Exhibit 2
AGREEMENT AND PLAN OF
REORGANIZATION
among
first shares bancorp, INC.,
FIRST BANK,
LINCOLN BANCORP,
and
LINCOLN BANK
March ___, 2004
TABLE OF CONTENTS
Article I The Company Merger..................................................1
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1.01 The Company Merger................................................1
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1.02 Reservation of Right to Revise Structure..........................2
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1.03 Effective Time....................................................3
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1.04 Accounting Treatment..............................................3
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Article II The Subsidiary Merger..............................................3
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2.01 The Subsidiary Merger.............................................3
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2.02 Effective Time....................................................4
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Article III Consideration.....................................................4
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3.01 Consideration.....................................................4
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3.02 Rights as Shareholders; Stock Transfers...........................8
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3.03 Fractional Shares.................................................9
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3.04 Exchange Procedures...............................................9
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3.05 Anti-Dilution Adjustments........................................10
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Article IV Actions Pending the Merger........................................10
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4.01 Forbearances of FSB..............................................10
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4.02 Forbearances of Lincoln..........................................13
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Article V Representations and Warranties.....................................15
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5.01 Disclosure Schedules.............................................15
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5.02 Representations and Warranties of FSB............................15
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5.03 Representations and Warranties of Lincoln........................25
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Article VI Covenants.........................................................34
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6.01 Reasonable Best Efforts..........................................34
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6.02 Shareholder Approval.............................................34
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6.03 Registration Statement...........................................34
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6.04 Press Releases...................................................35
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6.05 Access; Information..............................................36
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6.06 Acquisition Proposals............................................36
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6.07 Affiliate Agreements.............................................37
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6.08 NASDAQ Listing...................................................37
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6.09 Regulatory Applications..........................................37
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6.10 Title Insurance and Surveys......................................37
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6.11 Environmental Reports............................................38
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6.12 Conforming Accounting and Reserve Policies;
Restructuring Expenses...........................................38
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6.13 D & O Insurance..................................................39
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6.14 Notification of Certain Matters..................................40
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6.15 Defined Contribution Plans.......................................40
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6.16 Option Plans.....................................................40
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6.17 Debentures and Contracts.........................................41
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6.18 Deferred Fee Agreements..........................................41
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6.19 Employee Matters.................................................41
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6.20 Severance........................................................42
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6.21 Charter Conversion...............................................42
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6.22 Short-Swing Trading Exemption....................................42
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Article VII Conditions to Consummation of the Merger.........................43
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7.01 Conditions to Each Party's Obligation
to Effect the Company Merger.....................................43
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7.02 Conditions to Obligation of FSB..................................44
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7.03 Conditions to Obligation of Lincoln..............................45
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Article VIII Closing.........................................................46
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8.01 Deliveries by FSB at Closing.....................................46
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8.02 Deliveries by Lincoln at the Closing.............................47
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Article IX Termination.......................................................48
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9.01 Termination......................................................48
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9.02 Effect of Termination and Abandonment............................49
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9.03 Liquidated Damages...............................................49
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Article X Miscellaneous......................................................50
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10.01 Survival......................................................50
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10.02 Waiver; Amendment.............................................50
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10.03 Counterparts..................................................50
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10.04 Governing Law.................................................50
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10.05 Expenses......................................................50
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10.06 Notices.......................................................50
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10.07 Entire Understanding; No Third Party Beneficiaries............51
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AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is dated as of
March ___, 2004, by and among First Shares Bancorp, Inc., an Indiana corporation
with its headquarters in Greenwood, Indiana ("FSB"), First Bank, an Indiana
commercial bank based in Morgantown, Indiana ("First Bank"), Lincoln Bancorp, an
Indiana corporation with its principal place of business in Plainfield, Indiana
("Lincoln"), and Lincoln Bank, a federal savings bank based in Plainfield,
Indiana ("Lincoln Bank").
W I T N E S S E T H:
A. Each of the parties desire to effect a merger of FSB with and into Lincoln,
with Lincoln being the surviving entity in the merger (the "Company
Merger").
B. FSB owns all of the issued and outstanding shares of capital stock of First
Bank. Lincoln owns all of the issued and outstanding shares of capital
stock of Lincoln Bank. In addition to the Company Merger, the parties
desire to effect a merger of First Bank with and into Lincoln Bank, with
Lincoln Bank being the surviving entity in the merger (the "Subsidiary
Merger").
C. The Boards of Directors of FSB and Lincoln, respectively, each have
determined that it is in the best interests of their respective
corporations, shareholders, customers, and employees to effect the Company
Merger and the Subsidiary Merger.
D. It is the intention of the parties to this Agreement that the business
combinations contemplated hereby each be treated as a "reorganization"
under Section 368 of the Internal Revenue Code of 1986, as amended (the
"Code").
NOW, THEREFORE, in consideration of the premises, and of the mutual
covenants, representations, warranties and agreements contained herein, the
parties agree as follows:
Article I
The Company Merger
1.01 The Company Merger. At the date and time at which the Company Merger
becomes effective (the "Effective Time"), the Company Merger contemplated by
this Agreement shall occur and in furtherance thereof:
(a) Structure and Effects of the Company Merger. FSB shall merge with
and into Lincoln, and the separate corporate existence of FSB shall
thereupon cease. Lincoln shall be the surviving corporation in the Company
Merger (sometimes hereinafter referred to as the "Surviving Corporation")
and shall continue to be governed by the laws of the State of Indiana, and
the separate corporate existence of Lincoln with all its rights,
privileges, immunities, powers and franchises shall continue unaffected by
the Company Merger. The Company Merger shall have the effects specified in
the Indiana Business Corporation Law, IND. CODE ss. 23-1-17-1, et seq. (the
"IBCL").
(b) Name and Offices. The name of the Surviving Corporation shall be
Lincoln Bancorp. Its principal office shall be located at 0000 Xxxx Xxxx
Xxxxxx, Xxxxxxxxxx, Xxxxxxx 00000-0000.
(c) Articles of Incorporation. The Lincoln Articles of Incorporation
as in effect immediately prior to the Effective Time shall continue to be
the articles of incorporation of the Surviving Corporation following the
Company Merger, until duly amended in accordance with the terms thereof and
the IBCL.
(d) By-Laws. The Lincoln Code of By-laws as in effect immediately
prior to the Effective Time shall continue to be the by-laws of the
Surviving Corporation following the Company Merger, until duly amended in
accordance with the terms thereof, the Articles of Incorporation of
Lincoln, and the IBCL.
(e) Directors. The directors of Lincoln immediately prior to the
Effective Time shall continue to hold such positions following the Company
Merger, and such directors shall hold office until such time as their
successors shall be duly elected and qualified. In addition, Xxxxx X.
Xxxxx, X.X. XxXxxxxxx, and Xxxxx X. Xxxxxx (or in the event one or more of
such persons is not able to serve, another director or directors of FSB
selected by agreement between FSB and Lincoln prior to the Effective Time)
shall be appointed to the Board of Directors of Lincoln effective as of the
Effective Time. Xxxxx X. Xxxxxx shall serve for a one-year term ending at
the 2005 annual shareholders' meeting, X.X. XxXxxxxxx shall serve for a
two-year term ending at the 2006 annual shareholders' meeting, and Xxxxx X.
Xxxxx shall serve for a three-year term ending at the 2007 annual
shareholders' meeting, and in each case until such director's successor
shall be duly elected and qualified.
(f) Officers. The officers of Lincoln holding such positions
immediately prior to the Effective Time shall continue to be the officers
of the Surviving Corporation following the Company Merger. In addition,
Xxxxx X. Xxxxx shall be appointed Vice Chairman of Lincoln at the Effective
Time, and it is anticipated that Xxxxx X. Xxxxx shall be appointed as the
President and Chief Executive Officer of Lincoln not later than December
31, 2005.
1.02 Reservation of Right to Revise Structure. At Lincoln's election, the
Company Merger may alternatively be structured so that (a) FSB is merged with
and into any other direct or indirect wholly-owned subsidiary of Lincoln or (b)
any direct or indirect wholly-owned subsidiary of Lincoln is merged with and
into FSB; provided, however, that no such change shall (x) alter or change the
amount or kind of the consideration payable in the Company Merger (the
"Consideration") or the treatment of the holders of FSB Common Stock, $.01 par
value per share ("FSB Common Stock"), (y) prevent the parties from obtaining the
opinions of Xxxxxx & Xxxxxxxxx referred to in Sections 7.02(c) and 7.03(d) or
(z) 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.
1.03 Effective Time. The Company Merger shall become effective upon the
filing, in the office of the Secretary of State of the State of Indiana, of
Articles of Merger in accordance with IND. CODE ss.23-1-40-5, which shall
include the Plan of Merger attached hereto as Exhibit A, or at such later date
and time as may be set forth in such articles. Subject to the terms of this
Agreement, the parties shall cause the Company Merger to become effective (a) on
the date that is the fifth full National Association of Securities Dealers
Automated Quotation System ("NASDAQ") trading day to occur after the last of the
conditions set forth in Article VII shall have been satisfied or waived in
accordance with the terms of this Agreement, or (b) on such date as the parties
may agree in writing (the "Effective Date").
1.04 Accounting Treatment. The combination of Lincoln and FSB effected by
the Company Merger will be accounted for under the purchase method of
accounting.
Article II
The Subsidiary Merger
2.01 The Subsidiary Merger. At the Effective Time, the Subsidiary Merger
contemplated by this Agreement shall occur and in furtherance thereof:
(a) Structure and Effects of the Subsidiary Merger. First Bank shall
merge with and into Lincoln Bank on the terms set forth in Exhibit B (which
shall be executed by Lincoln Bank and First Bank simultaneously with the
execution of this Agreement), and the separate corporate existence of First
Bank shall thereupon cease. Lincoln Bank shall be the surviving bank in the
Subsidiary Merger (sometimes hereinafter referred to as the "Surviving
Bank") and shall continue to be governed by federal law, and the separate
corporate existence of Lincoln Bank with all its rights, privileges,
immunities, powers and franchises shall continue unaffected by the
Subsidiary Merger. The Subsidiary Merger shall have the effects specified
in IND. CODE ss. 28-1-7-19, and in 12 C.F.R. ss. 552.13(e).
(b) Name and Offices. The name of the Surviving Bank shall be Lincoln
Bank. Its principal office shall be located at 0000 Xxxx Xxxx Xxxxxx,
Xxxxxxxxxx, Xxxxxxx 00000-0000. However, subject to applicable legal
requirements, it will conduct business at the offices of First Bank under
the name "First Bank, a division of Lincoln Bank," for a maximum period of
one year.
(c) Articles of Conversion. The Lincoln Bank Stock Charter, as in
effect immediately prior to the Effective Time, shall continue to be the
charter of the Surviving Bank following the Subsidiary Merger, until duly
amended in accordance with the terms thereof and the Home Owners' Loan Act
of 1933, as amended ("HOLA").
(d) Bylaws. The Lincoln Bank Stock By-Laws, as in effect immediately
prior to the Effective Time, shall continue to be the by-laws of the
Surviving Bank following the Subsidiary Merger, until duly amended in
accordance with the terms thereof, the Stock Charter of Lincoln Bank, and
HOLA.
(e) Directors. The directors of Lincoln Bank, immediately prior to the
Effective Time, shall continue to hold such positions following the
Subsidiary Merger, and such directors shall hold offices until such time as
their successors shall be duly elected and qualified. In addition, Xxxxx X.
Xxxxx, X.X. XxXxxxxxx, and Xxxxx X. Xxxxxx (or in the event one or more of
such persons is not able to serve, another director or directors of FSB
selected by agreement between FSB and Lincoln prior to the Effective Time)
shall be appointed to the Board of Directors of Lincoln Bank effective as
of the Effective Time. Xxxxx X. Xxxxxx shall serve for a one-year term
ending at the 2005 annual shareholders' meeting, X.X. XxXxxxxxx shall serve
for a two-year term ending at the 2006 annual shareholders' meeting, and
Xxxxx X. Xxxxx shall serve for a three-year term ending at the 2007 annual
shareholders' meeting.
(f) Officers. The officers of Lincoln Bank holding such positions
immediately prior to the Effective Time shall continue to be the officers
of the Surviving Bank following the Subsidiary Merger. In addition, Xxxxx
X. Xxxxx shall be appointed Executive Vice President and Chief Operating
Officer of the Surviving Bank, and Xxxx X. Xxxxxxx shall be appointed
Senior Vice President of the Surviving Bank. It is anticipated that Xxxxx
X. Xxxxx shall be appointed to the positions of President and Chief
Executive Officer of Surviving Bank no later than December 31, 2005.
2.02 Effective Time. The Subsidiary Merger shall become effective upon the
filing with the Office of Thrift Supervision (the "OTS"), of Articles of
Combination in accordance with 12 C.F.R. ss. 552.13(j) and Articles of Merger in
accordance with IND. CODE ss. 28-1-7-9, or at such later date and time as may be
set forth in such filings. Subject to the terms of this Agreement, the parties
shall cause the Subsidiary Merger to become effective on the same date that the
Company Merger becomes effective.
Article III
Consideration
3.01 Consideration.
(a) Subject to the terms and conditions of this Agreement, at the
Effective Time:
(1) Each share of FSB Common Stock issued and outstanding
immediately prior to the Effective Time (other than shares held as
treasury stock of FSB and shares held directly or indirectly by
Lincoln, except shares held by Lincoln in a fiduciary capacity or in
satisfaction of a debt previously contracted, if any) shall become and
be converted into the right to receive, subject to adjustment as set
forth in Section 3.05:
(A) .75 shares (the "Exchange Ratio") of Common Stock,
without par value, of Lincoln ("Lincoln Common Stock") (the "Per
Share Stock Consideration"), or
(B) $14.80 in cash (such sum, the "Per Share Cash
Consideration" and together with the Per Share Stock
Consideration, the "Consideration"); provided that the aggregate
number of shares of Lincoln Common Stock that shall be issued in
the Company Merger shall equal a number which is as close as
possible (after prorations are made and cash in lieu of
fractional shares is determined) to, but no more than, the
product of (a) fifty percent (50%) and (b) the Exchange Ratio,
times (c) the number of shares of FSB Common Stock outstanding
immediately prior to the Effective Time (the "Stock Number").
(2) Each share of FSB Common Stock that, immediately prior to the
Effective Time, is held as treasury stock of FSB or held directly or
indirectly by Lincoln, other than shares held in a fiduciary capacity
or in satisfaction of a debt previously contracted, shall by virtue of
the Company Merger be canceled and retired and shall cease to exist,
and no exchange or payment shall be made therefor.
(3) Each share of Lincoln Common Stock which is issued and
outstanding immediately prior to the Effective Time shall continue to
be an issued and outstanding share of Lincoln Common Stock at and
after the Effective Time.
(4) Notwithstanding the foregoing, if any holders of FSB Common
Stock dissent from the Company Merger and demand dissenters' rights
under the IBCL, any issued and outstanding shares of FSB Common Stock
held by such dissenting holders shall not be converted as described in
this Section 3.01(a) but shall from and after the Effective Time
represent only the right to receive such consideration as may be
determined to be due to such dissenting holders pursuant to the IBCL;
provided, however, that each share of FSB Common Stock outstanding
immediately prior to the Effective Time and held by a dissenting
holder who shall, after the Effective Time, withdraw his or her demand
for dissenters' rights or lose his or her right to exercise
dissenters' rights shall have only the right to receive the
consideration as No-Election Shares (as hereinafter defined).
(b) Subject to the allocation procedures set forth in Section 3.01(c),
each record holder of FSB Common Stock will be entitled (1) to elect to
receive Lincoln Common Stock for all or some of the shares of FSB Common
Stock ("Stock Election Shares") held by such record holder, (2) to elect to
receive cash for all or some of the shares of FSB Common Stock ("Cash
Election Shares") held by such record holder or (3) to indicate that such
holder makes no such election for all or some of the shares of FSB Common
Stock ("No-Election Shares") held by such record holder. All such elections
(each, an "Election") shall be made on a form designed for that purpose by
Lincoln and reasonably acceptable to FSB (an "Election Form"). Any shares
of FSB Common Stock with respect to which the record holder thereof shall
not, as of the Election Deadline (as defined below), have properly
submitted to the Exchange Agent (as defined below) a properly completed
Election Form shall be deemed to be No-Election Shares. A record holder
acting in different capacities or acting on behalf of other persons in any
way shall be entitled to submit an Election Form for each capacity in which
such record holder so acts with respect to each person for which it so
acts.
(c) Not later than the 5th day after the Election Deadline, Lincoln
shall cause the Exchange Agent to effect the allocation among the holders
of FSB Common Stock of rights to receive the Per Share Stock Consideration
or the Per Share Cash Consideration in the Company Merger as follows:
(1) Number of Stock Election Shares Less Than the Stock Number.
If the number of Stock Election Shares (on the basis of Election Forms
received as of the Election Deadline) is less than the Stock Number,
then
(A) all Stock Election Shares shall be, as of the Effective
Time, converted into the right to receive the Per Share Stock
Consideration,
(B) the Exchange Agent shall allocate pro rata from among
the No-Election Shares a sufficient number of No-Election Shares
such that the sum of such number and the number of Stock Election
Shares shall equal as closely as practicable the Stock Number,
and all such selected shares ("Stock-Selected No-Election
Shares") shall be, as of the Effective Time, converted into the
right to receive the Per Share Stock Consideration; provided that
if the sum of all No-Election Shares and Stock Election Shares is
less than the Stock Number, all No-Election Shares shall be
Stock-Selected No-Election Shares,
(C) if the sum of Stock Election Shares and No-Election
Shares is less than the Stock Number, the Exchange Agent shall
allocate pro rata from among the Cash Election Shares a number of
Cash Election Shares such that the sum of such number, plus the
number of Stock Election Shares and the number of Stock-Selected
No-Election Shares, shall equal as closely as practicable the
Stock Number, and all such selected shares ("Converted Cash
Election Shares") shall be, as of the Effective Time, converted
into the right to receive the Per Share Stock Consideration, and
(D) the No-Election Shares and Cash Election Shares that are
not Stock-Selected No-Election Shares or Converted Cash Election
Shares (as the case may be) shall be, as of the Effective Time,
converted into the right to receive the Per Share Cash
Consideration; or
(2) Number of Stock Election Shares Greater Than the Stock
Number. If the number of Stock Election Shares (on the basis of
Election Forms received by the Election Deadline) is greater than the
Stock Number, then:
(A) all Cash Election Shares shall be, as of the Effective
Time, converted into the right to receive the Per Share Cash
Consideration;
(B) all No-Election Shares shall be, as of the Effective
Time, converted into the right to receive the Per Share Cash
Consideration (the "Cash-Selected No-Election Shares");
(C) the Exchange Agent shall allocate pro rata from among
the Stock Election Shares a number of Stock Election Shares such
that after converting such Stock Election Shares to Cash Election
Shares, the number of remaining Stock Election Shares shall equal
as closely as practicable the Stock Number, and all such selected
shares ("Converted Stock Election Shares") shall be, as of the
Effective Time, converted into the right to receive the Per Share
Cash Consideration, and
(D) the Stock Election Shares that are not Converted Stock
Election Shares shall be, as of the Effective Time, converted
into the right to receive the Per Share Stock Consideration; or
(3) Number of Stock Election Shares Equal to the Stock Number. If
the number of Stock Election Shares (on the basis of Election Forms
received by the Election Deadline) is equal to the Stock Number, then:
(A) all Stock Election Shares shall be, as of the Effective
Time, converted into the right to receive the Per Share Stock
Consideration, and
(B) all No-Election Shares and all Cash Election Shares
shall be, as of the Effective Time, converted into the right to
receive the Per Share Cash Consideration.
(d) Stock Options.
(1) With respect to options for FSB Common Stock ("FSB Stock
Option") held by directors of FSB or First Bank who are not also
officers or employees of FSB or First Bank, at the Effective Time,
each outstanding option granted and outstanding under the First Shares
Bancorp, Inc. Amended and Restated 1996 Option Plan and the First
Shares Bancorp, Inc. Amended and Restated 1999 Stock Option Plan (the
"Option Plans"), without any act on the part of any holder thereof,
shall be converted into the right to receive from Lincoln , at the
Effective Time, an amount in cash equal to $14.80 minus the per share
exercise price for each share of FSB Common Stock subject to an FSB
Stock Option; provided, however, that the payer shall withhold from
such cash payment any taxes required to be withheld by applicable law.
Each FSB Stock Option held by a director to which this subparagraph
applies shall be cancelled and cease to exist by virtue of such
payment.
(2) At the Effective Time, subject to any consents required by
law and Section 6.16 hereof, each outstanding option for FSB Common
Stock held by an officer or employee of FSB or First Bank, whether or
not vested ("FSB Common Stock"), shall be converted into an option (a
"Replacement Option") to acquire, on the same terms and conditions as
were applicable under such FSB Stock Option, a specified number of
shares of Lincoln Common Stock, at a specified exercise price per
share. In respect of each option or set of identical options
outstanding to the same holder, such number shall be determined by
multiplying the number of shares of FSB Common Stock subject to such
FSB Stock Option or set of identical FSB Stock Options by the Exchange
Ratio and rounding such product to the nearest whole number, and such
exercise price per share shall be determined by dividing the per share
exercise price under such FSB Stock Option or set of identical FSB
Stock Options by the Exchange Ratio and rounding such quotient to the
nearest whole cent. For example, an FSB Stock Option to purchase 200
shares of FSB Common Stock at an exercise price of $15.00 per share
would be converted into an option to purchase 150 shares of Lincoln
Common Stock at an exercise price of $20.00 per share. Notwithstanding
the foregoing, each FSB Stock Option which is intended to be an
"incentive stock option" (as defined in Section 422 of the Code) shall
be adjusted in accordance with the requirements of Section 424 of the
Code. Accordingly, with respect to "incentive stock options,"
fractional shares will be rounded down to the nearest whole number of
shares and where necessary the per share exercise price will be
rounded up to the nearest cent. At or prior to the Effective Time, FSB
may modify any or all outstanding FSB Stock Options held by employees
of FSB and its Subsidiaries who become employees of Lincoln or its
Subsidiaries on the Effective Date to provide that they shall become
exercisable, subject to any applicable bank regulatory requirements,
in full in the event the optionee's qualifying service with Lincoln
and its Subsidiaries is terminated by Lincoln or its Subsidiaries
without cause or by the optionee for good reason, in which case the
Replacement Option shall reflect the terms and conditions of the
non-vested FSB Stock Option as so modified. At the Effective Time,
Lincoln shall assume FSB Stock Plans. At all times after the Effective
Time, Lincoln shall reserve for issuance such number of shares of
Lincoln Common Stock as are needed to permit the Replacement Options
to be exercised in the manner contemplated by this Agreement and the
instruments pursuant to which such options were granted. Lincoln shall
file with the SEC a registration statement on an appropriate form
under the Securities Act with respect to the shares of Lincoln Common
Stock subject to the Replacement Options and shall use its reasonable
best efforts to maintain the current status of the prospectus
contained therein, as well as comply with any applicable state
securities or "blue sky" laws, for so long as such options remain
outstanding.
(e) Subject to any consents required by law and Section 6.17
hereof, on or before the Effective Time, all of FSB's outstanding
Commonly Registered Equity Contracts and Collateralized Equity
Contracts (collectively the "Contracts") shall either be exercised for
shares of FSB Common Stock by holders thereof and/or cancelled by FSB,
and (2) all of FSB's outstanding Commonly Registered Debentures and
Unrestricted Debentures (the "Debentures") shall either be surrendered
to FSB by the holders thereof as consideration for the exercise of the
Contracts or shall be redeemed by FSB. Each of these actions shall be
taken in accordance with the terms of a Trust Indenture for the
Debentures and the Equity Contract Agency Agreement relating to the
Contracts (the "Master Contract") and upon payment of no more than the
applicable redemption premium prescribed by the Trust Indenture and
any cancellation payment prescribed by the Trust Indenture and the
Master Contract. On or before the Effective Time, the Contracts and
Debentures so exercised, surrendered and/or redeemed will be cancelled
and cease to exist.
3.02 Rights as Shareholders; Stock Transfers. At the Effective Time, (a)
holders of FSB Common Stock shall cease to be, and shall have no rights as,
shareholders of FSB, other than the right to receive (1) any dividend or other
distribution with respect to such FSB Common Stock with a record date occurring
prior to the Effective Time, (2) the Consideration provided under this Article
III, and (3) any dissenters' rights to which they may be entitled under the IBCL
if such holders have dissented to the Company Merger. After the Effective Time,
there shall be no transfers on the stock transfer books of FSB or the Surviving
Corporation of shares of FSB Common Stock.
3.03 Fractional Shares. Notwithstanding any other provision in this
Agreement, no fractional shares of Lincoln Common Stock and no certificates or
scrip therefor, or other evidence of ownership thereof, will be issued in the
Company Merger; instead, Lincoln shall pay to each holder of FSB Common Stock
who otherwise would be entitled to a fractional share of Lincoln Common Stock an
amount in cash (without interest) determined by multiplying such fraction by the
quotient of the Per Share Consideration and the Exchange Ratio.
3.04 Exchange Procedures. (a) Not later than the 20th business day prior to
the anticipated Effective Date or such other date as the parties may agree in
writing (the "Mailing Date"), Lincoln shall mail an Election Form and a letter
of transmittal to each holder of record of FSB Common Stock. To be effective, an
Election Form must be properly completed, signed and actually received by
Computershare Investor Services, LLC, as Exchange Agent (the "Exchange Agent"),
no later than 5:00 p.m., Chicago time, on the 20th calendar day after the
Mailing Date (the "Election Deadline") or such other time and date as the
parties may agree in writing, and in order to be deemed properly completed the
Election Form must be accompanied by one or more certificates (the "Old
Certificates") (or an indemnity satisfactory to the Surviving Corporation and
the Exchange Agent, if any of such certificates are lost, stolen or destroyed )
representing all shares of FSB Common Stock covered by such Election Form,
together with duly executed transmittal materials included in or required by the
Election Form. Lincoln shall have reasonable discretion, which it may delegate
in whole or in part to the Exchange Agent, to determine whether Election Forms
(and the accompanying certificates and material) have been properly completed,
signed and timely submitted or to disregard defects in Election Forms; such
decisions of Lincoln (or of the Exchange Agent) shall be conclusive and binding.
Neither Lincoln nor the Exchange Agent shall be under any obligation to notify
any person of any defect in an Election Form submitted to the Exchange Agent.
The Exchange Agent and Lincoln shall also make all computations contemplated by
Section 3.01 hereof, and, after consultation with FSB, all such computations
shall be conclusive and binding on the former holders of FSB Common Stock absent
manifest error. Shares of FSB Common Stock covered by an Election Form which is
not effective shall be treated as if no Election had been made with respect to
such shares of FSB Common Stock. Once an Election is made it may be amended at
any time prior to the Election Deadline, but thereafter it may not be amended or
revoked.
(b) At or prior to the Effective Time, Lincoln shall deposit, or shall
cause to be deposited, with the Exchange Agent, certificates representing
the shares of Lincoln Common Stock ("New Certificates") and an estimated
amount of cash to be issued as Consideration (such cash and New
Certificates, together with any dividends or distributions with a record
date occurring on or after the Effective Date with respect thereto (without
any interest on any such cash, dividends or distributions), being
hereinafter referred to as the "Exchange Fund").
(c) The Surviving Corporation shall cause the New Certificates into
which shares of a shareholder's FSB Common Stock are converted on the
Effective Date and/or any check in respect of any Per Share Cash
Consideration, fractional share amounts or dividends or distributions which
such person shall be entitled to receive to be delivered to such
shareholder no later than the later of (i) 15 days following delivery to
the Exchange Agent of certificates representing such shares of FSB Common
Stock ("Old Certificates") (or indemnity satisfactory to the Surviving
Corporation and the Exchange Agent, if any of such certificates are lost,
stolen or destroyed) owned by such shareholder, or (ii) 15 days following
the Effective Date. No interest will be paid on any Consideration that any
such person shall be entitled to receive pursuant to this Article III upon
such delivery.
