AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of May 28, 1997,
among PREMIER FINANCIAL BANCORP, INC., a Kentucky corporation ("Parent"),
PFBI INTERIM BANK, an Ohio banking corporation in organization and a wholly
owned subsidiary of Parent ("Merger Sub"), and THE SABINA BANK, an Ohio
banking corporation (the "Company").
R E C I T A L S:
- - - - - - - -
A. The Boards of Directors of Parent, Merger Sub and the Company each
have determined that a business combination involving the merger of Merger
Sub into the Company and the Company becoming a wholly owned subsidiary of
Parent is in the best interests of their respective companies and
shareholders and presents an opportunity for Parent and the Company and their
respective shareholders to achieve long-term strategic and financial
benefits, and accordingly have agreed to effect the merger provided for
herein (the "Merger") upon the terms and subject to the conditions set forth
herein.
B. Parent, Merger Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and to prescribe various conditions to the Merger.
C. For federal income tax purposes, it is intended that the Merger
qualify as a reorganization under the provisions of Section 368 of the
Internal Revenue Code of 1986, as amended (the "Code").
D. It is intended that the Merger shall be recorded for accounting
purposes as a pooling of interests.
A G R E E M E N T:
- - - - - - - - -
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:
ARTICLE I
THE MERGER
1.1 EFFECTIVE TIME OF THE MERGER. Subject to the provisions of this
Agreement, a certificate of merger (the "Certificate of Merger") shall be
duly executed and acknowledged by Merger Sub and the Company and thereafter
delivered to the Secretary of State of the State of Ohio, for filing, as
provided in the General Corporation Law of the State of Ohio (the "OGCL"), as
soon as
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practicable on or after the Closing Date (as defined in Section 1.2). The
Merger shall become effective upon the filing of the Certificate of Merger
with the Secretary of State of the State of Ohio or at such time thereafter
as is provided in the Certificate of Merger (the "Effective Time").
1.2 CLOSING. The closing of the Merger (the "Closing") will take place
at 10:00 a.m. on a date to be specified by the parties, which shall be the
first day which is five business days after satisfaction of the latest to
occur of the conditions set forth in Sections 6.1, 6.2(b) and 6.3(b) (other
than the delivery of the officers' certificates referred to in Sections
6.2(b) and 6.3(b)), provided that the other closing conditions set forth in
Article VI have been met or waived as provided in Article VI at or prior to
the Closing (the "Closing Date"), at the offices of Vorys, Xxxxx, Xxxxxxx and
Xxxxx, 000 Xxxx Xxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxxxxx, Xxxx, unless another
time, date or place is agreed to in writing by the parties hereto.
1.3 EFFECTS OF THE MERGER. At the Effective Time, (a) the separate
existence of Merger Sub shall cease and Merger Sub shall be merged with and
into the Company, (b) the articles of incorporation of the Company as in
effect immediately prior to the Effective Time shall be the articles of
incorporation of the Surviving Corporation until thereafter changed or
amended as provided therein or by applicable law and (c) the code of
regulations of the Company as in effect immediately prior to the Effective
Time shall be the code of regulations of the Surviving Corporation until
thereafter changed or amended as provided therein or by applicable law. As
used in this Agreement, "Surviving Corporation" shall mean the Company. At
and after the Effective Time, the Merger will have the effects set forth in
Section 1701.82 of the OGCL.
ARTICLE II
EFFECT OF THE MERGER ON THE STOCK OF THE COMPANY
AND MERGER SUB; EXCHANGE OF CERTIFICATES
2.1 EFFECT ON CAPITAL STOCK. At the Effective Time, by virtue of the
Merger and without any action on the part of the holder of any common stock,
$1.00 par value, of the Company ("Company Common Stock"):
(a) CANCELLATION OF PARENT- OR MERGER SUB-OWNED SHARES. All
Company Common Stock that is owned by Parent, Merger Sub or any other
Subsidiary (as defined in Section 3.1(a)) of Parent (other than shares in
trust accounts, managed accounts and the like that are beneficially owned by
third parties (any such shares, "trust account shares")) shall be cancelled
and shall cease to exist and no shares of common stock of Parent or other
consideration shall be delivered in exchange therefor.
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(b) CONVERSION OF MERGER SUB COMMON STOCK. Each of the shares of
common stock of Merger Sub ("Merger Sub Common Stock") issued and outstanding
immediately prior to the Effective Time of the Merger shall be converted into
1,000 shares of common stock of the Surviving Corporation, $1.00 par value
per share.
(c) CONVERSION OF COMPANY COMMON STOCK. Each of the shares of
Company Common Stock issued and outstanding immediately prior to the
Effective Time of the Merger shall be converted into 4.33 (such number being
referred to as the "Conversion Number") fully paid and non-assessable shares
of common stock of Parent, without par value ("Parent Common Stock"), all in
accordance with Section 2.2.
(d) DISSENTING SHARES. Notwithstanding any other provisions of
this Agreement to the contrary, Company Common Stock that is outstanding
immediately prior to the Effective Time and which is held by shareholders who
shall not have voted in favor of the Merger or consented thereto in writing
and who shall have properly demanded in writing appraisal for such shares in
accordance with Section 1701.85 of the OGCL (collectively, the "Dissenting
Shares") shall not be converted into or represent the right to receive the
consideration provided in Section 2.1(c). Such shareholders ("Dissenting
Holders") shall be entitled to receive payment of the appraised value of such
Company Common Stock held by them in accordance with the provisions of
Section 1701.85 of the OGCL, except that all Dissenting Shares held by
shareholders who shall have failed to perfect or who effectively shall have
withdrawn or lost their rights to appraisal of such Company Common Stock
under such Section 1701.85 shall thereupon be deemed to have been converted
into and to have become exchangeable for, as of the Effective Time, the right
to receive the consideration provided in Section 2.1(c), without any interest
thereon, upon surrender of the certificate or certificates that formerly
evidenced such Company Common Stock in accordance with Section 2.2.
(e) ADJUSTMENT TO CONVERSION NUMBER. If, prior to the Effective
Time of the Merger, Parent shall pay a dividend in, subdivide, combine into a
smaller number of shares or issue by reclassification of its shares any
Parent Common Stock, the Conversion Number shall be multiplied by a fraction,
the numerator of which shall be the number of shares of Parent Common Stock
outstanding immediately after, and the denominator of which shall be the
number of such shares outstanding immediately before, the occurrence of such
event, and the product shall be the Conversion Number for purposes of Section
2.1(c).
2.2 EXCHANGE OF CERTIFICATES.
(a) EXCHANGE AGENT. Parent shall authorize a commercial bank (or
such other person or persons as shall be acceptable to Parent and the
Company) to act as exchange agent hereunder (the
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"Exchange Agent"). As soon as practicable, but not later than three business
days after the Effective Time, Parent shall deposit with the Exchange Agent,
in trust for the holders of certificates which immediately prior to the
Effective Time represented Company Common Stock converted in the Merger (the
"Company Certificates"), certificates representing the shares of Parent
Common Stock (such shares of Parent Common Stock, together with any dividends
or distributions with respect thereto in accordance with Section 2.2(c),
being hereinafter referred to as the "Exchange Fund") issuable pursuant to
Section 2.1(c) in exchange for the outstanding Company Common Stock (the
"Parent Certificates").
(b) EXCHANGE PROCEDURES.
(i) As soon as practicable after the Effective Time, the
Exchange Agent shall mail to each recordholder of a Company Certificate a
letter of transmittal (which shall specify that delivery shall be effected,
and risk of loss and title to the Company Certificates shall pass, only upon
actual delivery thereof to the Exchange Agent and shall contain instructions
for use in effecting the surrender of the Company Certificates in exchange
for the consideration described in the next sentence). Upon surrender for
cancellation to the Exchange Agent of all Company Certificates held by any
recordholder of a Company Certificate, together with such letter of
transmittal duly executed, such holder shall be entitled to receive in
exchange therefor a Parent Certificate(s) representing the number of whole
shares of Parent Common Stock into which the Company Common Stock represented
by the surrendered Company Certificate(s) shall have been converted at the
Effective Time pursuant to this Article II, cash in lieu of any fractional
share of Parent Common Stock in accordance with Section 2.2(e) and certain
dividends and other distributions in accordance with Section 2.2(c), and the
Company Certificate(s) so surrendered shall forthwith be cancelled; PROVIDED,
HOWEVER, that Company Certificates surrendered for exchange by any person
constituting an "affiliate" of the Company for purposes of Rule 145(c) under
the Securities Act of 1933, as amended (the "Securities Act"), shall not be
exchanged for Parent Certificates until Parent has received a written
agreement from such person as provided in Section 5.6.
(ii) Until Company Certificates have been surrendered and
exchanged for Parent Certificates as herein provided, each outstanding
Company Certificate shall be deemed at any time after the Effective Time to
represent only the right to receive upon such surrender a Parent
Certificate(s) representing a whole number of shares of Parent Common Stock
and cash in lieu of any fractional share as contemplated by this Section 2.2.
No transfer taxes shall be payable in connection with any such exchange,
except that if any Parent Certificate (or any check representing cash in lieu
of a fractional share) is to be issued in the name other than that in which
the Company Certificate surrendered in exchange therefor is registered, it
shall be a condition of such exchange
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that the person requesting such exchange shall pay to the Exchange Agent any
transfer or other taxes required by reason of the issuance of the Parent
Certificate (or check) in a name other than that of the registered holder of
the Company Certificate, or shall establish to the satisfaction of the
Exchange Agent that such tax has been paid or is not applicable. Parent or
the Exchange Agent shall be entitled to deduct and withhold from the
consideration otherwise payable pursuant to this Agreement to any holder of
Company Common Stock such amounts as Parent or the Exchange Agent are
required to deduct and withhold under the Code, or any provision of state,
local or foreign tax law, with respect to the making of such payment. To the
extent that amounts are so withheld by Parent or the Exchange Agent, such
withheld amounts shall be treated for all purposes of this Agreement as
having been paid to the holder of the Company Common Stock in respect of whom
such deduction and withholding was made by Parent or the Exchange Agent. If
outstanding Company Certificates are not surrendered prior to six years after
the Effective Time of the Merger (or, in any particular case, prior to such
earlier date on which dividends and other distributions, if any, described
above would otherwise escheat to or become the property of any governmental
unit or agency), the amount of dividends and other distributions, if any,
that have become payable and that thereafter become payable on Parent Common
Stock evidenced by such Company Certificates as provided herein shall, to the
extent permitted by applicable law, become the property of Parent (and, to
the extent not in its possession, shall be paid over to it), free and clear
of all claims or interest of any person previously entitled thereto.
