1
EXHIBIT 2
EXECUTION COPY
================================================================================
AGREEMENT AND PLAN OF MERGER
DATED AS OF THE 27th DAY OF JANUARY, 1997
BY AND AMONG
CITIZENS BANKING CORPORATION,
POLARIS ACQUISITION, INC.
AND
CB FINANCIAL CORPORATION
================================================================================
2
TABLE OF CONTENTS
Page
----
ARTICLE I. THE MERGER ........................................................ 3
SECTION 1.1. Structure of the Merger ........................................ 3
SECTION 1.2. Effect on Capital Stock ........................................ 3
SECTION 1.3. Exchange of Certificates ....................................... 6
SECTION 1.4. Alternative Structure........................................... 8
SECTION 1.5. Options ........................................................ 8
SECTION 1.6. Tax and Accounting Consequences ................................ 9
ARTICLE II. CONDUCT PENDING THE MERGER ........................................ 9
SECTION 2.1. Conduct of the Company's Business Prior to the Effective Time .. 9
SECTION 2.2. Forbearance by the Company ..................................... 9
SECTION 2.3. Cooperation of the Company ..................................... 12
SECTION 2.4. Conduct of Parent's Business Prior to the Effective Time ....... 12
SECTION 2.5. Cooperation of Parent .......................................... 13
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE COMPANY .................... 13
SECTION 3.1. Recitals True .................................................. 13
SECTION 3.2. Capital Stock .................................................. 13
SECTION 3.3. Due Organization ............................................... 13
SECTION 3.4. Authority ...................................................... 13
SECTION 3.5. Subsidiaries; Significant Investments .......................... 13
SECTION 3.6. Shareholder Approvals .......................................... 14
SECTION 3.7. No Violations .................................................. 14
SECTION 3.8. Consents and Approvals ......................................... 14
SECTION 3.9. Company Reports ................................................ 15
SECTION 3.10. Absence of Undisclosed Liabilities and Certain Changes or
Events.......................................................... 16
SECTION 3.11. Taxes........................................................... 16
SECTION 3.12. Absence of Claims............................................... 16
SECTION 3.13. Absence of Regulatory Actions................................... 16
SECTION 3.14. Agreements...................................................... 17
SECTION 3.15. Labor Matters................................................... 17
SECTION 3.16. Employee Benefit Plans.......................................... 18
SECTION 3.17. Properties...................................................... 19
SECTION 3.18. Knowledge as to Conditions...................................... 20
SECTION 3.19. Compliance with Laws............................................ 20
SECTION 3.20. Fees............................................................ 20
SECTION 3.21. Environmental Matters........................................... 20
(i)
3
Page
----
SECTION 3.22. Allowance....................................................... 23
SECTION 3.23. Antitakeover Provisions Inapplicable............................ 23
SECTION 3.24. Material Interests of Certain Persons........................... 24
SECTION 3.25. Insurance....................................................... 24
SECTION 3.26. Investment Securities........................................... 24
SECTION 3.27. Pooling of Interests............................................ 24
SECTION 3.28. Derivatives..................................................... 25
SECTION 3.29. Registration Obligations........................................ 25
SECTION 3.30. Books and Records............................................... 25
SECTION 3.31. Corporate Documents............................................. 25
SECTION 3.32. Company Action.................................................. 25
SECTION 3.33. Indemnification................................................. 25
SECTION 3.34. Fair Lending; Community Reinvestment Act........................ 25
SECTION 3.35. No Omission of Material Fact.................................... 25
SECTION 3.36. Conduct of Business............................................. 26
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF PARENT........................... 26
SECTION 4.1. Recitals True................................................... 26
SECTION 4.2. Capital Stock................................................... 26
SECTION 4.3. Due Organization................................................ 26
SECTION 4.4. Authority....................................................... 26
SECTION 4.5. Subsidiaries; Significant Investments........................... 26
SECTION 4.6. Shareholder Approvals........................................... 27
SECTION 4.7. No Violations................................................... 27
SECTION 4.8. Consents and Approvals.......................................... 27
SECTION 4.9. Parent Reports.................................................. 28
SECTION 4.10. Absence of Undisclosed Liabilities and Certain Changes or
Events.......................................................... 28
SECTION 4.11. Taxes........................................................... 29
SECTION 4.12. Absence of Claims............................................... 29
SECTION 4.13. Absence of Regulatory Actions................................... 29
SECTION 4.14. Agreements...................................................... 29
SECTION 4.15. Labor Matters................................................... 30
SECTION 4.16. Employee Benefit Plans.......................................... 30
SECTION 4.17. Properties...................................................... 31
SECTION 4.18. Knowledge as to Conditions...................................... 32
SECTION 4.19. Compliance with Laws............................................ 32
SECTION 4.20. Fees............................................................ 32
SECTION 4.21. Environmental Matters........................................... 32
SECTION 4.22. Allowance....................................................... 34
SECTION 4.23. Material Interests of Certain Persons........................... 34
(ii)
4
Page
----
SECTION 4.24. Insurance....................................................... 35
SECTION 4.25. Investment Securities........................................... 35
SECTION 4.26. Pooling of Interests............................................ 35
SECTION 4.27. Derivatives..................................................... 35
SECTION 4.28. Registration Obligations........................................ 35
SECTION 4.29. Books and Records............................................... 35
SECTION 4.30. Corporate Documents............................................. 35
SECTION 4.31. Parent Action................................................... 36
SECTION 4.32. Fair Lending; Community Reinvestment Act........................ 36
SECTION 4.33. No Omission of Material Fact.................................... 36
SECTION 4.34. Conduct of Business............................................. 36
ARTICLE V. ADDITIONAL AGREEMENTS............................................... 36
SECTION 5.1. Acquisition Proposals........................................... 36
SECTION 5.2. Certain Policies of the Company................................. 37
SECTION 5.3. Access and Information.......................................... 37
SECTION 5.4. Certain Filings, Consents and Arrangements...................... 38
SECTION 5.5. Antitakeover Statutes........................................... 38
SECTION 5.6. Directors' and Officers' Indemnification........................ 38
SECTION 5.7. Additional Agreements........................................... 39
SECTION 5.8. Publicity....................................................... 39
SECTION 5.9. Regulatory Matters.............................................. 39
SECTION 5.10. Shareholders' Meeting........................................... 40
SECTION 5.11. Affiliates; Publication of Combined Financial Results........... 41
SECTION 5.12. Authorization, Reservation and Listing.......................... 41
SECTION 5.13. Notification of Certain Matters................................. 41
SECTION 5.14. Board of Directors of Parent and Subsidiary..................... 42
SECTION 5.15. Retirement Plans................................................ 42
SECTION 5.16. Employment Agreements........................................... 42
SECTION 5.17. Director Deferral Plan.......................................... 43
ARTICLE VI. CONDITIONS TO CONSUMMATION......................................... 43
SECTION 6.1. Conditions to All Parties' Obligations.......................... 43
SECTION 6.2. Conditions to the Obligations of Parent and Merger Sub.......... 44
SECTION 6.3. Conditions to the Obligation of the Company..................... 45
ARTICLE VII. TERMINATION....................................................... 46
SECTION 7.1. Termination..................................................... 46
SECTION 7.2. Effect of Termination........................................... 47
(iii)
5
Page
----
ARTICLE VIII. EFFECTIVE DATE AND EFFECTIVE TIME................................ 47
SECTION 8.1. Effective Date and Effective Time............................... 47
ARTICLE IX. OTHER MATTERS...................................................... 48
SECTION 9.1. Certain Definitions; Interpretation............................. 48
SECTION 9.2. Survival........................................................ 48
SECTION 9.3. Waiver.......................................................... 48
SECTION 9.4. Counterparts.................................................... 48
SECTION 9.5. Governing Law................................................... 49
SECTION 9.6. WAIVER OF JURY TRIAL............................................ 49
SECTION 9.7. Expenses........................................................ 49
SECTION 9.8. Notices......................................................... 49
SECTION 9.9. Entire Agreement; Etc........................................... 50
SECTION 9.10. Assignment...................................................... 50
ANNEX 1
Stock Option Agreement
ANNEX 2
Affiliate Letter
(iv)
6
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of the 27th day of January, 1997
(this "Plan"), by and among Citizens Banking Corporation ("Parent"), Polaris
Acquisition, Inc., a wholly-owned subsidiary of Parent ("Merger Sub"), and CB
Financial Corporation (the "Company"). This Plan also constitutes a
"Memorandum of Understanding" between Parent, Merger Sub and the Company as
such term is used in Section B of Article XI of the Company's Articles of
Incorporation.
RECITALS:
A. Parent. Parent is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of Michigan, with its principal
executive offices located in Flint, Michigan. As of the date hereof, Parent
has 40,000,000 authorized shares of common stock, without par value, of which
no more than 14,344,847 shares were outstanding as of the date hereof,
5,000,000 authorized shares of preferred stock, without par value, none of
which were outstanding as of the date hereof, and has no other class of capital
stock authorized. Parent is a bank holding company duly registered with the
Board of Governors of the Federal Reserve System (the "Federal Reserve Board")
under the Bank Holding Company Act of 1956, as amended (the "BHC Act"). All
holders of Common Stock of Parent will be entitled to vote with respect to the
Merger (as that term is hereinafter defined). The number of shares of Parent
outstanding is subject to change prior to the Effective Time (as hereinafter
defined) as described in subparagraph E of these Recitals.
B. Merger Sub. Merger Sub is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Michigan, with its
principal executive offices located in Flint, Michigan. As of the date hereof,
the Merger Sub has 60,000 authorized shares of common stock of which 100 shares
were outstanding and no other class of capital stock authorized. All the
outstanding shares of the capital stock of Merger Sub are owned directly by
Parent. The number of shares of Merger Sub outstanding is not subject to
change prior to the Effective Time.
C. The Company. The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Michigan, with its
principal executive offices located in Jackson, Michigan. As of the date
hereof, the Company has 5,000,000 authorized shares of common stock, par value
$7.50 per share ("Company Common Stock"), of which 2,801,053 shares were
outstanding as of the date hereof, 100,000 authorized shares of preferred
stock, without par value, none of which were outstanding as of the date hereof,
and has no other class of capital stock authorized. The Company is a bank
holding company duly registered with the Federal Reserve Board under the BHC
Act. All holders of common stock of the Company will be entitled to vote
1
7
with respect to the Merger. The number of shares of Company Common Stock
outstanding is subject to change prior to the Effective Time as described in
subparagraph D of these Recitals.
D. Options, Etc. Neither the Company nor any of its subsidiaries has any
shares of its capital stock reserved for issuance, any outstanding option, call
or commitment relating to shares of its capital stock or any outstanding
securities, obligations or agreements convertible into or exchangeable for, or
giving any person any right (including, without limitation, preemptive rights)
to subscribe for or acquire from it, any shares of its capital stock, except as
set forth in the Company Disclosure Letter (as defined in Article III), which
includes details on the terms and conditions of any such options including the
grantee, vesting periods and exercise prices of any options.
E. Parent Options, Etc. Neither the Parent nor any of its subsidiaries
has any shares of its capital stock reserved for issuance, any outstanding
option, call or commitment relating to shares of its capital stock or any
outstanding securities, obligations or agreements convertible into or
exchangeable for, or giving any person any right (including, without
limitation, preemptive rights) to subscribe for or acquire from it, any shares
of its capital stock except as set forth in the Parent Reports (as defined in
Section 4.9).
