Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of December 17, 2004
("Agreement"), among Peoples Community Bancorp, Inc. ("Bancorp"),
a Maryland corporation, Peoples Community Bank (the "Bank"), a
federally-chartered savings bank and a wholly-owned subsidiary
of Bancorp, American State Corporation ("ASC"), an Indiana
corporation, and American State Bank ("American"), an Indiana-
chartered commercial bank and wholly-owned subsidiary of ASC.
WITNESSETH:
WHEREAS, the Boards of Directors of Bancorp, the Bank, ASC
and American have determined that it is in the best interests of
their respective companies and their stockholders to consummate
the business combination transactions provided for herein; and
WHEREAS, the parties desire to provide for certain
undertakings, conditions, representations, warranties and
covenants in connection with the transactions contemplated
hereby; and
WHEREAS, as a condition and inducement to the willingness of
Bancorp to enter into this Agreement, the directors of ASC
Directors are concurrently entering into a Stockholder Agreement
with Bancorp (the "Stockholder Agreement"), in substantially the
form attached hereto as Exhibit A, pursuant to which, among other
things, such directors agree to vote their shares of ASC Capital
Stock (as defined below) in favor of this Agreement and the
transactions contemplated hereby.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants, representations, warranties and agreements
herein contained, the parties hereto agree as follows:
ARTICLE I
THE MERGER
1.01 The Merger. Subject to the terms and conditions of
this Agreement and subject to and in accordance with an Agreement
of Merger, a copy of which is attached hereto as Exhibit B (the
"Agreement of Merger"), between ASC and ASC Acquisition Corp.
("Interim"), an Indiana corporation to be formed as a wholly-
owned subsidiary of the Bank in connection with the transactions
contemplated hereby, at the Effective Time (as defined in Section
1.05 hereof), Interim shall be merged with and into ASC in
accordance with Chapter 40 of the Indiana Business Corporation
Law ("IBCL") (the "Merger"), with ASC as the surviving
corporation (hereinafter sometimes called the "Surviving
Corporation"). Simultaneously with or as soon as practicable
after the Merger, the Surviving Corporation shall be merged with
and liquidated into the Bank (the "Liquidation") in accordance
with a Plan of Complete Liquidation, the form of which is
attached hereto as Exhibit C. Simultaneously with or immediately
following consummation of the Liquidation, American shall be
merged with and into the Bank, with the Bank as the resulting
institution (the "Bank Merger").
1.02 Effect of the Merger. As of the Effective Time (as
defined in Section 1.05 hereof), the Surviving Corporation shall
be considered the same business and corporate entity as each of
ASC and Interim and thereupon and thereafter, all the property,
rights, powers and franchises of each of ASC and Interim shall
vest in the Surviving Corporation and the Surviving Corporation
shall be subject to and be deemed to have assumed all of the
debts, liabilities, obligations and duties of each of ASC and
Interim and shall have succeeded to all of each of their
relationships, fiduciary or otherwise, as fully and to the same
extent as if such property rights, privileges, powers,
franchises, debts, obligations, duties and relationships had been
originally acquired, incurred or entered into by the Surviving
Corporation. In addition, any reference to either of ASC and
Interim in any contract or document, whether executed or taking
effect before or after the Effective Time, shall be considered a
reference to the Surviving Corporation if not inconsistent with
the other provisions of the contract or document; and any pending
action or other judicial proceeding to which either of ASC and
Interim is a party, shall not be deemed to have abated or to have
discontinued by reason of the Merger, but may be prosecuted to
final judgment, order or decree in the same manner as if the
Merger had not been made; or the Surviving Corporation may be
substituted as a party to such action or proceeding, and any
judgment, order or decree may be rendered for or against it that
might have been rendered for or against either of ASC and Interim
if the Merger had not occurred. At the Effective Time, the
directors and officers of the Surviving Corporation shall be the
persons designated in Section 1.04.
1.03 Articles of Incorporation and Bylaws. As of the
Effective Time, the Articles of Incorporation and Bylaws of ASC
shall be the Articles of Incorporation and Bylaws of the
Surviving Corporation until otherwise amended as provided by law.
1.04 Directors and Officers. As of the Effective Time, the
directors and officers of Interim shall become the directors and
officers of the Surviving Corporation. If requested by Bancorp,
the directors of ASC and/or American shall resign as of the
Effective Time.
1.05 Effective Time. The Merger shall become effective upon
the occurrence of the filing of Articles of Merger with the
Secretary of State of the State of Indiana, unless a later date
and time is specified as the effective time in such Articles of
Merger ("Effective Time"). A closing (the "Closing") shall take
place immediately prior to the Effective Time at 10:00 a.m., on
the fifth business day following the receipt of all necessary
regulatory or governmental approvals and consents and the
expiration of all statutory waiting periods in respect thereof
and the satisfaction or waiver, to the extent permitted
hereunder, of the conditions to the consummation of the Merger
specified in Article V of this Agreement (other than the delivery
of certificates and other instruments and documents to be
delivered at the Closing), at the offices of Bancorp or at such
other place, at such other time, or on such other date as the
parties may mutually agree upon. At the Closing, there shall be
delivered to Bancorp, the Bank, ASC and American the certificates
and other documents required to be delivered under Article V
hereof.
1.06 Modification of Structure. Notwithstanding any
provision of this Agreement to the contrary, Bancorp, with the
prior written consent of ASC, which consent shall not be
unreasonably withheld, may elect, subject to the filing of all
necessary applications and the receipt of all required regulatory
approvals, to modify the structure of the transactions
contemplated hereby so long as (i) there are no material adverse
federal income tax consequences to the stockholders of ASC as a
result
2
of such modification, (ii) the consideration to be paid to
holders of ASC Common Stock (as defined below) under this
Agreement is not thereby changed in kind or reduced in amount
solely because of such modification and (iii) such modification
will not be likely to materially delay or jeopardize receipt of
any required regulatory approvals or impair or prevent the
satisfaction of any conditions to the Closing.
1.07 Conversion of ASC Capital Stock. As of the Effective
Time, each share of Class A and Class B common stock, no par
value, of ASC (the "ASC Common Stock"), issued and outstanding
immediately prior to the Effective Time (other than shares (i) as
to which dissenters' rights have been asserted and duly perfected
in accordance with the IBCL ("Dissenting Shares"), and (ii) held
by ASC (including treasury shares) or Bancorp or the Bank other
than in a fiduciary capacity, which shares shall be cancelled)
shall, by virtue of the Merger and without any action on the part
of the holder thereof, be cancelled and by operation of law be
converted into and represent the right to receive from Bancorp,
$4.79 in cash (the "Common Consideration"). In addition, as of
the Effective Time, each share of preferred stock, par value
$1,000 per share, of ASC ("ASC Preferred Stock"), issued and
outstanding immediately prior to the Effective Time shall, by
virtue of the Merger and without any action on the part of the
holder thereof, be cancelled and by operation of law be converted
into and represent the right to receive from the Bank, $1,000 in
cash (the "Preferred Consideration"). The aggregate
consideration to be paid for the conversion of all outstanding
shares of ASC Common Stock and ASC Preferred Stock is hereinafter
referred to as the "Aggregate Merger Consideration." ASC Common
Stock and ASC Preferred Stock are together referred to as "ASC
Capital Stock."
In addition, holders of ASC Common Stock shall have a
proportionate interest in funds, if any, remaining in the escrow
account to be established at Closing in accordance with the
Holdback Escrow Agreement, attached hereto as Exhibit D.
1.08 Exchange Procedures
(a) As of the Effective Time, Bancorp shall deposit in
trust with an exchange agent designated by Bancorp and reasonably
acceptable to ASC (the "Exchange Agent") cash in an amount equal
to the Aggregate Merger Consideration. No later than ten
business days following the Effective Time, Bancorp shall cause
the Exchange Agent to mail or make available to each holder of
record of a certificate or certificates which immediately prior
to the Effective Time represented issued and outstanding shares
of ASC Capital Stock a notice and letter of transmittal (which
shall specify that delivery shall be effected and risk of loss
and title to the certificates theretofore representing shares of
ASC Capital Stock shall pass only upon proper delivery of such
certificates to the Exchange Agent) advising such holder of the
effectiveness of the Merger and the procedure for surrendering to
the Exchange Agent such certificate or certificates which
immediately prior to the Effective Time represented issued and
outstanding shares of ASC Capital Stock in exchange for the
consideration set forth in Section 1.07 hereof deliverable in
respect thereof pursuant to this Agreement. Within five business
days following receipt of surrendered certificates and a properly
completed letter of transmittal, the Exchange Agent shall deliver
the Common Consideration and/or the Preferred Consideration to
each former ASC stockholder. The Exchange Agent shall accept
such
3
certificates upon compliance with such reasonable terms and
conditions as the Exchange Agent may impose to effect an orderly
exchange thereof in accordance with normal exchange practices.
(b) Each outstanding certificate which prior to the
Effective Time represented ASC Common Stock (other than
Dissenting Shares) or ASC Preferred Stock and which is not
surrendered to the Exchange Agent in accordance with the
procedures provided for herein shall, except as otherwise herein
provided, until duly surrendered to the Exchange Agent, be deemed
to evidence the right to receive the Common Consideration or the
Preferred Consideration as the case may be. After the Effective
Time, there shall be no further transfer on the records of ASC of
certificates representing shares of ASC Capital Stock and if such
certificates are presented to ASC for transfer, they shall be
cancelled against delivery of the Common Consideration or the
Preferred Consideration as hereinabove provided.
(c) Bancorp shall not be obligated to deliver the Common
Consideration or the Preferred Consideration to which a holder of
ASC Common Stock or ASC Preferred Stock would otherwise be
entitled as a result of the Merger until such holder surrenders
the certificate or certificates representing the shares of ASC
Common Stock or ASC Preferred Stock for exchange as provided in
this Section 1.08, or, in lieu thereof, an appropriate affidavit
of loss and indemnity agreement as may be required in each case
by Bancorp. If payment of the Common Consideration or the
Preferred Consideration is to be made in a name other than that
in which the certificate evidencing ASC Common Stock or ASC
Preferred Stock surrendered in exchange therefor is registered,
it shall be a condition of the issuance thereof that the
certificate so surrendered shall be properly endorsed or
accompanied by an executed form of assignment separate from the
certificate and otherwise in proper form for transfer and that
the person requesting such payment pay to the Exchange Agent in
advance, any transfer or other tax required by reason of the
payment in any name other than that of the registered holder of
the certificate surrendered or otherwise establish to the
satisfaction of the Exchange Agent that such tax has been paid or
is not payable.
(d) Any portion of either the Common Consideration or the
Preferred Consideration delivered to the Exchange Agent by
Bancorp pursuant to Section 1.07 that remains unclaimed by the
stockholders of ASC for six months after the Effective Time (as
well as any proceeds from any investment thereof) shall be
delivered by the Exchange Agent to Bancorp. Any stockholders of
ASC who have not exchanged their shares of ASC Common Stock for
the Common Consideration or their shares of ASC Preferred Stock
for Preferred Consideration in accordance with this Agreement
shall thereafter look only to Bancorp for the consideration
deliverable in respect of each share of ASC Common Stock or ASC
Preferred Stock such stockholder holds as determined pursuant to
this Agreement without any interest thereon. If outstanding
certificates for shares of ASC Common Stock or ASC Preferred
Stock are not surrendered or the payment for them is not claimed
prior to the date on which payment of the Common Consideration or
Preferred Consideration would otherwise escheat to or become the
property of any governmental unit or agency, the unclaimed items
shall, to the extent permitted by abandoned property and any
other applicable law, become the property of Bancorp (and to the
extent not in its possession shall be delivered to it), free and
clear of all claims or interest of any person previously entitled
to such property. Neither the Exchange Agent nor any party to
this Agreement shall be liable to any holder of stock represented
by any certificate for any consideration paid to a public
official pursuant to applicable abandoned property, escheat or
similar
4
laws. Bancorp and the Exchange Agent shall be entitled
to rely upon the stock transfer books of ASC to establish the
identity of those persons entitled to receive the Common
Consideration or Preferred Consideration specified in this
Agreement, which books shall be conclusive with respect thereto.
In the event of a dispute with respect to ownership of stock
represented by any certificate, Bancorp and the Exchange Agent
shall be entitled to deposit any consideration represented
thereby in escrow with an independent third party and thereafter
be relieved with respect to any claims thereto.
1.09 Withholding Rights. Bancorp (through the Exchange
Agent, if applicable) shall be entitled to deduct and withhold
from any amounts otherwise payable pursuant to this Agreement to
any holder of shares of ASC Capital Stock such amounts as Bancorp
is required under the Internal Revenue Code of 1986, as amended
("Code") or any provision of state, local or foreign tax law to
deduct and withhold with respect to the making of such payment.
Any amounts so withheld shall be treated for all purposes of this
Agreement as having been paid to the holder of ASC Common Stock
or ASC Preferred Stock in respect of which such deduction and
withholding was made by Bancorp.
1.10 Dissenting Shares. Each outstanding share of ASC
Capital Stock the holder of which has perfected his right to
dissent under the IBCL and has not effectively withdrawn or lost
such rights as of the Effective Time shall not be converted into
or represent a right to receive the Common Consideration or
Preferred Consideration, as applicable, and the holder thereof
shall be entitled only to such rights as are granted by the IBCL.
ASC shall give Bancorp prompt notice upon receipt by ASC of any
such written demands for payment of their fair value of such
shares of ASC Capital Stock and of withdrawals of such demands
and any other instruments provided pursuant to the IBCL (any
stockholder duly making such demand being hereinafter called a
"Dissenting Stockholder"). Any payments made in respect of
Dissenting Shares shall be made by Bancorp. If any Dissenting
Stockholder shall effectively withdraw or lose (through failure
to perfect or otherwise) his right to such payment at or prior to
the Effective Time, such holder's shares of ASC Capital Stock
shall be converted into a right to receive the Common
Consideration or Preferred Consideration, as applicable, in
accordance with the applicable provisions of this Agreement.