(d) No dividends or other distributions on Lincoln Common Stock with a
record date occurring on or after the Effective Time shall be paid to the
holder of any unsurrendered Old Certificate representing shares of FSB
Common Stock converted in the Company Merger into the right to receive
shares of such Lincoln Common Stock until the holder thereof shall be
entitled to receive New Certificates in exchange therefor in accordance
with this Article III. After becoming so entitled in accordance with this
Article III, the record holder thereof also shall be entitled to receive
any such dividends or other distributions, without any interest thereon,
which theretofore had become payable with respect to shares of Lincoln
Common Stock such holder had the right to receive upon surrender of the Old
Certificate, as of the Effective Date.
(e) Any portion of the Exchange Fund that remains unclaimed by the
shareholders of FSB for six months after the Effective Time shall be
returned to Lincoln. Any shareholders of FSB who have not theretofore
complied with this Article III shall thereafter look only to Lincoln for
payment of Per Share Stock Consideration, Per Share Cash Consideration,
cash in lieu of any fractional shares and unpaid dividends and
distributions on Lincoln Common Stock deliverable in respect of each share
of FSB 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 FSB Common Stock for
any amount properly delivered to a public official pursuant to applicable
abandoned property, escheat or similar laws.
3.05 Anti-Dilution Adjustments. Should Lincoln change (or establish a
record date for changing) the number of shares of Lincoln Common Stock issued
and outstanding prior to the Effective Time by way of a stock split, stock
dividend, recapitalization or similar transaction with respect to the
outstanding Lincoln Common Stock, and the record date therefor shall be prior to
the Effective Time, the Exchange Ratio shall be proportionately adjusted.
Article IV
Actions Pending the Merger
4.01 Forbearances of FSB. From the date hereof until the earlier of the
termination of this Agreement or the Effective Time, except as expressly
contemplated by this Agreement or the Disclosure Schedule (as hereinafter
defined in Section 5.01), without the prior written consent of Lincoln, FSB will
not, and will cause First Bank not to:
(a) Ordinary Course. Conduct the business of FSB and First Bank other
than in the ordinary and usual course or, to the extent consistent
therewith, fail to use reasonable efforts to preserve intact their business
organizations and assets and maintain their rights, franchises and existing
relations with customers, suppliers, employees and business associates.
(b) Capital Stock. Except as contemplated by Sections 3.01(d) and
3.01(e), or pursuant to currently outstanding options or similar securities
or obligations convertible into or exercisable or exchangeable into shares
of capital stock (1) issue, sell or otherwise permit to become outstanding,
or authorize the creation of, any additional shares of FSB Common Stock or
any rights to subscribe for or purchase FSB Common Stock or any other
capital stock, or securities convertible into or exchangeable for any
capital stock, of FSB or First Bank, (2) permit any additional shares of
FSB Common Stock or capital stock of First Bank to become subject to grants
of employee or director stock options, restricted stock grants, or similar
stock-based employee or director rights, (3) repurchase, redeem or
otherwise acquire, directly or indirectly, any shares of FSB Common Stock
or capital stock of First Bank, (4) effect any recapitalization,
reclassification, stock split or like change in capitalization, (5) form a
new subsidiary, or (6) enter into, or take any action to cause any holders
of FSB Common Stock to enter into, any agreement, understanding or
commitment relating to the right of holders of FSB Common Stock to vote any
shares of FSB Common Stock, or cooperate in any formation of any voting
trust relating to such shares.
(c) Dividends, Etc. Make, declare, pay or set aside for payment any
dividend other than dividends from First Bank to FSB consistent with past
practice, on or in respect of, any shares of its capital stock.
(d) Compensation; Employment Contracts; Etc. Enter into, amend,
modify, renew or terminate any employment, consulting, severance or similar
contracts with any directors, officers or employees of, or independent
contractors with respect to, FSB or First Bank, or grant any salary, wage
or other increase or increase any employee benefit (including incentive or
bonus payments), except (1) for normal general increases in salary to
individual employees in the ordinary course of business consistent with
past practice, (2) for other changes that are required by applicable law,
(3) to satisfy contracts described in the Disclosure Schedule existing on
the date hereof, (4) for the hiring of new non-salaried employees to
replace prior employees, or (5) for changes contemplated by Sections 6.18,
6.19 and 6.20 hereof.
(e) Benefit Plans. Except as set forth in the Disclosure Schedule,
Enter into, establish, adopt, amend, modify or terminate any pension,
retirement, stock option, stock purchase, savings, profit sharing, employee
stock ownership, deferred compensation, consulting, bonus, group insurance
or other employee or director benefit, incentive or welfare contract, plan
or arrangement, or any trust agreement (or similar arrangement) related
thereto, or make any new or increase any outstanding grants or awards under
any such contract, plan or arrangement, in respect of any current or former
directors, officers or employees of, or independent contractors with
respect to, FSB or First Bank (or any dependent or beneficiary of any of
the foregoing persons), including taking any action that accelerates the
vesting or exercisability of or the payment or distribution with respect to
other compensation or benefits payable thereunder, except, in each such
case, (1) as may be required by applicable law or to satisfy contracts
existing on the date hereof and described in the Disclosure Schedule or (2)
as are provided for or contemplated by this Agreement.
(f) Dispositions. Except as set forth in the Disclosure Schedule,
sell, transfer, mortgage, lease, encumber or otherwise dispose of or
discontinue any material portion of its assets, business or properties.
(g) Acquisitions. Except (1) pursuant to contracts existing on the
date hereof and described in the Disclosure Schedule, (2) for short-term
investments for cash management purposes, (3) pursuant to bona fide hedging
transactions, or (4) by way of foreclosures or otherwise in satisfaction of
debts previously contracted in good faith, in each case in the ordinary and
usual course of business consistent with past practice, neither FSB nor
First Bank will acquire any assets or properties of another person in any
one transaction or a series of related transactions, other than readily
marketable securities in the ordinary and usual course of business
consistent with past practice.
(h) Governing Documents. Amend the FSB Articles of Incorporation, FSB
By-laws or the articles of incorporation or by-laws of First Bank.
(i) Accounting Methods. Implement or adopt any change in the
accounting principles, practices or methods used by FSB and First Bank,
other than as may be required by generally accepted accounting principles,
as concurred with by FSB's independent auditors or as required by Section
6.12 hereof.
(j) Contracts. Except in the ordinary course of business consistent
with past practice, enter into or terminate any material contract or amend
or modify in any material respect any of its existing material contracts.
(k) Claims. Settle any claim, action or proceeding, except for any
claim, action or proceeding involving solely money damages in an amount,
individually or in the aggregate, that is not material to FSB and First
Bank, taken as a whole.
(l) 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.
(m) Indebtedness. Other than 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) consistent with past practice, (1) incur any indebtedness for
borrowed money, (2) assume, guarantee, endorse or otherwise as an
accommodation become responsible for the obligations of any other person or
(3) cancel, release, assign or modify any material amount of indebtedness
of any other person.
(n) Loans. Without prior consultation with Lincoln, make any loan or
advance in excess of $500,000 other than residential mortgage loans in the
ordinary course of business consistent with lending policies as in effect
on the date hereof, provided that in the case of any loan for which
consultation is required, FSB or First Bank may make any such loan in the
event (A) FSB or First Bank has delivered to Lincoln or its designated
representative a notice of its intention to make such loan and such
additional information as Lincoln or its designated representative may
reasonably require and (B) Lincoln or its designated representative shall
not have reasonably objected to such loan by giving notice of such
objection within three business days following the delivery to Lincoln of
the applicable notice of intention.
(o) Adverse Actions. (1) Take any action reasonably likely to prevent
or impede the Company Merger or the Subsidiary Merger from qualifying as a
reorganization within the meaning of Section 368 of the Code; 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 Company Merger set forth
in Article VII 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.
(p) Interest Rates. Increase or decrease the rate of interest paid by
First 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 First Bank pay a rate of interest on any
deposit product which is more than the greater of (i) 0.0025 above the
average of the rates paid on comparable deposit products by the five (5)
highest deposit interest paying other banks or thrifts located in the
market in which such deposit product is offered by First Bank or, if fewer
than five (5) other banks and thrifts are located in such market, the
average of the rates paid by all other banks and thrifts located in such
market or (ii) the rate paid by Lincoln Bank.
(q) Commitments. Agree or commit to do, or enter into any contract
regarding, anything that would be precluded by clauses (a) through (p)
without first obtaining Lincoln's consent.
4.02 Forbearances of Lincoln. From the date hereof until the Effective
Time, except as expressly contemplated by this Agreement, without the prior
written consent of FSB, Lincoln will not, and will cause each of its direct or
indirect subsidiaries (collectively, the "Subsidiaries") not to:
(a) Ordinary Course. Conduct the business of Lincoln and its
Subsidiaries other than in the ordinary and usual course or, to the extent
consistent herewith, fail to use reasonable efforts to preserve intact
their business organizations and assets and maintain their rights,
franchises and existing relations with customers, suppliers, employees and
business associates.
(b) Capital Stock. Except as contemplated by this Agreement or
pursuant to currently outstanding options or similar securities or
obligations convertible into or exercisable into shares of capital stock or
pursuant to previously authorized stock repurchase programs, (1) issue,
sell or otherwise permit to become outstanding, or authorize the creation
of, any additional shares of Lincoln Common Stock or any rights to
subscribe for or purchase Lincoln Common Stock or any other capital stock,
or securities convertible into or exchangeable for any capital stock,
Lincoln or Lincoln Bank, (2) permit any additional shares of Lincoln Common
Stock or capital stock of Lincoln Bank to become subject to grants of
employee or director stock options, restricted stock grants, or similar
stock-based employee or director rights, (3) repurchase, redeem or
otherwise acquire, directly or indirectly, any shares of Lincoln Common
Stock or capital stock of Lincoln Bank, (4) effect any recapitalization,
reclassification, stock split or like change in capitalization, (5) form a
new subsidiary, or (6) enter into, or take any action to cause any holders
of Lincoln Common Stock to enter into, any agreement, understanding or
commitment relating to the right of holders of Lincoln Common Stock to vote
any shares of Lincoln Common Stock, or cooperate in any formation of any
voting trust relating to such shares.
(c) Dividends, Etc. Make, declare, pay or set aside for payment any
dividend, other than dividends from Lincoln Bank to Lincoln consistent with
past practice or dividends from Lincoln Bank to Lincoln to allow Lincoln to
pay any of the Consideration under this Agreement, on or in respect of, any
shares of its capital stock and quarterly dividends by Lincoln to its
shareholders in the ordinary course of business and consistent with past
practice.
(d) Accounting Methods. Implement or adopt any change in the
accounting principles, practices or methods used by Lincoln and its
Subsidiaries, other than as may be required by generally accepted
accounting principles, as concurred with by Lincoln's independent auditors.
(e) Risk Management. Except as provided 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.
(f) Indebtedness. Other than in the ordinary course of business
(including creation of deposit liabilities, entry into repurchase
agreements, purchases or sales of federal funds, and sales of certificates
of deposit) consistent with past practice, (1) incur any indebtedness for
borrowed money, (2) assume, guarantee, endorse or otherwise as an
accommodation become responsible for the obligations of any other person,
or (3) cancel, release, assign or modify any material amount of
indebtedness of any other person.
(g) Loans. Without prior consultation with FSB, make any loan or
advance in excess of $500,000 other than residential mortgage loans in the
ordinary course of business consistent with lending policies as in effect
on the date hereof, provided that in the case of any loan for which
consultation is required, Lincoln or Lincoln Bank may make any such loan in
the event (A) Lincoln or Lincoln Bank has delivered to FSB or its
designated representative a notice of its intention to make such loan and
such additional information as FSB or its designated representative may
reasonably require and (B) FSB or its designated representative shall not
have reasonably objected to such loan by giving notice of such objection
within three (3) business days following the delivery to FSB of the
applicable notice of intention.
(h) Adverse Actions. (1) Take any action reasonably likely to prevent
or impede the Company Merger or the Subsidiary Merger from qualifying as a
reorganization within the meaning of Section 368 of the Code; 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 Company Merger set forth
in Article VII 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.
(i) Governing Documents. Amend the Lincoln Articles of Incorporation
or the Lincoln Code of By-Laws in a manner that would be materially adverse
to the holders of Lincoln Common Stock.
(j) Commitments. Agree or commit to do, or enter into any contract
regarding, anything that would be precluded by clauses (a) through (d)
without first obtaining FSB's consent.
(k) Benefit Plans. Except for the potential termination or
modification of its existing defined benefit plan, enter into, establish,
adopt, amend, modify or terminate any pension, retirement, stock option,
stock purchase, savings, profit sharing, employee stock ownership, deferred
compensation, consulting, bonus, group insurance or other employee or
director benefit, incentive or welfare contract, plan or arrangement, or
any trust agreement (or similar arrangement) related thereto, or make any
new or increase any outstanding grants or awards under any such contract,
plan or arrangement, in respect of any current or former directors,
officers or employees of, or independent contractors with respect to,
Lincoln or Lincoln Bank (or any dependent or beneficiary of any of the
foregoing persons), including taking any action that accelerates the
vesting or exercisability of or the payment or distribution with respect to
other compensation or benefits payable thereunder, except, in each such
case, (1) as may be required by applicable law or to satisfy contracts or
obligations existing on the date hereof and described in the Disclosure
Schedule or (2) as are provided for or contemplated by this Agreement.
Article V
Representations and Warranties
5.01 Disclosure Schedules. On or prior to the date hereof, FSB has
delivered to Lincoln and Lincoln has delivered to FSB a schedule (respectively,
each party's "Disclosure Schedule") setting forth, among other things, items the
disclosure of which is necessary or appropriate either (1) in response to an
express disclosure requirement contained in a provision hereof or (2) as an
exception to one or more representations or warranties contained in Section 5.02
or 5.03, respectively, or to one or more of its covenants contained in Article
IV.
5.02 Representations and Warranties of FSB. Except as set forth in the
Disclosure Schedule, FSB and First Bank hereby represent and warrant, jointly
and severally, to Lincoln:
(a) Organization and Capital Stock.
(1) FSB is a corporation duly organized, validly existing and in
good standing under the laws of the State of Indiana and has the
corporate power to own all of its property and assets, to incur all of
its liabilities, and to carry on its business as now being conducted.
FSB is a bank holding company registered with the Board of Governors
of the Federal Reserve System ("Federal Reserve").
(2) The authorized capital stock of FSB consists of (i)
12,000,000 shares of FSB Common Stock, of which, as of the date
hereof, 1,622,662 shares are issued and outstanding, and (ii)
2,000,000 shares of preferred stock, $.01 par value per share, of
which no shares are issued and outstanding. All of the issued and
outstanding shares of FSB Common are duly and validly issued and
outstanding and are fully paid and non-assessable. None of the
outstanding shares of FSB Common Stock has been issued in violation of
any preemptive rights of the current or past shareholders of FSB.
(3) Except as disclosed in the Disclosure Schedule, there are no
shares of FSB Common or other capital stock or other equity securities
of FSB 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 FSB Common Stock or other capital stock of FSB or
contracts, commitments, understandings or arrangements by which FSB 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.
(4) Except as disclosed in the Disclosure Schedule, each
certificate representing shares of FSB Common Stock issued by FSB 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 FSB only upon receipt of an Affidavit of lost
stock certificate and indemnity agreement of such shareholder
indemnifying FSB against any claim that may be made against it on
account of the alleged loss, theft or destruction of any such
certificate or the issuance of such replacement certificate.
(b) Authorization and No Default. FSB's Board of Directors has, by all
appropriate action, approved this Agreement and the Company Merger and
authorized the execution of this Agreement on its behalf by its duly
authorized officers and the performance by FSB of its obligations
hereunder. First Bank's Board of Directors has, by all appropriate action,
approved this Agreement, Exhibit B, and the Subsidiary Merger and
authorized the execution hereof and of Exhibit B on its behalf by its duly
authorized officers and the performance by First Bank of its obligations
hereunder and under Exhibit B. Nothing in the articles of incorporation or
bylaws of FSB or First Bank, as amended, or any other agreement,
instrument, decree, proceeding, law or regulation (except as specifically
referred to in or contemplated by this Agreement) by or to which FSB or
First Bank are bound or subject which is material to FSB and First Bank
taken as a whole or to the Company Merger or the Subsidiary Merger would
prohibit or inhibit FSB or First Bank from consummating this Agreement, the
Company Merger or the Subsidiary Merger on the terms and conditions herein
contained. This Agreement has been duly and validly executed and delivered
by FSB and First Bank and constitutes a legal, valid and binding obligation
of FSB and First Bank, enforceable against FSB and First Bank in accordance
with its terms, except as such enforcement may be limited by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or similar
laws affecting the enforceability of creditors' rights generally and by
judicial discretion in applying principles of equity. No other corporate
acts or proceedings are required to be taken by FSB or First Bank (except
for approval by FSB's shareholders and the sole shareholder of First Bank
and Lincoln Bank) to authorize the execution, delivery and performance of
this Agreement and Exhibit B. Except for the requisite approval of the OTS,
and notices to the Indiana Department of Financial Institutions (the "DFI")
and the Federal Reserve, no notice to, filing with, or authorization by, or
consent or approval of, any federal or state bank regulatory authority is
necessary for the execution of this Agreement or consummation of the
Company Merger by FSB or the Subsidiary Merger by First Bank. FSB and First
Bank are neither in default under, nor in violation of, any provision of
their articles of incorporation, or bylaws, or any promissory note,
indenture or any evidence of indebtedness or security therefor, lease,
contract, purchase or other commitment or any other agreement, except for
defaults and violations which will not have a Material Adverse Effect on
FSB and First Bank, taken as a whole. For purposes of this Agreement,
"Material Adverse Effect" means with respect to Lincoln or FSB, any effect
that (1) is both material and adverse to the financial position, results of
operation or business of Lincoln and its Subsidiaries, taken as a whole, or
FSB and First Bank, taken as a whole, respectively, other than (A) the
effects of any change attributable to or resulting from changes in economic
conditions, laws, regulations or accounting guidelines (generally accepted
accounting principles or otherwise) applicable to depository institutions
generally, or in general levels of interest rates, (B) payments associated
with the Company Merger or the Subsidiary Merger, (C) charges required
under Section 6.12 hereof, or (D) actions or omissions of either Lincoln,
FSB, First Bank or any of Lincoln's Subsidiaries, taken with the prior
informed written consent of the other party in contemplation of the
transactions contemplated by this Agreement; or (2) would materially impair
the ability of either Lincoln or FSB to perform its obligations under this
Agreement or otherwise materially threaten or materially impede the
consummation of the Company Merger or the Subsidiary Merger and the other
transactions contemplated by this Agreement.
(c) Subsidiaries. First Bank is wholly-owned by FSB and is a
commercial bank duly organized, validly existing and in good standing under
Indiana law and has the corporate power to own its respective properties
and assets, to incur its respective liabilities and to carry on its
respective business as now being conducted. The number of issued and
outstanding shares of capital stock of First Bank is set forth in the
Disclosure Schedule, all of which shares are owned by FSB free and clear of
all liens, encumbrances, rights of first refusal, options or other
restrictions of any nature whatsoever. FSB has no other direct or indirect
subsidiaries. There are no options, warrants or rights outstanding to
acquire any capital stock of First Bank and no person or entity has any
other right to purchase or acquire any unissued shares of stock of First
Bank, nor does First 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
and as may be disclosed in the Disclosure Schedule, neither FSB nor First
Bank is a party to any partnership or joint venture or owns an equity
interest in any other business or enterprise.
(d) Financial Information. The consolidated balance sheets of FSB and
First Bank as of December 31, 2002 and December 30, 2001, and related
consolidated income statements and statements of changes in shareholders'
equity and of cash flows for the three (3) years ended December 31, 2002,
together with the notes thereto, included in FSB's Form 10-KSB for the
fiscal year ended December 31, 2002, as currently on file with the SEC, and
the periodic financial statements for the fiscal quarter September 30,
2003, together with the notes thereto included in FSB's Form 10-QSB for
that quarter as currently on file with the SEC (together, the "FSB
Financial Statements"), copies of which have been provided to Lincoln, have
been prepared in accordance with generally accepted accounting principles
applied on a consistent basis (except as may be disclosed therein and for
the absence of footnotes and normal year end adjustments in the quarterly
FSB Financial Statements) and fairly present in all material respects the
consolidated financial position and the consolidated results of operations,
changes in shareholders' equity and cash flows of FSB and First Bank as of
the dates and for the periods indicated.
(e) Absence of Changes. Except as set forth in the Disclosure
Schedule, since September 30, 2003, there has not been any material adverse
change in the financial condition, the results of operations or the
business of FSB and First Bank taken as a whole, nor have there been any
events or transactions having a Material Adverse Effect on FSB and First
Bank, taken as a whole.
(f) Regulatory Enforcement Matters. Except as may be disclosed in the
Disclosure Schedule, neither FSB nor First Bank is subject to, or has
received any notice or advice that it may become subject to, any order,
agreement or memorandum of understanding with any federal or state agency
charged with the supervision or regulation of banks or bank holding
companies or engaged in the insurance of financial institution deposits or
any other governmental agency having supervisory or regulatory authority
with respect to FSB or First Bank.
(g) Tax Matters. FSB and First 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. Except as set forth in the
Disclosure Schedule, neither FSB nor First Bank is (a) delinquent in the
payment of any taxes shown on such returns or reports or on any assessments
received by it for such taxes; (b) 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; (c) subject to any agreement extending
the period for assessment or collection of any federal or state tax; or (d)
a party to any action or proceeding with, nor has any claim been asserted
against it by, any court, administrative agency or commission or other
federal, state or local governmental authority or instrumentality
("Governmental Authority") for assessment or collection of taxes. None of
the tax returns of FSB or First Bank has been audited by the IRS or any
state tax agency for any period since December 31, 1999. Neither FSB nor
First Bank is, to the knowledge of FSB, the subject of any threatened
action or proceeding by any Governmental Authority for assessment or
collection of taxes. The reserve for taxes in the unaudited financial
statements of FSB for the quarter ended September 30, 2003, is, in the
opinion of management, adequate to cover all of the tax liabilities of FSB
and First Bank (including, without limitation, income taxes and franchise
fees) as of such date in accordance with generally accepted accounting
principles ("GAAP").
(h) Litigation. Except as may be disclosed in the Disclosure Schedule
and except for foreclosure and other collection proceedings commenced in
the ordinary course of business by First Bank with respect to loans in
default with respect to which no claims have been asserted against First
Bank, there is no litigation, claim or other proceeding before any
arbitrator or Governmental Authority pending or, to the knowledge of FSB,
threatened, against FSB or First Bank, or of which the property of FSB or
First Bank is or would be subject involving a monetary amount, singly or in
the aggregate, in excess of $25,000, or a request for specific performance,
injunctive relief, or other equitable relief. No litigation, claim or other
proceeding disclosed in the Disclosure Schedule is material to FSB and
First Bank taken as a whole.
(i) Employment Agreements. Except as disclosed in the Disclosure
Schedule, neither FSB nor First Bank is a party to or bound by any contract
for the employment, retention or engagement, or with respect to the
severance, of any officer, employee, agent, consultant or other person or
entity which, by its terms, is not terminable by FSB or First Bank on
thirty (30) days written notice or less without the payment of any amount
by reason of such termination. A description of each such agreement which
is in writing is included in the Disclosure Schedule.
(j) Reports. Except as may be disclosed in the Disclosure Schedule,
FSB and First Bank have filed all reports and statements, together with any
amendments required to be made with respect thereto, if any, that they were
required to file with (i) the DFI, (ii) the FDIC, (iii) the Federal
Reserve, and (iv) any other Governmental Authority with jurisdiction over
FSB or First Bank, including the SEC. 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, 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.
(k) Loans and Investments.
(1) Except as set forth in the Disclosure Schedule, as of
September 30, 2003, First Bank had no loan in excess of $10,000 that
has been classified by regulatory examiners or management of First
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
date hereof, the most recent loan watch list of First Bank and a list
of all loans in excess of $10,000 that First 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
the Disclosure Schedule.
(2) All loans reflected in the FSB Financial Statements as of
September 30, 2003, and which have been made, extended, renewed,
restructured, approved, amended or acquired since September 30, 2003,
(i) have been made for good, valuable and adequate consideration in
the ordinary course of business; (ii) to the best of First Bank's
knowledge, constitute the legal, valid and binding obligation of the
obligor and any guarantor named therein, except to the extent limited
by general principles of equity and public policy or by bankruptcy,
insolvency, fraudulent transfer, reorganization, liquidation,
moratorium, readjustment of debt or other laws of general application
relative to or affecting the enforcement of creditors' rights; (iii)
are evidenced by notes, instruments or other evidences of indebtedness
which are true, genuine and what they purport to be; and (iv) are
secured, to the extent that First Bank has a security interest in
collateral or a mortgage securing such loans, by perfected security
interests or recorded mortgages naming First Bank as the secured party
or mortgagee.
(3) Except as set forth in 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 FSB Financial
Statements are, in the opinion of management of FSB, adequate in all
respects under the requirements of generally accepted accounting
principles 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. To the
best knowledge of FSB, the aggregate loan balances outstanding as of
September 30, 2003, in excess of the reserve for loan losses as of
such date, were, as of September 30, 2003, collectible in accordance
with their respective terms.
(4) None of the investments reflected in the FSB Financial
Statements as of and for the quarter ended September 30, 2003, and
none of the investments made by FSB or First Bank since September 30,
2003, are subject to any restriction, whether contractual or
statutory, which materially impairs the ability of FSB or First Bank
to dispose freely of such investment at any time.
(5) Set forth in the Disclosure Schedule is a true, accurate and
complete list of all loans in which FSB has any participation interest
or which have been made with or through another financial institution
on a recourse basis against First Bank.
(l) Employee Matters and ERISA.
(1) Except as may be disclosed in the Disclosure Schedule,
neither FSB nor First Bank has entered into any collective bargaining
agreement with any labor organization with respect to any group of
employees of FSB or First Bank and to the knowledge of FSB there is no
present effort nor existing proposal to attempt to unionize any group
of employees of FSB or First Bank.
(2) Except as may be disclosed in the Disclosure Schedule, (i)
FSB and First Bank are and have been in material 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 FSB nor First
Bank is engaged in any unfair labor practice; (ii) there is no unfair
labor practice complaint against FSB or First Bank pending or, to the
knowledge of FSB, threatened before the National Labor Relations
Board; (iii) there is no labor dispute, strike, slowdown or stoppage
actually pending or, to the knowledge of FSB, threatened against or
directly affecting FSB or First Bank; and (iv) neither FSB nor First
Bank has experienced any work stoppage or other such labor difficulty
during the past five (5) years.
(3) Except as may be disclosed in the Disclosure Schedule,
neither FSB nor First 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 FSB or First Bank (the "FSB
Employee Plans"). To the knowledge of FSB, no present or former
employee of FSB or First Bank has been charged with breaching nor has
breached a fiduciary duty under any of the FSB Employee Plans. Except
as may be disclosed in the Disclosure Schedule, neither FSB nor First
Bank participates in, nor has it in the past five (5) years
participated in, nor has it any present or future obligation or
liability under, any multiemployer plan. Except as may be disclosed in
the Disclosure Schedule, neither FSB nor First 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 FSB or First Bank. FSB has provided to
Lincoln a true, accurate and complete copy of each written plan or
program disclosed in the Disclosure Schedule or a summary plan
description therefor. FSB has also provided to Lincoln, with respect
to each such plan or program to the extent available to FSB, 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, (ix)
registration statements on Form S-8 and prospectuses, and (x) trust
agreements.
(4) All liabilities of the FSB Employee Plans have been funded on
the basis of consistent methods in accordance with sound actuarial
assumptions and practices, and no FSB Employee Plan, at the end of any
plan year, or at September 30, 2003, 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 FSB 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 FSB Financial Statements, FSB and First Bank have no
contingent or actual liabilities under Title IV of ERISA as of
December 31, 2003. 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 FSB Employee Plans, whether or not
waived, nor does FSB 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 FSB or by any person which may be
aggregated with FSB 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 FSB Employee Plans as to which a notice
would be required to be filed with the Pension Benefit Guaranty
Corporation. No claim is pending, or to the knowledge of FSB
threatened or imminent with respect to any FSB Employee Plan (other
than a routine claim for benefits for which plan administrative review
procedures have not been exhausted) for which FSB or First Bank would
be liable after September 30, 2003, except as is reflected on the FSB
Financial Statements. As of December 31, 2003, FSB and First 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 FSB Employee Plan. All FSB Employee Plans have
been operated, administered and maintained in accordance with the
terms thereof and in material compliance with the requirements of all
applicable laws, including, without limitation, ERISA.
