiaries.
7.19 Section 16(b)
Exemption. MutualFirst and MFB agree that, in order to most
effectively compensate and retain Rule 16(b) Insiders (as defined below) in
connection with the Merger, both prior to and after the Effective Time, it
is
desirable that Rule 16(b) Insiders not be subject to a risk of liability under
Section 16(b) of the Exchange Act to the fullest extent permitted by
applicable law in connection with the conversion of shares of MFB Common Stock
and MFB Stock Options into shares of MutualFirst Common Stock and Assumed
Options in the Merger, and for that compensatory and retentive purpose agree
to
the provisions of this Section 7.19. Assuming that MFB delivers
to MutualFirst the MFB Section 16 Information (as defined below) in a
timely fashion prior to the Effective Time, the MutualFirst Board, or a
committee of non-employee directors thereof (as such term is defined for
purposes of Rule 16b-3(d) under the Exchange Act), shall reasonably promptly
thereafter and in any event prior to the Effective Time adopt a resolution
providing in substance that the receipt by the Rule 16(b) Insiders of
MutualFirst Common Stock in exchange for shares of MFB Common Stock, and of
Assumed Options upon conversion of MFB Stock Options, in each case pursuant
to
the transactions contemplated hereby and to the extent such securities are
listed in the MFB Section 16 Information, are intended to be exempt from
liability pursuant to Section 16(b) under the Exchange Act to the fullest
extent permitted by applicable law. “MFB Section 16
Information” shall mean information accurate in all material respects
regarding the Rule 16(b) Insiders, the number of shares of MFB Common Stock
held
by each such Rule 16(b) Insider and expected to be exchanged for MutualFirst
Common Stock in the Merger, and the number and description of the options to
purchase shares of MFB Common Stock held by each such MFB Insider and expected
to be converted into options to purchase shares of MutualFirst Common Stock
in
connection with the Merger; provided that the requirement for a description
of
any MFB Stock Options shall be deemed to be satisfied if copies of all plans,
and forms of agreements, under which such options have been granted have been
made available to MutualFirst. “Rule 16(b) Insiders”
shall mean
those officers and directors of MFB who are subject to the reporting
requirements of Section 16(a) of the Exchange Act and who are listed in the
MFB Section 16 Information.
7.20 Reservation
of
Shares. MutualFirst shall reserve for issuance such number of
shares of MutualFirst Common Stock as is necessary to satisfy its obligations
under this Agreement.
7.21 Expansion
of MutualFirst
Board and XXXX Board. At the Effective Time, Xxxxxxx X.
Xxxxxx, Xxxxxxx X. Xxxxxx, Xxxxxxxx X. Xxxxxx, and Xxxxxx X. Xxxx shall be
added
as directors to the MutualFirst Board and to the board of directors of XXXX
at
the effective time of the Bank Merger.
7.22 Supplemental
Indenture. Upon the Effective Time, MutualFirst shall assume
the due and punctual performance and observance of the covenants and conditions
to be performed by MFB under the Indenture (the “Indenture”) dated July 29,
2005, between MFB and Wilmington Trust Company, as Trustee, relating to
Fixed/Floating Rate Junior Subordinated Deferrable Interest Debentures due
2035
(the “Debentures”), and the due and punctual payments of the principal of and
premium, if any, and interest on, the Debentures as required by Article XI
of
the Indenture.
54
ARTICLE VIII
CONDITIONS
PRECEDENT
8.1 Conditions
Precedent -
Parties. The obligations of the Parties to effect the
Transactions shall be subject to satisfaction of the following conditions at
or
prior to the Effective Date.
(a) The
approval of this Agreement by the shareholders of MFB and the approval of the
stock issuance contemplated by this Agreement by the shareholders of
MutualFirst.
(b) All
approvals, authorizations and consents from any Regulatory Authority which
are
required for the completion of the Transactions and the change in ownership
of
the MFB Subsidiaries shall have been received and shall remain in full force
and
effect and all statutory waiting periods in respect thereof shall have expired;
provided, however, no such approval, authorization or consent shall include
any
condition or requirement, excluding standard conditions that are normally
imposed by Regulatory Authorities in thrift merger transactions, that would,
in
good faith reasonable judgment of MutualFirst Board, materially and adversely
affect the business, operations, financial condition, property or assets of
the
combined enterprise of MutualFirst and MFB or materially impair the value of
MFB
to MutualFirst.