(c) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No dividends
or other distributions declared or made after the Effective Time with respect to
Parent Common Stock with a record date after the Effective Time shall be paid to
the holder of any unsurrendered Company Certificate with respect to the Parent
Common Stock represented thereby, and no cash payment in lieu of fractional
shares shall be paid to any such holder pursuant to Section 2.2(e), until the
holder of such Company Certificate shall surrender it. Subject to the effect of
applicable laws, following surrender of any such Company Certificate, there
shall be paid to the holder of the Parent Certificate representing whole shares
of Parent Common Stock issued in exchange therefor, without interest, (i) at the
time of such surrender or promptly thereafter as is practicable, the amount of
any cash payable with respect to a fractional share of Parent Common Stock to
which such holder is entitled pursuant to Section 2.2(e) and the amount of
dividends or other distributions with a record date after the Effective Time
theretofore paid with respect to such whole number of shares of Parent Common
Stock and (ii) at the appropriate payment date, the amount of dividends or other
distributions with a record date after the Effective Time but prior to surrender
and a payment date subsequent to surrender payable with respect to such whole
number of shares of Parent Common Stock.
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(d) NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK. All
Parent Common Stock issued upon conversion of Company Common Stock in
accordance with the terms hereof (including any cash paid pursuant to Section
2.2(e)) shall be deemed to have been issued in full satisfaction of all
rights pertaining to such Company Common Stock, SUBJECT, HOWEVER, to the
Surviving Corporation's obligation to pay any dividends or make any other
distributions with a record date prior to the Effective Time that may have
been declared or made by the Company on Company Common Stock in accordance
with the terms of this Agreement on or prior to the Effective Time and which
remain unpaid at the Effective Time. At the Effective Time, the stock
transfer books of the Company shall be closed to holders of Company Common
Stock immediately prior to the Effective Time and no transfer of Company
Common Stock by any such holder shall thereafter be made or recognized. If,
after the Effective Time, Company Certificates are presented to the Surviving
Corporation for any reason, they shall be cancelled and exchanged as provided
in this Article II.
(e) NO FRACTIONAL SHARES.
(i) Notwithstanding any other provision hereof, no fractional
share of Parent Common Stock and no certificate or scrip therefor, or other
evidence of ownership thereof, will be issued, and no right to receive cash
in lieu thereof shall entitle the holder thereof to any voting or other
rights of a holder of shares or fractional share interests.
(ii) Each holder of Company Common Stock shall be paid an amount in
cash equal to the product obtained by multiplying the fractional share
interest to which such holder (after taking into account all shares of
Company Common Stock then held by such holder) would otherwise be entitled by
the midpoint between the highest "bid" and lowest "asked" price for a share
of Parent Common Stock in the over-the-counter market for the business day
immediately preceding the Closing Date.
(iii) As soon as practicable after the determination of the amount
of cash, if any, to be paid to holders of Company Common Stock with respect
to any fractional share interests, the Exchange Agent shall make available
such amounts to such holders of Company Common Stock subject to and in
accordance with the terms of Section 2.2(b).
(f) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange
Fund which remains undistributed to the shareholders of the Company for six
months after the Effective Time shall be delivered to Parent, upon demand,
and any shareholders of the Company who have not theretofore complied with
this Article II shall thereafter look only to Parent for payment of their
claim for Parent Common Stock, any cash in lieu of fractional shares of
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Parent Common Stock and any dividends or distributions with respect to Parent
Common Stock.
(g) NO LIABILITY. Neither Parent, Merger Sub, the Company nor the
Surviving Corporation shall be liable to any holder of Company Common Stock
for any amount paid or property delivered in good faith to a public official
pursuant to any applicable abandoned property, escheat or similar law.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents
and warrants to Parent and Merger Sub that:
(a) ORGANIZATION, STANDING AND POWER. The Company is a banking
corporation duly organized, validly existing and in good standing under the
laws of the State of Ohio. The Company is a bank duly organized under
Chapter 1113 of the Ohio Revised Code validly existing and in good standing
under the laws of the State of Ohio, and all of its deposits are insured by
the Bank Insurance Fund of the Federal Deposit Insurance Corporation ("FDIC")
to the maximum extent permitted by law. The Company has all requisite power
and authority to own, lease and operate its properties and to carry on its
business as now being conducted, and is duly qualified and in good standing
to do business in each jurisdiction in which the nature of its business or
the ownership or leasing of its properties makes such qualification
necessary, except where the failure to be so qualified would not reasonably
be expected to have, individually or in the aggregate, a Material Adverse
Effect on the Company. For purposes of this Agreement: (i) "Material
Adverse Change" or "Material Adverse Effect" means, when used with respect to
Parent, the Company or the Surviving Corporation, as the case may be, any
change or effect that is or would reasonably be expected (so far as can be
foreseen at the time) to be materially adverse to the business, properties,
assets, liabilities, condition (financial or otherwise) or results of the
operations of Parent and its Subsidiaries taken as a whole, the Company, or
the Surviving Corporation, as the case may be; provided, however, that no
Material Adverse Change or Material Adverse Effect shall be deemed to have
occurred by reason of a change or effect resulting from general economic
conditions, general industry conditions, changes in banking laws or
regulations of general applicability or interpretations thereof, or a general
deterioration in the financial markets; and (ii) "Subsidiary" means any
corporation, partnership, joint venture or other legal entity of which Parent
or the Company, as the case may be (either alone or through or together with
any other Subsidiary), owns, directly or indirectly, 50% or more of the
capital stock or other equity interest the holders of which are generally
entitled to vote for the election of
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the board of directors or other governing body of such corporation,
partnership, joint venture or other legal entity.
(b) CAPITAL STRUCTURE.
(i) The authorized capital stock of the Company consists of
110,000 shares of Company Common Stock, all of which are outstanding.
(ii) No bonds, debentures, notes or other indebtedness having
the right to vote (or convertible into or exercisable for securities having
the right to vote) on any matters on which shareholders of the Company may
vote ("Voting Debt") are issued or outstanding. All outstanding shares of
Company Common Stock are, and any Company Common Stock that may be issued
pursuant to the exercise of any outstanding stock option will be, duly
authorized, validly issued, fully paid and nonassessable and not subject to
preemptive rights.
(iii) Except as set forth in the letter dated and delivered
to Parent on the date hereof (the "Company Letter"), which relates to this
Agreement and is designated therein as being the Company Letter, there is no
option, warrant, call, right (including any preemptive right), commitment or
any other agreement of any character that the Company is a party to, or may
be bound by, requiring it to issue, transfer, sell, purchase or redeem any
shares of capital stock, any Voting Debt, or any securities or rights
convertible into, exchangeable for, or evidencing the right to subscribe for
any shares of capital stock of the Company, or to provide funds to, or make
an investment, in the form of a loan, capital contribution or otherwise
(excepting loans made in the ordinary course of a commercial banking
business), in any other corporation, partnership, firm, individual, trust or
other legal entity (each, and any group of any two or more of the foregoing,
a "Person").
(iv) Except as set forth in the Company Letter, there is no
voting trust or other agreement or understanding to which the Company is a
party, or may be bound by, with respect to the voting of the capital stock of
the Company.
(v) Since December 31, 1994, except as set forth in the
Company Letter, the Company has not (A) issued or permitted to be issued any
shares of capital stock, or securities exercisable for or convertible into
shares of capital stock, of the Company; (B) repurchased, redeemed or
otherwise acquired any shares of capital stock of the Company (other than the
acquisition of trust account shares); or (C) declared, set aside, made or
paid to shareholders of the Company dividends or other distributions on the
outstanding shares of capital stock of the Company, other than regular
semi-annual cash dividends at a rate not in excess of the
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regular semi-annual cash dividends most recently declared by the Company
prior to March 31, 1997.
(c) AUTHORITY.
(i) The Company has all requisite corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. This Agreement and the consummation by the
Company of the transactions contemplated hereby have been duly and validly
authorized by the Board of Directors of the Company and no other corporate
proceedings on the part of the Company are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby (other than
the approval of this Agreement by the shareholders of the Company in
accordance with the OGCL and the Company's articles of incorporation). This
Agreement has been duly and validly executed and delivered by the Company
and, assuming this Agreement constitutes the valid and binding agreement of
Parent and Merger Sub, constitutes the valid and binding agreement of the
Company, enforceable in accordance with its terms, except that the
enforcement hereof may be limited by (A) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect,
relating to creditors' rights generally, (B) general principles of equity
(regardless of whether enforceability is considered in a proceeding in equity
or at law) and (C) judicial discretion.
(ii) Except as set forth in the Company Letter, the execution
and delivery of this Agreement does not, and the consummation of the
transactions contemplated hereby (subject to approval by the shareholders of
the Company of this Agreement) will not, conflict with or result in any
violation of, or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, amendment, cancellation,
acceleration or payment of any obligation or the loss of a material benefit
under, or the creation of a lien, pledge, security interest, charge or other
encumbrance on assets (any such conflict, violation, default, right of
termination, amendment, cancellation, acceleration or payment, loss or
creation, a "Violation") pursuant to, any provisions of the articles of
incorporation or code of regulations of the Company or, except as set forth
in the Company Letter, and subject to obtaining or making the consents,
approvals, orders, authorizations, registrations, declarations and filings
referred to in Subsection (iii) below, result in any Violation of any loan or
credit agreement, note, mortgage, indenture, lease, Benefit Plan (as defined
in Section 3.1(o)) or other agreement, obligation, instrument, permit,
concession, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to the Company or its properties or
assets.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, any federal or state court,
administrative agency or commission or other governmental authority or
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instrumentality (a "Governmental Entity") is required by or with respect
to the Company in connection with the execution and delivery of this
Agreement, or the consummation by the Company of the transactions
contemplated hereby, the failure to obtain which would have a Material
Adverse Effect on the Company, except for (A) the filing by Parent of an
application with the Board of Governors of the Federal Reserve System (the
"Federal Reserve") under the Bank Holding Company Act of 1956, as amended
("BHC Act"), and approval of same, (B) the filing by Merger Sub and/or the
Company of an application with the Federal Reserve under the Bank Merger Act
and approval of same, (C) the filing by Parent of a Registration Statement on
Form S-4 ("S-4") with the Securities and Exchange Commission ("SEC"), and the
declaration by the SEC of its effectiveness, (D) the filing by the Company of
the Certificate of Merger with the Secretary of State of the State of Ohio,
and appropriate documents with the relevant authorities of other states in
which the Company is qualified to do business, (E) the filing of applications
by Parent and/or Merger Sub with the Ohio Superintendent of Financial
Institutions (the "Superintendent"), and approval thereof, (F) the filing of
an application by Parent with the Commissioner of the Department of Financial
Institutions of the Commonwealth of Kentucky ("KDFI"), and approval thereof,
(G) notices to or filings with the Small Business Administration ("SBA"), or
the Internal Revenue Service (the "IRS") or the Pension Benefit Guaranty
Corporation (the "PBGC") with respect to any Benefit Plans, and (H) such
filings and approvals as may be required under the "blue sky" laws of various
states.