F. Stock Option Agreement. As a condition and inducement to Parent's and
Merger Sub's willingness to enter into this Plan, the Company is entering into
a Stock Option Agreement dated as of the date hereof in the form of Annex 1
hereto (the "Stock Option Agreement") with Parent pursuant to which the Company
has granted to Parent an option to purchase shares of Company Common Stock.
G. Tax-Free Reorganization. The parties hereto intend that the Merger
provided for herein shall qualify as a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code of 1986, as amended (the "Code"),
and the rules and regulations promulgated thereunder, and this Plan is intended
to be and is adopted as a plan of reorganization within the meaning of Section
368 of the Code.
H. Board Approvals. The respective Boards of Directors of Parent, Merger
Sub and the Company have duly approved this Plan and have duly authorized its
execution and delivery and a majority of the members of the Company's Board of
Directors voting in favor of this Plan were duly elected and acting members of
the Board of Directors of the Company prior to the date hereof.
In consideration of their mutual promises and obligations hereunder, the
parties hereto adopt and make this Plan and prescribe the terms and conditions
hereof and the manner and basis of carrying it into effect, which shall be as
follows:
2
8
ARTICLE I. THE MERGER
SECTION 1.1. Structure of the Merger. On the Effective Date (as defined
in Section 8.1):
(a) Effect of the Merger. Merger Sub will merge (the "Merger") with and
into the Company, with the Company being the surviving corporation (the
"Surviving Corporation"), pursuant to the provisions of, and with the effect
provided in the Michigan Business Corporation Act (the "State Corporation
Law"). The separate corporate existence of Merger Sub shall thereupon cease.
The name of the surviving corporation shall be "CB Financial Corporation." The
Surviving Corporation shall continue to be governed by the State Corporation
Law and its separate corporate existence with all of its rights, privileges,
immunities, powers and franchises shall continue unaffected by the Merger. The
Merger shall have the effects set forth in Section 724 of the State Corporation
Law.
(b) Articles of Incorporation and By-laws. The articles of incorporation
and by-laws of the Surviving Corporation shall be the articles of incorporation
and by-laws of the Company immediately prior to the Effective Time (as defined
in Section 8.1).
(c) Directors and Officers. The Board of Directors of Merger Sub
immediately prior to the Effective Time shall be the initial Board of Directors
of the Surviving Corporation and the officers of the Merger Sub immediately
prior to the Effective Time shall be the initial officers of the Surviving
Corporation.
SECTION 1.2. Effect on Capital Stock. At the Effective Time (as defined
in Section 8.1), automatically and without any action on the part of any
holder of any of the following securities:
(a) Conversion of Outstanding Shares. Each share (a "Share") of Company
Common Stock issued and outstanding at the Effective Time (other than shares
held directly or indirectly by Parent, other than shares held in a fiduciary or
agency capacity or in satisfaction of a debt previously contracted), shall be
converted, subject to Sections 1.2(b) and 1.2(e), into the right to receive
1.489 shares (the "Exchange Ratio") of validly issued, fully paid and
nonassessable shares ("Parent Shares") of the common stock, without par value,
of Parent (the "Parent Common Stock"). The aggregate number of Parent Shares
that shall be issued in the Merger, subject to Section 1.2(b), shall be
referred to herein as the "Stock Amount."
(b) Company Termination Right; Parent Adjustment Right; Parent Termination
Right.
(i) Company Termination Right. The Company shall have the right
to elect to abandon the Merger and terminate this Plan, if
its Board of Directors so determines, whether before or
after approval of the Merger by the shareholders of the
Company or of Parent, if the Final Parent Stock Price (as
3
9
defined below) shall be less than $25.30 (the "Floor Price")
subject, however, to the following Subparagraph (ii):
(ii) Parent Adjustment Right. If the Company makes an election
to abandon the Merger under subparagraph (i) above, it shall
give written notice thereof to Parent within 2 calendar days
after the end of the Valuation Period (as defined below) or
such right shall be deemed waived. If the Company shall
have the right to terminate this Plan pursuant to
subparagraph (i) above but shall not have done so within
such period, or at any time within 2 calendar days of the
Company's having done so, and if the Final Parent Stock
Price is not less than $23.72, Parent shall have the right
but not the obligation to elect to increase the Exchange
Ratio by multiplying (A) the Exchange Ratio by (B) the
number of Parent Shares, carried to three decimal places,
which when multiplied by the Final Parent Stock Price will
equal the Floor Price; and increasing the Stock Amount such
that (A) the per Share value of the Parent Common Stock
received (valued at the Final Parent Stock Price) is at
least equal to the per Share consideration that would have
been received if the Final Parent Stock Price had been equal
to the Floor Price and (B) the Merger continues to qualify
as a reorganization within the meaning of Section 368 of the
Internal Revenue Code of 1986, as amended (the "Code") and
as a pooling of interests for accounting purposes. If
Parent elects to make the above-described adjustment within
such period, it shall give prompt written notice to the
Company thereof, and set forth the increase in the Parent
Common Stock which will be delivered to holders of Company
Common Stock, whereupon no abandonment or termination shall
be deemed to have occurred and this Plan shall remain in
effect in accordance with its terms (except the Exchange
Ratio and Stock Amount shall have been so increased). If
the Company shall not have made the election to abandon the
Merger under subparagraph (i) above and Parent shall not
have elected to make the above-described adjustment, then
the Stock Amount shall not be increased, the other
adjustments contemplated by the foregoing provisions of this
subparagraph shall not be made and this Plan shall remain in
effect in accordance with its terms.
(iii) Parent Termination Right. Notwithstanding any other
provision of this Plan, in the event that the Final Parent
Stock Price shall be more than $37.96 (the "Ceiling Price"),
Parent shall have the right to elect to abandon and
terminate this Plan, if its Board of Directors so
determines, whether before or after approval of the Merger
by the shareholders of the Company or of Parent; provided,
however, that this subparagraph (iii) shall not apply if the
Final Parent Stock Price exceeds the Ceiling Price and prior
to or during the Valuation Period (as defined below) (A)
Parent has signed a letter of intent or a definitive
agreement providing for, or (B) any person other than the
4
10
Company, its officers and directors or any of their
affiliates shall have made a bona fide proposal to Parent,
by public announcement or written communication that is the
subject of public disclosure to engage in (including any
situation in which such person shall have commenced, as such
term is defined in Rule 14d-2 under the Securities Exchange
Act of 1934, or shall have filed a registration statement
with respect to a tender offer to purchase Parent Common
Stock), or (C) Parent has publicly announced that it is
engaged in discussions, in each case, involving a
reorganization, merger, consolidation or similar transaction
between Parent and an unaffiliated third party, if as a
result of such transaction, shareholders of Parent
(immediately prior to the date such transaction is announced
or such agreement is executed) will not own a majority of
the voting stock of the corporation surviving the
transaction and a majority in value of the total outstanding
stock of such surviving corporation after the transaction.
(iv) The following definitions apply for purposes of this Section
1.2(b):
(A) "Final Parent Stock Price" shall mean the average of
the Closing Prices of Parent Common Stock for the
Valuation Period;
(B) "Closing Prices" shall mean the last sale price for
shares of Parent Common Stock listed on The Nasdaq
Stock Market (as reported by The Wall Street Journal,
or if not reported thereby, another authoritative
source) for each trading day during the Valuation
Period; and
(C) "Valuation Period" shall mean the twenty (20)
consecutive days on which shares of Parent Common Stock
are traded on The Nasdaq Stock Market ending on the
seventh (7th) calendar day immediately prior to the
anticipated Effective Time.
(c) Cancellation. Each Share held directly or indirectly by Parent, other
than shares held in a fiduciary or agency capacity or in satisfaction of a debt
previously contracted, and shares held as treasury stock of the Company, shall
be canceled and retired and shall cease to exist, and no exchange or payment
shall be made with respect thereto.
(d) Capital Stock of Merger Sub. The shares of common stock of Merger Sub
issued and outstanding immediately prior to the Effective Time shall be
converted into validly issued, fully paid and nonassessable shares of common
stock of the Surviving Corporation and shall thereafter constitute all of the
issued and outstanding shares of capital stock of the Surviving Corporation.
(e) Adjustments to Exchange Ratio. The Exchange Ratio and Stock Amount
shall be equitably adjusted to reflect fully the effect of any
reclassification, stock split, reverse split, stock
5
11
dividend (including any dividend or distribution of securities convertible into
Parent Common Stock or Company Common Stock), reorganization or other like
change with respect to Parent Common Stock or Company Common Stock, as
applicable, occurring after the date hereof and prior to the Effective Date.
(f) Fractional Shares. No certificates or script representing less than
one Parent Share shall be issued upon the surrender for exchange of a
certificate or certificates which immediately prior to the Effective Time
represented outstanding Shares (the "Certificates"). In lieu of any such
fractional share, each holder of Shares who would otherwise have been entitled
to a fraction of a Parent Share upon surrender of Certificates for exchange
shall be paid, upon such surrender, cash (without interest) determined by
multiplying (i) the Final Parent Stock Price by (ii) the fractional interest of
Parent Common Stock to which such holder would otherwise be entitled. As soon
as practicable after determining the amount of cash, if any, to be paid to
former holders of Company Common Stock with respect to any fractional shares of
Parent Common Stock, the Exchange Agent shall promptly pay such amounts to such
holders in accordance with this Article I.
SECTION 1.3. Exchange of Certificates.
(a) Exchange Agent. Parent shall supply, or shall cause to be supplied,
to or for the account of ChaseMellon Shareholder Services, L.L.C., or such
other bank (which may be a subsidiary of Parent) or trust company as shall be
designated by Parent and reasonably satisfactory to the Company (the "Exchange
Agent"), in trust for the benefit of the holders of Company Common Stock, for
exchange in accordance with this Section 1.3, through the Exchange Agent,
certificates evidencing the Parent Shares issuable pursuant to Section 1.2 in
exchange for outstanding Shares.
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, Parent will instruct the Exchange Agent to mail to each holder
of record of Certificates (i) a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon proper delivery of the Certificates to the Exchange Agent
and shall be in such form and have such other provisions as Parent and the
Company may reasonably specify), and (ii) instructions to effect the surrender
of the Certificates in exchange for the certificates evidencing Parent Shares.
Upon surrender of a Certificate for cancellation to the Exchange Agent together
with such letter of transmittal, duly executed, and such other customary
documents as may be required pursuant to such instructions, the holder of such
Certificate shall be entitled to receive in exchange therefor (A) certificates
evidencing that number of whole Parent Shares which such holder has the right
to receive in accordance with the Exchange Ratio in respect of the Shares
formerly evidenced by such Certificate, (B) any dividends or other
distributions to which such holder is entitled pursuant to Section 1.3(c), and
(C) cash in respect of fractional shares as provided in Section 1.2(f) (the
Parent Shares, dividends, distributions and cash being, collectively, the
"Merger Consideration"), and the Certificate so surrendered shall forthwith be
canceled. In the event of a transfer of ownership of Shares which is not
registered in the transfer records of the Company as of the Effective Time, the
Merger Consideration may be issued and paid in accordance with this Article I
to a transferee if the Certificate evidencing such Shares is presented to the
Exchange Agent,
6
12
accompanied by all documents required to evidence and effect such transfer
pursuant to this Section 1.3 and by evidence that any applicable stock transfer
taxes have been paid. Until so surrendered, each outstanding Certificate that,
prior to the Effective Time, represented Shares of Company Common Stock will be
deemed from and after the Effective Time, for all corporate purposes, other than
the payment of dividends and subject to Section 1.2(f), to evidence the
ownership of the number of full Parent Shares into which such shares of Company
Common Stock shall have been so converted. Parent Shares issued in the Merger
shall be issued as of and deemed to be outstanding as of the Effective Time.