(m) Title to Properties; Insurance. Except as may be disclosed in the
Disclosure Schedule, (i) FSB and First Bank have good and marketable title,
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 FSB Financial Statements and easements, rights-of-way, and other
restrictions which do not have a Material Adverse Effect on FSB and First
Bank, taken as a whole, and further excepting in the case of other real
estate owned ("OREO"), as such real estate is internally classified on the
books of FSB or First Bank, rights of redemption under applicable law) to
all of their owned real properties; (ii) all leasehold interests for real
property and any material personal property used by FSB and First Bank in
their businesses are held pursuant to lease agreements which are valid and
enforceable in accordance with their terms; (iii) to our knowledge, all
such properties comply in all material respects with all applicable private
agreements, zoning requirements and other governmental laws and regulations
relating thereto and there are no condemnation proceedings pending or, to
the knowledge of FSB, threatened with respect to such properties; and (iv)
FSB and First Bank have valid title or other ownership rights under
licenses to all material intangible personal or intellectual property used
by FSB or First Bank in their respective businesses, free and clear of any
claim, defense or right of any other person or entity which is material to
such property, subject only to rights of the licensors pursuant to
applicable license agreements and, in the case of non-exclusive licenses,
of other licensees, which rights do not materially adversely interfere with
the use of such property. All material insurable properties owned or held
by FSB and First Bank are adequately insured by financially sound and
reputable insurers in such amounts and against fire and other risks insured
against by extended coverage and public liability insurance, as is
customary with bank holding companies of similar size. The Disclosure
Schedule sets forth, for each policy of insurance maintained by FSB and
First Bank, the amount and type of insurance, the name of the insurer and
the amount of the annual premium.
(n) Environmental Matters.
(1) 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 FSB, First Bank, Lincoln and
Lincoln's Subsidiaries have done business or owned, leased or operated
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.
(2) Except as may be disclosed in the Disclosure Schedule and
based on the best knowledge, after reasonable investigation, of FSB,
neither the conduct nor operation of FSB or First Bank nor any
condition of any property presently or previously owned, leased or
operated by either of them violates or violated Environmental Laws in
any respect material to the business of FSB and First Bank and no
condition has existed or event has occurred with respect to either of
them or any such property that, with notice or the passage of time, or
both, would constitute a violation material to the business of FSB and
First Bank of Environmental Laws or obligate (or potentially obligate)
FSB or First Bank to remedy, stabilize, neutralize or otherwise alter
the environmental condition of any such property where the aggregate
cost of such actions would be material to FSB and First Bank. Except
as may be disclosed in the Disclosure Schedule and based on the best
knowledge, after reasonable investigation, of FSB, neither FSB nor
First Bank has received any notice from any person or entity that FSB
or First Bank or the operation or condition of any property ever
owned, leased or operated by either of them are or were in violation
of any Environmental Laws or that either of them are responsible (or
potentially responsible) for the cleanup or other remediation of any
pollutants, contaminants, or hazardous or toxic wastes, substances or
materials at, on or beneath any such property.
(o) Compliance with Law. FSB and First Bank have all licenses,
franchises, permits and other governmental authorizations that are legally
required to enable them to conduct their respective businesses in all
material respects and conduct and have conducted their businesses in
compliance in all material respects with all applicable federal, state and
local statutes, laws, regulations, ordinances, rules, judgments, orders or
decrees applicable thereto or to the employees conducting such businesses.
(p) Brokerage. Except as may be disclosed in the Disclosure Schedule
and with the exception of fees payable to Xxxxx X. Xxxxx & Company ("Xxxxx
Xxxxx"), there are no existing claims or agreements for brokerage
commissions, finders' fees, or similar compensation in connection with the
transactions contemplated by this Agreement payable by FSB or First Bank.
(q) No Undisclosed Liabilities. To the knowledge or FSB and First
Bank, FSB and First Bank do not have any material 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 FSB or
First Bank giving rise to any such liability) required in accordance with
GAAP to be reflected in an audited consolidated balance sheet of FSB or the
notes thereto, except (i) for liabilities set forth or reserved against in
the FSB 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 FSB and First Bank since
the date of the most recent balance sheet included in the FSB Financial
Statements, which such fluctuations in the aggregate are not material to
FSB and First Bank taken as a whole, (iii) liabilities relating to the
possible sale of FSB or other transactions contemplated by this Agreement,
and (iv) as may be disclosed in the Disclosure Schedule.
(r) Properties, Contracts and Other Agreements. The Disclosure
Schedule lists or describes the following:
(1) Each parcel of real property owned by FSB or First Bank and
the principal buildings and structures located thereon;
(2) Each lease of real property to which FSB or First Bank is a
party, identifying the parties thereto, the annual rental payable, the
term and expiration date thereof and a brief description of the
property covered;
(3) Each loan and credit agreement, conditional sales contract,
indenture or other title retention agreement or security agreement
relating to money borrowed by FSB;
(4) Each guaranty by FSB or First Bank of any obligation for the
borrowing of money or otherwise (excluding any endorsements and
guarantees in the ordinary course of business and letters of credit
issued by First Bank in the ordinary course of its business) or any
warranty or indemnification agreement;
(5) Each agreement between FSB or First Bank and any present or
former officer, director or greater than 5% shareholder of FSB or
First Bank (except for deposit or loan agreements entered into in the
ordinary course of First Bank's business);
(6) Each lease or license where FSB has an annual payment in
excess of $10,000 with respect to personal property involving FSB or
First Bank, whether as lessee or lessor or licensee or licensor;
(7) The name and annual salary as of January 1, 2004, of each
director or employee of FSB or First Bank and any employment agreement
or arrangement with respect to each such person; and
(8) Each agreement, loan, contract, lease, guaranty, letter of
credit, line of credit or commitment of FSB or First Bank not referred
to elsewhere in this Section which (i) involves payment by FSB or
First Bank (other than as disbursement of loan proceeds to customers)
of more than $50,000 annually or in the aggregate unless, in the
latter case, such is terminable within one (1) year without premium or
penalty; (ii) involves payments based on profits of FSB or First Bank;
(iii) relates to the future purchase of goods or services in excess of
the requirements of its respective business at current levels or for
normal operating purposes; or (iv) were not made in the ordinary
course of business.
Final and complete copies of each document, plan or contract listed and
described in the Disclosure Schedule have been provided to Lincoln. Neither FSB
nor First Bank nor, to FSB's knowledge, any other party thereof, is in default
under any such contracts 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.
(s) Interim Events. Except as provided in the Disclosure Schedule,
since September 30, 2003, neither FSB nor First 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 Lincoln pursuant to Section 4.01 hereof.
(t) Statements True and Correct. None of the information supplied or
to be supplied by FSB or First Bank for inclusion in (i) the Proxy
Statement (as defined in Section 6.03 hereof), and (ii) any other documents
to be filed with the SEC or any banking or other regulatory authority in
connection with the transactions contemplated hereby, will, at the
respective times such documents are filed, and with respect to the Proxy
Statement, when first mailed to the shareholders of FSB and at the time of
the FSB shareholders' meeting referred to in 6.02 hereof, contain any
untrue statement of a material fact, or omit to state any material fact
necessary in order to make the statements made therein, in light of the
circumstances under which they are made, not misleading. All documents that
FSB is responsible for filing with the SEC or any other regulatory
authority in connection with the transactions contemplated hereby will
comply as to form in all material respects with the provisions of
applicable law and the applicable rules and regulations thereunder.
(u) Books and Records. The books and records of FSB and First 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 FSB and First Bank.
(v) Deposit Insurance. The deposits of First Bank are insured by the
FDIC up to applicable limits and in accordance with the Federal Deposit
Insurance Corporation Act, as amended, and First Bank has paid or properly
reserved or accrued for all current premiums and assessments with respect
to such deposit insurance.
5.03 Representations and Warranties of Lincoln. Except as set forth in the
Disclosure Schedule corresponding to the relevant paragraph below, Lincoln and
Lincoln Bank hereby represent and warrant, jointly and severally, to FSB as
follows:
(a) Organization and Capital Stock.
(1) Lincoln is a corporation duly organized, validly existing and
in good standing under the laws of the State of Indiana and has the
corporate power to own all of its property and assets, to incur all of
its liabilities, and to carry on its business as now being conducted.
Lincoln is a savings and loan holding company registered with the OTS
under HOLA. Lincoln Bank is wholly-owned by Lincoln and is a federal
savings bank validly existing under federal law.
(2) The authorized capital stock of Lincoln consists of (i)
20,000,000 shares of Lincoln Common Stock, of which, as of the date
hereof, 4,414,391 shares are issued and outstanding, and (ii)
2,000,000 shares of preferred stock, without par value, of which no
shares are issued and outstanding. All of the issued and outstanding
shares of Lincoln Common Stock are duly and validly issued and
outstanding and are fully paid and non-assessable. None of the
outstanding shares of Lincoln Common Stock has been issued in
violation of any preemptive rights of the current or past shareholders
of Lincoln.
(3) Except as disclosed in the Disclosure Schedule, there are no
shares of Lincoln Common Stock or other capital stock or other equity
securities of Lincoln 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 Lincoln Common Stock or other
capital stock of Lincoln or contracts, commitments, understandings or
arrangements by which Lincoln 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.
(b) Authorization and No Default. Lincoln's Board of Directors has, by
all appropriate action, approved this Agreement and the Company Merger and
authorized the execution of this Agreement on its behalf by its duly
authorized officers and the performance by Lincoln of its obligations
hereunder. Lincoln Bank's Board of Directors has, by all appropriate
action, approved this Agreement, Exhibit B, and the Subsidiary Merger and
authorized the execution hereof and of Exhibit B on its behalf by its duly
authorized officers and the performance by Lincoln Bank of its obligations
hereunder and under Exhibit B. Nothing in the articles of incorporation,
charter or bylaws of Lincoln or Lincoln Bank, as amended, or any other
agreement, instrument, decree, proceeding, law or regulation (except as
specifically referred to in or contemplated by this Agreement) by or to
which Lincoln or Lincoln Bank or any of Lincoln's other Subsidiaries are
bound or subject which is material to Lincoln and its Subsidiaries taken as
a whole or to the Company Merger or the Subsidiary Merger would prohibit or
inhibit Lincoln or Lincoln Bank from consummating this Agreement, the
Company Merger or the Subsidiary Merger on the terms and conditions herein
contained. This Agreement has been duly and validly executed and delivered
by Lincoln and Lincoln Bank and constitutes a legal, valid and binding
obligation of Lincoln and Lincoln Bank, enforceable against Lincoln and
Lincoln Bank in accordance with its terms, except as such enforcement may
be limited by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or similar laws affecting the enforceability of
creditors' rights generally and by judicial discretion in applying
principles of equity. No other corporate acts or proceedings are required
to be taken by Lincoln or Lincoln Bank except for approvals by the sole
shareholder of Lincoln Bank to authorize the execution, delivery and
performance of this Agreement and Exhibit B. Except for the requisite
approval of the OTS and notices to the DFI and the Federal Reserve, no
notice to, filing with, or authorization by, or consent or approval of, any
federal or state bank regulatory authority is necessary for the execution
of this Agreement or consummation of the Company Merger by Lincoln or the
Subsidiary Merger by Lincoln Bank. Lincoln and its Subsidiaries are neither
in default under nor in violation of any provision of their articles of
incorporation or charter or bylaws, or any promissory note, indenture or
any evidence of indebtedness or security therefor, lease, contract,
purchase or other commitment or any other agreement, except for defaults
and violations which will not have a Material Adverse Effect on Lincoln and
its Subsidiaries, taken as a whole.
(c) Subsidiaries.
(1) Lincoln Bank is wholly-owned by Lincoln and is a federal
savings bank duly organized, validly existing and in good standing
under federal law and has the corporate power to own its respective
properties and assets, to incur its respective liabilities and to
carry on its respective business as now being conducted. All of the
outstanding shares of capital stock of Lincoln Bank are owned by
Lincoln free and clear of all liens, encumbrances, rights of first
refusal, options or other restrictions of any nature whatsoever. There
are no options, warrants or rights outstanding to acquire any capital
stock of Lincoln Bank and no person or entity has any other right to
purchase or acquire any unissued shares of stock of Lincoln Bank, nor
does Lincoln 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 and as may be disclosed in the Disclosure Schedule, neither
Lincoln nor Lincoln Bank is a party to any partnership or joint
venture or owns any equity interest in any other business or
enterprise.
(2) Except as set forth in the Disclosure Schedule, Lincoln has
no Subsidiaries, other than Lincoln Bank, and each of the Subsidiaries
identified on the Disclosure Schedule is a corporation duly organized,
validly existing and in good standing under the laws of the State in
which it was organized and has the corporate power to own its
respective properties, to incur its respective liabilities and to
carry on its respective business as now being conducted. The
Disclosure Schedule sets forth the number of shares of such
Subsidiaries owned by Lincoln or Lincoln Bank. All of such shares are
so owned free and clear of all liens, encumbrances, rights of first
refusal, options or other restrictions of any nature whatsoever, with
no options, warrants or rights outstanding to acquire any of their
capital stock, and no person or entity has any other right to purchase
or acquire any unissued stock of any of the Subsidiaries.
(d) Financial Information. The consolidated balance sheets of
Lincoln and its Subsidiaries as of December 31, 2002 and December 31,
2001, and related consolidated income statements and statements of
changes in shareholders' equity and of cash flows for the three (3)
years ended December 31, 2002, together with the notes thereto,
included in Lincoln's Form 10-K for the fiscal year ended December 31,
2002, as currently on file with the SEC, and the periodic financial
statements for the fiscal quarter ended September 30, 2003, together
with the notes thereto, included in Lincoln's Form 10-Q for that
quarter as currently on file with the SEC (together, the "Lincoln
Financial Statements"), copies of which have been provided to FSB,
have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis (except as may be disclosed
therein and for the absence of footnotes and normal year end
adjustments in the quarterly Lincoln Financial Statements) and fairly
present in all material respects the consolidated financial position
and the consolidated results of operations, changes in shareholders'
equity and cash flows of Lincoln and its Subsidiaries as of the dates
and for the periods indicated.
(e) Absence of Changes. Except as set forth in the Disclosure
Schedule, since September 30, 2003, there has not been any material
adverse change in the financial condition, the results of operations
or the business of Lincoln and its Subsidiaries taken as a whole, nor
have there been any events or transactions having a Material Adverse
Effect on Lincoln and its Subsidiaries, taken as a whole.
(f) Regulatory Enforcement Matters. Except as may be disclosed in
the Disclosure Schedule, neither Lincoln nor any of its Subsidiaries
is subject to, or has received any notice or advice that it may become
subject to, any order, agreement or memorandum of understanding with
any federal or state agency charged with the supervision or regulation
of banks or bank holding companies or engaged in the insurance of
financial institution deposits or any other governmental agency having
supervisory or regulatory authority with respect to Lincoln or any of
its Subsidiaries.
(g) Tax Matters. Lincoln and its Subsidiaries 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.
Neither Lincoln nor its Subsidiaries is (a) delinquent in the payment
of any taxes shown on such returns or reports or on any assessments
received by it for such taxes; (b) 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; (c) subject to any
agreement extending the period for assessment or collection of any
federal or state tax; or (d) a party to any action or proceeding with,
nor has any claim been asserted against it by, any court,
administrative agency or commission or other federal, state or local
governmental authority or instrumentality ("Governmental Authority")
for assessment or collection of taxes. None of the tax returns of
Lincoln or its Subsidiaries has been audited by the IRS or any state
tax agency since 1999. Neither Lincoln nor its Subsidiaries is, to the
knowledge of Lincoln, the subject of any threatened action or
proceedings by any Governmental Authority for assessment or collection
of taxes. The reserve for taxes in the unaudited financial statements
of Lincoln for the quarter ended September 30, 2003, is, in the
opinion of management, adequate to cover all of the tax liabilities of
Lincoln and its Subsidiaries (including, without limitation, income
taxes and franchise fees) as of such date in accordance with generally
accepted accounting principles ("GAAP").
(h) Litigation. Except for foreclosure and other collection
proceedings commenced in the ordinary course of business by Lincoln
Bank with respect to loans in default with respect to which no claims
have been asserted against Lincoln Bank, there is no litigation, claim
or other proceeding before any arbitrator or Governmental Authority
pending or to the knowledge of Lincoln, threatened, against Lincoln or
its Subsidiaries, or of which the property of Lincoln or its
Subsidiaries is or would be subject involving a monetary amount,
singly or in the aggregate, in excess of $25,000, or a request for
specific performance, injunctive relief, or other equitable relief.
(i) Reports. Except as may be disclosed in the Disclosure
Schedule, Lincoln and its Subsidiaries have filed all reports and
statements, together with any amendments required to be made with
respect thereof, if any, that they were required to file with (i) the
OTS, (ii) the FDIC, and (iii) any other Governmental Authority with
jurisdiction over Lincoln or its Subsidiaries, including the SEC. 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, 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.
(j) Loans and Investments.
(1) Except as set forth in the Disclosure Schedule, as of
September 30, 2003, Lincoln Bank has no loan in excess of $10,000
that has been classified by regulatory examiners or management of
Lincoln 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 date hereof, the most recent loan
watch list of Lincoln Bank and a list of all loans in excess of
$10,000 that Lincoln 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 the
Disclosure Schedule.
(2) All loans reflected in the Lincoln Financial Statements
as of September 30, 2003, and which have been made, extended,
renewed, restructured, approved, amended or acquired since
September 30, 2003, (i) have been made for good, valuable and
adequate consideration in the ordinary course of business; (ii)
to the best of Lincoln Bank's knowledge, constitute the legal,
valid and binding obligation of the obligor and any guarantor
named therein, except to the extent limited by general principles
of equity and public policy or by bankruptcy, insolvency,
fraudulent transfer, reorganization, liquidation, moratorium,
readjustment of debt or other laws of general application
relative to or affecting the enforcement of creditors' rights;
(iii) are evidenced by notes, instruments or other evidences of
indebtedness which are true, genuine and what they purport to be;
and (iv) are secured, to the extent that Lincoln Bank has a
security interest in collateral or a mortgage securing such
loans, by perfected security interests or recorded mortgages
naming Lincoln Bank as the secured party or mortgagee.
(3) Except as set forth in 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
Lincoln Financial Statements are, in the opinion of management of
Lincoln, adequate in all respects under the requirements of
generally accepted accounting principles 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. To the best knowledge of Lincoln, the
aggregate loan balances outstanding as of September 30, 2003, in
excess of the reserve for loan losses as of such date, were, as
of September 30, 2003, collectible in accordance with their
respective terms.
(4) Except as set forth in the Disclosure Schedule, none of
the investments reflected in the Lincoln Financial Statements as
of and for the quarter ended September 30, 2003, and none of the
investments made by Lincoln or Lincoln Bank since September 30,
2003, are subject to any restriction, whether contractual or
statutory, which materially impairs the ability of Lincoln or
Lincoln Bank to dispose freely of such investment at any time.
(k) Employee Benefit Plans.
(1) Lincoln's Disclosure Schedule contains a complete list of all
bonus, vacation, deferred compensation-based compensation, pension,
retirement, profit-sharing, thrift, savings, employee stock ownership,
stock bonus, stock purchase, restricted stock, stock appreciation and
stock option plans, all employment or severance contracts, all
medical, dental, disability, severance, health and life insurance
plans, all other employee benefit and fringe benefit plans, contracts
or arrangements maintained or contributed to by Lincoln or any of its
Subsidiaries for the benefit of current or former officers, employees
or directors or the beneficiaries or dependents of any of the
foregoing (collectively, "Lincoln Compensation Plans").
(2) With respect to each Lincoln Compensation Plan, if
applicable, Lincoln has provided or made available to FSB, true and
complete copies of existing: (A) Lincoln Compensation Plan documents
and amendments thereto; (B) trust instruments and insurance contracts;
(C) the most recent Form 5500 filed with the IRS; (D) the most recent
actuarial report and financial statement; (E) the most recent summary
plan description; (F) forms filed with the PBGC (other than for
premium payments); (G) the most recent determination letter issued by
the IRS; and (H) any Form 5310 or Form 5330 filed with the IRS. Each
Form 5500, actuarial report and financial statement referred to in the
preceding sentence accurately reflects the contributions, liabilities
and funding levels of the applicable Lincoln Compensation Plan.
(l) Employee Matters and ERISA.
(1) Neither Lincoln nor its Subsidiaries has entered into any
collective bargaining agreement with any labor organization with
respect to any group of employees of Lincoln or its Subsidiaries and
to the knowledge of Lincoln there is no present effort nor existing
proposal to attempt to unionize any group of employees of Lincoln or
its Subsidiaries.
(2) Except as may be disclosed in the Disclosure Schedule, (i)
Lincoln and its Subsidiaries are and have been in material 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 Lincoln nor its Subsidiaries is engaged in any unfair labor
practice; (ii) there is no unfair labor practice complaint against
Lincoln or its Subsidiaries pending or, to the knowledge of Lincoln,
threatened before the National Labor Relations Board; (iii) there is
no labor dispute, strike, slowdown or stoppage actually pending or to
the knowledge of Lincoln, threatened against or directly affecting
Lincoln or its Subsidiaries; and (iv) neither Lincoln nor its
Subsidiaries has experienced any work stoppage or other such labor
difficulty during the past five (5) years.
(3) Except as may be disclosed in the Disclosure Schedule,
neither Lincoln nor its Subsidiaries 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 Lincoln or its Subsidiaries
(the "Lincoln Employee Plans"). To the knowledge of Lincoln, no
present or former employee of Lincoln or its Subsidiaries has been
charged with breaching nor has breached a fiduciary duty under any of
the Lincoln Employee Plans. Except as may be disclosed in the
Disclosure Schedule, neither Lincoln nor its Subsidiaries participates
in, nor has it in the past five (5) years participated in, nor has it
any present or future obligation or liability under, any multiemployer
plan. Except as may be disclosed in the Disclosure Schedule, neither
Lincoln nor its Subsidiaries maintains, contributes to, or
participates in, any plan that provides health, major medical,
disability or life insurance benefits to former employees or directors
of Lincoln or its Subsidiaries. Lincoln has provided to FSB a true,
accurate and complete copy of each written plan or program disclosed
in the Disclosure Schedule or a summary plan description therefor.
Lincoln has also provided to FSB, with respect to each such plan or
program to the extent available to Lincoln, 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, (ix)
registration statements on Form S-8 and prospectuses, and (x) trust
agreements.
(4) All liabilities of the Lincoln Employee Plans have been
funded on the basis of consistent methods in accordance with sound
actuarial assumptions and practices, and no Lincoln Employee Plan, at
the end of any plan year, or at September 30, 2003, 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 Lincoln
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 Lincoln Financial Statements, Lincoln
and its Subsidiaries have no contingent or actual liabilities under
Title IV of ERISA as of December 31, 2003. 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 Lincoln
Employee Plans, whether or not waived, nor does Lincoln 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 Lincoln or by any person which may be aggregated with Lincoln 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
Lincoln Employee Plans as to which a notice would be required to be
filed with the Pension Benefit Guaranty Corporation. No claim is
pending, or to the knowledge of Lincoln threatened or imminent with
respect to any Lincoln Employee Plan (other than a routine claim for
benefits for which plan administrative review procedures have not been
exhausted) for which Lincoln or its Subsidiaries would be liable after
September 30, 2003, except as is reflected on the Lincoln Financial
Statements. As of December 31, 2003, Lincoln and its Subsidiaries 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 Lincoln Employee Plan. All Lincoln Employee Plans
have been operated, administered and maintained in accordance with the
terms thereof and in material compliance with the requirements of all
applicable laws, including, without limitation, ERISA.
(m) Title to Properties; Insurance. Except as may be disclosed in the
Disclosure Schedule, (i) Lincoln and its Subsidiaries have good and
marketable title, 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 Lincoln Financial Statements and easements,
rights-of-way, and other restrictions which do not have a Material Adverse
Effect on Lincoln or its Subsidiaries, taken as a whole, and further
excepting in the case of OREO, as such real estate is internally classified
on the books of Lincoln or its Subsidiaries, rights of redemption under
applicable law) to all of their owned real properties; (ii) all leasehold
interests for real property and any material personal property used by
Lincoln and its Subsidiaries in their businesses are held pursuant to lease
agreements which are valid and enforceable in accordance with their terms;
(iii) to our knowledge, all such properties comply in all material respects
with all applicable private agreements, zoning requirements and other
governmental laws and regulations relating thereto and there are no
condemnation proceedings pending or, to the knowledge of Lincoln,
threatened with respect to such properties; and (iv) Lincoln and its
Subsidiaries have valid title or other ownership rights under licenses to
all material intangible personal or intellectual property used by Lincoln
or its Subsidiaries in their respective businesses, free and clear of any
claim, defense or right of any other person or entity which is material to
such property, subject only to rights of the licensors pursuant to
applicable license agreements and, in the case of non-exclusive licenses,
of other licensees, which rights do not materially adversely interfere with
the use of such property. All material insurable properties owned or held
by Lincoln and its Subsidiaries are adequately insured by financially sound
and reputable insurers in such amounts and against fire and other risks
insured against by extended coverage and public liability insurance, as is
customary with thrift holding companies of similar size.
(n) Environmental Matters. Except as may be disclosed in the
Disclosure Schedule and based on the best knowledge, after reasonable
investigation, of Lincoln, neither the conduct nor operation of Lincoln or
its Subsidiaries nor any condition of any property presently or previously
owned, leased or operated by any of them violates or violated Environmental
Laws in any respect material to the business of Lincoln and its
Subsidiaries and no condition has existed or event has occurred with
respect to any of them or any such property that, with notice or the
passage of time, or both, would constitute a violation material to the
business of Lincoln and its Subsidiaries of Environmental Laws or obligate
(or potentially obligate) Lincoln or its Subsidiaries to remedy, stabilize,
neutralize or otherwise alter the environmental condition of any such
property where the aggregate cost of such actions would be material to
Lincoln and its Subsidiaries. Except as may be disclosed in the Disclosure
Schedule and based on the best knowledge, after reasonable investigation,
of Lincoln, neither Lincoln nor any of its Subsidiaries has received any
notice from any person or entity that Lincoln or its Subsidiaries or the
operation or condition of any property ever owned, leased or operated by
any of them are or were in violation of any Environmental Laws or that any
of them are responsible (or potentially responsible) for the cleanup or
other remediation of any pollutants, contaminants, or hazardous or toxic
wastes, substances or materials at, on or beneath any such property.
(o) Compliance with Law. Lincoln and its Subsidiaries have all
licenses, franchises, permits and other governmental authorizations that
are legally required to enable them to conduct their respective businesses
in all material respects and are in compliance in all material respects and
conduct and have conducted their businesses in compliance in all material
respects with all applicable federal, state and local statutes, laws,
regulations, ordinances, rules, judgments, orders or decrees applicable
thereto or to the employees conducting such businesses.
(p) Brokerage. Except as may be disclosed in the Disclosure Schedule
and with the exception of fees payable to Xxxxx, Xxxxxxxx & Xxxxx, Inc.,
there are no existing claims or agreements for brokerage commissions,
finders' fees, or similar compensation in connection with the transactions
contemplated by this Agreement payable by Lincoln or its Subsidiaries.
(q) No Undisclosed Liabilities. To the knowledge of Lincoln and
Lincoln Bank, Lincoln and its Subsidiaries do not have any material
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 Lincoln or its Subsidiaries giving rise to any such liability)
required in accordance with GAAP to be reflected in an audited consolidated
balance sheet of Lincoln or the notes thereto, except (i) for liabilities
set forth in or reserved against the Lincoln 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 Lincoln and its Subsidiaries since the date of the most recent balance
sheet included in the Lincoln Financial Statements, which such fluctuations
in the aggregate are not material to Lincoln and its Subsidiaries taken as
a whole, (iii) liabilities relating to the possible acquisition of FSB or
other transactions contemplated by this Agreement, and (iv) as may be
disclosed in the Disclosure Schedule.
(r) Interim Events. Other than as disclosed on the Disclosure
Schedule, since September 30, 2003, Lincoln has not paid or declared any
dividend, other than Lincoln's scheduled quarterly 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 FSB
pursuant to Section 4.02 hereof.