(d) FINANCIAL STATEMENTS. The Company has made available to
Parent true and complete copies of the audited statements of financial
position and the related statements of operations, shareholders' equity and
cash flows (including the related notes thereto) of the Company for the years
ended December 31, 1996, 1995 and 1994, certified by Xxxxx Xxxxxxxx LLP,
independent certified public accountants (the "Company Audited Financial
Statements"). The Company also has made available to Parent true and
complete copies of the monthly and quarterly unaudited statements of
financial position and the related statements of operations, shareholders'
equity and cash flows of the Company for the monthly and quarterly periods
ended during the period of January 1, 1997 through April 30, 1997 (the
"Company Unaudited Financial Statements"). (The Company Audited Financial
Statements, the Company Unaudited Financial Statements and those audited and
unaudited financial statements that the Company hereafter shall deliver to
Parent pursuant to Section 5.5 are collectively referred to as the "Company
Financial Statements"). Except as set forth in the Company Letter, the
Company Financial Statements are or, as the context requires shall be, in
compliance as to form in all material respects with applicable accounting
requirements, have been (or shall be) prepared in accordance with generally
accepted accounting principles applied on a consistent basis during the
periods involved (except as otherwise noted therein) and fairly (or shall
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fairly) present (subject, in the case of unaudited financial statements, to
normal year-end audit adjustments and any other adjustments described therein
which individually or in the aggregate will not be material in amount or
effect) the financial position of the Company as of their respective dates
and the results of its operations and cash flows for the periods presented
therein.
(e) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in
the Company Letter, since December 31, 1996, the Company has not incurred any
material liability or obligation (indirect, direct or contingent), except in
the ordinary course of its business consistent with past practices, taken any
of the prohibited actions set forth in Section 4.1, or suffered any change,
or any event involving a prospective change, in its business, financial
condition or results of operations that has had, or is reasonably likely to
have, a Material Adverse Effect on the Company.
(f) ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth in
the Company Letter or reflected or reserved against in the Company Audited
Financial Statements for the 1996 year, the Company has no obligations or
liabilities (contingent or otherwise) that might reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on the
Company. The Company has set forth in the Company Letter, as of the date
hereof, all interest rate and currency exchange agreements, and all trading
positions regarding any form or type of derivative financial product the
value of which is linked to, or derived from, the value of an underlying
asset, rate or index.
(g) ALLOWANCE FOR CREDIT LOSSES. Except as set forth in the
Company Letter, the allowance for credit losses (the "Allowance") shown on
the statements of financial position of the Company as of April 30, 1997
included in the Company Financial Statements was, and the Allowance shown on
each of the statements of condition of the Company as of a date subsequent to
the execution of this Agreement will be, in each case as of the dates
thereof, determined in accordance with safe and sound banking practices and
the guidelines and policies of the FDIC, and are (and will be) adequate, in
the reasonable judgment of management, to provide for losses relating to or
inherent in the loan and lease portfolios (including accrued interest
receivable) of the Company and other extensions of credit (including letters
of credit and commitments to make loans or extend credit) by the Company.
(h) ENVIRONMENTAL MATTERS. Except as set forth in the Company
Letter, to the knowledge of the Company, neither the Company nor any
properties presently or previously owned or operated by the Company has been
or is in violation of or liable under any Environmental Law (as hereinafter
defined). There are no actions, suits or proceedings, or demands, claims,
notices or, to the knowledge of the Company, investigations (including
notices,
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demand letters or requests for information from any environmental agency),
instituted or pending, or to the knowledge of the Company, threatened,
relating to the liability of any properties owned or operated by the Company
under any Environmental Law. "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 between the Company and any Governmental Entity relating to (i) the
protection, preservation or restoration of the environment (including,
without limitation, air, water vapor, surface water, ground water, drinking
water supply, surface soil, subsurface soil, plant and animal life or any
other natural resource), and/or (ii) the use, storage, recycling, treatment,
generation, transportation, processing, handling, labeling, production,
release or disposal of any substance presently listed, defined, designated or
classified as hazardous, toxic, radioactive or dangerous, or otherwise
regulated, whether by type or by quantity, including any material containing
any such substance as a component; and includes, without limitation, the
Resource Conservation and Recovery Act, the Clean Air Act, the Federal Water
Pollution Control Act, the Toxic Substances Control Act and the Comprehensive
Environmental Response, Compensation and Liability Act.
(i) INFORMATION SUPPLIED. None of the information supplied or to
be supplied by the Company for inclusion in (i) the S-4 to be filed with the
SEC by Parent in connection with the issuance of Parent Common Stock in the
Merger will, at the time the S-4 is filed with the SEC and at the time it
becomes effective under the Securities Act, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and (ii) the proxy
statement of the Company contained within the S-4 (the "Proxy Statement")
will, at the date of mailing to shareholders of the Company and at the time
of the meeting of shareholders of the Company to be held in connection with
the Merger, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading. The Proxy Statement (except for such portions thereof
that relate only to Parent and Merger Sub) will comply as to form in all
material respects with the provisions of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), and the rules and regulations thereunder, to
the extent applicable. The information set forth in the Company Letter by
the Company for purposes of this Agreement is true and accurate in all
material respects.
(j) NO DEFAULT. Except as set forth in the Company Letter, no
Violation exists on the part of the Company with respect to any term, condition
or provision of (i) its articles of incorporation or bylaws, (ii) any note,
mortgage, indenture, other
12
evidence of indebtedness, guaranty, license, agreement or other contract,
instrument or contractual obligation to which the Company is now a party or
by which it or any of its properties or assets may be bound, or (iii) any
order, writ, injunction or decree applicable to the Company, except for
possible Violations that, individually or in the aggregate, do not, and,
insofar as reasonably can be foreseen, in the future will not, have a
Material Adverse Effect on the Company.
(k) COMPLIANCE WITH LICENSES, PERMITS AND APPLICABLE LAWS. The
Company has received such certificates, permits, licenses, franchises,
consents, approvals, orders, authorizations and clearances from appropriate
governmental entities (the "Company Permits") as are necessary to own or
lease and operate its properties and to conduct its business as currently
owned or leased and conducted, and all such Company Permits are valid and in
full force and effect. The Company is in compliance in all material respects
with its obligations under the Company Permits, with only such exceptions as,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect on the Company, and no event has occurred that
allows, or after notice of lapse of time, or both, would allow, revocation or
termination of any material Company Permit. Except as set forth in the
Company Letter, the business of the Company is not being conducted in
violation of any law, ordinance or regulation of any Governmental Entity,
except for possible violations that individually or in the aggregate do not,
and in the future will not, have a Material Adverse Effect on the Company.
Except for routine examinations by Governmental Entities charged with the
supervision or regulation of banks or bank holding companies or the insurance
of bank deposits ("Bank Regulators"), as of the date of this Agreement, to
the knowledge of the Company, no investigation by any Governmental Entity
with respect to the Company is pending or threatened.
(l) ACTIONS AND PROCEEDINGS. Except as set forth in the Company
Letter, there are no outstanding orders, judgments, injunctions, awards or
decrees of any Governmental Entity against or affecting the Company, any of
its current or former directors, employees, consultants, agents or
shareholders, as such, any of its properties, assets or business or any
Company Benefit Plan (as defined in Section 3.1(o)). Except as set forth in
the Company Letter, there are no actions, suits or claims or legal,
administrative or arbitration proceedings or, to the knowledge of the
Company, investigations pending or threatened, against or affecting the
Company, any of its current or former directors, officers, employees,
consultants, agents or shareholders, as such, any of its properties, assets
or business or any Company Benefit Plan that if brought (if not now pending)
would reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on the Company. There are no actions, suits or
claims or legal, administrative or arbitration proceedings or, to the
knowledge of the Company, investigations or labor disputes
13
pending or threatened, against or affecting the Company, any of its current
or former directors, officers, employees, consultants, agents or
shareholders, as such, any of its properties, assets or business or any
Company Benefit Plan relating to the transactions contemplated by this
Agreement.
(m) TAXES. To the Company's knowledge, the Company has filed all
tax returns required to be filed by it and has paid, or has set up an
adequate reserve for the payment of, all Taxes required to be paid as shown
on such returns, and the most recent Company Financial Statements reflect an
adequate reserve for all Taxes payable by the Company accrued through the
date of such financial statements. No material deficiencies for any Taxes
have been proposed, asserted or assessed against the Company that are not
adequately reserved for. Except with respect to claims for refund, the
federal income tax returns of the Company have been examined by and settled
with the IRS, or the statute of limitations with respect to such years has
expired (and no waiver extending the statute of limitations has been
requested or granted), for all years through 1993. For the purpose of this
Agreement, the term "Taxes" (including, with correlative meaning, the term
"tax") shall include, except where the context otherwise requires, all
federal, state, local and foreign income, profits, franchise, gross receipts,
payroll, sales, employment, unemployment (including unemployment insurance
premiums or contributions), use, property, withholding, excise, occupancy,
and other taxes, duties or assessments of any nature whatsoever, together
with all interest, penalties and additions imposed with respect to such
amounts.
(n) CERTAIN AGREEMENTS. Except as set forth in the Company
Letter, and except for this Agreement, as of the date of this Agreement, the
Company is not a party to any oral or written (i) employment or other
agreement, contract, commitment, program, policy or arrangement requiring the
Company to pay compensation (including any salary, bonus, deferred
compensation, incentive compensation, severance, vacation or sick pay, or any
other fringe benefit payment) or any other type of remuneration to any
Person, (ii) agreement or plan, including any stock option plan, any of the
benefits of which will be increased, or the vesting of the benefits of which
will be accelerated, by the occurrence of any of the transactions
contemplated by this Agreement, or the value of any of the benefits of which
will be calculated on the basis of any of the transactions contemplated by
this Agreement, (iii) contract or agreement not terminable on 30 days' or
less notice involving the payment of more than $5,000 in any 12 month period;
(iv) contract or agreement that materially limits the ability of Company to
compete in any line of business or with any Person or in any geographic area
or during any period of time, or (v) any other material contract the
disclosure and inclusion as an exhibit of which would be required by Item 601
of Regulation S-K of the SEC if the Company were a corporation making filings
with the SEC under
14
the periodic reporting requirements of Section 13 of the Exchange Act and the
rules and regulations of the SEC thereunder.
(o) BENEFIT PLANS.
(i) The Company has disclosed in the Company Letter each
employee benefit plan (including, without limitation, any "employee benefit
plan," as defined in Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended, ("ERISA")) (all the foregoing being herein called
"Benefit Plans"), maintained or contributed to by the Company (the "Company
Benefit Plans"). The Company will make available to Parent a true and
correct copy of (a) the most recent annual report (Form 5500) filed with the
IRS, (B) each such Company Benefit Plan, (C) each trust agreement relating to
such Company Benefit Plan, (D) the most recent summary plan description for
each Company Benefit Plan for which a summary plan description is required,
(E) the most recent actuarial report or valuation relating to a Company
Benefit Plan subject to Title IV of ERISA and (F) the most recent
determination letter issued by the IRS with respect to any Company Benefit
Plan qualified under Section 401(a) of the Code.
(ii) With respect to the Company Benefit Plans, individually
and in the aggregate, except as set forth in the Company Letter, no event has
occurred and, to the knowledge of the Company, there exists no condition or
set of circumstances, in connection with which the Company could be subject
to any liability (except liability for benefits, claims and funding
obligations payable in the ordinary course) under ERISA, the Code or any
other applicable law.
(p) SUBSIDIARIES. The Company has no Subsidiaries.