Parent shall cause all such Parent Shares issued in accordance with the Merger
to be duly authorized, validly issued, fully paid and nonassessable.
(c) Distributions With Respect to Unexchanged Parent Shares. No dividends
or other distributions declared or made after the Effective Time with respect
to Parent Shares with a record date after the Effective Time shall be paid to
the holder of any unsurrendered Certificate with respect to the Parent Shares
they are entitled to receive until the holder of such Certificate shall
surrender such Certificate. Subject to applicable law, following surrender of
any such Certificate, there shall be paid to the record holder of the
certificates representing whole Parent Shares issued in exchange therefor,
without interest, (i) at the time of such surrender, the amount of dividends or
other distributions with a record date after the Effective Time theretofore
paid with respect to such whole Parent shares and (ii) at the appropriate
payment date, the amount of dividend or other distributions with a record date
after the Effective Time and a payment date subsequent to such surrender.
(d) Transfers of Ownership. If any certificate for Parent Shares is to be
issued in a name other than that which the Certificate surrendered in exchange
therefor is registered, it will be a condition to the issuance thereof that the
Certificate so surrendered will be properly endorsed and otherwise in proper
form for transfer and that the person requesting such exchange will have paid
to Parent or any agent designated by it any transfer or other taxes required by
reason of the issuance of a Certificate for Parent Shares in any name other
than that of the registered holder of the certificate surrendered, or have
established to the satisfaction of Parent or any agent designated by it that
such tax has been paid or is not payable.
(e) Withholding Rights. Parent or the Exchange Agent shall be entitled to
deduct and withhold from the Merger Consideration otherwise payable pursuant to
this Plan to any holder of Company Common Stock such amounts as Parent or the
Exchange Agent is required to deduct and withhold with respect to the making of
such payment under the Code, or any provision of state, local or foreign tax
law. To the extent that amounts are so withheld by Parent or the Exchange
Agent, such withheld amounts shall be treated for all purposes of this Plan as
having been paid to the holder of the Shares in respect of which such deduction
and withholding was made by Parent or the Exchange Agent.
(f) No Further Ownership Rights in Company Common Stock. The Merger
Consideration delivered upon the surrender for exchange of Shares in accordance
with the terms hereof shall be deemed to have been issued in full satisfaction
of all rights pertaining to such Shares. From and after the Effective Time,
there shall be no transfers on the stock transfer records of the
7
13
Company of any shares of Company Common Stock that were outstanding immediately
prior to the Effective Time. If after the Effective Time Certificates are
presented to the Surviving Corporation, they shall be canceled and exchanged
for the Merger Consideration deliverable in respect thereof pursuant to this
Plan in accordance with the procedures set forth in this Section 1.3.
(g) Unclaimed Merger Consideration. Any portion of the aggregate Merger
Consideration or the proceeds of any investments thereof that remains unclaimed
by the shareholders of the Company for six months after the Effective Time
shall be repaid by the Exchange Agent to Parent. Any shareholder of the
Company who has not theretofore complied with this Section 1.3 shall thereafter
be entitled to look only to Parent for payment of the Merger Consideration
deliverable in respect of each share of Company Common Stock held by such
shareholder without any interest thereon. If outstanding certificates for
shares of Company Common Stock are not surrendered or the payment for them is
not claimed prior to the date on which such payments would otherwise escheat to
or become the property of any governmental unit or agency, the unclaimed items
shall, to the extent permitted by abandoned property and any other applicable
law, become the property of Parent (and to the extent not in its possession
shall be paid over to Parent), free and clear of all claims or interest of any
person previously entitled to such claims. Notwithstanding the foregoing, none
of Parent, the Surviving Corporation, the Exchange Agent or any other person
shall be liable to any former holder of Company Common Stock for any amount
delivered to a public official pursuant to applicable abandoned property,
escheat or similar laws.
(h) Lost, Stolen or Destroyed Certificates. In the event any Certificate
shall have been lost, stolen or destroyed, upon the making of an affidavit of
that fact by the person claiming such Certificate to be lost, stolen or
destroyed and, if required by the Exchange Agent, the posting by such person of
a bond in such amount as the Exchange Agent may direct as indemnity against any
claim that may be made against it with respect to such Certificate, the
Exchange Agent will issue in exchange for such lost, stolen or destroyed
Certificate a check for the Merger Consideration deliverable in exchange
therefor.
SECTION 1.4. Alternative Structure. Notwithstanding anything in this
Plan to the contrary, Parent may specify that, before or after the Merger, any
of its direct or indirect subsidiaries and the Company and any of its direct or
indirect subsidiaries shall enter into transactions other than those described
in Article I hereof in order to effect the purposes of this Plan, and Parent and
the Company shall take all action necessary and appropriate to effect, or cause
to be effected, such transactions; provided, however, that no such specification
shall materially and adversely effect the timing of the consummation of the
transactions contemplated herein or the tax effect or economic benefits of the
Merger to the holders of Company Common Stock.
SECTION 1.5. Options. Immediately prior to or at the Effective Time,
each outstanding employee stock option to purchase shares of Company Common
Stock (an "Option") granted under (i) the CB Financial Corporation 1992
Employee Stock Option Plan (the "1992 Option Plan"), (ii) the CB Financial
Corporation Nonqualified and Deferred Compensation Plan for Independent
Directors (the "Director Plan") and (ii) any other stock option plan or
arrangement of the Company
8
14
(such plans or arrangements, together with the 1992 Option Plan and the Director
Plan, are hereinafter collectively referred to as the "Option Plans"), shall be
canceled, and each Option, whether or not then vested or exercisable, shall be
converted into the right to receive shares of Parent Common Stock at a ratio
which shall be determined by dividing (i) the difference of the product of the
Exchange Ratio and the Final Parent Stock Price less the exercise price of each
Option by (ii) the Final Parent Stock Price. The Company shall use all
reasonable efforts to effectuate the foregoing, including without limitation
amending the Option Plans and obtaining any necessary consents from Option
holders, in such form as is reasonably acceptable to Parent and which shall
include an acknowledgment that such transaction may be subject to applicable
withholding taxes, which the Company shall withhold as required by law;
provided, however, that prior to the Effective Time, the Board of Directors of
the Company shall adopt such resolutions or take such other actions as are
permitted and required to adjust, effective immediately prior to the Effective
Time, the terms of each outstanding Option under the Option Plans as to which
any such consent is not obtained prior to the Effective Time to provide that
such Option shall be converted into the right, upon exercise of such Option at
any time after the Effective Time, to receive shares of Parent Common Stock as
provided herein.
SECTION 1.6. Tax and Accounting Consequences. It is intended by the
parties hereto that the Merger shall (i) constitute a reorganization within
the meaning of Section 368 of the Code and (ii) qualify for accounting
treatment as a pooling of interests. The parties hereto hereby adopt this
Plan as a "plan of reorganization" within the meaning of Sections 1.368-2(g)
and 1.368-3(a) of the United States Treasury Regulations.
ARTICLE II. CONDUCT PENDING THE MERGER
SECTION 2.1. Conduct of the Company's Business Prior to the Effective Time.
Except as expressly provided in this Plan, during the period from the date of
this Plan to the Effective Time, the Company shall, and shall cause each of its
subsidiaries to, (i) conduct its business in the usual, regular and ordinary
course of business consistent with past practice, (ii) use its best efforts to
maintain and preserve intact its business organization, properties, leases,
employees and advantageous business relationships and retain the services of its
officers and key employees, (iii) take no action which would adversely affect or
delay the ability of the Company, Parent, Merger Sub or any subsidiary thereof
to obtain any necessary approvals, consents or waivers of any governmental
authority required for the transactions contemplated hereby or to perform its
covenants and agreements on a timely basis under this Plan and (iv) take no
action that is reasonably likely to have a Material Adverse Effect (as defined
in Section 9.1 hereof) on the Company.
SECTION 2.2. Forbearance by the Company. During the period from the date
of this Plan to the Effective Time, the Company shall not, and shall not
permit any of its subsidiaries, without the prior written consent of Parent, to:
9
15
(a) other than in the ordinary course of business consistent with past
practice, make any loan or advance or incur any indebtedness for borrowed
money, assume, guarantee, endorse or otherwise as an accommodation become
responsible for the obligations of any other person;
(b) adjust, split, combine or reclassify any capital stock; make, declare
or pay any dividend or make any other distribution on, or directly or
indirectly redeem, purchase or otherwise acquire, any shares of its capital
stock or any securities or obligations convertible into or exchangeable for any
shares of its capital stock, or grant any stock appreciation rights or grant,
sell or issue to any individual, corporation or other person any right or
option to acquire, or securities evidencing a right to convert into or acquire,
any shares of its capital stock, except for regular quarterly cash dividends
both (i) at a rate per share of Company Common Stock not in excess of $0.30 per
share and (ii) having record dates and payment dates consistent with past
practice, provided, however, that the Company may not declare regular quarterly
cash dividends after receipt of all regulatory approvals necessary for
consummation (excluding any applicable waiting periods) of the Merger to the
extent that the Company's shareholders would, after giving effect to the
Merger, be eligible to receive a dividend from Parent for the same quarter for
which the Company did not declare a dividend as a result of this subsection
2.2(b)(ii) and may not declare any regular quarterly cash dividends in any
quarter if with respect to such quarter the amount of the dividend exceeds the
amount of net income for such quarter; or issue any additional shares of
capital stock except pursuant to the exercise of Company options outstanding as
of the date hereof and on the terms in effect on the date hereof;
(c) other than in the ordinary course of business consistent with past
practice and pursuant to policies currently in effect, sell, transfer,
mortgage, encumber or otherwise dispose of any of its properties, leases or
assets to any person, or cancel, release or assign any indebtedness of any such
person, except pursuant to contracts or agreements in force as of the date of
this Plan;
(d) make any capital expenditures, other than capital expenditures made in
the ordinary course of business consistent with past practice in amounts not
exceeding $50,000, individually, or $200,000 in the aggregate;
(e) increase in any manner the compensation or fringe benefits of any of
its employees or directors, or create or institute, or make any payments
pursuant to, any severance plan or package, or pay any pension or retirement
allowance not required by any existing plan or agreement to any such employees
or directors, or become a party to, amend or commit itself to or fund or
otherwise establish any trust or account related to any Employee Plan (as
defined in Section 3.16), with or for the benefit of any employee, other than
general increases in compensation in the ordinary course of business consistent
with past practice not in excess of an average of 3% in any 12-month period or
any amendment required by applicable law (provided that any such amendment
shall provide the least increase to cost permitted under such applicable law),
or voluntarily accelerate the vesting of any stock options or other
compensation or benefit;
10
16
(f) (i) other than in the ordinary course of business
consistent with past practice in individual amounts not
to exceed $50,000 or $200,000 in the aggregate or in
securities transactions as provided in (f)(ii) below,
make any investment either by contributions to capital,
property transfers, or purchase of any property or
assets of any person, provided that the Company shall
make no acquisition of business operations without
Parent's prior consent; or
(ii) other than purchases of direct obligations of the
United States of America with a remaining maturity at
the time of purchase of 3 years or less, purchase or
acquire securities of any type; provided, however,
that, in the case of investment securities, the Company
may purchase (or permit any subsidiary of the Company
to purchase) investment securities if, within two
business days after the Company requests in writing
(which notice shall describe in detail the investment
securities to be purchased and the price thereof) that
Parent consent to the making of any such purchase,
Parent has approved such request in writing or has not
responded in writing to such request;
(g) enter into or terminate any contract or agreement, or make any change
in any of its leases or contracts, other than with respect to those involving
aggregate payments of less than, or the provision of goods or services with a
market value of less than, $50,000;
(h) settle any claim, action or proceeding involving any liability of the
Company or any of its subsidiaries for money damages in excess of $50,000 or
material restrictions upon the operations of the Company or any of its
subsidiaries;
(i) except in the ordinary course of business and in amounts less than
$250,000 in the aggregate waive or release any material right or collateral or
cancel or compromise any extension of credit or other debt or claim;
(j) make, renegotiate, renew, increase, extend or purchase any loan, lease
(credit equivalent), advance, credit enhancement or other extension of credit,
or make any commitment in respect of any of the foregoing, except (i) unsecured
loans, advances or commitments in amounts less than $250,000 made in the
ordinary course of business consistent with past practice and made in
conformity with all applicable policies and procedures, (ii) secured loans,
advances or commitments in an amount less than $1,000,000 made in the ordinary
course of business consistent with past practice and made in conformity with
all applicable policies and procedures and (iii) loans or advances as to which
the Company has a legally binding obligation to make such loan or advance as of
the date hereof and a description of which has been provided by the Company in
writing to Parent prior to the execution of this Plan;
(k) except as contemplated by Section 5.2, change its fiscal year or its
method of accounting as in effect at December 31, 1996, except as required by
changes in generally accepted accounting principles as concurred in by the
Company's independent auditors;
11
17
(l) knowingly take any action that would prevent or impede the Merger from
qualifying (i) for "pooling of interests" accounting treatment or (ii) as a
reorganization within the meaning of Section 368 of the Code; provided,
however, that nothing contained herein shall limit the ability of Parent to
exercise its rights under the Stock Option Agreement;
(m) enter into any new activities or lines of business, or cease to
conduct any activities or lines of business that it conducts on the date
hereof, or conduct any business activity not consistent with past practice;
(n) amend its articles of incorporation or its by-laws; or
(o) agree to, or make any commitment to, take any of the actions
prohibited by this Section 2.2 or any action which would make any of the
representations or warranties of the Company contained in this Plan incorrect
or prevent the Company from performing or cause the Company not to perform its
covenants hereunder.