(s) Statements True and Correct. None of the information supplied or
to be supplied by Lincoln or its Subsidiaries for inclusion in (i) the
Proxy Statement (as defined in Section 6.03 hereof), and (ii) any other
documents to be filed with the SEC or any banking or other regulatory
authority in connection with the transactions contemplated hereby, will, at
the respective times such documents are filed, and with respect to the
Proxy Statement, when first mailed to the shareholders of FSB and at the
time of the FSB shareholders' meeting (referred to in Section 6.02 hereof),
contain any untrue statement of a material fact, or omit to state any
material fact necessary in order to make the statements made therein, in
light of the circumstances under which they are made, not misleading. All
documents that Lincoln is responsible for filing with the SEC or any other
regulatory authority in connection with the transactions contemplated
hereby will comply as to form in all material respects with the provisions
of applicable law and the applicable rules and regulations thereunder.
(t) Books and Records. The books and records of Lincoln and its
Subsidiaries 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 Lincoln and its Subsidiaries.
(u) Deposit Insurance. The deposits of Lincoln Bank are insured by the
FDIC up to applicable limits and in accordance with the Federal Deposit
Insurance Corporation Act, as amended, and Lincoln Bank has paid or
properly reserved or accrued for all current premiums and assessments with
respect to such deposit insurance.
Article VI
Covenants
6.01 Reasonable Best Efforts. Subject to the terms and conditions of this
Agreement, each of FSB, Lincoln, First Bank and Lincoln Bank agrees to use its
reasonable best efforts in good faith to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary, proper or
desirable, or advisable under applicable laws, so as to permit consummation of
the Company Merger and the Subsidiary Merger as promptly as practicable and
otherwise to enable consummation of the transactions contemplated hereby and
shall cooperate fully with the other party hereto to that end.
6.02 Shareholder Approval.
(a) Each of Lincoln and FSB agrees to take, in accordance with
applicable law, applicable rules of NASDAQ, and its articles of
incorporation and by-laws, all action necessary to convene an appropriate
meeting of its shareholders to consider and vote upon the approval and
adoption of this Agreement and the consummation of the actions and
transactions contemplated hereby, and to solicit shareholder approval and
adoption, as promptly as practicable after the Registration Statement (as
hereinafter defined) is declared effective. The Lincoln Board of Directors
and the FSB Board of Directors each is recommending and, unless either
Board of Directors, after having consulted with and considered the written
advice of outside counsel and its financial advisor, has determined in good
faith that to do so would result in a failure by the directors to discharge
properly their fiduciary duties in accordance with Indiana law, the Lincoln
Board of Directors and the FSB Board of Directors will continue to
recommend to the shareholders of Lincoln and FSB, respectively, that they
approve this Agreement and the Company Merger, and will take any other
action required to permit consummation of the transactions contemplated
hereby.
(b) Each of FSB and Lincoln agree to take all action necessary in
their respective capacities as sole shareholder of First Bank and Lincoln
Bank to approve and adopt the Merger Agreement for Subsidiary Merger set
forth in Exhibit B hereto and the transactions contemplated thereby.
6.03 Registration Statement.
(a) Lincoln agrees to prepare a registration statement on Form S-4
(the "Registration Statement"), to be filed by Lincoln with the SEC in
connection with the issuance of Lincoln Common Stock in the Company Merger
(including the proxy statements and prospectus and other proxy solicitation
materials of Lincoln and FSB constituting a part thereof (the "Proxy
Statements") and all related documents). The Proxy Statements shall fully
disclose that FSB's shareholders have dissenters' rights under IND. CODE
ss. 23-1-44 et. seq. FSB shall advise Lincoln promptly of any exercise of
such rights by an FSB shareholder. Both FSB and the Surviving Corporation
agree to comply with the requirements contained in IND. CODE ss. 23-1-44
et. seq. applicable to them. FSB agrees to cooperate, and to cause First
Bank to cooperate, with Lincoln, its counsel and its accountants, in
preparation of the Registration Statement and the Proxy Statements; and,
provided that FSB and First Bank have cooperated as required above, Lincoln
agrees to file the Registration Statement with the SEC as promptly as
reasonably practicable after the date hereof. Each of FSB and Lincoln
agrees to use its reasonable best efforts to cause the Registration
Statement to be declared effective under the Securities Act of 1933, as
amended (the "Securities Act") as promptly as reasonably practicable after
filing thereof. Lincoln also agrees to use all reasonable best efforts to
obtain all necessary state securities law or "Blue Sky" permits and
approvals required to carry out the transactions contemplated by this
Agreement. FSB agrees to furnish to Lincoln all information concerning FSB,
First Bank, and their officers, directors and shareholders as may be
reasonably requested in connection with the foregoing.
(b) FSB agrees, as to itself and First Bank, and Lincoln agrees, as to
itself and its Subsidiaries, that none of the information supplied or to be
supplied by it for inclusion or incorporation by reference in (1) the
Registration Statement will, at the time the Registration Statement and
each amendment or supplement thereto, if any, becomes effective under the
Securities Act, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make
the statements therein not misleading, and (2) the Proxy Statements and any
amendment or supplement thereto will, at the date of mailing to
shareholders and at the time of the shareholders meetings for the
respective corporations, contain any untrue statement which, at the time
and in the light of the circumstances under which such statement is made,
is 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
false or misleading or necessary to correct any statement in any earlier
statement in the Proxy Statements or any amendment or supplement thereto.
Each of FSB and Lincoln further agrees that if it shall become aware prior
to the Effective Date of any information furnished by it that would cause
any of the statements in the Proxy Statements to be false or misleading
with respect to any material fact, or to omit to state any material fact
necessary to make the statements therein not false or misleading, to
promptly inform the other party thereof and to take the necessary steps to
correct the Proxy Statements.
(c) Lincoln agrees to advise FSB, promptly after Lincoln receives
notice thereof, of the time when the Registration Statement has become
effective or any supplement or amendment has been filed, of the issuance of
any stop order or the suspension of the qualification of Lincoln Common
Stock for offering or sale in any jurisdiction, of the initiation or threat
of any proceeding for any such purpose, or of any request by the SEC for
the amendment or supplement of the Registration Statement or for additional
information.
6.04 Press Releases. Each of FSB and Lincoln 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 disclosure by
or at the direction of such party or any of its representatives that was
not permitted by this Agreement).
6.05 Access; Information.
(a) Each of FSB and Lincoln agrees that upon reasonable notice and
subject to applicable laws relating to the exchange of information, it
shall afford the other party and the other party's officers, employees,
counsel, accountants and other authorized representatives, such access
during normal business hours throughout the period prior to the Effective
Time to the books, records (including, without limitation, tax returns and
work papers of independent auditors), properties, personnel and to such
other information as any party may reasonably request and, during such
period, it shall furnish promptly to such other party (1) a copy of each
material report, schedule and other document filed by it pursuant to the
requirements of federal or state securities or banking laws, and (2) all
other information concerning the business, properties and personnel of it
as the other may reasonably request.
(b) Each of FSB and Lincoln agrees that it will not, and will cause
its representatives not to, use any information obtained pursuant to this
Section 6.05 for any purpose unrelated to the consummation of the
transactions contemplated by this Agreement. Subject to the requirements of
law, each party will keep confidential, and will cause its representatives
to keep confidential, all information and documents obtained pursuant to
this Section 6.05 in accordance with that certain Confidentiality Agreement
dated as of September 17, 2003, by and between Lincoln and FSB. In the
event that this Agreement is terminated or the transactions contemplated by
this Agreement shall otherwise fail to be consummated, each party shall
promptly cause all copies of documents or extracts thereof containing
information and data as to another party hereto to be returned to the party
which furnished the same.
(c) No investigation by either party of the business and affairs of
the other shall affect or be deemed to modify or waive any representation,
warranty, covenant or agreement in this Agreement, or the conditions to
either party's obligation to consummate the transactions contemplated by
this Agreement.
6.06 Acquisition Proposals. Lincoln and FSB each agree that it shall not,
and shall cause its Subsidiaries and its Subsidiaries' 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 Lincoln or FSB, respectively, or any of
its Subsidiaries 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,
Lincoln or FSB, respectively, or any of its Subsidiaries, other than the
transactions contemplated by this Agreement (any of the foregoing, an
"Acquisition Proposal"); provided however, that if Lincoln or FSB is not
otherwise in violation of this Section 6.06, the Lincoln or FSB 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 Lincoln or FSB 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 would constitute a failure to discharge properly the
fiduciary duties of such directors in accordance with Indiana law. Lincoln or
FSB shall promptly (within 24 hours) advise the other following the receipt by
it of any Acquisition Proposal and the substance thereof (including the identity
of the person making such Acquisition Proposal and a copy of such Acquisition
Proposal), and advise the other of any developments with respect to such
Acquisition Proposal immediately upon the occurrence thereof.
6.07 Affiliate Agreements. Not later than the 15th day prior to the mailing
of the Proxy Statements FSB shall deliver to Lincoln a schedule of each person
that, to FSB's knowledge, is or is reasonably likely to be, as of the date of
FSB shareholders' meeting, deemed to be an "affiliate" of it (each, an "FSB
Affiliate") as that term is used in Rule 145 under the Securities Act. FSB
agrees to use its reasonable best efforts to cause each person who may be deemed
to be an FSB Affiliate to execute and deliver to FSB and Lincoln on or before
the date of mailing of the Proxy Statement an agreement in the form attached
hereto as Exhibit C.
6.08 NASDAQ Listing. Lincoln agrees to use its reasonable best efforts to
list, prior to the Effective Date, on the National Market System of NASDAQ,
subject to official notice of issuance, the shares of Lincoln Common Stock to be
issued to the holders of FSB Common Stock in the Company Merger.
6.09 Regulatory Applications.
(a) Lincoln and FSB and their respective Subsidiaries shall cooperate
and use their respective reasonable best efforts to prepare all
documentation, to effect all filings and to obtain all permits, consents,
approvals and authorizations of all third parties and any Governmental
Authority necessary to consummate the transactions contemplated by this
Agreement. Each of Lincoln, FSB, First Bank and Lincoln Bank agrees that it
will consult with the other party hereto with respect to the obtaining of
all material permits, consents, approvals and authorizations of all third
parties and Governmental Authorities necessary or advisable to consummate
the transactions contemplated by this Agreement and each party will keep
the other party appraised of the status of material matters relating to
completion of the transactions contemplated hereby. Copies of applications
and correspondence with such Governmental Authorities promptly shall be
provided to the other party.
(b) Each of Lincoln and FSB agrees, upon request, to furnish the other
party with all information concerning itself, First Bank, Lincoln's
Subsidiaries, and their respective directors, officers and shareholders and
such other matters as may be reasonably necessary or advisable in
connection with any filing, notice or application made by or on behalf of
such party or Lincoln Bank or First Bank to any third party or Governmental
Authority.
6.10 Title Insurance and Surveys. FSB shall deliver to Lincoln prior to the
Effective Date copies of its most recent owner's closing title insurance binder
or abstract and surveys on each parcel of real estate described in the
Disclosure Schedule, or such other evidence of title reasonably acceptable to
Lincoln. FSB will also provide to Lincoln upon request any updates or new
policies, abstracts or surveys on any such real estate as Lincoln shall
reasonably request. Lincoln shall make any such requests for new policies,
abstracts or surveys within 20 days after the date hereof, and agrees to pay the
costs of any such policies, abstracts or surveys so requested.
6.11 Environmental Reports. FSB shall provide Lincoln copies of any
environmental reports it has obtained or received with respect to real property
owned, leased or operated by FSB or First Bank within 5 days after the date
hereof. Lincoln, within 20 days after the date hereof, shall order a phase one
environmental report of real property owned by FSB or First Bank as to which
Lincoln has not been provided reports pursuant to the foregoing sentence for
which Lincoln desires a phase one environmental investigation. No such reports
shall be requested with respect to single family non-agricultural residential
property of one acre or less unless Lincoln has reason to believe that such
property might contain any waste materials or otherwise might be contaminated.
If required by any phase one investigation or similar environmental report
provided to or obtained by Lincoln pursuant to this Section 6.11 in Lincoln's
reasonable opinion, and within 10 days after learning of such requirement,
Lincoln shall order a report of a phase two investigation on properties
requiring such additional study. Lincoln shall have fifteen (15) business days
from the receipt of any such phase two investigation report to notify FSB of any
dissatisfaction with the contents of such report. Should the cost of taking all
remedial or other corrective actions and measures (i) required by applicable
law, or (ii) recommended or suggested by such report or reports or prudent in
light of serious life, health or safety concerns, in the aggregate, exceed the
sum of $250,000 as reasonably estimated by an environmental expert retained for
such purpose by Lincoln and reasonably acceptable to FSB, or if the cost of such
actions and measures cannot be so reasonably estimated by such expert to be such
amount or less with any reasonable degree of certainty, then Lincoln shall have
the right pursuant to Section 9.01(e) hereof, for a period of fifteen (15)
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, which shall be Lincoln's sole remedy in such event. Lincoln agrees to
pay the costs of any phase one investigation or environmental report requested
pursuant to this section and the cost of any phase two investigation prepared or
conducted at Lincoln's request pursuant to this section which does not recommend
or suggest as being appropriate the taking of any remedial or corrective
actions. FSB agrees to pay the costs of any phase two investigation prepared or
conducted at Lincoln's request pursuant to this section which recommends or
suggests as being appropriate the taking of any remedial or corrective action.
6.12 Conforming Accounting and Reserve Policies; Restructuring Expenses.
(a) Notwithstanding that FSB believes that it and First Bank have
established all reserves and taken all provisions for possible loan losses
required by generally accepted accounting principles and applicable laws,
rules and regulations, FSB recognizes that Lincoln 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, Lincoln and FSB
shall consult and cooperate with each other with respect to conforming,
based upon such consultation, as specified in each case in writing to FSB
by Lincoln, and subject to the conditions in Section 6.12(d) below and as
hereinafter provided, the loan, accrual and reserve policies of FSB and
First Bank to those policies of Lincoln.
(b) In addition, from and after the date of this Agreement to the
Effective Time, FSB and Lincoln shall consult and cooperate with each other
with respect to determining, as specified in a written notice from Lincoln
to FSB, based upon such consultation, subject to the conditions in Section
6.12(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
Company Merger.
(c) FSB and Lincoln shall consult and cooperate with each other with
respect to determining, as specified in a written notice from Lincoln to
FSB, based upon such consultation, subject to the conditions in Section
6.12(d) below and as hereinafter provided, the amount and the timing for
recognizing for financial accounting purposes the expenses of the Company
Merger and the Subsidiary Merger to be incurred in connection with the
Company Merger and the Subsidiary Merger.
(d) Subject to applicable laws, FSB shall (i) establish and take such
reserves and accruals at such time as Lincoln shall reasonably request to
conform FSB's loan, accrual and reserve policies to Lincoln'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 Company Merger and the Subsidiary Merger and
restructuring charges related to or to be incurred in connection with the
Company Merger and the Subsidiary Merger, in each case at such times as are
reasonably requested by Lincoln, but in no event prior to two business days
before the Effective Date; provided, however, that on the date such
reserves, accruals and charges are to be taken, Lincoln shall certify to
FSB that all conditions to Lincoln's obligation to consummate the Company
Merger set forth in Sections 7.01 and 7.03 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 Lincoln's
obligation to consummate the Company Merger) have been satisfied or waived;
and provided, further, that FSB 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 6.12 may be a basis to assert a violation of a breach of a
representation, warranty or covenant of FSB or First Bank herein or a basis
to assert that FSB has suffered a Material Adverse Effect.
6.13 D & O Insurance.
(a) For a period of three years from the Effective Time, Lincoln shall
use its reasonable best efforts to obtain an endorsement to its director's
and officer's liability insurance policy to cover the present and former
officers and directors of FSB or First 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, which
insurance shall contain at least the same coverage and amounts, and contain
terms and conditions no less advantageous, as that coverage currently
provided by FSB; provided however, that if Lincoln is unable to obtain such
endorsement, then FSB may purchase tail coverage under its existing
director and officer liability insurance policy for such claims; provided
further that in no event shall Lincoln be required to expend in the
aggregate during such three-year period more than three times the current
annual amount spent by FSB (the "Insurance Amount") to maintain or procure
its current directors' and officers' insurance coverage; provided further,
that if Lincoln is unable to maintain or obtain the insurance called for by
this Section 6.13(a), Lincoln 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 FSB or First Bank
may be required to make application and provide customary representations
and warranties to Lincoln's insurance carrier for the purpose of obtaining
such insurance.
(b) For six years after the Effective Time, the Surviving Corporation
shall indemnify, defend and hold harmless the present and former officers
and directors of FSB and First Bank against all losses, expenses (including
attorneys' fees), claims, damages or liabilities 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 full
extent then permitted under the IBCL and by Lincoln's Articles of
Incorporation as in effect on the date hereof, including provisions
relating to advances of expenses incurred in the defense of any action or
suit.
(c) If Lincoln shall consolidate with or merge into any other entity
and shall not be the continuing or surviving entity of such consolidation
or merger or shall transfer all or substantially all of its assets to any
entity, then and in each case, proper provision shall be made so that the
successors and assigns of Lincoln shall assume the obligations set forth in
this Section 6.13.
6.14 Notification of Certain Matters. Each of FSB and Lincoln shall give
prompt notice to the other of any fact, event or circumstance known to it that
(1) is reasonably likely, individually or taken together with all other facts,
events and circumstances known to it, to result in any Material Adverse Effect
with respect to it or (2) would cause or constitute a material breach of any of
its representations, warranties, covenants or agreements contained herein.
6.15 Defined Contribution Plans. First Bank maintains a 401(k) Plan ("First
Bank 401(k) Plan") and Lincoln Bank maintains an Employees' Salary Savings Plan
("Lincoln Bank 401(k) Plan"). FSB shall make contributions to the FSB 401(k)
Plan between the date hereof and the Effective Date consistent with the terms of
the FSB 401(k) Plan and past practices. At the Effective Time, subject to
applicable law and the requirements of the Lincoln Bank 401(k) Plan, Lincoln
Bank shall assume the FSB 401(k) Plan, merge such plan into its own Lincoln Bank
401(k) Plan, and amend as necessary the participation agreement of such merged
plan so that, (i) from and after the Effective Time, employees of First Bank who
become employees of Lincoln Bank will accrue benefits pursuant to the Lincoln
Bank 401(k) Plan as adopted by Lincoln Bank resulting from the merger of the
First Bank 401(k) Plan with the Lincoln Bank 401(k) Plan, and (ii) from and
after the merger of those plans, former First Bank employees participating in
the merged plan shall receive credit for eligibility and vesting purposes, for
the service of such employees with First Bank prior to the Effective Time as if
such service were with Lincoln and First Bank; provided, however, that the
benefit of any such former FSB employee in respect of service prior to the
Effective Time shall be determined under the contribution formulae under the
First Bank 401(k) Plan as in effect from time to time prior to the Effective
Time and the benefit of any such former FSB employee in respect of service from
and after the Effective Time shall be determined under the contribution formulae
under the Lincoln Bank 401(k) Plan as in effect from time to time from and after
the Effective Time.
6.16 Option Plans.(a).. Within 45 days of the date as of which this
Agreement is dated, FSB will use its best efforts to obtain written consents
from each holder of an FSB Stock Option who is an employee of First Bank
consenting to the disposition of such options in accordance with the provisions
of Section 3.01(d) above. By signing the signature page hereof, the directors of
FSB or First Bank who are not also officers or employees of FSB or First Bank
hereby consent to the cashing out of their FSB Stock Options as provided in
Section 3.01(d) above and agree not to exercise their options on or before the
Effective Time unless (A) this Agreement is terminated and the Company Merger is
abandoned pursuant to Article IX or (B) such exercise is made not more than one
week before the date on which the option otherwise would cease to be
exercisable.
6.17 Debentures and Contracts.(a) On or before the Closing, FSB shall take
steps to cause the Debentures to be redeemed or applied to the purchase of
shares pursuant to the Contracts, and any remaining Contracts to be cancelled.
These actions shall be taken consistent with the terms of the Trust Indenture
and the Master Contract and with the payment of no more than any redemption
price (principal, accrued interest and premium) payable under the Trust
Indenture and any cancellation payment due under the Master Contract.
6.18 Deferred Fee Agreements. Pursuant to the terms of the Deferred Fee
Agreements between the Bank and Xxxxx X. Xxxxx, H. Xxxx Xxxxxxx, Xxxxxxx
Xxxxxxxx and Xxxxxx X. Xxxxxxxx (the "Directors"), no later than 60 days
following the Effective Date, the Directors shall be paid in one lump sum their
previously accrued account balances under those Deferred Fee Agreements, and the
Deferred Fee Plan shall be terminated.
6.19 Employee Matters.
(a) Lincoln agrees that those employees of FSB or First Bank who
become employees of Lincoln or its Subsidiaries, on the Effective Date
("Former FSB Employees"), while they remain employees of Lincoln or its
Subsidiaries after the Effective Date will be provided with benefits under
employee benefit plans during their period of employment which are no less
favorable in the aggregate than those provided by Lincoln to similarly
situated employees of Lincoln and its Subsidiaries, except as otherwise
provided herein. Except as hereinafter provided, at the Effective Time,
Lincoln will amend or cause to be amended each employee benefit and welfare
plan of Lincoln and its Subsidiaries in which Former FSB Employees are
eligible to participate, to the extent necessary, so that as of the
Effective Time (i) such plans take into account for purposes of
eligibility, participation, vesting, and benefit accrual (except that there
shall not be any benefit accrual for past service under any qualified
defined benefit pension plan), the service of such employees with FSB and
First Bank as if such service were with Lincoln and its Subsidiaries, (ii)
Former FSB Employees are not subject to any waiting periods or pre-existing
condition limitations under the medical, dental and health plans of Lincoln
or its Subsidiaries in which they are eligible to participate and may
commence participation in such plans on the Effective Date, (iii) Former
FSB Employees will retain credit for unused sick leave and vacation pay
which has been accrued as of the Effective Time, (iv) for purposes of
determining the entitlement of Former FSB Employees to sick leave and
vacation pay following the Effective Time, the service of such employees
with FSB and First Bank shall be treated as if such service were with
Lincoln and its Subsidiaries; and (v) former FSB Employees are first
eligible to participate and will commence participation in the Lincoln Bank
401(k) Plan on the Effective Date. Notwithstanding the foregoing, no Former
FSB Employees shall be eligible to participate in Lincoln Bank's Financial
Institutions Retirement Fund as Lincoln Bank agrees that it will freeze or
terminate that plan as soon as practicable after the date hereof, and the
entry date of Former FSB Employees into the Lincoln Bancorp Employee Stock
Ownership Plan and Trust shall be January 1, 2005.
(b) FSB and First Bank will comply with applicable law and the terms
of the relevant Employee Plan with respect to the voting of any FSB Common
Stock held by any such plan.
(c) Lincoln Bank agrees to employ Xxxxx X. Xxxxx pursuant to the terms
of the Employment Agreement attached hereto as Exhibit D, and agrees to use
its best efforts to negotiate and enter into with Xx. Xxxxx an agreement on
the terms set forth in Exhibit D or on such alternate terms as Xx. Xxxxx
and Lincoln reasonably may agree. Lincoln Bank agrees to employ Xxxx X.
Xxxxxxx pursuant to the terms of the Employment Agreement attached hereto
as Exhibit E, and agrees to use its best efforts to negotiate and enter
into with Xx. Xxxxxxx an agreement on the terms set forth in Exhibit E or
on such alternate terms as Xx. Xxxxxxx and Lincoln reasonably may agree.
Prior to the Effective Time, Xx. Xxxxx and Xx. Xxxxxxx will continue to be
paid the compensation provided for in their employment agreements with
First Bank and will continue participating in the employee benefit,
retirement, and compensation plans and other perquisites provided for in
such Agreement. At the Effective Time, Xx. Xxxxx'x and Xx. Xxxxxxx'
employment agreements with First Bank shall terminate without the payment
of any consideration other than entering into the new employment agreements
with the Surviving Bank contemplated by this Section 6.19(c). First Bank
will use its best efforts to obtain from Xx. Xxxxx and Xx. Xxxxxxx, within
30 days of the date of this Agreement, a binding written commitment, in the
event the Company Merger is consummated, to accept the terms of this
Section 6.19(c). Lincoln has concluded that Xx. Xxxxx possesses the
qualifications its Board of Directors will seek in a successor to current
Lincoln President, Mr. T. Xxx Xxxxx, and anticipates that Xx. Xxxxx will
succeed Xx. Xxxxx as President and Chief Executive Officer not later than
December 31, 2005.
6.20 Severance. With the exception of Xxxxx X. Xxxxx and Xxxx X. Xxxxxxx,
those employees of FSB or First Bank as of the Effective Time (i) who Lincoln or
its Subsidiaries elect not to employ after the Effective Time or who are
terminated other than for cause within six months after the Effective Date, and
(ii) who sign and deliver a termination and release agreement in the form
attached hereto as Exhibit F, shall be entitled to severance pay equal to one
week of pay, at their rate of pay in effect at the Effective Time, for each full
year of continuous service with FSB or First Bank or their successors not in
excess of 26 years completed prior to the Effective Time or, in the case of
employees who continue as employees of Lincoln or its Subsidiaries after the
Effective Time, prior to their termination as such. Furthermore, any terminated
employees shall be entitled to continuation coverage under Lincoln Bank's (or
First Bank's, if they are never employed by Lincoln Bank) group health plans as
required by COBRA. Nothing in this Section 6.20 shall be deemed to limit or
modify Lincoln's or Lincoln Bank's at will employment policy.
6.21 Charter Conversion. Lincoln will use its best efforts to cause Lincoln
Bank to convert from a federal savings bank to an Indiana commercial state bank
no later than one year after the Effective Time, including using its best
efforts to obtain any and all necessary regulatory approvals for such
conversion.
6.22 Short-Swing Trading Exemption. Prior to the Effective Date, the board
of directors of Lincoln shall adopt such resolutions as necessary to cause any
shares of Lincoln Common Stock to be received by Xxxxx X. Xxxxx, Xxxx X.
Xxxxxxx, Xxxxx X. Xxxxxx or X.X. XxXxxxxxx as part of the Consideration, all
Replacement Options to be granted to such persons and all other stock options to
be granted to Xx. Xxxxx or Xx. Xxxxxxx pursuant to their employment agreements
to qualify for the exemptions provided in Rule 16b-3(d) under the Securities
Exchange Act of 1934, as amended.
Article VII
Conditions to Consummation of the Merger
7.01 Conditions to Each Party's Obligation to Effect the Company Merger.
The respective obligation of each of Lincoln and FSB to consummate the Company
Merger is subject to the fulfillment or written waiver by Lincoln and FSB prior
to the Effective Time of each of the following conditions:
(a) Shareholder Approval. This Agreement and the actions and
transactions contemplated hereby shall have been duly adopted by the
affirmative vote of the holders of the requisite number of the outstanding
shares of Lincoln Common Stock and FSB Common Stock entitled to vote
thereon in accordance with applicable law, the Lincoln Articles of
Incorporation, the Lincoln Code of By-Laws, the FSB Articles of
Incorporation and the FSB Bylaws, and the actions and transactions
contemplated in the Merger Agreement for Subsidiary Merger shall have been
duly adopted by FSB and Lincoln, acting in their respective capacities as
sole shareholders of First Bank and Lincoln Bank.
(b) Governmental and Regulatory Consents. All approvals and
authorizations of, filings and registrations with, and notifications to,
all Governmental Authorities required for the consummation of the Company
Merger and the Subsidiary Merger, and for the prevention of any termination
of any material right, privilege, license or agreement of either Lincoln,
FSB, First Bank, or Lincoln's Subsidiaries, shall have been obtained or
made and shall be in full force and effect and all waiting periods required
by law shall have expired; provided, however, that none of the preceding
shall be deemed obtained or made if it shall be subject to any condition or
restriction the effect of which would have been such that Lincoln would not
reasonably have entered into this Agreement had such condition or
restriction been known as of the date hereof.
(c) Third Party Consents. All consents or approvals of all persons,
other than Governmental Authorities, required for or in connection with the
execution, delivery and performance of this Agreement and the consummation
of the Company Merger and the Subsidiary Merger shall have been obtained
and shall be in full force and effect, unless the failure to obtain any
such consent or approval is not reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on the Surviving Corporation
and its Subsidiaries, taken as a whole.