1.11 Additional Actions. If at any time after the Effective
Time the Surviving Corporation shall consider that any further
assignments or assurances in law or any other acts are necessary
or desirable to (i) vest, perfect or confirm, of record or
otherwise, in the Surviving Corporation its rights, title or
interest in, to or under any of the rights, properties or assets
of ASC acquired or to be acquired by the Surviving Corporation as
a result of, or in connection with, the Merger, or (ii) otherwise
carry out the purposes of this Agreement, ASC and its proper
officers and directors shall be deemed to have granted to the
Surviving Corporation an irrevocable power of attorney to execute
and deliver all such proper deeds, assignments and assurances in
law and to do all acts necessary or proper to vest, perfect or
confirm title to and possession of such rights, properties or
assets in the Surviving Corporation and otherwise to carry out
the purposes of this Agreement; and the proper officers and
directors of the Surviving Corporation are fully authorized in
the name of ASC or otherwise to take any and all such action.
1.12 Interim Shares. Each outstanding share of common stock
of Interim, $.01 par value per share ("Interim Common Stock"), on
the Effective Time shall be converted automatically and without
any action on the part of the holder thereof into an equal number
of shares of the Surviving
5
Corporation, which shall constitute all of the outstanding common
stock of the Surviving Corporation.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF ASC
AND AMERICAN
References to "ASC Disclosure Schedules" shall mean all of
the disclosure schedules required by this Article II and Article
IV hereof, dated as of the date hereof and referenced to the
specific sections and subsections of this Agreement, which have
been delivered by ASC to Bancorp. ASC and American hereby
represent and warrant to Bancorp and the Bank as follows as of
the date hereof:
2.01 Corporate Organization.
(a) ASC is a corporation duly organized and validly
existing under the laws of the State of Indiana. ASC has the
corporate power and authority to own or lease all of its
properties and assets and to carry on its business as it is now
being conducted and is duly licensed or qualified to do business
and is in good standing (if and to the extent the concept of good
standing is recognized in such jurisdiction) in each jurisdiction
in which the nature of the business conducted by it or the
character or location of the properties and assets owned or
leased by it makes such licensing or qualification necessary,
except where the failure to be so licensed, qualified or in good
standing would not have a Material Adverse Effect (as defined
below). ASC is registered as a bank holding company under the
Bank Holding Company Act of 1956 ("BHCA"). ASC Disclosure
Schedule 2.01(a) sets forth true and complete copies of the
Articles of Incorporation and Bylaws of ASC as in effect on the
date hereof.
For the purposes of this Agreement, the term "Material
Adverse Effect" shall mean any effect that (i) is material and
adverse to the financial condition, results of operations or
business of ASC and American, either individually or considered
as one enterprise and results in a substantial diminution of
value of ASC and American, either individually or considered as
one enterprise or (ii) materially impairs the ability of ASC
and/or American to consummate the transactions contemplated by
this Agreement and the Agreement of Merger, provided, however,
that the term "Material Adverse Effect" shall not be deemed to
include (i) the impact of changes in (a) laws, regulations, or
policies of any Federal or state court, administrative agency,
commission or other governmental authority or interpretations
thereof; (b) generally accepted accounting principles; or (c)
interest rates, that in each case are generally applicable to the
banking industry, (ii) actions taken or to be taken by ASC or
American upon the written request of Bancorp pursuant to this
Agreement or the Agreement of Merger, (iii) any adverse effect
resulting from or relating to the announcement or pendency of the
Merger, pursuant to Section 4.10 below or (iv) any losses related
to the assets listed in Appendix A to the Holdback Escrow
Agreement.
6
(b) The only direct or indirect subsidiaries of ASC are
American and American State Advisory Group Corp. ("Advisory").
Advisory is an Indiana corporation and a wholly-owned subsidiary
of American. Disclosure Schedule 2.01(b)(i) sets forth true and
complete copies of the Articles of Incorporation and Bylaws of
American and Advisory as in effect on the date hereof. American
and Advisory (i) are duly organized and validly existing under
the laws of the State of Indiana, (ii) have the corporate power
and authority to own or lease all of their respective properties
and assets, and (iii) are duly licensed or qualified to do
business and are in good standing (if and to the extent the
concept of good standing is recognized in such jurisdiction) in
each jurisdiction in which the nature of the business
respectively conducted by them or the character or location of
the respective properties and assets owned or leased by them
makes such licensing or qualification necessary, except where the
failure to be so licensed, qualified or in good standing would
not have a Material Adverse Effect. ASC and American have
satisfied in all material respects all commitments, financial or
otherwise, as may have been agreed upon with their state and/or
federal regulatory agencies. Other than American and Advisory,
and except as set forth in ASC Disclosure Schedule 2.01(b)(ii),
ASC does not own or control, directly or indirectly, greater than
a 5% equity interest in any corporation, company, association,
partnership, joint venture or other entity.
2.02 Capitalization. The authorized capital stock of ASC
consists of 10,000,000 shares of ASC Common Stock, of which
1,469,062 are issued and outstanding as of the date hereof, and
100,000 shares of ASC Preferred Stock, of which 700 shares are
issued and outstanding as of date hereof. All issued and
outstanding shares of ASC Capital Stock have been duly authorized
and validly issued and are fully paid, nonassessable and free of
preemptive rights. ASC does not have and is not bound by any
outstanding subscriptions, options, warrants, calls, commitments
or agreements of any character calling for the transfer, purchase
or issuance of any shares of capital stock of ASC or any
securities representing the right to purchase or otherwise
receive any shares of such capital stock or any securities
convertible into or representing the right to purchase or
subscribe for any such stock.
2.03 Authority; No Violation.
(a) Subject to the approval of this Agreement by the
stockholders of ASC Capital Stock, ASC and American have full
corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby
in accordance with the terms hereof. The execution and delivery
of this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly approved by the
boards of directors of ASC and American. Except for the adoption
of this Agreement by the holders of ASC Capital Stock, no other
corporate proceedings on the part of ASC or American are
necessary to consummate the Merger. This Agreement has been duly
and validly executed and delivered by ASC and American and
constitutes the valid and binding obligation of ASC and American,
enforceable against them in accordance with and subject to its
terms, except as limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting
creditors' rights generally, and except that the availability of
equitable remedies (including, without limitation, specific
performance) is within the discretion of the appropriate court.
7
(b) Subject to the approval of this Agreement by the
stockholders of ASC Capital Stock, ASC has full corporate power
and authority to execute and deliver the Agreement of Merger and
to consummate the transactions contemplated thereby in accordance
with the terms thereof. The execution and delivery of the
Agreement of Merger by ASC and the consummation of the
transactions contemplated thereby have been duly and validly
approved by the Board of Directors of ASC. The Agreement of
Merger, upon its execution and delivery by ASC, will constitute a
valid and binding obligation of ASC, enforceable against it in
accordance with and subject to its terms, except as limited by
applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting creditors' rights generally, and
except that the availability of equitable remedies (including,
without limitation, specific performance) is within the
discretion of the appropriate court.
(c) None of the execution and delivery of this Agreement by
ASC and American, the execution and delivery of the Agreement of
Merger by ASC, the consummation by ASC and American of the
transactions contemplated hereby in accordance with the terms
hereof, the consummation by ASC of the transactions contemplated
by the Agreement of Merger in accordance with the terms thereof,
compliance by ASC and American with any of the terms or
provisions hereof or compliance by ASC with any terms or
provisions of the Agreement of Merger, will (i) violate any
provision of the Articles of Incorporation, Charter or Bylaws of
ASC or American, (ii) assuming that the consents and approvals
set forth below are duly obtained, violate any statute, code,
ordinance, rule, regulation, judgment, order, writ, decree or
injunction applicable to ASC or American or any of their
respective properties or assets, or (iii) except as disclosed in
Disclosure Schedule 2.03(c), violate, conflict with, result in a
breach of any provisions of, constitute a default (or an event
which, with notice or lapse of time, or both, would constitute a
default) under, result in the termination of, accelerate the
performance required by, or result in the creation of any lien,
security interest, charge or other encumbrance upon any of the
properties or assets of ASC or American under any of the terms,
conditions or provisions of any note, bond, mortgage, indenture,
deed of trust, license, lease, agreement or other instrument or
obligation to which ASC or American are a party, or by which any
of their respective properties or assets may be bound or
affected, except, with respect to (ii) and (iii) above, such as
individually or in the aggregate will not have a Material Adverse
Effect and which will not prevent or delay the consummation of
the transactions contemplated hereby. Except as set forth in
Disclosure Schedule 2.03(c) and for consents and approvals of or
filings or registrations with or notices to the Board of
Governors of the Federal Reserve System (the "FRB")), the
Department of Financial Institutions of the State of Indiana (the
"Department"), the Federal Deposit Insurance Corporation ("FDIC")
the Secretary of State of the State of Indiana, and the
stockholders of ASC, no consents or approvals of or filings or
registrations with or notices to any federal, state, municipal or
other governmental or regulatory commission, board, agency, or
non-governmental third party are required on behalf of ASC in
connection with (a) the execution and delivery of this Agreement
by ASC and American or the execution and delivery of the
Agreement of Merger by ASC, and (b) the completion by ASC and
American of the transactions contemplated hereby or the
completion by ASC of the transactions contemplated by the
Agreement of Merger.
(d) As of the date hereof, neither ASC nor American is
aware of any reasons relating to ASC or American why all consents
and approvals shall not be procured from all regulatory agencies
having jurisdiction over the transactions contemplated by this
Agreement as shall be necessary for consummation of the
transactions contemplated hereby.
8
2.04 Financial Statements.
(a) ASC has previously delivered to Bancorp copies of the
consolidated statements of financial condition of ASC as of
December 31, 2003 and 2002 and the related consolidated
statements of operations, consolidated income (loss),
stockholders' equity and cash flows for the years ended December
31, 2003, 2002 and 2001, in each case accompanied by the
respective audit report of Xxxxxxx Xxxxxxxxx, LLP or Xxxxx Xxxxxx
and Company, LLC, independent public accountants, as well as the
unaudited consolidated statements of financial condition of ASC
as of September 30, 2004 and the related unaudited consolidated
statements of operations, consolidated income (loss) and
stockholders' equity for the nine months ended September 30, 2004
and 2003. The consolidated balance sheets of ASC referred to
herein, as well as the financial statements to be delivered
pursuant to Section 4.04 hereof, (including the related notes,
where applicable) fairly present or will fairly present, as the
case may be, the consolidated financial condition of ASC as of
the respective dates set forth therein, and the related
consolidated statements of income and stockholders' equity
(including the related notes, where applicable) fairly present or
will fairly present, as the case may be, the results of the
consolidated income and stockholders' equity for the respective
periods or as of the respective dates set forth therein (it being
understood that ASC's interim financial statements are not
audited and are not prepared with all related notes but have
been, or will be, prepared in compliance with all applicable
legal and regulatory accounting requirements and reflect all
adjustments which are, in the opinion of ASC, necessary for a
fair presentation of such financial statements).
(b) Each of the audited financial statements referred to in
this Section 2.04 (including the related notes, where applicable)
has been prepared in accordance with generally accepted
accounting principles consistently applied during the periods
involved. The books and records of ASC are being maintained in
material compliance with applicable legal and accounting
requirements.
(c) Except to the extent reflected, disclosed or reserved
against in the consolidated financial statements referred to in
the first sentence of Section 2.04(a) or the notes thereto, and
except for liabilities incurred since September 30, 2004 in the
ordinary course of business and consistent with past practice,
ASC does not have any obligation or liability, whether absolute,
accrued, contingent or otherwise, material to the business,
results of operations, assets or financial condition of ASC and
American taken as a whole.
2.05 Absence of Certain Changes or Events. Except as set
forth in ASC Disclosure Schedule 2.05, since September 30, 2004,
(i) ASC and American have conducted their businesses in the
ordinary and usual course and (ii) no event has occurred or
circumstances arisen that, individually or in the aggregate, has
had or is reasonably likely to have a Material Adverse Effect.
2.06 Legal Proceedings. Except as disclosed in ASC
Disclosure Schedule 2.06, neither ASC nor American is a party to
any, and there are no pending or, to the knowledge of ASC and
American, threatened legal, administrative, arbitration or other
proceedings, claims, actions or governmental investigations of
any nature against ASC or American, except such proceedings,
claims, actions or governmental investigations which in the good
faith judgment of ASC and
9
American will not have a Material Adverse Effect.
Neither ASC nor American is a party to any
order, judgment or decree which has or could reasonably be
expected to have a Material Adverse Effect.
2.07 Taxes and Tax Returns.
(a) ASC and American have duly filed (and until the
Effective Time will so file) all returns, declarations, reports,
information returns and statements ("Returns") required to be
filed or sent by or with respect to them in respect of any Taxes
(as hereinafter defined), and have duly paid (and until the
Effective Time will so pay) all Taxes due and payable other than
Taxes or other charges which (i) are being contested in good
faith (and disclosed in writing to Bancorp) and (ii) have not
finally been determined. ASC has established (and until the
Effective Time will establish) on its books and records reserves
that are adequate for the payment of all Taxes not yet due and
payable for periods ending on or prior to the Effective Time,
whether or not disputed or accrued. Except as set forth in ASC
Disclosure Schedule 2.07(a), (i) the federal income tax returns
of ASC have been examined by the Internal Revenue Service
("IRS"), and (ii) the Indiana income tax returns of ASC have been
examined by applicable authorities, and in the case of both (i)
and (ii) no deficiencies were asserted as a result of such
examinations which have not been resolved and paid in full.
There are no audits or other administrative or court proceedings
presently pending nor any other disputes pending, or claims
asserted for, Taxes or assessments upon ASC or American, nor has
ASC given any currently outstanding waivers or comparable
consents regarding the application of the statute of limitations
with respect to any Taxes or Returns.
(b) Except as set forth in ASC Disclosure Schedule 2.07(b),
ASC (i) has not requested any extension of time within which to
file any Return which Return has not since been filed, (ii) is
not a party to any agreement providing for the allocation or
sharing of Taxes, (iii) is not required to include in income any
adjustment pursuant to Section 481(a) of the Code, by reason of a
voluntary change in accounting method initiated by ASC (nor does
ASC have any knowledge that the IRS has proposed any such
adjustment or change of accounting method), or (iv) has not filed
a consent pursuant to Section 341(f) of the Code or agreed to
have Section 341(f)(2) of the Code apply.