(c) None
of
the Parties or any of their Subsidiaries shall be subject to any statute, rule,
regulation, injunction or other order or decree which shall have been enacted,
entered, promulgated or enforced by any Governmental Authority which prohibits,
prevents or makes illegal completion of any of the Transactions.
(d) No
proceeding initiated by any Government Authority seeking an order, injunction
or
decree to be issued by any court or agency of competent jurisdiction or other
legal restraint or prohibition preventing the completion of any of the
Transactions shall be pending or threatened.
(e) The
Registration Statement shall have become effective under the Securities Act
and
no stop order suspending the effectiveness of the Registration Statement shall
have been issued and no proceedings for that purpose shall have been initiated
or threatened by the SEC.
(f) All
permits and other authorizations under state securities laws necessary to
consummate the Merger and to issue the shares of MutualFirst Common Stock in
the
Merger shall have been received and shall be in full force and
effect.
(g) The
shares of MutualFirst Common Stock to be issued in the Merger shall have been
approved for listing on the Nasdaq, subject to official notice of
issuance.
55
(h) Each
Party shall have obtained all other permits, authorizations, waivers, approvals
and consents required by Governmental Authorities for the lawful consummation
of
the Transaction.
8.2 Conditions
Precedent -
MFB. The obligations of MFB to effect the Transactions shall
be subject to satisfaction of the following conditions at or prior to the
Effective Date unless waived by MFB pursuant to Section 9.4
hereof.
(a) The
representations and warranties of MutualFirst set forth in Article VI
hereof shall be true and correct on the date of this Agreement and as of the
Effective Time, in each case subject to the standards and qualifications set
forth in Section 6.1.
(b) MutualFirst
shall have performed in all material respects all obligations and complied
with
all covenants required to be performed and complied with by it pursuant to
this
Agreement at or prior to the Effective Date.
(c) MFB
shall
have received an opinion from counsel to MutualFirst, dated the Effective Time,
to the effect that, on the basis of the facts, representations and assumptions
set forth in such opinion, (i) the Merger will be treated for federal
income tax purposes as a reorganization within the meaning of
Section 368(a) of the Code, and (ii) each of MFB, MutualFirst and
Acquisition Corp. will be a party to that reorganization within the meaning
of
Section 368(b) of the Code. In rendering its opinion, counsel
may require and rely upon representations contained in letters from each of
MFB
and MutualFirst.
(d) MutualFirst
shall have delivered to MFB a certificate, dated the Effective Date and signed
by its Chief Executive Officer or Chief Financial Officer, to the effect that
the conditions set forth in Sections 8.2(a) and (b) have been
satisfied.
8.3 Conditions
Precedent -
MutualFirst. The obligations of MutualFirst to effect the
Transactions shall be subject to satisfaction of the following conditions at
or
prior to the Effective Date unless waived by MutualFirst pursuant to
Section 9.4 hereof.
(a) The
representations and warranties of MFB set forth in Article V
hereof shall be true and correct on the date of this Agreement and as
of the Effective Time, in each case subject to the standards and qualifications
set forth in Section 5.1.
(b) MFB
shall
have performed in all material respects all obligations and complied with all
covenants required to be performed and complied with by it pursuant to this
Agreement at or prior to the Effective Date.
(c) MutualFirst
shall have received an opinion from its counsel, dated the Effective Time,
to
the effect that, on the basis of the facts, representations and assumptions
set
forth in such opinion, (i) the Merger will be treated for federal income
tax purposes as a reorganization within the meaning of Section 368(a) of
the Code, and (ii) each of MFB, MutualFirst and Acquisition Corp. will be a
party to that reorganization within the meaning of Section 368(b) of the
Code. In rendering its opinion, counsel may require and rely upon
representations contained in letters from each of MFB and
MutualFirst.