(q) AGREEMENTS WITH BANK REGULATORS. The Company is not a party
to any written agreement or memorandum of understanding with, or a party to
any commitment letter or similar undertaking to, or subject to any order or
directive by, nor is it a recipient of any extraordinary supervisory letter
from, any Bank Regulator which restricts materially the conduct of its
business, or in any manner relates to its capital adequacy, its credit
policies or its management, nor has the Company been advised by any Bank
Regulator that it is contemplating issuing or requesting (or is considering
the appropriateness of issuing or requesting) any such order, directive,
agreement, memorandum of understanding, extraordinary supervisory letter,
commitment letter or similar submission.
(r) VOTE REQUIRED. The affirmative vote of the holders of
two-thirds of the outstanding shares of Company Common Stock entitled to vote
thereon is the only vote of the holders of any class or series of Company
capital stock necessary to approve this Agreement and the transactions
contemplated hereby.
15
(s) PROPERTIES.
(i) Except as set forth in the Company Letter, the Company
(A) has good, valid and marketable title to all the properties and assets
reflected in the latest audited financial statements included in the Company
Financial Statements as being owned by the Company, or acquired after the
date thereof (except properties sold or otherwise disposed of since the date
thereof in the ordinary course of business), free and clear of all mortgages,
pledges, security interests, claims, liens, charges, options or other
encumbrances of any nature whatsoever (including, without limitation, in the
case of real property, easements and rights-of-way) (collectively, "Liens"),
except (x) statutory Liens securing payments not yet due, (y) Liens on assets
of the Company incurred in the ordinary course of a commercial banking
business and (z) such Liens and imperfections or irregularities of title that
do not materially affect the use of the properties or assets subject thereto
or affected thereby or otherwise materially impair business operations at
such properties, and (B) is the lessee of all leasehold estates reflected in
the latest audited financial statements included in the Company Financial
Statements or acquired after the date thereof (except for leases that have
expired by their terms since the date thereof) and is in possession of the
properties purported to be leased thereunder, and each such lease is valid
without default thereunder by the lessee or, to the Company's knowledge, the
lessor.
(ii) The Company has set forth in the Company Letter the
street address of all real property currently owned by the Company, including
properties held by the Company as a result of foreclosure or repossession or
carried on the Company's books as "other real estate owned" (the "Current
Real Properties"). Except as set forth in the Company Letter, the Current
Real Properties are in generally good condition and have been well maintained
in accordance with reasonable and prudent business practices applicable to
like facilities. Except as set forth in the Company Letter, there are no
proceedings, claims, disputes or conditions affecting any of the Current Real
Properties or leasehold interests of the Company that, insofar as reasonably
can be foreseen, may curtail or interfere with the use of such property.
(t) CORPORATE DOCUMENTS, BOOKS AND RECORDS. The Company has made
available to Parent true and complete copies of the articles of incorporation
and code of regulations of the Company. The minute books of the Company
contain complete and accurate records in all material respects of all
meetings and other corporate actions of its shareholders and Board of
Directors (including committees of the Board of Directors). The stock
transfer records of the Company are, to the knowledge of the Company,
complete and accurate in all material respects.
16
(u) INSURANCE. The Company maintains with financially sound and
reputable insurance companies insurance policies and bonds in force in such
amounts and against such liabilities and risks as companies engaged in a
similar business, in accordance with good business practice, customarily
would be insured. Except as set forth in the Company Letter, to the
Company's knowledge, the Company is not liable for any material, retroactive
premium adjustments. All such insurance policies and bonds are valid,
enforceable and in full force and effect and, except as set forth in the
Company Letter, the Company has not received any notice of premium increases
or cancellation and, to the Company's knowledge, no grounds for any
cancellation notice exists. Except as set forth in the Company Letter, since
December 31, 1994, the Company has not failed to make a timely claim with
respect to any matter giving rise to a claim or potential claim under any
such insurance policies and bonds where such failure to make a timely claim
would have a Material Adverse Effect on the Company.
(v) POTENTIAL COMPETING INTERESTS. Except as set forth in the
Company Letter, (i) no director, officer or key employee or, to the Company's
knowledge, any beneficial owner of 10% or more of any class of capital stock
(a "Ten Percent Owner") of the Company directly or indirectly beneficially
owns a 5% or more interest in any institution that is engaged in the business
of making loans and/or taking deposits, (ii) neither the Company, nor any
director, officer or key employee of the Company has any interest, direct or
indirect, in any contract or agreement with, commitment or obligation of or
to, or claim against, the Company (excluding contracts, agreements or
obligations with respect to monies borrowed from, or claims for deposits
maintained with, the Company in the ordinary course of a commercial banking
business consistent with safe and sound banking practices), and (iii) the
Company does not use any real or personal property in which any director,
officer or key employee or, to the Company's knowledge, Ten Percent Owner of
the Company directly or indirectly beneficially owns a 5% or more interest in
any such real or personal property.
(w) POOLING OF INTERESTS. To the Company's knowledge, the Company
has not taken or failed to take any action that would prevent the accounting
for the Merger as a pooling of interests in accordance with Accounting
Principles Board Opinion No. 16, the interpretive releases issued pursuant
thereto, and the pronouncements of the SEC.
3.2 REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER Sub. Each of
Parent and Merger Sub jointly and severally represent and warrant to the
Company as follows:
(a) ORGANIZATION, STANDING AND POWER. Parent is a corporation
duly organized, validly existing and in good standing under the laws of the
Commonwealth of Kentucky. Each of Parent's Subsidiaries is a corporation
duly organized, validly existing and
17
in good standing under the laws of its state of incorporation or
organization. Each of Parent and its Subsidiaries has all requisite power
and authority to own, lease and operate its properties and to carry on its
business as now being conducted, and is duly qualified and in good standing
to do business in each jurisdiction in which the nature of its business or
the ownership or leasing of its properties makes such qualification
necessary, except where the failure to be so qualified would not reasonably
be expected to have, individually or in the aggregate, a Material Adverse
Effect on Parent.
(b) CAPITAL STRUCTURE.
(i) The authorized capital stock of Parent consists of
10,000,000 shares of common stock, without par value ("Parent Common Stock"),
and 1,000,000 shares of preferred stock, without par value ("Parent Preferred
Stock"), of which 4,209,090 shares of Common Stock are outstanding, 100,000
shares of Common Stock are reserved for issuance under Parent's 1996 Employee
Stock Ownership Incentive Plan and no shares of Common Stock are held by
Parent in its treasury. There are no shares of Parent Preferred Stock
outstanding, reserved for issuance or held by Parent in its treasury.
(ii) No Voting Debt of Parent is issued or outstanding. All
outstanding shares of Parent Common Stock are duly authorized, validly
issued, fully paid and nonassessable and not subject to preemptive rights.
(iii) Except as set forth in the Parent SEC Documents (as
defined in Section 3.2(d)) or the letter dated and delivered to the Company
on the date hereof (the "Parent Letter"), which relates to this Agreement and
is designated therein as the Parent Letter, there is no option, warrant,
call, right (including any preemptive right), commitment or any other
agreement of any character that Parent or any Subsidiary is a party to, or
may be bound by, requiring it to issue, transfer, sell, purchase or redeem
any shares of capital stock, any Voting Debt, or any securities or rights
convertible into, exchangeable for, or evidencing the right to subscribe for
any shares of capital stock of Parent or any Subsidiary, or to provide funds
to, or make an investment (in the form of a loan, capital contribution or
otherwise) in, any of Parent's Subsidiaries or (excepting loans made in the
ordinary course of a commercial banking business) any other Person.
(iv) Except as set forth in the Parent SEC Documents or the
Parent Letter, and except for this Agreement, there is no voting trust or
other agreement or understanding to which Parent or any Subsidiary is a
party, or may be bound by, with respect to the voting of the capital stock of
Parent or any Subsidiary.
18
(v) Since December 31, 1994, except as set forth in the
Parent SEC Documents or the Parent Letter, Parent has not (A) issued or
permitted to be issued any shares of capital stock, or securities exercisable
for or convertible into shares of capital stock, of Parent or any Subsidiary;
(B) repurchased, redeemed or otherwise acquired, directly or indirectly
through any Subsidiary, any shares of capital stock of Parent or any
Subsidiary (other than the acquisition of trust account shares); or
(C) declared, set aside, made or paid to shareholders of Parent dividends or
other distributions on the outstanding shares of capital stock of Parent,
other than regular quarterly cash dividends.
(c) AUTHORITY.
(i) Each of Parent and Merger Sub has all requisite corporate
power and authority to execute and deliver this Agreement and to consummate
the transactions contemplated hereby. This Agreement and the consummation by
Parent and Merger Sub of the transactions contemplated hereby have been duly
and validly authorized by the Board of Directors of Parent and Merger Sub,
and by Parent as the shareholder of Merger Sub, and no other corporate
proceedings on the part of Parent or Merger Sub are necessary to authorize
this Agreement or to consummate the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by Parent and
Merger Sub, and assuming this Agreement constitutes the valid and binding
agreement of the Company, constitutes the valid and binding agreement of
Parent and Merger Sub, enforceable in accordance with its terms, except that
the enforcement hereof may be limited by (A) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect,
relating to creditors' rights generally, (B) general principles of equity
(regardless of whether enforceability is considered in a proceeding in equity
or at law) and (C) judicial discretion.
(ii) The execution and delivery of this Agreement does not,
and the consummation of the transactions contemplated hereby will not, create
any Violation under any provisions of the articles of incorporation or bylaws
of Parent or any Subsidiary or, except as set forth in the Parent Letter and
subject to obtaining or making the consents, approvals, orders,
authorizations, registrations, declarations and filings referred to in
Subsection (iii) below, result in any Violation of any loan or credit
agreement, note, mortgage, indenture, lease, Benefit Plan (as defined in
Section 3.1(o)) or other agreement, obligation, instrument, permit,
concession, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to Parent or any Subsidiary or their
respective properties or assets.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity is required
by or with respect to Parent or any Subsidiary in connection with the
execution and delivery of this Agreement, or
19
the consummation by Parent and Merger Sub of the transactions contemplated
hereby, the failure to obtain which would have a Material Adverse Effect on
Parent, except for (A) the filing by Parent of an application with the
Federal Reserve under the BHC Act, and approval of same, (B) the filing by
Merger Sub and/or the Company of an application with the Federal Reserve
under the Bank Merger Act and approval of same, (C) the filing by Parent of
the S-4 with the SEC, and the declaration by the SEC of its effectiveness,
(D) the filing by the Company of the Certificate of Merger with the Secretary
of State of the State of Ohio and appropriate documents with the relevant
authorities of other states in which the Company or any Subsidiary is
qualified to do business, (E) the filing of applications by Parent and/or
Merger Sub with the Superintendent, and the approval thereof, (F) the filing
of an application by Parent with the KDFI, and approval thereof, (G) notices
to or filings with the SBA, or the IRS or the PBGC with respect to any
Benefit Plans, and (H) such filings and approvals as may be required under
the "blue sky" laws of various states.