SECTION 2.3. Cooperation of the Company. The Company shall, and the
Company shall cause each of its subsidiaries to, cooperate with Parent and
Merger Sub in completing the transactions contemplated hereby, including, as set
forth in Section 1.4, with respect to any merger or consolidation of the
Company's subsidiaries with Parent's subsidiary which the Parent may request and
the taking of actions and giving of notices related thereto and providing such
notices as may be required to terminate those contracts identified by Parent
prior to the Effective Time, which terminations shall be effective on the
Effective Date and conditioned upon the consummation of the Merger. Neither the
Company nor any of its subsidiaries shall take, cause to be taken or agree or
make any commitment to take any action: (i) that would cause any of the
representations or warranties that are set forth in Article III hereof not to be
true and correct, or (ii) that is inconsistent with or prohibited by Section 2.1
or Section 2.2.
SECTION 2.4. Conduct of Parent's Business Prior to the Effective Time.
Except as expressly provided in this Plan, during the period from the date of
this Plan to the Effective Time, Parent shall, and shall cause each of its
subsidiaries to, (i) conduct its business in the usual, regular and ordinary
course of business consistent with past practice, (ii) take no action outside of
the ordinary course of business (mergers and acquisitions by Parent shall be
deemed to be in the ordinary course of its business) which would adversely
affect or delay the ability of the Company, Parent, Merger Sub or any subsidiary
thereof to obtain any necessary approvals, consents or waivers of any
governmental authority required for the transactions contemplated hereby or to
perform its covenants and agreements on a timely basis under this Plan and (iii)
take no action that is reasonably likely to have a Material Adverse Effect on
Parent. Parent shall not knowingly take any action that would prevent or impede
the Merger from qualifying for "pooling of interests" accounting treatment or as
a reorganization within the meaning of Section 368 of the Code; provided,
however, that nothing contained herein shall limit the ability of Parent to
exercise its rights under the Stock Option Agreement.
12
18
SECTION 2.5 Cooperation of Parent. Parent shall, and Parent shall cause
each of its subsidiaries to, cooperate with the Company in completing the
transactions contemplated hereby and shall not take, cause to be taken or agree
to make any commitment to take any action (i) that is reasonably likely to have
a Material Adverse Effect on Parent, or (ii) that is inconsistent with or
prohibited by Section 2.4.
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Merger Sub, that, except
as specifically disclosed in a letter (the "Company Disclosure Letter") of the
Company delivered to Parent prior to the execution of this Plan (and making
specific reference to the Section of this Plan for which an exception is taken
or for which information is required):
SECTION 3.1. Recitals True. The facts set forth in the Recitals of this
Plan with respect to the Company are true and correct.
SECTION 3.2. Capital Stock. All outstanding shares of capital stock of
the Company and its subsidiaries have been duly authorized and validly issued,
are fully paid and non-assessable and are not subject to any preemptive rights.
SECTION 3.3. Due Organization. Each subsidiary of the Company is a
corporation or banking organization duly incorporated, validly existing and in
good standing under the laws of the state of its incorporation. Each of the
Company's subsidiaries which is a bank is a member of the Bank Insurance Fund
("BIF") of the Federal Deposit Insurance Corporation (the "FDIC") and all of its
deposits are subject to assessment by the BIF.
SECTION 3.4. Authority. Each of the Company and its subsidiaries has the
power and authority, and is duly qualified in all jurisdictions (except for such
qualifications the absence of which, in the aggregate, would not have a
Material Adverse Effect on Company) where such qualification is required, to
carry on its business as it is now being conducted and to own all its
properties and assets, and it has all federal, state, local, and foreign
governmental authorizations necessary for it to own or lease its properties
and assets and to carry on its business as it is now being conducted.
SECTION 3.5. Subsidiaries; Significant Investments. The only
subsidiaries of the Company are set forth in the Company Disclosure Letter.
All of the shares of capital stock of each subsidiary of the Company are owned
directly and of record by the Company or a wholly-owned subsidiary of the
Company, in each such case free and clear of all liens, claims, encumbrances and
restrictions on transfer ("Liens") and there are no Options with respect to any
such capital stock. Neither the Company nor any of its subsidiaries maintains a
liquidation or similar type of account. None of the Company or any of such
subsidiaries owns any equity securities, any security
13
19
convertible or exchangeable into an equity security or any rights to acquire
any equity security except those of its subsidiaries as listed in the Company
Disclosure Letter.
SECTION 3.6. Shareholder Approvals.
(a) Subject to the receipt of required shareholder approval of this Plan,
this Plan and the transactions contemplated herein have been duly authorized by
all necessary corporate action of the Company. In addition, the Company has
received the written opinion of ABN AMRO Chicago Corporation to the effect that
the Merger Consideration to be received by the shareholders of the Company is
fair to such shareholders from a financial point of view and will provide as
soon as practicable after the date hereof a true and complete copy of such
opinion to Parent. Subject to receipt of (i) such shareholder approval and
(ii) the required approvals, consents or waivers of governmental authorities
referred to in Section 6.1(b), this Plan is a valid and binding agreement of
the Company enforceable against it in accordance with its terms, subject as to
enforcement to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors, rights and to general equity principles.
(b) The affirmative vote of a majority of the outstanding shares of
Company Common Stock entitled to vote on this Plan is the only shareholder vote
required for approval of the Plan and consummation of the Merger and the other
transactions contemplated hereby.
SECTION 3.7. No Violations. The execution, delivery and performance of
this Plan by the Company do not, and the consummation of the transactions
contemplated hereby by the Company and each of its subsidiaries will not,
constitute (a) a breach or violation of, or a default under, any law, rule or
regulation or any judgment, decree, order, governmental permit or license, or
agreement, indenture or instrument of the Company or any subsidiary of the
Company or to which the Company or any of its subsidiaries (or any of their
respective properties) is subject, or enable any person to enjoin the Merger or
the other transactions contemplated hereby, (b) a breach or violation of, or a
default under, the articles of incorporation or by-laws or similar
organizational documents of the Company or any subsidiary of the Company or (c)
a breach or violation of, or a default under (or an event which with due notice
or lapse of time or both would constitute a default under), or result in the
termination of, accelerate the performance required by, or result in the
creation of any lien, pledge, security interest, charge or other encumbrance
upon any of the properties or assets of the Company or any subsidiary of the
Company under, any of the terms, conditions or provisions of any note, bond,
indenture, deed of trust, loan agreement or other agreement, instrument or
obligation to which the Company or any subsidiary of the Company is a party, or
to which any of their respective properties or assets may be bound or affected.
SECTION 3.8. Consents and Approvals. Except for (a) the filing with the
Securities and Exchange Commission (the "SEC") of a joint proxy statement in
definitive form relating to the meetings of the Company's and Parent's
shareholders (the "Company Meeting" and "Parent Meeting," respectively) to be
held in connection with this Plan and the transactions contemplated hereby (the
"Joint Proxy Statement") and the registration statement on Form S-4 (the "S-4")
in which
14
20
the Joint Proxy Statement will be included as a prospectus, (b) the filing of
the Certificate of Merger with the Department of Consumer and Industry Services
pursuant to the State Corporation Law, and (c) the approval of this Plan by the
requisite vote of the shareholders of the Company, no consents or approvals of
or filings or registrations with any court, administrative agency or commission
or other governmental authority or instrumentality or with any third party are
necessary in connection with (i) the execution and delivery by the Company of
this Plan and (ii) the consummation by the Company of the Merger and the other
transactions contemplated hereby.
SECTION 3.9. Company Reports.
(a) As of their respective dates, neither the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1995, nor any other document
filed by the Company subsequent to December 31, 1995 under Section 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended (the
"Securities Exchange Act"), each in the form (including exhibits) filed with
the SEC) (collectively, the "Company Reports"), contained or will contain any
untrue statement of a material fact or omitted or will omit to state a material
fact required to be stated therein or necessary to make the statements made
therein, in light of the circumstances under which they were made, not
misleading and the Company Reports complied in all material respects with the
requirements of the Securities Exchange Act. Each of the consolidated balance
sheets contained or incorporated by reference in the Company Reports (including
in each case any related notes and schedules) fairly presented in all material
respects the financial position of the entity or entities to which it relates
as of its date and each of the consolidated statements of income, consolidated
statements of shareholders, equity and consolidated statement of cash flows,
contained or incorporated by reference in the Company Reports (including in
each case any related notes and schedules), fairly presented in all material
respects the results of operations, stockholders, equity and cash flows, as the
case may be, of the entity or entities to which it relates for the periods set
forth therein (subject, in the case of unaudited interim statements, to normal
year-end audit adjustments that are not material in amount or effect), in each
case in accordance with generally accepted accounting principles consistently
applied during the periods involved, except as may be noted therein.