56
(d) MFB
shall
have delivered to MutualFirst a certificate, dated the Effective Date and signed
by its Chief Executive Officer or Chief Financial Officer, to the effect that
the conditions set forth in Sections 8.3(a) and (b) have been
satisfied.
ARTICLE IX
TERMINATION,
WAIVER AND
AMENDMENT
9.1 Termination. This
Agreement may be terminated at any time prior to the Effective Time by a Party
or the Parties (based upon action of its or their Board(s) of Directors) as
follows:
(a) by
the
mutual consent in writing of the Parties;
(b) by
MutualFirst in writing if MFB has, or by MFB in writing if MutualFirst has,
breached in any material respect any covenant or undertaking contained herein
or
any representation or warranty contained herein such that the conditions set
forth in Section 8.2(a) or (b), or Section 8.3(a) or (b), whichever is
applicable, would not be satisfied, unless such breach has been cured within
30
days after written notice of such breach; provided that a Party which is then
in
material breach of any of its representations, warranties, covenants or
undertakings under this Agreement shall not be entitled to be a terminating
Party hereunder;
(c) by
either
MutualFirst or MFB in writing (i) if any application for prior approval of
a Regulatory Authority which is necessary to consummate any of the Transactions
is denied or withdrawn at the request or recommendation of the Regulatory
Authority which must grant such approval, provided, however, that a
Party shall not have the right to terminate this Agreement pursuant to this
Section 9.1(c)(i) if such denial or request or recommendation for
withdrawal shall be due to the failure of such Party to perform or observe
its
covenants and agreements set forth herein, or (ii) if any Governmental
Authority of competent jurisdiction shall have issued a final nonappealable
order enjoining or otherwise prohibiting the completion of the any of the
Transactions;
(d) by
either
MutualFirst or MFB in writing if the shareholders of MFB do not approve this
Agreement at the MFB Meeting or the shareholders of MutualFirst do not approve
the stock issuance at the MutualFirst Meeting, provided a termination pursuant
to Section 9.1(g) shall supersede and take precedent over any termination
pursuant to this subsection (i.e., the termination pursuant to this subsection
shall not be effective);
(e) by
MutualFirst writing within five (5) business days after the expiration of the
Resolution Period if an MFB Objection Notice has been delivered by MFB in
accordance with Section 7.5(a) herein, otherwise within twenty (20) business
days after delivery of the Expert’s Opinion if the Independent Expert’s
conclusion, as set forth in the Expert’s Opinion, is that the Required
Environmental Expenditures are greater than $250,000;
(f) by
either
MutualFirst or MFB in writing if the Effective Time has not occurred by the
close of business on September 30, 2008, provided that a Party which is
then in material breach of any of its representations, warranties, covenants
or
obligations shall not be entitled to be a terminating Party
hereunder;
57
(g) by
MutualFirst in writing if MFB has made a Change in Recommendation and the
shareholders of MFB fail to approve this Agreement at the MFB Meeting (or such
MFB Meeting is not held); provided this subsection shall not apply if prior
to
the MFB Meeting, the MutualFirst Meeting took place and its shareholders failed
to approve the stock issuance;
(h) by
MFB in
writing prior to the MFB Meeting in order to concurrently enter into a Competing
Acquisition Agreement; provided MFB shall, concurrently with the termination
of
this Agreement pursuant to this subsection, pay the Termination Fee to
MutualFirst; or
(i) by
MFB at
any time during the ten (10) business day period commencing on the Determination
Date, such termination to be effective immediately following the expiration
of
the five (5) business day period specified in Section 9.1(i)(2) below (“Effective Termination
Date”), if both of the following conditions are satisfied:
(1) the
MutualFirst Market Value on the Determination Date is less than $12.664;
and
(2) the
number obtained by dividing the MutualFirst Market Value on the Determination
Date by the Initial MutualFirst Market Value (“MutualFirst Ratio”) shall be less
than the quotient obtained by dividing the Final Index Price by the Initial
Index Price minus 0.15; subject, however, to the following
sentences. If MFB elects to exercise its termination right pursuant
to this Section 9.1(i), it shall give prompt written notice thereof to
MutualFirst and MutualFirst shall, for a period of five (5) business days after
its receipt of such notice, have the option of paying additional Aggregate
Merger Consideration in the form of MutualFirst Common Stock, cash, or a
combination of MutualFirst Common Stock and cash (the “Additional
Consideration”) in compliance with the following
sentence. Specifically, MutualFirst shall pay such Additional
Consideration so that the value of the aggregate Stock Consideration (prior
to
adjustment for the Additional Consideration) together with the Additional
Consideration (whether in cash or stock) shall be valued at an amount which
is
no less than the lesser of (i) the product of 0.80 and the Initial MutualFirst
Market Value multiplied by the product of the Stock Conversion Number and the
Exchange Ratio or (ii) the product of the Index Ratio and the Initial
MutualFirst Market Value multiplied by the product of the Stock Conversion
Number and the Exchange Ratio. If within such five (5) business day
period, MutualFirst delivers written notice to MFB that it intends to proceed
by
paying the Additional Consideration, as contemplated by the preceding sentence,
then no termination shall occur pursuant to this Section 9.1(i) and this
Agreement shall remain in full force and effect in accordance with its terms
(except that the Aggregate Merger Consideration shall have been so
modified).