(c) For purposes of this Agreement, "Taxes" shall mean all
taxes, charges, fees, levies or other assessments, including,
without limitation, all net income, gross income, gross receipts,
sales, use, ad valorem, transfer, franchise, profits, license,
withholding, payroll, employment (including withholding, payroll
and employment taxes required to be withheld with respect to
income paid to employees), excise, estimated, severance, stamp,
occupation, property or other taxes, customs duties, fees,
assessments or charges of any kind whatsoever, together with any
interest and any penalties, additions to tax or additional
amounts imposed by any taxing authority (domestic or foreign)
upon ASC.
2.08 Employee Benefit Plans.
(a) ASC Disclosure Schedule 2.08(a) sets forth all benefit
and compensation plans, contracts, policies or arrangements
covering current or former employees of ASC and American (the
"Employees") and current or former directors of ASC and American
including, but not limited to,
10
"employee benefit plans" within the meaning of Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
and deferred compensation, stock option, stock purchase, stock
appreciation rights, stock based, incentive and bonus plans (the
"Benefits Plans"). True and complete copies of all Benefit Plans
including, but not limited to, any trust instruments and
insurance contracts forming a part of any Benefit Plans and all
amendments thereto have been provided or otherwise made available
to Bancorp.
(b) All Benefits Plans other than "multiemployer plans"
within the meaning of Section 3(37) of ERISA, covering Employees,
to the extent subject to ERISA, are in substantial compliance
with ERISA. Each Benefit Plan which is an "employee pension
benefit plan" within the meaning of Section 3(2) of ERISA
("Pension Plan") and which is intended to be qualified under
Section 401(a) of the Code, has received a favorable
determination letter from the IRS, and ASC is not aware of any
circumstances likely to result in revocation of any such
favorable determination letter or the loss of the qualification
of such Pension Plan under Section 401(a) of the Code. There is
no material pending or, to ASC's knowledge, threatened litigation
relating to the Benefits Plans. Neither ASC nor American has
engaged in a transaction with respect to any Benefit Plan or
Pension Plan that, assuming the taxable period of such
transaction expired as of the date hereof, could subject ASC or
American to a tax or penalty imposed by either Section 4975 of
the Code or Section 502(i) of ERISA in an amount which would be
material.
(c) No liability under Subtitle C or D of Title IV of ERISA
has been or is expected to be incurred by ASC or American with
respect to any ongoing, frozen or terminated "single-employer
plan," within the meaning of Section 4001(a)(15) of ERISA,
currently or formerly maintained by any of them, or the single-
employer plan of any entity which is considered one employer with
ASC under Section 4001 of ERISA or Section 414 of the Code (an
"ERISA Affiliate"). Neither ASC nor American has incurred, and
neither expects to incur, any withdrawal liability with respect
to a multiemployer plan under Subtitle E of Title IV of ERISA
(regardless of whether based on contributions of an ERISA
Affiliate). No notice of a "reportable event," within the
meaning of Section 4043 of ERISA for which the 30-day reporting
requirement has not been waived, has been required to be filed
for any Pension Plan or by any ERISA Affiliate within the 12 -
month period ending on the date hereof or will be required to be
filed in connection with the transactions contemplated by this
Agreement.
(d) All contributions required to be made under the terms
of any Benefit Plan have been timely made or have been reflected
on the financial statements of ASC. Neither any Pension Plan nor
any single-employer plan of an ERISA Affiliate has an
"accumulated funding deficiency" (whether or not waived) within
the meaning of Section 412 of the Code or Section 302 of ERISA
and no ERISA Affiliate has an outstanding funding waiver.
Neither ASC nor American has provided, or is required to provide,
security to any Pension Plan or to any single-employer plan of an
ERISA Affiliate pursuant to Section 401(a)(29) of the Code.
(e) Under each Pension Plan which is a single-employer
plan, as of the last day of the most recent plan year ended prior
to the date hereof, the actuarially determined present value of
all "benefit liabilities," within the meaning of Section
4001(a)(16) of ERISA (as determined on the basis of the actuarial
assumptions contained in the Pension Plan's most recent actuarial
valuation), did not exceed the then current value of the assets
of such Pension Plan, and there has been no material
11
change in the financial condition of such Plan since the last
day of the most recent plan year.
(f) Neither ASC nor American has any obligations for
retiree health and life benefits under any Benefit Plan other
than as may be required under Section 4980B of the Code or Part 6
of Title I of ERISA, or under the continuation of coverage
provisions of the laws of any state or locality. ASC or American
may amend or terminate any such Benefit Plan at any time without
incurring any liability thereunder.
(g) Except as set forth on ASC Disclosure Schedule 2.08(g),
none of the execution of this Agreement, stockholder approval of
this Agreement or consummation of the transactions contemplated
hereby will (A) entitle any employees of ASC or American to
severance pay or any increase in severance pay upon any
termination of employment after the date hereof, (B) accelerate
the time of payment or vesting or trigger any payment or funding
(through a grantor trust or otherwise) of compensation or
benefits under, increase the amount payable or trigger any other
material obligation pursuant to, any of the Benefit Plans, (C)
result in any breach or violation of, or a default under, any of
the Benefit Plans or (D) result in any payment that would be a
"parachute payment" to a "disqualified individual" as those terms
are defined in Section 280G of the Code, without regard to
whether such payment is reasonable compensation for personal
services performed or to be performed in the future.
2.09 Regulatory Reports. Since January 1, 2001, ASC and
American have duly filed with the FRB, the FDIC and the
Department in correct form the monthly, quarterly and annual
reports required to be filed under applicable laws and
regulations, and ASC has delivered or made available to Bancorp
accurate and complete copies of such reports. ASC Disclosure
Schedule 2.09 lists all examinations of ASC or American conducted
by the applicable regulatory authorities since January 1, 2001
and the dates of any responses thereto submitted by ASC or
American. Except as set forth in ASC Disclosure Schedule 2.09,
in connection with the most recent examinations of ASC or
American by the applicable regulatory authorities, neither ASC
nor American were required to correct or change any action,
procedure or proceeding which ASC or American believe has not
been now corrected or changed as required other than corrections
or changes which, if not made, either individually or in the
aggregate, would not have a Material Adverse Effect.
2.10 Compliance with Applicable Law.
(a) Except as disclosed in ASC Disclosure Schedule 2.10,
(i) ASC and American have all permits, licenses, certificates of
authority, orders and approvals of, and have made all filings,
applications and registrations with, federal, state, local and
foreign governmental or regulatory bodies that are required in
order to permit them to carry on their respective businesses as
they are presently being conducted and the absence of which could
reasonably be expected to have a Material Adverse Effect; (ii)
all such permits, licenses, certificates of authority, orders and
approvals are in full force and effect; and (iii) to the best
knowledge of ASC and American, no suspension or cancellation of
any of the same is threatened.
(b) Neither ASC nor American is in violation of its
Articles of Incorporation, Charter or Bylaws, or of any
applicable federal, state or local law or ordinance or any order,
rule or regulation of any federal, state, local or other
governmental agency or body (including, without limitation, all
12
banking, securities, municipal securities, safety, health,
zoning, anti-discrimination, antitrust, and wage and hour laws,
ordinances, orders, rules and regulations), or in default with
respect to any order, writ, injunction or decree of any court, or
in default under any order, license, regulation or demand of any
governmental agency, any of which violations or defaults could
reasonably be expected to have a Material Adverse Effect, and
neither ASC nor American has received any notice or communication
from any federal, state or local governmental authority asserting
that ASC or American is in violation of any of the foregoing
which could reasonably be expected to have a Material Adverse
Effect. Except as set forth in ASC Disclosure Schedule 2.10,
neither ASC nor American is subject to any regulatory or
supervisory cease and desist order, agreement, written directive,
memorandum of understanding or written commitment (other than
those of general applicability to all commercial banks issued by
governmental authorities), and has not received any written
communication requesting that it enter into any of the foregoing.
2.11 Deposit Insurance. The deposit accounts of American
are insured by the Bank Insurance Fund administered by the FDIC
to the maximum extent permitted by the Federal Deposit Insurance
Act, as amended ("FDIA"), and American has paid all premiums and
assessments required by the FDIA and the regulations thereunder.
2.12 Certain Contracts.
(a) Except as disclosed in ASC Disclosure Schedule 2.12(a),
neither ASC nor American is a party to, is bound by, receives, or
is obligated to pay benefits under, (i) any agreement,
arrangement or commitment, including without limitation, any
agreement, indenture or other instrument relating to the
borrowing of money by ASC or American (other than in the case of
federal funds purchased and securities sold under agreements to
repurchase in the ordinary course of business) or the guarantee
by ASC or American of any obligation, (ii) any agreement,
arrangement or commitment relating to the employment of a
consultant or the employment, election or retention in office of
any present or former director or officer of ASC or American,
(iii) any contract, agreement or understanding with a labor
union, (iv) any agreement, arrangement or understanding pursuant
to which any payment (whether of severance pay or otherwise)
became or may become due to any director, officer or employee of
ASC or American upon execution of this Agreement and the
Agreement of Merger or upon or following consummation of the
transactions contemplated by this Agreement or the Agreement of
Merger (either alone or in connection with the occurrence of any
additional acts or events), (v) any agreement, arrangement or
understanding to which ASC or American is a party or by which any
of the same is bound which limits the freedom of ASC or American
to compete in any line of business or with any person, or (vi)
any other agreement, arrangement or understanding to which ASC or
American is a party and which is material to the business,
results of operations, assets or financial condition of ASC or
American taken as a whole (excluding loan agreements or
agreements relating to deposit accounts), in each of the
foregoing cases whether written or oral.
(b) Neither ASC nor American is in default or in non-
compliance under any contract, agreement, commitment,
arrangement, lease, insurance policy or other instrument to which
it is a party or by which its assets, business or operations may
be bound or affected, whether entered into in the ordinary course
of business or otherwise and whether written or oral, which
default or non-
13
compliance would have a Material Adverse Effect, and there has not
occurred any event that with the lapse of time or the giving of notice,
or both, would constitute such a default or non-compliance.
(c) Neither ASC nor American is a party or has agreed to
enter into an exchange traded or over-the-counter equity,
interest rate, foreign exchange or other swap, forward, future,
option, cap, floor or collar or any other contract that is not
included in ASC's unaudited financial statements at and for
September 30, 2004 and is a derivatives contract (including
various combinations thereof) (each, a "Derivatives Contract") or
owns securities that are referred to generically as "structured
notes," "high risk mortgage derivatives," "capped floating rate
notes" or "capped floating rate mortgage derivatives."
2.13 Properties and Insurance.
(a) All real and personal property owned by ASC or American
or presently used by them in their respective businesses is in
adequate condition (ordinary wear and tear excepted) and is
sufficient to carry on the business of ASC and American in the
ordinary course of business consistent with their past practices.
ASC and American have good and, as to owned real property,
marketable title to all material assets and properties, whether
real or personal, tangible or intangible, reflected in ASC's
consolidated balance sheet as of September 30, 2004, or owned and
acquired subsequent thereto (except to the extent that such
assets and properties have been disposed of for fair value in the
ordinary course of business since September 30, 2004), subject to
no encumbrances, liens, mortgages, securities interests or
pledges, except (i) those items that secure liabilities that are
reflected in said consolidated balance sheet or the notes thereto
or have been incurred in the ordinary course of business after
the date of such consolidated balance sheet, (ii) statutory liens
for current taxes not yet due, (iii) such encumbrances, liens,
mortgages, securities interests, pledges and title imperfections
that are not in the aggregate material to the business, results
of operations, assets or financial condition of ASC and American
taken as a whole, and (iv) with respect to owned real property,
title imperfections noted in title reports prior to the date
hereof. ASC and American as lessees have the right under valid
and subsisting leases to occupy, use, possess and control all
property leased by them in all material respects as presently
occupied, used, possessed and controlled by ASC and American and
the consummation of the transactions contemplated hereby and by
the Agreement of Merger will not affect any such right in a way
that would have a Material Adverse Effect. ASC Disclosure
Schedule 2.13(a) sets forth an accurate listing of each lease
pursuant to which ASC or American act as lessor or lessee,
including the expiration date and the terms of any renewal
options which relate to the same.
(b) The business operations and all insurable properties
and assets of ASC and American are insured for its benefit
against all risks which, in the reasonable judgment of the
management of ASC and American, should be insured against, in
each case under valid, binding and enforceable policies or bonds
issued by insurers of recognized responsibility, in such amounts
with such deductibles and against such risks and losses as are in
the opinion of the management of ASC and American adequate for
the business engaged in by ASC and American. As of the date
hereof, neither ASC nor American has received any notice of
cancellation or notice of a material amendment of any such
insurance policy or bond or is in material default under such
policy or bond, no coverage thereunder is being disputed and all
material claims thereunder have been filed in a timely fashion.
14
2.14 Environmental Matters. For purposes of this Agreement,
the following terms shall have the indicated meaning:
"Environmental Law" 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 entity relating to
(1) the protection, preservation or restoration of the
environment (including, without limitation, air, water vapor,
surface water, groundwater, drinking water supply, surface soil,
subsurface soil, plant and animal life or any other natural
resource), and/or (2) the use, storage, recycling, treatment,
generation, transportation, processing, handling, labeling,
production, release or disposal of Hazardous Substances. The
term Environmental Law includes without limitation (1) 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. 00000, et seq; the Safe Drinking Xxxxx Xxx, 00
X.X.X. 000x, et seq; and all comparable state and local laws, and
(2) any common law (including without limitation common law that
may impose strict liability) that may impose liability or
obligations for injuries or damages due to, or threatened as a
result of, the presence of or exposure to any Hazardous
Substance.