(b) Except with respect to the filing of a registration statement on Form
S-8 in connection with the Company's 401(k) Plan, which is currently in
process, the Company and each of its subsidiaries have each timely filed all
reports, registrations and statements, together with any amendments required to
be made with respect thereto, that they were required to file since December
31, 1993 with (i) the SEC, (ii) the Federal Reserve Board, (iii) the FDIC, (iv)
the BIF, (vi) any state banking or insurance commission or other regulatory
authority (each, a "State Regulator") (such entities collectively, the
"Regulatory Agencies"), and (vii) the National Association of Securities
Dealers, Inc. and any other self-regulatory organization (an "SRO"), and all
other material reports and statements required to be filed by them since
December 31, 1993, including, without limitation, any report or statement
required to be filed pursuant to the laws, rules or regulations of the United
States, the Regulatory Agencies or any SRO, and have paid all fees and
assessments due and payable in connection therewith.
15
21
SECTION 3.10. Absence of Undisclosed Liabilities and Certain Changes or
Events. Since December 31, 1995, the Company and its subsidiaries have
conducted their business only in the ordinary course of business consistent
with past practice and have not incurred any material liability, except in the
ordinary course of their business consistent with past practice. Since
December 31, 1995, there has not been any change in the condition (financial or
other), properties, business, results of operations or prospects of the Company
or its subsidiaries which, individually or in the aggregate, has had, or is
reasonably likely to have, a Material Adverse Effect on the Company.
SECTION 3.11. Taxes. All federal, state, local, and foreign tax returns
required to be filed by or on behalf of the Company or any of its subsidiaries
have been timely filed or requests for extensions have been timely filed and any
such extension shall have been granted and not have expired, and all such filed
returns are complete and accurate in all respects. All taxes shown on such
returns have been paid in full or adequate provision has been made for any such
taxes on the Company's balance sheet (in accordance with generally accepted
accounting principles). There is no audit examination, deficiency, or refund
litigation with respect to any taxes of the Company or any of its subsidiaries
that could result in a determination. All taxes, interest, additions, and
penalties due with respect to completed and settled examinations or concluded
litigation relating to it have been paid in full or adequate provision has been
made for any such taxes on the Company's balance sheet (in accordance with
generally accepted accounting principles). The Company has not executed an
extension or waiver of any statute of limitations on the assessment or
collection of any material tax due that is currently in effect.
SECTION 3.12. Absence of Claims. Except as set forth in the Company
Disclosure Letter and except for retail collections and mortgage foreclosures
in the ordinary course of business, as of the date hereof, no litigation,
proceeding or controversy before any court or governmental agency is pending,
and there is no pending claim, action or proceeding against the Company or any
of its subsidiaries, and, to the best of the Company's knowledge after
reasonable inquiry, no such litigation, proceeding, controversy, claim or
action has been threatened or is contemplated.
SECTION 3.13. Neither the Company nor any of its subsidiaries is a party
to any cease and desist order, written agreement or memorandum of
understanding with, or a party to any commitment letter or similar undertaking
to, or is subject to any order or directive by, or is a recipient of any
extraordinary supervisory letter from, or has adopted any board resolutions at
the request of, federal or state governmental authorities charged with the
supervision or regulation of depository institutions or depository institution
holding companies or engaged in the insurance of bank and/or savings and loan
deposits ("Government Regulators") nor has it been advised by any Government
Regulator that it is contemplating issuing or requesting (or is considering the
appropriateness of issuing or requesting) any such order, directive, written
agreement, memorandum of understanding, extraordinary supervisory letter,
commitment letter, board resolutions or similar undertaking.
16
22
SECTION 3.14. Agreements.
(a) Except for this Plan and arrangements made in the ordinary course of
business, the Company and its subsidiaries are not bound by any material
contract (as defined in Item 601(b)(10) of Regulation S-K) to be performed
after the date hereof that has not been filed with or incorporated by reference
in the Company Reports filed prior to the date of this Plan. Except as
disclosed in the Company Reports filed prior to the date of this Plan and
except as set forth in the Company Disclosure Letter, neither the Company nor
any of its subsidiaries is a party to an oral or written (i) other than with
respect to the agreement referenced in Section 3.20 hereof, consulting
agreement (other than data processing, software programming and licensing
contracts entered into in the ordinary course of business) involving the
payment of more than $25,000 per annum, (ii) agreement with any executive
officer or other key employee of the Company or any of its subsidiaries the
benefits of which are contingent, or the terms of which are materially altered,
upon the occurrence of a transaction involving the Company or any of its
subsidiaries of the nature contemplated by this Plan and which provides for the
payment of in excess of $25,000, (iii) agreement with respect to any executive
officer of the Company or any of its subsidiaries providing any term of
employment or compensation guarantee extending for a period longer than one
year and for the payment of in excess of $25,000 per annum, (iv) agreement or
plan, including any stock option plan, stock appreciation rights plan,
restricted stock plan or stock purchase plan, any of the benefits of which will
be increased, or the vesting of the benefits of which will be accelerated, by
the occurrence of any of the transactions contemplated by this Plan or the
value of any of the benefits of which will be calculated on the basis of any of
the transactions contemplated by this Plan, (v) agreement containing covenants
that limit the ability of the Company or any of its subsidiaries to compete in
any line of business or with any person, or that involve any restriction on the
geographic area in which, or method by which, the Company (including any
successor thereof) or any of its subsidiaries may carry on its business (other
than as may be required by law or any regulatory agency) or (vi) agreement
(other than agreements relating to credit or credit equivalent type
transactions by bank subsidiaries of the Company) containing provisions under
which the Company or any of its subsidiaries is obligated to pay in excess of
$50,000 per annum.
(b) Neither the Company nor any of its subsidiaries is in default under or
in violation of any provision of any note, bond, indenture, mortgage, deed of
trust, loan agreement or other agreement to which it is a party or by which it
is bound or to which any of its respective properties or assets is subject.
SECTION 3.15. Labor Matters. Neither the Company nor any of its
subsidiaries is a party to, or is bound by, any collective bargaining
agreement, contract, or other agreement or understanding with a labor union or
labor organization, nor is the Company or any of its subsidiaries the subject
of any proceeding asserting that it has committed an unfair labor practice or
seeking to compel it or any such subsidiary to bargain with any labor
organization as to wages and conditions of employment, nor is there any strike,
other labor dispute or organizational effort involving the Company or any of
its subsidiaries pending or threatened.
17
23
SECTION 3.16. Employee Benefit Plans. The Company Disclosure Letter
contains a complete and correct list of the names and current annual salary or
director fees, as applicable, for each director and officer of the Company and
each of its subsidiaries, including those whose compensation was paid in whole
or in part by persons or entities other than the Company or any of its
subsidiaries (bonus, commission and perquisite arrangements, written or
unwritten, with respect to such persons will be provided to Parent within ten
(10) calendar days of the date hereof). The Company Disclosure Letter also
contains a complete list of all pension, retirement, stock option, stock
purchase, stock ownership, savings, stock appreciation right, profit sharing,
deferred compensation, consulting, bonus, group insurance, severance and other
benefit plans, contracts, agreements, arrangements, including, but not limited
to, "employee benefit plans", as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), incentive and
welfare policies, contracts, plans and arrangements and all trust agreements
related thereto in respect to any present or former directors, officers, or
other employees of the Company or any of its subsidiaries (hereinafter referred
to collectively as the "Employee Plans"). (i) All of the Employee Plans comply
in all material respects with all applicable requirements of ERISA, the Code and
other applicable laws; neither the Company nor any of its subsidiaries has
engaged in a "prohibited transaction" (as defined in Section 406 of ERISA or
Section 4975 of the Code) with respect to any Employee Plan which could subject
the Company or any subsidiary to a material tax or penalty under Section 4975 of
the Code or Section 502(i) of ERISA; and all contributions required to be made
under the terms of any Employee Plan have been timely made or have been
reflected on the Company's balance sheet (ii) no liability to the Pension
Benefit Guaranty Corporation (the "PBGC") has been or is expected by the Company
or any of its subsidiaries to be incurred with respect to any Employee Plan
which is subject to Title IV of ERISA (a "Pension Plan"), or with respect to any
"single employer plan" (as defined in Section 4001(a)(15) of ERISA) currently or
formerly maintained by the Company or any entity (an "ERISA Affiliate") which is
considered one employer with the Company under Section 4001 of ERISA or Section
414 of the Code (an "ERISA Affiliate Plan"); and no proceedings have been
instituted to terminate any Pension Plan or ERISA Affiliate Plan and no
condition exists that presents a material risk of the institution of such
proceedings; (iii) no Pension Plan or ERISA Affiliate Plan had an "accumulated
funding deficiency" (as defined in Section 302 of ERISA (whether or not waived))
as of the last day of the end of the most recent plan year ending prior to the
date hereof; the fair market value of the assets of each Pension Plan and ERISA
Affiliate Plan exceeds the present value of the "benefit liabilities" (as
defined in Section 4001(a)(16) of ERISA) under such Pension Plan or ERISA
Affiliate Plan as of the end of the most recent plan year with respect to the
respective Pension Plan or ERISA Affiliate Plan ending prior to the date hereof,
calculated on the basis of the actuarial assumptions used in the most recent
actuarial valuation for such Pension Plan or ERISA Affiliate Plan prior to the
date hereof, and there has been no material change in the financial condition of
any such Pension Plan or ERISA Affiliate Plan since the last day of the most
recent plan year; and no notice of a "reportable event" (as defined in Section
4043 of ERISA) for which the 30-day reporting requirement has not been waived
has been required to be filed for any Pension Plan or ERISA Affiliate Plan
within the 12-month period ending on the date hereof; (iv) neither the Company
nor any subsidiary of the Company has provided or is required to provide,
security to any Pension Plan or to any ERISA Affiliate Plan pursuant to section
401(a)(29) of the Code; (v) neither the Company, its subsidiaries,
18
24
nor any ERISA Affiliate has contributed to any "multiemployer plan", as defined
in Section 3(37) of ERISA, on or after September 26, 1980; (vi) each Employee
Plan of the Company or any of its subsidiaries which is an "employee pension
benefit plan" (as defined in Section 3(2) of ERISA) has received a favorable
determination letter from the Internal Revenue Service deeming such plan (a
"Qualified Plan") to be qualified under Section 401(a) of the Code; and neither
the Company nor its subsidiaries are aware of any circumstances likely to result
in revocation of any such favorable determination letter; (vii) each Qualified
Plan which is an "employee stock ownership plan" (as defined in Section
4975(e)(7) of the Code) has satisfied all of the applicable requirements of
Sections 409 and 4975(e)(7) of the Code and the regulations thereunder; all
Employee Plans covering foreign participants comply in all material respects
with applicable local law , and there are no material unfunded liabilities with
respect to any Employee Plan which covers foreign employees; (viii) there is no
pending or threatened litigation, administrative action or proceeding relating
to any Employee Plan; (ix) there has been no announcement or commitment by the
Company or any subsidiary of the Company to create an additional Employee Plan,
or to amend an Employee Plan except for amendments required by applicable law
which do not increase the cost of such Employee Plan; and the Company and its
subsidiaries do not have any obligations for retiree health and life benefits
under any Employee Plan except as set forth in the Company Disclosure Letter,
and there are no such Employee Plans that cannot be amended or terminated
without incurring any liability thereunder; (x) with respect to the Company or
any of its subsidiaries, except as specifically identified in the Company
Disclosure Letter, the execution and delivery of this Plan and the consummation
of the transactions contemplated hereby will not result in any payment or series
of payments by the Company or any subsidiary of the Company to any person which
is an "excess parachute payment" (as defined in Section 28OG of the Code) under
any Employee Plan, increase or secure (by way of a trust or other vehicle) any
benefits payable under any Employee Plan, or accelerate the time of payment or
vesting of any such benefit, and (xi) with respect to each Employee Plan, the
Company has supplied to Parent a true and correct copy, if applicable, of (A)
the two most recent annual reports on the applicable form of the Form 5500
series filed with the Internal Revenue Service (the "IRS',), (B) such Employee
Plan, including amendments thereto, (C) each trust agreement and insurance
contract relating to such Employee Plan, including amendments thereto, (D) the
most recent summary plan description for such Employee Plan, including
amendments thereto, if the Employee Plan is subject to Title I of ERISA, (E) the
most recent actuarial report or valuation if such Employee Plan is a Pension
Plan, (F) the most recent determination letter issued by the IRS if such
Employee Plan is a Qualified Plan and (G) the most recent financial statements
and auditor's report.