(d) No Injunction. No Governmental Authority of competent jurisdiction
shall have enacted, issued, promulgated, enforced or entered any statute,
rule, regulation, judgment, decree, injunction or other order (whether
temporary, preliminary or permanent) which is in effect and prohibits
consummation of the transactions contemplated by this Agreement.
(e) Registration Statement. The Registration Statement shall have
become effective under the Securities Act and no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been initiated or threatened by the
SEC.
(f) Blue Sky Approvals. All permits and other authorizations under the
state securities laws necessary to consummate the transactions contemplated
hereby and to issue the shares of Lincoln Common Stock to be issued in the
Company Merger shall have been received and be in full force and effect.
(g) Listing. The shares of Lincoln Common Stock to be issued in the
Company Merger shall have been approved for listing on the National Market
System of NASDAQ, subject to official notice of issuance.
7.02 Conditions to Obligation of FSB. The obligation of FSB to consummate
the Company Merger is also subject to the fulfillment or written waiver by FSB
prior to the Effective Time of each of the following conditions:
(a) Representations and Warranties. The representations and warranties
of Lincoln set forth in this Agreement shall be true and correct in all
material respects as of the date of this Agreement and, except for any
failures, noncompliances, facts, events or circumstances, which when
aggregated with all other failures, non-compliances, facts, events or
circumstances would not have a Material Adverse Effect, as of the Effective
Date as though made on and as of the Effective Date (except that
representations and warranties that by their terms speak as of the date of
this Agreement or some other date shall be true and correct only as of such
date), and FSB shall have received a certificate, dated the Effective Date,
signed on behalf of Lincoln by the Chief Executive Officer and the Chief
Financial Officer of Lincoln to such effect.
(b) Performance of Obligations of Lincoln. Lincoln shall have
performed in all material respects all obligations required to be performed
by it under this Agreement at or prior to the Effective Time, and FSB shall
have received a certificate, dated the Effective Date, signed on behalf of
Lincoln by the Chief Executive Officer and the Chief Financial Officer of
Lincoln to such effect.
(c) Opinion of Counsel. FSB shall have received an opinion, dated the
Effective Date, of Xxxxxx & Xxxxxxxxx, counsel to Lincoln, in substantially
the same form as that attached hereto as Exhibit G.
(d) Tax Opinion of Lincoln's Counsel. FSB shall have received an
opinion of Xxxxxx & Xxxxxxxxx, counsel to Lincoln, to the effect that (1)
the Company Merger constitutes a "reorganization" within the meaning of
Section 368 of the Code and (2) no gain or loss will be recognized by
shareholders of FSB to the extent they receive shares of Lincoln Common
Stock as Consideration in exchange for shares of FSB Common Stock.
(e) Xxxxx X. Xxxxx and Co. Fairness Opinion. FSB shall have received
the opinion of Xxxxx X. Xxxxx and Co., dated the date of this Agreement
(which shall be appended as an exhibit to the Proxy Statements), that the
Consideration to be received in the Company Merger by the shareholders of
FSB is fair to the shareholders of FSB from a financial point of view.
(f) Employment Matters. Either (1) Lincoln Bank and Xxxxx X. Xxxxx
shall have entered into a mutually acceptable Employment Agreement as
provided in Section 6.19(c) above or (2) Lincoln Bank shall have offered to
enter into the Employment Agreement attached hereto as Exhibit D and Xx.
Xxxxx shall not have accepted such offer. Either Xxxx X. Xxxxxxx shall have
entered into a mutually acceptable Employment Agreement as provided in
Section 6.19(c) above or (2) Lincoln Bank shall have offered to enter into
the Employment Agreement attached hereto as Exhibit E and Xx. Xxxxxxx shall
not have accepted such offer. Furthermore, Lincoln and its Subsidiaries
shall have amended or adopted employee benefit plans to the extent
necessary to comply with Section 6.19(a).
7.03 Conditions to Obligation of Lincoln. The obligation of Lincoln to
consummate the Company Merger is also subject to the fulfillment or written
waiver by Lincoln prior to the Effective Time of each of the following
conditions:
(a) Representations and Warranties. The representations and warranties
of FSB set forth in this Agreement shall be true and correct in all
material respects as of the date of this Agreement and, except for any
failures, non-compliances, facts, events or circumstances, which when
aggregated with all other failures, non-compliances, facts, events or
circumstances would not have a Material Adverse Effect, as of the Effective
Date as though made on and as of the Effective Date (except that
representations and warranties that by their terms speak as of the date of
this Agreement or some other date shall be true and correct only as of such
date) and FSB shall have received a certificate, dated the Effective Date,
signed on behalf of FSB by the Chief Executive Officer and the Chief
Financial Officer of FSB to such effect.
(b) Performance of Obligations of FSB. FSB shall have performed in all
material respects all obligations required to be performed by it under this
Agreement at or prior to the Effective Time, and Lincoln shall have
received a certificate, dated the Effective Date, signed on behalf of FSB
by the Chief Executive Officer and the Chief Financial Officer of FSB to
such effect.
(c) Opinion of Counsel. Lincoln shall have received an opinion, dated
the Effective Date, of Bose XxXxxxxx & Xxxxx LLP, Counsel to FSB, in
substantially the same form as that attached hereto as Exhibit H.
(d) Xxxxx, Xxxxxxxx & Xxxxx, Inc. Fairness Opinion. Lincoln shall have
received the opinion of Xxxxx, Xxxxxxxx & Xxxxx, Inc., dated the date of
this Agreement (which shall be appended as an exhibit to the Proxy
Statements), that the Consideration to be received in the Company Merger by
the shareholders of FSB is fair to the shareholders of Lincoln from a
financial point of view.
(e) Tax Opinion of Lincoln's Counsel. Lincoln shall have received an
opinion of Xxxxxx & Xxxxxxxxx, counsel to Lincoln, dated the Effective
Date, to the effect that the Company Merger constitutes a "reorganization"
within the meaning of Section 368 of the Code.
(f) Environmental Report. Lincoln shall have received the
environmental reports required by Section 6.11 hereof, and shall not have
elected, pursuant thereto and pursuant to Section 9.01(e) hereof, to
terminate and cancel this Agreement.
(g) Closing Book Value. The Closing Book Value of FSB shall not be
less than the consolidated stockholders' equity of FSB as of September 30,
2003. As used in the preceding sentence, the term "Closing Book Value"
shall mean the amount of the consolidated stockholders' equity of FSB, as
of the end of the month immediately preceding the Closing Date, determined
in accordance with generally accepted accounting principles, plus (i) the
amount of any decrease in the consolidated stockholders' equity of FSB
resulting from or attributable to expenses of the Company Merger or the
Subsidiary Merger, plus (ii) any reduction of consolidated stockholders'
equity theretofore recorded solely as a result of accruals, reserves or
charges taken by FSB at the request of Lincoln pursuant to Section 6.12
hereof, plus (iii) any reduction of consolidated stockholders' equity as a
result of the actions taken pursuant to Section 301(e).
(h) Approval of Supplemental Indenture. To the extent required to
comply with Section 3.01(e), the requisite number of holders of the
Debentures shall have adopted a supplemental indenture to the Trust
Indenture governing the Debentures to allow FSB to redeem the Debentures
without restriction, except for any applicable notice requirements to the
holders of the Debentures and except for the payment of the redemption
premium.
(i) Conversion of Contracts and/or Redemption of Debentures. (1) All
of the outstanding Contracts shall have been exercised by the holders
thereof and/or cancelled by FSB with the payment of all applicable
cancellation payments, and (2) all of the outstanding Debentures shall have
been surrendered to FSB by the holders thereof as consideration for the
exercise of a corresponding amount of Contracts and/or shall have been
redeemed by FSB with the payment of all applicable redemption premiums.
Article VIII
Closing
8.01 Deliveries by FSB at Closing. At the Closing, FSB shall deliver to
Lincoln:
(a) certified copies of the Articles of Incorporation and Bylaws of
FSB and First Bank;
(b) the officers' certificates required by Sections 7.03(a) and
7.03(b) hereof;
(c) a certified copy of the resolutions of FSB's Board of Directors
and shareholders, as required for valid approval of the execution of this
Agreement and the consummation of the Company Merger;
(d) a certified copy of the resolutions of First Bank's Board of
Directors and sole shareholder, as required for valid approval of the
execution of this Agreement and Exhibit B and the consummation of the
Subsidiary Merger;
(e) a Certificate of the Secretary of State of the State of Indiana,
dated a recent date, stating that FSB is validly existing;
(f) Certificates of the DFI, the Indiana Secretary of State and the
FDIC, dated recent dates, relating to the valid existence and the FDIC
insurance of deposits of First Bank;
(g) Articles of Merger executed by the proper parties thereto
reflecting the terms and provisions of this Agreement and including as an
exhibit thereto the Plan of Merger attached hereto as Exhibit A in proper
form for filing with the Secretary of State of the State of Indiana in
order to cause the Company Merger to become effective pursuant to the IBCL;
(h) Articles of Consolidation and Articles of Merger executed by First
Bank reflecting the terms and provisions of this Agreement and Exhibit B in
proper form for filing with the OTS and the DFI in order to cause the
Subsidiary Merger to become effective under federal law;
(i) a legal opinion from counsel for FSB in form reasonably acceptable
to Lincoln counsel, opining with respect to the matters required by Section
7.03(c) hereto; and
(j) such other documents as Lincoln or its counsel may reasonably
request.
8.02 Deliveries by Lincoln at the Closing. At the Closing, Lincoln shall
deliver to FSB:
(a) certified copies of the Articles of Incorporation and Bylaws of
Lincoln and Lincoln Bank;
(b) the officers' certificates required by Section 7.02(a) and (b)
hereof;
(c) a certified copy of the resolutions of Lincoln's Board of
Directors and shareholders authorizing the execution of this Agreement and
the consummation of the Company Merger;
(d) a certified copy of the resolutions of Lincoln Bank's Board of
Directors and its sole shareholder authorizing the execution of this
Agreement and the consummation of the Subsidiary Merger;
(e) Articles of Merger executed by the proper parties thereto
reflecting the terms and provisions of this Agreement and including as an
exhibit thereto the Plan of Merger attached hereto as Exhibit A in proper
form for filing with the Secretary of State of the State of Indiana in
order to cause the Company Merger to become effective pursuant to the IBCL;
(f) Articles of Combination and Articles of Merger executed by Lincoln
Bank reflecting the terms and provisions of this Agreement and Exhibit B in
proper form for filing with the OTS and the DFI, respectively, in order to
cause the Subsidiary Merger to become effective under federal law;
(g) a legal opinion from counsel for Lincoln, in form reasonably
acceptable to FSB's counsel, opining with respect to the matters required
by Section 7.02(c) hereto; and
(h) the tax opinion required by Section 7.02(d) hereto; and
(i) such other documents as FSB or its counsel may reasonably request.
Article IX
Termination
9.01 Termination. This Agreement may be terminated and the Company Merger
may be abandoned:
(a) Mutual Consent. At any time prior to the Effective Time, by the
mutual consent of Lincoln and FSB, if the Board of Directors of each so
determines by vote of a majority of the members of its entire Board.
(b) Breach. At any time prior to the Effective Time, by Lincoln or
FSB, in each case if its Board of Directors so determines by vote of a
majority of the members of its entire Board, in the event of either: (1) a
breach by the other party of any representation or warranty contained
herein, which breach cannot be or has not been cured within 30 days after
the giving of written notice to the breaching party of such breach; or (2)
a breach by the other party of any of the covenants or agreements contained
herein, which breach cannot be or has not been cured within 30 days after
the giving of written notice to the breaching party of such breach.
(c) Delay. At any time prior to the Effective Time, by Lincoln or FSB,
in each case if its Board of Directors so determines by vote of a majority
of the members of its entire Board of Directors, in the event that the
Company Merger is not consummated by December 31, 2004, except to the
extent that the failure of the Company Merger then to be consummated arises
out of or results from the action or inaction of the party seeking to
terminate pursuant to this Section 9.01(c).
(d) No Approval. By FSB or Lincoln, in each case if its Board of
Directors so determines by a vote of a majority of the members of its
entire Board, in the event (1) the approval of any Governmental Authority
required for consummation of the Company Merger and the other transactions
contemplated by this Agreement shall have been denied by final
non-appealable action of such Governmental Authority or (2) the shareholder
approval contemplated by Section 6.02 herein is not obtained.
(e) Environmental Reports. Lincoln may terminate this Agreement to the
extent provided by Section 6.11 hereof by giving written notice thereof to
FSB.
(f) Failure to Recommend, Etc. By either party if (1) prior to the
effectiveness of the Registration Statement, the Board of Directors of the
other party shall not have recommended adoption and approval of this
Agreement to its shareholders, or (2) at any time prior to the receipt of
the approval of the other party's shareholders contemplated by Section
7.01(a), the other party's Board of Directors shall have withdrawn such
recommendation or modified or changed such recommendation in a manner
adverse to the interests of the other party (whether in accordance with
Section 6.02 or otherwise).
(g) Acceptance of Superior Proposal. By FSB, if, without breaching
Section 6.06, FSB shall contemporaneously enter into a definitive agreement
with a third party providing for an Acquisition Proposal on terms
determined in good faith by the FSB Board, after consulting with and
considering the advice of FSB's outside counsel and financial advisors, to
constitute a Superior Proposal; provided, that the right to terminate this
Agreement under this Section 9.01(g) shall not be available to FSB unless
it delivers to Lincoln (1) written notice of FSB's intention to terminate
at least five days prior to termination and (2) simultaneously with such
termination, the Fee referred to in Section 9.03. For purposes of this
Section 9.01(g), "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 FSB receiving the Acquisition Proposal, taking
into account the various legal, financial and regulatory aspects of the
proposal and the person making such proposal, (1) if accepted, is
significantly more likely than not to be consummated, and (2) if
consummated, is reasonably likely to result in a materially more favorable
transaction than the Company Merger for FSB and its shareholders and other
relevant constituencies.
9.02 Effect of Termination and Abandonment. In the event of termination of
this Agreement and the abandonment of the Company Merger pursuant to this
Article IX, no party to this Agreement shall have any liability or further
obligation to any other party hereunder except (a) as set forth in Sections 9.03
and 10.01 and (b) that termination will not relieve a breaching party from
liability for any willful breach of this Agreement giving rise to such
termination.
9.03 Liquidated Damages. If (1) Lincoln terminates this Agreement pursuant
to Section 9.01(f) (at a time when FSB could not also terminate pursuant to
Section 9.01(f)) or (2) FSB terminates this Agreement pursuant to Section
9.01(g), then, within five business days of such termination, FSB shall pay
Lincoln by wire transfer in immediately available funds, as agreed upon
liquidated damages and not as a penalty and as the sole and exclusive remedy,
$1,000,000 (the "Fee"). If FSB terminates this Agreement pursuant to Section
9.01(f) (at a time when Lincoln would not also do so pursuant to Section
9.01(f)), then, within five (5) business days of such termination, Lincoln shall
pay the Fee to FSB by wire transfer in immediately available funds. If this
Agreement is terminated solely by reason of the failure of FSB to receive
shareholder approval of the Company Merger, and if, and only if, an Acquisition
Proposal for FSB was publicly announced (or otherwise disseminated to the
shareholders of the party), prior to the date that the party's shareholders
voted against the adoption of this Agreement) and if, within twelve months after
the date of such termination, a change in control of FSB is consummated, then
FSB shall pay the Fee to Lincoln by wire transfer in immediately available
funds. (For purposes of this Section 9.03, a "change in control" of FSB shall be
deemed to have taken place if: (w) any person or entity, including a "group" as
defined in Section 13(d)(3) of the Securities Exchange Act of 1934, other than
FSB, First Bank, or any employee benefit plan of FSB or First 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
FSB or First Bank or the combined voting power of the then-outstanding
securities of FSB or First Bank, whether through a tender offer or otherwise;
(x) there occurs any consolidation or merger in which FSB or First Bank is not
the continuing or surviving corporation (except for a merger in which the
holders of FSB or First Bank's common 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); (y) there occurs any consolidation or merger in which FSB or First 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 50% of the outstanding
common stock immediately after the transaction; or (z) 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 FSB or First Bank.
Notwithstanding the foregoing, no Fee shall be required to be paid if Lincoln or
FSB terminates this Agreement solely because of the failure of FSB to obtain the
shareholder approval of this Agreement and the actions and transactions
contemplated hereby.
Article X
Miscellaneous
10.01 Survival. None of the representations, warranties, covenants and
other agreements in this Agreement or in any instrument delivered pursuant to
this Agreement, other than those contained in Sections 6.05(b), 9.02, and 9.03
and in this Article X, shall survive the termination of this Agreement if this
Agreement is terminated prior to the Effective Time. None of the
representations, warranties, covenants and other agreements in this Agreement or
in any instrument delivered pursuant to this Agreement, including any rights
arising out of any breach of such representations, warranties, covenants and
other agreements, shall survive the Effective Time, except for those covenants
and agreements contained in Sections 1.01(e), 2.01(e), 6.13, 6.18, 6.19, 6.20
and 6.21, which by its terms apply or are to be performed in whole or in part
after the Effective Time and this Article X.
10.02 Waiver; Amendment. Prior to the Effective Time, any provision of this
Agreement may be (a) waived in writing by the party benefited by the provision,
or (b) amended or modified by an agreement in writing executed by both parties,
except that, after approval of the Company Merger by the shareholders of FSB or
of Lincoln, no amendment may be made which under applicable law requires further
approval of such shareholders without obtaining such required further approval.
10.03 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to constitute an original.
10.04 Governing Law. This Agreement shall be governed by, and interpreted
in accordance with, the laws of the State of Indiana applicable to contracts
made and to be performed entirely within such State.
10.05 Expenses. Subject to Sections 9.03, each party hereto will bear all
expenses incurred by it in connection with this Agreement and the transactions
contemplated hereby, except that printing and postage expenses relating to the
FSB and the Lincoln shareholder meeting shall be shared equally between FSB and
Lincoln.
10.06 Notices. All notices, requests and other communications hereunder to
a party shall be in writing and shall be deemed given (a) on the date of
delivery, if personally delivered or telecopied (with confirmation), (b) on the
first business day following the date of dispatch, if delivered by a recognized
next-day courier service, or (c) on the third business day following the date of
mailing, if mailed by registered or certified mail (return receipt requested),
in each case to such party at its address or telecopy number set forth below or
such other address or numbers as such party may specify by notice to the parties
hereto.
If to Lincoln, to:
T. Xxx Xxxxx, President
Lincoln Bancorp
0000 Xxxx Xxxx Xxxxxx
XX Xxx 000
Xxxxxxxxxx, XX 00000-0000
Facsimile: (000) 000-0000
With a copy to:
Xxxxxxx X. Xxxxxx, Esq.
Xxxxxx & Xxxxxxxxx
00 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000
If to FSB, to:
Xxxxx X. Xxxxx, President
First Shares Bancorp, Inc.
000 X. Xxxxx Xxxx 000
Xxxxxxxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000
With a copy to:
Xxxxx X. Xxxxxxx, Esq.
Bose XxXxxxxx & Xxxxx LLP
0000 Xxxxx Xxxxxxx Xxxxx
000 Xxxxx Xxxxxxxxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
10.07 Entire Understanding; No Third Party Beneficiaries. This Agreement
(together with the Disclosure Schedules and the Exhibits hereto) represents the
entire understanding of the parties hereto with reference to the transactions
contemplated hereby and this Agreement supersedes any and all other oral or
written agreements heretofore made. Except for Sections 1.01(e), 2.01(e), 6.13,
6.18, 6.19, 6.20 and 6.21 hereof (which is intended to be for the benefit of
those present and former officers and directors of FSB and First Bank affected
thereby and may be enforced by such persons), nothing in this Agreement,
expressed or implied, is intended to confer upon any person, other than the
parties hereto or their respective successors and permitted assigns, any rights,
remedies, obligations or liabilities under or by reason of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
FIRST SHARES BANCORP, INC.. LINCOLN BANCORP
("FSB") ("Lincoln")
By: By:
------------------------- -----------------------------
Printed: Xxxxx X. Xxxxx Printed: T. Xxx Xxxxx
Title: President Title: President
FIRST BANK LINCOLN BANK
By: By:
------------------------- -----------------------------
Printed: Xxxxx X. Xxxxx Printed: T. Xxx Xxxxx
Title: President Title: President
Each of the undersigned directors of FSB hereby (a) agrees in his capacity
as a director to recommend to FSB's shareholders the approval of this Agreement
and the Merger, except as otherwise provided in Sections 6.02 and 6.06 of this
Agreement, and (b) agrees in his individual capacity to vote his shares of FSB
Common Stock that are registered in his personal name (and agrees to use his
best efforts to cause all additional shares of FSB Common Stock owned jointly
with any other person or by his spouse or over which he has voting influence or
control to be voted) in favor of this Agreement and the Company Merger. In
addition, each of the undersigned directors hereby agrees not to make any
transfers of shares of FSB Common Stock with the purpose of avoiding his
agreements set forth in the preceding sentence. Each of the undersigned
directors who are not also officers or employees of FSB or First Bank agrees to
the terms of Section 6.16 of this Agreement.
Dated this day of March, 2004.
--------
-------------------------------
Xxxxx X. Xxxxx
-------------------------------
Xxxxx X. Xxxxx
-------------------------------
H. Xxxx Xxxxxxx
-------------------------------
Xxxx X. Xxxxx
-------------------------------
X.X. XxXxxxxxx
-------------------------------
Xxxxxxx X. Xxxxxxxx
-------------------------------
Xxxxx X. Xxxxxx
-------------------------------
Xxxxxx X. Xxxxxxxx
List of Exhibits
Exhibit Title
------- -----
A Plan of Merger
B Form of Merger Agreement for Subsidiary Merger
C Form of Affiliate Agreement
D Form of Employment Agreement - Xxxxx X. Xxxxx
E Form of Employment Agreement - Xxxx X. Xxxxxxx
F Form of Termination and Release Agreement
G Form of Opinion of Lincoln's Counsel
H Form of Opinion of FSB's Counsel
Exhibit A
PLAN OF MERGER
of
LINCOLN BANCORP
an Indiana corporation
and
FIRST SHARES BANCORP, INC.
an Indiana corporation
1. The names of the corporations proposing to merge (the "Company Merger") are
Lincoln Bancorp, an Indiana corporation (the "Surviving Corporation") and
First Shares Bancorp, Inc., an Indiana corporation (the "Merging
Corporation"), pursuant to an Agreement and Plan of Reorganization dated as
of March ___, 2004 (the "Reorganization Agreement").
2. The Merging Corporation has 12,000,000 authorized shares of common stock,
par value $.01 per share ("FSB Common Stock"), and 2,000,000 authorized
shares of preferred stock, par value $.01 per share, of which _________
shares of FSB Common Stock and no shares of preferred stock are presently
issued and outstanding.
3. The Surviving Corporation has 20,000,000 authorized shares of common stock,
without par value ("Lincoln Common Stock"), and 2,000,000 authorized shares
of preferred stock, without par value, of which ___________ shares of
Lincoln Common Stock and no shares of preferred stock are presently issued
and outstanding.
4. The effective date of the Company Merger, as that phrase is used herein,
shall mean ________________, 2004 (the "Effective Date"). The date and time
at which the Company Merger becomes effective shall be the Effective Time.
5. Each share of FSB Common Stock issued and outstanding immediately prior to
the Effective Time (other than shares held as treasury stock of Merging
Corporation and shares held directly or indirectly by Surviving
Corporation, except shares held in a fiduciary capacity or in satisfaction
of a debt previously contracted, if any) shall become and be converted into
the right to receive, subject to adjustment as set forth in paragraph 10:
(A) .75 shares (the "Exchange Ratio") of Lincoln Common Stock (the "Per
Share Stock Consideration"), or
(B) $14.80 in cash (such sum, the "Per Share Cash Consideration" and
together with the Per Share Stock Consideration, the "Consideration");
provided that the aggregate number of shares of Lincoln Common Stock that
shall be issued in the Company Merger shall equal a number which is as
close as possible (after prorations are made and cash in lieu of fractional
shares is determined) to but no more than the product of (a) fifty percent
(50%) and (b) the Exchange Ratio, times (c) the number of shares of FSB
Common Stock outstanding immediately prior to the Effective Time (the
"Stock Number").
(C) Each share of FSB Common Stock that, immediately prior to the
Effective Time, is held as treasury stock of Merging Corporation or
held directly or indirectly by Lincoln, other than shares held in a
fiduciary capacity or in satisfaction of a debt previously contracted,
shall by virtue of the Company Merger be canceled and retired and
shall cease to exist, and no exchange or payment shall be made
therefor.
6. Each share of Lincoln Common Stock which is issued and outstanding
immediately prior to the Effective Time shall continue to be an issued and
outstanding share of Lincoln Common Stock at and after the Effective Time.
7. Notwithstanding the foregoing, if any holders of FSB Common Stock dissent
from the Company Merger and demand dissenters' rights under the Indiana
Business Corporation Law (the "IBCL"), any issued and outstanding shares of
FSB Common Stock held by such dissenting holders shall not be converted as
described in paragraph 5 but shall from and after the Effective Time
represent only the right to receive such consideration as may be determined
to be due to such dissenting holders pursuant to the IBCL; provided,
however, that each share of FSB Common Stock outstanding immediately prior
to the Effective Time and held by a dissenting holder who shall, after the
Effective Time, withdraw his or her demand for dissenters' rights or lose
his or her right to exercise dissenters' rights shall have only the right
to receive the consideration as No-Election Shares (as hereinafter
defined).
8. Subject to the allocation procedures set forth in paragraph 10, each record
holder of FSB Common Stock will be entitled (1) to elect to receive Lincoln
Common Stock for all or some of the shares of FSB Common Stock ("Stock
Election Shares") held by such record holder, (2) to elect to receive cash
for all or some of the shares of FSB Common Stock ("Cash Election Shares")
held by such record holder or (3) to indicate that such holder makes no
such election for all or some of the shares of FSB Common Stock
("No-Election Shares") held by such record holder. All such elections
(each, an "Election") shall be made on a form designed for that purpose by
Surviving Corporation and reasonably acceptable to Merging Corporation (an
"Election Form"). Any shares of FSB Common Stock with respect to which the
record holder thereof shall not, as of the election deadline established by
the Surviving Corporation (the "Election Deadline"), have properly
submitted to the exchange agent designated by the Surviving Corporation
(the "Exchange Agent") a properly completed Election Form shall be deemed
to be No-Election Shares. A record holder acting in different capacities or
acting on behalf of other persons in any way shall be entitled to submit an
Election Form for each capacity in which such record holder so acts with
respect to each person for which it so acts.
9. Not later than the 5th day after the Election Deadline, Surviving
Corporation shall cause the Exchange Agent to effect the allocation among
the holders of FSB Common Stock of rights to receive the Per Share Stock
Consideration or the Per Share Cash Consideration in the Company Merger as
follows:
(A) Number of Stock Elections Less Than Stock Number. If the number of
Stock Election Shares (on the basis of Election Forms received as of
the Election Deadline) is less than the Stock Number, then
(i) all Stock Election Shares shall be, as of the Effective Time,
converted into the right to receive the Per Share Stock
Consideration,
(ii) the Exchange Agent shall allocate pro rata from among the
No-Election Shares a sufficient number of No-Election Shares such
that the sum of such number and the number of Stock Election
Shares shall equal as closely as practicable the Stock Number,
and all such selected shares ("Stock-Selected No-Election
Shares") shall be, as of the Effective Time, converted into the
right to receive the Per Share Stock Consideration; provided that
if the sum of all No-Election Shares and Stock Election Shares is
less than the Stock Number, all No-Election Shares shall be
Stock-Selected No-Election Shares,
(iii)if the sum of Stock Election Shares and No-Election Shares is
less than the Stock Number, the Exchange Agent shall allocate pro
rata from among the Cash Election Shares a number of Cash
Election Shares such that the sum of such number, plus the number
of Stock Election Shares and the number of Stock-Selected
No-Election Shares, shall equal as closely as practicable the
Stock Number, and all such selected shares ("Converted Cash
Election Shares") shall be, as of the Effective Time, converted
into the right to receive the Per Share Stock Consideration, and
(iv) the No-Election Shares and Cash Election Shares that are not
Stock-Selected No-Election Shares or Converted Cash Election
Shares (as the case may be) shall be, as of the Effective Time,
converted into the right to receive the Per Share Cash
Consideration; or
(B) Number of Stock Elections Greater Than the Stock Number. If the number
of Stock Election Shares (on the basis of Election Forms received by
the Election Deadline) is greater than the Stock Number, then:
(i) all Cash Election Shares shall be, as of the Effective Time,
converted into the right to receive the Per Share Cash
Consideration;
(ii) all No-Election Shares shall be, as of the Effective Time,
converted into the right to receive the Per Share Cash
Consideration (the "Cash-Selected No-Election Shares");
(iii)the Exchange Agent shall allocate pro rata from among the Stock
Election Shares a number of Stock Election Shares such that after
converting such Stock Election Shares to Cash Election Shares,
the number of remaining Stock Election Shares shall equal as
closely as practicable the Stock Number, and all such selected
shares ("Converted Stock Election Shares") shall be, as of the
Effective Time, converted into the right to receive the Per Share
Cash Consideration, and
(iv) the Stock Election Shares that are not Converted Stock Election
Shares shall be, as of the Effective Time, converted into the
right to receive the Per Share Stock Consideration; or
(C) Number of Stock Elections Equal to the Stock Number. If the number of
Stock Election Shares (on the basis of Election Forms received by the
Election Deadline) is equal to the Stock Number, then:
(i) all Stock Election Shares shall be, as of the Effective Time,
converted into the right to receive the Per Share Stock
Consideration, and
(ii) all No-Election Shares and all Cash Election Shares shall be, as
of the Effective Time, converted into the right to receive the
Per Share Cash Consideration.