(d) SEC DOCUMENTS: FINANCIAL STATEMENTS. Parent has made
available to the Company each document filed by it since December 31, 1994
with the SEC under the Securities Act or the Exchange Act, including without
limitation, (i) Parent's Annual Report on Form 10-K for the year ended
December 31, 1996, (ii) Parent's Quarterly Report on Form 10-Q for the period
ended March 31, 1997, and (iii) Parent's definitive proxy statement for its
1997 Annual Meeting of Shareholders held May 6, 1997, each in the form
(including exhibits and any amendments) filed with the SEC (collectively, the
"Parent SEC Documents"). As of their respective dates, each of the Parent
SEC Documents did not, and each of the Parent SEC Documents filed with the
SEC subsequent to the date hereof will not, contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein
or necessary to make the statements made therein, in light of the
circumstances in which they were made, not misleading, provided, that Parent
makes no representation with respect to information supplied by the Company
for use in Parent SEC Documents after the date hereof. Each of the
consolidated balance sheets included in or incorporated by reference into the
Parent SEC Documents (including their related notes and schedules) fairly
presents the consolidated financial condition of Parent and its consolidated
Subsidiaries as of its date and each of the consolidated statements of income
and of changes in financial position included or incorporated by reference
into the Parent SEC Documents (including any related notes and schedules)
fairly presents the results of operations, retained earnings and changes in
financial position, as the case may be, of Parent and its consolidated
Subsidiaries for the periods set forth therein (subject, in the case of
unaudited statements to normal year-end adjustments and any other adjustments
described therein which individually or in the aggregate will not be material
in amount or effect), in each case in accordance with
20
generally accepted accounting principals consistently applied during the
periods involved, except as may be noted therein.
(e) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in
the Parent Letter, since December 31, 1996, neither Parent nor any
Subsidiary has incurred any material liability or obligation (indirect,
direct or contingent), except in the ordinary course of its business
consistent with past practices, or suffered any change, or any event
involving a prospective change, in its business, financial condition or
results of operations that has had, or is reasonably likely to have, a
Material Adverse Effect on Parent.
(f) ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth in
the Parent Letter or disclosed in the Parent SEC Documents, neither Parent
nor any Subsidiary has any obligations or liabilities (contingent or
otherwise) that might reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on Parent. Parent has set forth in the
Parent Letter, as of the date hereof, all interest rate and currency exchange
agreements, and all trading positions regarding any form or type of
derivative financial product the value of which is linked to, or derived
from, the value of an underlying asset, rate or index.
(g) INFORMATION SUPPLIED. None of the information supplied or to
be supplied by Parent for inclusion in (i) the S-4 to be filed with the SEC
by Parent in connection with the issuance of Parent Common Stock in the
Merger will, at the time the S-4 is filed with the SEC and at the time it
becomes effective under the Securities Act, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and (ii) the Proxy
Statement will, at the date of mailing to shareholders of the Company and at
the time of the meeting of shareholders of the Company to be held in
connection with the Merger, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading. The Proxy Statement (except for such
portions thereof that relate only to the Company) will comply as to form in
all material respects with the provisions of the Exchange Act and the rules
and regulations thereunder. The information set forth in the Parent Letter
by Parent for purposes of this Agreement is true and accurate in all material
respects.
(h) CORPORATE DOCUMENTS, BOOKS AND RECORDS. Parent has made
available to the Company true and complete copies of the articles of
incorporation and bylaws of Parent and each Subsidiary. The minute books of
Parent and each Subsidiary contain complete and accurate records in all
material respects of all meetings and other
21
corporate actions of its shareholders and Board of Directors (including
committees of the Board of Directors). The stock transfer records of Parent
and each Subsidiary are, to the knowledge of Parent, complete and accurate in
all material respects.
(i) POOLING OF INTERESTS. To Parent's knowledge, neither Parent
nor any Subsidiary has taken or failed to take any action that would prevent
the accounting for the Merger as a pooling of interests in accordance with
Accounting Principles Board Opinion No. 16, the interpretive releases issued
pursuant thereto, and the pronouncements of the SEC.
(j) INDEPENDENT OPERATION. It has been the practice of Parent
since its formation to maintain the separate charters of commercial banks
that become affiliated with, and Subsidiaries of, Parent. It has also been
the practice of Parent to continue the directorships of directors and the
employment of officers and employees of commercial banks that become
affiliated with, and Subsidiaries of, Parent following consummation of
transactions resulting in such affiliations with Parent.
ARTICLE IV
CONDUCT OF THE COMPANY PRIOR TO CLOSING
4.1 CONDUCT OF BUSINESS.
(a) Except as set forth in the Company Letter, the Company agrees
that during the period from the date of this Agreement to the Effective Time
(unless Parent shall otherwise agree in writing and except as otherwise
contemplated by this Agreement), the Company will conduct its operations
according to its ordinary and usual course of business consistent with past
practice and, to the extent consistent therewith, with no less diligence and
effort than would be applied in the absence of this Agreement, seek to
preserve intact its current business organization, keep available the service
of its current directors, officers and employees and preserve its
relationships with customers, suppliers and others having business dealings
with it to the end that goodwill and ongoing business shall not be impaired
in any material aspect at the Effective Time. Without limiting the
generality of the foregoing, and except as otherwise permitted in this
Agreement prior to the Effective Time or except as set forth in the Company
Letter, the Company will not, without the prior written consent of Parent:
(i) issue, sell, grant, dispose of, pledge or otherwise
encumber, or authorize or propose the issuance, sale, disposition or pledge
or other encumbrance of (A) any additional shares of capital stock of any
class (including shares of Company Common Stock), or any securities or rights
convertible into,
22
exchangeable for, or evidencing the right to subscribe for any shares of
capital stock, or any rights, warrants, options, calls, commitments or any
other agreements of any character to purchase or acquire any shares of
capital stock or any securities or rights convertible into, exchangeable for,
or evidencing the right to subscribe for, any shares of capital stock, or any
other ownership interest (including, without limitation, any phantom
interest), or (B) any other securities in respect of, in lieu of, or in
substitution for, shares of Company Common Stock outstanding on the date
hereof;
(ii) redeem, purchase or otherwise acquire, or propose to
redeem, purchase or otherwise acquire, any of its outstanding shares of
Company Common Stock (except for the acquisition of trust account shares);
(iii) split, combine, subdivide or reclassify any shares of
Company Common Stock or declare, set aside for payment or pay any dividend,
or make any other actual, constructive or deemed distribution, whether in
cash, stock, property or otherwise, in respect of any shares of Company
Common Stock or otherwise make any payments to shareholders in their capacity
as such; except that if the Effective Time has not occurred before the record
date for dividends on Parent Common Stock for the calendar quarter ended
December 31, 1997 the Company may declare a special dividend on Company
Common Stock to holders of record of such shares as of the record date
established therefor (which record date shall be prior to the date of the
Effective Time) with a payment date that is the same as the Closing Date, in
an amount per share equal to the product of (x) 4.33 multiplied by (y) the
dividend per share declared on Parent Common Stock by Parent for the calendar
quarter ended December 31, 1997;
(iv) adopt a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or other
reorganization of the Company (other than the Merger);
(v) adopt any amendments to its articles of incorporation or
code of regulations;
(vi) make any acquisition or disposition of assets or
securities, except in the ordinary course of business consistent with past
practices;
(vii) incur any indebtedness for borrowed money or guarantee
any such indebtedness or make any loans, advances or capital contributions
to, or investments in, any other Person, other than in the ordinary course of
a commercial banking business consistent with past practices, it being
understood and agreed that the incurrence of indebtedness in the ordinary
course of a commercial banking business shall include the creation of deposit
23
liabilities, purchases of federal funds, sales of certificates of deposit and
entering into repurchase agreements;
(viii) offer any new deposit or loan product or service or
change its lending, investment, liability management, loan loss provision,
loan loss charge-off or other material banking policies;
(ix) grant any increases in the compensation of any of its
directors, officers or employees, except in the ordinary course of business
and in accordance with past practice or as may be approved on a case by case
basis by Parent;
(x) pay or agree to pay any pension, retirement allowance,
severance or other employee benefit not required or contemplated by any of
the existing Company Benefit Plans or any agreements or arrangements as in
effect on the date hereof to any such director, officer or employee, whether
past or present;
(xi) enter into any new or amend any existing employment or
severance or termination agreement with any director, officer or employee;
(xii) except in the ordinary course of business consistent
with past practice or as may be required to comply with applicable law,
become obligated under any new Benefit Plan or amend any Company Benefit Plan
in existence on the date hereof if such amendment would have the effect of
materially enhancing any benefits thereunder;
(xiii) make any capital expenditures or commitments for any
capital expenditures, other than capital expenditures or commitments for any
capital expenditures set forth in the Company Letter;
(xiv) make any material changes in its customary methods of
marketing;
(xv) take, or agree to commit to take, any action that would
make any representation or warranty of the Company contained herein
inaccurate in any respect at, or as of any time prior to, the Effective Time;
or
(xvi) change its method of accounting in effect at December
31, 1996, except as required by changes in generally accepted accounting
principles as concurred in by each party's independent auditors, or change
its fiscal year;
(xvii) take any action that would, or reasonably might be
expected to, adversely affect the ability of the Company or Parent to obtain
any of the Requisite Regulatory Approvals (as
24
defined in Section 6.1(b)) without imposition of a condition or restriction
of the type referred to in Section 6.1(f);
(xviii) authorize, recommend, propose or announce an intention
to do any of the foregoing, or enter into any contract, agreement, commitment or
arrangement to do any of the foregoing.
4.2 ACQUISITION PROPOSALS.
(a) The Company shall not, and the Company shall direct and use its
best efforts to cause its officers, directors, employees, agents and
representatives (including without limitation any attorney, accountant,
investment banker or other advisor retained by it) not to, initiate, solicit
or encourage, directly or indirectly, any inquiries or the making or
implementation of any proposal or offer (including, without limitation, any
proposal or offer to its shareholders) with respect to a merger, acquisition,
consolidation or similar transaction involving, or any purchase of all or any
significant portion of the assets or any equity securities of, the Company
(any such proposal or offer being hereinafter referred to as an "Acquisition
Proposal") or engage in any negotiations or discussions with, or furnish any
information or data to, any third party relating to an Acquisition Proposal.
The Company and its officers, directors, employees, agents and
representatives shall immediately cease any existing discussions or
negotiations with any parties conducted heretofore with respect to any
Acquisition Proposal.