"Hazardous Substance" means any substance presently listed,
defined, designated or classified as hazardous, toxic,
radioactive or dangerous, or otherwise regulated, under any
Environmental Law, whether by type or by quantity, including any
regulated material containing any such substance as a component.
Hazardous Substances include without limitation petroleum
(including crude oil or any fraction thereof), asbestos,
radioactive material, and polychlorinated biphenyls.
"Loan Portfolio Properties" means those properties which
serve as collateral for loans owned by ASC or American.
"Other Properties Owned" means those properties owned,
leased or operated by ASC or American which are not Loan
Portfolio Properties.
(a) Except as set forth in ASC Disclosure Schedule 2.14(a),
to the knowledge of ASC and American, neither ASC nor American
has been and are not in violation of or liable under any
Environmental Law.
(b) None of the Other Properties Owned is the subject of
liability under, or, to the knowledge of ASC and American, has
been in violation of, any Environmental Law except any such
violations or liabilities which would not, individually or in the
aggregate, have a Material Adverse Effect.
15
(c) Except as disclosed in ASC Disclosure Schedule 2.14(c),
to the knowledge of ASC and American, none of the Loan Portfolio
Properties has been in violation of, or is the subject of
liability under, any Environmental Law except any such violations
or liabilities which would not, individually or in the aggregate,
have a Material Adverse Effect.
(d) There are no actions, suits, demands, notices, claims,
investigations or proceedings pending or, to the knowledge of ASC
and American, threatened relating to the liability of the Loan
Portfolio Properties and Other Properties Owned under any
Environmental Law, including without limitation any notices,
demand letters or requests for information from any federal or
state environmental agency relating to any such liabilities under
or violations of Environmental Law, except such which would not
have or result in a Material Adverse Effect.
(e) ASC Disclosure Schedule 2.14(e) lists (i) any
environmental studies which have been undertaken by, or on behalf
of, ASC or American with respect to the Other Properties Owned
and (ii) any correspondence known to ASC or American with respect
to the Other Properties Owned and issues related to Environmental
Laws.
2.15 Allowance for Loan Losses and Real Estate Owned. The
allowance for loan losses reflected on ASC's consolidated balance
sheets included in the consolidated financial statements referred
to in Section 2.04 hereof, and as supplemented pursuant to the
Holdback Escrow Agreement referenced above in Section 1.07 and
attached as Exhibit D, is in the opinion of ASC's management,
adequate in all material respects as of their respective dates
under the requirements of generally accepted accounting
principles to provide for reasonably anticipated losses on
outstanding loans net of recoveries. The real estate owned
reflected on the consolidated balance sheets included in the
consolidated financial statements referred to in Section 2.04
hereof is carried at book value until it is either appraised or
sold, as allowed by generally accepted accounting principles.
2.16 Minute Books. The minute books of ASC and American
contain complete and accurate records of all meetings and other
corporate action held or taken by their Boards of Directors
(including committees of its Board of Directors) and
stockholders.
2.17 Broker Fees. Except as set forth in ASC Disclosure
Schedule 2.17, neither ASC nor American nor any of the respective
directors or officers, has employed any consultant, broker or
finder or incurred any liability for any consultant's, broker's
or finder's fees or commissions in connection with any of the
transactions contemplated by this Agreement.
2.18 Proxy Statement Information. None of the information
relating to it which is included in the proxy statement
distributed by ASC to its stockholders in order to solicit their
approval of this Agreement and the transactions contemplated
hereby ("Proxy Statement"), as of the date such Proxy Statement
is mailed to its stockholders and up to and including the date of
the meeting of its stockholders to which such Proxy Statement
relates, will contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were
made, not misleading, provided that information as of a later
date shall be deemed to modify information as of an earlier date.
16
2.19 Transactions with Affiliates. Except as set forth in
ASC Disclosure Schedule 2.19, there are no existing or pending
transactions, nor are there any agreements or understandings,
with any directors, officers or employees of ASC or American or
any person or entity affiliated with it (collectively,
"Affiliates"), relating to, arising from or affecting ASC and
American, including, without limitation, any transactions,
arrangements or understandings relating to the purchase or sale
of goods or services, the lending of monies or the sale, lease or
use of any assets of ASC or American.
2.20 Required Vote; Inapplicability of Antitakeover
Statutes; Fairness Opinion.
(a) This Agreement and the transactions contemplated
hereby are required to be approved on behalf of ASC by the
affirmative vote of the holders of at least a majority of the
outstanding shares of the ASC Capital Stock.
(b) No "control share acquisition," "interested
stockholder," "fair price" or other form of antitakeover statute
or regulation is applicable to this Agreement and the
transactions contemplated hereby.
(c) ASC has received a written opinion of Xxxxx X. Xxxxx &
Company, dated the date hereof with respect to the fairness of
the Merger Consideration to be received by the stockholders of
ASC pursuant to this Agreement from a financial point of view.
2.21 Disclosures. No representation or warranty contained
in Article II of this Agreement, and no statement contained in
the ASC Disclosure Schedules, contains any untrue statement of a
material fact or omits to state a material fact necessary in
order to make the statements herein or therein not misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BANCORP AND THE BANK
References to "Bancorp Disclosure Schedules" shall mean all
of the disclosure schedules required by this Article III, dated
as of the date hereof and referenced to the specific sections and
subsections of Article III of this Agreement, which have been
delivered by Bancorp to ASC. Bancorp and the Bank hereby
represent and warrant to ASC and American as follows as of the
date hereof:
17
3.01 Corporate Organization.
(a) Bancorp is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Maryland. Bancorp has the corporate power and authority to own
or lease all of its properties and assets and to carry on its
business as it is now being conducted and is duly licensed or
qualified to do business and is in good standing in each
jurisdiction in which the nature of the business conducted by it
or the character or location of the properties and assets owned
or leased by it makes such licensing or qualification necessary,
except where the failure to be so licensed, qualified or in good
standing would not have a material adverse effect on the ability
of Bancorp to consummate the transactions contemplated hereby.
Bancorp is registered as a savings and loan holding company under
the Home Owners' Loan Act.
(b) The Bank is duly organized, validly existing and in
good standing under the laws of the United States of America and
is a wholly-owned subsidiary of Bancorp. The Bank (i) has the
corporate power and authority to own or lease all of its
properties and assets and to conduct its business as it is now
being conducted and (ii) is duly licensed or qualified to do
business and is in good standing in each jurisdiction in which
the nature of the business conducted by it or the character or
location of the properties and assets owned or leased by it makes
such licensing or qualification necessary, except where the
failure to be so licensed, qualified or in good standing would
not have a material adverse effect on the ability of Bancorp and
the Bank to consummate the transactions contemplated hereby.
(c) Interim will be at the Effective Time an interim stock
corporation duly organized, validly existing and in good standing
under the laws of the State of Indiana. Interim will not engage
in any business other than in connection with the transactions
contemplated by this Agreement and the Agreement of Merger and
Interim will have no material obligations or liabilities other
than its obligations hereunder.
3.02. Authority; No Violation.
(a) Bancorp and the Bank have full corporate power and
authority to execute and deliver this Agreement and to consummate
the transactions contemplated hereby in accordance with the terms
hereof. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been
duly and validly approved by the Board of Directors of Bancorp
and the Bank, and no other corporate proceedings on the part of
Bancorp or the Bank are necessary to consummate the transactions
so contemplated. This Agreement has been duly and validly
executed and delivered by Bancorp and the Bank and constitutes a
valid and binding obligation of Bancorp and the Bank, enforceable
against them in accordance with and subject to its terms, except
as limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights
generally, and except that the availability of equitable remedies
(including, without limitation, specific performance) is within
the discretion of the appropriate court.
18
(b) At the Effective Time, Interim will have full corporate
power and authority to execute and deliver the Agreement of
Merger and to consummate the transactions contemplated thereby in
accordance with the terms thereof. At the Effective Time, the
execution and delivery of the Agreement of Merger by Interim and
the consummation of the transactions contemplated thereby will
have been duly and validly approved by the Board of Directors of
Interim and by Bank as the sole stockholder of Interim, and no
other corporate proceedings on the part of Interim are necessary
to consummate the transactions so contemplated. The Agreement of
Merger, upon its execution and delivery by Interim, will
constitute a valid and binding obligation of Interim, enforceable
against it in accordance with and subject to its terms, except as
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights
generally, and except that the availability of equitable remedies
(including, without limitation, specific performance) is within
the discretion of the appropriate court.
(c) None of the execution and delivery of this Agreement by
Bancorp and the Bank, the execution and delivery of the Agreement
of Merger by Interim, the consummation by Bancorp and the Bank of
the transactions contemplated hereby in accordance with the terms
hereof, the consummation by Interim of the transactions
contemplated by the Agreement of Merger, compliance by Bancorp or
the Bank with any of terms or provisions hereof or compliance by
Interim with any terms or provisions of the Agreement of Merger,
will (i) violate any provision of the Certificate of
Incorporation, Charter or Bylaws of Bancorp, the Bank or Interim,
(ii) assuming that the consents and approvals set forth below are
duly obtained, violate any statute, code, ordinance, rule,
regulation, judgment, order, writ, decree or injunction appli
cable to Bancorp, the Bank or Interim or any of their respective
properties or assets, or (iii) violate, conflict with, result in
a breach of any provisions of, constitute a default (or an event
which, with notice or lapse of time, or both, would constitute a
default) under, result in the termination of, accelerate the
performance required by, or result in the creation of any lien,
security interest, charge or other encumbrance upon any of the
respective properties or assets of Bancorp, the Bank or Interim
under any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, deed of trust, license, lease,
agreement or other instrument or obligation to which Bancorp, the
Bank or Interim is a party, or by which any of their respective
properties or assets may be bound or affected, except, with
respect to (ii) and (iii) above, such as individually or in the
aggregate will not have a material adverse effect on the
business, operations, assets or financial condition of Bancorp
and the Bank taken as a whole and which will not prevent or delay
the consummation of the transactions contemplated hereby. Except
for consents and approvals of or filings or registrations with or
notices to the Secretary of State of the State of Indiana, the
Department, the FRB, the FDIC and the OTS, no consents or
approvals of or filings or registrations with or notices to any
federal, state, municipal or other governmental or regulatory
commission, board, agency or non-governmental third party are
required on behalf of Bancorp, the Bank and Interim in connection
with (a) the execution and delivery of this Agreement by Bancorp
and the Bank or the execution and delivery of the Agreement of
Merger by Interim and (b) the completion by Bancorp and the Bank
of the transactions contemplated hereby or the completion by
Interim of the transactions contemplated by the Agreement of
Merger.
(d) As of the date hereof, neither Bancorp nor the Bank is
aware of any reasons relating to Bancorp or the Bank why all
consents and approvals shall not be procured from all regulatory
19
agencies having jurisdiction over the transactions contemplated
by this Agreement as shall be necessary for consummation of the
transactions contemplated hereby.
3.03. Financial Statements.
(a) Bancorp has previously delivered to ASC copies of the
unaudited consolidated statement of financial condition of
Bancorp as of June 30, 2004, and the related unaudited
consolidated statements of earnings, comprehensive income,
stockholders' equity and cash flows for the nine months ended
June 30, 2004 and 2003. The consolidated statements of financial
condition of Bancorp referred to herein (including the related
notes, where applicable) fairly present, the consolidated
financial condition of Bancorp as of the respective dates set
forth therein, and the related consolidated statements of
earnings, stockholders' equity and cash flows (including the
related notes, where applicable) fairly present the results of
the consolidated earnings, stockholders' equity and cash flows of
Bancorp for the respective periods or as of the respective dates
set forth therein (it being understood that Bancorp's interim
financial statements are not audited and are not prepared with
all related notes but reflect all adjustments which are, in the
opinion of Bancorp, necessary for a fair presentation of such
financial statements).
(b) Each of the financial statements referred to in this
Section 3.03 (including the related notes, where applicable) has
been prepared in accordance with generally accepted accounting
principles consistently applied during the periods involved. The
books and records of Bancorp and the Bank are being maintained in
material compliance with applicable legal and accounting
requirements and reflect only actual transactions.
(c) Except to the extent reflected, disclosed or reserved
against in the consolidated financial statements referred to in
this Section 3.03 or the notes thereto or liabilities incurred
since June 30, 2004 in the ordinary course of business and
consistent with past practice, neither Bancorp nor the Bank has
any obligation or liability, whether absolute, accrued,
contingent or otherwise, which would have a material adverse
effect on the ability of Bancorp and the Bank to consummate the
transactions contemplated hereby.
3.04 Ability to Pay Merger Consideration. Bancorp or the
Bank will have available to it as of the Effective Time
sufficient cash to pay the Aggregate Merger Consideration to
stockholders of ASC as set forth in Section 1.07.
3.05 Legal Proceedings. Neither Bancorp nor the Bank is a
party to any, and there are no pending or, to the best knowledge
of Bancorp and the Bank, threatened legal, administrative,
arbitration or other proceedings, claims, actions or governmental
investigations of any nature against Bancorp or the Bank, except
such proceedings, claims actions or governmental investigations
which in the good faith judgment of Bancorp and the Bank will not
have a material adverse effect on the ability of Bancorp and the
Bank to consummate the transactions contemplated hereby.
3.06 Broker Fees. Neither Bancorp nor the Bank, nor any of
their respective directors or officers, has employed any
consultant, broker or finder or incurred any liability for any
consultant's,
20
broker's or finder's fees or commissions in connection with any of
the transactions contemplated by this Agreement.
3.07 Certain Information. None of the information relating
to Bancorp supplied or to be supplied by Bancorp to ASC expressly
for inclusion in the Proxy Statement, as of the date such Proxy
Statement is mailed to shareholders of ASC and up to and
including the date of the meeting of shareholders to which such
Proxy Statement relates, will contain any untrue statement of a
material fact or omit to state a material fact necessary to make
the statements therein, in light of the circumstances under which
they were made, not misleading.
308 No Knowledge. As of the date hereof only, neither
Bancorp nor the Bank has any knowledge (as defined in Section
7.09(i)) of any breach of the representations and warranties
contained in Article II hereof by ASC or American that would have
a Material Adverse Effect.
