EXHIBIT 2.1
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AGREEMENT OF MERGER AND PLAN OF REORGANIZATION
BY AND AMONG
HORIZON BANCORP,
an Indiana Corporation
HORIZON ACQUISITION CORP.,
an Indiana Corporation
ALLIANCE FINANCIAL CORPORATION,
a Michigan Corporation
HORIZON BANK, NATIONAL ASSOCIATION,
a National Banking Association
AND
ALLIANCE BANKING COMPANY,
a Michigan State-Chartered Commercial Bank
FEBRUARY 24, 2005
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TABLE OF CONTENTS
Page
ARTICLE 1. TERMS OF THE MERGERS........................................................... 2
Section 1.1 Terms of the Bank Merger.................................................... 2
Section 1.2 Effect of the Bank Merger................................................... 2
Section 1.3 Conversion of Shares: The Bank Merger....................................... 3
Section 1.4 Terms of the Holding Company Merger......................................... 3
Section 1.5 Effect of the Holding Company Merger........................................ 3
Section 1.6 Conversion and Exchange of Shares: The Holding Company Merger.............. 4
Section 1.7 Alliance Stock Options...................................................... 4
Section 1.8 Terms of the Third Merger................................................... 4
Section 1.9 Effect of the Third Merger.................................................. 4
Section 1.10 Conversion and Exchange of Shares: The Third Merger........................ 5
Section 1.11 Reservation of Right to Revise Structure................................... 5
Section 1.12 Exchange Procedures........................................................ 5
ARTICLE 2. REPRESENTATIONS AND WARRANTIES OF ALLIANCE..................................... 6
Section 2.1 Organization and Capital Stock.............................................. 7
Section 2.2 Authorization; No Defaults.................................................. 7
Section 2.3 Subsidiaries................................................................ 8
Section 2.4 Financial Information....................................................... 8
Section 2.5 Absence of Changes.......................................................... 9
Section 2.6 Agreements with Banking Authorities......................................... 9
Section 2.7 Tax Matters................................................................. 9
Section 2.8 Litigation.................................................................. 10
Section 2.9 Employment Agreements....................................................... 10
Section 2.10 Reports.................................................................... 10
Section 2.11 Investment Portfolio....................................................... 11
Section 2.12 Loan Portfolio............................................................. 11
Section 2.13 Employee Matters and ERISA................................................. 12
Section 2.14 Title to Properties; Insurance............................................. 13
Section 2.15 Environmental Matters...................................................... 14
Section 2.16 Compliance with Americans with Disabilities Act............................ 15
Section 2.17 Compliance with Law........................................................ 15
Section 2.18 Brokerage.................................................................. 15
Section 2.19 Material Contracts......................................................... 15
Section 2.20 No Undisclosed Liabilities................................................. 16
Section 2.21 Delivery of Documents...................................................... 16
Section 2.22 Interim Events............................................................. 16
Section 2.23 Books and Records.......................................................... 16
Section 2.24 Deposit Insurance.......................................................... 16
Section 2.25 No Regulatory Filings...................................................... 16
Section 2.26 Statements True and Correct................................................ 16
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF HORIZON...................................... 17
Section 3.1 Organization................................................................ 17
Section 3.2 Authorization............................................................... 17
Section 3.3 Financial Information....................................................... 18
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Section 3.4 Reports..................................................................... 18
Section 3.5 Agreements with Banking Authorities......................................... 18
Section 3.6 Compliance with Law......................................................... 18
ARTICLE 4. AGREEMENTS OF ALLIANCE......................................................... 19
Section 4.1 Conduct of Business......................................................... 19
Section 4.2 Breaches.................................................................... 22
Section 4.3 Submission to Shareholders.................................................. 22
Section 4.4 Consummation of Agreement; Regulatory Approvals............................. 22
Section 4.5 Environmental Reports....................................................... 22
Section 4.6 Access to Information....................................................... 23
Section 4.7 Press Release............................................................... 23
Section 4.8 Acquisition Proposals....................................................... 24
Section 4.9 Title Insurance and Surveys................................................. 24
Section 4.10 Conforming Accounting and Reserve Policies; Restructuring Expenses......... 25
Section 4.11 Consolidated Shareholders' Equity.......................................... 26
Section 4.12 Attendance of Standing Committee Meetings.................................. 27
Section 4.13 Cooperation on Conversion of Systems....................................... 27
Section 4.14 Disposition of Alliance Bank 401(k) Plan................................... 27
Section 4.15 Section 125 Plan........................................................... 28
Section 4.16 Other Welfare Benefit Plans................................................ 28
ARTICLE 5. AGREEMENTS OF HORIZON.......................................................... 28
Section 5.1 Regulatory Approvals........................................................ 28
Section 5.2 Breaches.................................................................... 28
Section 5.3 Consummation of Agreement................................................... 28
Section 5.4 Director and Officer Indemnification........................................ 29
Section 5.5 Employee Benefits........................................................... 29
Section 5.6 Severance................................................................... 29
Section 5.7 Employee Transition Plan.................................................... 30
Section 5.8 Southwest Michigan Advisory Board........................................... 30
Section 5.9 Merger and Termination of Benefit Plans..................................... 30
Section 5.10 Further Matters............................................................ 31
ARTICLE 6. CONDITIONS PRECEDENT TO MERGERS................................................ 31
Section 6.1 Conditions of Horizon's Obligations......................................... 31
Section 6.2 Conditions of Alliance's Obligation......................................... 33
ARTICLE 7. TERMINATION OR ABANDONMENT..................................................... 34
Section 7.1 Mutual Agreement............................................................ 34
Section 7.2 Breach of Representations or Agreements..................................... 34
Section 7.3 Environmental Reports....................................................... 34
Section 7.4 Failure of Conditions....................................................... 34
Section 7.5 Approval Denied............................................................. 34
Section 7.6 Shareholder Approval Denial................................................. 34
Section 7.7 Lapse of Time............................................................... 34
Section 7.8 Failure to Recommend........................................................ 34
Section 7.9 Acceptance of Superior Proposal............................................. 35
Section 7.10 Effect of Termination and Abandonment...................................... 35
Section 7.11 Liquidated Damages......................................................... 35
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ARTICLE 8. THE CLOSING OF THE BANK MERGER AND HOLDING COMPANY MERGER...................... 36
Section 8.1 The Closing................................................................. 36
Section 8.2 The Closing Date............................................................ 36
Section 8.3 Actions at Closing.......................................................... 36
ARTICLE 9. GENERAL PROVISIONS............................................................. 38
Section 9.1 Confidential Information.................................................... 38
Section 9.2 Return of Documents......................................................... 38
Section 9.3 Notices..................................................................... 38
Section 9.4 Nonsurvival of Representations and Agreements............................... 39
Section 9.5 Entire Agreement............................................................ 39
Section 9.6 Headings and Captions....................................................... 39
Section 9.7 Waiver, Amendment or Modification........................................... 39
Section 9.8 Rules of Construction....................................................... 40
Section 9.9 Counterparts................................................................ 40
Section 9.10 Successors and Assigns..................................................... 40
Section 9.11 Governing Law; Assignment.................................................. 40
Section 9.12 No Third Party Beneficiaries............................................... 40
APPENDICES
Appendix A Holding Company Merger Agreement
EXHIBITS
Exhibit 1.7 Agreement to Convert Options
Exhibit 4.3 Agreement of Directors of Alliance Concerning
Agreement of Merger
Exhibit 5.6 Termination and Release Agreement
Exhibit 6.1(i) Alliance Legal Opinion
Exhibit 6.2(g) Horizon Legal Opinion
SCHEDULES
Schedule 2.1(d) Lost Stock Affidavits
Schedule 2.6 Agreements with Banking Authorities
Schedule 2.7(a) Tax Matters
Schedule 2.8 Litigation
Schedule 2.9 Employee Matters
Schedule 2.12(b) Problem Loans
Schedule 2.12(c) Loan Losses
Schedule 2.12(d) Loan Participations
Schedule 2.13(b) Employment Laws
Schedule 2.13(c) Employee Benefit Plans
Schedule 2.14 Title to Properties; Insurance
Schedule 2.19 Material Contracts
Schedule 2.20 Undisclosed Liabilities
Schedule 2.22 Interim Events
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AGREEMENT OF MERGER
AND
PLAN OF REORGANIZATION
THIS AGREEMENT OF MERGER AND PLAN OF REORGANIZATION (this "AGREEMENT"), is
made February 24, 2005 by and among HORIZON BANCORP, an Indiana corporation
("HORIZON"), HORIZON ACQUISITION CORP., an Indiana corporation ("HORIZON
ACQUISITION CORP."), ALLIANCE FINANCIAL CORPORATION, a Michigan corporation
("ALLIANCE"), HORIZON BANK, NATIONAL ASSOCIATION, a national banking association
("HORIZON BANK"), and ALLIANCE BANKING COMPANY, a Michigan state-chartered
commercial bank ("ALLIANCE BANK").
WITNESSETH:
WHEREAS, Horizon is a corporation duly organized and existing under the
laws of the State of Indiana and a registered bank holding company under the
Bank Holding Company Act of 1956, as amended, holding one hundred percent (100%)
of the issued and outstanding shares of common stock of each of Horizon
Acquisition Corp. and Horizon Bank, both with their principal places of business
in Michigan City, Indiana; and
WHEREAS, Alliance is a corporation duly organized and existing under the
laws of the State of Michigan and a registered bank holding company under the
Bank Holding Company Act of 1956, as amended, holding one hundred percent (100%)
of the issued and outstanding shares of common stock of Alliance Bank, with its
principal place of business in New Buffalo, Michigan; and
WHEREAS, Horizon Bank is a national banking association duly organized and
existing under the laws of the United States of America with its principal
banking office located in Michigan City, Indiana; and
WHEREAS, Alliance Bank is a banking institution duly organized and
existing under the laws of the State of Michigan with its principal banking
office in New Buffalo, Michigan; and
WHEREAS, Horizon Acquisition Corp. is a newly formed Indiana corporation
(and wholly-owned subsidiary of Horizon) formed for the sole purpose of merging
with and into Alliance; and
WHEREAS, it is the desire of Alliance, Horizon, Horizon Acquisition Corp.,
Horizon Bank, and Alliance Bank to effect a transaction whereby Horizon
Acquisition Corp. will be merged with and into Alliance and concurrently
therewith Alliance Bank will be merged with and into Horizon Bank. After these
mergers, Alliance will be merged with and into Horizon; and
WHEREAS, the Boards of Directors of Alliance, Horizon, Horizon Acquisition
Corp., Horizon Bank and Alliance Bank, respectively, have approved this
Agreement and authorized its execution.
NOW, THEREFORE, in consideration of the premises and the mutual terms and
provisions set forth in this Agreement, the parties agree as follows:
AGREEMENT OF MERGER AND PLAN OF REORGANIZATION PAGE 1
ARTICLE 1. TERMS OF THE MERGERS
Section 1.1 TERMS OF THE BANK MERGER. Subject to the terms and provisions
of this Agreement, the National Bank Act, the Bank Merger Act and the Michigan
Banking Code of 1999, as amended, (the "MICHIGAN BANKING CODE"), Alliance Bank
shall be merged, simultaneously with the Holding Company Merger (as defined
below), with and into Horizon Bank. Horizon Bank shall be the "CONTINUING BANK"
and shall continue its corporate existence under the laws of the United States
of America, pursuant to the provisions of the National Bank Act and particularly
Xxxxxxx 000x xx Xxxxx 00 xx xxx Xxxxxx Xxxxxx Code, as amended, and as provided
under Sections 487.13701 and 487.13702 of the Michigan Banking Code (hereinafter
such merger shall be referred to as the "BANK MERGER").
Section 1.2 EFFECT OF THE BANK MERGER.
(a) GENERAL DESCRIPTION. Upon the effectiveness of the Bank Merger,
the separate existence of Alliance Bank shall cease and the Continuing
Bank shall possess all of the rights, privileges, immunities, powers and
franchises and shall be subject to all of the duties and liabilities of
Alliance Bank existing immediately prior to the effectiveness of the Bank
Merger, and the Continuing Bank shall continue to be a bank organized and
existing under the laws of the United States of America and shall continue
to be a wholly-owned subsidiary of Horizon.
(b) NAME AND OFFICES. The name of the Continuing Bank shall continue
to be "Horizon Bank, National Association." Its principal banking office
shall continue to be located at 000 Xxxxxxxx Xxxxxx, Xxxxxxxx Xxxx,
Xxxxxxx 00000. All branches of Alliance Bank shall become legally
established branches of the Continuing Bank.
(c) BOARD OF DIRECTORS. The Board of the Directors of the Continuing
Bank shall consist of the same individuals that served as the Board of
Directors of Horizon Bank immediately prior to the effective date of the
Bank Merger, until such time as their successors have been elected and
have been qualified.
(d) OFFICERS. The Officers of the Continuing Bank shall consist of
the same individuals that served as the Officers of Horizon Bank
immediately prior to the effective date of the Bank Merger, until such
time as their successors have been elected and have been qualified.
(e) ARTICLES OF ASSOCIATION AND BYLAWS. The Articles of Association
and Bylaws of Horizon Bank in effect immediately prior to the
effectiveness of the Bank Merger shall be and remain the Articles of
Association and Bylaws of the Continuing Bank without change, until the
same shall be amended or replaced as therein provided.
(f) ASSETS, LIABILITIES, AND OBLIGATIONS. All assets and all rights,
franchises and interests of Horizon Bank and Alliance Bank, respectively,
in and to every type of property, all debts due on whatever account and
all choses in action shall be taken and be deemed transferred to and vest
in the Continuing Bank by virtue of the Bank Merger without any order or
other action on the part of any court or otherwise, and the Continuing
Bank shall be responsible for all liabilities and obligations of Horizon
Bank and Alliance Bank, respectively, by virtue of the Bank Merger, all
with the effect provided in 12 U.S.C. Section 215a and Section 487.13703
of the Michigan Banking Code.
AGREEMENT OF MERGER AND PLAN OF REORGANIZATION PAGE 2
Section 1.3 CONVERSION OF SHARES: THE BANK MERGER. All of the 36,091
outstanding shares of common stock of Alliance Bank, par value $10.00 per share,
shall be cancelled for no additional consideration in connection with the Bank
Merger. Horizon shall continue to own all the issued and outstanding common
stock of the Continuing Bank, with the effect that the Bank Merger will not
change the shares of issued and outstanding stock of Horizon Bank.
Section 1.4 TERMS OF THE HOLDING COMPANY MERGER. Subject to the terms and
conditions of this Agreement, the Merger Agreement attached hereto as Appendix A
(the "HOLDING COMPANY MERGER AGREEMENT"), the Michigan Business Corporation Act
of 1972, as amended ("MBCA"), and the Indiana Business Corporation Law ("IBCL")
Horizon Acquisition Corp. shall merge, simultaneously with the Bank Merger, with
and into, Alliance, which shall be the "CONTINUING COMPANY" and shall continue
its corporate existence under the laws of the State of Michigan pursuant to the
provisions of and with the effect provided in the MBCA and the IBCL (hereinafter
such merger is referred to as the "HOLDING COMPANY MERGER"). The Bank Merger and
the Holding Company Merger shall hereafter collectively be referred to as the
"MERGERS".
Section 1.5 EFFECT OF THE HOLDING COMPANY MERGER.
(a) GENERAL DESCRIPTION. Upon the effectiveness of the Holding
Company Merger, the separate existence of Horizon Acquisition Corp. shall
cease and the Continuing Company shall possess all of the rights,
privileges, immunities, powers and franchises and shall be subject to all
of the duties and liabilities of Alliance and Horizon Acquisition Corp.
existing immediately prior to the effectiveness of the Holding Company
Merger, and the Continuing Company shall continue to be a corporation
organized and existing under the laws of the State of Michigan.
(b) NAME AND OFFICES. The name of the Continuing Company shall
continue to be "Alliance Financial Corporation," but its principal office
shall continue to be located at 000 Xxxx Xxxxxxx Xxxxxx, Xxx Xxxxxxx,
Xxxxxxxx 00000.
(c) BOARD OF DIRECTORS. The Board of the Directors of the Continuing
Company shall consist of the Board of Directors of Horizon Acquisition
Corp. immediately prior to the effective date of the Holding Company
Merger, until such time as their successors have been elected and have
been qualified.
(d) OFFICERS. The Officers of the Continuing Company shall consist
of the Officers of Horizon Acquisition Corp. immediately prior to the
effective date of the Holding Company Merger, until such time as their
successors have been elected and have been qualified.
(e) ARTICLES OF INCORPORATION AND BYLAWS. The Articles of
Incorporation and Bylaws of Alliance in effect immediately prior to the
effectiveness of the Holding Company Merger shall be and remain the
Articles of Incorporation and Bylaws of the Continuing Company without
change, until the same shall be amended or replaced as therein provided.
(f) ASSETS, LIABILITIES, AND OBLIGATIONS. All assets and all rights,
franchises and interests of Horizon Acquisition Corp. and Alliance,
respectively, in and to every type of property, all debts due on whatever
account and all choses in action shall be taken and be deemed transferred
to and vest in the Continuing Company by virtue of the
AGREEMENT OF MERGER AND PLAN OF REORGANIZATION PAGE 3
Holding Company Merger without any order or other action on the part of
any court or otherwise, and the Continuing Company shall be responsible
for all liabilities and obligations of Horizon Acquisition Corp. and
Alliance, respectively, by virtue of the Holding Company Merger, all with
the effect provided in IC 23-1-40-6 of the IBCL and Section 450.1735 of
the MBCA.
Section 1.6 CONVERSION AND EXCHANGE OF SHARES: THE HOLDING COMPANY MERGER.
At the Effective Time (as defined in Section 8.2 hereof) of the Holding Company
Merger, all of the issued and outstanding shares of common stock, $1.00 par
value, of Alliance (the "ALLIANCE COMMON STOCK") by virtue of the Holding
Company Merger and without any action on the part of the holders thereof, shall
be converted into the right to receive $11,502,258 in the aggregate in cash
which will equal $38.00 per share if there are 302,691 shares of common stock
issued and outstanding at that time (the "MERGER CONSIDERATION").
Section 1.7 ALLIANCE STOCK OPTIONS. All 15,960 outstanding options to
purchase Alliance Common Stock ("ALLIANCE STOCK OPTIONS"), without any act on
the part of any holder thereof, shall be converted into the right to receive
from Horizon, at the Effective Time, an amount in cash equal to $38.00 minus the
per share exercise price for each share of Alliance Common Stock subject to an
Alliance Stock Option; provided, however, that there shall be withheld from such
cash payment any taxes required to be withheld by applicable law. Each holder of
an Alliance Stock Option shall agree to the treatment of their options in the
manner contemplated by this Section within thirty (30) days after the date of
this Agreement by executing and delivering to Alliance an agreement in the same
form as Exhibit 1.7 attached hereto. Each Alliance Stock Option shall be
cancelled and cease to exist by virtue of such payment. Execution by every
holder of Alliance Stock Options shall not be a condition precedent to
consummation of the transactions contemplated herein, but shall only be a
condition to the holder of such options receiving the payment noted in this
Section 1.7.
Section 1.8 TERMS OF THE THIRD MERGER. Subject to the terms and conditions
of this Agreement, the MBCA and the IBCL and as soon as reasonably practicable
after the Effective Time of the Mergers, the Continuing Company shall merge,
with and into Horizon, which shall be the "SURVIVING COMPANY" and shall continue
its corporate existence under the laws of the State of Indiana pursuant to the
provisions of and with the effect provided in the MBCA and the IBCL (hereinafter
such merger is referred to as the "THIRD MERGER").
Section 1.9 EFFECT OF THE THIRD MERGER.
(a) GENERAL DESCRIPTION. Upon the effectiveness of the Third Merger,
the separate existence of the Continuing Company shall cease and Horizon
shall possess all of the rights, privileges, immunities, powers and
franchises and shall be subject to all of the duties and liabilities of
the Continuing Company and Horizon existing immediately prior to the
effectiveness of the Third Merger, and Horizon shall continue to be a
corporation organized and existing under the laws of the State of Indiana.
(b) NAME AND OFFICES. The name of the Surviving Company shall
continue to be "Horizon Bancorp." Its principal office shall continue to
be located at 000 Xxxxxxxx Xxxxxx, Xxxxxxxx Xxxx, Xxxxxxx 00000.
(c) BOARD OF DIRECTORS. The Board of the Directors of the Surviving
Company shall consist of the same individuals that served as the Board of
Directors of
AGREEMENT OF MERGER AND PLAN OF REORGANIZATION PAGE 4
Horizon immediately prior to the effective date of the Third Merger, until
such time as their successors have been elected and have been qualified.
(d) OFFICERS. The Officers of the Surviving Company shall consist of
the same individuals that served as the Officers of Horizon immediately
prior to the effective date of the Third Merger, until such time as their
successors have been elected and have been qualified.
(e) ARTICLES OF INCORPORATION AND BYLAWS. The Articles of
Incorporation and Bylaws of Horizon in effect immediately prior to the
effectiveness of the Third Merger shall be and remain the Articles of
Incorporation and Bylaws of the Surviving Company without change, until
the same shall be amended or replaced as therein provided.