10. At the Effective Time, (a) holders of FSB Common Stock shall cease to be,
and shall have no rights as, shareholders of FSB, other than the right to
receive (1) any dividend or other distribution with respect to such FSB
Common Stock with a record date occurring prior to the Effective Time, (2)
the Consideration provided under this Article III, and (3) any dissenters'
rights to which they may be entitled under the IBCL if such holders have
dissented to the Company Merger. After the Effective Time, there shall be
no transfers on the stock transfer books of Merging Corporation or the
Surviving Corporation of shares of FSB Common Stock.
11. Notwithstanding any other provision in this Agreement, no fractional shares
of Lincoln Common Stock and no certificates or scrip therefor, or other
evidence of ownership thereof, will be issued in the Company Merger;
instead, Surviving Corporation shall pay to each holder of FSB Common Stock
who otherwise would be entitled to a fractional share of Lincoln Common
Stock an amount in cash (without interest) determined by multiplying such
fraction by the quotient of the Per Share Consideration and the Exchange
Ratio.
12. Upon the Effective Date, the Merging Corporation shall merge into and with
the Surviving Corporation, which shall survive the Company Merger and the
separate existence of the Merging Corporation shall thereupon cease.
13. Upon and after the Effective Date, the Surviving Corporation shall
thereupon and thereafter possess all the rights, privileges, powers and
franchises, of a public, as well as a private nature, of each of the
parties hereto; and all property, real, personal and mixed, all debts due
on whatever account and all other choses in action and all and every other
interests of or belonging to or due to each of the parties hereto shall be
taken and deemed to be transferred to and vested in the Surviving
Corporation without further act or deed; and the title to any real estate,
or any interest therein, shall not revert or be in any way impaired by
reason of the Company Merger.
14. Upon and after the Effective Date, the Surviving Corporation shall be
responsible and liable for all the liabilities and obligations of both of
the parties hereto in the same manner and to the same extent as if the
Surviving Corporation had itself incurred the same or contracted therefor;
and any claim existing or action or proceeding by or against either of the
parties hereto may be prosecuted to judgment as if the Company Merger had
not taken place or the Surviving Corporation may be substituted in its
place. Neither the rights of creditors nor liens upon the property of
either of the parties hereto shall be impaired by such Company Merger; but
any such lien shall be limited to the property upon which there were liens
immediately prior to the time of the Company Merger.
15. The Articles of Incorporation of the Surviving Corporation shall continue
to be the Articles of Incorporation of the Surviving Corporation upon and
after the Effective Date until changed or amended in accordance with the
terms thereof.
16. The Code of By-Laws of the Surviving Corporation shall continue to be the
Code of By-Laws of the Surviving Corporation upon and after the Effective
Date until changed or amended in accordance with the terms thereof.
17. The directors of the Surviving Corporation immediately prior to the
Effective Date shall continue to hold such positions following the Company
Merger, and such directors shall hold office until such time as their
successors shall be duly elected and qualified; provided, however, that
Xxxxx X. Xxxxx, X.X. XxXxxxxxx and Xxxxx X. Xxxxxx shall be appointed to
the Board of Directors of the Surviving Corporation effective as of the
Effective Date.
Exhibit B
MERGER AGREEMENT FOR SUBSIDIARY MERGER
This AGREEMENT FOR SUBSIDIARY MERGER (this "Agreement") dated as of March
___, 2004, by and between Lincoln Bank ("Lincoln Bank"), a federal savings bank
and wholly-owned subsidiary of Lincoln Bancorp, an Indiana corporation
("Lincoln"), and First Bank ("First Bank"), an Indiana commercial bank and
wholly-owned subsidiary of First Shares Bancorp, Inc., an Indiana corporation
("FSB").
WITNESSETH:
WHEREAS, Lincoln, FSB, Lincoln Bank and First Bank have entered into an
Agreement and Plan of Reorganization dated as of March ___, 2004 (the
"Reorganization Agreement") providing for the acquisition by Lincoln of all of
the outstanding shares of common stock, $.01 par value per share, of FSB in a
merger pursuant to the provisions of the Indiana Business Corporation Law (the
"IBCL"), and providing for the merger of First Bank with and into Lincoln Bank
(the "Merger"), in accordance with the provisions of applicable state and
federal law; and
WHEREAS, the Boards of Directors of Lincoln Bank and First Bank have each
adopted a resolution approving this Agreement for Subsidiary Merger and the
Boards of Directors of Lincoln Bank and First Bank have directed that this
Merger Agreement for Subsidiary Merger and the Merger contemplated thereby be
submitted to the sole shareholders of Lincoln Bank and First Bank for adoption
and approval;
NOW, THEREFORE, the parties hereto, in consideration of amounts to be paid
pursuant hereto and subject to the terms and conditions of the Reorganization
Agreement, agree as follows:
Article I.
Constituent Corporations
Lincoln Bank and First Bank shall be the constituent corporations with
respect to the Merger.
Article II.
Merger
Effective as of the time of the filing of appropriate articles of
combination with the Office of Thrift Supervision and articles of merger with
the Indiana Department of Financial Institutions or such later time as may be
specified in such articles of combination or articles of merger (the "Effective
Time of the Merger"), Lincoln Bank shall be merged with and into First Bank, and
Lincoln Bank shall be the surviving institution (the "Surviving Institution").
Article III.
Charter, By-Laws, Etc.
1. Charter. At the Effective Time of the Merger, the charter of First Bank
in effect immediately prior to the Effective Time shall continue to be the
charter of the Surviving Institution.
2. By-Laws. At the Effective Time of the Merger, the by-laws of First Bank
in effect immediately prior to the Effective Time of the Merger shall continue
to be the by-laws of the Surviving Institution.
3. Directors and Officers. At the Effective Time of the Merger, the
directors of Lincoln Bank then holding office and Xxxxx X. Xxxxx, X.X.
XxXxxxxxx, and Xxxxx X. Xxxxxx shall continue to be and become the directors of
the Surviving Institution, and the officers of Lincoln Bank then holding office
and Xxxxx X. Xxxxx and Xxxx X. Xxxxxxx of First Bank shall continue to be and
become the officers of the Surviving Institution, in each case subject to the
Surviving Institution's charter and by-laws and applicable law as to the term
and removal of directors and officers and subject to Lincoln Bank's right to
change the titles of the officers of Lincoln Bank after the Effective Time of
the Merger as specified in their respective Employment Agreements.
4. Home Office. The home office and branch offices of Lincoln Bank
immediately prior to the Merger shall continue to be the home office and branch
offices of the Surviving Institution at the Effective Time of the Merger. The
home office and branch offices of First Bank immediately prior to the Merger
shall become branch offices of the Surviving Institution at the Effective Time
of the Merger.
Article IV.
Manner of Converting and Exchanging Stock
1. Subject to the provisions of this Article IV, the manner of converting
and exchanging the shares of the constituent corporations' stock at the
Effective Time of the Merger shall be as follows:
(a) Each of the 1,000 shares of common stock, $.01 par value per share of
Lincoln Bank ("Lincoln Bank Common Stock"), outstanding immediately
prior to the Effective Time of the Merger shall remain outstanding
immediately after the Effective Time of the Merger.
(b) Each of the __________ shares of the common stock, $100 par value per
share, of First Bank (the "First Bank Common Stock") outstanding
immediately prior to the Effective Time of the Merger shall, at the
Effective Time of the Merger, be cancelled without consideration
therefor.
2. After the Effective Time of the Merger, there shall be no transfers on
the stock transfer books of First Bank or the Surviving Institution of any
shares of First Bank Common Stock.
Article V.
Effect of Merger
From and after the Effective Time of the Merger, the Surviving Institution
shall have all of the rights, privileges, powers, immunities and franchises
(public and private) of each of the constituent corporations, and all property
(real, personal, and mixed), all debts due on whatever account, and all other
choses in action, of each of the constituent corporations. All interests of or
belonging to or due to either of the constituent corporations shall thereupon be
deemed to be transferred to and vested in the Surviving Institution without act
or deed and no title to any real estate or any interest therein vested in either
of the constituent corporations shall revert or be in any way impaired because
of the Merger.
Article VI.
Surviving Institution
From and after the Effective Time of the Merger, the Surviving Institution
shall be responsible for all obligations of each of the constituent corporations
and each claim existing and each action or proceeding pending by or against
either of the constituent corporations may be prosecuted as if the Merger had
not taken place, and the Surviving Institution may be substituted in the place
of such constituent corporation. No right of any creditor of either constituent
corporation and no lien upon the property of either constituent corporation
shall be impaired by the Merger.
Article VII.
Further Documents
If at any time the Surviving Institution shall consider or be advised that
any further assignments, conveyances or assurances in law are necessary or
desirable to vest, perfect or confirm of record in the Surviving Institution the
title to any property or rights of the constituent corporations, or otherwise to
carry out the provisions hereof, the persons who were the proper officers and
directors of the constituent corporations immediately prior to the Effective
Time of the Merger (or their successors in office) shall execute and deliver any
and all proper deeds, assignments and assurances in law, and do all things
necessary or proper, to vest, perfect or confirm title to such property or
rights in the Surviving Institution and otherwise to carry out the provisions
hereof.
Article VIII.
Effect of Termination
In the event that this Agreement is terminated pursuant to Article IX of
the Reorganization Agreement, the Merger provided for herein shall be abandoned
automatically and without any further act or deed by the parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Merger Agreement
for Subsidiary Merger to be executed and attested to on their behalf by their
officers thereunto duly authorized as of the day and year first written above.
LINCOLN BANK
By:
--------------------------------------------------
T. Xxx Xxxxx, Chairman and President
FIRST BANK
By:
--------------------------------------------------
Xxxxx X. Xxxxx, President
Exhibit C
[DATE]
Lincoln Bancorp
000 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxx 00000
Ladies and Gentlemen:
I have been advised that as of the date hereof I may be deemed to be an
"affiliate" of First Shares Bancorp, Inc., an Indiana corporation ("FSB"), as
that term is defined for purposes of paragraphs (c) and (d) of Rule 145 of the
rules and regulations (the "Rules and Regulations") of the Securities and
Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended (the "Act"). Neither my entering into this letter agreement, nor
anything contained herein, shall be deemed an admission on my part that I am
such an "affiliate."
Pursuant to the terms of the Agreement and Plan of Reorganization dated as
of ____________, 2004, (the "Merger Agreement"), between Lincoln Bancorp, an
Indiana corporation ("Lincoln"), FSB, Lincoln Bank, and First Bank, providing
for the merger of FSB with and into Lincoln (the "Merger"), and as a result of
the Merger, I may receive shares of common stock, without par value, of Lincoln
(the "Lincoln Securities") and cash in exchange for the shares of common stock,
$.01 par value per share, of FSB owned by me at the effective time of the
Merger.
I represent and warrant to Lincoln that in such event:
A. I shall not make any sale, transfer or other disposition of the
Lincoln Securities in violation of the Act and the Rules and
Regulations.
B. I have carefully read this letter and the Merger Agreement and
discussed its requirements and other applicable limitations upon my
ability to sell, transfer or otherwise dispose of Lincoln Securities,
to the extent I felt necessary, with my counsel and counsel for FSB.
C. I have been advised that the issuance of Lincoln Securities to me
pursuant to the Merger has been registered with the Commission under
the Act on a Registration Statement on Form S-4. However, I have also
been advised that, since at the time the Merger was submitted for a
vote of the shareholders of FSB, I may have been deemed to have been
an affiliate of FSB and a distribution by me of Lincoln Securities has
not been registered under the Act, the Lincoln Securities must be held
by me indefinitely unless (i) a distribution of Lincoln Securities by
me has been registered under the Act, (ii) a sale of Lincoln
Securities by me is made in conformity with the volume and other
limitations of Rule 145 promulgated by the Commission under the Act,
or (iii) in the opinion of counsel reasonably acceptable to Lincoln,
some other exemption from registration is available with respect to a
proposed sale, transfer or other disposition of the Lincoln Securities
by me.
D. I understand that Lincoln is under no obligation to register the sale,
transfer or other disposition of Lincoln Securities by me or on my
behalf or to take any other action necessary in order to make
compliance with an exemption from registration available.
E. I also understand that stop transfer instructions will be given to
Lincoln transfer agent with respect to Lincoln Securities and that
there will be placed on the certificates for the Lincoln Securities,
or any substitutes therefor, a legend stating in substance:
"The shares represented by this certificate were issued in a
transaction to which Rule 145 promulgated under the Securities
Act of 1933 applies. The shares represented by this certificate
may only be transferred in accordance with the terms of an
agreement dated __________, 2004, between the registered holder
hereof and Lincoln Bancorp, a copy of which is on file with
Lincoln Bancorp."
F. I also understand that unless the transfer by me of my Lincoln
Securities has been registered under the Act or is a sale made in
conformity with the provisions of Rule 145, Lincoln reserves the
right to put the following legend on the certificates issued to
my transferee:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933 and were
acquired from a person who received such shares in a
transaction to which Rule 145 promulgated under the
Securities Act of 1933 applies. The shares have been
acquired by the holder not with a view to, or for resale in
connection with, any distribution thereof within the meaning
of the Securities Act of 1933 and may not be sold, pledged
or otherwise transferred except in accordance with an
exemption from the registration requirements of the
Securities Act of 1933."
It is understood and agreed that the legends set forth in paragraph E and F
above shall be removed by delivery of substitute certificates without such
legend if the undersigned shall have delivered to Lincoln a copy of a letter
from the staff of the Commission, or an opinion of counsel reasonably acceptable
to Lincoln, to the effect that such legend is not required for purposes of the
Act and, in any event, may be removed after one year following the Effective
Time (as defined in the Merger Agreement) as long as Lincoln is then current in
its filings under the Securities Exchange Act of 1934.
Very truly yours,
Printed:
--------------------------------
Accepted this ____ day of __________, 2004 by: Printed:
------------------------
LINCOLN BANCORP
By:
--------------------------------------------------
Name: T. Xxx Xxxxx
------------------------------------------------
Title: Chairman and President
-----------------------------------------------
Exhibit D
EMPLOYMENT AGREEMENT
This Agreement, made and dated as of __________, 2004, by and between
Lincoln Bank, a federal savings bank ("Employer"), and Xxxxx X. Xxxxx, a
resident of Xxxxxxx County, Indiana ("Employee").
W I T N E S S E T H
WHEREAS, Employee is employed by Employer as its Executive Vice President
and Chief Operating Officer and has made valuable contributions to the
profitability and financial strength of Employer;
WHEREAS, Employer desires to encourage Employee to continue to make
valuable contributions to Employer's business operations and not to seek or
accept employment elsewhere;
WHEREAS, Employee desires to be assured of a secure minimum compensation
from Employer for his services over a defined term;
WHEREAS, Employer desires to assure the continued services of Employee on
behalf of Employer on an objective and impartial basis and without distraction
or conflict of interest in the event of an attempt by any person to obtain
control of Employer or Lincoln Bancorp (the "Holding Company"), the Indiana
corporation which owns all of the issued and outstanding capital stock of
Employer;
WHEREAS, Employer recognizes that when faced with a proposal for a change
of control of Employer or the Holding Company, Employee will have a significant
role in helping the Boards of Directors assess the options and advising the
Boards of Directors on what is in the best interests of Employer, the Holding
Company, and its shareholders, and it is necessary for Employee to be able to
provide this advice and counsel without being influenced by the uncertainties of
his own situation;
WHEREAS, Employer desires to provide fair and reasonable benefits to
Employee on the terms and subject to the conditions set forth in this Agreement;
WHEREAS, Employer desires reasonable protection of its confidential
business and customer information which it has developed over the years at
substantial expense and assurance that Employee will not compete with Employer
for a reasonable period of time after termination of his employment with
Employer, except as otherwise provided herein.
NOW, THEREFORE, in consideration of these premises, the mutual covenants
and undertakings herein contained and the continued employment of Employee by
Employer as its Executive Vice President and Chief Operating Officer, Employer
and Employee, each intending to be legally bound, covenant and agree as follows:
1. Upon the terms and subject to the conditions set forth in this
Agreement, Employer employs Employee as its Executive Vice President and Chief
Operating Officer, and Employee accepts such employment.
2. Employee agrees to serve as Executive Vice President and Chief Operating
Officer of Employer and to perform such duties in those offices as may
reasonably be assigned to him by Employer's Board of Directors; provided,
however, that such duties shall be performed in or from the offices of Employer
currently located at Greenwood, Indiana, and shall be of the same character as
those previously performed by Employee and generally associated with the offices
held by Employee. Employee shall render services to Employer as Executive Vice
President and Chief Operating Officer of Employer in substantially the same
manner and to substantially the same extent as Employee rendered his services to
First Bank before the date hereof. While employed by Employer, Employee shall
devote substantially all his business time and efforts to Employer's business
during regular business hours and shall not engage in any other related
business.
3. It is anticipated that Employee shall be appointed to serve as President
and Chief Executive Officer of Employer no later than December 31, 2005.
4. During the term of this Agreement, Employer shall nominate the Employee
to successive terms as a member of Employer's Board of Directors and shall use
its best efforts to elect and re-elect Employee as a member of such Board and to
cause Employee to be nominated, elected and re-elected as a member of Holding
Company's Board of Directors. Employee shall receive additional compensation and
benefits as are provided from time to time to any other member of Employer's
Board of Directors who is also an officer of Employer, but the Employee
acknowledges that currently there is no such additional compensation being paid
and that there may never be any such additional compensation.
5. The term of this Agreement shall begin on the date set forth above (the
"Effective Date") and shall end on the date which is three years following such
date; provided, however, that such term shall be extended automatically for an
additional year on each anniversary of the Effective Date if Employer's Board of
Directors determines by resolution that the performance of the Employee has met
the Board's requirements and standards and that this Agreement should be
extended prior to such anniversary of the Effective Date, unless either party
hereto gives written notice to the other party not to so extend within ninety
(90) days prior to such anniversary, in which case no further automatic
extension shall occur and the term of this Agreement shall end two years
subsequent to the anniversary as of which the notice not to extend for an
additional year is given (such term, including any extension thereof shall
herein be referred to as the "Term"). Notwithstanding the foregoing, the Term
may end earlier upon the occurrence of any event described in Section 9.
In the event of termination pursuant to Section 5, subject to the
occurrence of another event described in Section 9, compensation provided for
herein (including Base Compensation) shall continue to be paid, and Employee
shall continue to participate in the employee benefit, retirement, and
compensation plans and other perquisites as provided in Sections 6, 7 and 8
hereof through and until the end of the remaining two years of the Term. Any
benefits payable under insurance, health, retirement and bonus plans as a result
of Employee's participation in such plans through such date shall be paid when
due under those plans.
6. Employee shall receive an annual salary of $_______ ("Base
Compensation") payable at regular intervals in accordance with Employer's normal
payroll practices now or hereafter in effect. Employer may consider and declare
from time to time increases in the salary it pays Employee and thereby increases
in his Base Compensation. Prior to a Change of Control, Employer may also
declare decreases in the salary it pays Employee if the operating results of
Employer are significantly less favorable than those for the fiscal year ending
December 31, 2004, and Employer makes similar decreases in the salary it pays to
other executive officers of Employer. After a Change in Control, Employer shall
consider and declare salary increases based upon the following standards:
Inflation;
Adjustments to the salaries of other senior management personnel; and
Past performance of Employee and the contribution which Employee makes
to the business and profits of Employer during the Term.
Any and all increases or decreases in Employee's salary pursuant to this Section
shall cause the level of Base Compensation to be increased or decreased by the
amount of each such increase or decrease for purposes of this Agreement. The
increased or decreased level of Base Compensation as provided in this Section
shall become the level of Base Compensation for the remainder of the Term of
this Agreement until there is a further increase or decrease in Base
Compensation as provided herein.
7. So long as Employee is employed by Employer pursuant to this Agreement,
he shall be included as a participant in all present and future employee
benefit, retirement, and compensation plans available to any management employee
of Employer, consistent with his Base Compensation and his positions as
Executive Vice President and Chief Operating Officer of Employer, including,
without limitation, Employer's or the Holding Company's pension plan, 401(k)
plan, Stock Option Plan, Recognition and Retention Plan and Trust, Employee
Stock Ownership Plan, and hospitalization, disability and group life insurance
plans, each of which Employer agrees to continue in effect on terms no less
favorable than those currently in effect as of the date hereof (as permitted by
law) during the Term of this Agreement unless prior to a Change of Control the
operating results of Employer are significantly less favorable than those for
the fiscal year ending December 31, 2004, and unless (either before or after a
Change of Control) changes in the accounting, legal, or tax treatment of such
plans would adversely affect Employer's operating results or financial condition
in a material way, and the Board of Directors of Employer or the Holding Company
concludes that modifications to such plans need to be made to avoid such adverse
effects. However, Employer may freeze or terminate the Lincoln Bank Financial
Institutions Retirement Fund without violating its obligations contained in this
Agreement, nor shall Employer be obligated to provide a replacement plan or
benefit of equivalent value.
In addition to the foregoing, a nonqualified stock option for a total of
seventy thousand (70,000) shares of Common Stock of Lincoln Bancorp shall be
granted to Employee as of the Effective Date. The option price shall be one
hundred percent (100%) of the fair market value of one (1) share of Common Stock
of Lincoln Bancorp as of the Effective Date as determined in accordance with the
Lincoln Bancorp Stock Option Plan, such option may not be exercised more than
ten (10) years from the date of this grant, and such option shall otherwise be
subject in all respects to the terms and conditions of the Lincoln Bancorp Stock
Option Plan.
8. So long as Employee is employed by Employer pursuant to this Agreement,
Employee shall receive reimbursement from Employer for all reasonable business
expenses incurred in the course of his employment by Employer, upon submission
to Employer of written vouchers and statements for reimbursement. Employee shall
attend, upon the prior approval of Employer's Board of Directors, those
professional meetings, conventions, and/or similar functions that he deems
appropriate and useful for purposes of keeping abreast of current developments
in the industry and/or promoting the interests of Employer. So long as Employee
is employed by Employer pursuant to the terms of this Agreement, Employer shall
continue in effect vacation policies applicable to Employee no less favorable
from his point of view than those written vacation policies in effect on the
date hereof. So long as Employee is employed by Employer pursuant to this
Agreement, Employee shall be entitled to office space and working conditions no
less favorable than were in effect for him on the date hereof.
9. Subject to the respective continuing obligations of the parties,
including but not limited to those set forth in subsections 11(A), 11(B), 11(C)
and 11(D) hereof, Employee's employment by Employer may be terminated prior to
the expiration of the Term of this Agreement as follows:
(A) Employer, by action of its Board of Directors and upon written
notice to Employee, may terminate Employee's employment with Employer
immediately for cause. For purposes of this subsection 9(A), "cause" shall
be defined as (i) personal dishonesty, (ii) incompetence, (iii) willful
misconduct, (iv) breach of fiduciary duty involving personal profit, (v)
intentional failure to perform stated duties, (vi) willful violation of any
law, rule, or regulation (other than traffic violations or similar
offenses) or final cease-and-desist order, or (vii) any material breach of
any provision of this Agreement.
(B) Employer, by action of its Board of Directors may terminate
Employee's employment with Employer without cause at any time; provided,
however, that the "date of termination" for purposes of determining
benefits payable to Employee under subsection 10(B) hereof shall be the
date which is 60 days after Employee receives written notice of such
termination.
(C) Employee, by written notice to Employer, may terminate his
employment with Employer immediately for cause. For purposes of this
subsection 9(C), "cause" shall be defined as (i) any action by Employer's
Board of Directors to remove the Employee as Executive Vice President or
Chief Operating Officer of Employer, except for title changes contemplated
by this Agreement and other promotions, if any, and except where the
Employer's Board of Directors properly acts to remove Employee from such
office for "cause" as defined in subsection 9(A) hereof, (ii) any action by
Employer's Board of Directors to materially limit, increase, or modify
Employee's duties and/or authority as Executive Vice President and Chief
Operating Officer of Employer, except for changes commensurate with title
changes contemplated by this Agreement or other promotions, if any, (iii)
any failure of Employer to obtain the assumption of the obligation to
perform this Agreement by any successor or the reaffirmation of such
obligation by Employer, as contemplated in Section 22 hereof; (iv) Holding
Company's failure to use its best efforts to cause Employer to convert from
a federal savings bank to an Indiana commercial state bank no later than
one year after the Effective Time; or (v) any material breach by Employer
of a term, condition or covenant of this Agreement. Employer's failure to
appoint Employee to serve as President and Chief Executive Officer of
Employer no later than December 31, 2005 shall not constitute a material
breach of this Agreement.
(D) Employee, upon sixty (60) days written notice to Employer, may
terminate his employment with Employer without cause.
(E) Employee's employment with Employer shall terminate in the event
of Employee's death or disability. For purposes hereof, "disability" shall
be defined as Employee's inability by reason of illness or other physical
or mental incapacity to perform the duties required by his employment for
any consecutive One Hundred Eighty (180) day period, provided that notice
of any termination by Employer because of Employee's "disability" shall
have been given to Employee prior to the full resumption by him of the
performance of such duties.
10. In the event of termination of Employee's employment with Employer
pursuant to Section 9 hereof, compensation shall continue to be paid by Employer
to Employee as follows:
(A) In the event of termination pursuant to subsection 9(A) or 9(D),
compensation provided for herein (including Base Compensation) shall
continue to be paid, and Employee shall continue to participate in the
employee benefit, retirement, and compensation plans and other perquisites
as provided in Sections 6, 7 and 8 hereof, through the date of termination
specified in the notice of termination. Any benefits payable under
insurance, health, retirement and bonus plans as a result of Employee's
participation in such plans through such date shall be paid when due under
those plans. The date of termination specified in any notice of termination
pursuant to subsection 9(A) shall be no later than the last business day of
the month in which such notice is provided to Employee.
(B) In the event of termination pursuant to subsection 9(B) or 9(C),
compensation provided for herein (including Base Compensation) shall
continue to be paid, and Employee shall continue to participate in the
employee benefit, retirement, and compensation plans and other perquisites
as provided in Sections 6, 7 and 8 hereof, through the date of termination
specified in the notice of termination. Any benefits payable under
insurance, health, retirement and bonus plans as a result of Employee's
participation in such plans through such date shall be paid when due under
those plans. In addition, Employee shall be entitled to continue to receive
from Employer his Base Compensation at the rates in effect at the time of
termination (1) for three additional l2-month periods if the termination
follows a Change of Control or (2) for the remaining Term of the Agreement,
but not less than six (6) months, if the termination does not follow a
Change of Control. In addition, during such periods and except as otherwise
specifically provided herein, Employer will maintain in full force and
effect for the continued benefit of Employee each employee welfare benefit
plan and each employee pension benefit plan (as such terms are defined in
the Employee Retirement Income Security Act of 1974, as amended) in which
Employee was entitled to participate immediately prior to the date of his
termination unless an essentially equivalent and no less favorable benefit
is provided by a subsequent employer of Employee. If the terms of any
employee welfare benefit plan or employee pension benefit plan of Employer
do not permit continued participation by Employee, Employer will arrange to
provide to Employee a benefit substantially similar to, and no less
favorable than, the benefit he was entitled to receive under such plan at
the end of the period of coverage. For purposes of this Agreement, a
"Change of Control" shall mean an acquisition of "control" of the Holding
Company or of Employer within the meaning of 12 C.F.R. ss.574.4(a) (other
than a change of control resulting from a trustee or other fiduciary
holding shares of Common Stock under an employee benefit plan of the
Holding Company or any of its subsidiaries). Notwithstanding anything to
the contrary in the foregoing, any benefits payable under this subsection
8(B) shall be subject to the limitations on severance benefits set forth in
Section 310 of the OTS Thrift Activities Bulletin, as in effect on the
Effective Date.