3.09 Disclosures. No representation or warranty contained
in Article III of this Agreement, and no statement contained in
the Bancorp Disclosure Schedules, contains any untrue statement
of a material fact or omits to state a material fact necessary in
order to make the statements herein or therein not misleading.
ARTICLE IV
COVENANTS OF THE PARTIES
4.01. Conduct of the Business of ASC and American.
During the period from the date hereof to the Effective Time, ASC
and American shall conduct their respective businesses and engage
in transactions permitted hereunder or only in the ordinary
course and consistent with past practice. ASC and American shall
use all reasonable efforts to (i) preserve their business
organization intact, (ii) keep available for themselves, Bancorp
and the Bank the present services of the employees of ASC and
American, and (iii) preserve for themselves, Bancorp and the Bank
the goodwill of their customers and others with whom business
relationships exist.
4.02. Negative Covenants. ASC agrees that from the date
hereof to the Effective Time, except as otherwise approved by
Bancorp in writing or as permitted or required by this Agreement,
ASC will not and ASC will not permit American to:
(i) amend or change any provision of its Articles of
Incorporation, Charter or Bylaws;
(ii) change the number of shares of its authorized or issued
capital stock (except upon the exercise of ASC options) or issue
or grant any option, warrant, call, commitment, subscription,
award, right to purchase or agreement of any character relating
to the authorized or issued capital stock of ASC, or any
securities convertible into shares of such capital stock, or
split, combine or reclassify any shares of its capital stock, or
redeem or otherwise acquire any shares of such capital stock;
21
(iii) declare, set aside or pay any dividend or other
distribution (whether in cash, stock or property or any combina
tion thereof) in respect of the capital stock of ASC except for
all regular quarterly cash dividends not in excess of 7% per
share of ASC Preferred Stock, which dividends shall be paid in
accordance with the terms of the ASC Preferred Stock;
(iv) grant any severance or termination pay (other than
pursuant to binding contracts, plans, or policies of ASC or
American in effect on the date hereof and disclosed to Bancorp on
ASC Disclosure Schedule 2.12(a)) to, or enter into or amend any
employment, consulting or compensation agreement with, any of its
directors, officers or employees; or award any increase in
compensation or benefits to its directors, officers or employees
except as set forth in Section 4.12(h);
(v) enter into or modify any pension, retirement, stock
option, stock purchase, stock grant, stock appreciation right,
savings, profit sharing, deferred compensation, consulting,
bonus, group insurance or other employee benefit, incentive or
welfare contract, plan or arrangement, or any trust agreement
related thereto, in respect of any of its directors, officers or
employees; or make any contributions to any defined contribution
plan or any defined benefit pension or retirement plan other than
in the ordinary course of business consistent with past practice;
(vi) purchase or otherwise acquire, or sell or otherwise
dispose of, any assets or incur any liabilities other than in the
ordinary course of business consistent with past practice and
policies;
(vii) enter into any new capital commitments or make any
capital expenditures in excess of $5,000 each other than pursuant
to binding commitments existing on the date hereof, other than
expenditures necessary to maintain existing assets in good
repair;
(viii) file any applications or make any contract with
respect to branching or site location or relocation;
(ix) make any material change in its accounting methods or
practices, other than changes required by changes in laws or
regulations or generally accepted accounting principles, or
change any of its methods of reporting income and deductions for
federal income tax purposes, except as required by changes in
laws or regulations;
(x) change its lending, investment, deposit or asset and
liability management or other banking policies in any material
respect except as may be required by applicable law or
regulations;
(xi) enter into any futures contract, option or other
agreement or take any other action for purposes of hedging the
exposure of its interest-earning assets and interest-bearing
liabilities to changes in market rates of interest;
(xii) incur any liability for borrowed funds (other than
in the case of deposits, federal funds purchased and securities
sold under agreements to repurchase in the ordinary course of
business) or place upon or permit any lien or encumbrance upon
any of its properties or assets, except liens of the type
permitted in the exceptions to Section 2.13(a).
22
(xiii) acquire in any manner whatsoever (other than to
realize upon collateral for a defaulted loan) any business or
entity;
(xiv) engage in any transaction with an Affiliate;
(xv) discharge or satisfy any material lien or encumbrance
or pay any material obligation or liability (absolute or
contingent) other than at scheduled maturity or in the ordinary
course of business;
(xvi) enter or agree to enter into any agreement or
arrangement granting any preferential right to purchase any of
its assets or rights or requiring the consent of any party to the
transfer and assignment of any such assets or rights;
(xvii) invest in any investment securities other than
United States government agencies with a term of one (1) year or
less or federal funds;
(xviii) originate or acquire any loans or other
extensions of credit except for any lending commitments
outstanding on the date hereof;
(xix) take any action that would result in any of its
representations and warranties contained in Article II of this
Agreement not being true and correct in any material respect at
the Effective Time; or
(xx) agree to do any of the foregoing.
4.03. No Solicitation. ASC and American agree that
neither they nor any of their respective officers or directors
shall, and that they shall direct and use their reasonable best
efforts to cause each of their employees, agents and
representatives not to, directly or indirectly, initiate,
solicit, encourage or otherwise facilitate any inquiries or the
making of any proposal or offer with respect to a merger,
reorganization, share exchange, consolidation or similar
transaction involving, or any purchase of all or substantially
all of the assets of ASC (any such proposal or offer being
hereinafter referred to as an "Acquisition Proposal"). ASC and
American further agree that neither ASC nor American nor any of
their respective officers and directors shall, and that they
shall direct and use their reasonable best efforts to cause their
employees, agents and representatives not to, directly or
indirectly, engage in any negotiations concerning, or provide any
confidential information or data to, or have any discussions
with, any person relating to an Acquisition Proposal, or
otherwise facilitate any effort or attempt to make or implement
an Acquisition Proposal; provided, however, that nothing
contained in this Agreement shall prevent ASC or American from
(A) complying with its disclosure obligations under federal or
state law; (B) providing information in response to a request
therefor by a person who has made an unsolicited bona fide
written Acquisition Proposal if ASC receives from the person so
requesting such information an executed confidentiality
agreement; (C) engaging in any negotiations or discussions with
any person who has made an unsolicited bona fide written
Acquisition Proposal or (D) recommending such an Acquisition
Proposal to the Stockholders of ASC, if and only to the extent
that, (i) in each such case referred to in clause (B), (C) or (D)
above, the ASC Board of Directors determines in good faith (after
consultation with outside
23
legal counsel) that such action could be reasonably required in
order for its directors to comply with their respective fiduciary
duties under applicable law and (ii) the ASC Board of Directors
determines in good faith (after consultation with its financial
advisor) that such Acquisition Proposal, if accepted, is reasonably
likely to be consummated, taking into account all legal, financial
and regulatory aspects of the proposal and the person making the
proposal and would, if consummated, result in a transaction more
favorable to ASC's stockholders from a financial point of view than
the Merger. ASC and American agree that they will immediately cease
and cause to be terminated any existing activities, discussions or
negotiations with any parties conducted heretofore with respect
to any Acquisition Proposals. ASC and American agree that they
will notify Bancorp immediately if any such inquiries, proposals
or offers are received by, any such information is requested
from, or any such discussions or negotiations are sought to be
initiated or continued with, any of its representatives and shall
provide Bancorp with copies of all such written inquiries or
proposals and keep Bancorp apprised of any related discussions
and negotiations.
4.04. Current Information. During the period from the
date hereof to the Effective Time, ASC will cause one or more of
its designated representatives to confer from time to time, as
Bancorp may reasonably request, with representatives of Bancorp
regarding ASC's business, operations, prospects, assets and
financial condition and matters relating to the completion of the
transactions contemplated hereby. Within 25 days after the end
of each month, ASC shall provide Bancorp with a consolidated
statement of financial condition and a consolidated statement of
earnings, without related notes, for such month prepared in
accordance with past practices. On a weekly basis, ASC and
American shall furnish Bancorp with a report, in such detail as
reasonably requested by Bancorp, indicating all loans which have
been originated, purchased or sold during such week as well as
all applications for loans which have been received for
processing ("pipeline report").
24
4.05. Access to Properties and Records; Confidentiality.
(a) ASC and American shall permit Bancorp and its
representatives reasonable access to their properties and shall
disclose and make available to Bancorp all books, papers and
records relating to the assets, stock ownership, properties,
operations, obligations and liabilities of ASC and American,
including, but not limited to, all books of account (including
the general ledger), tax records, minute books of directors' and
stockholders' meetings (other than with respect to any minutes
regarding discussions regarding Bancorp or Bank, which ASC and
American, in their respective sole discretion, shall have the
opportunity to redact from such minutes prior to disclosing to
Bancorp or Bank), organizational documents, bylaws, material
contracts and agreements, filings with any regulatory authority,
accountants' work papers, litigation files, plans affecting
employees, and any other business activities or prospects in
which Bancorp may have a reasonable interest. ASC and American
shall not be required to provide access to or to disclose
information where such access or disclosure would violate or
prejudice the rights of any customer or would contravene any law,
rule, regulation, order or judgment. ASC and American will use
their best efforts to obtain waivers of any such restriction and
in any event make appropriate substitute disclosure arrangements
under circumstances in which the restrictions of the preceding
sentence apply. ASC and American shall make its directors,
officers, employees and agents and authorized representatives
(including counsel and independent public accountants) available
to confer with Bancorp and its representatives, provided that
such access shall be reasonably related to the transactions
contemplated hereby and not unduly interfere with normal
operations.
(b) All information furnished previously in connection with
the transactions contemplated by this Agreement or pursuant
hereto shall be treated as the sole property of the party
furnishing the information until consummation of the Merger and,
if such Merger shall not occur, the party receiving the
information shall, at the request of the party which furnished
such information, either return to the party which furnished such
information or destroy all documents or other materials
containing, reflecting or referring to such information; shall
use its best effort to keep confidential all such information;
shall use such information only for the purpose of consummating
the transactions contemplated by this Agreement; and shall not
directly or indirectly use such information for any competitive
or commercial purposes. The obligation to keep such information
confidential shall not apply to (i) any information which (A) the
party receiving the information can establish by convincing
evidence was already in its possession prior to the disclosure
thereof to it by the party furnishing the information; (B) was
then generally known to the public; (C) became known to the
public through no fault of the party receiving the information;
or (D) was disclosed to the party receiving the information by a
third party not bound by an obligation of confidentiality; or
(ii) disclosures pursuant to a legal requirement or in accordance
with an order of a court of competent jurisdiction.
25
4.06. Regulatory Matters.
(a) Each of ASC, American, Bancorp and the Bank shall
cooperate with each other and use their best efforts to prepare
all necessary documentation to effect all necessary filings and
to obtain all necessary permits, consents, approvals and
authorizations of all third parties and governmental bodies
necessary to consummate the transactions contemplated by this
Agreement as soon as practicable (the parties hereto shall, in
this context, use their best efforts to consummate the
transactions contemplated hereby on or before March 31, 2005).
The parties shall each have the right to review and approve in
advance all information relating to the other, as the case may
be, and any of their respective subsidiaries, which appears in
any filing made with, or written material submitted to, any third
party or governmental body in connection with the transactions
contemplated by this Agreement.
(b) Each of the parties will furnish each other with all
information concerning themselves, their directors, officers and
stockholders and such other matters as may be necessary or
advisable in connection with any statement or application made by
or on behalf of them to any governmental body in connection with
the Merger and the other transactions, applications or filings
contemplated by this Agreement.
(c) Each of the parties will promptly furnish each other
with copies of written communications received by them from, or
delivered by any of the foregoing to, any governmental body in
connection with the Merger and the other transactions,
applications or filings contemplated by this Agreement.
4.07. Approval of Stockholders. ASC will (a) take all
steps necessary to duly call, give notice of, convene and hold a
special meeting of its stockholders as soon as reasonably
practicable for the purposes of securing the adoption of such
stockholders of this Agreement and the Agreement of Merger (which
shall be the only matters considered at such special meeting),
(b) unless the Board of Directors of ASC makes a good faith
determination, upon consideration of the advice of outside
counsel that such recommendation could be reasonably deemed to
constitute a breach of their fiduciary duties under applicable
Indiana law, recommend to its stockholders the approval of this
Agreement and the Agreement of Merger and the transactions
contemplated hereby and thereby, and use its commercially
reasonable efforts to obtain, as promptly as practicable, such
approvals, and (c) cooperate and consult with Bancorp and the
Bank with respect to the foregoing matters.
4.08. Further Assurances. Subject to the terms and
conditions herein provided, each of the parties hereto agrees to
use its commercially reasonable efforts to take, or cause to be
taken, all reasonable action and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and
regulations to satisfy the conditions to closing contained herein
and to consummate and make effective the transactions
contemplated by this Agreement and the Agreement of Merger. In
case at any time after the Effective Time any further action is
reasonably necessary or desirable to carry out the purposes of
this Agreement, the proper officers and directors of each party
to this Agreement shall take all such necessary action. Nothing
in this section shall be construed to require any party to
participate in any threatened or actual legal, administrative or
other proceedings (other than proceedings, actions or
investigations to which it is a party or subject or threatened to
be
26
made a party or subject) in connection with consummation of
the transactions contemplated by this Agreement unless such party
shall consent in advance and in writing to such participation and
the other party agrees to reimburse and indemnify such party for
and against any and all costs and damages related thereto.
4.09. Disclosure Supplements. From time to time prior
to the Effective Time, each party will promptly supplement or
amend its respective Disclosure Schedules delivered pursuant
hereto with respect to any matter hereafter arising which, if
existing, occurring or known as of the date hereof, would have
been required to be set forth or described in such Schedules or
which is necessary to correct any information in such Schedules
which has been rendered inaccurate thereby. No supplement or
amendment to such Schedules shall have any effect for the purpose
of determining satisfaction of the conditions set forth in
Article V or the compliance by ASC and American with the
covenants set forth in Section 4.01 hereof.
4.10. Public Announcements. The parties hereto shall
approve in advance the substance of and cooperate with each other
in the development and distribution of all news releases and
other public disclosures with respect to this Agreement or any of
the transactions contemplated hereby, except as may be otherwise
required by law or regulation and as to which the parties
releasing such information have used their best efforts to
discuss with the other parties in advance.