SECTION 3.17. Properties. Except as disclosed in the Company Reports
filed prior to the date hereof, the Company and its subsidiaries (a) have
good, clear and marketable title to all the properties and assets which are
material to the Company's business on a consolidated basis and are reflected in
the latest audited statement of condition included in the Company Reports as
being owned by the Company and its subsidiaries or acquired after the date
thereof (except properties sold or otherwise disposed of since the date
thereof), free and clear of all Liens except (i) statutory Liens securing
payments not yet due, (ii) Liens on assets of subsidiaries of the Company
incurred in the ordinary course of their business and (iii) such imperfections
or irregularities of title or Liens as do
19
25
not affect the use of the properties or assets subject thereto or affected
thereby or otherwise materially impair business operations at such properties,
in either case in such a manner as to have a Material Adverse Effect on the
Company, and (b) are collectively the lessee of all leasehold estates which are
material to the Company's business on a consolidated basis and are reflected in
the latest audited financial statements included in the Company Reports or
acquired after the date thereof (except for leases that have expired by their
terms or as to which the Company has agreed to terminate or convey since the
date thereof) and is in possession of the properties purported to be leased
thereunder, and each such lease is valid without default thereunder by the
lessee or, to the Company's knowledge, the lessor, other than defaults that
would not have a Material Adverse Effect on the Company. Each of the Company
and each of its subsidiaries enjoys peaceful and undisturbed possession of all
such leases. Substantially all the Company's and its subsidiaries, owned
buildings, structures and equipment have been well maintained and are in good
and serviceable condition, normal wear and tear excepted.
SECTION 3.18. Knowledge as to Conditions. As of the date hereof, the
Company knows of no reason why the approvals, consents and waivers of
governmental authorities referred to in Section 6.1(b) should not be obtained
without the imposition of any condition of the type referred to in the
provisos thereto.
SECTION 3.19. Compliance with Laws. Since December 31, 1993, the Company
and each of its subsidiaries have complied in all material respects with all
applicable laws. The Company and each of its subsidiaries has all permits,
licenses, certificates of authority, orders and approvals of, and has made all
filings, applications and registrations with, federal, state, local and foreign
governmental or regulatory bodies that are required in order to permit it to
carry on its business as it is presently conducted; all such permits, licenses,
certificates of authority, orders and approvals are in full force and effect,
and, to the best knowledge of the Company, no suspension or cancellation of any
of them is threatened.
SECTION 3.20. Fees. Other than financial advisory services performed for
the Company by ABN AMRO Chicago Corporation in an amount and pursuant to an
agreement both previously disclosed to Parent and attached to the Company
Disclosure Letter, neither the Company nor any of its subsidiaries, nor any of
their respective officers, directors, employees or agents, has employed any
broker or finder or incurred any liability for any financial advisory fees,
brokerage fees, commissions, or finder's fees, and no broker or finder has acted
directly or indirectly for the Company or any subsidiary of the Company, in
connection with the Plan or the transactions contemplated hereby.
SECTION 3.21. Environmental Matters.
(a) Except as will not, individually or in the aggregate, involve any
liability of the Company or any of its subsidiaries in excess of
$1,000,000, with respect to the Company and each of its
subsidiaries:
20
26
(i) Each of the Company and its subsidiaries, the
Participation Facilities, and the Loan Properties (each
as defined below) are, and have been, in substantial
compliance with all Environmental Laws (as defined
below);
(ii) There is no suit, claim, action, demand, executive or
administrative order, directive, investigation or
proceeding pending or threatened, before any court,
governmental agency or board or other forum against it
or any of its subsidiaries or any Participation
Facility (A) for alleged noncompliance (including by
any predecessor) with, or liability under, any
Environmental Law or (B) relating to the presence of or
release into the environment of any Hazardous Material
(as defined below) or oil, whether or not occurring at
or on a site owned, leased or operated by it or any of
its subsidiaries or any Participation Facility;
(iii) There is no suit, claim, action, demand, executive or
administrative order, directive, investigation or
proceeding pending or threatened, before any court,
governmental agency or board or other forum relating to
or against any Loan Property (or the Company or any of
its subsidiaries in respect of such Loan Property) (A)
relating to alleged noncompliance (including by any
predecessor) with, or liability under, any
Environmental Law or (B) relating to the presence of or
release into the environment of any Hazardous Material
or oil whether or not occurring at or on a site owned,
leased or operated by a Loan Property;
(iv) There is no reasonable basis for any suit, claim,
action, demand, executive or administrative order,
directive or proceeding of a type described in Section
3.21(a)(ii) or (iii);
(v) The properties currently or formerly owned or operated
by the Company or any of its subsidiaries (including,
without limitation, soil, groundwater or surface water
on, under or adjacent to the properties, and buildings
thereon) do not contain any Hazardous Material (as
defined below) other than as permitted under applicable
Environmental Law (provided, however, that with respect
to properties formerly owned or operated by the Company
or any of its subsidiaries, such representation is
limited to the period the Company or any such
subsidiary owned or operated such properties);
(vi) None of it or any of its subsidiaries has received any
notice, demand letter, executive or administrative
order, directive or request for
21
27
information from any Federal, state, local or foreign
governmental entity or any third party indicating that
it may be in violation of, or liable under, any
Environmental Law;
(vii) There are no underground storage tanks on, in or under
any properties or Participation Facility and, except
with respect to the property of the Company's
subsidiary owned and operated in St. Xxxxx, Michigan,
which is fully described in the Company Disclosure
Letter, no underground storage tanks have been closed
or removed from any properties or Participation
Facility which are or have been in the ownership of it
or any of its subsidiaries;
(viii) During the period of (A) its or any of its
subsidiaries, ownership or operation of any of their
respective current properties, (B) its or any of its
subsidiaries, participation in the management of any
Participation Facility, or (C) its or any of its
subsidiaries, holding of a security interest in a Loan
Property, there has been no contamination by or release
of Hazardous Material or oil in, on, under or affecting
such properties. Prior to the period of (x) its or any
of its subsidiaries' ownership or operation of any of
their respective current properties, (y) its or any of
its subsidiaries, participation in the management of
any Participation Facility, or (z) its or any of its
subsidiaries, holding of a security interest in a Loan
Property, there was no contamination by or release of
Hazardous Material or oil in, on, under or affecting
any such property, Participation Facility or Loan
Property; and
(ix) None of it or its subsidiaries participates in the
management of a Loan Property or Participation Facility
to an extent that it would be deemed an "owner or
operator" as defined in 42 U.S.C. Section 9601 or any
similar Environmental Law.
(b) The following definitions apply for purposes of this Section 3.21: (i)
"Loan Property" means any property in which the applicable party (or a
subsidiary of it) holds a security interest, and, where required by the
context, includes the owner or operator of such property, but only with respect
to such property; (ii) "Participation Facility" means any facility in which the
applicable party (or a subsidiary of it) participates in the management
(including all property held as trustee or in any other fiduciary or agency
capacity) and, where required by the context, includes the owner or operator of
such property; (iii) "Environmental Law" means (A) any federal, state or local
law, statute, ordinance, rule, regulation, code, license, permit,
authorization, approval, consent, legal doctrine, order, directive, executive
or administrative order, judgment, decree, injunction, requirement or agreement
with any governmental entity, (x) relating to the protection, preservation or
restoration of the environment (which includes, without limitation, air, water
vapor, surface water, groundwater,
22
28
drinking water supply, structures, soil, surface land, subsurface land, plant
and animal life or any other natural resource), or to human health or safety, or
(y) the exposure to, or the use, storage, recycling, treatment, generation,
transportation, processing, handling, labeling, production, release or disposal
of, Hazardous Materials, in each case as amended and as now in effect, including
all current Environmental Laws. The term Environmental Law includes, without
limitation, the federal Comprehensive Environmental Response Compensation and
Liability Act of 1980, the Superfund Amendments and Reauthorization Act, the
federal Water Pollution Control Act of 1972, the federal Clean Air Act, the
federal Clean Water Act, the federal Resource Conservation and Recovery Act of
1976 (including the Hazardous and Solid Waste Amendments thereto), the federal
Solid Waste Disposal and the federal Toxic Substances Control Act, the Federal
insecticide, Fungicide and Rodenticide Act, the Federal Occupational Safety and
Health Act of 1970, the Federal Hazardous Materials Transportation Act, or any
so called "Superfund" or "Superlien" law, each as amended and as now or
hereafter in effect, and (B) any common law or equitable doctrine (including,
without limitation, injunctive relief and tort doctrines such as negligence,
nuisance, trespass and strict liability) that may impose liability or
obligations for injuries or damages due to, or threatened as a result of, the
presence of or exposure to any Hazardous Material; and (iv) "Hazardous Material"
means any substance in any concentration which is or could be detrimental to
human health or safety or to the environment, currently or hereafter listed,
defined, designated or classified as hazardous, toxic, radioactive or dangerous,
or otherwise regulated, under any Environmental Law, whether by type or by
quantity, including any substance containing any such substance as a component.
Hazardous Material includes, without limitation, any toxic waste, pollutant,
contaminant, hazardous substance, toxic substance , hazardous waste, special
waste, industrial substance, oil or petroleum or any derivative or by-product
thereof, radon, radioactive material, asbestos, asbestos-containing material,
urea formaldehyde foam insulation, lead and polychlorinated biphenyl.
SECTION 3.22. Allowance. The allowance for possible loan losses shown on
the Company's unaudited balance sheet as of September 30, 1996 was, and the
allowance for possible loan losses shown on the balance sheets in the Company
Reports for periods ending after the date of this Plan will be, adequate, as of
the date thereof, under generally accepted accounting principles applicable to
banks and bank holding companies. The Company has disclosed to Parent in
writing prior to the execution hereof and has set forth in the Company
Disclosure Letter all loans, leases, advances, credit enhancements, other
extensions of credit, commitments and interest-bearing assets of the Company and
its subsidiaries that have been classified as "Other Loans Specially Mentioned",
"Special Mention", "Substandard", "Doubtful", "Loss", "Classified",
"Criticized", "Credit Risk Assets", "Concerned Loans" or words of similar import
and the aggregate amount thereunder of each such category or type. The Other
Real Estate Owned included in any non-performing assets of the Company or any of
its subsidiaries is carried net of reserves at the lower of cost or market value
based on current independent appraisals.
SECTION 3.23. Antiakeover Provisions Inapplicable. The Company has taken
all actions required to exempt this Plan and the Merger and any amendment or
revision thereto, the Stock Option Agreement and any amendment or revision
thereof and the transactions contemplated hereby
23
29
and thereby from any state antitakeover laws, including without limitation,
Chapters 7A and 7B of the State Corporation Law.