(f) ASSETS, LIABILITIES, AND OBLIGATIONS. All assets and all rights,
franchises and interests of Horizon and the Continuing Company,
respectively, in and to every type of property, all debts due on whatever
account and all choses in action shall be taken and be deemed transferred
to and vest in the Surviving Company by virtue of the Third Merger without
any order or other action on the part of any court or otherwise, and the
Surviving Company shall be responsible for all liabilities and obligations
of Horizon and the Continuing Company, respectively, by virtue of the
Third Merger, all with the effect provided in IC 23-1-40-6 of the IBCL and
Section 450.1735 of the MBCA.
Section 1.10 CONVERSION AND EXCHANGE OF SHARES: THE THIRD MERGER. At the
closing of the Third Merger, each common share of the Continuing Company issued
and outstanding immediately prior to the closing, by virtue of the Third Merger
and without any action on the part of the holders thereof, shall be cancelled
for no additional consideration and all certificates shall be surrendered to the
Surviving Company.
Section 1.11 RESERVATION OF RIGHT TO REVISE STRUCTURE. At Horizon's
election, any of the mergers may alternatively be structured so that (a)
Alliance and/or Alliance Bank is merged with and into any other direct or
indirect wholly-owned subsidiary of Horizon or (b) any direct or indirect
wholly-owned subsidiary of Horizon is merged with and into Alliance or Alliance
Bank; provided, however, that no such change shall (i) alter or change the
amount or kind of the Merger Consideration payable in the Holding Company Merger
or the treatment of the holders of Alliance Common Stock, or (ii) materially
impede or delay consummation of the transactions contemplated by this Agreement.
In the event of such an election, the parties agree to execute an appropriate
amendment to this Agreement in order to reflect such election.
Section 1.12 EXCHANGE PROCEDURES.
(a) Horizon Trust and Investment Management, N.A. ("HORIZON TRUST")
shall act as the Exchange Agent in the Holding Company Merger (the
"EXCHANGE AGENT"). At the Effective Time, Horizon shall deposit the Merger
Consideration in a separate account at Horizon Trust (the "EXCHANGE FUND")
which shall be used for the sole purpose of making disbursements to the
Alliance shareholders in connection with the Holding Company Merger.
(b) Not less than ten (10) days prior to the anticipated Effective
Time, the Exchange Agent shall mail to each record holder of any
certificate representing Alliance Common Stock (a "CERTIFICATE") whose
shares will be converted into the right to receive the Merger
Consideration a letter of transmittal (which shall specify that delivery
shall be
AGREEMENT OF MERGER AND PLAN OF REORGANIZATION PAGE 5
effected, and risk of loss and title to the Certificates shall pass, only
upon proper delivery of the Certificates to the Exchange Agent and shall
be in such form and have such other provisions as Horizon may reasonably
specify) (each such letter, the "MERGER LETTER OF TRANSMITTAL") and
instructions for use in effecting the surrender of the Certificates in
exchange for the Merger Consideration.
(c) As soon as reasonably practical, but not more than five (5)
business days after surrender to the Exchange Agent of a Certificate (but
not prior to the Effective Time), together with a Merger Letter of
Transmittal duly executed and any other documents reasonably required by
the Exchange Agent, the Exchange Agent shall transmit to the holder of
such Certificate the Merger Consideration. No interest on the Merger
Consideration issuable upon the surrender of the Certificates shall be
paid or accrued for the benefit of holders of Certificates. If the Merger
Consideration is to be issued to a person other than a person in whose
name a surrendered Certificate is registered, it shall be a condition of
issuance that the surrendered Certificate shall be properly endorsed or
otherwise in proper form for transfer and that the person requesting such
issuance shall pay to the Exchange Agent any required transfer or other
taxes or establish to the satisfaction of the Exchange Agent that such tax
has been paid or is not applicable.
(d) Horizon reserves the right in all cases involving more than five
hundred (500) shares of Alliance Common Stock to require that a surety
bond on terms and in an amount reasonably satisfactory to Horizon be
provided to Horizon at the expense of the Alliance shareholder in the
event that such shareholder claims loss of a Certificate and requests that
Horizon waive the requirement for surrender of such Certificate.
(e) Any portion of the Exchange Fund that remains unclaimed by the
shareholders of Alliance for six (6) months after the Effective Time shall
be returned to Horizon. Any shareholders of Alliance who have not
theretofore complied with this Section shall thereafter look only to
Horizon for payment of the Merger Consideration deliverable in respect of
each share of Alliance Common Stock such shareholder holds as determined
pursuant to this Agreement, in each case, without any interest thereon.
(f) Notwithstanding the foregoing, neither the Exchange Agent nor
any party hereto shall be liable to any former holder of Alliance Common
Stock for any amount properly delivered to a public official pursuant to
applicable abandoned property, escheat or similar laws.
ARTICLE 2. REPRESENTATIONS AND WARRANTIES OF ALLIANCE
On or prior to the date hereof, Alliance has delivered to Horizon a
schedule (the "DISCLOSURE SCHEDULE") setting forth, among other things, items,
the disclosure of which are necessary or appropriate either in response to an
express disclosure requirement contained in a provision hereof or as an
exception to one or more representations or warranties contained in this Article
2 or to one or more of its covenants contained in Article 4; provided, that the
mere inclusion of an item in the Disclosure Schedule as a exception to a
representation or warranty shall not be deemed an admission by Alliance that
such item represents a material exception or fact, event or circumstance or that
such items is reasonably likely to have or result in a Material Adverse Effect
on Alliance. Alliance's representations, warranties and covenants contained in
AGREEMENT OF MERGER AND PLAN OF REORGANIZATION PAGE 6
this Agreement shall not be deemed to be untrue, incorrect or to have been
breached as a result of effects on Alliance arising solely from actions taken in
compliance with a written request from Horizon.
Subject to the foregoing, Alliance hereby makes the following
representations and warranties to Horizon:
Section 2.1 ORGANIZATION AND CAPITAL STOCK.
(a) Alliance is a corporation duly incorporated and in good standing
under the laws of the State of Michigan, is a registered bank holding
company under the Bank Holding Company Act of 1956, as amended, and has
the corporate power and authority to own all of its property and assets,
to incur all of its liabilities and to carry on its business as now being
conducted.
(b) Alliance has authorized capital stock of 2,000,000 shares of
common stock, $1.00 par value per share ("ALLIANCE COMMON STOCK"), 302,691
shares of which are issued and outstanding and 15,960 of which are subject
to options which are currently outstanding (the "ALLIANCE STOCK OPTIONS").
All of the issued and outstanding shares of Alliance Common Stock are duly
and validly issued and outstanding, fully paid and non-assessable. None of
the outstanding shares of Alliance Common Stock has been issued in
violation of any preemptive rights of the current or past shareholders of
Alliance or in violation of any applicable federal or state securities
laws or regulations. All of the Alliance Stock Options have been duly and
validly issued.
(c) Except as set forth in Section 2.1(b) there are no shares of
capital stock or other equity securities of Alliance outstanding and no
outstanding options, warrants, rights to subscribe for, calls, or
commitments of any character whatsoever relating to, or securities or
rights convertible into or exchangeable for, shares of the capital stock
of Alliance or contracts, commitments, understandings or arrangements by
which Alliance is or may be obligated to issue additional shares of its
capital stock or options, warrants or rights to purchase or acquire any
additional shares of its capital stock.
(d) Except as disclosed in Section 2.1(d) of the Disclosure
Schedule, each certificate representing shares of Alliance Common Stock
issued by Alliance in replacement of any certificate theretofore issued by
it which was claimed by the record holder thereof to have been lost,
stolen or destroyed was issued by Alliance only upon receipt of an
affidavit of lost stock certificate which contains an indemnity agreement
in favor of Alliance.
Section 2.2 AUTHORIZATION; NO DEFAULTS.
(a) The Boards of Directors of Alliance and Alliance Bank has each,
by all appropriate action, approved this Agreement and the Mergers and has
authorized the execution of this Agreement on its behalf by its duly
authorized officers and the performance, respectively, by Alliance and
Alliance Bank of its obligations hereunder.
(b) Nothing in the Articles of Incorporation or Bylaws of Alliance,
as amended, in the Charter or Bylaws of Alliance Bank, or in any
agreement, instrument, decree, proceeding, law or regulation (except as
specifically referred to in or contemplated by this Agreement) by or to
which Alliance or Alliance Bank is bound or subject, would prohibit either
Alliance or Alliance Bank from entering into and
AGREEMENT OF MERGER AND PLAN OF REORGANIZATION PAGE 7
consummating, or would be violated or breached by Alliance's or Alliance
Bank's consummation of, this Agreement and the transactions contemplated
herein and the Mergers on the terms and conditions herein contained.
(c) This Agreement has been duly and validly executed and delivered
by Alliance and Alliance Bank and constitutes a legal, valid and binding
obligation of Alliance and Alliance Bank, enforceable against Alliance and
Alliance Bank in accordance with its terms, and, except for the approval
by Alliance, as the sole shareholder of Alliance Bank, and Alliance's
shareholders, no other corporate acts or proceedings are required to be
taken by Alliance or Alliance Bank to authorize the execution, delivery
and performance of this Agreement.
(d) Alliance or Alliance Bank is not, and will not be by reason of
the consummation of the transactions contemplated herein, in default under
or in violation of any provision of, nor will the consummation of the
transactions contemplated herein afford any party a right to accelerate
any indebtedness under, Alliance's Articles of Incorporation or Bylaws or
Alliance Bank's Articles of Incorporation or Bylaws, any promissory note,
indenture or other evidence of indebtedness or security therefor, or any
lease, contract, or other commitment or agreement to which Alliance or
Alliance Bank is a party or by which Alliance or Alliance Bank or their
property is bound.
(e) Except for the requisite approvals of and filings with the FDIC,
the Board of Governors of the Federal Reserve System and its delegates
(the "FRB"), the Office of the Comptroller of the Currency (the "OCC"),
the Michigan Office of Financial and Insurance Services ("MOFIS"), the
Indiana Secretary of State, and the Michigan Department of Commerce, no
notice to, filing with, authorization by, or consent or approval of, any
federal or state regulatory authority is necessary for the execution and
delivery of this Agreement or the consummation of the Mergers by Alliance
and Alliance Bank.
Section 2.3 SUBSIDIARIES. Alliance Bank is duly organized and validly
existing under the laws of the State of Michigan and has the corporate power to
own its properties and assets, to incur its liabilities and to carry on its
business as now being conducted. Alliance owns of record and beneficially free
and clear of all liens and encumbrances all of the 36,091 outstanding shares of
the capital stock of Alliance Bank. Alliance has no other direct or indirect
subsidiaries. There are no options, warrants or rights outstanding to acquire
any capital stock of Alliance Bank, and no person or entity has any other right
to purchase or acquire any unissued shares of stock of Alliance Bank, nor does
Alliance Bank have any obligation of any nature with respect to its unissued
shares of stock. Except for the ownership of readily marketable securities,
Federal Home Loan Bank or Federal Reserve Bank stock, neither Alliance nor
Alliance Bank is a party to any partnership or joint venture or owns an equity
interest in any other business or enterprise.
Section 2.4 FINANCIAL INFORMATION. The audited consolidated balance sheets
of Alliance and Alliance Bank as of December 31, 2002 and 2003, and the related
audited consolidated statements of income, changes in equity capital, and cash
flows, for the three years ended December 31, 2003, together with the notes
thereto; and the quarterly Reports of Condition and Income of Alliance Bank as
filed with the Federal Deposit Insurance Corporation (the "FDIC") for the
quarter ended September 30, 2004, (the "ALLIANCE BANK REPORTS"); all of which
have been previously furnished by Alliance to Horizon (collectively the
"ALLIANCE FINANCIAL
AGREEMENT OF MERGER AND PLAN OF REORGANIZATION PAGE 8
STATEMENTS"), together with all subsequent financial statements filed with the
FDIC prior to the Effective Date, shall have been prepared in accordance with
generally accepted accounting principles ("GAAP") applied on a consistent basis
(except as disclosed therein and except for regulatory reporting differences
required with respect to Alliance Bank's Reports) and fairly present the
consolidated financial position and the consolidated results of operations,
changes in shareholders' equity and cash flows of Alliance and Alliance Bank in
all material respects as of the dates and for the periods indicated (subject, in
the case of interim financial statements, to normal recurring year-end
adjustments, none of which are material). Alliance and Alliance Bank each does
not have any material liability, fixed or contingent, except to the extent set
forth in the Alliance Financial Statements or incurred in the ordinary course of
business since the date of the most recent Alliance Financial Statement.
Section 2.5 ABSENCE OF CHANGES. Since September 30, 2004, there has not
been any Material Adverse Change with respect to Alliance or Alliance Bank. For
purposes of this Agreement, "MATERIAL ADVERSE CHANGE" means, with respect to
Alliance or Alliance Bank, any change that (a) is both material and adverse to
the financial position, results of operations, business or future prospects of
Alliance or Alliance Bank, other than (i) the effects of any change attributable
to or resulting from changes in economic conditions, laws, regulations or
accounting guidelines (GAAP or otherwise) applicable to depository institutions
generally, or in general, levels of interest rates, (ii) payments associated
with the Holding Company Merger or the Bank Merger, (iii) charges required under
Section 4.10 hereof, or (iv) actions or omissions of either Alliance or Alliance
Bank taken with the prior informed written consent of Horizon in contemplation
of the transactions contemplated by this Agreement; or (b) would materially
impair the ability of either Alliance or Alliance Bank to perform its
obligations under this Agreement or otherwise materially threaten or materially
impede the consummation of the Holding Company Merger or the Bank Merger and the
other transactions contemplated by this Agreement.
Section 2.6 AGREEMENTS WITH BANKING AUTHORITIES. Except as otherwise
disclosed in Section 2.6 of the Disclosure Schedule, neither Alliance nor
Alliance Bank is subject (or has been subject during the last five (5) years) to
any order (other than orders applicable to banks generally) or is a party (or
has been a party during the last five (5) years) to any agreement or memorandum
of understanding with any federal or state agency charged with the supervision
or regulation of banks or bank holding companies, including without limitation
the MOFIS, the FDIC and the FRB.
Section 2.7 TAX MATTERS.
(a) Alliance and Alliance Bank have each filed with the appropriate
governmental agencies all federal, state and local income, franchise,
excise, sales, use, real and personal property and other tax returns and
reports required to be filed by it and has paid all taxes required to be
paid by it on or before their due date. Except as set forth in Section
2.7(a) of the Disclosure Schedule, neither Alliance nor Alliance Bank is
(i) delinquent in the payment of any taxes shown on such returns or
reports or on any assessments received by it for such taxes; (ii) aware of
any pending or threatened examination for income taxes for any year by the
Internal Revenue Service (the "IRS") or any state tax agency; (iii)
subject to any agreement extending the period for assessment, payment or
collection of any federal or state tax; or (iv) a party to any action or
proceeding with, nor has any claim been asserted against it by, any court,
AGREEMENT OF MERGER AND PLAN OF REORGANIZATION PAGE 9
administrative agency or commission or other federal, state or local
governmental authority or instrumentality ("GOVERNMENTAL AUTHORITY") for
assessment or collection of taxes.
(b) None of the tax returns of Alliance or Alliance Bank has been
audited by the IRS or any state tax agency for any period since December
31, 2001. Neither Alliance nor Alliance Bank is the subject of any
threatened action or proceeding by any Governmental Authority for
assessment or collection of taxes.
(c) The reserve for taxes in the unaudited financial statements of
Alliance for the quarter ended September 30, 2004, is, in the opinion of
management, adequate to cover all of the tax liabilities of Alliance and
Alliance Bank (including, without limitation, income taxes and franchise
fees) as of such date in accordance with GAAP.
(d) Alliance has not filed any consolidated federal income tax
return with an "affiliated group" (within the meaning of Section 1505 of
the Internal Revenue Code of 1986, as amended) (the "CODE") where Alliance
was not the common parent of the group. Neither Alliance nor Alliance Bank
is, or has been, a party to any tax allocation agreement or arrangement
pursuant to which it has any contingent or outstanding liability to anyone
other than Alliance or Alliance Bank.
(e) Alliance has disclosed in all of its federal income tax returns
all positions taken therein that could give rise to a substantial
understatement of federal income tax within the meaning of Section 6662 of
the Code.
(f) Alliance has never elected under Section 1362 of the Code (or
under any analogous or similar provision of state or local law in any
jurisdiction where Alliance files its tax returns) to be treated as an "S"
Corporation for state or federal tax purposes.
Section 2.8 LITIGATION. Except as set forth in Section 2.8 of the
Disclosure Schedule and except for foreclosure and other collection proceedings
commenced in the ordinary course of business by Alliance Bank with respect to
loans in default with respect to which no counter claims have been asserted
against Alliance Bank, there is no litigation, claim or other proceeding pending
or threatened before any judicial, administrative or regulatory agency or
tribunal against or involving Alliance or Alliance Bank, or to which any of the
properties of Alliance or Alliance Bank is subject.
Section 2.9 EMPLOYMENT AGREEMENTS. Except as set forth in Section 2.9 of
the Disclosure Schedule, neither Alliance nor Alliance Bank is a party to or
bound by any written contract for the employment, retention, engagement, or
severance of any officer, employee, agent, consultant or other person or entity
which, by its terms, is not terminable by Alliance or Alliance Bank on thirty
(30) days' written notice or less without the payment of any amount by reason of
such termination. Section 2.9 of the Disclosure Schedule also contains a list of
all current employees of Alliance and Alliance Bank with their annual
compensation, employment start date, current employment status, employee benefit
plan elections and such other information as Horizon may reasonably require.
Section 2.10 REPORTS. Since January 1, 2003, Alliance and Alliance Bank
have filed all reports, notices and other statements, together with any
amendments required to be made with respect thereto, if any, that they were
required to file with (i) the FRB, (ii) the FDIC, (iii) the MOFIS, and (iv) any
other governmental authority with jurisdiction over Alliance or Alliance
AGREEMENT OF MERGER AND PLAN OF REORGANIZATION PAGE 10
Bank. As of their respective dates, each of such reports and documents,
including the financial statements, exhibits and schedules thereto, complied in
all material respects with the relevant statutes, rules and regulations enforced
or promulgated by the regulatory authority with which they were filed.
Section 2.11 INVESTMENT PORTFOLIO. All United States Treasury securities,
obligations of other United States Government agencies and corporations,
obligations of States of the United States and their political subdivisions, and
other investment securities classified as "held to maturity" held by Alliance
and Alliance Bank, as reflected in the latest balance sheet in the Alliance
Financial Statements, are carried in the aggregate at no more than cost adjusted
for amortization of premiums and accretion of discounts. All United States
Treasury securities, obligations of other United States Government agencies and
corporations, obligations of States of the United States and their political
subdivisions, and other investment securities classified as "available for sale"
held by Alliance and Alliance Bank, as reflected in the latest balance sheet in
the Alliance Financial Statements, are carried in the aggregate at market value.
Provisions for losses have been made on all such securities which have had a
decline in value deemed "other than temporary" as defined in SEC Staff
Accounting Bulletin No. 59. None of the investments reflected in the Alliance
Financial Statements as of and for the quarter ended September 30, 2004, and
none of the investments made by Alliance or Alliance Bank since September 30,
2004, are subject to any restriction, whether contractual or statutory, which
materially impairs the ability of Alliance or Alliance Bank to dispose freely of
such investment at any time.
Section 2.12 LOAN PORTFOLIO.
(a) All loans shown in the Alliance Financial Statements at
September 30, 2004, or which were entered into after September 30, 2004,
but before the Closing Date, were and will be made in all material
respects for good, valuable and adequate consideration in the ordinary
course of the business of Alliance Bank, in accordance in all material
respects with sound banking practices, and are not subject to any material
defenses, set offs or counterclaims, including without limitation any such
as are afforded by usury or truth in lending laws, except as may be
provided by bankruptcy, insolvency or similar laws or by general
principles of equity. The notes or other evidences of indebtedness
evidencing such loans and all forms of pledges, mortgages and other
collateral documents and security agreements are, and will be,
enforceable, valid, true and genuine and what they purport to be. Alliance
and Alliance Bank have complied, and will prior to the Closing Date
comply, with all laws and regulations relating to such loans, Alliance and
Alliance Bank have not sold, purchased or entered into any loan
participation arrangement except where such participation is on a pro rata
basis according to the respective contributions of the participants to
such loan amount. Alliance has no knowledge that any condition of property
in which Alliance Bank has an interest as collateral to secure a loan
violates the Environmental Laws (defined in Section 2.15(a)) or obligates
Alliance Bank or the owner or operator of such property to remedy,
stabilize, neutralize or otherwise alter the environmental condition of
such property.
(b) Except as set forth in Section 2.12(b) of the Disclosure
Schedule, as of September 30, 2004, Alliance Bank had no loan in excess of
$10,000 that has been classified by regulatory examiners or management of
Alliance Bank as "Substandard," "Doubtful" or "Loss" or in excess of
$10,000 that has been identified by accountants or auditors (internal or
external) as having a significant risk of uncollectability. As of the
AGREEMENT OF MERGER AND PLAN OF REORGANIZATION PAGE 11
date hereof, the most recent loan watch list of Alliance Bank and a list
of all loans in excess of $10,000 that Alliance Bank has determined to be
ninety (90) days or more past due with respect to principal or interest
payments or has placed on nonaccrual status are set forth in Section
2.12(b) of the Disclosure Schedule.