4.11. Failure to Fulfill Conditions. In the event that
either of the parties hereto determines that a condition to its
respective obligations to consummate the transactions
contemplated hereby cannot be fulfilled and that it will not
waive that condition, it will promptly notify the other party.
Bancorp and ASC will promptly inform the other of any facts
applicable to them, or their respective directors or officers,
that would be likely to prevent or materially delay approval of
the Merger by any governmental authority or which would otherwise
prevent or materially delay completion of the Merger.
4.12. Certain Post-Merger Agreements.
The parties hereto agree to the following arrangements
following the Effective Time:
(a) Transferred Employees. Subject to the provisions of
this Section 4.12, all Employees immediately prior to the
Effective Time who are employed by Bancorp or the Bank
immediately following the Effective Time ("Transferred
Employees") will be covered by the employee benefit plans of
Bancorp and/or the Bank on substantially the same basis as any
employee of Bancorp and/or the Bank in a comparable position.
Notwithstanding the foregoing, Bancorp may determine to continue
any of the ASC or American's Benefits Plans for Transferred
Employees in lieu of offering participation in the benefit plans
of Bancorp and/or the Bank providing similar benefits (e.g.,
medical and hospitalization benefits), to terminate any of the
ASC or American Benefits Plans, or to merge any such Benefits
Plans with the benefit plans of Bancorp and/or the Bank, provided
the result is the provision of benefits to Transferred Employees
that are substantially similar to the benefits provided to the
employees of Bancorp and/or the Bank generally. Except as
specifically provided in this Section 4.12 and as otherwise
prohibited by law, Transferred Employees' service with ASC or
American shall be recognized as service with Bancorp or the Bank
for purposes of eligibility to
27
participate and vesting, if applicable (but not for purposes of
benefit accrual) under the benefit plans of Bancorp and/or the
Bank subject to applicable break-in-service rules.
(b) Health Plans. Bancorp will use its best efforts to
cause any pre-existing condition, limitation or exclusion in its
medical, long-term disability and life insurance plans not apply
to Transferred Employees or their covered dependents who are
covered under a medical or hospitalization indemnity plan
maintained by ASC or American on the Effective Time and who then
change coverage to the Bancorp's or the Bank's medical or
hospitalization indemnity health plan at the time such
Transferred Employees are first given the option to enroll.
(c) Employment, Severance and Change in Control Agreements.
Any officer or employee of ASC or American who has an employment,
severance or change in control agreement with ASC or American
(each a "Contract Officer") which is disclosed on ASC Disclosure
Schedule 2.12(a) shall receive as of the Effective Time, the
severance or termination payments provided for in their
respective agreements ("Contract Payments") and as described and
quantified in reasonable detail on ASC Disclosure Schedule
4.12(c). As a condition to receiving their Contract Payments,
each Contract Officer shall sign and deliver to Bancorp a release
agreement in the form reasonably requested by Bancorp.
(d) Indemnification. From and after the Effective Time,
Bancorp shall indemnify and hold harmless each present and former
director, officer and employee of ASC and American determined as
of the Effective Time (the "Indemnified Parties") against any
costs or expenses (including reasonable attorneys' fees),
judgments, fines, losses, claims, damages or liabilities
(collectively, "Costs") incurred in connection with any claim,
action, suit, proceeding or investigation, whether civil,
criminal, administrative or investigative, arising out of matters
existing or occurring at or prior to the Effective Time, whether
asserted or claimed prior to, at or after the Effective Time
(collectively, "Claims"), to the fullest extent to which such
Indemnified Parties were entitled under Indiana law, the Articles
of Incorporation, Charter and Bylaws of ASC and American as in
effect on the date hereof. All rights to indemnification in
respect to any Claim shall continue until the final disposition
of such Claim.
Any Indemnified Party wishing to claim indemnification under
this Section 4.12(d), upon learning of any such claim, action,
suit, proceeding or investigation, shall promptly notify Bancorp,
but the failure to so notify shall not relieve Bancorp of any
liability it may have to such Indemnified Party if such failure
does not materially prejudice Bancorp. In the event of any such
claim, action, suit, proceeding or investigation (whether arising
before or after the Effective Time), (i) Bancorp shall have the
right to assume the defense thereof and Bancorp shall not be
liable to such Indemnified Parties for any legal expenses of
other counsel or any other expenses subsequently incurred by such
Indemnified Parties in connection with the defense thereof,
except that if Bancorp elects not to assume such defense or
counsel for the Indemnified Parties advises that there are issues
which raise conflicts of interest between Bancorp and the
Indemnified Parties, the Indemnified Parties may retain counsel
which is reasonably satisfactory to Bancorp, and Bancorp shall
pay, promptly as statements therefor are received, the reasonable
fees and expenses of such counsel for the Indemnified Parties
(which may not exceed one firm in any jurisdiction unless the use
of one counsel for such Indemnified Parties would present such
counsel with a conflict of interest), (ii) the
28
Indemnified Parties will cooperate in the defense of any such matter,
and (iii) Bancorp shall not be liable for any settlement effected
without its prior written consent, which consent shall not be
withheld unreasonably.
In the event that Bancorp or any of its respective
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 any person, then, and in each such case, the successors and
assigns of such entity shall assume the obligations set forth in
this Section 4.12(d), which obligations are expressly intended to
be for the irrevocable benefit of, and shall be enforceable by,
each of the Indemnified Parties.
(e) Insurance. Bancorp and the Bank shall maintain a
directors' and officers' liability insurance policy covering the
Indemnified Parties Costs in connection with any Claims for a
period of three (3) years after the Effective Time at annual
premiums no greater than 125% of the annual premium of the
directors' and officers' liability insurance maintained by ASC
and American as of the date hereof. With the prior written
consent of Bancorp, such insurance policy may be acquired by ASC
prior to the Effective Time.
(f) Severance. Within sixty (60) days of the date hereof,
the Bank shall use its reasonable best efforts to inform the
employees of American of the likelihood of such employees having
continued employment with the Bank following the Effective Time
and, where appropriate, shall use its reasonable best efforts to
interview the employees of American to determine if there are
mutually beneficial employment opportunities available at the
Bank. The Bank shall give any full-time, Transferred Employee
who is terminated within six months from the Effective Time,
except for those individuals terminated for cause, two weeks of
severance pay for each year of service up to a maximum of 26
weeks severance pay. As a condition to receiving severance
payments, such employees shall sign and deliver to Bancorp a
release and non-solicitation agreement in the form reasonably
requested by Bancorp.
(g) Advisory Board. The Bank shall, effective as of the
Effective Time, cause each person set forth on Exhibit E hereto,
if such persons are willing to serve, to be elected or appointed
as members of an Advisory Board to the Bank (the "Peoples
Advisory Board") to be established by the Bank, the function of
which shall be to assist the Bank maintain customer relationships
in the market area currently served by American. The Peoples
Advisory Board will be maintained for a period of two years and
shall meet on a monthly basis. Each member of the Peoples
Advisory Board shall receive fees for such service of $500 for
each monthly meeting attended.
(h) Retention Bonus. Bancorp agrees to create a retention
bonus pool in order to help retain key employees. Employees of
ASB or American, other than those covered by employment or change
in control agreements, will be eligible to participate in the
retention bonus pool. The amount to be awarded to an eligible
employee, if any, shall be determined by Bancorp in consultation
with ASB. Retention bonuses shall be paid only if the employee
continues to be employed as of the Effective Time.
29
4.13. Additional Covenants of Bancorp and Bank. From
the date of this Agreement through and including the Effective
Time, Bancorp and Bank agree to (a) allow ASC and American full
and complete access to their respective compliance and collection
departments and any related departments, including the full
support of any employees within such departments, (b) use their
respective best efforts to assist ASC and American with any and
all issues related to compliance, and (c) use their respective
best efforts to assist ASC and American with the collection of
any amounts owed to American pursuant to any and all outstanding
loans. Notwithstanding the foregoing, ASC and American
acknowledge and affirm that, in any event, each entity is
ultimately responsible for its own compliance and/or collection
and neither Bancorp nor the Bank shall have, or shall be implied
to have, any responsibility for such compliance or collection.
ARTICLE V
CLOSING CONDITIONS
5.01. Conditions to the Parties' Obligations Under This
Agreement. The respective obligations of the parties under this
Agreement shall be subject to the fulfillment at or prior to the
Effective Time of the following conditions:
(a) All necessary regulatory, governmental or third party
approvals, waivers, clearances, authorizations and consents
(including without limitation the requisite approval and/or non-
objection of the FRB, the OTS and the Department required to
consummate the transactions contemplated hereby) shall have been
obtained without any term or condition which would materially
impair the value of ASC and American to Bancorp and the Bank or
materially adversely affect the terms of the Merger as they
relate to the stockholders of ASC; all conditions required to be
satisfied prior to the Effective Time by the terms of such
approvals and consents shall have been satisfied; and all waiting
periods in respect thereof shall have expired.
(b) All corporate action necessary to authorize the
execution and delivery of this Agreement and the Agreement of
Merger and consummation of the transactions contemplated hereby
and thereby shall have been duly and validly taken by Bancorp,
the Bank, ASC and American, including approval by the requisite
vote of the stockholders of ASC of this Agreement and the
Agreement of Merger.
30
(c) No order, judgment or decree shall be outstanding
against a party hereto or a third party that would have the
effect of preventing completion of the Merger; no suit, action or
other proceeding shall be pending or threatened by any
governmental body in which it is sought to restrain or prohibit
the Merger; and no suit, action or other proceeding shall be
pending before any court or governmental agency in which it is
sought to restrain or prohibit the Merger or obtain other
substantial monetary or other relief against one or more of the
parties hereto in connection with this Agreement and which
Bancorp, the Bank, ASC or American determines in good faith,
based upon the advice of their respective counsel, makes it
inadvisable to proceed with the Merger because any such suit,
action or proceeding has a significant potential to be resolved
in such a way as to deprive the party electing not to proceed of
any of the material benefits to it of the Merger.
5.02. Conditions to the Obligations of Bancorp and the
Bank Under This Agreement. The obligations of Bancorp and the
Bank under this Agreement shall be further subject to the
satisfaction, at or prior to the Effective Time, of the following
conditions, any one or more of which may be waived by Bancorp and
the Bank:
(a) Each of the obligations of ASC and American required to
be performed by them at or prior to the Closing pursuant to the
terms of this Agreement shall have been duly performed and
complied with in all material respects and the representations
and warranties of ASC and American contained in this Agreement
shall have been true and correct as of the date hereof and as of
the Effective Time as though made at and as of the Effective
Time, except (i) as to any representation or warranty which
specifically relates to an earlier date, or (ii) where the facts
which caused the failure of any representation or warranty to be
so true and correct would not, either individually or in the
aggregate, constitute a Material Adverse Effect, and Bancorp and
the Bank shall have received a certificate to that effect signed
by the Chief Executive Officer of ASC and American.
(b) ASC and American shall have furnished Bancorp and the
Bank with such certificates of its officers or others and such
other documents to evidence fulfillment of the conditions set
forth in this Section 5.02 as Bancorp and the Bank may reasonably
request.
5.03. Conditions to the Obligations of ASC and American
Under this Agreement. The obligations of ASC and American under
this Agreement shall be further subject to the satisfaction, at
or prior to the Effective Time, of the following conditions, any
one or more of which may be waived by ASC and American:
(a) Each of the obligations of Bancorp and the Bank
required to be performed by them at or prior to the Closing
pursuant to the terms of this Agreement shall have been duly
performed and complied with in all material respects and the
representations and warranties of Bancorp and the Bank contained
in this Agreement shall have been true and correct as of the date
hereof and as of the Effective Time as though made at and as of
the Effective Time, except (i) as to any representation or
warranty which specifically relates to an earlier date or (ii)
where the facts which caused the failure of any representation or
warranty to be so true and correct would not, either individually
or in the aggregate, constitute a material adverse change in the
business, operations, assets or financial condition of Bancorp
and the Bank taken as a whole, and ASC and American shall have
received a
31
certificate to that effect signed by the President and
Chief Executive Officer of Bancorp and the Bank.
(b) Bancorp and the Bank shall have furnished ASC and
American with such certificates of its officers or others and
such other documents to evidence fulfillment of the conditions
set forth in this Section 5.03 as ASC and American may reasonably
request.
ARTICLE VI
TERMINATION, AMENDMENT AND WAIVER, ETC.