SECTION 3.24. Material Interests of Certain Persons. Except as disclosed
in the Company's Proxy Statement for its 1996 Annual Meeting of Stockholders, no
officer or director of the Company, or any "associate" (as such term is defined
in Rule 12b-2 under the Securities Exchange Act) of any such officer or
director, has any material interest in any material contract or property (real
or personal), tangible or intangible, used in or pertaining to the business of
the Company or any of its subsidiaries other than loan relationships established
in the ordinary course of business which were made on substantially the same
terms as comparable transactions made with unrelated parties prevailing at the
time of such transactions.
SECTION 3.25. Insurance. The Company and its subsidiaries are presently
insured, and since December 31, 1993, have been insured, for reasonable amounts
with financially sound and reputable insurance companies, against such risks as
companies engaged in a similar business would, in accordance with good business
practice, customarily be insured. All of the insurance policies and bonds
maintained by the Company and its subsidiaries are in full force and effect, the
Company and its subsidiaries are not in default thereunder and all material
claims thereunder have been filed in due and timely fashion. Since December 31,
1993, no claim by the Company or any of its subsidiaries on or in respect of an
insurance policy or bond has been declined or refused by the relevant insurer or
insurers. In the best judgment of the Company's management, such insurance
coverage is adequate and will be available in the future under terms and
conditions substantially similar to those in effect on the date hereof. Between
the date hereof and the Effective Time, the Company and its subsidiaries will
maintain the levels of insurance coverage in effect on the date hereof and will
submit all potential claims existing prior to the Effective Time to its
insurance carrier on or before the Effective Time. The Company Disclosure
Letter lists all insurance policies maintained by or for the benefit of the
Company, of its subsidiaries or its directors, officers, employees or agents,
specifying the (i) type of policy and a brief description thereof, (ii) policy
limits and (iii) self insurance amounts.
SECTION 3.26. Investment Securities. Except for pledges to secure
public and trust deposits and reverse repurchase agreements entered into in
arm's-length transactions pursuant to normal commercial terms and conditions
and other pledges required by law, none of the investments reflected in the
consolidated balance sheet of the Company included in the Company's Report on
Form 10-Q for the quarter ended September 30, 1996, and none of the material
investments made by it or any of its subsidiaries since December 31, 1995, is
subject to any restriction (contractual, statutory or otherwise) that would
materially impair the ability of the entity holding such investment freely to
dispose of such investment at any time.
SECTION 3.27. Pooling of Interests. As of the date of this Plan, the
Company has no reason to believe that the Merger will not qualify as a
"pooling of interests" for accounting purposes.
24
30
SECTION 3.28. Derivatives. Neither the Company nor any of its
subsidiaries is currently a party to any interest rate swap, cap, floor,
option agreement, other interest rate risk management arrangement or agreement
or derivative-type security or derivative arrangement or agreement.
SECTION 3.29. Registration Obligations. Neither the Company nor any of
its subsidiaries is under any obligation, contingent or otherwise, to register
any of its securities under the Securities Act of 1933, as amended.
SECTION 3.30. Books and Records. The books and records of the Company
and its subsidiaries have been, and are being, maintained in accordance with
applicable legal and accounting requirements and reflect in all material
respects the substance of events and transactions that should be included
therein.
SECTION 3.31. Corporate Documents. The Company has delivered to Parent
true and complete copies of (i) its articles of incorporation and by-laws and
(ii) the charter and by-laws of each subsidiary of the Company.
SECTION 3.32. Company Action. The Board of Directors of the Company has
adopted resolutions recommending that this Plan be approved by the shareholders
of the Company and directing that this Plan be submitted for consideration by
the Company's shareholders at the Company Meeting.
SECTION 3.33. Indemnification. Except as provided in the State
Corporation Law and in the by-laws of the Company and its subsidiaries,
neither the Company nor any subsidiary of the Company is a party to any
indemnification agreement with any of its present or future directors, officers,
employees, agents or other persons who serve or served in any other capacity
with any other enterprise at the request of the Company or a subsidiary of the
Company (a "Covered Person"), and to the best knowledge of the Company, there
are no claims for which any Covered Person would be entitled to indemnification
under Section 5.6 if such provisions were deemed to be in effect.
SECTION 3.34. Fair Lending; Community Reinvestment Act. As of the date
hereof, with the exception of routine investigation of consumer complaints,
neither the Company nor any of its subsidiaries has been advised that it is or
may be in violation of the Equal Credit Opportunity Act or the Fair Housing
Act or any similar federal or state statute. Each of the Company's
subsidiaries received a CRA rating of "1" or "outstanding" in its most recent
CRA examination.
SECTION 3.35. No Omission of Material Fact. No representation or
warranty by the Company in this Plan or under any documents, instruments,
certificates or schedules delivered or to be delivered pursuant hereto or in
connection with the transactions contemplated hereby contains any untrue
statement of material fact, or omits to state a material fact necessary to make
the statements or facts contained herein or therein not misleading. None of the
information regarding the Company or any of its subsidiaries or the transactions
contemplated hereby supplied or to be supplied by the Company or any of its
subsidiaries for inclusion in any documents or filings to be
26
31
filed with any regulatory authority in connection with the transactions
contemplated hereby will contain any untrue statement of material fact, or omit
to state a material fact necessary to make the statements or facts contained
therein not misleading.
SECTION 3.36. Conduct of Business. Since September 30, 1996, except as
contemplated by this Plan, neither the Company nor any of its subsidiaries has
taken any action which would have violated Section 2.1 or Section 2.2 had such
Sections been in effect since September 30, 1996. The Company has not
purchased or caused to be purchased any Company Common Stock since 1994.
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF PARENT
Parent and Merger Sub represent and warrant to the Company that, except
as specifically disclosed in a letter (the "Parent Disclosure Letter") of
Parent delivered to the Company prior to the execution of this Plan (and making
specific references to the section of this Plan for which an exception is
taken):
SECTION 4.1. Recitals True. The facts set forth in the Recitals of this
Plan with respect to Parent and Merger Sub are true and correct.
SECTION 4.2. Capital Stock. All outstanding shares of capital stock of
Parent and its subsidiaries have been duly authorized and validly issued, are
fully paid and nonassessable and are not subject to any preemptive rights.
SECTION 4.3. Due Organizations. Each subsidiary of Parent is a
corporation or banking organization duly incorporated, validly existing and in
good standing under the laws of the state of its incorporation. Each of the
Parent's subsidiaries which is a bank is a member of the Bank Insurance Fund
("BIF") of the Federal Deposit Insurance Corporation (the "FDIC") and all of
its deposits are subject to assessment by the BIF.
SECTION 4.4. Authority. Each of Parent and its subsidiaries has the power
and authority, and is duly qualified in all jurisdictions (except for such
qualifications the absence of which, in the aggregate, would not have a Material
Adverse Effect on Parent) where such qualification is required, to carry on its
business as it is now being conducted and to own all its properties and assets,
and it has all federal, state, local, and foreign governmental authorizations
necessary for it to own or lease its properties and assets and to carry on its
business as it is now being conducted.
SECTION 4.5. Subsidiaries; Significant Investments. The only
subsidiaries of Parent are set forth in the Disclosure Letter. All of the
shares of capital stock of each subsidiary of Parent are owned directly and of
record by Parent or a wholly-owned subsidiary of Parent, in each such case
free and clear of all Liens and there are no options or similar rights with
respect to any such capital stock. Neither Parent nor any of its subsidiaries
maintains a liquidation or similar type of account.
26
32
None of Parent or any of such subsidiaries owns any equity securities, any
security convertible or exchangeable into an equity security or any rights to
acquire any equity security except those of its subsidiaries as listed in the
Parent Disclosure Letter.
SECTION 4.6. Shareholder Approvals.
(a) Subject to the receipt of required shareholder approval of this Plan,
this Plan and the transactions contemplated herein have been duly authorized by
all necessary corporate action of Parent and Merger Sub. In addition, Parent
expects to receive the written opinion of its financial advisor to the effect
that the Merger is fair to Parent and its shareholders from a financial point
of view in standard industry form with respect to transactions of this nature.
Subject to receipt of (i) such shareholder approval and (ii) the required
approvals, consents or waivers of governmental authorities referred to in
Section 6.1(b), this Plan is a valid and binding agreement of Parent and Merger
Sub enforceable against each in accordance with its terms, subject as to
enforcement to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors, rights and to general equity principles.
(b) The affirmative vote of a majority of the outstanding shares of Parent
Common Stock entitled to vote on this Plan and the vote of the sole shareholder
of Merger Sub are the only shareholder votes required for approval of the Plan
and consummation of the Merger and the other transactions contemplated hereby.
SECTION 4.7. No Violations. The execution, delivery and performance of
this Plan by Parent and Merger Sub do not, and the consummation of the
transactions contemplated hereby by Parent and each of its subsidiaries will
not, constitute (i) a breach or violation of, or a default under, any law, rule
or regulation or any judgment, decree, order, governmental permit or license, or
agreement, indenture or instrument of Parent or any subsidiary of Parent or to
which Parent or any of its subsidiaries (or any of their respective properties)
is subject, or enable any person to enjoin the Merger or the other transactions
contemplated hereby, (ii) a breach or violation of, or a default under, the
articles of incorporation or by-laws or similar organizational documents of
Parent or any subsidiary of Parent or (iii) a breach or violation of, or a
default under (or an event which with due notice or lapse of time or both would
constitute a default under), or result in the termination of, accelerate the
performance required by, or result in the creation of any lien, pledge, security
interest, charge or other encumbrance upon any of the properties or assets of
Parent or any subsidiary of Parent under, any of the terms, conditions or
provisions of any note, bond, indenture, deed of trust, loan agreement or other
agreement, instrument or obligation to which Parent or any subsidiary of Parent
is a party, or to which any of their respective properties or assets may be
bound or affected.
SECTION 4.8. Consents and Approvals. Except for (a) the filing of
applications and notices, as applicable, with the Federal Reserve Board under
the BHC Act and approval of such applications and notices, (b) the filing of
any required applications or notices with any state or foreign agencies and
approval of such applications and notices ("State Approvals"), (c) the filing
with the SEC of the Joint Proxy Statement and the S-4 in which the Joint Proxy
Statement will be
27
33
included as a prospectus, (d) the filing of the Certificate of Merger with the
Department of Consumer and Industry Services pursuant to the State Corporation
Law, (e) any notices to or filings with the Small Business Administration
("SBA"), (f) such filings and approvals as are required to be made or obtained
under the securities or "Blue Sky" laws of various states in connection with the
issuance of the shares of Parent Common Stock pursuant to this Plan, and (g) the
approval of this Plan by the requisite vote of the shareholders of the Company,
and the Parent, no consents or approvals of or filings or registrations with any
Regulatory Agencies or with any third party are necessary in connection with (i)
the execution and delivery by Parent and Merger Sub of this Plan and (ii) the
consummation by Parent and Merger Sub of the Merger and the other transactions
contemplated hereby.
SECTION 4.9. Parent Reports.