For
purposes of this Section 9.1(i), the following terms shall have the
meanings indicated below:
“Determination
Date”
shall mean the date on which MFB receives written notice in accordance
with the
requirements of Section 10.4 regarding notices, that the last shareholder or
regulatory approval (and waivers, if applicable) necessary for consummation
of
the Transactions has been received (disregarding any waiting
period).
58
“Final
Index Price”
means the average of the unweighted reported closing prices of the Index
Group
on the Determination Date.
“Index
Group” means
the SNL Thrift Index as published by SNL Financial LLC. In the
event that the common stock of any company in the Index Group ceases to be
publicly traded or a proposal to acquire any such company is announced at any
time during the period beginning on the date of this Agreement and ending on
the
Determination Date, such company will be removed from the Index
Group.
“Index
Ratio” shall be
the Final Index Price divided by the Initial Index Price.
“Initial
Index Price”
means the average of the unweighted reported closing prices of the Index
Group
for the three trading days including and ending on December 12, 2007, which
was
$14.66.
“Initial
MutualFirst Market
Value” means $15.83, adjusted as indicated in the last sentence of this
Section 9.1(i).
“MutualFirst
Market
Value” shall be the average of the daily closing sales prices of a share
of MutualFirst Common Stock as reported on the Nasdaq for the ten consecutive
trading days immediately preceding the Determination Date.
If
MutualFirst or any company belonging to the Index Group declares or effects
a
stock dividend, reclassification, recapitalization, split-up, combination,
exchange of shares or similar transaction between the date of this Agreement
and
the Determination Date, the prices for MutualFirst Common Stock or the common
stock of such company, as applicable, shall be appropriately adjusted for the
purposes of applying this Section 9.1(i).
9.2 Effect
of
Termination. In the event that this Agreement is terminated
pursuant to Section 9.1 hereof, this Agreement shall become void and have
no effect, except that (i) the provisions relating to confidentiality set
forth in Section 7.5(b), to expenses set forth in Section 10.1, to the
Termination Fee set forth in Section 9.6, to relief under Section 9.7,
and this Section 9.2, shall survive any such termination.
9.3 Survival
or Non-Survival of
Representations, Warranties and Covenants. All
representations, warranties, covenants and agreements of the Parties set
forth herein shall expire at the Effective Time other than those
covenants and agreements which by their expressed terms are to be performed
after the Effective Time.
9.4 Waiver. Either
MutualFirst or MFB by written instrument approved by its Board of Directors
(or
an executive officer pursuant to delegated authority) and signed by an executive
officer of such Party, may at any time (whether before or after approval of
this
Agreement by the shareholders of MFB and the approval of the stock issuance
by
MutualFirst) extend the time for the performance of any of the obligations
or
other acts of the other Party and may waive (a) any inaccuracies of the
other Party in the representations or warranties contained in this Agreement
or
any document delivered pursuant hereto, (b) compliance with any of the
covenants, undertakings or agreements of the other Party, (c) to the extent
permitted by law, satisfaction of any of the conditions precedent to its
obligations contained herein or (d) the performance by the other Party of
any of its obligations set forth herein; provided that any such waiver granted
or any amendment or supplement pursuant to Section 9.5 hereof shall not
modify either the amount or form of the consideration to be paid in the Merger
without the approval of the shareholders of MFB and/or MutualFirst to the extent
required by applicable law.