(C) In the event of termination pursuant to subsection 9(E),
compensation provided for herein (including Base Compensation) shall
continue to be paid, and Employee shall continue to participate in the
employee benefit, retirement, and compensation plans and other perquisites
as provided in Sections 6, 7 and 8 hereof, (i) in the event of Employee's
death, through the date of death, or (ii) in the event of Employee's
disability, through the date of proper notice of disability as required by
subsection 9(E). Any benefits payable under insurance, health, retirement
and bonus plans as a result of Employer's participation in such plans
through such date shall be paid when due under those plans.
(D) Employer will permit Employee or his personal representative(s) or
heirs, during a period of three months following Employee's termination of
employment by Employer for the reasons set forth in subsections 9(B), (C)
or (E), if such termination follows a Change of Control, to require
Employer, upon written request, to purchase all outstanding stock options
previously granted to Employee under any Holding Company stock option plan
then in effect whether or not such options are then exercisable at a cash
purchase price equal to the amount by which the aggregate "fair market
value" of the shares subject to such options exceeds the aggregate option
price for such shares. For purposes of this Agreement, the term "fair
market value" shall mean the higher of (1) the average of the highest asked
prices for Holding Company shares in the over-the-counter market as
reported on the NASDAQ system if the shares are traded on such system for
the 30 business days preceding such termination, or (2) the average per
share price actually paid for the most highly priced 1% of the Holding
Company shares acquired in connection with the Change of Control of the
Holding Company by any person or group acquiring such control.
11. In order to induce Employer to enter into this Agreement, Employee
hereby agrees as follows:
(A) While Employee is employed by Employer and for a period of three
years after termination of such employment, Employee shall not divulge or
furnish any trade secrets (as defined in IND. CODE ss. 24-2-3-2) of
Employer or any confidential information acquired by him while employed by
Employer concerning the policies, plans, procedures or customers of
Employer to any person, firm or corporation, other than Employer or upon
its written request, or use any such trade secret or confidential
information directly or indirectly for Employee's own benefit or for the
benefit of any person, firm or corporation other than Employer, since such
trade secrets and confidential information are confidential and shall at
all times remain the property of Employer.
(B) For a period of two years after termination of Employee's
employment by Employer for reasons other than those set forth in
subsections 9(B) or (C) of this Agreement, Employee shall not directly or
indirectly provide banking or bank-related services to or solicit the
banking or bank-related business of any customer of Employer at the time of
such provision of services or solicitation which Employee served either
alone or with others while employed by Employer in any city, town, borough,
township, village or other place in which Employee performed services for
Employer while employed by it, or assist any actual or potential competitor
of Employer to provide banking or bank-related services to or solicit any
such customer's banking or bank-related business in any such place.
Notwithstanding the foregoing, the period for application of this
restriction in subsection 11(B) shall be reduced from two years to six
months following termination of Employee's employment: (i) in the event of
termination under Section 5 if Employer provides the notice not to extend
for an additional year or (ii) if Employer fails to appoint Employee as
President and Chief Executive Officer of Employer by December 31, 2005.
(C) While Employee is employed by Employer and for a period of one
year after termination of Employee's employment by Employer for reasons
other than those set forth in subsections 9(B) or (C) of this Agreement,
Employee shall not, directly or indirectly, as principal, agent, or
trustee, or through the agency of any corporation, partnership, trade
association, agent or agency, engage in any banking or bank-related
business which competes with the business of Employer as conducted during
Employee's employment by Employer if Employee's office with the competing
business is within a radius of twenty-five (25) miles of Employer's
Greenwood office or within twenty-five (25) miles of Employer's main
office. (Notwithstanding the foregoing, ownership of less than 2% of a
class of publicly held securities in any corporation shall not violate the
provisions of this subsection (C).) Furthermore, notwithstanding the
foregoing, the period for application of this restriction in subsection
11(C) shall be reduced from one year to six months following termination of
Employee's employment: (i) in the event of termination under Section 5 if
Employer provides the notice not to extend for an additional year or (ii)
if Employer fails to appoint Employee as President and Chief Executive
Officer of Employer by December 31, 2005.
(D) If Employee's employment by Employer is terminated hereunder for
any reason, Employee will turn over immediately thereafter to Employer all
business correspondence, letters, papers, reports, customers' lists,
financial statements, credit reports or other confidential information or
documents of Employer or its affiliates in the possession or control of
Employee, all of which writings are and will continue to be the sole and
exclusive property of Employer or its affiliates.
If Employee's employment by Employer is terminated during the Term of this
Agreement for reasons set forth in subsections 9(B) or (C) of this Agreement,
Employee shall have no obligations to Employer with respect to the
noncompetition provisions under this Section 11.
12. Any termination of Employee's employment with Employer as contemplated
by Section 9 hereof, except in the circumstances of Employee's death, shall be
communicated by written "Notice of Termination" by the terminating party to the
other party hereto. Any "Notice of Termination" pursuant to subsections 9(A),
9(C) or 9(E) shall indicate the specific provisions of this Agreement relied
upon and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for such termination.
13. If Employee is suspended and/or temporarily prohibited from
participating in the conduct of Employer's affairs by a notice served under
section 8(e)(3) or (g)(1) of the Federal Deposit Insurance Act (12 U.S.C. ss.
1818(e)(3) or (g)(1)), Employer's obligations under this Agreement shall be
suspended as of the date of service, unless stayed by appropriate proceedings.
If the charges in the notice are dismissed, Employer shall (i) pay Employee all
or part of the compensation withheld while its obligations under this Agreement
were suspended and (ii) reinstate (in whole or in part) any of its obligations
which were suspended.
14. If Employee is removed and/or permanently prohibited from participating
in the conduct of Employer's affairs by an order issued under section 8(e)(4) or
(g)(1) of the Federal Deposit Insurance Act (12 U.S.C. ss. 1818(e)(4) or
(g)(1)), all obligations of Employer under this Agreement shall terminate as of
the effective date of the order, but vested rights of the parties to the
Agreement shall not be affected.
15. If Employer is in default (as defined in section 3(x)(1) of the Federal
Deposit Insurance Act), all obligations under this Agreement shall terminate as
of the date of default, but this provision shall not affect any vested rights of
Employer or Employee.
16. All obligations under this Agreement shall be terminated except to the
extent determined that the continuation of the Agreement is necessary for the
continued operation of Employer: (i) by the Director of the Office of Thrift
Supervision or his or her designee (the "Director"), at the time the Federal
Deposit Insurance Corporation enters into an agreement to provide assistance to
or on behalf of Employer under the authority contained in Section 13(c) of the
Federal Deposit Insurance Act; or (ii) by the Director at the time the Director
approves a supervisory merger to resolve problems related to operation of
Employer or when Employer is determined by the Director to be in an unsafe and
unsound condition. Any rights of the parties that have already vested, however,
shall not be affected by such action.
17. Anything in this Agreement to the contrary notwithstanding, in the
event that the Employer's independent public accountants determine that any
payment by the Employer to or for the benefit of the Employee, whether paid or
payable pursuant to the terms of this Agreement, would be non-deductible by the
Employer for federal income tax purposes because of Section 280G of the Internal
Revenue Code of 1986, as amended (the "Code"), then the amount payable to or for
the benefit of the Employee pursuant to this Agreement shall be reduced (but not
below zero) to the Reduced Amount. For purposes of this Section 17, the "Reduced
Amount" shall be the amount which maximizes the amount payable without causing
the payment to be non-deductible by the Employer because of Section 280G of the
Code. Any payments made to Employee pursuant to this Agreement or otherwise, are
subject to and conditional upon their compliance with 12 U.S.C. ss.1828(k) and
FDIC regulation 12 C.F.R. Part 359 (Golden Parachute and Indemnification
Payments) and any other regulations promulgated thereunder, to the extent
applicable to such parties.
18. If a dispute arises regarding the termination of Employee pursuant to
Section 9 hereof or as to the interpretation or enforcement of this Agreement
and Employee obtains a final judgment in his favor in a court of competent
jurisdiction or his claim is settled by Employer prior to the rendering of a
judgment by such a court, all reasonable legal fees and expenses incurred by
Employee in contesting or disputing any such termination or seeking to obtain or
enforce any right or benefit provided for in this Agreement or otherwise
pursuing his claim shall be paid by Employer, to the extent permitted by law.
19. Should Employee die after termination of his employment with Employer
while any amounts are payable to him hereunder, this Agreement shall inure to
the benefit of and be enforceable by Employee's executors, administrators,
heirs, distributees, devisees and legatees and all amounts payable hereunder
shall be paid in accordance with the terms of this Agreement to Employee's
devisee, legatee or other designee or, if there is no such designee, to his
estate.
20. For purposes of this Agreement, notices and all other communications
provided for herein shall be in writing and shall be deemed to have been given
when delivered or mailed by United States registered or certified mail, return
receipt requested, postage prepaid, addressed as follows:
If to Employee: Xxxxx X. Xxxxx
000 Xxxxx Xxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
If to Employer: Lincoln Bank
0000 X. Xxxx Xxxxxx
X.X. Xxx 000
Xxxxxxxxxx, Xxxxxxx 00000-0000
or to such address as either party hereto may have furnished to the other party
in writing in accordance herewith, except that notices of change of address
shall be effective only upon receipt.
21. The validity, interpretation, and performance of this Agreement shall
be governed by the laws of the State of Indiana, except as otherwise required by
mandatory operation of federal law.
22. Employer shall require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business or assets of Employer, by agreement in form and substance satisfactory
to Employee to expressly assume and agree to perform this Agreement in the same
manner and same extent that Employer would be required to perform it if no such
succession had taken place. Failure of Employer to obtain such agreement prior
to the effectiveness of any such succession shall be a material intentional
breach of this Agreement and shall entitle Employee to terminate his employment
with Employer pursuant to subsection 9(C) hereof. As used in this Agreement,
"Employer" shall mean Employer as hereinbefore defined and any successor to its
business or assets as aforesaid.
23. No provision of this Agreement may be modified, waived or discharged
unless such waiver, modification or discharge is agreed to in writing signed by
Employee and Employer. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of dissimilar provisions or conditions at the same or any prior
subsequent time. No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party which are not set forth expressly in this Agreement.
24. The invalidity or unenforceability of any provisions of this Agreement
shall not affect the validity or enforceability of any other provisions of this
Agreement which shall remain in full force and effect.
25. This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original but all of which together shall constitute one
and the same agreement.
26. This Agreement is personal in nature and neither party hereto shall,
without consent of the other, assign or transfer this Agreement or any rights or
obligations hereunder except as provided in Section 19 and Section 22 above.
Without limiting the foregoing, Employee's right to receive compensation
hereunder shall not be assignable or transferable, whether by pledge, creation
of a security interest or otherwise, other than a transfer by his will or by the
laws of descent or distribution as set forth in Section 19 hereof, and in the
event of any attempted assignment or transfer contrary to this paragraph,
Employer shall have no liability to pay any amounts so attempted to be assigned
or transferred.
IN WITNESS WHEREOF, the parties have caused the Agreement to be executed
and delivered as of the day and year first above set forth.
LINCOLN BANK
By:
-----------------------------------------------
T. Xxx Xxxxx, President
"Employer"
-----------------------------------------------
Xxxxx X. Xxxxx
"Employee"
The undersigned, Lincoln Bancorp, sole shareholder of Employer, agrees that
if it shall be determined for any reason that any obligations on the part of
Employer to continue to make any payments due under this Agreement to Employee
is unenforceable for any reason, Lincoln Bancorp, agrees to honor the terms of
this Agreement and continue to make any such payments due hereunder to Employee
pursuant to the terms of this Agreement.
During Employee's active employment by Employer, Lincoln Bancorp shall
nominate Employee to successive terms as a member of Lincoln Bancorp's Board of
Directors and as Lincoln Bancorp's Vice Chairman. Lincoln Bancorp shall use its
best efforts to elect and re-elect Employee as a member of such Board and Vice
Chairman. While serving as the Vice Chairman of Lincoln Bancorp and as a
director of Lincoln Bancorp, Employee shall be entitled to the same benefits and
compensation for services as provided to the Chairman and other employee
directors of Lincoln Bancorp.
Furthermore, it is anticipated that following retirement of the current
President and Chief Executive Officer of Lincoln Bancorp, Employee shall then be
appointed to the positions of President and Chief Executive Officer of Lincoln
Bancorp.
LINCOLN BANCORP
By:
-----------------------------------------
T. Xxx Xxxxx, President
Exhibit E
EMPLOYMENT AGREEMENT
This Agreement, made and dated as of __________, 2004, by and between
Lincoln Bank, a federal savings bank ("Employer"), and Xxxx X. Xxxxxxx, a
resident of Xxxxxxx County, Indiana ("Employee").
W I T N E S S E T H
WHEREAS, Employee is employed by Employer as its Senior Vice President and
has made valuable contributions to the profitability and financial strength of
Employer;
WHEREAS, Employer desires to encourage Employee to continue to make
valuable contributions to Employer's business operations and not to seek or
accept employment elsewhere;
WHEREAS, Employee desires to be assured of a secure minimum compensation
from Employer for his services over a defined term;
WHEREAS, Employer desires to assure the continued services of Employee on
behalf of Employer on an objective and impartial basis and without distraction
or conflict of interest in the event of an attempt by any person to obtain
control of Employer or Lincoln Bancorp (the "Holding Company"), the Indiana
corporation which owns all of the issued and outstanding capital stock of
Employer;
WHEREAS, Employer recognizes that when faced with a proposal for a change
of control of Employer or the Holding Company, Employee will have a significant
role in helping the Boards of Directors assess the options and advising the
Boards of Directors on what is in the best interests of Employer, the Holding
Company, and its shareholders, and it is necessary for Employee to be able to
provide this advice and counsel without being influenced by the uncertainties of
his own situation;
WHEREAS, Employer desires to provide fair and reasonable benefits to
Employee on the terms and subject to the conditions set forth in this Agreement;
WHEREAS, Employer desires reasonable protection of its confidential
business and customer information which it has developed over the years at
substantial expense and assurance that Employee will not compete with Employer
for a reasonable period of time after termination of his employment with
Employer, except as otherwise provided herein.
NOW, THEREFORE, in consideration of these premises, the mutual covenants
and undertakings herein contained and the continued employment of Employee by
Employer as its Senior Vice President, Employer and Employee, each intending to
be legally bound, covenant and agree as follows:
1. Upon the terms and subject to the conditions set forth in this
Agreement, Employer employs Employee as its Senior Vice President, and Employee
accepts such employment.
2. Employee agrees to serve as Senior Vice President of Employer and to
perform such duties in that office as may reasonably be assigned to him by
Employer's Board of Directors; provided, however, that such duties shall be
performed in or from the offices of Employer currently located at Greenwood,
Indiana, and shall be of the same character as those previously performed by
Employee and generally associated with the office held by Employee. Employee
shall render services to Employer as its Senior Vice President, in substantially
the same manner and to substantially the same extent as Employee rendered his
services to First Bank before the date hereof. While employed by Employer,
Employee shall devote substantially all his business time and efforts to
Employer's business during regular business hours and shall not engage in any
other related business.
3. The term of this Agreement shall begin on the date set forth above (the
"Effective Date") and shall end on the date which is two years following such
date; provided, however, that such term shall be extended automatically for an
additional year on each anniversary of the Effective Date if Employer's Board of
Directors determines by resolution that the performance of the Employee has met
the Board's requirements and standards and that this Agreement should be
extended prior to such anniversary of the Effective Date, unless either party
hereto gives written notice to the other party not to so extend within ninety
(90) days prior to such anniversary, in which case no further automatic
extension shall occur and the term of this Agreement shall end one year
subsequent to the anniversary as of which the notice not to extend for an
additional year is given (such term, including any extension thereof shall
herein be referred to as the "Term"). Notwithstanding the foregoing, the Term
may end earlier upon the occurrence of any event described in Section 7.
In the event of termination pursuant to Section 3, subject to the
occurrence of another event described in Section 7, compensation provided for
herein (including Base Compensation) shall continue to be paid, and Employee
shall continue to participate in the employee benefit, retirement, and
compensation plans and other perquisites as provided in Sections 4, 5 and 6
hereof through and until the end of the remaining one year of the Term. Any
benefits payable under insurance, health, retirement and bonus plans as a result
of Employee's participation in such plans through such date shall be paid when
due under those plans.
4. Employee shall receive an annual salary of $_______ ("Base
Compensation") payable at regular intervals in accordance with Employer's normal
payroll practices now or hereafter in effect. Employer may consider and declare
from time to time increases in the salary it pays Employee and thereby increases
in his Base Compensation. Prior to a Change of Control, Employer may also
declare decreases in the salary it pays Employee if the Operating results of
Employer are significantly less favorable than those for the fiscal year ending
December 31, 2004, and Employer makes similar decreases in the salary it pays to
other executive officers of Employer. After a Change in Control, Employer shall
consider and declare salary increases based upon the following standards:
Inflation;
Adjustments to the salaries of other senior management personnel; and
Past performance of Employee and the contribution which Employee makes
to the business and profits of Employer during the Term.
Any and all increases or decreases in Employee's salary pursuant to this Section
shall cause the level of Base Compensation to be increased or decreased by the
amount of each such increase or decrease for purposes of this Agreement. The
increased or decreased level of Base Compensation as provided in this Section
shall become the level of Base Compensation for the remainder of the Term of
this Agreement until there is a further increase or decrease in Base
Compensation as provided herein.
5. So long as Employee is employed by Employer pursuant to this Agreement,
he shall be included as a participant in all present and future employee
benefit, retirement, and compensation plans available to any management employee
of Employer, consistent with his Base Compensation and his positions as Senior
Vice President of Employer including, without limitation, Employer's or the
Holding Company's pension plan, 401(k) plan, Stock Option Plan, Recognition and
Retention Plan and Trust, Employee Stock Ownership Plan, and hospitalization,
disability and group life insurance plans, each of which Employer agrees to
continue in effect on terms no less favorable than those currently in effect as
of the date hereof (as permitted by law) during the Term of this Agreement
unless prior to a Change of Control the operating results of Employer are
significantly less favorable than those for the fiscal year ending December 31,
2004, and unless (either before or after a Change of Control) changes in the
accounting, legal, or tax treatment of such plans would adversely affect
Employer's operating results or financial condition in a material way, and the
Board of Directors of Employer or the Holding Company concludes that
modifications to such plans need to be made to avoid such adverse effects.
However, Employer may freeze or terminate the Lincoln Bank Financial
Institutions Retirement Fund without violating its obligations contained in this
Agreement, nor shall Employer be obligated to provide a replacement plan or
benefit of equivalent value.
In addition to the foregoing, a nonqualified stock option for a total of
twenty thousand (20,000) shares of Common Stock of Lincoln Bancorp shall be
granted to Employee as of the Effective Date. The option price shall be one
hundred percent (100%) of the fair market value of one (1) share of Common Stock
of Lincoln Bancorp as of the Effective Date, as determined in accordance with
the Lincoln Bancorp Stock Option Plan, such option may not be exercised more
than ten (10) years from the date of this grant, and such option shall otherwise
be subject in all respects to the terms and conditions of the Lincoln Bancorp
Stock Option Plan.
6. So long as Employee is employed by Employer pursuant to this Agreement,
Employee shall receive reimbursement from Employer for all reasonable business
expenses incurred in the course of his employment by Employer, upon submission
to Employer of written vouchers and statements for reimbursement. So long as
Employee is employed by Employer pursuant to the terms of this Agreement,
Employer shall continue in effect vacation policies applicable to Employee no
less favorable from his point of view than those written vacation policies in
effect on the date hereof. So long as Employee is employed by Employer pursuant
to this Agreement, Employee shall be entitled to office space and working
conditions no less favorable than were in effect for him on the date hereof.
7. Subject to the respective continuing obligations of the parties,
including but not limited to those set forth in subsections 9(A), 9(B), 9(C) and
9(D) hereof, Employee's employment by Employer may be terminated prior to the
expiration of the Term of this Agreement as follows:
(A) Employer, by action of its Board of Directors and upon written
notice to Employee, may terminate Employee's employment with Employer
immediately for cause. For purposes of this subsection 7(A), "cause" shall
be defined as (i) personal dishonesty, (ii) incompetence, (iii) willful
misconduct, (iv) breach of fiduciary duty involving personal profit, (v)
intentional failure to perform stated duties, (vi) willful violation of any
law, rule, or regulation (other than traffic violations or similar
offenses) or final cease-and-desist order, or (vii) any material breach of
any provision of this Agreement.
(B) Employer, by action of its Board of Directors may terminate
Employee's employment with Employer without cause at any time; provided,
however, that the "date of termination" for purposes of determining
benefits payable to Employee under subsection 8(B) hereof shall be the date
which is 60 days after Employee receives written notice of such
termination.
(C) Employee, by written notice to Employer, may terminate his
employment with Employer immediately for cause. For purposes of this
subsection 7(C), "cause" shall be defined as (i) any action by Employer's
Board of Directors to remove the Employee as Senior Vice President of
Employer, except for title changes in connection with promotions, if any,
and except where the Employer's Board of Directors properly acts to remove
Employee from such office for "cause" as defined in subsection 7(A) hereof,
(ii) any action by Employer's Board of Directors to materially limit,
increase, or modify Employee's duties and/or authority as Senior Vice
President of Employer, except for changes commensurate with title changes
in connection with promotions, if any, (iii) any failure of Employer to
obtain the assumption of the obligation to perform this Agreement by any
successor or the reaffirmation of such obligation by Employer, as
contemplated in Section 20 hereof; (iv) Holding Company's failure to use
its best efforts to cause Employer to convert from a federal savings bank
to an Indiana commercial state bank no later than one year after the
Effective Time; or (v) any material breach by Employer of a term, condition
or covenant of this Agreement.
(D) Employee, upon sixty (60) days written notice to Employer, may
terminate his employment with Employer without cause.
(E) Employee's employment with Employer shall terminate in the event
of Employee's death or disability. For purposes hereof, "disability" shall
be defined as Employee's inability by reason of illness or other physical
or mental incapacity to perform the duties required by his employment for
any consecutive One Hundred Eighty (180) day period, provided that notice
of any termination by Employer because of Employee's "disability" shall
have been given to Employee prior to the full resumption by him of the
performance of such duties.
8. In the event of termination of Employee's employment with Employer
pursuant to Section 7 hereof, compensation shall continue to be paid by Employer
to Employee as follows:
(A) In the event of termination pursuant to subsection 7(A) or 7(D),
compensation provided for herein (including Base Compensation) shall
continue to be paid, and Employee shall continue to participate in the
employee benefit, retirement, and compensation plans and other perquisites
as provided in Sections 4, 5 and 6 hereof, through the date of termination
specified in the notice of termination. Any benefits payable under
insurance, health, retirement and bonus plans as a result of Employee's
participation in such plans through such date shall be paid when due under
those plans. The date of termination specified in any notice of termination
pursuant to subsection 7(A) shall be no later than the last business day of
the month in which such notice is provided to Employee.
(B) In the event of termination pursuant to subsection 7(B) or 7(C),
compensation provided for herein (including Base Compensation) shall
continue to be paid, and Employee shall continue to participate in the
employee benefit, retirement, and compensation plans and other perquisites
as provided in Sections 4, 5 and 6 hereof, through the date of termination
specified in the notice of termination. Any benefits payable under
insurance, health, retirement and bonus plans as a result of Employee's
participation in such plans through such date shall be paid when due under
those plans. In addition, Employee shall be entitled to continue to receive
from Employer his Base Compensation at the rates in effect at the time of
termination (1) for three additional l2-month periods if the termination
follows a Change of Control or (2) for the remaining Term of the Agreement,
but not less than six (6) months, if the termination does not follow a
Change of Control. In addition, during such periods and except as otherwise
specifically provided herein, Employer will maintain in full force and
effect for the continued benefit of Employee each employee welfare benefit
plan and each employee pension benefit plan (as such terms are defined in
the Employee Retirement Income Security Act of 1974, as amended) in which
Employee was entitled to participate immediately prior to the date of his
termination unless an essentially equivalent and no less favorable benefit
is provided by a subsequent employer of Employee. If the terms of any
employee welfare benefit plan or employee pension benefit plan of Employer
do not permit continued participation by Employee, Employer will arrange to
provide to Employee a benefit substantially similar to, and no less
favorable than, the benefit he was entitled to receive under such plan at
the end of the period of coverage. For purposes of this Agreement, a
"Change of Control" shall mean an acquisition of "control" of the Holding
Company or of Employer within the meaning of 12 C.F.R. ss.574.4(a) (other
than a change of control resulting from a trustee or other fiduciary
holding shares of Common Stock under an employee benefit plan of the
Holding Company or any of its subsidiaries). Notwithstanding anything to
the contrary in the foregoing, any benefits payable under this subsection
8(B) shall be subject to the limitations on severance benefits set forth in
Section 310 of the OTS Thrift Activities Bulletin, as in effect on the
Effective Date.
(C) In the event of termination pursuant to subsection 7(E),
compensation provided for herein (including Base Compensation) shall
continue to be paid, and Employee shall continue to participate in the
employee benefit, retirement, and compensation plans and other perquisites
as provided in Sections 4, 5 and 6 hereof, (i) in the event of Employee's
death, through the date of death, or (ii) in the event of Employee's
disability, through the date of proper notice of disability as required by
subsection 7(E). Any benefits payable under insurance, health, retirement
and bonus plans as a result of Employer's participation in such plans
through such date shall be paid when due under those plans.
(D) Employer will permit Employee or his personal representative(s) or
heirs, during a period of three months following Employee's termination of
employment by Employer for the reasons set forth in subsections 7(B) or
(C), if such termination follows a Change of Control, to require Employer,
upon written request, to purchase all outstanding stock options previously
granted to Employee under any Holding Company stock option plan then in
effect whether or not such options are then exercisable at a cash purchase
price equal to the amount by which the aggregate "fair market value" of the
shares subject to such options exceeds the aggregate option price for such
shares. For purposes of this Agreement, the term "fair market value" shall
mean the higher of (1) the average of the highest asked prices for Holding
Company shares in the over-the-counter market as reported on the NASDAQ
system if the shares are traded on such system for the 30 business days
preceding such termination, or (2) the average per share price actually
paid for the most highly priced 1% of the Holding Company shares acquired
in connection with the Change of Control of the Holding Company by any
person or group acquiring such control.
9. In order to induce Employer to enter into this Agreement, Employee
hereby agrees as follows:
(A) While Employee is employed by Employer and for a period of three
years after termination of such employment, Employee shall not divulge or
furnish any trade secrets (as defined in IND. CODE ss. 24-2-3-2) of
Employer or any confidential information acquired by him while employed by
Employer concerning the policies, plans, procedures or customers of
Employer to any person, firm or corporation, other than Employer or upon
its written request, or use any such trade secret or confidential
information directly or indirectly for Employee's own benefit or for the
benefit of any person, firm or corporation other than Employer, since such
trade secrets and confidential information are confidential and shall at
all times remain the property of Employer.
(B) For a period of two years after termination of Employee's
employment by Employer for reasons other than those set forth in
subsections 7(B) or (C) of this Agreement, Employee shall not directly or
indirectly provide banking or bank-related services to or solicit the
banking or bank-related business of any customer of Employer at the time of
such provision of services or solicitation which Employee served either
alone or with others while employed by Employer in any city, town, borough,
township, village or other place in which Employee performed services for
Employer while employed by it, or assist any actual or potential competitor
of Employer to provide banking or bank-related services to or solicit any
such customer's banking or bank-related business in any such place.