(b) Notwithstanding anything to the contrary contained in this
Section 4.2, the Company and the Board of Directors of the Company (A) may
furnish information to, and participate in discussions or negotiations with
any third party that after the date hereof submits an unsolicited bona fide
written Acquisition Proposal to the Company if the Company's Board of
Directors determines in good faith, based upon the written advice of outside
legal counsel, that the failure to furnish such information or participate in
such discussions or negotiations may reasonably constitute a breach of the
Board's fiduciary duties under applicable law, and (B) shall be permitted to
(y) take and disclose to the Company's shareholders a position with respect
to the Merger or an Acquisition Proposal, or amend or withdraw such position,
or (z) make disclosure to the Company's shareholders, in each case either
with respect to or as a result of an Acquisition Proposal, if the Company's
Board of Directors determines in good faith, based upon the written advice of
outside legal counsel, that the failure to take such action may reasonably
constitute a breach of the Board's fiduciary duties under applicable law;
PROVIDED, that the Company shall not enter into any acquisition agreement
with respect to any Acquisition Proposal except concurrently with the
termination of this Agreement in accordance with the provisions of Section
7.1(d) and shall not enter into any other agreements with respect to an
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Acquisition Proposal except concurrently with such termination unless, and
only to the extent that, such other agreements would facilitate the process
of providing information to, or conducting discussions or negotiations with,
the parties submitting such an Acquisition Proposal, such as confidentiality
and standstill agreements.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 ACCESS TO INFORMATION. Upon reasonable notice, the Company and
Parent shall each (and Parent shall cause its Subsidiaries to) afford to the
officers, directors, employees, accountants, counsel and other authorized
representatives of the other ("Representatives") reasonable access, during
normal business hours throughout the period prior to the Effective Time, to
its books and records, properties, officers, directors, employees, counsel,
accountants and other representatives, and, during such period, shall (and
Parent shall cause its Subsidiaries to) make available to such
Representatives (i) a copy of each report, schedule, registration statement
and other document filed or received by it during such period pursuant to the
requirements of federal securities laws or federal or state banking laws
(other than reports or documents that such party is not permitted to disclose
under applicable law) and (ii) all other information concerning its business,
properties and personnel and all financial operating and other data as may
reasonably be requested. The parties will hold any such information that is
non-public in confidence and, without limitation on its obligations under the
preceding clause, Parent will hold any such information in confidence to the
extent required by, and in accordance with, the provisions of the
Confidentiality Agreement dated March 26, 1997 between Parent and the Company
(the "Confidentiality Agreement"), which is incorporated herein by reference.
No investigation by either Parent or Merger Sub, on the one hand, or the
Company on the other hand, shall affect the representations and warranties of
the other, except to the extent such representations and warranties are by
their terms qualified by information set forth in the Parent Letter (in the
case of Parent and Merger Sub) or the Company Letter (in the case of the
Company) to the other party.
5.2 PREPARATION OF S-4 AND THE PROXY STATEMENT. Parent shall prepare
and file with the SEC the S-4, in which the Proxy Statement will be included
as a prospectus. Parent shall use all reasonable efforts to have the S-4
declared effective under the Securities Act as promptly as practicable after
such filing. Parent shall also take any action (other than qualifying to do
business in any jurisdiction in which it is now not so qualified) required to
be taken under any applicable state securities laws in connection with the
issuance of Parent Common Stock in the Merger and the Company shall furnish
all information concerning the Company and the
26
holders of Company Common Stock as may be reasonably requested in connection
with any such action.
5.3 SHAREHOLDER MEETING. The Company shall duly call, give notice of,
convene and hold a meeting of its shareholders to be held for the purpose of
voting upon the approval of this Agreement and the transactions contemplated
hereby. Unless the Company has determined to recommend an Acquisition Proposal
in accordance with Section 4.2(ii), the Company will, through its Board of
Directors, unanimously recommend to its shareholders approval of this Agreement
and the transactions contemplated hereby, subject to its receipt of a fairness
opinion from its financial advisor to the effect that the consideration to be
received by the shareholders of the Company pursuant to Section 2.1 is fair from
a financial point of view and such opinion shall not have been withdrawn or
materially modified. The Company shall cooperate with Parent with respect to
the timing of such meeting and shall use its best efforts to hold such meeting
as soon as reasonably practicable after the date on which the S-4 becomes
effective.
5.4 REASONABLE EFFORTS. Each of the Company and Parent shall, and Parent
shall cause its Subsidiaries to, use all reasonable efforts to take, or cause to
be taken, all actions necessary, proper or advisable to comply promptly with all
legal requirements that may be imposed on such party or (in the case of Parent)
its Subsidiaries with respect to the Merger and to consummate and make effective
the transactions contemplated by this Agreement, subject to the appropriate vote
of shareholders of the Company described in Section 3.2(r), including using all
reasonable efforts (i) to obtain (and to cooperate with the other party to
obtain) any necessary or appropriate consent, authorization, order or approval
of, or any exemption by, any Governmental Entity and/or any other public or
private third party in connection with the Merger and the transactions
contemplated by this Agreement, (ii) to effect all necessary registrations,
filings and submissions and (iii) to lift any injunction or other legal bar to
the Merger (and, in such case, to proceed with the Merger as expeditiously as
possible), subject, however, to the requisite vote of the shareholders of the
Company.
5.5 POST-APRIL 30, 1997 COMPANY FINANCIAL STATEMENTS. The Company shall
make available to Parent true and complete copies of the following:
(a) UNAUDITED FINANCIAL STATEMENTS. Any monthly and quarterly
unaudited balance sheet and the related statements of income, changes in
shareholders' equity and statements of cash flows of the Company for any monthly
or quarterly period ended subsequent to April 30, 1997 and prior to the
Effective Time; and
(b) AUDITED FINANCIAL STATEMENTS. Any audited balance sheet and the
related statements of income, changes in
27
shareholders' equity and statements of cash flows of the Company for any year
ended after December 31, 1996 and prior to the Effective Time.
5.6 AFFILIATES.
(a) OF THE COMPANY. At least 30 days prior to the Closing Date,
the Company shall deliver to Parent a list of names and addresses of those
persons who were, in the Company's reasonable judgment, at the record date
for its meeting of shareholders to approve the Merger, "affiliates" (each
such person, an "Affiliate") of the Company within the meaning of Rule 145 of
the rules and regulations promulgated under the Securities Act. The Company
shall provide Parent such information and documents as Parent shall
reasonably request for purposes of reviewing such list. The Company shall
use all reasonable efforts to deliver or cause to be delivered to Parent and
the Company, prior to the Closing Date, from each of the Affiliates of the
Company identified in the foregoing list, an Affiliate Letter in the form
attached hereto as Exhibit 5.6(a). Parent shall be entitled to place legends
as specified in such Affiliate Letters on the certificates evidencing any
Parent Common Stock to be received by such Affiliates pursuant to the terms
of this Agreement, and to issue appropriate stop transfer instructions to the
transfer agent for Parent Common Stock, consistent with the terms of such
Affiliate Letters.
(b) OF PARENT. At least 30 days prior to the Closing Date, Parent
shall deliver to the Company a list of names and addresses of those persons
who were, in Parent's reasonable judgment, at the record date for the meeting
of shareholders of the Company to approve the Merger, Affiliates of Parent.
Parent shall provide the Company such information and documents as the
Company shall reasonably request for purposes of reviewing such list. Parent
shall use all reasonable efforts to deliver or cause to be delivered to
Parent, prior to the Closing Date, from each of the Affiliates of Parent
identified in the foregoing list, an Affiliate Letter in the form attached
hereto as Exhibit 5.6(b).
5.7 EXPENSES. Whether or not the Merger is consummated, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expense, except
as expressly provided herein and except that expenses incurred in connection
with printing and mailing the Proxy Statement shall be shared equally by
Parent and the Company.
5.8 BROKERS OR FINDERS. Except as set forth in the Company Letter or
the Parent Letter, each of Parent and the Company respectively represents, as
to itself, its Subsidiaries (in the case of Parent) and its affiliates, that
no agent, broker, investment banker, financial advisor or other firm or
person is or will be entitled to any broker's or finder's fee or any other
28
commission or similar fee in connection with any of the transactions
contemplated by this Agreement. Each party agrees to indemnify the other
party and hold the other party harmless from and against any and all claims,
liabilities or obligations with respect to any fees, commissions or expenses
asserted by any Person on the basis of any act or statement alleged to have
been made by such first party or its Subsidiary or affiliate.
5.9 ADDITIONAL AGREEMENTS. In case at any time after the Effective
Time any further action is necessary or desirable to carry out the purposes
of this Agreement or to vest the Surviving Corporation with full title to all
properties, assets, rights, approvals, immunities and franchises of either of
the Company or Merger Sub, the proper officers and directors of the Company
and Merger Sub shall take all such necessary action.
5.10 INDEMNIFICATION. For a period of three years from and after the
Effective Time, Parent shall indemnify, defend and hold harmless each person
who is now or who becomes prior to the Effective Time, an officer, director
or employee of the Company (each, an "Indemnified Party" and, collectively,
the "Indemnified Parties") against (i) all losses, claims, damages, costs,
expenses, liabilities or judgments or amounts that are paid in settlement
with the approval of Parent (which approval shall not be unreasonably
withheld) of or in connection with any claim, action, suit, proceeding or
investigation based in whole or in part on or arising in whole or in part out
of the fact that such person is or was a director, officer or employee of the
Company, whether pertaining to any matter existing or occurring at or prior
to the Effective Time and whether asserted or claimed prior to, or at or
after, the Effective Time ("Indemnified Liabilities") and (ii) all
Indemnified Liabilities based in whole or in part on, or arising in whole or
in part out of, or pertaining to this Agreement or the transactions
contemplated hereby, in each case to the full extent the Company would have
been permitted under Ohio law and its articles of incorporation and code of
regulations to indemnify such person (and Parent shall pay expenses in
advance of the final disposition of any such action or proceeding to each
Indemnified Party to the full extent permitted by law upon receipt of any
undertaking required by Section 1701.13(E)(5) of the OGCL). Without limiting
the foregoing, in the event any such claim, action, suit, proceeding or
investigation is brought against Indemnified Parties (whether arising before
or after the Effective Time), (i) any counsel retained by the Indemnified
Parties for any period after the Effective Time shall be reasonably
satisfactory to Parent; (ii) after the Effective Time, Parent shall pay all
reasonable fees and expenses of such counsel for the Indemnified Parties
promptly as statements therefor are received; and (iii) after the Effective
Time, Parent will use all reasonable efforts to assist in the vigorous
defense of any such matter, provided that Parent shall not be liable for any
settlement of any claim effected without its written consent, which consent,
however, shall not be unreasonably
29
withheld. Any Indemnified Party wishing to claim indemnification under this
Section 5.10, upon learning of any such claim, action, suit, proceeding or
investigation, shall promptly notify Parent (but the failure so to notify
Parent shall not relieve it from any liability which it may have under this
Section 5.10 except to the extent such failure materially prejudices Parent),
and shall deliver to Parent the undertaking, if any, required by Section
1701.13(E)(5) of the OGCL. The Indemnified Parties as a group may retain
only one law firm to represent them with respect to each such matter unless
there is, under applicable standards of professional conduct, a conflict on
any significant issue between the positions of any two or more Indemnified
Parties. In any case in which the approval by the Surviving Corporation is
required to effectuate any indemnification, Parent shall cause the Surviving
Corporation to direct, at the election of any Indemnified Party (or, if more
than one Indemnified Party, a majority of the Indemnified Parties), that the
determination of any such approval shall be made by independent counsel
mutually satisfactory to the Surviving Corporation and the Indemnified Party
(or, if applicable, a majority of the Indemnified Parties).
5.11 POOLING AND TAX-FREE REORGANIZATION TREATMENT. Neither Parent
nor the Company shall intentionally cause to be taken any action, whether
before or after the Effective Time, that would disqualify the Merger as a
"pooling of interests" for accounting purposes or as a "reorganization"
within the meaning of Section 368(a) of the Code.
5.12 THE COMPANY'S ESOP. After the Effective Time, the Company shall
maintain the Company's Employee Stock Ownership Plan ("ESOP") only for such
period of time and on such terms and conditions as are set forth in Exhibit
5.12.