6.01. Termination. This Agreement may be terminated at
any time prior to the Effective Time, whether before or after
approval of this Agreement and the Agreement of Merger by the
stockholders of ASC:
(a) by mutual written consent of the parties hereto;
(b) by Bancorp, the Bank, ASC or American (i) if the
Effective Time shall not have occurred on or prior to September
30, 2005, or (ii) if a vote of the stockholders of ASC is taken
and such stockholders fail to approve this Agreement and the
Agreement of Merger at the meeting of stockholders (or upon
reconvening the meeting after an adjournment thereof) of ASC
contemplated by Section 4.07 hereof; unless the failure of such
occurrence shall be due to the failure of the party seeking to
terminate this Agreement to perform or observe its agreements set
forth herein to be performed or observed by such party at or
before the Effective Time;
(c) by Bancorp or ASC upon written notice to the other 30
or more days after the date upon which any application for a
regulatory or governmental approval necessary to consummate the
Merger and the other transactions contemplated hereby shall have
been denied or withdrawn at the request or recommendation of the
applicable regulatory agency or governmental authority, unless
within such 30-day period a petition for rehearing or an amended
application is filed or noticed, or 30 or more days after any
petition for rehearing or amended application is denied;
(d) by Bancorp or the Bank in writing if ASC or American
has, or by ASC or American in writing if Bancorp or the Bank has,
breached (i) any covenant or undertaking contained herein or in
the Agreement of Merger, or (ii) any representation or warranty
contained herein, which, in the case of either (i) or (ii),
breach would, with respect to ASC or American, have a Material
Adverse Effect on the business, operations, assets or financial
condition of ASC and American taken as a whole, or upon the
consummation of the transactions contemplated hereby, or, with
respect to Bancorp and the Bank, have a material adverse effect
on the ability of Bancorp and the Bank to consummate the
transactions contemplated hereby, in any case if such breach has
not been cured by the earlier of 30 days after the date on which
written notice of such breach is given to the party committing
such breach or the Effective Time;
(e) by Bancorp or ASC in writing, if any of the
applications for prior approval referred to in Section 4.06
hereof are denied or are approved contingent upon the
satisfaction of any condition or
32
requirement which, in the reasonable opinion of the Board of Directors
of Bancorp or ASC as applicable, would materially impair the value of ASC
and American taken as a whole to Bancorp, or would materially adversely
affect the terms of the Merger as they relate to the stockholders of ASC
and the time period for appeals and requests for reconsideration
has run;
(f) at any time prior to the meeting of stockholders of ASC
to consider the Agreement, by Bancorp if (i) ASC shall have
breached Section 4.03, (ii) ASC's Board of Directors shall have
failed to make its recommendation referred to in Section 4.07,
withdrawn such recommendation or modified or changed such
recommendation in a manner adverse in any respect to the
interests of Bancorp or (iii) ASC shall have materially breached
its obligations under Section 4.07 by failing to call, give
notice of, convene and hold the meeting of ASC's stockholders in
accordance with Section 4.07;
(g) by Bancorp if a tender offer or exchange offer for 15%
or more of the outstanding shares of ASC Common Stock is
commenced (other than by Bancorp), and the ASC Board of Directors
recommends that the stockholders of ASC tender their shares in
such tender or exchange offer or otherwise fails to recommend
that such stockholders reject such tender offer or exchange offer
within a 10 business day period; and
(h) by Bancorp or ASC in the event ASC has received an
Acquisition Proposal and has determined to accept such
Acquisition Proposal in accordance with Section 4.03.
6.02. Effect of Termination. In the event of
termination of this Agreement by Bancorp, the Bank, ASC or
American as provided above, this Agreement shall forthwith become
void (other than Sections 4.05(b), 6.04 and 7.01 hereof, which
shall remain in full force and effect) and there shall be no
further liability on the part of the parties or their respective
officers or directors except for the obligation of the parties
under Sections 4.05(b) and 7.01 hereof and except for liability
for any willful breach of this Agreement.
6.03. Amendment, Extension and Waiver. Subject to
applicable law, at any time prior to the consummation of the
Merger, whether before or after approval thereof by the
stockholders of ASC, the parties may (a) amend this Agreement and
the Agreement of Merger, (b) extend the time for the performance
of any of the obligations or other acts of the other parties
hereto, (c) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant
hereto, or (d) waive compliance with any of the agreements or
conditions contained herein; provided, however, that after any
approval of the Merger by the stockholders of ASC, there may not
be, without further approval of such stockholders, any amendment
or waiver of this Agreement or the Agreement of Merger which
modifies the amount of the Merger Consideration to be delivered
to stockholders of ASC. This Agreement and the Agreement of
Merger may not be amended except by an instrument in writing
signed on behalf of each of the parties hereto. Any agreement on
the part of a party hereto to any extension or waiver shall be
valid only if set forth in an instrument in writing signed on
behalf of such party, but such waiver or failure to insist on
strict compliance with such obligation, covenant, agreement or
condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure.
33
6.04 Credit Line. Upon termination of this Agreement under
Section 6.01 above, Bancorp and Bank shall not take any action
to collect any of the amounts owed to Bancorp or Bank by ASC or
American, including but not limited to amounts owed pursuant to
that certain Credit Line issued by Bank to ASC on or about June
29, 2004, for a minimum of ninety days after such termination.
ARTICLE VII
MISCELLANEOUS
7.01. Expenses; Termination Fee. Bancorp or Bank shall
bear and pay all reasonable costs and expenses incurred by all
parties in connection with the transactions contemplated by this
Agreement, including fees and expenses of its own financial
consultants, accountants and counsel and the fees and expenses of
the financial consultants, accountants and counsel of ASC and
American , provided that in the event of a termination of this
Agreement resulting from a willful breach of a representation,
warranty, covenant or undertaking, the party committing such
breach shall be liable for $375,000 to the other party, plus the
reasonable expenses of the other party without prejudice to any
other rights or remedies as may be available to the non-breaching
party, including without limitation any rights under Section
7.01(b) hereof.
(b) Notwithstanding anything to the contrary herein, ASC
shall pay Bancorp the sum of $375,000 (the "Termination Fee") if
this Agreement is terminated as follows:
(i) if this Agreement is terminated by Bancorp
pursuant to Section 6.01(f) or (g) or by Bancorp or ASC
pursuant to Section 6.01(h); or
(ii) if this Agreement is terminated by (A) Bancorp
pursuant to Section 6.01(d) or (B) by either Bancorp or ASC
pursuant to Section 6.01(b) and in the case of any
termination pursuant to clause (A) or (B) an Acquisition
Proposal shall have been publicly announced or otherwise
communicated or made known to the senior management of ASC
or ASC's Board of Directors (or any person shall have
publicly announced, communicated or made known an intention,
whether or not conditional, to make an Acquisition Proposal)
at any time after the date of this Agreement and prior to
the taking of the vote of the stockholders of ASC
contemplated by this Agreement at the meeting of ASC's
stockholders to consider the Agreement, in the case of
clause (B) (if the termination is pursuant to 6.01(b)(ii)),
or the date of termination, in the case of clause (A) or
clause (B) (if the termination was pursuant to Section
6.01(b)(i)).
Any amount that becomes payable pursuant to this Section
7.01(b) shall be paid by wire transfer of immediately available
funds to an account designated by Bancorp no later than the third
business day following such termination.
(c) ASC and Bancorp agree that the agreement contained in
paragraph (b) of this Section 7.01 is an integral part of the
transactions contemplated by this Agreement, that without such
34
agreement Bancorp would not have entered into this Agreement and
that such amounts do not constitute a penalty or liquidated
damages in the event of a breach of this Agreement by ASC and
American. If ASC or American fail to pay Bancorp the amounts due
under paragraph (b) above within the time periods specified
therein, ASC or American shall pay the costs and expenses
(including reasonable legal fees and expenses) incurred by
Bancorp in connection with any action in which Bancorp prevails,
including the filing of any lawsuit, taken to collect payment of
such amounts, together with interest on the amount of any such
unpaid amounts at the prime lending rate prevailing during such
period as published in The Wall Street Journal, calculated on a
daily basis from the date such amounts were required to be paid
until the date of actual payment.
(d) Amounts paid pursuant to Section 7.01(a) shall not be
in addition to the amounts paid pursuant to Section 7.01(b). The
maximum amount payable to Bancorp pursuant to this Agreement
shall be $500,000, excluding costs and expenses incurred by
Bancorp in connection with any action in which Bancorp prevails.
7.02. Survival. The respective representations,
warranties and covenants of the parties to this Agreement shall
not survive the Effective Time but shall terminate as of the
Effective Time, except for the provisions of Sections 4.12, 6.04
and 7.01 hereof.
7.03. Notices. All notices or other communications
hereunder shall be in writing and shall be deemed given if
delivered personally, sent by overnight express or mailed by
prepaid registered or certified mail (return receipt requested)
or by cable, telegram or telex addressed as follows:
(a) If to Bancorp, to:
Peoples Community Bancorp, Inc.
0000 Xxxx Xxxxxxx Xxxx
Xxxx Xxxxxxx, Xxxx 00000
Attn: Xxxxx X. Xxxxxxxx
President and Chief Executive Officer
Copy to:
Elias, Matz, Xxxxxxx and Xxxxxxx L.L.P.
000 00xx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attn: Xxxxx X. Xxxxxxxx, Esq.
35
(b) If to ASC, to:
American State Corporation
000 Xxxxxx Xxxxxx
X.X. Xxx 0000
Xxxxxxxxxxxx, Xxxxxxx 00000
Attn: Xxxxx X. Xxxxx, Xx.
Chairman of the Board
Copy to:
Bose XxXxxxxx & Xxxxx LLP
0000 Xxxxx Xxxxxxx Xxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxxx, Esq.
or such other address as shall be furnished in writing by any
party, and any such notice or communication shall be deemed to
have been given as of the date so mailed.
7.04. Parties in Interest. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto
and their respective successors and assigns; provided, however,
that neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any party hereto with
out the prior written consent of the other party and, except as
provided in Section 4.12 hereof or as otherwise expressly
provided herein, that nothing in this Agreement is intended to
confer, expressly or by implication, upon any other person any
rights or remedies under or by reason of this Agreement.
7.05. Complete Agreement. This Agreement and the
Agreement of Merger, including the documents and other writings
referred to herein or therein or delivered pursuant hereto or
thereto, contain the entire agreement and understanding of the
parties with respect to their subject matter and shall supersede
all prior agreements and understandings between the parties, both
written and oral, with respect to such subject matter. There are
no restrictions, agreements, promises, representations,
warranties, covenants or undertakings between the parties other
than those expressly set forth herein or therein.
7.06. Counterparts. This Agreement may be executed in
one or more counterparts, all of which shall be considered one
and the same agreement and each of which shall be deemed an
original.
7.07. Governing Law. This Agreement shall be governed
by the laws of the State of Indiana, without giving effect to the
principles of conflicts of laws thereof.
7.08. Headings. The Article and Section headings
contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this
Agreement.
7.09. Knowledge. An individual or entity will be deemed
to have "knowledge" or to be "aware" of a particular fact or other
matter if (i) such individual or entity is actually aware of such
36
fact or other matter; or (ii) a prudent individual could
be expected to discover or otherwise become aware of such fact or
other matter in the course of conducting a reasonably
comprehensive investigation concerning the existence of such fact
or other matter.
37
IN WITNESS WHEREOF, Bancorp, the Bank, ASC and American have
caused this Agreement to be executed by their duly authorized
officers as of the day and year first above written.
PEOPLES COMMUNITY BANCORP, INC.
By: /s/Xxxxx X. Xxxxxxxx
_____________________________________
Xxxxx X. Xxxxxxxx
President and Chief Executive Officer
PEOPLES COMMUNITY BANK
By: /s/Xxxxx X. Xxxxxxxx
_____________________________________
Xxxxx X. Xxxxxxxx
President and Chief Executive Officer
AMERICAN STATE CORPORATION
By: /s/Xxxxx X. Xxxxx, Xx.
_____________________________________
Xxxxx X. Xxxxx, Xx.
Chairman of the Board
AMERICAN STATE BANK
By: /s/Xxxxx X. Xxxxx, Xx.
_____________________________________
Xxxxx X. Xxxxx, Xx.
Chairman of the Board
EXHIBIT D
HOLDBACK
ESCROW AGREEMENT
THIS HOLDBACK ESCROW AGREEMENT effective as of December 17,
2004 (the "Holdback Escrow Agreement") is entered into by and
among Peoples Community Bancorp, Inc. ("Bancorp"), Peoples
Community Bank (the "Bank") in its own capacity and as escrow
agent ("Escrow Agent"), American State Corporation ("ASC") and
American State Bank ("American").
Xxxxxxx X. Xxxxxx joins in the execution hereof to evidence
his agreement to serve as the initial representative for the
shareholders of ASC immediately prior to the Effective Time.
Xxxxxxx X. Xxxxxx or any successor appointed as the Shareholder
Representative pursuant to the terms hereof is herein referred to
as the "Shareholder Representative."
WHEREAS, Bancorp, the Bank, ASC and American have entered
into that certain Agreement and Plan of Merger dated as of
December 17, 2004, pursuant to which ASC and American will be
acquired by the Bank and the holders of the Class A and Class B
common stock of ASC, no par value (the "ASC Common Stock"), shall
receive consideration in the form of cash in accordance with such
Merger Agreement (the "Merger Consideration");
WHEREAS, Section 1.07 of the Merger Agreement provides for
the escrow of certain funds for the potential benefit of former
shareholders of ASC; and
WHEREAS, Bancorp, the Bank, ASC and American believe it is
in their respective best interests and the best interests of the
shareholders of ASC to enter into this Escrow Agreement;
NOW, THEREFORE, in consideration of the premises and
covenants contained herein and in the Merger Agreement, and other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties, intending to be
legally bound, hereby agree as follows:
1. Definitions. Except as herein defined, capitalized
terms used in this Holdback Escrow Agreement have the meanings
set forth in the Merger Agreement.
2. Appointment of Escrow Agent. Peoples Community Bank is
hereby appointed as Escrow Agent under this Holdback Escrow
Agreement to perform the services described herein, and the
Escrow Agent hereby accepts such appointment.
3. Loan and Real Estate Owned Resolution. The funds
constituting the Holdback Escrow are being held for the potential
benefit of holders of the issued and outstanding shares of ASC
Common Stock immediately prior to the Effective Time, other than
Bancorp or the Bank ("Holdback Participants"), subject to the
repayment, individual or bulk sale, refinance, disposition,
acceptance or retention by the Bank in its reasonable judgment or
other similar resolution (the "Resolution") of all loans
("Loans") and real estate owned ("REO") set forth on Appendix A
hereto (Loans and REO are referred to collectively as "Assets").
Appendix A hereto
sets forth with respect to the Loans and REO, to the extent applicable,
the borrower's name, loan file number, collateral and carrying value on
American's books and records as of November 30, 2004. ("Carrying Value").
To the extent that there has been no Resolution of an Asset as of September
30, 2005, such Asset shall be sold at auction.
Pursuant to Section 4.01 of the Agreement and Plan of
Merger, between the date hereof and the Closing, American and ASC
shall use commercially reasonable efforts to seek Resolution of
all Assets. After the Closing, the Bank shall assume such
responsibility.
All reasonable attorneys' fees and expenses incurred in
seeking Resolution of the Assets shall be recoverable on a
monthly basis as a distribution from the Escrow.
4. Deposit into Escrow. Pursuant to the terms of the
Merger Agreement, as of the date hereof, the Bank will establish
an escrow account for the potential benefit of Holdback
Participants in the amount of $1.2 million (the "Escrow Amount").