59
9.5 Amendment
or
Supplement. This Agreement may be amended or supplemented at
any time by mutual written agreement of the Parties, subject to the proviso
to
Section 9.4 hereof. Any such amendment or supplement must be in
writing and, if entered into by a Party, must be authorized by or under the
direction of its Board of Directors.
9.6 Termination
Fee. MFB shall pay MutualFirst the cash amount of $1.7
million, as an agreed upon liquidated damages and not as a penalty and as the
sole and exclusive remedy of MutualFirst and Acquisition Corp. against MFB
(the
“Termination Fee”), payable within two (2) business days after written demand
(or as otherwise provided below) in immediately available funds, upon the
occurrence of any of the following:
(a) a
termination of this Agreement by MutualFirst pursuant to
Section 9.1(g);
(b) a
termination of this Agreement by MFB pursuant to Section 9.1(h), in which
case the Termination Fee shall be paid concurrently with the termination of
this
Agreement;
(c) the
entering into a definitive agreement by MFB or MFB Financial relating to a
change in control of MFB, MFB Financial or substantially all of the assets
of
either of them (by merger, consolidation, stock purchase, bulk sale of assets
or
otherwise) within one (1) year after the termination of this Agreement by
MutualFirst pursuant to Section 9.1(b); provided, however, that if
MutualFirst seeks relief against MFB under Section 9.7(a), then MFB shall
have no obligation to MutualFirst under this Section 9.6(c) and the
provisions of this Section 9.6(c) shall thereupon terminate;
or
(d) the
consummation of a transaction involving a change in control of MFB, MFB
Financial or substantially all of the assets of either of them (by merger,
consolidation, tender offer, stock purchase, bulk sale of assets or otherwise)
within one year after the termination of this Agreement by MutualFirst pursuant
to Section 9.1(b); provided, however, that if MutualFirst seeks relief
against MFB under Section 9.7(a), then MFB shall have no obligation to
MutualFirst under this Section 9.6(d) and the provisions of this
Section 9.6(d) shall thereupon terminate.
Upon
payment of the Termination Fee to MutualFirst, MFB shall have no further
liability to MutualFirst or Acquisition Corp. under this Agreement or otherwise
related to the Transactions.
60
9.7 Relief
for Willful Breach;
Specific Performance.
(a) Notwithstanding
anything to the contrary herein, in the event of a willful material breach
hereof by a Party, then the non-breaching Party shall be entitled to such
additional remedies and relief against the breaching Party as are available
at
law or in equity (with all remedies hereunder and thereunder being
cumulative).
(b) The
Parties agree that, in the event of any breach or threatened breach (whether
or
not willful or material) by a Party of any covenant, obligation or other term
or
provision set forth in this Agreement for the benefit of any other Party, such
other Party shall be entitled to (i) a decree or order of specific
performance or mandamus to enforce the observance and performance of such
covenant, obligation or other term or provision and (ii) an injunction
restraining such breach or threatened breach.
ARTICLE X
MISCELLANEOUS
10.1 Expenses. Each
of the Parties shall bear and pay all costs and expenses incurred by it or
on
its behalf in connection with the transactions contemplated herein, including
fees and expenses of its own financial or other consultants, investment bankers,
accountants and counsel, except that (a) MutualFirst and MFB each shall
bear and pay one-half of the costs (excluding the fees and disbursements of
counsel and accountants) incurred in connection with the preparation (including
copying and printing) of the Joint Proxy Statement-Prospectus and Registration
Statement and (b) MutualFirst shall bear the cost of all listing, filing or
registration fees, including fees paid for filing the Registration Statement
and
the Joint Proxy Statement-Prospectus with the SEC and fees paid for filings
with
Governmental Authorities.