ARTICLE VI
CONDITIONS PRECEDENT
6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligation of each party to effect the Merger shall be subject to
the satisfaction prior to the Closing Date of the following conditions:
(a) SHAREHOLDER APPROVAL. This Agreement shall have been
respectively approved and adopted by the affirmative vote of the holders of
the outstanding shares of Company Common Stock.
(b) OTHER APPROVALS. Other than the filing of the Certificate of
Merger provided for by Section 1.1, all authorizations, consents, orders or
approvals of, or declarations or filings with, and all expirations of waiting
periods imposed by, any Governmental Entity (all of the foregoing,
"Consents") that are necessary for the consummation of the Merger, other than
immaterial
30
Consents the failure to obtain which would not have a significant adverse
effect on the consummation of the Merger or on Parent and its Subsidiaries,
taken as a whole, after consummation of the Merger, shall have been filed,
occurred or been obtained (all such permits, approvals, filings and consents
and the lapse of all such waiting periods being referred to as the "Requisite
Regulatory Approvals") and all such Requisite Regulatory Approvals shall be
in full force and effect. Parent shall have received all state securities or
blue sky permits and other authorizations necessary to issue the Parent
Common Stock in exchange for Company Common Stock and to consummate the
Merger.
(c) S-4. The S-4 shall have become effective under the Securities
Act and shall not be the subject of any stop order or proceeding seeking a
stop order.
(d) POOLING. Parent, Merger Sub and the Company shall have
received a letter from Xxxxx & Xxxxxxx, P.S.C., Parent's independent
certified public accountants, to the effect that the Merger qualifies for
"pooling of interests" accounting treatment under Accounting Principles Board
Opinion No. 16, the interpretive releases issued pursuant thereto, and the
pronouncements of the SEC if consummated in accordance with this Agreement.
(e) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No temporary
restraining order, preliminary or permanent injunction or other order issued
by any court of competent jurisdiction or other legal restraint or
prohibition (an "Injunction") preventing the consummation of the Merger shall
be in effect, nor shall any proceeding by any Governmental Entity seeking any
of the foregoing be pending. There shall not be any action taken, or any
statute, rule, regulation or order enacted, entered, enforced or deemed
applicable to the Merger, which makes the consummation of the Merger illegal.
(f) BURDENSOME CONDITION. There shall not be any action taken, or
any statute, rule, regulation or order enacted, entered, enforced or deemed
applicable to the Merger, by any Governmental Entity which, in connection
with the grant of a Requisite Regulatory Approval, imposes any condition or
restriction upon Parent or its Subsidiaries, the Company or the Surviving
Corporation that would so materially adversely impact the economic or
business benefits of the transactions contemplated by this Agreement as to
render inadvisable the consummation of the Merger.
(g) NMS LISTING. The shares of Parent Common Stock issuable
pursuant to this Agreement shall have been approved for listing on the NASDAQ
National Market System, subject to official notice of issuance.
6.2 CONDITIONS TO OBLIGATIONS OF PARENT AND MERGER Sub. The obligations
of Parent and Merger Sub to effect the Merger are
31
subject to the satisfaction of the following conditions or waiver by Parent
on or prior to the Closing Date:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company set forth in this Agreement that are qualified as
to materiality shall be true and correct, and the representations and
warranties of the Company set forth in this Agreement that are not so
qualified shall be true and correct in all material respects, in each case as
of the date of this Agreement, and as of the Closing Date as though made on
and as of the Closing Date, except to the extent such representation or
warranty expressly relates to an earlier date (in which case as of such
date), and Parent shall have received a certificate signed on behalf of the
Company by the Chief Executive Officer and the Chief Financial Officer of the
Company to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF THE COMPANY. The Company shall
have performed in all material respects all obligations required to be
performed by it under this Agreement, at or prior to the Closing Date, and
Parent shall have received a certificate signed on behalf of the Company by
the Chief Executive Officer and the Chief Financial Officer of the Company to
such effect.
(c) CONSENTS UNDER AGREEMENTS. The Company shall have obtained the
consent or approval of each person (other than the Governmental Entities
referred to in Section 6.1(b)) whose consent or approval shall be required in
order to permit the succession by the Surviving Corporation pursuant to the
Merger to any obligation, right or interest of the Company under any loan or
credit agreement, note, mortgage, indenture, lease, license or other
agreement or instrument, except those for which failure to obtain such
consents and approvals would not, in the reasonable opinion of Parent,
individually or in the aggregate, have a Material Adverse Effect on the
Surviving Corporation or upon the consummation of the transactions
contemplated hereby.
(d) TAX OPINION. Parent shall have received an opinion of Xxxxx &
Xxxxxxx, P.S.C., dated the Closing Date, in form and substance satisfactory
to Parent, to the effect that the Merger will be treated for federal income
tax purposes as a reorganization within the meaning of Section 368(a) of the
Code.
(e) LETTERS FROM THE COMPANY AFFILIATES. Parent shall have
received from each person named in the letter referred to in Section 5.6(a)
an executed copy of an agreement in the form of Exhibit 5.6(a).
(f) APPRAISAL RIGHTS. The holders of not more than 10% of the
issued and outstanding shares of Company Common Stock shall have properly
demanded appraisal or dissenters rights pursuant to the OGCL.
32
6.3 CONDITIONS TO OBLIGATIONS OF THE COMPANY. The obligations of the
Company to effect the Merger are subject to the satisfaction or waiver by the
Company on or prior to the Closing Date of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Parent and Merger Sub set forth in this Agreement that are
qualified as to materiality shall be true and correct, and the
representations and warranties of Parent and Merger Sub set forth in this
Agreement that are not so qualified shall be true and correct in all material
respects, in each case as of the date of this Agreement and as of the Closing
Date as though made on and as of the Closing Date, except to the extent such
representation or warranty expressly relates to another date (in which case
as of such date), and the Company shall have received a certificate signed on
behalf of Parent and Merger Sub by the Chief Executive Officer and the Chief
Financial Officer of Parent and Merger Sub to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF PARENT AND MERGER Sub. Parent
and Merger Sub shall have performed in all material respects all obligations
required to be performed by them under this Agreement at or prior to the
Closing Date, and the Company shall have received a certificate signed on
behalf of Parent and Merger Sub by the Chief Executive Officer and the Chief
Financial Officer of Parent and Merger Sub to such effect.
(c) CONSENTS UNDER AGREEMENTS. Parent and Merger Sub shall have
obtained the consent or approval of each person (other than the Governmental
Entities referred to in Section 6.1(b)) whose consent or approval shall be
required in connection with the transactions contemplated hereby under any
loan or credit agreement, note, mortgage, indenture, lease, license or other
agreement or instrument, except those for which failure to obtain such
consents and approvals would not, in the reasonable opinion of the Company,
individually or in the aggregate, have a Material Adverse Effect on Parent or
upon the consummation of the transactions contemplated hereby.
(d) TAX OPINION. The Company shall have received an opinion of
Vorys, Xxxxx, Xxxxxxx and Xxxxx dated the Closing Date, in form and substance
satisfactory to Parent and its counsel, to the effect that the Merger will be
treated for federal income tax purposes as a reorganization within the
meaning of Section 368(a) of the Code.
(e) LETTERS FROM PARENT AFFILIATES. The Company shall have
received from each person named in the letter referred to in Section 5.6(b)
an executed copy of an agreement substantially in the form of Exhibit 5.6(b).
33
(f) PRICE OF PARENT COMMON STOCK. The Average Closing Price of a
share of Parent Common Stock shall be $14 or more. For purposes of this
Agreement, the "Average Closing Price" of a share of Parent Common Stock
shall be the average of the high bid and low asked price of a share of Parent
Common Stock as furnished by Advest, Inc. for the 20 consecutive trading days
ending on the fifth business day prior the Effective Time of the Merger.
ARTICLE VII
TERMINATION; AMENDMENT; WAIVER
7.1 TERMINATION. This Agreement may be terminated at any time prior to
the Effective Time of the Merger, whether before or after the approval of
this Agreement by the shareholders of the Company:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company:
(i) if, at a duly held shareholders meeting of the Company or
any adjournment thereof at which approval of this Agreement is voted upon,
the approval of the shareholders of the Company shall not have been obtained;
(ii) if the Merger shall not have been consummated on or before
December 31, 1997, unless the failure to consummate the Merger is the result
of a willful and material breach of this Agreement by the party seeking to
terminate this Agreement;
(iii) if any court of competent jurisdiction or other
Governmental Entity shall have issued an order, decree or ruling or taken any
other action permanently enjoining, restraining or otherwise prohibiting the
Merger and such order, decree, ruling or other action shall have become final
and non-appealable;
(iv) in the event of a breach by the other party of any
representation, warranty, covenant or other agreement contained in this
Agreement which (A) would give rise to the failure of a condition set forth
in Section 6.2(a) or 6.2(b) or Section 6.3(a) or 6.3(b), as applicable, and
(B) cannot be or has not been cured within 30 days after the giving of
written notice to the breaching party of such breach ("Material Breach")
(PROVIDED that the terminating party is not then in breach of any
representation, warranty, covenant or other agreement that would give rise to
a failure of a condition described in clause (A) above);
(c) by either Parent or the Company in the event that (i) all the
conditions to the obligation of such party to effect the Merger set forth in
Section 6.1 shall have been satisfied and (ii) any condition to the
obligation of such party to effect the
34
Merger set forth in Section 6.2 (in the case of Parent) or Section 6.3 ( in
the case of the Company) is not capable of being satisfied prior to the date
on which this Agreement may be terminated pursuant to Section 7.1(b)(ii); or
(d) by the Company, subject to Section 7.5(b), if the Board of
Directors of the Company shall concurrently approve, and the Company shall
concurrently enter into, a definitive agreement providing for the
implementation of the transactions contemplated by an Acquisition Proposal;
PROVIDED, HOWEVER, that (i) the Company is not then in breach of Section 4.2
or in breach of any other representation, warranty, covenant or agreement
that would give rise to a failure of a condition set forth in Section 6.2(a)
or 6.2(b); (ii) the Board of Directors of the Company shall have complied
with Section 7.5(b) in connection with such Acquisition Proposal and (iii) no
termination pursuant to this Section 7.1(d) shall be effective unless the
Company shall simultaneously make the payment required by Section 7.2(a).