(c) Except as set forth in Section 2.12(c) of the Disclosure
Schedule, the reserves, the allowance for possible loan and lease losses
and the carrying value for real estate owned which are shown on the
Alliance Financial Statements are, in the opinion of management of
Alliance, adequate in all respects under the requirements of GAAP applied
on a consistent basis to provide for possible losses on items for which
reserves were made, on loans and leases outstanding and real estate owned
as of the respective dates.
(d) Set forth in Section 2.12(d) of the Disclosure Schedule is a
true, accurate and complete list of all loans in which Alliance Bank has
any participation interest or which have been made with or through another
financial institution on a recourse basis against Alliance Bank.
SECTION 2.13 EMPLOYEE MATTERS AND ERISA.
(a) Neither Alliance nor Alliance Bank has entered into any
collective bargaining agreement with any labor organization with respect
to any group of employees of Alliance or Alliance Bank, and there is no
present effort nor existing proposal to attempt to unionize any group of
employees of Alliance or Alliance Bank.
(b) Except as set forth in Section 2.13(b) of the Disclosure
Schedule, (i) Alliance and Alliance Bank are and have been in compliance
with all applicable laws respecting employment and employment practices,
terms and conditions of employment and wages and hours, including, without
limitation, any such laws respecting employment discrimination and
occupational safety and health requirements, and neither Alliance nor
Alliance Bank is engaged in any unfair labor practice; (ii) there is no
unfair labor practice complaint against Alliance or Alliance Bank pending
or threatened before the National Labor Relations Board; (iii) there is no
labor dispute, strike, slowdown or stoppage actually pending or threatened
against or directly affecting Alliance or Alliance Bank; and (iv) neither
Alliance nor Alliance Bank has experienced any material work stoppage or
other material labor difficulty during the past five (5) years.
(c) Except as may be disclosed in Section 2.13(c) of the Disclosure
Schedule, neither Alliance nor Alliance Bank maintains, contributes to or
participates in or has any liability under any employee benefit plans, as
defined in Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), including (without limitation) any
multiemployer plan (as defined in Section 3(37) of ERISA), or any
nonqualified employee benefit plans or deferred compensation, bonus, stock
or incentive plans, or other employee benefit or fringe benefit programs
for the benefit of former or current employees or directors (or their
beneficiaries or dependents) of Alliance or Alliance Bank (the "EMPLOYEE
PLANS"). No present or former employee of Alliance or Alliance Bank has
been charged with breaching nor has breached a fiduciary duty under any of
the Employee Plans. Except as may be disclosed in Section 2.13(c) of the
Disclosure Schedule, neither Alliance nor Alliance Bank participates in,
nor has it in the past five (5) years participated in, nor has it any
present or future obligation or liability
AGREEMENT OF MERGER AND PLAN OF REORGANIZATION PAGE 12
under, any multiemployer plan. Except as may be disclosed in Section
2.13(c) of the Disclosure Schedule, neither Alliance nor Alliance Bank
maintains, contributes to, or participates in, any plan that provides
health, major medical, disability or life insurance benefits to former
employees or directors of Alliance or Alliance Bank. Alliance has provided
to Horizon a true, accurate and complete copy of each written plan or
program disclosed in the Disclosure Schedule. Alliance has also provided
to Horizon, with respect to each such plan or program to the extent
available to Alliance, all (i) amendments or supplements thereto, (ii)
summary plan descriptions, (iii) descriptions of all current participants
in such plans and programs and all participants with benefit entitlements
under such plans and programs, (iv) contracts relating to plan documents,
(v) actuarial valuations for any defined benefit plan, (vi) valuations for
any plan as of the most recent date, (vii) determination letters from the
IRS, (viii) the most recent annual report filed with the IRS, and (ix)
trust agreements.
(d) All liabilities of the Employee Plans have been funded on the
basis of consistent methods in accordance with sound actuarial assumptions
and practices, and no Employee Plan, at the end of any plan year, or at
September 30, 2004, had or has had an accumulated funding deficiency
(within the meaning of Section 302 of ERISA or Section 412 of the Code).
No actuarial assumptions have been changed since the last written report
of actuaries on such Employee Plans. All insurance premiums (including
premiums to the Pension Benefit Guaranty Corporation) have been paid in
full, subject only to normal retrospective adjustments in the ordinary
course. Except as may be noted on the Alliance Financial Statements,
Alliance and Alliance Bank have no contingent or actual liabilities under
Title IV of ERISA as of September 30, 2004. No accumulated funding
deficiency (within the meaning of Section 302 of ERISA or Section 412 of
the Code has been incurred with respect to any of the Employee Plans,
whether or not waived, nor does Alliance or any of its affiliates have any
liability or potential liability as a result of the underfunding of, or
termination of, or withdrawal from, any plan by Alliance or by any person
which may be aggregated with Alliance for purposes of Section 412 of the
Code. No reportable event (as defined in Section 4043 of ERISA) has
occurred with respect to any of the Employee Plans as to which a notice
would be required to be filed with the Pension Benefit Guaranty
Corporation. No claim is pending or threatened with respect to any
Employee Plan (other than a routine claim for benefits for which plan
administrative review procedures have not been exhausted) for which
Alliance or Alliance Bank would be liable after September 30, 2004, except
as is reflected on the Alliance Financial Statements. As of September 30,
2004, Alliance and Alliance Bank had no liability for excise taxes under
Sections 4971, 4975, 4976, 4977, 4979 or 4980B of the Code or for a fine
under Section 502 of ERISA with respect to any Employee Plan. All Employee
Plans have been operated, administered and maintained in accordance with
the terms thereof and in compliance with the requirements of all
applicable laws, including, without limitation, ERISA.
Section 2.14 TITLE TO PROPERTIES; INSURANCE. Section 2.14 to the
Disclosure Schedule sets forth a list of all real property owned or leased by
Alliance or Alliance Bank and a reasonable description of the size, use and
location thereof. Except as described in Section 2.14 of the Disclosure
Schedule, Alliance and Alliance Bank have marketable title, insurable at
standard rates, free and clear of all liens, charges and encumbrances (except
taxes which are a lien but not yet payable and liens, charges or encumbrances
reflected in the Alliance Financial
AGREEMENT OF MERGER AND PLAN OF REORGANIZATION PAGE 13
Statements and easements, rights-of-way, and other restrictions which do not
interfere with the current use of such properties, and, in the case of Other
Real Estate Owned, as such real estate is internally classified on the books of
Alliance or Alliance Bank, rights of redemption under applicable law) to all
real properties reflected on the Alliance Financial Statements as being owned by
Alliance or Alliance Bank. All real properties are currently being used in
compliance with all zoning laws, and there are no encroachments or other
violations of law with respect to any such property. All leasehold interests
used by Alliance and Alliance Bank in their operations, if any, are held
pursuant to lease agreements that are valid and enforceable in accordance with
their terms, and no party to any such lease agreement is currently in default
thereunder. No leasehold interest is subject to any superior mortgage or other
lien. All such properties comply with all applicable private agreements, zoning
requirements and other governmental laws and regulations relating thereto, and
there are no condemnation proceedings pending or threatened with respect to such
properties. Alliance and Alliance Bank have valid title or other ownership
rights under licenses to all intangible personal or intellectual property used
by Alliance or Alliance Bank in their respective businesses free and clear of
any claim, defense or right of any other person or entity, subject only to
rights of the licensor pursuant to applicable license agreements, which rights
do not materially adversely interfere with the use or enjoyment of such
property. All insurable real and personal properties owned or held by Alliance
and Alliance Bank are insured in such amounts, and against fire and other risks
insured against by extended coverage and public liability insurance, as, in the
opinion of management of Alliance, is customary with companies of the same size
and in the same business. Section 2.14 of the Disclosure Schedule also contains
a list of all prior insurance companies and insurance coverages provided by
those companies for Alliance or Alliance Bank during the last five (5) years and
a listing of all claims made under any such policy involving $40,000 or more for
any single claim.
Section 2.15 ENVIRONMENTAL MATTERS.
(a) As used in this Agreement, "ENVIRONMENTAL LAWS" means all local,
state and federal environmental, health and safety laws and regulations in
all jurisdictions in which the parties hereto have done business or owned
property, including, without limitation, the Federal Resource Conservation
and Recovery Act, the Federal Comprehensive Environmental Response,
Compensation and Liability Act, the Federal Clean Water Act, the Federal
Clean Air Act, and the Federal Occupational Safety and Health Act.
(b) To the knowledge of management of Alliance and Alliance Bank,
neither the conduct nor operation of Alliance or Alliance Bank nor any
condition of any property owned by Alliance or Alliance Bank within the
past ten (10) years and used in its business operations or the condition
of any property owned by Alliance or Alliance Bank within the past ten
(10) years but not used in its business operations, violates or violated
Environmental Laws or contained or contains any underground storage tank,
and no condition or event has occurred with respect to it or any such
property that, with notice or the passage of time, or both, would
constitute a violation of Environmental Laws or obligate Alliance or
Alliance Bank to remedy, stabilize, neutralize or otherwise alter the
environmental condition of any such property. Neither Alliance nor
Alliance Bank has received any notice from any person or entity that
Alliance or Alliance Bank or the operation of any facilities or any
property owned by Alliance or Alliance Bank is or was in violation of any
Environmental Laws or that Alliance or Alliance Bank is responsible
AGREEMENT OF MERGER AND PLAN OF REORGANIZATION PAGE 14
for the cleanup of any pollutants, contaminants, or hazardous or toxic
wastes, substances or materials at, on or beneath any such property.
Section 2.16 COMPLIANCE WITH AMERICANS WITH DISABILITIES ACT. Alliance and
Alliance Bank are in compliance with all applicable provisions of the Americans
with Disabilities Act (the "ADA") and no action under the ADA against Alliance
or Alliance Bank or any of their properties has been initiated or has been
threatened or contemplated.
Section 2.17 COMPLIANCE WITH LAW. Alliance and Alliance Bank have all
licenses, franchises, permits and other governmental authorizations that are
legally required to enable them to conduct their respective businesses as
presently conducted and are in compliance with all applicable laws and
regulations.
Section 2.18 BROKERAGE. Except for a fee payable to Austin Associates, LLC
in connection with it acting as financial advisor and issuing a fairness opinion
to Alliance, there are no existing claims or agreements for brokerage
commissions, finders' fees, investment banking fees, or similar compensation in
connection with the Mergers payable by Alliance or Alliance Bank.
Section 2.19 MATERIAL CONTRACTS. Except as set forth in Section 2.19 of
the Disclosure Schedule, neither Alliance nor Alliance Bank is a party to or
bound by any oral or written:
(a) agreement, security agreement, pledge agreement, contract or
indenture under which it has borrowed or will borrow money or pursuant to
which it has granted any lien on any of its assets (not including federal
funds and money deposited, including without limitation, checking and
savings accounts and certificates of deposit);
(b) guaranty of any obligation for the borrowing of money or
otherwise, excluding endorsements made for collection and guarantees made
in the ordinary course of business and letters of credit issued in the
ordinary course of business;
(c) agreement with any present or former officer, director or
shareholder (except for deposit or loan agreements entered into in the
ordinary course of business);
(d) any lease or license of personal property (whether tangible or
intangible, including intellectual property and software), whether as
licensor or licensee involving payments or receipts in excess of $10,000;
(e) contract or commitment for the purchase of materials, supplies
or other real or personal property in an amount in excess of $10,000 or
for the performance of services involving an amount in excess of $10,000;
(f) joint venture or partnership agreement or arrangement; or
(g) contract, agreement or other commitment not made in the ordinary
course of business and involving payments or receipts in excess of
$10,000.
All of the contracts listed in Section 2.19 of the Disclosure Schedule (1) are
currently in full force and effect, (2) represent due and valid obligations of
the parties thereto, and (3) are enforceable against each of the parties thereto
in accordance with their terms. Neither Alliance nor Alliance Bank is in default
with respect to any such contract, and neither Alliance nor Alliance Bank is
aware of any default by any other party to any such contract.
AGREEMENT OF MERGER AND PLAN OF REORGANIZATION PAGE 15
Section 2.20 NO UNDISCLOSED LIABILITIES. Alliance and Alliance Bank do not
have any liability, whether asserted or unasserted, whether absolute or
contingent, whether accrued or unaccrued, whether liquidated or unliquidated,
and whether due or to become due (and there is no past or present fact,
situation, circumstance, condition or other basis for any present or future
action, suit or proceeding, hearing, charge, complaint, claim or demand against
Alliance or Alliance Bank giving rise to any such liability) required in
accordance with GAAP to be reflected in an audited consolidated balance sheet of
Alliance or the notes thereto, except (i) for liabilities set forth or reserved
against in the Alliance Financial Statements, (ii) for normal fluctuations in
the amount of the liabilities referred to in clause (i) above or other
liabilities occurring in the ordinary course of business of Alliance and
Alliance Bank since the date of the most recent balance sheet included in the
Alliance Financial Statements, which such fluctuations in the aggregate are not
material to Alliance and Alliance Bank taken as a whole, (iii) liabilities
relating to the possible sale of Alliance or other transactions contemplated by
this Agreement, and (iv) as may be disclosed in Section 2.20 of the Disclosure
Schedule.
Section 2.21 DELIVERY OF DOCUMENTS. Final and complete copies of each
document, plan or contract listed and described in the Disclosure Schedule have
been provided to Horizon. Neither Alliance nor Alliance Bank nor any other party
thereof is in default under any such contract and there has not occurred any
event that with the lapse of time or the giving of notice, or both, would
constitute such a default.
Section 2.22 INTERIM EVENTS. Except as provided in Section 2.22 of the
Disclosure Schedule, since September 30, 2004, neither Alliance nor Alliance
Bank has paid or declared any dividend or made any other distribution to
shareholders or taken any action which if taken after the date of this Agreement
would require the prior written consent of Horizon pursuant to Section 4.1
hereof.
Section 2.23 BOOKS AND RECORDS. The books and records of Alliance and
Alliance Bank have been fully, properly and accurately maintained in all
material respects, there are no material inaccuracies or discrepancies of any
kind contained or reflected therein, and they fairly present the financial
position of Alliance and Alliance Bank.
Section 2.24 DEPOSIT INSURANCE. The deposits of Alliance Bank are insured
by the FDIC up to applicable limits and in accordance with the Federal Deposit
Insurance Corporation Act, as amended, and Alliance Bank has paid or properly
reserved or accrued for all current premiums and assessments with respect to
such deposit insurance, if any.
Section 2.25 NO REGULATORY FILINGS. There are no filings, notices or
submissions required to be made by Alliance or Alliance Bank with any regulatory
authority in connection with obtaining approval for either of the Mergers.
Section 2.26 STATEMENTS TRUE AND CORRECT. None of the information supplied
or to be supplied by Alliance or Alliance Bank for inclusion in any documents to
be filed with the FRB, OCC, SEC, MOFIS, or any other regulatory authority in
connection with the Mergers will, at the respective times such documents are
filed, be false or misleading with respect to any material fact or omit to state
any material fact necessary in order to make the statements therein not
misleading.
AGREEMENT OF MERGER AND PLAN OF REORGANIZATION PAGE 16
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF HORIZON
Horizon hereby makes the following representations and warranties to
Alliance:
Section 3.1 ORGANIZATION. Each of Horizon and Horizon Acquisition Corp. is
a corporation duly incorporated and validly existing under the laws of the State
of Indiana, and Horizon is a registered bank holding company under the Bank
Holding Company Act of 1956, as amended, and each has the corporate power and
authority to own all of its property and assets, to incur all of its
liabilities, and to carry on its business as it is now being conducted. Horizon
Bank is a national bank duly incorporated and validly existing under the laws of
the United States, and has the corporate power and authority to own all of its
property and assets, to incur all of its liabilities, and to carry on its
business as it is now being conducted.
Section 3.2 AUTHORIZATION.
(a) The Boards of Directors of Horizon, Horizon Acquisition Corp.,
and Horizon Bank have each, by all appropriate action, approved this
Agreement and the Mergers and has authorized the execution of this
Agreement on its behalf by its respective duly authorized officers and the
performance, respectively, by Horizon, Horizon Acquisition Corp., and
Horizon Bank of its respective obligations hereunder.
(b) Nothing in the Articles of Incorporation or Bylaws of Horizon or
Horizon Acquisition Corp., as amended, or in the Articles of Association
or Bylaws of Horizon Bank, or in any agreement, instrument, decree,
proceeding, law or regulation (except as specifically referred to in or
contemplated by this Agreement) by or to which Horizon, Horizon
Acquisition Corp., or Horizon Bank is bound or subject would prohibit any
of them from entering into and consummating, or would be violated or
breached by any of their consummation of this Agreement and the
transactions contemplated herein on the terms and conditions herein
contained.
(c) This Agreement has been duly and validly executed and delivered
by Horizon, Horizon Acquisition Corp., and Horizon Bank and constitutes a
legal, valid and binding obligation of each of them, enforceable against
each of them in accordance with its terms, and no other corporate acts or
proceedings are required to be taken by Horizon, Horizon Acquisition
Corp., or Horizon Bank to authorize the execution, delivery and
performance of this Agreement.
(d) Neither Horizon, Horizon Acquisition Corp., nor Horizon Bank is,
and will not be by reason of the consummation of the transactions
contemplated herein be, in default under or in violation of any provision
of, nor will the consummation of the transactions contemplated herein
afford any party a right to accelerate any indebtedness under, Horizon's
or Horizon Acquisition Corp's Articles of Incorporation or Bylaws or
Horizon Bank's Articles of Association or Bylaws, any promissory note,
indenture, or other evidence of indebtedness or security therefore, or any
lease, contract, or other commitment or agreement to which Horizon,
Horizon Acquisition Corp., or Horizon Bank is a party or by which any of
them or their property is bound.
(e) Except for the requisite approvals of and filings with the FDIC,
the FRB, the OCC, the MOFIS, the Indiana Secretary of State and the
Michigan Department of Commerce, no notice to, filing with, authorization
by, or consent or approval of, any federal or state regulatory authority
is necessary for the execution and delivery of this
AGREEMENT OF MERGER AND PLAN OF REORGANIZATION PAGE 17
Agreement or the consummation of the Mergers by Horizon, Horizon
Acquisition Corp., and Horizon Bank.
Section 3.3 FINANCIAL INFORMATION. The audited consolidated balance sheets
of Horizon and its subsidiaries as of December 31, 2002 and 2003 and related
consolidated statements of income, changes in shareholders' equity and cash
flows for the three years ended December 31, 2003, together with the notes
thereto, included in Horizon's most recent 10-K, as filed with the SEC, and the
unaudited consolidated balance sheet of Horizon and its subsidiaries as of
September 30, 2004, and the related unaudited consolidated statement of income,
changes in shareholders' equity and cash flows for the period then ended
included in Horizon's Quarterly Report on Form 10-Q as filed with the SEC
(collectively, the "HORIZON FINANCIAL STATEMENTS"), all of which have been
previously furnished by Horizon to Alliance, together with all subsequent
financial statements and reports filed with the SEC prior to the Effective Date,
shall have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis (except as disclosed therein) and
fairly present the consolidated financial position and the consolidated results
of operations, changes in shareholders' equity and cash flows of Horizon and its
consolidated subsidiaries as of the dates and for the periods indicated
(subject, in the case of interim financial statements, to normal recurring
year-end adjustments, none of which will be material). Horizon and its
subsidiaries each does not have any material liability, fixed or contingent,
except as set forth in the Horizon Financial Statements or incurred in the
ordinary course of business since the date of the most recent Horizon Financial
Statement.
Section 3.4 REPORTS. Since January 1, 2003 Horizon and Horizon Bank has
filed all reports, notices and other statements, together with any amendments
required to be made with respect thereto, that it was required to file with (i)
the SEC, (ii) the FRB, (iii) the OCC, or (iv) any applicable state securities or
banking authorities, and (v) any other governmental authority with jurisdiction
over Horizon or Horizon Bank. As of their respective dates, each of such reports
and documents, as amended, including the financial statements, exhibits and
schedules thereto, complied in all material respects with the relevant statutes,
rules and regulations enforced or promulgated by the regulatory authority with
which they were filed, and did not 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.
Section 3.5 AGREEMENTS WITH BANKING AUTHORITIES. Neither Horizon, Horizon
Acquisition Corp., nor Horizon Bank is subject to any order (other than orders
applicable to banks generally) or is a party to any agreement or memorandum of
understanding with any federal or state agency charged with the supervision or
regulation of banks or bank holding companies, including, without limitation,
the FDIC, the OCC, and the FRB.
Section 3.6 COMPLIANCE WITH LAW. Each of Horizon, Horizon Acquisition
Corp., and Horizon Bank has all licenses, franchises, permits and other
governmental authorizations that are legally required to enable them to conduct
their respective businesses as presently conducted and are in compliance in all
material respects with all applicable laws and regulations.
Section 3.7 FINANCING FOR THE TRANSACTION. Horizon is in the process of
acquiring a portion of the funds to allow it to perform its obligations under
this Agreement. Horizon is not aware of any fact or circumstance that will
likely prevent it from being able to acquire such funds. Assuming the
acquisition of such funds, Horizon currently believes it will be, immediately
AGREEMENT OF MERGER AND PLAN OF REORGANIZATION PAGE 18
following the Mergers, in material compliance with all applicable capital
regulations of federal banking agencies having jurisdiction over Horizon and
Horizon Bank.