The Escrow Amount shall remain on deposit with the Escrow Agent
pursuant to the terms hereof and shall be disbursed only pursuant
to the terms of Section 6 of this Holdback Escrow Agreement.
The rights of Holdback Participants to any portion of the
Escrow Amount are not transferable or assignable by such
shareholders other than by will or by the laws of descent and
distribution in the case of a natural person, or in the case of a
trust or entity, to any successor trustee or successor entity.
5. Distribution From Escrow. Except for attorneys' fees
and expenses as set forth in Section 3 above, no distribution
shall be made from the Holdback Escrow unless and until the
Resolution of each and every Asset. Upon Resolution of all
Assets, any amounts remaining in the Holdback Escrow shall be
promptly distributed, with interest, to Holdback Participants, on
a pro rata basis based upon such shareholder's ownership interest
in ASC Common Stock immediately prior to the Effective Time. Any
amount distributed hereunder shall be the Holdback Consideration
(as defined below) and shall constitute the entire consideration
due Holdback Participants from the Holdback Escrow.
6. Determination of Holdback Consideration.
The amount, if any, to be distributed hereunder shall
be the sum of:
(i) the Escrow Amount (after payment of all
reasonable attorney fees and expenses), subject to the net gain
or net loss from the Resolution of the Assets ("Net Amount"); and
(ii) interest on the Net Amount at 5% for the
period between the Closing and such date of distribution (the
"Holdback Consideration").
The Net Amount shall be determined by comparing the
consideration received for the Resolution of an Asset, net of all
costs and fees not otherwise recovered from a borrower on a Loan,
including but not limited to real estate taxes and fees, legal
fees, collection fees, selling expenses, commissions and other
related costs and expenses ("Asset Consideration"), to the
2
Carrying Value and, with respect to a Loan, imputed interest and
late fees on the Loan through the date of Resolution. The amount
of Asset Consideration in excess of the Carrying Value shall be
added to the Escrow Amount while the amount of the shortfall
between the Asset Consideration and the Carrying Value shall be
deducted from the Escrow Amount. Notwithstanding the foregoing,
to the extent that there is a final determination in the action
entitled Xxxxx Xxxxxxx, Xxx Xxxxxxx, and Xxxxx Xxxxxxx American
State Bank and Xxxx Xxxxxxx (the "Xxxxxxx Action") in favor of
the plaintiffs and such determination exceeds $49,800 ("Base
Amount"), such excess amount shall also be deducted from the
Escrow Amount.
7. Shareholder Representative.
(a) Xxxxxxx X. Xxxxxx shall be the initial
representative for the Holdback Participants with respect to
their interests in the Holdback Escrow and the Holdback
Consideration. Subject to the foregoing, the Shareholder
Representative shall promptly and completely exercise such
authority in a timely manner to:
(i) participate in, represent and bind the
Holdback Participants in all respects with respect to any
arbitration or legal proceeding relating to this Holdback Escrow
Agreement, including, without limitation, the defense and
settlement of any matter, and the calculation thereof for every
purpose thereunder, consent to jurisdiction, to enter into any
settlement, and to entry of judgment, each with respect to any or
all of the Holdback Participants;
(ii) receive, comment on, accept and give notices
and other communications relating to this Holdback Escrow
Agreement;
(iii) take any reasonable action that the
Shareholder Representative deems necessary or desirable in order
to fully effectuate the transactions contemplated by this
Holdback Escrow Agreement; provided that, the responsibility for
seeking Resolution of Assets shall be that of American, ASC and
the Bank pursuant to this Holdback Escrow Agreement; and
(iv) execute and deliver any instrument or
document that the Shareholders Representative deems necessary or
desirable in the exercise of his authority under this Holdback
Escrow Agreement.
(b) If any Shareholder Representative shall have died,
become incapacitated or unable to serve or resigned, those
Holdback Participants who, as of immediately prior to the
Effective Date, held shares of ASC Common Stock entitling such
shareholders to receive a majority of the Holdback Consideration
(a "Majority in Interest") shall promptly designate by written
notice delivered to the Escrow Agent, a replacement Shareholder
Representative. In addition, a Majority in Interest shall
maintain the right to remove the Shareholder Representative and
designate by written notice delivered to the Escrow Agent, a
replacement Shareholder Representative.
(c) Compensation to Shareholder Representative at the
hourly rate of $175 and any reasonable costs and expenses
incurred by the Shareholder Representative in connection with
actions taken pursuant to or permitted by this section will
initially be reimbursed by the Bank and deducted from the
Holdback Escrow.
3
(d) All parties hereto shall be entitled to rely on all
actions and communications of any such Shareholder Representative
as being genuine and binding on all of the Holdback Participants.
(e) The Shareholder Representative shall have no
liability to any Holdback Participants for any act or omission or
obligation hereunder, unless such action or inaction results from
the Shareholder Representative's gross negligence or willful
misconduct. The duties and responsibilities of the Shareholder
Representative hereunder shall be determined solely by the
express provisions of this Holdback Escrow Agreement and no other
or further duties or responsibilities shall be implied.
8. The Escrow Agent's Responsibilities. The Escrow
Agent's responsibilities with respect to the Holdback Escrow
shall be for the receipt and holding of the Escrow Account, and
the disbursement thereof in accordance with this Holdback Escrow
Agreement. The Escrow Agent may in accordance with this Escrow
Agreement act upon (and shall be fully protected in acting upon)
any written instruction or other instrument that the Escrow Agent
in good faith believes to be genuine and what it purports to be.
The Escrow Agent shall not be liable to any person for anything
that the Escrow Agent may do or refrain from doing in accordance
with this Escrow Agreement, unless such action or inaction
results from the Escrow Agent's gross negligence or willful
misconduct. The duties and responsibilities of the Escrow Agent
hereunder shall be determined solely by the express provisions of
this Escrow Agreement and no other or further duties or
responsibilities shall be implied.
9. Arbitration of Dispute. If the parties are unable to
resolve any dispute within 30 days after a dispute notice is
given by one party to the other, such dispute shall be submitted
for resolution to an independent accounting firm jointly selected
by the parties hereto. If the parties hereto are unable to agree
upon such accounting firm within fifteen days after the end of
the 30-day period referred to in the preceding sentence, then
such matter shall be submitted for resolution to the accounting
firm of Xxxxxxx Xxxxxxxxx, LLP. Xxxxxxx Xxxxxxxxx, LLP or the
independent accounting firm to whom the dispute is submitted for
resolution is hereinafter referred to as the "Arbiter." The
Arbiter shall gather information in such manner as it determines,
in its sole discretion and judgment, is fair and appropriate and
the Arbiter shall not be governed by the rules of the American
Arbitration Association or any other published rules generally
governing arbitration. The determinations of the Arbiter shall
be final and binding for all purposes under this Agreement. The
Arbiter shall allocate responsibility for paying its fees and
expenses and the parties' attorneys' fees and expenses,
accounting fees and expenses and other professional fees and
expenses between the parties in a manner that reflects the
Arbiter's resolution of the matters in dispute.
The parties agree that the determination of the Arbiter and
award, if any, may be entered with any court having jurisdiction
and the determination and award, if any, may then be enforced
among the parties, without further evidentiary proceedings, as if
entered by a court at the conclusion of a judicial proceeding in
which no appeal was taken.
4
By agreeing to arbitrate the dispute, the Parties are giving
up any rights they might possess to have the dispute litigated in
a court or jury trial and judicial rights to discovery and
appeal. If a party refuses to submit to arbitration by the
Arbiter after agreeing to this provision, such party may be
compelled to arbitrate under the authority of Indiana law.
10. Termination. This Holdback Escrow Agreement shall
terminate upon the earlier of (i) the distribution of the
Holdback Escrow upon the Resolution of all Assets in accordance
with Section 5 hereof, and (ii) December 31, 2005, provided,
however, that if the Xxxxxxx Action is not settled or resolved or
a final determination, including legal fees and expenses ("Final
Determination") has not been reached by December 31, 2005, this
Holdback Escrow Agreement shall survive but only with respect to
an amount equal to $100,000. Such amount shall be maintained in
the Holdback Escrow until Final Determination. If a Final
Determination is made in favor of the plaintiffs in an amount up
to the Base Amount, the entire $100,000 shall be distributed to
Holdback Participants. If a Final Determination is made in favor
of the plaintiffs in an amount in excess of the Base Amount but
less than $149,800, the $100,000 shall be reduced proportionately
for each dollar of the Final Determination in excess of the Base
Amount. If a Final Determination is made in favor of plaintiff's
in excess of $149,800 no distribution of the $100,000 shall be
made to the Holdback Participants.
11. Miscellaneous.
(a) Notices. Any and all notices, requests,
instructions and other communications required or permitted to be
given under this Holdback Escrow Agreement after the date hereof
by any party hereto to any other party may be delivered
personally or by nationally recognized overnight courier service
or sent by mail or by facsimile transmission, at the respective
addresses or transmission numbers set forth below and shall be
effective (i) in the case of personal delivery or facsimile
transmission, when received; (ii) in the case of mail, upon the
earlier of actual receipt or three (3) business days after
deposit in the United States Postal Service, first class
certified or registered mail, postage prepaid, return receipt
requested; and (iii) in the case of nationally-recognized
overnight courier service, one (1) business day after delivery to
such courier service together with all appropriate fees or
charges and instructions for such overnight delivery. The parties
may change their respective addresses and transmission numbers by
written notice to all other parties, sent as provided in this
Section 11. All communications must be in writing and addressed
as follows:
If to Bancorp or the Bank:
0000 Xxxx Xxxxxxx Xxxx
X.X. Xxx 0000
Xxxx Xxxxxxx, Xxxx 00000
Fax No.: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxx, President and Chief Executive Officer
With a copy to:
Elias, Matz, Xxxxxxx & Xxxxxxx L.L.P.
000 00xx Xxxxxx, XX, 00xx Xxxxx
0
Xxxxxxxxxx, X.X. 00000
Fax No.: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxx, Esq.
If to ASC or American; to:
American State Corporation
c/o of The Key Corporation
X.X. Xxx 0000
Xxxxxxxxxxxx, Xxxxxxx 00000-0000
Fax No.: (000) 000-0000
Attention: Xxxxx X. Xxxxx, Xx., Chairman of the Board
With a copy to:
Bose XxXxxxxx & Xxxxx LLP
0000 Xxxxx Xxxxxxx Xxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000
Fax No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
If to Shareholder Representative:
Xxxxxxx X. Xxxxxx, Esq.
000 Xxxx Xxxx Xxxxxx
Xxxxxxxxxxxx XX 00000
Fax No.: (000) 000-0000
(b) Binding Agreement. This Holdback Escrow Agreement
shall be binding upon and inure to the benefit of the parties
hereto and their respective successors, personal representatives
and assigns. Nothing in this Holdback Escrow Agreement is
intended or shall be construed to give any party, other than the
parties hereto, any legal or equitable rights, remedy or claim
under or in respect of this Holdback Escrow Agreement or any
provision contained herein.
(c) Assignment. This Holdback Escrow Agreement shall
not be assigned by operation of law or otherwise. Prior to the
distribution thereof, no portion of the Holdback Escrow shall be
subject to interference or control by any creditor of any
Holdback Participant or the Escrow Agent or be subject to being
taken or reached by any legal or equitable process in
satisfaction of any debt or other liability of any such party
hereto prior to the disbursement thereof to such party hereto in
accordance with the provisions of this Holdback Escrow Agreement.
This Holdback Escrow Agreement and the Merger Agreement and
related agreements constitute the entire agreement among the
parties and there are no agreements,
6
understandings, representations or warranties among the parties on
the subject matter hereof other than those set forth herein and therein.
(d) Headings. The section headings contained herein are
for the purposes of convenience only and are not intended to
define or limit the contents of said sections.
(e) Further Cooperation. Each party hereto shall
cooperate, shall take such further action and shall execute and
deliver such further documents as may be reasonably requested by
any other party in order to carry out the provisions and purposes
of this Holdback Escrow Agreement.
(f) Counterparts. This Holdback Escrow Agreement may be
executed in one or more counterparts, all of which taken together
shall be deemed one original.
(g) Applicable Law. This Holdback Escrow Agreement
shall be governed by and construed in accordance with the laws of
the State of Indiana without giving effect to conflicts of laws
principles.
(h) Amendment. This Holdback Escrow Agreement may be
amended only by a written instrument executed by Bancorp, the
Bank and the Shareholder Representative and, to the extent
applicable, ASC and American; provided, however, that no
amendment that reduces the amount that any Holdback Participant
will receive under this Holdback Escrow Agreement shall be
effective without such Holdback Participant's consent.
(i) Severability. If any clause, provision, or section
of this Holdback Escrow Agreement is ruled illegal, invalid, or
unenforceable by any court of competent jurisdiction, the
invalidity or unenforceability of such clause, provision, or
section shall not affect any of the remaining provisions hereof.
[Signature Page Follows]
7
IN WITNESS WHEREOF, the parties have duly caused this
Holdback Escrow Agreement to be effective as of the date first
written.
PEOPLES COMMUNITY BANCORP, INC.
By: /s/Xxxxx X. Xxxxxxxx
_____________________________________________
Xxxxx X. Xxxxxxxx
President and Chief Executive Officer
PEOPLES COMMUNITY BANK
By: /s/Xxxxx X. Xxxxxxxx
_____________________________________________
Xxxxx X. Xxxxxxxx
President and Chief Executive Officer
AMERICAN STATE CORPORATION
By: /s/Xxxxx X. Xxxxx, Xx.
_____________________________________________
Xxxxx X. Xxxxx, Xx.
Chairman of the Board
AMERICAN STATE BANK
By: /s/Xxxxx X. Xxxxx, Xx.
_____________________________________________
Xxxxx X. Xxxxx, Xx.
Chairman of the Board
"SHAREHOLDER REPRESENTATIVE"
By: /s/Xxxxxxx X. Xxxxxx
_____________________________________________
Xxxxxxx X. Xxxxxx, Shareholder Representative
8