7.2 EFFECT OF TERMINATION.
(a) In the event that any person shall make an Acquisition Proposal
with respect to the Company and thereafter (i) this Agreement is terminated
(A) pursuant to Section 7.1(b)(i), (B) pursuant to Section 7.1(b)(ii) (if at
the time of termination (x) the Company is in breach of any representation,
warranty, covenant or other agreement that would give rise to a failure of a
condition set forth in Section 6.2(a) or 6.2(b) and (y) such breach cannot be
or has not been cured within 30 days after the Company becomes aware of such
breach or such shorter period that may elapse between the date the Company
becomes aware of such breach and the time of termination), (C) pursuant to
Section 7.1(b)(iii) (if at the time of termination (x) the Company is in
breach of any representation, warranty, covenant or other agreement that
would give rise to a failure of a condition set forth in Section 6.2(a) or
6.2(b) and (y) such breach cannot be or has not been cured within 30 days
after the Company becomes aware of such breach or such shorter period that
may elapse between the date the Company becomes aware of such breach and the
time of termination), (D) by Parent pursuant to Section 7.1(b)(iv), (E) by
Parent pursuant to Section 7.1(c) or (F) by the Company pursuant to Section
7.1(d), and (ii) a definitive agreement with respect to an Acquisition
Proposal is executed, or an Acquisition Proposal is consummated, at or within
12 months after such termination, then Parent shall be paid a fee of $350,000
(reduced by any amount actually paid by the Company pursuant to Section
7.2(b) in connection with such termination), which amount shall be payable by
wire transfer of same day funds on the date such agreement is executed, or
such Acquisition Proposal is consummated, as applicable. The Company
acknowledges that the agreements contained in this Section 7.2(a) are an
integral part of the transactions contemplated by this Agreement, and that
without these agreements, Parent would not enter into this Agreement;
35
accordingly, if the Company fails to promptly pay the amount due pursuant to
this Section 7.2(a), and, in order to obtain such payment, Parent commences a
suit that results in a judgment against the Company for the fees set forth in
this Section 7.2(a), the Company shall also pay to Parent its costs and
expenses (including reasonable attorneys' fees) in connection with such suit.
(b) In the event of termination of this Agreement by either Parent
or the Company pursuant to Section 7.1(b)(i), then the Company shall
reimburse Parent for all its reasonable out-of-pocket expenses actually
incurred in connection with this Agreement and the transactions contemplated
hereby, up to a maximum of $100,000, which amount shall be payable by wire
transfer of same day funds within three business days of written demand,
accompanied by a reasonably detailed statement of such expenses and
appropriate supporting documentation therefor.
(c) In the event of termination of this Agreement by either Parent
or the Company as provided in Section 7.1, this Agreement shall forthwith
become void and have no effect, without any liability or obligation on the
part of Parent, Merger Sub or the Company, other than the provisions of
Section 5.1 (penultimate sentence), Section 5.7, this Section 7.2 and Article
VIII and except to the extent that such termination results from the willful
and material breach by a party of any its representations, warranties,
covenants or other agreements set forth in this Agreement.
7.3 AMENDMENT. This Agreement may be amended by the parties at any time
before or after the approval of this Agreement by the shareholders of the
Company; PROVIDED, HOWEVER, that after such approval by the shareholders of
the Company, there shall be made no amendment that pursuant to the OGCL
requires further approval by the shareholders of the Company without the
further approval of such shareholders. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties.
7.4 EXTENSION; WAIVER. At any time prior to the Effective Time of the
Merger, the parties may (i) extend the time for the performance of any of the
obligations or other acts of the other parties; (ii) waive any inaccuracies
in the representations and warranties contained in this Agreement or in any
document delivered pursuant to this Agreement; or (iii) subject to the
proviso of Section 7.3, waive compliance with any of the agreements or
conditions contained in this Agreement. Any agreement on the part of a party
to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party. The failure of any
party to this Agreement to assert any of its rights under this Agreement or
otherwise shall not constitute a waiver of such rights.
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7.5 PROCEDURE FOR TERMINATION, AMENDMENT, EXTENSION OR WAIVER.
(a) A termination of this Agreement pursuant to Section 7.1, an
amendment of this Agreement pursuant to Section 7.3 or an extension or waiver
pursuant to Section 7.4 shall, in order to be effective, require, in the case
of Parent, Merger Sub or the Company, action by its Board of Directors or, in
the case of an extension or waiver pursuant to Section 7.4, the duly
authorized designee of its Board of Directors.
(b) The Company shall provide to Parent written notice prior to any
termination of this Agreement pursuant to Section 7.1(d) advising Parent (i)
that the Board of Directors of the Company in the exercise of its good faith
judgment as to its fiduciary duties to the shareholders of the Company under
applicable law, after receipt of written advice of outside legal counsel, has
determined (on the basis of such Acquisition Proposal and the terms of this
Agreement, as then in effect) that such termination is required in connection
with an Acquisition Proposal that is more favorable to the shareholders of
the Company than the transactions contemplated by this Agreement (taking into
account all terms of such Acquisition Proposal and this Agreement, including
all conditions) and (ii) as to the material terms of any such Acquisition
Proposal. At any time after five business days following receipt of such
notice, the Company may terminate this Agreement as provided in Section
7.1(d) only if the Board of Directors of the Company determines that such
Acquisition Proposal is more favorable to the shareholders of the Company
than the transactions contemplated by this Agreement (taking into account all
terms of such Acquisition Proposal and this Agreement, including all
conditions, and which determination shall be made in light of any revised
proposal made by Parent prior to the expiration of such five business day
period) and concurrently enters into a definitive agreement providing for the
implementatation of the transactions contemplated by such Acquisition
Proposal.
ARTICLE VIII
GENERAL PROVISIONS
8.1 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the
representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Effective Time of the
Merger. This Section 8.1 shall not limit any covenant or agreement of the
parties that by its terms contemplates performance after the Effective Time
of the Merger.
8.2 NOTICES. All notices and other communications required to be given
hereunder shall be in writing and shall be deemed given
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upon (i) transmitter's confirmation of receipt of a facsimile transmission,
(ii) confirmed delivery by a standard overnight carrier or when delivered by
hand or (iii) the expiration of five business days after the day when mailed
by certified or registered mail, postage prepaid, addressed to the parties at
the following addresses (or at such other address for a party as shall be
specified by like notice):
(a) If to Parent or
Merger Sub, to: Premier Financial Bancorp, Inc.
000 X. Xxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attn: J. Xxxxxx Xxxxx,
President and
Chief Executive Officer
Telecopy No. (000) 000-0000
With a copy to: Xxxxx X. Xxxxxx, Esq.
0000 Xxxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Telecopy No. (000) 000-0000
and
(b) If to Company, to: The Sabina Bank
000 X. Xxxxxx Xxxxxx
Xxxxxx, Xxxx 00000
Attn: Xxxxx X. Xxxxxx,
President and Chief Executive
Officer
Telecopy No. (000) 000-0000
With a copy to: Xxxxx Xxxxxxxx Xxxxx, Esq.
Vorys, Xxxxx, Xxxxxxx and Xxxxx
000 X. Xxxxxx, Xxxxx 0000
Xxxxxxxxxx, Xxxx 00000
Telecopy No. (000) 000-0000
8.3 INTERPRETATION. Unless the context otherwise requires, words
describing the singular number shall include the plural and vice versa, and
words denoting any gender shall include all genders and words denoting
natural persons shall include corporations and other entities and vice versa.
The table of contents, index of terms and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. When a reference is made in
this Agreement to any "Section" or "Exhibit," such reference shall be to
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a section or exhibit to this Agreement unless otherwise indicated. Whenever
the words "include," "includes" or "including" are used in this Agreement,
they shall be deemed to be followed by the words "without limitation."
Whenever the words "or any Subsidiary", "or any Subsidiaries," "nor any
Subsidiary" or "nor any Subsidiaries" are used in this Agreement in
connection with a preceding reference to Parent, they shall be deemed to
refer to a Subsidiary or Subsidiaries Parent. The phrase "made available" in
this Agreement shall mean that the information referred to has been made
available if requested by the party to whom such information is to be made
available, and the correlative phrase "make available" shall mean that such
information shall be promptly made available if so requested. The phrases
"the date of this Agreement," "the date hereof" and terms of similar import,
unless the context otherwise requires, shall be deemed to refer to May 28,
1997.
8.4 ASSIGNMENT; BINDING EFFECT; BENEFIT. Neither this Agreement nor
any of the rights, interests or obligations hereunder shall be assigned by
any of the parties hereto (whether by operation of law or otherwise) without
the prior written consent of the other parties. Subject to the preceding
sentence, this Agreement shall be binding upon and shall inure to the benefit
of the parties hereto and their respective successors and assigns.
Notwithstanding anything contained in this Agreement to the contrary, except
for the provisions of Article II and Sections 5.10 and 5.12 (collectively,
the "Third Party Provisions"), nothing in this Agreement, express or implied,
is intended to confer on any person other than the parties hereto or their
respective heirs, successors, executors, administrators and assigns any
rights, remedies, obligations or liabilities under or by reason of this
Agreement. The Third Party Provisions may be enforced on behalf of the
Company or the other respective beneficiaries thereof by those individuals
who were the directors of the Company immediately prior to the Effective Time
and also by the holder of Company Common Stock converted in the Merger, the
Indemnified Party or the ESOP that such provisions respectively are intended
to benefit and their respective heirs and representatives. Parent shall pay
all expenses, including attorneys' fees, that may be incurred by such
directors or other persons in enforcing the Third Party Provisions.
8.5 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Ohio regardless of the laws that might
otherwise govern under applicable principles of conflicts of laws thereof.
8.6 COUNTERPARTS. This Agreement may be executed in separate
counterparts, each of which when so executed and delivered shall be an
original, but all of which shall together constitute one and the same
instrument. Each counterpart may consist of a number of copies hereof each
signed by less than all, but together signed by
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all of the parties hereto. It shall not be necessary, in making proof of
this Agreement or any counterpart hereof, to produce or account for any of
the other counterparts.
8.7 SEVERABILITY. Any term or provision of this Agreement that is
invalid or unenforceable shall be ineffective to the extent of such
invalidity or unenforceability without rendering invalid or unenforceable the
remaining terms and provisions of this Agreement. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be
interpreted to be only so broad as is enforceable.
8.8 INCORPORATION OF DOCUMENTS. The Company Letter, Parent Letter, the
Confidentiality Agreement, and all Annexes, Exhibits and Schedules, if any,
attached hereto and referred to herein are hereby incorporated herein and
made a part hereof for all purposes as if fully set forth herein.
8.9 ENFORCEMENT. The parties agree that irreparable damage would occur
in the event that any of the provisions of this Agreement were not performed
in accordance with its specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to seek an injunction
or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement in any court of the
United States located in the State of Ohio or in Ohio state court, this being
in addition to any other remedy to which they are entitled at law or in
equity.
8.10 WAIVERS. Except as provided in this Agreement or in any waiver
pursuant to Section 7.4, no action taken pursuant to this Agreement,
including any investigation by or on behalf of any party, shall be deemed to
constitute a waiver by the party taking such action of compliance with any
representations, warranties, covenants or agreements contained in this
Agreement. The waiver by any party hereto of a breach of any provision
hereunder shall not operate or be construed as a waiver of any prior or
subsequent breach of the same or any other provision hereunder.
8.11 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and supersedes
all prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof.
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
signed on its behalf by its officers thereunto duly authorized, all as of the
day and year first above written.
PREMIER FINANCIAL BANCORP, INC.
By: ------------------------------------
J. Xxxxxx Xxxxx, President and Chief
Executive Officer
PFBI INTERIM BANK
By: -------------------------------------
J. Xxxxxx Xxxxx, an Incorporator
THE SABINA BANK
By: --------------------------------------
Xxxxx X. Xxxxxx, President and
Chief Executive Officer
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