ARTICLE 4. AGREEMENTS OF ALLIANCE
Section 4.1 CONDUCT OF BUSINESS.
(a) Alliance and Alliance Bank shall continue to carry on its
business and the discharge or incurrence of its obligations and
liabilities only in the ordinary course of business as heretofore
conducted and, by way of amplification and not limitation with respect to
such obligation, Alliance and Alliance Bank will not, without the prior
written consent of Horizon, which consent will not be unreasonably
withheld:
(I) DIVIDENDS. Declare or pay any dividend or make any other
distribution to shareholders, whether in cash, stock or other
property; or
(II) ISSUANCES OF STOCK. Issue any common or other capital
stock or any options, warrants or other rights to subscribe for or
purchase common or any other capital stock or any securities
convertible into or exchangeable for any capital stock or permit any
additional shares of Alliance Common Stock or capital stock of
Alliance Bank to become subject to grants of employee or director
stock options, restricted stock grants, or similar stock-based
employee or director rights; or
(III) REDEMPTIONS OF STOCK. Directly or indirectly redeem,
purchase or otherwise acquire (except for shares acquired in
satisfaction of a debt previously contracted) any of their own
common or any other capital stock or form a new subsidiary; or
(IV) REORGANIZATIONS. Effect a split, reverse split,
reclassification, or other similar change in or of any common or
other capital stock or otherwise reorganize or recapitalize; or
(V) AMENDMENTS TO ORGANIZATIONAL DOCUMENTS. Change their
Articles of Incorporation or Bylaws; or
(VI) WAGES AND BENEFIT PLANS. Except in the ordinary course of
business consistent with past practices and except as contemplated
by this Agreement (including severance payments anticipated to be
paid by Horizon as described in Section 5.6 hereof), pay or agree to
pay, conditionally or otherwise, any additional compensation
(including bonuses) or severance benefit or otherwise make any
changes with respect to the fees or compensation payable or to
become payable to management consultants, directors, officers or
salaried employees or, except as required by law and except as
contemplated by this Agreement, adopt or make any change in any
Employee Plan or other arrangement (including any agreement for
indemnification) or payment made to, for or with any of such
consultants, directors, officers or employees; or
(VII) INDEBTEDNESS. Except in the ordinary course of business
(including creation of deposit liabilities, enter into repurchase
agreements, purchases or sales of federal funds, and sales of
certificates of deposit), borrow or agree to borrow
AGREEMENT OF MERGER AND PLAN OF REORGANIZATION PAGE 19
any material amount of funds or directly or indirectly guarantee or
agree to guarantee any material obligations of others except
pursuant to outstanding letters of credit; or
(VIII) INVESTMENTS. Purchase or otherwise acquire any
investment security for their own account that exceeds $500,000
individually or $1,000,000 in the aggregate or purchase or otherwise
acquire any security other than U.S. treasury or other governmental
obligations or asset-backed securities issued or guaranteed by
United States governmental or other governmental agencies, in either
case having an average remaining life of three (3) years or less, or
sell any investment security owned by them other than sales made in
the ordinary course of business as previously conducted during the
past three (3) years and in accordance with applicable law and
regulations or engage in any activity that would be inconsistent
with the classification of investment securities as either "held to
maturity" or "available for sale;" or
(IX) CONTRACTS. Enter into, terminate or amend any agreement,
contract or commitment out of the ordinary course of business which
involves an amount of $25,000 individually or $100,000 in the
aggregate or enter into any agreement which has a term greater than
one (1) year regardless of the amount of payments; or
(X) LIENS. Place on any of their assets or properties any
mortgage, pledge, lien, charge, or other encumbrance; or
(XI) CANCELLATION OF DEBTS. Cancel, release or compromise any
indebtedness in excess of $25,000 owing to Alliance or Alliance Bank
or any claims which Alliance or Alliance Bank may possess, or
voluntarily waive any material rights with respect thereto; or
(XII) SALE OF ASSETS. Sell or otherwise dispose of any real
property or any amount of any personal property other than
properties acquired in foreclosure or otherwise in the ordinary
course of collection of indebtedness to Alliance or Alliance Bank;
or
(XIII) ACQUISITION OF ASSETS. Acquire any assets of any other
person by any means or foreclose upon or otherwise take title to or
possession or control of, any real property without first obtaining
a Phase One environmental report thereon, prepared by a reliable and
qualified person or firm acceptable to Horizon, which indicates that
the property is free of pollutants, contaminants or hazardous or
toxic waste materials; provided, however, that neither Alliance nor
Alliance Bank shall be required to obtain such a report with respect
to single family, non-agricultural residential property of one acre
or less to be foreclosed upon unless Alliance has reason to believe
that such property might contain such materials or otherwise might
be contaminated; or
(XIV) BREACHES. Commit any act or fail to do any act which
will cause a material breach of any agreement, contract or
commitment; or
AGREEMENT OF MERGER AND PLAN OF REORGANIZATION PAGE 20
(XV) VIOLATIONS OF LAW. Knowingly or recklessly violate any
law, statute, rule, governmental regulation or order, which
violation might have a material adverse effect on their business,
financial condition, or earnings; or
(XVI) SETTLEMENT OF CLAIMS. Settle any litigation or claims
against them without the prior consent of Horizon unless settlement
does not require Alliance or Alliance Bank to pay any monies, incur
any obligation or admit any wrongdoing or liability; or
(XVII) ACCOUNTING CHANGES. Implement or adopt any change in
the accounting principles, practices or methods used by Alliance and
Alliance Bank, other than as may be required by GAAP, as concurred
with by Horizon's independent auditors, or as required by Section
4.10 hereof.
(XVIII) RISK MANAGEMENT. Except as required by applicable law
or regulation: (1) implement or adopt any material change in its
interest rate risk management and hedging policies, procedures or
practices; (2) fail to follow its existing policies or practices
with respect to managing its exposure to interest rate risk; or (3)
fail to use commercially reasonable means to avoid any material
increase in its aggregate exposure to interest rate risk.
(XIX) LOANS. Make (1) any new commercial loan in excess of
$250,000, (2) any new single family, residential mortgage loan or
home equity loan with a loan to value in excess of 80% or make any
other new single family, residential mortgage loan or home equity
line of credit in excess of $300,000, or (3) any new consumer loan
in excess of $50,000.
(XX) ADVERSE ACTIONS. (1) Take any action reasonably likely to
prevent or impede the Holding Company Merger or the Bank Merger; or
(2) take any action that is intended or is reasonably likely to
result in (A) any of its representations and warranties set forth in
this Agreement being or becoming untrue in any material respect at
any time at or prior to the Effective Time, (B) any of the
conditions to the Holding Company Merger set forth in Article 6 not
being satisfied or (C) a material breach of any provision of this
Agreement; except, in each case, as may be required by applicable
law.
(XXI) INTEREST RATES. Increase or decrease the rate of
interest paid by Alliance Bank on any deposit product, including
without limitation on certificates of deposit, except in a manner
and pursuant to policies consistent with past practices; provided,
however, that, notwithstanding the foregoing, in no event shall
Alliance Bank pay a rate of interest on any deposit product which is
more than 0.0025 above the average of the rates paid on comparable
deposit products by the banks and thrifts located in the market in
which such deposit product is offered by Alliance Bank.
(XXII) COMMITMENTS. Agree or commit to do, or enter into any
contract regarding, anything that would be precluded by this Section
without first obtaining Horizon's consent.
AGREEMENT OF MERGER AND PLAN OF REORGANIZATION PAGE 21
(XXIII) LOAN LOSS RESERVE. Take any action that would change
Alliance Bank's loan loss reserves which is not in compliance with
Alliance Bank's past practices consistently applied and in
compliance with GAAP.
(b) Neither Alliance nor Alliance Bank shall, without the prior
written consent of Horizon, engage in any transaction or take any action
that would render untrue in any material respect any of the
representations and warranties of Alliance contained in Article 2 hereof
if such representations and warranties were given as of the date of such
transaction or action.
(c) Alliance shall promptly notify Horizon in writing of the
occurrence of any matter or event known to and involving Alliance or
Alliance Bank that is materially adverse to the business, operations,
properties, assets or condition (financial or otherwise) of Alliance or
Alliance Bank taken as a whole.
Section 4.2 BREACHES. Alliance shall, in the event it has knowledge of the
occurrence of any event or condition which would cause or constitute a breach
(or would have caused or constituted a breach had such event occurred or been
known prior to the date of this Agreement) of any of its representations or
agreements contained or referred to in this Agreement, give prompt notice
thereof to Horizon and use its best efforts to prevent or promptly remedy the
same.
Section 4.3 SUBMISSION TO SHAREHOLDERS. Alliance shall cause to be duly
called and held, on a date mutually selected by Horizon and Alliance, a special
meeting of the shareholders of Alliance (the "SHAREHOLDERS' MEETING") for
submission of this Agreement and the Holding Company Merger for approval by such
shareholders as required by the MBCA and IBCL. In connection with the
Shareholders' Meeting, (i) Alliance shall mail (or otherwise provide) to its
shareholders all necessary information to enable the shareholders to make a
fully informed decision about the Holding Company Merger, and (ii) the Board of
Directors of Alliance shall (subject to compliance with its fiduciary duties as
advised by counsel) recommend to its shareholders the approval of this Agreement
and the Holding Company Merger contemplated hereby and use its best efforts to
obtain such shareholder approval. Additionally, each director of Alliance agrees
to vote any shares of Alliance Common Stock he or she owns in favor of the
Holding Company Merger pursuant to the agreement attached hereto as Exhibit 4.3.
Alliance acknowledges and agrees that none of the holders of Alliance Common
Stock shall have the right to assert dissenters' rights in connection with the
Holding Company Merger.
Section 4.4 CONSUMMATION OF AGREEMENT; REGULATORY APPROVALS. Alliance and
Alliance Bank shall use their best efforts to perform and fulfill all conditions
and obligations on their part to be performed or fulfilled under this Agreement
and to effect the Mergers in accordance with the terms and provisions hereof.
Alliance shall furnish to Horizon in a timely manner all information, data and
documents in the possession of Alliance and Alliance Bank requested by Horizon
as may be required to obtain any necessary regulatory or other approvals of the
Mergers or to file with the SEC and shall otherwise cooperate fully with Horizon
to carry out the purpose and intent of this Agreement.
Section 4.5 ENVIRONMENTAL REPORTS. Alliance has provided to Horizon copies
of all Phase One environmental investigations and other environmental
information in its possession in regard to all real property owned by Alliance,
including any OREO property. Horizon shall have the right, at its own cost, for
forty-five (45) days after the date of this Agreement, to obtain a report of a
Phase One environmental investigation on all real property owned or leased by
AGREEMENT OF MERGER AND PLAN OF REORGANIZATION PAGE 22
Alliance or Alliance Bank (including Other Real Estate Owned) as of the date of
this Agreement or acquired or leased thereafter, except that Alliance shall
provide Horizon with any reports prepared pursuant to Section 4.1(a)(xiii). If
required by the Phase One investigation in Horizon's reasonable opinion, Horizon
may, at its own cost, obtain a Phase Two investigation on properties requiring
such additional study. Horizon shall have ten (10) business days from the
receipt of any such investigation report to notify Alliance in writing of any
material environmental concerns. Within forty-five (45) days of the delivery of
such notification, Horizon shall obtain an estimate or indication as described
below regarding the cost of taking remedial and corrective actions or the
inability to make such an estimate. Should the cost of taking all remedial and
corrective actions and measures (i) required by applicable law, or (ii)
recommended or suggested by such report or reports and prudent in light of the
findings of such report, in the aggregate, exceed the sum of $100,000, as
reasonably estimated by an environmental expert promptly retained for such
purpose by Horizon and reasonably acceptable to Alliance, or if the cost of such
actions and measures cannot be so reasonably estimated by such expert with any
reasonable degree of certainty, then Horizon shall have the right pursuant to
Section 7.3 hereof, for a period of ten (10) business days following receipt of
such estimate or indication that the cost of such actions and measures cannot be
so reasonably estimated, to terminate this Agreement by providing written notice
to Alliance within such ten (10)-day period.
Section 4.6 ACCESS TO INFORMATION. Alliance shall permit Horizon
reasonable access, in a manner which will avoid undue disruption or interference
with Alliance's normal operations, to Alliance's and Alliance Bank's properties
and shall disclose and make available to Horizon all books, documents, papers
and records relating to Alliance's and Alliance Bank's assets, stock, ownership,
properties, operations, obligations and liabilities, including, but not limited
to, all books of account (including general ledgers), tax records, minute books
of directors' and shareholders' meetings, organizational documents, material
contracts and agreements, loan files, filings with any regulatory authority,
litigation files, plans affecting employees, and any other business activities
in which Horizon may have a reasonable and legitimate interest in light of the
transactions contemplated by this Agreement. During the period from the date of
this Agreement to the Effective Time, Alliance will cause one or more of
Alliance's designated representatives to confer on a regular basis, but no less
frequently than weekly, with the Chief Executive Officer of Horizon, or any
other person designated in a written notice given to Alliance by Horizon
pursuant to this Agreement, to report the general status of the ongoing
operations of Alliance and Alliance Bank. Alliance and Alliance Bank will
promptly notify Horizon of any material change in the normal course of the
operation of its business or properties and of any regulatory complaints,
investigations or hearings (or communications indicating that the same may be
contemplated), or the institution or the threat of significant litigation
involving Alliance or Alliance Bank and will keep Horizon fully informed of such
events. Horizon will hold any such information which is nonpublic in confidence
in accordance with the provisions of Section 9.1 and Section 9.2 hereof.
Section 4.7 PRESS RELEASE. Each of Alliance and Horizon agrees that it
will not, without the prior approval of the other party, issue any press release
or written statement for general circulation relating to the transactions
contemplated hereby (except for any release or statement that, in the written
opinion of outside counsel to such party, is required by law or regulation and
as to which such party has used its best efforts to discuss with the other party
in advance, provided that such release or statement has not been caused by, or
is not the result of, a previous
AGREEMENT OF MERGER AND PLAN OF REORGANIZATION PAGE 23
disclosure by or at the direction of such party or any of its representatives
that was not permitted by this Agreement).
Section 4.8 ACQUISITION PROPOSALS. Alliance and Alliance Bank each agree
that it shall not, and shall cause its officers, directors, agents, advisors and
affiliates not to, solicit or encourage inquiries or proposals with respect to,
or engage in any negotiations concerning, or provide any confidential
information to, or have any discussions with, any person relating to, any tender
or exchange offer, proposal for a merger, consolidation or other business
combination involving Alliance or Alliance Bank, respectively, or any proposal
or offer to acquire in any manner a substantial equity interest in, or a
substantial portion of the assets or deposits of, Alliance or Alliance Bank,
other than the transactions contemplated by this Agreement (any of the
foregoing, an "ACQUISITION PROPOSAL"); provided however, that if Alliance or
Alliance Bank is not otherwise in violation of this Section, the Alliance or
Alliance Bank Board of Directors may provide information to, and may engage in
such negotiations or discussions with, a person with respect to an Acquisition
Proposal, directly or through representatives, if the Alliance or Alliance Bank
Board of Directors, after consulting with and considering the advice of its
financial advisor and its outside counsel, determines in good faith that its
failure to engage in any such negotiations or discussions could reasonably be
deemed to constitute a failure to discharge properly the fiduciary duties of
such directors in accordance with Michigan law. Prior to taking Board action,
Alliance shall promptly (within 24 hours) advise Horizon following the receipt
by it of any Acquisition Proposal and shall provide Horizon with (i) the
substance of the Acquisition Proposal (including the identity of the person
making such Acquisition Proposal and a copy of such Acquisition Proposal), and
(ii) a summary of the advice provided to it by its counsel. Alliance shall also
advise Horizon of any other developments with respect to such Acquisition
Proposal immediately upon the occurrence thereof.
Section 4.9 TITLE INSURANCE AND SURVEYS.
(a) Alliance has delivered to Horizon copies of the deeds, the most
recent owner's title insurance policies, if any, and the surveys, if any,
currently in Alliance's possession for each parcel of real estate owned by
it and described in Section 2.14 of the Disclosure Schedule. Horizon shall
be entitled, at its own cost and within forty five (45) days of the date
hereof, to obtain new commitments for, and policies of title insurance or
surveys in respect of, any real property owned or leased by Alliance.
(b) Within fifteen (15) days after the Horizon's receipt of such
surveys and title commitments, Horizon shall notify Alliance of any
objections to any exceptions, conditions or other matters contained in or
set forth in any survey or title commitment other than Standard Permitted
Exceptions (the "UNPERMITTED EXCEPTIONS"). The term "STANDARD PERMITTED
EXCEPTIONS" shall include (i) liens for real estate taxes and assessments
not yet delinquent; and (ii) utility, access and other easements, rights
of way, restrictions and exceptions existing on the real estate owned or
leased by Alliance as shown in the title commitments, none of which impair
such real property for the use and business being conducted thereon.
Within ten (10) days after receipt of such written notice of Unpermitted
Exceptions from Horizon, Alliance shall commence using its best efforts to
cure any such Unpermitted Exceptions to the satisfaction of Horizon prior
to the Closing. If Alliance agrees to cure the Unpermitted Exceptions but
is unable to cure the Unpermitted Exceptions to the reasonable
satisfaction of Horizon prior to the Closing, Horizon may either: (i)
waive the uncured Unpermitted Exceptions and close the
AGREEMENT OF MERGER AND PLAN OF REORGANIZATION PAGE 24
transactions contemplated by this Agreement; or (ii) terminate this
Agreement, in which event this Agreement shall be terminated, and neither
party shall have any further obligation or liability to the other party
hereunder.
Section 4.10 CONFORMING ACCOUNTING AND RESERVE POLICIES; RESTRUCTURING
EXPENSES.
(a) Notwithstanding that Alliance believes that it and Alliance Bank
have established all reserves and taken all provisions for possible loan
losses required by GAAP and applicable laws, rules and regulations,
Alliance recognizes that Horizon may have adopted different loan, accrual
and reserve policies (including loan classifications and levels of
reserves for possible loan losses). From and after the date of this
Agreement to the Effective Time, Horizon and Alliance shall consult and
cooperate with each other with respect to conforming, based upon such
consultation, as specified in each case in writing to Alliance by Horizon,
and subject to the conditions in Section 4.10(d) below and as hereinafter
provided, the loan, accrual and reserve policies of Alliance and Alliance
Bank to those policies of Horizon.
(b) In addition, from and after the date of this Agreement to the
Effective Time, Alliance and Horizon shall consult and cooperate with each
other with respect to determining, as specified in a written notice from
Horizon to Alliance, based upon such consultation, subject to the
conditions in Section 4.10(d) below and as hereinafter provided,
appropriate and reasonable accruals, reserves and charges to establish and
take in respect of severance costs and other appropriate and reasonable
charges and accounting adjustments taking into account the parties'
business plans following the Holding Company Merger.
(c) Alliance and Horizon shall consult and cooperate with each other
with respect to determining, as specified in a written notice from Horizon
to Alliance, based upon such consultation, subject to the conditions in
Section 4.10(d) below and as hereinafter provided, the amount and the
timing for recognizing for financial accounting purposes the expenses of
the Holding Company Merger and the Bank Merger to be incurred in
connection with the Holding Company Merger and the Bank Merger.
(d) Subject to applicable laws, Alliance shall (i) establish and
take such reserves and accruals at such time as Horizon shall reasonably
request to conform Alliance's loan, accrual and reserve policies to
Horizon's policies, and (ii) establish and take such accruals, reserves
and charges in order to implement such policies and to recognize for
financial accounting purposes such expenses of the Holding Company Merger
and the Bank Merger and restructuring charges related to or to be incurred
in connection with the Holding Company Merger and the Bank Merger, in each
case at such times as are reasonably requested by Horizon, but in no event
prior to two (2) business days before the Effective Date; provided,
however, that on the date such reserves, accruals and charges are to be
taken, Horizon shall certify to Alliance that all conditions to Horizon's
obligation to consummate the Holding Company Merger set forth in Section
6.1 hereof (other than the delivery of certificates, opinions and other
instruments and documents to be delivered at the Closing or otherwise to
be dated at the Effective Time, the delivery of which shall continue to be
conditions to Horizon's obligation to consummate the Holding Company
Merger) have been satisfied or waived; and provided,
AGREEMENT OF MERGER AND PLAN OF REORGANIZATION PAGE 25
further, that Alliance shall not be required to take any such action that
is not consistent with GAAP and regulatory accounting principles.
(e) No reserves, accruals or charges taken in accordance with this
Section may be a basis to assert a violation of a breach of a
representation, warranty or covenant of Alliance or Alliance Bank herein
or be considered in computing the Consolidated Shareholders' Equity of
Alliance pursuant to Section 4.11.
Section 4.11 CONSOLIDATED SHAREHOLDERS' EQUITY.