Notwithstanding the foregoing, the period for application of this
restriction in subsection 9(B) shall be reduced from two years to six
months following termination of Employee's employment: (i) in the event of
termination under Section 3 if Employer provides the notice not to extend
for an additional year; (ii) if Employer fails to appoint Xxxxx X. Xxxxx as
President and Chief Executive Officer of Employer by December 31, 2005; or
(iii) if Xxxxx X. Xxxxx'x employment with Employer has been terminated
without cause by Employer or with cause by Xxxxx X. Xxxxx, as described in
the separate employment agreement between Xxxxx X. Xxxxx and Employer.
(C) While Employee is employed by Employer and for a period of one
year after termination of Employee's employment by Employer for reasons
other than those set forth in subsections 7(B) or (C) of this Agreement,
Employee shall not, directly or indirectly, as principal, agent, or
trustee, or through the agency of any corporation, partnership, trade
association, agent or agency, engage in any banking or bank-related
business which competes with the business of Employer as conducted during
Employee's employment by Employer if Employee's office with the competing
business is within a radius of twenty-five (25) miles of Employer's main
office or within a radius of twenty-five (25) miles of Employer's Greenwood
office. (Notwithstanding the foregoing, ownership of less than 2% of a
class of publicly held securities in any corporation shall not violate the
provisions of this subsection (C).) Furthermore, notwithstanding the
foregoing, the period for application of this restriction in subsection
9(C) shall be reduced from one year to six months following termination of
Employee's employment: (i) in the event of termination under Section 3 if
Employer provides the notice not to extend for an additional year; (ii) if
Employer fails to appoint Xxxxx X. Xxxxx as President and Chief Executive
Officer of Employer by December 31, 2005; or (iii) if Xxxxx X. Xxxxx'x
employment with Employer has been terminated without cause by Employer or
with cause by Xxxxx X. Xxxxx, as described in the separate employment
agreement between Xxxxx X. Xxxxx and Employer.
(D) If Employee's employment by Employer is terminated hereunder for
any reason, Employee will turn over immediately thereafter to Employer all
business correspondence, letters, papers, reports, customers' lists,
financial statements, credit reports or other confidential information or
documents of Employer or its affiliates in the possession or control of
Employee, all of which writings are and will continue to be the sole and
exclusive property of Employer or its affiliates.
If Employee's employment by Employer is terminated during the Term of this
Agreement for reasons set forth in subsections 7(B) or (C) of this Agreement,
Employee shall have no obligations to Employer with respect to the
noncompetition provisions under this Section 9.
10. Any termination of Employee's employment with Employer as contemplated
by Section 7 hereof, except in the circumstances of Employee's death, shall be
communicated by written "Notice of Termination" by the terminating party to the
other party hereto. Any "Notice of Termination" pursuant to subsections 7(A),
7(C) or 7(E) shall indicate the specific provisions of this Agreement relied
upon and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for such termination.
11. If Employee is suspended and/or temporarily prohibited from
participating in the conduct of Employer's affairs by a notice served under
section 8(e)(3) or (g)(1) of the Federal Deposit Insurance Act (12 U.S.C. ss.
1818(e)(3) or (g)(1)), Employer's obligations under this Agreement shall be
suspended as of the date of service, unless stayed by appropriate proceedings.
If the charges in the notice are dismissed, Employer shall (i) pay Employee all
or part of the compensation withheld while its obligations under this Agreement
were suspended and (ii) reinstate (in whole or in part) any of its obligations
which were suspended.
12. If Employee is removed and/or permanently prohibited from participating
in the conduct of Employer's affairs by an order issued under section 8(e)(4) or
(g)(1) of the Federal Deposit Insurance Act (12 U.S.C. ss. 1818(e)(4) or
(g)(1)), all obligations of Employer under this Agreement shall terminate as of
the effective date of the order, but vested rights of the parties to the
Agreement shall not be affected.
13. If Employer is in default (as defined in section 3(x)(1) of the Federal
Deposit Insurance Act), all obligations under this Agreement shall terminate as
of the date of default, but this provision shall not affect any vested rights of
Employer or Employee.
14. All obligations under this Agreement shall be terminated except to the
extent determined that the continuation of the Agreement is necessary for the
continued operation of Employer: (i) by the Director of the Office of Thrift
Supervision or his or her designee (the "Director"), at the time the Federal
Deposit Insurance Corporation enters into an agreement to provide assistance to
or on behalf of Employer under the authority contained in Section 13(c) of the
Federal Deposit Insurance Act; or (ii) by the Director at the time the Director
approves a supervisory merger to resolve problems related to operation of
Employer or when Employer is determined by the Director to be in an unsafe and
unsound condition. Any rights of the parties that have already vested, however,
shall not be affected by such action.
15. Anything in this Agreement to the contrary notwithstanding, in the
event that the Employer's independent public accountants determine that any
payment by the Employer to or for the benefit of the Employee, whether paid or
payable pursuant to the terms of this Agreement, would be non-deductible by the
Employer for federal income tax purposes because of Section 280G of the Internal
Revenue Code of 1986, as amended (the "Code"), then the amount payable to or for
the benefit of the Employee pursuant to this Agreement shall be reduced (but not
below zero) to the Reduced Amount. For purposes of this Section 15, the "Reduced
Amount" shall be the amount which maximizes the amount payable without causing
the payment to be non-deductible by the Employer because of Section 280G of the
Code. Any payments made to Employee pursuant to this Agreement or otherwise, are
subject to and conditional upon their compliance with 12 U.S.C. ss.1828(k) and
FDIC regulation 12 C.F.R. Part 359 (Golden Parachute and Indemnification
Payments) and any other regulations promulgated thereunder, to the extent
applicable to such parties.
16. If a dispute arises regarding the termination of Employee pursuant to
Section 7 hereof or as to the interpretation or enforcement of this Agreement
and Employee obtains a final judgment in his favor in a court of competent
jurisdiction or his claim is settled by Employer prior to the rendering of a
judgment by such a court, all reasonable legal fees and expenses incurred by
Employee in contesting or disputing any such termination or seeking to obtain or
enforce any right or benefit provided for in this Agreement or otherwise
pursuing his claim shall be paid by Employer, to the extent permitted by law.
17. Should Employee die after termination of his employment with Employer
while any amounts are payable to him hereunder, this Agreement shall inure to
the benefit of and be enforceable by Employee's executors, administrators,
heirs, distributees, devisees and legatees and all amounts payable hereunder
shall be paid in accordance with the terms of this Agreement to Employee's
devisee, legatee or other designee or, if there is no such designee, to his
estate.
18. For purposes of this Agreement, notices and all other communications
provided for herein shall be in writing and shall be deemed to have been given
when delivered or mailed by United States registered or certified mail, return
receipt requested, postage prepaid, addressed as follows:
If to Employee: Xxxx X. Xxxxxxx
00 Xxxx XX 000
Xxxxxxxx, XX 00000
If to Employer: Lincoln Bank
0000 X. Xxxx Xxxxxx
X.X. Xxx 000
Xxxxxxxxxx, Xxxxxxx 00000-0000
or to such address as either party hereto may have furnished to the other party
in writing in accordance herewith, except that notices of change of address
shall be effective only upon receipt.
19. The validity, interpretation, and performance of this Agreement shall
be governed by the laws of the State of Indiana, except as otherwise required by
mandatory operation of federal law.
20. Employer shall require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business or assets of Employer, by agreement in form and substance satisfactory
to Employee to expressly assume and agree to perform this Agreement in the same
manner and same extent that Employer would be required to perform it if no such
succession had taken place. Failure of Employer to obtain such agreement prior
to the effectiveness of any such succession shall be a material intentional
breach of this Agreement and shall entitle Employee to terminate his employment
with Employer pursuant to subsection 7(C) hereof. As used in this Agreement,
"Employer" shall mean Employer as hereinbefore defined and any successor to its
business or assets as aforesaid.
21. No provision of this Agreement may be modified, waived or discharged
unless such waiver, modification or discharge is agreed to in writing signed by
Employee and Employer. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of dissimilar provisions or conditions at the same or any prior
subsequent time. No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party which are not set forth expressly in this Agreement.
22. The invalidity or unenforceability of any provisions of this Agreement
shall not affect the validity or enforceability of any other provisions of this
Agreement which shall remain in full force and effect.
23. This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original but all of which together shall constitute one
and the same agreement.
24. This Agreement is personal in nature and neither party hereto shall,
without consent of the other, assign or transfer this Agreement or any rights or
obligations hereunder except as provided in Section 17 and Section 20 above.
Without limiting the foregoing, Employee's right to receive compensation
hereunder shall not be assignable or transferable, whether by pledge, creation
of a security interest or otherwise, other than a transfer by his will or by the
laws of descent or distribution as set forth in Section 17 hereof, and in the
event of any attempted assignment or transfer contrary to this paragraph,
Employer shall have no liability to pay any amounts so attempted to be assigned
or transferred.
IN WITNESS WHEREOF, the parties have caused the Agreement to be executed
and delivered as of the day and year first above set forth.
LINCOLN BANK
By:
--------------------------------------
T. Xxx Xxxxx, President
"Employer"
--------------------------------------
Xxxx X. Xxxxxxx
"Employee"
The undersigned, Lincoln Bancorp, sole shareholder of Employer, agrees that
if it shall be determined for any reason that any obligations on the part of
Employer to continue to make any payments due under this Agreement to Employee
is unenforceable for any reason, Lincoln Bancorp, agrees to honor the terms of
this Agreement and continue to make any such payments due hereunder to Employee
pursuant to the terms of this Agreement.
LINCOLN BANCORP
By:
--------------------------------------
T. Xxx Xxxxx, President
Exhibit F
TERMINATION AND RELEASE AGREEMENT
THIS TERMINATION AND RELEASE AGREEMENT (the "Agreement") is made and
entered into by and between Lincoln Bank ("Lincoln Bank") and
__________________________________ ("Employee") (collectively, the "Parties").
The Parties agree as follows:
1. Employee hereby voluntarily terminates employment with Lincoln Bank and
its predecessor, First Bank ("First Bank"), effective _____________, 200__.
2. In consideration of the agreements and promises made by Employee in this
Agreement, Lincoln Bank shall pay to Employee the sum of $ ___________________,
less usual and customary withholding and deductions. Lincoln 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 Lincoln Bank or First Bank, or any employee pension
benefit plan of Lincoln Bank or First Bank, but which, under the applicable plan
document, are not payable until after such effective date.
3. Employee specifically agrees that Lincoln Bank has complied with all of
its notification requirements under COBRA, and Lincoln 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 Lincoln Bank in
this Agreement, Employee hereby RELEASES AND FOREVER DISCHARGES Lincoln 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 Lincoln Bank or
First 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
State of Indiana, the laws of the State of Indiana governing employment
discrimination and civil rights, any and all other statutes of the State of
Indiana, 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 Lincoln 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. 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.
7. 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.
8. 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.
9. This Agreement shall be interpreted in accordance with the laws of the
State of Indiana.
10. 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 Lincoln
Bank and Employee, shall be legally binding upon the Parties, as well as upon
their heirs, assigns, executors, administrators, agents, and successors in
interest.
11. Employee may revoke this Agreement by giving written notice to Lincoln
Bank of such revocation at any time prior to seven 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.
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 ___________, 200__.
CAUTION: Lincoln Bank
READ BEFORE SIGNING
________________________________ By:___________________________
"Employee" Its:___________________________
"Lincoln Bank"
Exhibit G
[B&T Letterhead]
-------------------------
First Shares Bancorp, Inc.
000 Xxxxx Xxxxx Xxxx 000
Xxxxxxxxx, Xxxxxxx 00000
Re: Merger of First Shares Bancorp, Inc. with and into Lincoln Bancorp
Gentlemen:
We have acted as counsel to Lincoln Bancorp, an Indiana corporation
("Lincoln"), and Lincoln Bank, a federal savings bank and wholly-owned
subsidiary of Lincoln ("Lincoln Bank," and together with Lincoln, the "Lincoln
Entities") in connection with the preparation, execution, and delivery of that
certain Agreement and Plan of Reorganization dated March ___, 2004 (the "Merger
Agreement"), by and between Lincoln, Lincoln Bank, First Shares Bancorp, Inc.,
an Indiana corporation ("FSB"), and First Bank, an Indiana commercial bank
("First Bank"), pursuant to which FSB will be merged with and into Lincoln
effective as of ____________ (the "Effective Date"), and pursuant to which First
Bank will be merged with and into Lincoln Bank effective as of the Effective
Date. We have been asked to furnish this opinion to you on behalf of Lincoln in
connection with the Merger Agreement and pursuant to Section 7.02(c) of the
Merger Agreement.
Unless separately defined herein, the capitalized words and phrases used
herein shall have the meanings ascribed to them in the Merger Agreement.
In connection with the foregoing, we have been provided with and have
reviewed originals or copies, certified or otherwise identified to our
satisfaction, of the following documents:
A. The Merger Agreement.
B. The Articles of Merger, with related Plan of Merger, respecting
the merger of FSB with and into Lincoln.
C. The Articles of Combination and Articles of Merger respecting the
merger of First Bank with and into Lincoln Bank.
D. The Merger Agreement for Subsidiary Merger between Lincoln Bank
and First Bank dated March ___, 2004.
E. The Employment Agreements between Lincoln Bank and Xxxxx X. Xxxxx
and Xxxx X. Xxxxxxx.
F. The Articles of Incorporation and Code of By-laws of Lincoln and
all amendments thereto.
G. The Charter and By-laws of Lincoln Bank and all amendments
thereto (together with the Articles of Incorporation and Code of
By- laws of Lincoln, the "Lincoln Entities Organizational
Documents").
H. A Certificate of Existence from the Office of the Secretary of
State of the State of Indiana for Lincoln dated .
----------
I. A Certificate of Good Standing respecting Lincoln Bank issued by
the Office of Thrift Supervision.
J. Resolutions adopted by the Board of Directors of Lincoln and
Lincoln Bank, the shareholders of Lincoln, and the sole
shareholder of Lincoln Bank, each authorizing the transactions
contemplated by the Merger Agreement.
K. Such other documents and instruments as we have deemed necessary
or appropriate for the purposes of rendering the opinions set
forth herein.
The documents referred to in Paragraphs A through D above are sometimes referred
to collectively herein as the "Transaction Documents."
For purposes of this opinion, we have examined the above documents and have
made such examination of Indiana law and the laws of the United States as we
have deemed necessary and appropriate. We have relied upon the above documents
as to matters of fact. We have not independently checked or verified the
accuracy or completeness of the information set forth or certified in such
documents.
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 the Lincoln Entities except as otherwise 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 and agreement
contemplated by the Transaction Documents or on any other matters, legal or
otherwise, not specifically covered herein. In examining the above listed items,
we have assumed with respect to all documents examined by us the genuineness of
all signatures, the authenticity of all documents submitted to us as originals,
and the conformity to the originals of all documents submitted to us as
certified, conformed, photostatic or telefacsimile copies. In addition, in
making our examination of the documents described herein which have been
executed by parties other than directors and officers of the Lincoln Entities,
we have assumed that all such other parties had the power to enter into and
perform all obligations thereunder, that all such other parties were duly
authorized by all requisite action to execute, deliver and perform their
respective obligations thereunder, that all signatories on all such documents
were duly qualified and incumbent parties with the proper authority to execute
all such documents, and the due execution and delivery of all such documents and
the validity and binding effect of all such documents on such other parties.
As to certain facts material to our opinion which we did not independently
establish or verify, we have been furnished with, and have relied upon (i)
certificates of officers and other representatives of the Lincoln Entities
delivered to us in connection with this opinion (the "Officer's Certificates"),
(ii) information concerning the stock records of the Lincoln Entities, and (iii)
the representations and warranties of Lincoln set forth in the Merger Agreement.
With respect to matters relating to the organization and existence of Lincoln
addressed in the first paragraph below, we have obtained and relied upon a
Certificate of Existence from the Office of the Indiana Secretary of State for
Lincoln, and with respect to matters relating to the organization and existence
of Lincoln Bank addressed in the second paragraph below, we have obtained and
relied upon a Certificate of Good Standing respecting Lincoln Bank issued by the
Office of Thrift Supervision. Other than as specifically set forth herein, it is
understood that we have not undertaken any independent investigation to
determine the existence or absence of such facts.
As used herein, "to our knowledge" or words or phrases of similar import
shall mean (i) we have relied, without any independent investigation or inquiry,
solely upon the Officer's Certificates, and (ii) during the course of our
representation of the Lincoln Entities, 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 office 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. We express no opinion as to state or federal securities or tax
laws.
For purposes of this opinion, we also have assumed the following: (i) the
legal capacity of natural persons; (ii) that FSB and First Bank are duly
organized and validly existing; (iii) that the conduct of all of the parties to
the Transaction Documents and the other instruments and agreements contemplated
by the Transaction Documents has complied with any requirement of good faith,
fair dealing, and conscionability; (iv) that there has been no mutual mistake of
fact or misunderstanding, fraud, duress, or undue influence; and (v) that the
execution, delivery, and performance of the Transaction Documents and the other
instruments and agreements contemplated by the Transaction Documents will not
violate, contravene, conflict with or result in a breach of (A) any statute,
rule, regulation, ordinance or other law of any jurisdiction other than the
State of Indiana or the federal governmental of the United States, or (B) any
license, judgment, order, writ, injunction or decree of any court, arbitrator or
governmental agency or body or any indenture agreement or instrument to which
either of the Lincoln Entities is a party or by which either of the Lincoln
Entities or its properties are bound, the existence of which is not known to us.
Based solely on the foregoing examination, and subject to and relying on
the assumptions and other matters referred to above and subject to the
limitations and qualifications contained herein, we are of the opinion that:
1. Lincoln is a corporation duly organized and validly existing under the
laws of the State of Indiana and has all requisite corporate power and
authority (including all licenses, franchises, permits and other
governmental authorizations which are legally required) to engage in
the business and activities now conducted by it.
2. Lincoln Bank is a federal savings bank duly organized and validly
existing under federal law, and has full power and authority
(including all licenses, franchises, permits and other governmental
authorizations which are legally required) to engage in the business
activities now conducted by it.
3. Each of the Lincoln Entities has full right, legal power, and
authority to execute and deliver the Transaction Documents to which it
is a party, to perform its obligations under the Transaction
Documents, and to consummate the transactions contemplated thereby and
to be consummated thereby. The Transaction Documents and the
transactions contemplated thereby have been duly authorized by each of
the Lincoln Entities, as applicable and as necessary. The Transaction
Documents to which they are party have been duly executed and
delivered by the Lincoln Entities, respectively, and constitute valid
and binding agreements of the Lincoln Entities, enforceable against
the Lincoln Entities in accordance with their terms.
4. The execution, delivery, and performance of the Transaction Documents
by the Lincoln Entities and the consummation by the Lincoln Entities
of the transactions therein contemplated will not, directly or
indirectly, (i) violate, conflict with or result in the breach of any
provision of the Lincoln Entities Organizational Documents; (ii)
violate any law, rule or regulation applicable to, or, to our
knowledge, any judgment, order, or decree which is binding upon, the
Lincoln Entities; or (iii) to our knowledge, violate or result in a
breach of any of the terms of any contract or other agreement to which
either of the Lincoln Entities is a party, or binding on it or any of
its properties.
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 FSB or First 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 FSB and First 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 FSB and
First Bank and not to the Lincoln Entities, (ii) any provision of the
constituent documents of FSB or First 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 FSB or First 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 the Lincoln Entities 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 caselaw. 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.
I. 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.
J. This letter is solely for your information in connection with the
transaction specified in the first paragraph of this letter and may be
relied upon only by you in connection with such transaction. This
letter may not be quoted in whole or in part by any entity, nor is it
to be filed with any governmental agency or any other person or
institution without the prior written consent of this firm.
Sincerely,
XXXXXX & XXXXXXXXX
Exhibit H
[BM&E Letterhead]
-----------------
Lincoln Bancorp
0000 Xxxx Xxxx Xxxxxx
XX Xxx 000
Xxxxxxxxxx, XX 00000-0000
Re: Merger of First Shares Bancorp, Inc. with and into Lincoln Bancorp
Gentlemen:
We have acted as counsel to First Shares Bancorp, Inc., an Indiana
corporation ("FSB"), and First Bank, an Indiana commercial bank and wholly-owned
subsidiary of FSB ("First Bank," and together with FSB, the "FSB Entities") in
connection with the preparation, execution, and delivery of that certain
Agreement and Plan of Reorganization dated March ___, 2004 (the "Merger
Agreement"), by and between FSB, First Bank, Lincoln Bancorp, an Indiana
corporation ("Lincoln"), and Lincoln Bank, a federal savings bank ("Lincoln
Bank"), pursuant to which FSB will be merged with and into Lincoln effective as
of __________________ (the "Effective Date"), and pursuant to which First Bank
will be merged with and into Lincoln Bank effective as of the Effective Date. We
have been asked to furnish this opinion to you on behalf of FSB in connection
with the Merger Agreement and pursuant to Section 7.03(c) of the Merger
Agreement.
Unless separately defined herein, the capitalized words and phrases used
herein shall have the meanings ascribed to them in the Merger Agreement.
In connection with the foregoing, we have been provided with and have
reviewed originals or copies, certified or otherwise identified to our
satisfaction, of the following documents:
A. The Merger Agreement.
B. The Articles of Merger, with related Plan of Merger, respecting the
merger of FSB with and into Lincoln.
C. The Articles of Combination and Articles of Merger respecting the
merger of First Bank with and into Lincoln Bank.
D. The Merger Agreement for Subsidiary Merger between Lincoln Bank and
First Bank dated March ___, 2004.
E. The Employment Agreements between Lincoln Bank and Xxxxx X. Xxxxx and
Xxxx X. Xxxxxxx.
F. The Articles of Incorporation and By-laws of FSB and all amendments
thereto.
G. The Articles of Incorporation and Bylaws of First Bank and all
amendments thereto (together with the Articles of Incorporation and
By-laws of FSB, the "FSB Entities Organizational Documents").
H. A Certificate of Existence from the Office of the Indiana Secretary of
State for FSB dated ___________.
I. A Certificate of Existence respecting First Bank issued by the Indiana
Department of Financial Institutions and the Indiana Secretary of
State.
J. Resolutions adopted by the Board of Directors of FSB and First Bank,
by the shareholders of FSB, and by the sole shareholder of First Bank,
each authorizing the transactions contemplated by the Merger
Agreement.
K. Such other documents and instruments as we have deemed necessary or
appropriate for the purposes of rendering the opinions set forth
herein.
The documents referred to in Paragraphs A through D above are sometimes
referred to collectively herein as the "Transaction Documents."
For purposes of this opinion, we have examined the above documents and have
made such examination of Indiana law and the laws of the United States as we
have deemed necessary and appropriate. We have relied upon the above documents
as to matters of fact. We have not independently checked or verified the
accuracy or completeness of the information set forth or certified in such
documents.
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 the FSB Entities except as otherwise 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 and agreement
contemplated by the Transaction Documents or on any other matters, legal or
otherwise, not specifically covered herein. In examining the above listed items,
we have assumed with respect to all documents examined by us the genuineness of
all signatures, the authenticity of all documents submitted to us as originals,
and the conformity to the originals of all documents submitted to us as
certified, conformed, photostatic or telefacsimile copies. In addition, in
making our examination of the documents described herein which have been
executed by parties other than directors and officers of the FSB Entities, we
have assumed that all such other parties had the power to enter into and perform
all obligations thereunder, that all such other parties were duly authorized by
all requisite action to execute, deliver and perform their respective
obligations thereunder, that all signatories on all such documents were duly
qualified and incumbent parties with the proper authority to execute all such
documents, and the due execution and delivery of all such documents and the
validity and binding effect of all such documents on such other parties.
As to certain facts material to our opinion which we did not independently
establish or verify, we have been furnished with, and have relied upon (i)
certificates of officers and other representatives of the FSB Entities delivered
to us in connection with this opinion (the "Officer's Certificates"), (ii)
information concerning the stock records of the FSB Entities, and (iii) the
representations and warranties of FSB set forth in the Merger Agreement. With
respect to matters relating to the organization and existence of FSB addressed
in the first paragraph below, we have obtained and relied upon a Certificate of
Existence from the Office of the Indiana Secretary of State for FSB, and with
respect to matters relating to the organization and existence of First Bank
addressed in the second paragraph below, we have obtained and relied upon
Certificates of Existence respecting First Bank issued by the Indiana Department
of Financial Institutions and the Indiana Secretary of State. Other than as
specifically set forth herein, it is understood that we have not undertaken any
independent investigation to determine the existence or absence of such facts.
As used herein, "to our knowledge" or words or phrases of similar import
shall mean (i) we have relied, without any independent investigation or inquiry,
solely upon the Officer's Certificates, and (ii) during the course of our
representation of the FSB Entities, 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 office 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. We express no opinion as to state or federal securities or tax
laws.
For purposes of this opinion, we also have assumed the following: (i) the
legal capacity of natural persons; (ii) that Lincoln and Lincoln Bank are duly
organized and validly existing; (iii) that the conduct of all of the parties to
the Transaction Documents and the other instruments and agreements contemplated
by the Transaction Documents has complied with any requirement of good faith,
fair dealing, and conscionability; (iv) that there has been no mutual mistake of
fact or misunderstanding, fraud, duress, or undue influence; and (v) that the
execution, delivery, and performance of the Transaction Documents and the other
instruments and agreements contemplated by the Transaction Documents will not
violate, contravene, conflict with or result in a breach of (A) any statute,
rule, regulation, ordinance or other law of any jurisdiction other than the
State of Indiana or the federal governmental of the United States, or (B) any
license, judgment, order, writ, injunction or decree of any court, arbitrator or
governmental agency or body or any indenture agreement or instrument to which
either of the FSB Entities is a party or by which either of the FSB Entities or
its properties are bound, the existence of which is not known to us.
Based solely on the foregoing examination, and subject to and relying on
the assumptions and other matters referred to above and subject to the
limitations and qualifications contained herein, we are of the opinion that:
1. FSB is a corporation duly organized and validly existing under the
laws of the State of Indiana and has all requisite corporate power and
authority (including all licenses, franchises, permits and other
governmental authorizations which are legally required) to engage in
the business and activities now conducted by it.
2. First Bank is a commercial banking association duly organized and
validly existing under the laws of the State of Indiana, and has full
power and authority (including all licenses, franchises, permits and
other governmental authorizations which are legally required) to
engage in the business activities now conducted by it.
3. Each of the FSB Entities has full right, legal power, and authority to
execute and deliver the Transaction Documents to which it is a party,
to perform its obligations under the Transaction Documents, and to
consummate the transactions contemplated thereby and to be consummated
thereby. The Transaction Documents and the transactions contemplated
thereby have been duly authorized by each of the FSB Entities, as
applicable and as necessary. The Transaction Documents to which they
are party have been duly executed and delivered by the FSB Entities,
respectively, and constitute valid and binding agreements of the FSB
Entities, enforceable against the FSB Entities in accordance with
their terms.
4. The execution, delivery, and performance of the Transaction Documents
by the FSB Entities and the consummation by the FSB Entities of the
transactions therein contemplated will not, directly or indirectly,
(i) violate, conflict with or result in the breach of any provision of
the FSB Entities Organizational Documents or (ii) violate any law,
rule or regulation applicable to, or, to our knowledge, any judgment,
order, or decree which is binding upon, the FSB Entities.
5. At the Effective Time, there were no outstanding Commonly Registered
Equity Contracts, Collateralized Equity Contracts, Commonly Registered
Debentures, or Unrestricted Debentures, FSB has satisfied all
obligations and liabilities with respect thereto, and the transactions
in which the Contracts and Debentures were eliminated comply with the
terms of the Trust Indenture relating to the Debentures and the Master
Contract.
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 Lincoln or Lincoln 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 Lincoln and Lincoln 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 Lincoln
and Lincoln Bank and not to the FSB Entities, (ii) any provision of
the constituent documents of Lincoln or Lincoln 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 Lincoln or Lincoln 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 the FSB Entities 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 caselaw. 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.
I. 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 letter is solely for your information in connection with the
transaction specified in the first paragraph of this letter and may be relied
upon only by you in connection with such transaction. This letter may not be
quoted in whole or in part by any entity, nor is it to be filed with any
governmental agency or any other person or institution without the prior written
consent of this firm.
Sincerely,
BOSE XXXXXXXX & XXXXX LLP