10.2 Entire
Agreement. This Agreement including the Exhibits and
Schedules hereto contains the entire agreement among the Parties with respect
to
the transactions contemplated herein and supersedes all prior arrangements
or
understandings with respect thereto, written or oral, other than documents
referred to herein. The terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the Parties and their respective
successors in interest. Except for Section 7.14, nothing in this
Agreement, expressed or implied, is intended to confer upon any Person, other
than the Parties and their respective successors in interest, any rights,
remedies, obligations or liabilities, except as expressly provided herein,
other
than the right of MFB, on behalf of its shareholders, to pursue damages in
the
event of a willful intentional breach by MutualFirst or Acquisition Corp. as
provided in Section 9.7(a).
10.3 No
Assignment. None of the Parties may assign any of its rights
or obligations under this Agreement to any other Person, except by operation
of
law.
10.4 Notices. All
notices or other communications which are required or permitted hereunder shall
be in writing and sufficient if delivered personally, telecopied or e-mailed
(with confirmation) or sent by overnight mail service or by registered or
certified mail (return receipt requested), postage prepaid, addressed as
follows:
61
If
to MFB:
|
||
0000
Xxxxxx Xxxxx Xxxxxxx
|
||
Xxxxxxxxx,
XX 00000
|
||
Attention: Xxxxxxx
X. Xxxxxx
|
||
Fax: (000)
000-0000
|
||
Xxxxx.Xxxxxx@xxxxxxx.xxx
|
||
With
a copy to:
|
||
Xxxxxx
& Xxxxxxxxx LLP
|
||
00
Xxxxx Xxxxxxxx Xxxxxx
|
||
Xxxxxxxxxxxx,
XX 00000
|
||
Attention: Xxxxxxx
Xxxxxx, Esq.
|
||
Fax: (000)
000-0000
|
||
Xxxxxxx.xxxxxx@XXXxx.xxx
|
||
If
to MutualFirst or Acquisition Corp:
|
||
MutualFirst
Financial, Inc.
|
||
000
X. Xxxxxxx Xxxxxx
|
||
Xxxxxx,
XX 00000
|
||
Attention: Xxxxx
X. Xxxxxx
|
||
Fax: (000)
000-0000
|
||
Xxxxxxx@xxxxxxx.xxx
|
||
With
a copy to:
|
||
Silver,
Xxxxxxxx & Taff LLP
|
||
0000
X Xxxxxx, X.X.
|
||
Xxxxxxxxxx,
X.X. 00000
|
||
Attention:
Xxxxx Xxxxxxxxx
|
||
Fax: (000)
000-0000
|
||
E-mail:
xxxxxxxxxx@xxxxxx.xxx
|
10.5 Interpretation. The
captions contained in this Agreement are for reference purposes only and are
not
part of this Agreement.
10.6 Counterparts. This
Agreement may be executed in any number of counterparts, and each such
counterpart shall be deemed to be an original instrument, but all such
counterparts together shall constitute but one agreement.
10.7 Governing
Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Indiana applicable to agreements made
and entirely to be performed within such jurisdiction.
62
10.8 Severability. Any
term, provision, covenant or restriction contained in this Agreement held to
be
invalid, void or unenforceable, shall be ineffective to the extent of such
invalidity, voidness or unenforceability, but neither the remaining terms,
provisions, covenants or restrictions contained in this Agreement nor the
validity or enforceability thereof in any other jurisdiction shall be affected
or impaired thereby. Any term, provision, covenant or restriction
contained in this Agreement that is so found to be so broad as to be
unenforceable shall be interpreted to be as broad as is
enforceable.
* * * * *
The
Parties have executed this Agreement in counterparts, all as of the day and
year
first above written.
MUTUALFIRST
FINANCIAL,
INC.
|
||
By:
|
/s/ Xxxxx X. Xxxxxx | |
Authorized
Officer
|
||
MUTUALFIRST
ACQUISITION
CORP.
|
||
By:
|
/s/ Xxxxx X. Xxxxxx | |
Authorized
Officer
|
||
MFB
CORP.
|
||
By:
|
/s/ Xxxxxxx X. Xxxxxx | |
Authorized
Officer
|
63