(a) Subject to the adjustments as provided in this Section, the
aggregate amount of the Consolidated Shareholders' Equity of Alliance at
the close of business on the last day of the month preceding the Effective
Time (the "DETERMINATION DATE"), as shown by and reflected in its books
and records of accounts prepared in accordance with GAAP, consistently
applied, shall not be less than $7,900,000. The Consolidated Shareholders'
Equity shall be calculated by Alliance's independent auditors, in
consultation with Horizon's independent auditors, as of the close of
business on the Determination Date using reasonable estimates of revenues
and expenses where actual amounts are not available. For purposes of this
calculation, Alliance shall assume a tax rate of 34%. Such calculation
shall be subject to verification and approval prior to the Closing (as
defined below) by Horizon's independent auditors, which approval shall not
be unreasonably withheld.
(b) As used in the preceding sentence, "Consolidated Shareholders'
Equity" shall mean:
(i) the sum of Alliance's common stock, additional paid-in
capital, retained earnings, and accumulated other comprehensive
income as reflected on its balance sheet and as fully accrued to
reflect all provisions to its allowance for loan losses,
(ii) excluding the following expenses associated with the
Mergers (1) legal, accounting, and investment banking fees and
expenses, not to exceed $175,000 in the aggregate, and (2) severance
payments to be paid under Section 5.6 which may be accrued prior to
Closing,
(iii) excluding additions to the loan loss reserve and similar
changes requested by Horizon, except for those that are otherwise
required by GAAP, any bank regulatory authority, or not made
pursuant to Section 4.1(a)(xxiii),
(iv) excluding any other changes not contemplated by this
Agreement but requested by Horizon prior to Closing, including any
changes resulting from Section 4.10,
(v) including any gain or loss on the sale of investment
securities, and
(vi) excluding the costs of terminating the current data
processing contract with Computer Services, Inc. up to $200,000.
(c) Horizon and Alliance recognize and agree that any changes to the
valuation of the Alliance investment portfolio attributed to FAS 115,
whether upward or downward, as determined to be necessary by Horizon's
external auditors will not be
AGREEMENT OF MERGER AND PLAN OF REORGANIZATION PAGE 26
considered in calculating the Consolidated Shareholders' Equity for
purposes of this Section.
(d) In the event the Consolidated Shareholders' Equity of Alliance
at the Effective Time is not equal to or greater than $7,900,000 (as
calculated pursuant to this Section), the purchase price shall be reduced
(on a dollar for dollar basis) to the extent of the shortfall. In the
event the purchase price is reduced by more than $250,000 in the
aggregate, Alliance shall have the option (in its sole discretion) to
proceed to close the transactions contemplated by this Agreement or
terminate this Agreement without incurring any liability or obligation to
Horizon or any other party to this Agreement, subject to Section 7.10 with
respect to willful breaches.
Section 4.12 ATTENDANCE OF STANDING COMMITTEE MEETINGS. In order to
provide for a smooth transition after the Mergers and for Horizon to monitor the
compliance by Alliance with the provisions of Section 4.1(a) of this Agreement,
Alliance agrees to allow representatives of Horizon to attend all meetings of
Alliance's standing committees (excluding meetings of the Board of Directors)
and shall provide Horizon with advance notice of all such meetings at the same
time that such notice is provided to members of the committees.
Section 4.13 COOPERATION ON CONVERSION OF SYSTEMS. Alliance agrees to
commence immediately after the date of this Agreement (and continue until
Closing or completed) using its best efforts to ensure an orderly transfer of
information, processes, systems and data to Horizon and to otherwise assist
Horizon in facilitating the conversion of all of Alliance's systems into, or to
conform with, Horizon's systems; so that, as of the Effective Time, the systems
of Alliance are readily convertible to Horizon's systems to the fullest extent
possible without actually converting them prior to the Effective Time. The
parties acknowledge that such conversion shall not actually occur until after
the Effective Time.
Section 4.14 DISPOSITION OF ALLIANCE BANK 401(k) PLAN. Alliance Bank
maintains the Alliance Banking Company 401(k) Plan ("ALLIANCE BANK 401(k) PLAN")
and Horizon maintains the Horizon Bancorp Employees' Thrift Plan ("HORIZON
PLAN") and the Horizon Bancorp Employees' Stock Bonus Plan ("HORIZON STOCK BONUS
PLAN"). Alliance Bank shall make contributions to the Alliance Bank 401(k) Plan
between the date hereof and the Closing Date consistent with the terms of the
Alliance Bank 401(k) Plan and past practices. Prior to execution of this
Agreement, the Alliance Bank board of directors will adopt resolutions
acceptable to Horizon and its employee benefits counsel providing for the
"freeze" and termination of the Alliance Bank 401(k) Plan, effective as of the
last business day preceding the Effective Time ("TERMINATION DATE"), subject to
the consummation of the Mergers, so that (i) no participant in the Alliance Bank
401(k) Plan will accrue additional benefits under the Alliance Bank 401(k) Plan
after the Termination Date; (ii) no current or future employee of Alliance Bank
or Alliance, who is not a participant in the Alliance Bank 401(k) Plan on the
Termination Date, will become a participant in the Alliance Bank 401(k) Plan
after the Termination Date; (iii) the account balances of all participants in
the Alliance Bank 401(k) Plan which were not previously 100 percent vested will
become 100 percent vested on the Termination Date; and (iv) any contributions
due to the Alliance Bank 401(k) Plan for the period prior to the Termination
Date, and not yet paid on the Termination Date, will be contributed by Alliance
Bank as soon as administratively feasible following the Termination Date. Such
resolutions will remain in effect through and including the Effective Time of
the Mergers. Horizon Bank shall receive from
AGREEMENT OF MERGER AND PLAN OF REORGANIZATION PAGE 27
Alliance Bank evidence that the directors of Alliance Bank have adopted such
resolutions prior to the Closing Date.
Section 4.15 SECTION 125 PLAN. From the date of this Agreement through
December 31, 2005, Alliance Bank shall continue to contribute to the Section 125
plan maintained by Alliance Bank for its employees ("ALLIANCE CAFETERIA PLAN")
the pre-tax amounts which the Alliance Cafeteria Plan participants elect to
defer from compensation in order to pay the employee portion of the cost of
health care coverage and to fund any flexible spending accounts under the
Alliance Cafeteria Plan. The Alliance Cafeteria Plan shall be terminated,
effective as of December 31, 2005, and thereafter, the Alliance employees who
have become and remain Horizon Bank employees shall participate in the Section
125 plan sponsored by Horizon ("HORIZON CAFETERIA PLAN"), effective as of
January 1, 2006. Alliance shall take such action in respect of the Alliance
Cafeteria Plan as Horizon reasonably may request so that it will be able to
effect such termination and transfer of coverage in a prompt and efficient
manner.
Section 4.16 OTHER WELFARE BENEFIT PLANS. From the date of this Agreement
until the Effective Time, Alliance Bank shall continue to maintain and fund all
expenses of all other welfare benefit plans sponsored by Alliance Bank,
including any and all group health and dental plans, life insurance plans, and
short or long term disability plans including, but not limited to, benefits,
insurance premiums and administrative fees, attributable to claims incurred on
or prior to the Effective Time. If Horizon decides that it wants to terminate
the other Alliance welfare benefit plans at or shortly after the Effective Time
and thereafter to cover continuing employees under its own welfare benefit
plans, Alliance Bank shall take such action in respect of the Alliance welfare
benefit plans prior to the Effective Time as Horizon reasonably may request so
that it will be able to effect such termination and transfer of coverage in a
prompt and efficient manner.
ARTICLE 5. AGREEMENTS OF HORIZON
Section 5.1 REGULATORY APPROVALS. Horizon shall use its reasonable best
efforts to file all regulatory applications required in order to consummate the
Mergers and the Third Merger, including the necessary applications for the prior
approval of the FRB and the OCC within thirty (30) days after the date hereof.
Horizon shall keep Alliance reasonably informed as to the status of such
applications and provide Alliance copies of such applications and supplementally
filed materials prior to or immediately after their filing and provide copies of
all correspondence regarding the applications received from the FRB and OCC.
Section 5.2 BREACHES. Horizon shall, in the event it has knowledge of the
occurrence of any event or condition which would cause or constitute a breach
(or would have caused or constituted a breach had such event occurred or been
known prior to the date of this Agreement) of any of its representations or
agreements contained or referred to in this Agreement, give prompt notice
thereof to Alliance and use its best efforts to prevent or promptly remedy the
same.
Section 5.3 CONSUMMATION OF AGREEMENT. Horizon shall use its best efforts
to perform and fulfill all conditions and obligations on its part to be
performed or fulfilled under this Agreement and to effect the Mergers in
accordance with the terms and conditions of this
AGREEMENT OF MERGER AND PLAN OF REORGANIZATION PAGE 28
Agreement. This commitment shall include Horizon using its best efforts to
obtain the additional financing necessary for it to consummate the transactions
contemplated hereby.
Section 5.4 DIRECTOR AND OFFICER INDEMNIFICATION.
(a) Following the Effective Time, Horizon shall indemnify, defend
and hold harmless the present and former officers, directors and employees
of Alliance and Alliance Bank (each an "Indemnified Party") against costs
or expenses (including reasonable attorneys' fees) judgments, fines,
losses, claims, damages or liabilities (collectively "Costs") incurred in
connection with any claim, action, suit, proceeding or investigation,
whether civil, criminal, administrative or investigative, arising out of
actions or omissions occurring on or prior to the Effective Time
(including, without limitation, the transactions contemplated by this
Agreement) to the fullest extent that Horizon or Horizon Bank is required
to indemnify (and advance expenses to) its directors, officers and
employees under the laws of the State of Indiana and the Horizon Articles
of Incorporation and Bylaws as in effect on the date hereof.
(b) For a period of five (5) years from the Effective Time, Horizon
shall use its reasonable best efforts to obtain and maintain an
endorsement to Horizon's director's and officer's liability insurance
policy to cover the officers and directors of Alliance and Alliance Bank
(determined as of the Effective Time) with respect to claims against such
directors and officers arising from facts or events which occurred before
the Effective Time; provided, however, that if Horizon is unable to obtain
such endorsement, then Horizon may purchase tail coverage under Alliance's
existing director and officer liability insurance policy for such claims;
provided further that in no event shall Horizon be required to expend in
the aggregate during such five (5) year period more than three (3) times
the current annual amount spent by Alliance (the "INSURANCE AMOUNT") to
maintain or procure its current directors' and officers' insurance
coverage; provided further, that if Horizon is unable to maintain or
obtain the insurance called for by this Section, Horizon shall use its
reasonable best efforts to obtain as much comparable insurance as is
available for the Insurance Amount; provided, further, that officers and
directors of Alliance or Alliance Bank may be required to make application
and provide customary representations and warranties to Horizon's
insurance carrier for the purpose of obtaining such insurance.
(c) Any Indemnified Party wishing to claim indemnification under
this Section 5.4, upon learning of any claim, action, suit, proceeding or
investigation described above, shall promptly notify Horizon thereof,
provided that the failure so to notify shall not effect the obligations of
Horizon hereunder unless and to the extent that Horizon is actually
prejudiced as a result of such failure.
Section 5.5 EMPLOYEE BENEFITS. Upon the Closing Date, it is intended that
the employees of Alliance Bank who are not terminated shall become employees of
Horizon Bank (or an affiliate); provided, nothing herein shall be interpreted as
creating a contractual or other right to continued employment of an employee
subsequent to the Closing Date. It is the intent of Horizon that, after the
Effective Time, the employees of Alliance Bank who are not terminated will be
added to the Horizon employee benefit plans.
Section 5.6 SEVERANCE.
AGREEMENT OF MERGER AND PLAN OF REORGANIZATION PAGE 29
(a) Except as provided in paragraph 5.6(b) below in regard to
specific employees, those employees of Alliance and Alliance Bank as of
the Effective Time (a) who are still employed by Alliance and who Horizon
or its affiliates elect not to employ after the Effective Time or who are
terminated other than for cause within twelve (12) months after the
Effective Date, and (b) who sign and deliver a termination and release
agreement in the form attached hereto as Exhibit 5.6, shall be entitled to
severance pay equal to one (1) week of pay, at their rate of pay in effect
at the time of termination, for each full year of continuous service with
Alliance or Alliance Bank with a minimum of four (4) weeks and a maximum
of twenty-six (26) weeks. Such employees will have the option of: (i)
receiving their severance in a lump-sum payment, or (ii) receiving their
severance bi-weekly through Horizon's standard payroll process.
Furthermore, any terminated employees shall be entitled to continuation
coverage under Horizon Bank's group health plans as required by COBRA.
Nothing in this Section shall be deemed to limit or modify Horizon's or
Horizon Bank's at will employment policy.
(b) In order to retain the services of certain key officers of
Alliance through the Effective Time and in certain instance after such
time, Horizon has agreed to provide specific severance payments to such
officers of Alliance that are different from those to be provided pursuant
to Section 5.6(a). The names of such officers and the amount of such
severance payments are set forth on Confidential Schedule 5.6(b) which,
while not specifically attached hereto, is deemed incorporated herein.
Such officers shall also be required to sign and deliver the termination
and release agreement in the form attached hereto as Exhibit 5.6 in order
to obtain such payments.
Section 5.7 EMPLOYEE TRANSITION PLAN. Non-critical positions which become
open with Horizon or its affiliates in the ordinary course of Horizon's business
will be communicated weekly to Alliance after the date of this Agreement, and
Alliance employees will be given an opportunity to apply for such positions. If
Horizon elects to hire an Alliance employee to fill an open position, such
employee shall not become an employee of Horizon until the Closing, and Horizon
will hold such positions open until the Closing. In addition, Horizon, at its
expense (a) will provide group career counseling for the Alliance employees who
will not be continuing with Horizon and (b) will make professional career
counseling services available through its internal employee assistance program
of up to four (4) visits per Alliance employee.
Section 5.8 SOUTHWEST MICHIGAN ADVISORY BOARD. As soon as reasonably
practical after the Effective Time, Horizon agrees to add Xxxx Xxxxxx and
Xxxxxxx Xxxx to its Southwest Michigan Advisory Board.
Section 5.9 MERGER AND TERMINATION OF BENEFIT PLANS.
(a) As of, or as soon as administratively possible following the
Effective Time, Horizon and its affiliates will make available to the
employees of Alliance Bank who continue as employees of Horizon Bank or
any affiliate after the Effective Time, subject to Section 5.9(b) through
Section 5.9(c) hereof, substantially the same employee benefits on
substantially the same terms and conditions as Horizon and the Horizon
affiliates offer to other similarly situated employees. Until such time as
such employees of Alliance Bank become covered by the Horizon benefit
plans, they shall remain covered by the corresponding Alliance benefit
plans, which Horizon and the Horizon
AGREEMENT OF MERGER AND PLAN OF REORGANIZATION PAGE 30
affiliates shall assume and maintain as successor employers to the extent
such plans are not terminated as of the Closing Date.
(b) From and after the Effective Time, employees of Alliance Bank
who become employees of Horizon Bank shall accrue benefits pursuant to the
Horizon Thrift Plan and Horizon Stock Bonus Plan, as adopted by Horizon,
and from and after the Effective Time former Alliance Bank employees
participating in the Horizon Thrift Plan and Horizon Stock Bonus Plan
shall receive credit, for eligibility and vesting purposes, for the
service of such employees with Alliance Bank prior to the Effective Time
as if such service were with Horizon Bank. Furthermore, if the Effective
Date is not an "Entry Date" under the Horizon Thrift Plan or Horizon Stock
Bonus Plan, respectively, such plans shall be amended to provide a special
entry date for Alliance Bank employees who continue as employees of
Horizon Bank as of the Effective Time.
(c) Neither the terms of this Section 5.9 nor the provision of any
employee benefits by Horizon or any of the Horizon affiliates to employees
of Alliance Bank or any of its affiliates shall: (i) create any employment
contract, agreement or understanding with or employment rights for, or
constitute a commitment or obligation of employment to, any of the
officers or employees of Alliance; or (ii) prohibit or restrict Horizon or
the Horizon affiliates, whether before or after the Effective Time, from
changing, amending or terminating any employee benefits provided to its
employees from time to time.
Section 5.10 FURTHER MATTERS. Neither Horizon nor any of its subsidiaries
shall, without the prior written consent of Alliance, engage in any transaction
or take any action that would render untrue in any material respect any of the
representations and warranties of Horizon contained in Article 3 hereof if such
representations and warranties were given as of the date of such transaction or
action. Horizon shall promptly notify Alliance in writing of the occurrence of
any matter or event known to and involving Horizon or any of its subsidiaries
that is materially adverse to the business, operations, properties, assets, or
condition (financial or otherwise) of Horizon or its subsidiaries taken as a
whole.
ARTICLE 6. CONDITIONS PRECEDENT TO MERGERS
Section 6.1 CONDITIONS OF HORIZON'S OBLIGATIONS. Horizon's and Horizon
Bank's obligations to effect the Mergers shall be subject to the satisfaction
(or waiver by Horizon or Horizon Bank) prior to or on the Closing Date of the
following conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE. The representations and
warranties made by Alliance in this Agreement shall be true in all
material respects on and as of the Closing Date with the same effect as
though such representations and warranties had been made or given on and
as of the Closing Date.
(b) COVENANTS PERFORMED. Alliance and Alliance Bank each shall have
performed and complied in all material respects with all of its
obligations and agreements required to be performed prior to the Closing
Date under this Agreement.
(c) NO ADVERSE ORDERS. No temporary restraining order, preliminary
or permanent injunction or other order issued by any court of competent
jurisdiction or other legal restraint or prohibition preventing the
consummation of the Mergers shall be in effect, nor shall any proceeding
by any bank regulatory authority, governmental agency
AGREEMENT OF MERGER AND PLAN OF REORGANIZATION PAGE 31
or other person 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 Mergers which makes the
consummation of the Mergers illegal.
(d) APPROVALS. All necessary regulatory and third party approvals,
consents, and authorizations required for consummation of the Mergers
shall have been obtained and all waiting periods required by law shall
have expired.
(e) ENVIRONMENTAL REPORTS. Horizon shall have obtained the
environmental reports permitted by Section 4.5 and Section 4.1(a)(xiii)
hereof and shall not have elected, pursuant to Section 4.5 and Section 7.3
hereof, to terminate and cancel this Agreement.
(f) OTHER DOCUMENTS. Horizon shall have received all documents
required to be received from Alliance and Alliance Bank on or prior to the
Closing Date, all in form and substance reasonably satisfactory to
Horizon.
(g) CONSOLIDATED SHAREHOLDERS' EQUITY. The aggregate amount of the
Consolidated Shareholders' Equity of Alliance shall not be less than
$7,900,000 (as computed pursuant to Section 4.11), and Alliance shall have
delivered to Horizon a certificate, dated as of the Effective Time and
signed by Alliance's President and Secretary to such effect.
(h) FAIRNESS OPINION. Horizon shall have received the opinion of
XxXxxxxxx, Xxxx & Xxxxxx, Inc. or another qualified investment banking
firm or other qualified financial expert to the effect that, as of the
date of this Agreement, the Holding Company Merger was fair to Horizon
from a financial point of view.
(i) LEGAL OPINION. Horizon shall have received a legal opinion from
Alliance's counsel in substantially in the same form as the legal opinion
attached hereto as Exhibit 6.1(i).
(j) NO MATERIAL ADVERSE CHANGE. There shall not have occurred a
Material Adverse Change to Alliance or Alliance Bank since September 30,
2004.
(k) DUE DILIGENCE. Horizon shall be satisfied and shall have
completed its due diligence review of the assets, business and operations
of Alliance and Alliance Bank.
(l) HORIZON INSURANCE. Horizon shall have obtained liability
insurance indemnifying it and all of its subsidiaries and affiliates from
any and all liability which may result from acts or omissions of
Alliance's or Alliance Bank's officers, directors, employees and agents.
(m) TERMINATION OF DATA PROCESSING CONTRACT. Horizon shall be
reasonably satisfied that Alliance's data processing contract with
Computer Services, Inc. may be terminated as of the Effective Time for
$200,000 or less.
(n) 401(k) PLAN TERMINATION. Horizon shall have received evidence
that the directors of Alliance Bank have adopted resolutions affecting the
freezing and the termination of the Alliance Bank 401(k) Plan effective as
of the business day preceding the Effective Time of the Mergers in
accordance with Section 4.14.
AGREEMENT OF MERGER AND PLAN OF REORGANIZATION PAGE 32
Section 6.2 CONDITIONS OF ALLIANCE'S OBLIGATION. Alliance's and Alliance
Bank's obligations to effect the Mergers shall be subject to the satisfaction
(or waiver by Alliance or Alliance Bank) prior to or on the Closing Date of the
following conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE. The representations and
warranties made by Horizon in this Agreement shall be true in all material
respects on and as of the Closing Date with the same effect as though such
representations and warranties had been made or given on and as of the
Closing Date.
(b) COVENANTS PERFORMED. Horizon shall have performed and complied
in all material respects with all of its obligations and agreements
required to be performed prior to the Closing Date under this Agreement
including, but not limited to, the deposit of the Merger Consideration in
the Exchange Fund.
(c) NO ADVERSE ORDERS. No temporary restraining order, preliminary
or permanent injunction or other order issued by any court of competent
jurisdiction or other legal restraint or prohibition preventing the
consummation of the Mergers shall be in effect, nor shall any proceeding
by any bank regulatory authority, other governmental agency or other
person seeking any of the foregoing be pending. There shall not be any
action taken, or any statute, rule, regulation or order enacted, enforced
or deemed applicable to the Mergers which makes the consummation of the
Mergers illegal.
(d) APPROVALS. All necessary regulatory and third party approvals,
consents, and authorizations required for consummation of the Mergers,
including the requisite approval of the Mergers by the shareholders of
Alliance, shall have been obtained and all waiting periods required by law
shall have expired.
(e) OTHER DOCUMENTS. Alliance shall have received all documents
required to be received from Horizon on or prior to the Closing Date, all
in form and substance reasonably satisfactory to Alliance.
(f) FAIRNESS OPINION. Alliance shall have received an opinion of
Austin Associates, LLC or another qualified investment banking firm or
other qualified financial expert to the effect that, as of the date of the
mailing of the proxy statement to the Alliance shareholders, the Holding
Company Merger was fair to the shareholders of Alliance from a financial
point of view.
(g) LEGAL OPINION. Alliance shall have received an opinion from
Horizon's counsel in substantially the same form as the legal opinion
attached hereto as Exhibit 6.2(g).
(h) XXXXXX EMPLOYMENT AGREEMENT. Horizon Bank and XxXxx Xxxxxx shall
have entered into a mutually agreed upon employment agreement.
(i) D&O INSURANCE. Horizon and/or Alliance (as the case may be)
shall have in place the director and officer liability insurance
contemplated by Section 5.4.
(j) SEVERANCE ARRANGEMENTS WITH KEY EMPLOYEES. Horizon and the
officers specified on Confidential Schedule 5.6 shall have entered into
mutually acceptable severance arrangements in accordance with such
Schedule, except that this condition shall be deemed satisfied if the
severance arrangement offered to each such key employee
AGREEMENT OF MERGER AND PLAN OF REORGANIZATION PAGE 33
is comprised of the terms of Confidential Schedule 5.6 and the Termination
and Release Agreement attached hereto as Exhibit 5.6.
ARTICLE 7. TERMINATION OR ABANDONMENT
Section 7.1 MUTUAL AGREEMENT. This Agreement may be terminated by the
mutual written agreement of the parties at any time prior to the Closing Date,
regardless of whether shareholder approval of this Agreement and the Holding
Company Merger by the shareholders of Alliance shall have been previously
obtained.
Section 7.2 BREACH OF REPRESENTATIONS OR AGREEMENTS. In the event that
there is a material breach of any of the representations, warranties or
agreements of Horizon or Alliance which breach cannot be cured or is not cured
within thirty (30) days after written notice to cure such breach is given by the
non-breaching party, then the non-breaching party, regardless of whether
shareholder approval of this Agreement and the Holding Company Merger shall have
been previously obtained, may terminate and cancel this Agreement by providing
written notice thereof within ten (10) days after such date or after such thirty
(30) day cure period has expired, as applicable.
Section 7.3 ENVIRONMENTAL REPORTS. Horizon may terminate this Agreement to
the extent provided by Section 4.5 by giving written notice thereof to Alliance.
Section 7.4 FAILURE OF CONDITIONS. In the event any of the conditions to
the obligations of either party are not satisfied or waived on or prior to the
Closing Date, then such party may, regardless of whether shareholder approval of
this Agreement and the Holding Company Merger shall have been previously
obtained, terminate and cancel this Agreement on the Closing Date by delivery of
written notice thereof to the other party on such date.
Section 7.5 APPROVAL DENIED. If any regulatory application filed pursuant
to Section 4.4 or Section 5.1 hereof should be finally denied or disapproved by
the respective regulatory authority, then this Agreement thereupon shall be
deemed terminated and canceled. However, it is understood that a request for
additional information or undertaking by Horizon or Alliance , as a condition
for approval, shall not be deemed to be a denial or disapproval so long as
Horizon or Alliance diligently provides the requested information or, in its
sole discretion, accepts such undertaking. In the event an application is denied
subject to the right of an appeal, petition for review, or similar such act on
the part of Horizon or Alliance (hereinafter referred to as the "APPEAL"), then
the application will be deemed denied unless Horizon or Alliance promptly and
diligently prepares and files such Appeal and continues the appellate process
for purposes of obtaining the necessary approval.
Section 7.6 SHAREHOLDER APPROVAL DENIAL. If this Agreement and
consummation of the Holding Company Merger is not approved by the shareholders
of Alliance at the Shareholders' Meeting, then either party may terminate this
Agreement by giving written notice thereof to the other party.
Section 7.7 LAPSE OF TIME. If the Closing Date does not occur on or prior
to October 31, 2005, then this Agreement may be terminated by either party by
giving written notice thereof to the other party.
Section 7.8 FAILURE TO RECOMMEND. By Horizon if (a) upon the mailing of
the proxy statement to the Alliance shareholders, the Board of Directors of
Alliance shall not have
AGREEMENT OF MERGER AND PLAN OF REORGANIZATION PAGE 34
recommended adoption and approval of this Agreement to its shareholders, or (b)
at any time prior to the receipt of the approval of the Alliance shareholders,
Alliance's Board of Directors shall have withdrawn such recommendation or
modified or changed such recommendation in a manner adverse to the interests of
Horizon (whether in accordance with Section 4.3 or otherwise).
Section 7.9 ACCEPTANCE OF SUPERIOR PROPOSAL. By Alliance, if, without
breaching Section 4.8, Alliance shall enter into a definitive agreement with a
third party providing for an Acquisition Proposal on terms determined in good
faith by the Alliance Board, after consulting with and considering the advice of
Alliance's outside counsel and financial advisors, to constitute a Superior
Proposal; provided, that the right to terminate this Agreement under this
Section shall not be available to Alliance unless it delivers to Horizon (a)
written notice of Alliance's intention to terminate at least five (5) days prior
to termination and (b) simultaneously with such termination, the Fee referred to
in Section 7.11. For purposes of this Section, "SUPERIOR PROPOSAL" means an
Acquisition Proposal made by a third party after the date hereof which, in the
good faith judgment of the Board of Directors of Alliance receiving the
Acquisition Proposal, taking into account the various legal, financial and
regulatory aspects of the proposal and the person making such proposal, (i) if
accepted, is significantly more likely than not to be consummated, and (ii) if
consummated, is reasonably likely to result in a materially more favorable
transaction than the Company Merger for Alliance and its shareholders and other
relevant constituencies.
Section 7.10 EFFECT OF TERMINATION AND ABANDONMENT. In the event of
termination of this Agreement and the abandonment of the Mergers pursuant to
this Article 7, no party to this Agreement shall have any liability or further
obligation to any other party hereunder except (a) as set forth in Section 7.11
and Section 9.4, and (b) that termination will not relieve a breaching party
from liability for any willful breach of this Agreement giving rise to such
termination.
Section 7.11 LIQUIDATED DAMAGES. If (a) Horizon terminates this Agreement
pursuant to Section 7.8, or (b) Alliance terminates this Agreement pursuant to
Section 7.9, then, within five (5) business days of such termination, Alliance
shall pay Horizon by wire transfer in immediately available funds, as agreed
upon liquidated damages and not as a penalty and as the sole and exclusive
remedy, $583,800 (the "FEE"). If this Agreement is terminated solely by reason
of the failure of Alliance to receive shareholder approval of the Holding
Company Merger, and if, and only if, an Acquisition Proposal for Alliance was
publicly announced (or otherwise disseminated to the shareholders of Alliance),
prior to the date that Alliance's shareholders voted against the adoption of
this Agreement, and if, within twelve (12) months after the date of such
termination, a Change in Control of Alliance is consummated, then Alliance shall
pay the Fee to Horizon by wire transfer in immediately available funds. For
purposes of this Section, a "CHANGE IN CONTROL" of Alliance shall be deemed to
have taken place if: (i) any person or entity, including a "group" as defined in
Section 13(d)(3) of the Securities Exchange Act of 1934, other than Alliance,
Alliance Bank, or any employee benefit plan of Alliance or Alliance Bank, is or
becomes the beneficial owner, directly or indirectly, of securities representing
fifty percent (50%) or more of the then-issued and outstanding common stock of
Alliance or Alliance Bank or the combined voting power of the then-outstanding
securities of Alliance or Alliance Bank, whether through a tender offer or
otherwise; (ii) there occurs any consolidation or merger in which Alliance or
Alliance Bank is not the continuing or surviving corporation (except for a
merger in which the holders of Alliance or Alliance Bank's common
AGREEMENT OF MERGER AND PLAN OF REORGANIZATION PAGE 35
stock and/or other voting stock immediately prior to the merger have the same
proportionate ownership of common and/or other voting stock of the surviving
corporation immediately after the merger); (iii) there occurs any consolidation
or merger in which Alliance or Alliance Bank is the surviving corporation but in
which shares of its common and/or other voting stock would be converted into
cash or securities of any other corporation or other property or if its
shareholders own less than fifty percent (50%) of the outstanding common stock
immediately after the transaction; or (iv) there occurs any sale, lease,
exchange or other transfer (in one transaction or a series of related
transactions) of all or substantially all of the assets of Alliance or Alliance
Bank. Notwithstanding the foregoing, no Fee shall be required to be paid if
Horizon or Alliance terminates this Agreement solely because of the failure of
Alliance to obtain the shareholder approval of this Agreement and the actions
and transactions contemplated hereby do not occur solely as a result thereof.
ARTICLE 8. THE CLOSING OF THE BANK MERGER AND HOLDING COMPANY MERGER
Section 8.1 THE CLOSING. The closing of the Bank Merger and the Holding
Company Merger (the "CLOSING") shall take place at the corporate offices of
Horizon at 10:00 A.M. Michigan City, Indiana time on the Closing Date described
in Section 8.2 of this Agreement.
Section 8.2 THE CLOSING DATE. The Closing shall take place on the first
business day of the month following the month during which each of the
conditions in Section 6.1 and Section 6.2 is satisfied or waived by the
appropriate party or on such other date as Alliance and Horizon may agree (the
"CLOSING DATE"). The Bank Merger shall become effective at the time specified in
the certificate to be issued by the OCC approving the Bank Merger. The Holding
Company Merger shall be effective upon the later to occur of (a) the filing of
the Merger Agreement in the Office of the Indiana Secretary of State, or (b) the
filing of the Merger Agreement in the Michigan Department of Commerce (the
"EFFECTIVE TIME"), which the parties shall cause to occur simultaneous with the
effectiveness of the Bank Merger and on the Closing Date.
Section 8.3 ACTIONS AT CLOSING.
(a) At the Closing, Alliance shall deliver to Horizon:
(i) certified copies of the Articles of Incorporation and
Bylaws of Alliance and the Articles of Incorporation and the Bylaws
of Alliance Bank, as amended; and
(ii) a certificate or certificates signed by the Chief
Executive Officer of Alliance stating, to the best of his knowledge
and belief, after due inquiry, that (A) each of the representations
and warranties contained in Article 2 hereof is true and correct in
all material respects at the Effective Time with the same force and
effect as if such representations and warranties had been made at
the Effective Time, and (B) Alliance has performed and complied in
all material respects, unless waived by Horizon, with all of its
obligations and agreements required to be performed hereunder prior
to the Effective Time;
(iii) certified copies of the resolutions of Alliance's Board
of Directors and shareholders, approving and authorizing the
execution of this Agreement, the Merger Agreement, and authorizing
the consummation of the Mergers;
AGREEMENT OF MERGER AND PLAN OF REORGANIZATION PAGE 36
(iv) certified copies of the resolutions of Alliance Bank's
Board of Directors and shareholder, approving and authorizing the
execution of this Agreement and authorizing the consummation of the
Bank Merger;
(v) the legal opinion of Alliance's legal counsel in the form
attached hereto as Exhibit 6.1(i);
(vi) a Certificate of the Michigan Department of Commerce,
dated a recent date, stating that Alliance is validly existing and
in good standing;
(vii) Certificates of the MOFIS, the Michigan Department of
Commerce and the FDIC, dated recent dates, relating to the valid
existence and the FDIC insurance of deposits of Alliance Bank; and
(viii) Articles of Merger executed by the proper parties
thereto reflecting the terms and provisions of this Agreement and
including as an exhibit thereto the Agreement of Merger attached
hereto as Appendix A in proper form for filing with the Secretary of
State of the State of Indiana and the Michigan Department of
Commerce in order to cause the Holding Company Merger to become
effective pursuant to the IBCL and the MBCA.
(b) At the Closing, Horizon shall deliver to Alliance:
(i) a Certificate signed by the Chief Executive Officer of
Horizon stating, to the best of his knowledge and belief, after due
inquiry, that (A) each of the representations and warranties
contained in Article 3 is true and correct in all material respects
at the Effective Time with the same force and effect as if such
representations and warranties had been made at the Effective Time
and (B) Horizon has performed and complied in all material respects,
unless waived by Alliance, with all of its obligations and
agreements required to be performed hereunder prior to the Effective
Time;
(ii) certified copies of the resolutions of Horizon's Board of
Directors authorizing the execution of this Agreement, the Merger
Agreement, and the consummation of the Mergers;
(iii) certified copies of the resolutions of Horizon Bank's
Board of Directors authorizing the execution of this Agreement and
the consummation of the Bank Merger;
(iv) the legal opinion of Xxxxxx & Xxxxxxxxx LLP, counsel for
Horizon, in the form attached hereto as Exhibit 6.2(g); and
(v) Articles of Merger executed by the proper parties thereto
reflecting the terms and provisions of this Agreement and including
as an exhibit thereto the Agreement of Merger attached hereto as
Appendix A in proper form for filing with the Secretary of State of
the State of Indiana and the Michigan Department of Commerce in
order to cause the Holding Company Merger to become effective
pursuant to the IBCL and the MBCA.
(c) At and after the Closing, the parties and their representatives
shall execute and/or deliver to one another such other documents and
instruments and take such actions as shall be necessary or appropriate to
consummate the Mergers.
AGREEMENT OF MERGER AND PLAN OF REORGANIZATION PAGE 37
ARTICLE 9. GENERAL PROVISIONS
Section 9.1 CONFIDENTIAL INFORMATION. The parties acknowledge the
confidential and proprietary nature of "INFORMATION" (as hereinafter described)
which has heretofore been exchanged and which will be received from each other
hereunder and agree to hold and keep the same confidential. Such Information
will include any and all financial, technical, commercial, marketing, customer
or other information concerning the business, operations and affairs of a party
that may be provided to the other, irrespective of the form of the
communications, by such party's employees or agents. Such Information shall not
include information which is or becomes generally available to the public other
than as a result of a disclosure by a party or its representatives in violation
of this Agreement. The parties agree that the Information will be used solely
for the purposes contemplated by this Agreement and that such Information will
not be disclosed to any person other than employees and agents of a party who
are directly involved in evaluating the transaction contemplated herein. The
Information shall not be used in any way detrimental to a party, including use
directly or indirectly in the conduct of the party's business or any business or
enterprise in which such party may have an interest, now or in the future, and
whether or not now in competition with such other party.
Section 9.2 RETURN OF DOCUMENTS. Upon termination of this Agreement
without the Bank Merger becoming effective, each party shall deliver to the
other originals and all copies of all Information made available to such party
and will not retain any copies, extracts or other reproductions in whole or in
part of such Information.
Section 9.3 NOTICES. Any notice or other communication hereunder shall be
in writing and shall be deemed to have been given or made (a) on the date of
delivery, in the case of hand delivery, or (b) three (3) business days after
deposit in the United States Registered or Certified Mail, with mailing receipt
postmarked by the Postal Service to show date of mailing, postage prepaid, (c)
on the next business day after deposit with an overnight carrier, or (d) upon
actual receipt if transmitted during business hours by fax (but only if receipt
of a legible copy of such transmission is confirmed by the recipient); addressed
(in any case) as follows:
AGREEMENT OF MERGER AND PLAN OF REORGANIZATION PAGE 38
IF TO HORIZON: WITH A COPY TO:
HORIZON BANCORP XXXXXX & XXXXXXXXX LLP
000 XXXXXXXX XXXXXX (46360) 00 XXXXX XXXXXXXX XXXXXX
XXXXXXXX XXXX, XX 00000 XXXXXXXXXXXX, XX 00000-0000
ATTN: XXXXX X. XXXXXX ATTN: XXXXXXX X. XXXXXX, ESQ.
PRESIDENT AND CEO FAX: (000) 000-0000
FAX: (000) 000-0000
AND
IF TO ALLIANCE: WITH A COPY TO:
ALLIANCE FINANCIAL CORPORATION XXXXXXXX, LOOP & XXXXXXXX, LLP
000 XXXX XXXXXXX XXXXXX 0000 XXXXXXX XXXXXX
XXX XXXXXXX, XXXXXXXX 00000 XXXXX XXXXXXXXXX XXXXXX
XXXXXX, XXXX 00000
ATTN: XXX XXXXXX, PRESIDENT ATTN: XXXXXX X. XXXXX, ESQ.
FAX: (000) 000-0000 FAX: (000) 000-0000
or to such other address as any party may from time to time designate by notice
to the other.
Section 9.4 NONSURVIVAL OF REPRESENTATIONS AND AGREEMENTS.
(a) Except as specifically provided below, no representation,
warranty, agreement, or covenant contained in this Agreement shall survive
(and no claims for the breach or nonperformance thereof may be brought
after) the Effective Time, except those matters addressed in Section 1.6,
Section 1.12, Section 5.4, Section 5.6, Section 5.7, Section 5.8, and this
Article 9, and
(b) No representation, warranty, agreement, or covenant contained in
this Agreement shall survive (and no claims for the breach or
nonperformance thereof may be brought after) the termination of this
Agreement pursuant to Article 7 hereof, except those matters addressed in
Section 7.10 and Section 7.11 and this Article 9.
Section 9.5 ENTIRE AGREEMENT. This Agreement, the Disclosure Schedule and
the other attached Schedules, including Confidential Schedule 5.6(b),
constitutes the entire agreement between the parties and supersedes and cancels
any and all prior discussions, negotiations, undertakings and agreements between
the parties relating to the subject matter hereof.
Section 9.6 HEADINGS AND CAPTIONS. The captions of Articles, Sections and
subsections hereof are for convenience only and shall not control or affect the
meaning or construction of any of the provisions of this Agreement.
Section 9.7 WAIVER, AMENDMENT OR MODIFICATION. The conditions of this
Agreement which may be waived may only be waived by written notice to the other
party waiving such condition. The failure of any party at any time or times to
require performance of any provision
AGREEMENT OF MERGER AND PLAN OF REORGANIZATION PAGE 39
hereof shall in no manner affect the right at later time to enforce the same.
This Agreement may not be amended or modified except by a written document duly
executed by the parties hereto.
Section 9.8 RULES OF CONSTRUCTION. Unless the context otherwise requires
(a) a term used herein has the meaning assigned to it, and (b) an accounting
term not otherwise defined has the meaning assigned to it in accordance with
generally accepted accounting principles.
Section 9.9 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which shall
be deemed one and the same instrument.
Section 9.10 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns. There shall be no third party beneficiaries hereof. This Agreement
may not be assigned by either of the parties hereto.
Section 9.11 GOVERNING LAW; ASSIGNMENT. This Agreement shall be governed
by the laws of the State of Indiana without respect to conflicts of laws
principles.
Section 9.12 NO THIRD PARTY BENEFICIARIES. This Agreement shall not confer
any rights or remedies upon any person other than the parties hereto and their
respective successors and permitted assigns, and in no event shall any employee
of Alliance or Alliance Bank have any individual rights under this Agreement.
AGREEMENT OF MERGER AND PLAN OF REORGANIZATION PAGE 40
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the day and year first above written.
HORIZON BANCORP
BY: /s/ XXXXX X. XXXXXX
NAME: XXXXX X. XXXXXX
TITLE: PRESIDENT AND CEO
HORIZON ACQUISITION CORP.
BY: /s/ XXXXX X. XXXXXX
NAME: XXXXX X. XXXXXX
TITLE: CHAIRMAN AND CEO
ALLIANCE FINANCIAL CORPORATION
BY: /s/ XXXXXX X. XXXXXX
NAME: ____________________________
TITLE: PRESIDENT
HORIZON BANK, NATIONAL ASSOCIATION
BY: /s/ XXXXX X. XXXXXX
NAME: XXXXX X. XXXXXX
TITLE: CHAIRMAN AND CEO
ALLIANCE BANKING COMPANY
BY: /s/ XXXXXX X. XXXXXX
NAME: XXXXXX X. XXXXXX
TITLE: PRESIDENT
737026-5
AGREEMENT OF MERGER AND PLAN OF REORGANIZATION PAGE 41
APPENDIX A
--------------------------------------------------------------------------------
MERGER AGREEMENT
AMONG
ALLIANCE FINANCIAL CORPORATION
(A MICHIGAN CORPORATION)
AND
HORIZON ACQUISITION CORP.
(AN INDIANA CORPORATION)
--------------------------------------------------------------------------------
FEBRUARY 24, 2005
MERGER AGREEMENT A-1
MERGER AGREEMENT
THIS MERGER AGREEMENT made and entered into as of February 24, 2005,
between ALLIANCE FINANCIAL CORPORATION, a Michigan corporation located at 000
Xxxx Xxxxxxx Xxxxxx, Xxx Xxxxxxx, Xxxxxxxx 00000 ("ALLIANCE"), and HORIZON
ACQUISITION CORP., an Indiana corporation located at 000 Xxxxxxxx Xxxxxx,
Xxxxxxxx Xxxx, Xxxxxxx 00000 ("HORIZON ACQUISITION CORP.").
WITNESSETH:
WHEREAS, Alliance and Horizon Acquisition Corp. deem it advisable for
their benefit respectively, and for the benefit of their respective
shareholders, for Horizon Acquisition Corp. to merge with and into Alliance
pursuant to this Merger Agreement in accordance with the Acts (as defined in
Section 1.1); and
WHEREAS, the Boards of Directors of Alliance and Horizon Acquisition Corp.
have approved an Agreement of Merger and Plan of Reorganization that was
executed and delivered as of February 24, 2005 between them (the "AGREEMENT AND
PLAN OF MERGER").
NOW, THEREFORE, the parties hereby agree as follows:
ARTICLE 1. THE HOLDING COMPANY MERGER
Section 1.1 THE HOLDING COMPANY MERGER. Pursuant to the terms and
provisions of this Merger Agreement, the Michigan Business Corporation Act of
1972, as amended ("MICHIGAN LAW"), and the Indiana Business Corporation Law
("INDIANA LAW") (referred to herein collectively as the "ACTS"), Horizon
Acquisition Corp. shall merge with and into Alliance (the "HOLDING COMPANY
MERGER"). The Holding Company Merger shall be effective upon the later to occur
of (i) the filing of this Merger Agreement together with Articles of Merger in
the Office of the Indiana Secretary of State, or (ii) the filing of this Merger
Agreement together with Articles of Merger with the Michigan Department of
Commerce (the "EFFECTIVE TIME").
Section 1.2 MERGING CORPORATION. Horizon Acquisition Corp. shall be the
merging corporation under the Holding Company Merger and its corporate identity
and existence, shall cease on consummation of the Holding Company Merger.
Section 1.3 SURVIVING CORPORATION. Alliance shall be the surviving
corporation in the Holding Company Merger (the "SURVIVING CORPORATION"), and the
Articles of Incorporation and Bylaws of Alliance in effect prior to the Holding
Company Merger shall be the Articles of Incorporation and Bylaws of the
Surviving Corporation.
ARTICLE 2. TERMS OF THE HOLDING COMPANY MERGER AND CONVERSION OF SHARES
Section 2.1 EFFECT OF THE HOLDING COMPANY MERGER. The Holding Company
Merger shall have all of the effects provided by the Acts.
Section 2.2 CONVERSION OF ALLIANCE SHARES.
(a) At the Effective Time, all of the shares of common stock, $1.00
par value, of Alliance (the "ALLIANCE COMMON STOCK") issued and
outstanding immediately prior to the Effective Time, by virtue of the
Holding Company Merger and without any action on
MERGER AGREEMENT A-2
the part of the holders thereof, shall be converted into the right to
receive $11,502,258 in cash in the aggregate from Horizon Bancorp
("HORIZON") which will equal $38.00 if there are 302,691 shares of common
stock issued and outstanding at that time (the "MERGER CONSIDERATION").
(b) At the Effective Time, each holder of any certificate or
certificates which immediately prior to the Effective Time represented
outstanding shares of Alliance Common Stock (the "CERTIFICATES") shall
thereafter cease to have any rights with respect to such shares, except
the right of such holders to receive, without interest, the Merger
Consideration upon the surrender of such Certificate or Certificates in
accordance with Section 2.3.
(c) At the Effective Time, all 15,960 outstanding options to
purchase Alliance Common Stock ("ALLIANCE STOCK OPTIONS"), without any act
on the part of any holder thereof, shall be converted into the right to
receive from Horizon, at the Effective Time, an amount in cash equal to
$38.00 minus the per share exercise price for each share of Alliance
Common Stock subject to an Alliance Stock Option; provided, however, that
there shall be withheld from such cash payment any taxes required to be
withheld by applicable law. Each Alliance Stock Option shall be cancelled
and cease to exist by virtue of such payment.
Section 2.3 EXCHANGE PROCEDURES; SURRENDER OF CERTIFICATES.
(a) Horizon Trust and Investment Management, N.A. ("HORIZON TRUSt")
shall act as Exchange Agent in the Holding Company Merger (the "EXCHANGE
AGENT"). At the Effective Time, Horizon shall deposit the Merger
Consideration in a separate account at Horizon Trust (the "EXCHANGE FUND")
which shall be used for the sole purpose of making disbursements to the
Alliance shareholders in connection with the Holding Company Merger.
(b) As soon as reasonably practicable after the Effective Time, the
Exchange Agent shall mail to each record holder of any Certificate or
Certificates whose shares were converted into the right to receive the
Merger Consideration a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon proper delivery of the Certificates to the Exchange
Agent and shall be in such form and have such other provisions as Horizon
may reasonably specify) (each such letter, the "MERGER LETTER OF
TRANSMITTAL") and instructions for use in effecting the surrender of the
Certificates in exchange for the Merger Consideration.
(c) As soon as reasonably practical after surrender to the Exchange
Agent of a Certificate, together with a Merger Letter of Transmittal duly
executed and any other required documents, the Exchange Agent shall
transmit to the holder of such Certificate the Merger Consideration. No
interest on the Merger Consideration issuable upon the surrender of the
Certificates shall be paid or accrued for the benefit of holders of
Certificates. If the Merger Consideration is to be issued to a person
other than a person in whose name a surrendered Certificate is registered,
it shall be a condition of issuance that the surrendered Certificate shall
be properly endorsed or otherwise in proper form for transfer and that the
person requesting such issuance shall pay to the Exchange Agent any
MERGER AGREEMENT A-3
required transfer or other taxes or establish to the satisfaction of the
Exchange Agent that such tax has been paid or is not applicable.
(d) Horizon reserves the right in all cases involving more than five
hundred (500) shares of Alliance Common Stock to require that a surety
bond on terms and in an amount satisfactory to Horizon be provided to
Horizon at the expense of the Alliance shareholder in the event that such
shareholder claims loss of a Certificate for Alliance Common Stock and
requests that Horizon waive the requirement for surrender of such
Certificate.
(e) Any portion of the Exchange Fund that remains unclaimed by the
shareholders of Alliance for six (6) months after the Effective Time shall
be returned to Horizon. Any shareholders of Alliance who have not
theretofore complied with this Section 2.3 shall thereafter look only to
Horizon for payment of the Merger Consideration, deliverable in respect of
each share of Alliance Common Stock such shareholder holds as determined
pursuant to this Agreement, in each case, without any interest thereon.
(f) Notwithstanding the foregoing, neither the Exchange Agent nor
any party hereto shall be liable to any former holder of Alliance Common
Stock for any amount properly delivered to a public official pursuant to
applicable abandoned property, escheat or similar laws.
ARTICLE 3. AMENDMENT; TERMINATION; ASSIGNMENT
Section 3.1 AMENDMENT. At any time prior to the Effective Time, the
parties to this Agreement by mutual written agreement authorized by their
respective Boards of Directors (and whether before or after the shareholders of
Alliance have approved and adopted this Agreement) may amend this Agreement;
provided, however, that if the shareholders of Alliance have approved and
adopted this Agreement, any such amendment shall not have a material adverse
effect on the shareholders of Alliance.
Section 3.2 TERMINATION. This Merger Agreement may be terminated by the
parties hereto prior to the Effective Time under the circumstances provided in,
and strictly in accordance with, the provisions of the Agreement and Plan of
Merger.
Section 3.3 SUCCESSORS AND ASSIGNS. This Merger Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns, but none of the
provisions hereof shall inure to the benefit of any other person, firm, or
corporation whomsoever. Neither this Merger Agreement nor any of the rights,
interests, or obligations hereunder shall be assigned or transferred by
operation of law or otherwise by either of the parties hereto without the prior
written consent of the other party.
MERGER AGREEMENT A-4
IN WITNESS WHEREOF, the parties hereto have executed this Merger Agreement
as of the day and year first above written.
ALLIANCE FINANCIAL CORPORATION
BY:______________________________
PRINTED:_________________________
TITLE:___________________________
HORIZON ACQUISITION CORP.
BY:______________________________
PRINTED:_________________________
TITLE:___________________________
HORIZON BANCORP
BY:______________________________
PRINTED:_________________________
TITLE:___________________________
MERGER AGREEMENT A-5
EXHIBIT 1.7
AGREEMENT TO CONVERT OPTIONS
The undersigned represents and warrants that he/she is the legal and
beneficial owner of an option to purchase up to ____________ shares of common
stock, $1.00 par value, of Alliance Financial Corporation ("ALLIANCE") which was
issued to the undersigned under the Alliance Financial Corporation
___________________________ Stock Option Plan and is evidenced by a
____________________ Stock Option Agreement dated ____________________ (the
"STOCK OPTION AGREEMENT").
The undersigned acknowledges that Alliance has agreed to merge with
Horizon Bancorp, and acknowledges and agrees that in connection therewith, the
holders of the Alliance stock options are required to convert their stock
options into cash pursuant to the terms of the Agreement of Merger and Plan of
Reorganization dated February ____, 2005.
The undersigned acknowledges and agrees that he/she shall be entitled to
receive, in connection with the merger, the difference between $38.00 and the
per share exercise price for each share of Alliance common stock subject to the
stock options owned by the undersigned, provided, however, that there shall be
withheld from such cash payment any taxes required to be withheld by applicable
law, and the undersigned further agrees to surrender the Stock Option Agreement
evidencing his/her ownership of the stock options to Alliance or Horizon Bancorp
on or before the closing of the merger in exchange for the aforementioned
consideration and recognizes and agrees that the Stock Option Agreement (and all
other agreements or instruments evidencing the ownership of stock options of
Alliance Financial Corporation held by the undersigned) shall be cancelled and
be of no further force and effect upon the payment noted above.
IN WITNESS WHEREOF, the undersigned has executed this Agreement on the
____ day of ______________________, 2005.
OPTIONHOLDER
_________________________________
Signature
_________________________________
Name Printed
Accepted and agreed to this ___________ day of _____________, 2005.
HORIZON BANCORP
BY:______________________________
PRINTED:_________________________
TITLE:___________________________
EXHIBIT 1.7 PAGE 1
EXHIBIT 4.3
AGREEMENT OF DIRECTORS OF ALLIANCE CONCERNING
AGREEMENT OF MERGER
Each of the undersigned, being all of the Directors of Alliance Financial
Corporation ("ALLIANCE"), having voted as such Director for the approval and
adoption by Alliance of that certain Agreement of Merger and Plan of
Reorganization ("AGREEMENT OF MERGER") among Alliance, Horizon Bancorp
("HORIZON"), Horizon Acquisition Corp., Horizon Bank, National Association, and
Alliance Banking Company whereby Horizon will acquire all of the outstanding
capital stock of Alliance for $38.00 per share pursuant to a statutory merger
(the "HOLDING COMPANY MERGER"), in consideration of the benefits to be derived
from the consummation of such merger and in consideration of the mutual
agreements made herein, and in order to induce Horizon to execute and deliver
the Agreement of Merger to Alliance and to proceed with the consummation of the
Holding Company Merger and to incur the expenses required in connection
therewith, hereby represents that he/she is not aware of any fact or
circumstance that would make any of the representations or warranties of
Alliance contained in the Agreement of Merger incorrect in any material respect
and hereby irrevocably covenants and agrees with one another and with each of
the parties to such Agreement of Merger that the undersigned:
(a) will support the consummation of the Holding Company Merger and,
subject to fiduciary duties, will recommend the Holding Company Merger for
approval and adoption by the shareholders of Alliance;
(b) will vote all shares of common stock of Alliance ("ALLIANCE
COMMON") now or hereafter beneficially owned by him or her, in person or
by proxy, at any meeting of the shareholders of Alliance or adjournments
thereof, in favor of the approval and adoption of the Agreement of Merger;
and
(c) until such time as the Holding Company Merger has been
consummated or the Agreement of Merger has been duly terminated in
accordance with the provisions thereof, will not transfer any shares of
Alliance Common, or any right or option with respect thereto or any
interest therein, without first obtaining from the transferee thereof and
furnishing to Horizon a written agreement of such transferee substantially
to the effect of the agreements herein made and in form and substance
acceptable to Horizon.
The undersigned represents and warrants that he or she (except to the
extent indicated below) is the sole record and beneficial owner of (and has sole
rights to vote and to dispose of) the number of shares of Alliance Common
indicated beside his or her signature below.
This Agreement may be executed in one or more counterparts, each of which
shall constitute one and the same agreement.
EXHIBIT 4.3 PAGE 1
EXECUTED AND DELIVERED as of February 24, 2005.
_________________________________________ (__________ SHARES)
_________________________________________
_________________________________________ (__________ SHARES)
_________________________________________
_________________________________________ (__________ SHARES)
_________________________________________
_________________________________________ (__________ SHARES)
_________________________________________
_________________________________________ (__________ SHARES)
_________________________________________
_________________________________________ (__________ SHARES)
_________________________________________
_________________________________________ (__________ SHARES)
_________________________________________
_________________________________________ (__________ SHARES)
_________________________________________
_________________________________________ (__________ SHARES)
_________________________________________
_________________________________________ (__________ SHARES)
_________________________________________
EXHIBIT 4.3 PAGE 2
EXHIBIT 5.6
TERMINATION AND RELEASE AGREEMENT
THIS TERMINATION AND RELEASE AGREEMENT (the "AGREEMENT") is made and
entered into by and between HORIZON BANK, NATIONAL ASSOCIATION ("HORIZON BANK")
and ________________________________ ("EMPLOYEE") (collectively, the "PARTIES").
The Parties agree as follows:
1. Employee hereby voluntarily terminates employment with Horizon Bank and
its predecessor, Alliance Banking Company ("ALLIANCE BANK"), effective
_____________, 2005.
2. In consideration of the agreements and promises made by Employee in
this Agreement, Horizon Bank shall pay to Employee the sum of $
___________________, less usual and customary withholding and deductions.
Horizon Bank shall have no other continued liability to Employee for any
compensation, bonuses, or benefits of employment, other than any benefits which
accrued and became vested on or before the effective date of Employee's
termination, under any employee medical or dental benefit plan of Horizon Bank
or Alliance Bank, or any employee pension benefit plan of Horizon Bank or
Alliance Bank, but which, under the applicable plan document, are not payable
until after such effective date.
3. Employee specifically agrees that Horizon Bank has complied with all of
its notification requirements under COBRA, and Horizon Bank confirms Employee
may elect COBRA continuation coverage by timely returning the appropriate
election form and making the necessary premium payment.
4. In consideration of the agreements and promises made by Horizon Bank in
this Agreement, Employee hereby RELEASES AND FOREVER DISCHARGES Horizon Bank and
its affiliates, and their respective owners, officers, directors, agents,
attorneys, and employees, from any and all claims, demands, liabilities,
actions, or causes of action which Employee had, has, or may have on account of,
arising out of, or related to: (a) Employee's employment with Horizon Bank or
Alliance Bank or the termination of Employee's employment, including, without
limitation, any and all claims, demands, liabilities, actions, or causes of
action arising under the federal Fair Labor Standards Act of 1938, the federal
Civil Rights Act of 1964, the federal Age Discrimination in Employment Act of
1967, the federal Americans with Disabilities Act of 1990, the common law of the
States of Indiana and Michigan, the laws of the States of Indiana and Michigan
governing employment discrimination and civil rights, any and all other statutes
of the States of Indiana and Michigan, and any and all other federal, state, or
local laws; and (b) all other matters occurring prior to the date of this
Agreement.
5. This Agreement is made and entered into solely for the purpose of
terminating Employee's employment with Horizon Bank on an amicable and certain
basis and does not in any way constitute, and shall not be construed to
constitute, an admission of liability of any sort on the part of either of the
Parties.
6. Employee recognizes and agrees that all non-public information,
documents and records relating to the business of Horizon Bank and its
affiliates (the "CONFIDENTIAL INFORMATION") and all other information and
property of Horizon Bank and its affiliates, whether or not constituting
Confidential Information, which are obtained, received or created by the
Employee is and shall remain the sole and exclusive property of Horizon Bank,
shall be held by
EXHIBIT 5.6 PAGE 1
the Employee subject to the custody and control of Horizon Bank, and shall be
delivered and surrendered by the Employee to Horizon Bank immediately upon
termination of the Employee's employment.
7. Employee agrees and promises that the Employee will not at any time,
whether during Employee's employment by Horizon Bank or at any time thereafter,
directly or indirectly, disclose or use, on the Employee's own behalf or on
behalf of any third party, any Confidential Information of Horizon Bank or any
of its affiliates.
8. Employee promises and agrees that Employee will not at any time,
whether during the Employee's employment with Horizon Bank or at any time
thereafter, make false, disparaging or uncomplimentary remarks about Horizon
Bank or its employees or affiliates.
9. Each of the agreements and promises contained in this Agreement shall
be binding upon, and shall inure to the benefit of, the heirs, executors,
administrators, agents, and successors in interest to each of the Parties.
10. This Agreement represents the entire agreement between the Parties,
and fully supersedes any and all prior agreements or understandings between the
Parties pertaining to the subject matter of this Agreement.
11. Each provision and covenant of this Agreement is severable. If any
court or other governmental body of competent jurisdiction shall conclude that
any provision or individual covenant of this Agreement is invalid or
unenforceable, such provision or individual covenant shall be deemed ineffective
to the extent of such unenforceability without invalidating the remaining
provisions and covenants of this Agreement.
12. This Agreement shall be interpreted in accordance with the laws of the
State of Indiana without regard to conflict of law principles.
13. Employee expressly agrees and acknowledges as follows: (1) that
Employee understands the terms and conditions of this Agreement; (2) that
Employee has knowingly and voluntarily entered into this Agreement; (3) that
Employee has been advised in writing to consult an attorney in connection with
reviewing and entering into this Agreement; (4) that Employee has been advised
in writing that Employee may take as long as 21 days to review and consider this
Agreement before signing it; (5) and that this Agreement, when signed by Horizon
Bank and Employee, shall be legally binding upon the Parties, as well as upon
their heirs, assigns, executors, administrators, agents, and successors in
interest.
14. Employee may revoke this Agreement by giving written notice to Horizon
Bank of such revocation at any time prior to 7 days following the date this
Agreement is signed by the Parties, and this Agreement shall not become
effective or enforceable until the end of such seven day revocation period.
EXHIBIT 5.6 PAGE 2
IN WITNESS WHEREFORE, intending to be legally bound to each and all of the
terms of this Termination and Release Agreement, the Parties hereby execute this
Agreement this ____ day of ___________, 2005.
CAUTION: HORIZON BANK, NATIONAL ASSOCIATION
READ BEFORE SIGNING
________________________________ By:___________________________
"Employee"
Its:__________________________
EXHIBIT 5.6 PAGE 3
EXHIBIT 6.1(i)
LEGAL OPINION OF XXXXXXXX, LOOP & XXXXXXXX, LLP
[XXXXXXXX, LOOP & XXXXXXXX, LLP LETTERHEAD]
__________, 2005
Horizon Bancorp
000 Xxxxxxxx Xxxxxx
Xxxxxxxx Xxxx, XX 00000
Gentlemen:
We have acted as counsel for Alliance Bancorp, a Michigan corporation
("ALLIANCE") and Alliance Banking Company, a Michigan state-chartered commercial
bank ("ALLIANCE BANK"), in connection with the Agreement of Merger and Plan of
Reorganization dated ___________, 2005 (the "AGREEMENT OF MERGER"), among
Alliance, Alliance Bank, Horizon Bancorp, an Indiana corporation ("HORIZON"),
Horizon Acquisition Corp., an Indiana corporation ("HAC"), and Horizon Bank,
National Association, a national bank ("HORIZON BANK") and the Merger Agreement
between HAC and Alliance (the "MERGER AGREEMENT"). The Agreement of Merger and
Merger Agreement are collectively referred to herein as the "AGREEMENTS"). This
opinion is being delivered to you pursuant to Section 6.1(i) of the Agreement of
Merger. Terms used herein that are defined in the Agreements shall have the
meaning set forth therein unless otherwise defined herein.
In connection with this opinion, we have examined the following documents,
agreements and instruments:
- The Agreements,
- The Articles of Incorporation and Bylaws of Alliance,
- The Articles of Incorporation and Bylaws of Alliance Bank,
- __________________________________________________, and
- Such other corporate documents and records of Alliance and Alliance
Bank and public documents and records as we have deemed necessary or
appropriate for this opinion.
The documents, agreements and instruments referred to above are sometimes
collectively herein referred to as the "TRANSACTION DOCUMENTS."
As to questions of fact material to our opinion, we have relied upon
representations and/or certificates of (a) officers of Alliance and Alliance
Bank, and (b) public officials; none of which representations or information has
been independently verified by us. In our examination, we have assumed the
genuineness of all signatures, the legal capacity of natural persons, the
authenticity of all documents submitted to us as originals and conformity to the
original documents of all documents submitted to us as certified or photostatic
copies, the authenticity of
EXHIBIT 6.1(i) PAGE 1
the originals of the latter documents, and the due authorization, execution and
delivery of all documents by parties other than Alliance and Alliance Bank.
In connection with this opinion, we advise you that we have not made any
special examination of and are not expressing any opinion regarding the affairs
or financial condition of Alliance or Alliance Bank, except as otherwise may be
expressly stated herein.
Except as otherwise expressly stated herein, this opinion should in no way
be construed as passing upon the accuracy or completeness of any of the
representations or warranties which may be or have been made to you in
connection with the Transaction Documents or any other instrument or agreement
contemplated by the Transaction Documents or on any other matters, legal or
otherwise, not specifically covered herein.
As used herein, "to our knowledge" or words or phrases of similar import
shall mean during the course of our representation of Alliance or Alliance Bank,
no information that would give us current actual knowledge of the inaccuracy of
such statement has come within the conscious awareness of lawyers in our firm
who are actively involved in negotiating the Transaction Documents or preparing
documents in furtherance of the transaction which is the subject of the
Transaction Documents. Information shall not be deemed to be within our
knowledge if such information might have been revealed if there had been
undertaken a canvass of all lawyers within this firm or a general search of the
firm's files.
Based solely on the foregoing and subject to the assumptions, limitations
and qualifications set forth herein, we are of the opinion that:
1. Alliance is a corporation duly incorporated and in good standing
under the laws of the State of Michigan, and Alliance Bank is a
Michigan state-chartered bank duly organized and in good standing
under the laws of the State of Michigan. Alliance and Alliance Bank
each have all requisite corporate power and authority and all
licenses, permits, and authorizations necessary to own and operate
its properties and assets, to incur all of its liabilities, and to
carry on its business as it now is being conducted. Alliance and
Alliance Bank have all requisite corporate power and authority to
enter into the Agreements and to consummate the transactions
contemplated by the Agreements.
2. Alliance is the legal and record owner of all of the issued and
outstanding shares of capital stock of Alliance Bank free and clear
of any claims, liens, pledges and other encumbrances.
3. All corporate acts and other proceedings required to be taken by
Alliance and Alliance Bank to authorize the execution, delivery and
performance of the Agreements have been duly taken. The Agreements
have been duly executed and delivered by Alliance and Alliance Bank
and constitute legal, valid, and binding obligations of Alliance and
Alliance Bank enforceable against Alliance and Alliance Bank in
accordance with their terms.
4. To the best of our knowledge, neither the execution and the delivery
by Alliance or Alliance Bank of the Agreements nor the consummation
of the transactions contemplated by the Agreements will constitute a
default under or a material violation of any provision of, nor will
the consummation of the transactions
EXHIBIT 6.1(i) PAGE 2
contemplated by the Agreements afford any party a right to
accelerate any indebtedness under, the Articles of Incorporation or
Bylaws of Alliance, the Articles of Incorporation or Bylaws of
Alliance Bank, any material promissory note, indenture or other
evidence of indebtedness or agreement evidencing security therefor,
or any material lease, contract, or other commitment or agreement to
which Alliance or Alliance Bank is a party or by which either
Alliance or Alliance Bank or its property is bound, any statute,
regulation, or rules, or any judgment, order, or decree applicable
to Alliance or Alliance Bank.
5. Except as set forth in the Agreements and to the best of our
knowledge, no consent, approval, order or authorization of, or
registration, declaration or filing with or notice to any court,
administrative agency or commission or other governmental authority
or instrumentality, domestic or foreign, is required to be obtained
or made by Alliance or Alliance Bank in connection with the
execution and delivery of the Agreements or the consummation by
Alliance and Alliance Bank of the transactions contemplated by the
Agreements.
6. Alliance's authorized capital stock consists of 2,000,000 shares of
common stock, $1.00 par value per share (the "ALLIANCE COMMON
STOCK"), of which 302,691 of such shares are issued and outstanding.
All of the outstanding shares of Alliance Common Stock have been
duly and validly issued and are fully paid and non-assessable. To
our knowledge, none of the shares of Alliance Common Stock has been
issued in violation of the preemptive or subscription rights of any
person. Except for options to acquire 15,960 shares of common stock
of Alliance, there are no outstanding options, warrants, rights to
subscribe for, calls, or commitments of any character whatsoever
relating to, or securities or rights convertible into or
exchangeable for, shares of the capital stock of Alliance or
contracts, commitments, understandings or arrangements by which
Alliance is or may be obligated to issue additional shares of its
capital stock or options, warrants or rights to purchase or acquire
any additional shares of its capital stock. Alliance has no
obligation, contingent or otherwise, to reacquire any shares of
Alliance Common Stock.
7. Alliance Bank's authorized capital stock consists of 36,091 shares
of common stock, $10.00 par value per share (the "ALLIANCE BANK
COMMON STOCK"), all of which are issued and outstanding. All of the
outstanding shares of Alliance Bank Common Stock have been duly and
validly issued and are fully paid and non-assessable, except as
provided for under Michigan Law. To our knowledge, none of the
shares of Alliance Bank Common Stock has been issued in violation of
the preemptive or subscription rights of any person. There are no
outstanding options, warrants, rights to subscribe for, calls, or
commitments of any character whatsoever relating to, or securities
or rights convertible into or exchangeable for, shares of the
capital stock of Alliance Bank or contracts, commitments,
understandings or arrangements by which Alliance Bank is or may be
obligated to issue additional shares of its capital stock or
options, warrants or rights to purchase or acquire any additional
shares of its capital stock. Alliance Bank has no obligation,
contingent or otherwise, to reacquire any shares of Alliance Bank
Common Stock.
8. Except as disclosed in the Disclosure Schedule, to our knowledge,
there is no material litigation, claim or other proceeding pending
or threatened before any
EXHIBIT 6.1(i) PAGE 3
judicial, administrative or regulatory agency or tribunal against
Alliance or Alliance Bank, or to which the property of Alliance or
Alliance Bank is subject, which can reasonably be expected to result
in any material adverse change in the financial condition,
operations, or business of Alliance and Alliance Bank taken as a
whole.
The opinions expressed above are subject to the following qualifications:
A. Our opinions with respect to the legality, validity, binding effect,
and enforceability of any document or agreement referenced above and
any rights granted to Horizon, HAC, or Horizon Bank pursuant to any
such document or agreement are subject to the effect of any
applicable state and/or federal bankruptcy, insolvency, readjustment
of debt, receivership, fraudulent conveyance and equitable
subordination, reorganization, moratorium, equity of redemption, or
similar laws now or hereafter in effect governing or affecting
debtors' and creditors' rights or remedies generally and to the
effect of general principles of equity and matters of public policy
(regardless of whether considered in a proceeding in equity or at
law), including (without limitation) concepts of materiality,
reasonableness, good faith, and fair dealing. Without limiting the
generality of the foregoing exceptions, we express no opinion with
respect to the availability of the remedies of specific performance,
injunctive relief or of any other equitable remedy.
B. We have assumed that the execution, delivery, and performance of the
Transaction Documents by Horizon, HAC, and Horizon Bank, do not and
will not contravene, conflict with, violate or result in breach of
(i) any law, statute or ordinance of any jurisdiction applicable
solely to Horizon, HAC, and Horizon Bank and not to Alliance and
Alliance Bank, (ii) any provision of the constituent documents of
Horizon, HAC, or Horizon Bank, or (iii) any approvals, consents,
licenses, orders, writs, judgments, injunctions or decrees of any
court, arbitrator, administrative agency or other governmental
authority, or any indenture, mortgage, deed of trust, agreement,
lease or other instrument to which Horizon, HAC, or Horizon Bank are
parties.
C. We express no opinion that the structure of the transaction or the
performance of the Transaction Documents is or is not in compliance
with professional accounting statutes (state or federal), and all
rules, regulations, interpretations, statements, ethical codes,
professional standards, and licensing requirements relating to
accountancy, whether promulgated by any agency of the State of
Michigan or any local or national accounting organization or
association.
D. We wish to advise you that, under Michigan law, contractual
indemnification and hold harmless provisions may not be enforceable
to the extent the contract does not clearly and unequivocally
specify that the indemnity or exculpation covers claims, losses,
expenses or other liabilities arising or alleged to arise, in whole
or in part, from the negligence, strict liability or other acts or
omissions of the indemnified party. Moreover, indemnification (and
presumably exculpation) clauses generally are strictly construed and
the terms must be set forth clearly and unequivocally. Further,
indemnification or exculpation as against certain claims,
EXHIBIT 6.1(i) PAGE 4
losses, expenses or other liabilities arising as the result of the
indemnified party's violation of federal or state statutes, or the
indemnified party's own tort liability when performing a public or
quasi-public duty, or other acts or omissions, may be considered
contrary to the public policy and, therefore, invalid and/or
unenforceable.
E. We express no opinion as to the enforceability of provisions of the
Transaction Documents relating to (i) consents or waivers as to
jurisdiction, (ii) consents or waivers of service of process, (iii)
the validity or enforceability of any purported waiver or purported
consent relating to any rights of Alliance or Alliance Bank or
duties owed thereto, existing as a matter of law, (iv) self-help
provisions, and (v) waiver of Constitutional rights.
F. We express no opinion as to any provisions in the Transaction
Documents insofar as they purport to provide that any party (i) may
have rights to the payment or reimbursement of attorneys' fees and
litigation expenses, except to the extent that a court determines
that such fees are reasonable and such provision is enforceable,
(ii) may have rights to the payment of any sum of liquidated
damages, or (iii) waives any right or defense.
G. This opinion is limited to matters expressly stated herein and no
opinion is inferred or may be implied beyond the matters expressly
stated. This opinion does not constitute a guarantee of, or security
for, the obligations created pursuant to the Transaction Documents
or any of the other matters referred to or opined upon herein, and
by rendering this opinion, we are not guaranteeing or insuring
payment or performance of said transaction.
H. This opinion is based on and relies upon the current facts and the
current status of the law, and is subject in all respects to, and
may be limited by, after the date hereof, changes in the facts,
further rules, regulations and legislation, as well as developing
case law. We assume no obligation to notify any person of changes in
facts or law occurring or coming to our attention after the delivery
of this opinion letter, whether or not deemed material.
The opinions expressed herein represent our reasonable judgment as to
certain matters of law based upon the facts presented or assumed and should not
be considered or construed as a guarantee. Actions and reliance hereon are
subject to the final business judgment of the parties acting in reliance.
This opinion is solely for the benefit of the addressee hereof in
connection with the closing of the transactions contemplated by the Agreements,
and no other person or entity may rely upon this opinion without the prior,
express written consent of this firm.
Very truly yours,
EXHIBIT 6.1(i) PAGE 5
EXHIBIT 6.2(g)
LEGAL OPINION OF XXXXXX & XXXXXXXXX LLP
[XXXXXX & XXXXXXXXX LLP LETTERHEAD]
__________, 2005
Alliance Financial Corporation
000 Xxxx Xxxxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
Gentlemen:
We have acted as counsel for Horizon Bancorp, an Indiana corporation
("HORIZON"), Horizon Acquisition Corp., an Indiana corporation ("HAC"), and
Horizon Bank, National Association, a national bank ("HORIZON BANK"), in
connection with the Agreement of Merger and Plan of Reorganization dated
__________, 2005 (the "AGREEMENT OF MERGER"), among Horizon Bank, HAC, Alliance
Financial Corporation, a Michigan corporation ("ALLIANCE"), and Alliance Banking
Company, a Michigan state-chartered bank ("ALLIANCE BANK") and Horizon Bank, and
the Merger Agreement dated __________, 2005 (the "MERGER AGREEMENT") between
Alliance and Horizon (the Agreement of Merger and the Merger Agreement are
referred to collectively herein as the "AGREEMENTS"). This opinion is being
delivered to you pursuant to Section 6.2(g) of the Agreement of Merger. Terms
used herein that are defined in the Agreements shall have the meaning set forth
therein unless otherwise defined herein.
In connection with this opinion, we have examined the following documents,
agreements and instruments:
- The Agreements,
- The Articles of Incorporation and Bylaws of Horizon and HAC,
- The Articles of Association and Bylaws of Horizon Bank,
- _____________________________________________________________, and
- Such other corporate documents and records of Horizon, HAC and
Horizon Bank and public documents and records as we have deemed
necessary or appropriate for this opinion.
The documents, agreements and instruments referred to above are sometimes
collectively herein referred to as the "TRANSACTION DOCUMENTS."
As to questions of fact material to our opinion, we have relied upon
representations and/or certificates of (a) officers of Horizon, HAC and Horizon
Bank, and (b) public officials;
EXHIBIT 6.2(g) PAGE 1
none of which representations or information has been independently verified by
us. In our examination, we have assumed the genuineness of all signatures, the
legal capacity of natural persons, the authenticity of all documents submitted
to us as originals and conformity to the original documents of all documents
submitted to us as certified or photostatic copies, the authenticity of the
originals of the latter documents, and the due authorization, execution and
delivery of all documents by parties other than Horizon and Horizon Bank.
In connection with this opinion, we advise you that we have not made any
special examination of and are not expressing any opinion regarding the affairs
or financial condition of Horizon, HAC and Horizon Bank, except as otherwise may
be expressly stated herein.
Except as otherwise expressly stated herein, this opinion should in no way
be construed as passing upon the accuracy or completeness of any of the
representations or warranties which may be or have been made to you in
connection with the Transaction Documents or any other instrument or agreement
contemplated by the Transaction Documents or on any other matters, legal or
otherwise, not specifically covered herein.
As used herein, "to our knowledge" or words or phrases of similar import
shall mean during the course of our representation of Horizon, HAC and Horizon
Bank, no information that would give us current actual knowledge of the
inaccuracy of such statement has come within the conscious awareness of lawyers
in our firm who are actively involved in negotiating the Transaction Documents
or preparing documents in furtherance of the transaction which is the subject of
the Transaction Documents. Information shall not be deemed to be within our
knowledge if such information might have been revealed if there had been
undertaken a canvass of all lawyers within this firm or a general search of the
firm's files.
We are qualified to practice law only in the State of Indiana and we do
not purport to be experts on, or to express an opinion herein concerning, the
laws of any jurisdiction other than the State of Indiana and the laws of the
United States of general application to transactions in the State of Indiana.
For purposes of rendering this opinion, we have assumed that all matters of law
relevant to the Transaction Documents and the transactions contemplated thereby
will be governed by the laws of the State of Indiana and the federal laws of the
United States.
Based solely on the foregoing and subject to the assumptions, limitations
and qualifications set forth herein, we are of the opinion that:
1. Horizon and HAC are corporations duly incorporated and validly
existing under the laws of the State of Indiana, and Horizon Bank is
a national bank duly incorporated and validly existing under the
laws of the United States. Horizon, HAC and Horizon Bank each has
all requisite corporate power and authority and all licenses,
permits, and authorizations necessary to own and operate its
properties and assets, to incur all of its liabilities, and to carry
on its business as it is now being conducted. Horizon, HAC and
Horizon Bank each has all requisite corporate power and authority to
enter into the Agreements, to merge Alliance Bank with Horizon Bank
and to merge Alliance with HAC in accordance with the terms of the
Agreements, and to consummate the transactions contemplated by the
Agreements.
2. All corporate acts and other proceedings required to be taken by
Horizon, HAC and Horizon Bank to authorize the execution, delivery
and performance of the
EXHIBIT 6.2(g) PAGE 2
Agreements have been duly taken. The Agreements have been duly
executed and delivered by Horizon, HAC and Horizon Bank and
constitute legal, valid, and binding obligations of each of Horizon,
HAC and Horizon Bank enforceable against each in accordance with
their terms.
3. To the best of our knowledge after due inquiry, neither the
execution and the delivery by Horizon, HAC or Horizon Bank of the
Agreements nor the consummation of the transactions contemplated by
the Agreements will constitute a default under or a material
violation of any provision of, nor will the consummation of the
transactions contemplated by the Agreements afford any party a right
to accelerate any indebtedness under, the Articles of Incorporation
or Bylaws of Horizon or HAC, the Articles of Association or Bylaws
of Horizon Bank, any material promissory note, indenture or other
evidence of indebtedness or agreement evidencing security therefor,
or any material lease, contract, or other commitment or agreement to
which Horizon, HAC or Horizon Bank is a party or by which any of
Horizon, HAC, Horizon Bank or its property is bound, any statute,
regulation, or rules, or any judgment, order, or decree applicable
to Horizon, HAC or Horizon Bank.
4. Except as set forth in the Agreements and to the best of our
knowledge after due inquiry, no consent, approval, order or
authorization of, or registration, declaration or filing with or
notice to any court, administrative agency, or commission or other
governmental authority or instrumentality, domestic or foreign, is
required to be obtained or made by Horizon, HAC or Horizon Bank in
connection with the execution and delivery of the Agreements or the
consummation by Horizon, HAC and Horizon Bank of the transactions
contemplated by the Agreements.
The opinions expressed above are subject to the following qualifications:
A. Our opinions with respect to the legality, validity, binding effect,
and enforceability of any document or agreement referenced above and
any rights granted to Alliance or Alliance Bank pursuant to any such
document or agreement are subject to the effect of any applicable
state and/or federal bankruptcy, insolvency, readjustment of debt,
receivership, fraudulent conveyance and equitable subordination,
reorganization, moratorium, equity of redemption, or similar laws
now or hereafter in effect governing or affecting debtors' and
creditors' rights or remedies generally and to the effect of general
principles of equity and matters of public policy (regardless of
whether considered in a proceeding in equity or at law), including
(without limitation) concepts of materiality, reasonableness, good
faith, and fair dealing. Without limiting the generality of the
foregoing exceptions, we express no opinion with respect to the
availability of the remedies of specific performance, injunctive
relief or of any other equitable remedy.
B. We have assumed that the execution, delivery, and performance of the
Transaction Documents by Alliance and Alliance Bank, do not and will
not contravene, conflict with, violate or result in breach of (i)
any law, statute or ordinance of any jurisdiction applicable solely
to Alliance and Alliance Bank and not to Horizon, HAC or Horizon
Bank, (ii) any provision of the constituent
EXHIBIT 6.2(g) PAGE 3
documents of Alliance or Alliance Bank, or (iii) any approvals,
consents, licenses, orders, writs, judgments, injunctions or decrees
of any court, arbitrator, administrative agency or other
governmental authority, or any indenture, mortgage, deed of trust,
agreement, lease or other instrument to which Alliance or Alliance
Bank are parties.
C. We express no opinion that the structure of the transaction or the
performance of the Transaction Documents is or is not in compliance
with professional accounting statutes (state or federal), and all
rules, regulations, interpretations, statements, ethical codes,
professional standards, and licensing requirements relating to
accountancy, whether promulgated by any agency of the State of
Indiana or any local or national accounting organization or
association.
D. We wish to advise you that, under Indiana law, contractual
indemnification and hold harmless provisions may not be enforceable
to the extent the contract does not clearly and unequivocally
specify that the indemnity or exculpation covers claims, losses,
expenses or other liabilities arising or alleged to arise, in whole
or in part, from the negligence, strict liability or other acts or
omissions of the indemnified party. Moreover, indemnification (and
presumably exculpation) clauses generally are strictly construed and
the terms must be set forth clearly and unequivocally. Further,
indemnification or exculpation as against certain claims, losses,
expenses or other liabilities arising as the result of the
indemnified party's violation of federal or state statutes, or the
indemnified party's own tort liability when performing a public or
quasi-public duty, or other acts or omissions, may be considered
contrary to the public policy and, therefore, invalid and/or
unenforceable.
E. We express no opinion as to the enforceability of provisions of the
Transaction Documents relating to (i) consents or waivers as to
jurisdiction, (ii) consents or waivers of service of process, (iii)
the validity or enforceability of any purported waiver or purported
consent relating to any rights of Horizon, HAC or Horizon Bank or
duties owed thereto, existing as a matter of law, (iv) self-help
provisions, and (v) waiver of Constitutional rights.
F. We express no opinion as to any provisions in the Transaction
Documents insofar as they purport to provide that any party (i) may
have rights to the payment or reimbursement of attorneys' fees and
litigation expenses, except to the extent that a court determines
that such fees are reasonable and such provision is enforceable,
(ii) may have rights to the payment of any sum of liquidated
damages, or (iii) waives any right or defense.
G. This opinion is limited to matters expressly stated herein and no
opinion is inferred or may be implied beyond the matters expressly
stated. This opinion does not constitute a guarantee of, or security
for, the obligations created pursuant to the Transaction Documents
or any of the other matters referred to or opined upon herein, and
by rendering this opinion, we are not guaranteeing or insuring
payment or performance of said transaction.
EXHIBIT 6.2(g) PAGE 4
H. This opinion is based on and relies upon the current facts and the
current status of the law, and is subject in all respects to, and
may be limited by, after the date hereof, changes in the facts,
further rules, regulations and legislation, as well as developing
case law. We assume no obligation to notify any person of changes in
facts or law occurring or coming to our attention after the delivery
of this opinion letter, whether or not deemed material.
The opinions expressed herein represent our reasonable judgment as to
certain matters of law based upon the facts presented or assumed and should not
be considered or construed as a guarantee. Actions and reliance hereon are
subject to the final business judgment of the parties acting in reliance.
This opinion is solely for the benefit of the addressee hereof in
connection with the closing of the transactions contemplated by the Agreements,
and no person or entity may rely upon this opinion without the prior, express
written consent of this firm.
Very truly yours,
XXXXXX & XXXXXXXXX LLP
EXHIBIT 6.2(g) PAGE 5