(a) As of their respective dates, neither Parent's Annual Report on Form
10-K for the fiscal year ended December 31, 1995, nor any other document filed
by Parent subsequent to December 31, 1995 under Section 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act, each in the form (including exhibits)
filed with the SEC (collectively, the "Parent Reports"), contained or will
contain any untrue statement of a material fact or omitted or will omit to
state a material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which they were
made, not misleading and the Parent Reports complied in all material respects
with the requirements of the Securities Exchange Act. Each of the consolidated
balance sheets contained or incorporated by reference in the Parent Reports
(including in each case any related notes and schedules) fairly presented in
all material respects the financial position of the entity or entities to which
it relates as of its date and each of the consolidated statements of income,
consolidated statements of shareholders, equity and consolidated statement of
cash flows, contained or incorporated by reference in the Parent Reports
(including in each case any related notes and schedules), fairly presented in
all material respects the results of operations, stockholders, equity and cash
flows, as the case may be, of the entity or entities to which it relates for
the periods set forth therein (subject, in the case of unaudited interim
statements, to normal year-end audit adjustments that are not material in
amount or effect), in each case in accordance with generally accepted
accounting principles consistently applied during the periods involved, except
as may be noted therein.
(b) Parent and each of its subsidiaries have each timely filed all
reports, registrations and statements, together with any amendments required to
be made with respect thereto, that they were required to file since December
31, 1993 with (i) the Regulatory Agencies, and (ii) any SRO, and all other
material reports and statements required to be filed by them since December 31,
1993, including, without limitation, any report or statement required to be
filed pursuant to the laws, rules or regulations of the United States, the
Regulatory Agencies or any SRO, and have paid all fees and assessments due and
payable in connection therewith.
SECTION 4.10. Absence of Undisclosed Liabilities and Certain Changes or
Events. Since December 31, 1995, Parent and its subsidiaries have conducted
their business only in the ordinary
28
34
course of business consistent with past practice and have not incurred any
material liability, except in the ordinary course of their business consistent
with past practice. Since December 31, 1995, there has not been any change in
the condition (financial or other), properties, business, results of operations
or prospects of Parent or its subsidiaries which, individually or in the
aggregate, has had, or is reasonably likely to have, a Material Adverse Effect
on Parent.
SECTION 4.11. Taxes. All federal, state, local, and foreign tax returns
required to be filed by or on behalf of Parent or any of its subsidiaries have
been timely filed or requests for extensions have been timely filed and any
such extension shall have been granted and not have expired, and all such filed
returns are complete and accurate in all respects. All taxes shown on such
returns have been paid in full or adequate provision has been made for any such
taxes on Parent's balance sheet (in accordance with generally accepted
accounting principles). There is no audit examination, deficiency, or refund
litigation with respect to any taxes of Parent or any of its subsidiaries that
could result in a determination. All taxes, interest, additions, and penalties
due with respect to completed and settled examinations or concluded litigation
relating to it have been paid in full or adequate provision has been made for
any such taxes on Parent's balance sheet (in accordance with generally accepted
accounting principles). Parent has not executed an extension or waiver of any
statute of limitations on the assessment or collection of any material tax due
that is currently in effect.
SECTION 4.12. Absence of Claims. As of the date hereof, no litigation,
proceeding or controversy before any court or governmental agency is pending,
and there is no pending claim, action or proceeding against Parent or any of
its subsidiaries, and, to the best of Parent's knowledge after reasonable
inquiry, no such litigation, proceeding, controversy, claim or action has been
threatened or is contemplated, which in any case is reasonably likely,
individually or in the aggregate, to have a Material Adverse Effect on Parent or
to hinder or delay consummation of the transactions contemplated hereby.
SECTION 4.13. Absence of Regulatory Actions. Neither Parent nor any of
its subsidiaries is a party to any cease and desist order, written agreement
or memorandum of understanding with, or a party to any commitment letter or
similar undertaking to, or is subject to any order or directive by, or is a
recipient of any extraordinary supervisory letter from, or has adopted any
board resolutions at the request of Government Regulators nor has it been
advised by any Government Regulator that it is contemplating issuing or
requesting (or is considering the appropriateness of issuing or requesting)
any such order, directive, written agreement, memorandum of understanding,
extraordinary supervisory letter, commitment letter, board resolutions or
similar undertaking.
SECTION 4.14. Agreements.
(a) Except for this Plan and arrangements made in the ordinary course of
business, Parent and its subsidiaries are not bound by any material contract
(as defined in Item 601(b)(10) of Regulation S-K) to be performed after the
date hereof that has not been filed with or incorporated by reference in the
Parent Reports filed prior to the date of this Plan.
29
35
(b) Neither Parent nor any of its subsidiaries is in default under or in
violation of any provision of any note, bond, indenture, mortgage, deed of
trust, loan agreement or other agreement to which it is a party or by which it
is bound or to which any of its respective properties or assets is subject.
SECTION 4.15. Labor Matters. Neither Parent or any of its subsidiaries
is a party to, or is bound by, any collective bargaining agreement, contract,
or other agreement or understanding with a labor union or labor organization,
nor is Parent or any of its subsidiaries the subject of any proceeding
asserting that it has committed an unfair labor practice or seeking to compel
it or any such subsidiary to bargain with any labor organization as to wages and
conditions of employment, nor is there any strike, other labor dispute or
organizational effort involving Parent or any of its subsidiaries pending or
threatened.
SECTION 4.16. Employee Benefit Plans. (i) All of Parent's pension,
retirement, stock option, stock purchase, stock ownership, savings, stock
appreciation right, profit sharing, deferred compensation, consulting, bonus,
group insurance, severance and other benefit plans, contracts, agreements,
arrangements, including, but not limited to, "employee benefit plans", as
defined under ERISA, incentive and welfare policies, contracts, plans and
arrangements and all trust agreements related thereto in respect to any present
directors, officers, or other employees of Parent or any of its subsidiaries
(hereinafter referred to collectively as the "Parent Employee Plans") comply in
all material respects with all applicable requirements of ERISA, the Code and
other applicable laws; neither Parent nor any of its subsidiaries has engaged in
a "prohibited transaction" (as defined in Section 406 of ERISA or Section 4975
of the Code) with respect to any Parent Employee Plan which could subject Parent
or any subsidiary to a material tax or penalty under Section 4975 of the Code or
Section 502(i) of ERISA; and all contributions required to be made under the
terms of any Parent Employee Plan have been timely made or have been reflected
on Parent's balance sheet (ii) no liability to the PBGC has been or is expected
by Parent or any of its subsidiaries to be incurred with respect to any Parent
Employee Plan which is subject to Title IV of ERISA (a "Parent Pension Plan"),
or with respect to any "single employer plan" (as defined in Section 4001(a)(15)
of ERISA) currently or formerly maintained by Parent or any entity (an "ERISA
Affiliate") which is considered one employer with Parent under Section 4001 of
ERISA or Section 414 of the Code (an "ERISA Affiliate Plan"); and no proceedings
have been instituted to terminate any Parent Pension Plan or ERISA Affiliate
Plan and no condition exists that presents a material risk of the institution of
such proceedings; (iii) no Parent Pension Plan or ERISA Affiliate Plan had an
"accumulated funding deficiency" (as defined in Section 302 of ERISA (whether or
not waived)) as of the last day of the end of the most recent plan year ending
prior to the date hereof; the fair market value of the assets of each Parent
Pension Plan and ERISA Affiliate Plan exceeds the present value of the "benefit
liabilities" (as defined in Section 4001(a)(16) of ERISA) under such Parent
Pension Plan or ERISA Affiliate Plan as of the end of the most recent plan year
with respect to the respective Parent Pension Plan or ERISA Affiliate Plan
ending prior to the date hereof, calculated on the basis of the actuarial
assumptions used in the most recent actuarial valuation for such Parent Pension
Plan or ERISA Affiliate Plan prior to the date hereof, and there has been no
material change in the financial condition of any such Parent Pension Plan or
ERISA Affiliate Plan since the last day of the most
30
36
recent plan year; and no notice of a "reportable event" (as defined in Section
4043 of ERISA) for which the 30-day reporting requirement has not been waived
has been required to be filed for any Parent Pension Plan or ERISA Affiliate
Plan within the 12-month period ending on the date hereof; (iv) neither Parent
nor any subsidiary of Parent has provided or is required to provide, security to
any Parent Pension Plan or to any ERISA Affiliate Plan pursuant to section
401(a)(29) of the Code; (v) neither Parent, its subsidiaries, nor any ERISA
Affiliate has contributed to any "multiemployer plan", as defined in Section
3(37) of ERISA, on or after September 26, 1980; (vi) each Parent Employee Plan
of Parent or any of its subsidiaries which is an "employee pension benefit plan"
(as defined in Section 3(2) of ERISA) has received a favorable determination
letter from the Internal Revenue Service deeming such plan (a "Qualified Parent
Plan") to be qualified under Section 401(a) of the Code; and neither Parent nor
its subsidiaries are aware of any circumstances likely to result in revocation
of any such favorable determination letter; (vii) each Qualified Parent Plan
which is an "employee stock ownership plan" (as defined in Section 4975(e)(7) of
the Code) has satisfied all of the applicable requirements of Sections 409 and
4975(e)(7) of the Code and the regulations thereunder; all Parent Employee Plans
covering foreign participants comply in all material respects with applicable
local law , and there are no material unfunded liabilities with respect to any
Parent Employee Plan which covers foreign employees; (viii) there is no pending
or threatened litigation, administrative action or proceeding relating to any
Parent Employee Plan; (ix) there has been no announcement or commitment by
Parent or any subsidiary of Parent to create an additional Parent Employee Plan,
or to amend an Parent Employee Plan except for amendments required by applicable
law which do not increase the cost of such Parent Employee Plan; and Parent and
its subsidiaries do not have any obligations for retiree health and life
benefits under any Parent Employee Plan which would have a Material Adverse
Effect on Parent.
SECTION 4.17. Properties. Except as disclosed in the Parent Reports
filed prior to the date hereof, Parent and its subsidiaries (a) have good,
clear and marketable title to all the properties and assets which are material
to Parent's business on a consolidated basis and are reflected in the latest
audited statement of condition included in the Parent Reports as being owned by
Parent and its subsidiaries or acquired after the date thereof (except
properties sold or otherwise disposed of since the date thereof), free and clear
of all Liens except (i) statutory Liens securing payments not yet due, (ii)
Liens on assets of subsidiaries of Parent incurred in the ordinary course of
their business and (iii) such imperfections or irregularities of title or Liens
as do not affect the use of the properties or assets subject thereto or affected
thereby or otherwise materially impair business operations at such properties,
in either case in such a manner as to have a Material Adverse Effect on Parent,
and (b) are collectively the lessee of all leasehold estates which are material
to Parent's business on a consolidated basis and are reflected in the latest
audited financial statements included in the Parent Reports or acquired after
the date thereof (except for leases that have expired by their terms or as to
which Parent has agreed to terminate or convey since the date thereof) and is in
possession of the properties purported to be leased thereunder, and each such
lease is valid without default thereunder by the lessee or, to Parent's
knowledge, the lessor, other than defaults that would not have a Material
Adverse Effect on Parent. Each of Parent and each of its subsidiaries enjoys
peaceful and undisturbed possession of all such leases. Substantially all
Parent's and its subsidiaries, owned
31
37
buildings, structures and equipment have been well maintained and are in good
and serviceable condition, normal wear and tear excepted.
SECTION 4.18. Knowledge as to Conditions. As of the date hereof, Parent
knows of no reason why the approvals, consents and waivers of governmental
authorities referred to in Section 6.1(b) should not be obtained without the
imposition of any condition of the type referred to in the provisos thereto.
SECTION 4.19. Compliance with Laws. Since December 31, 1993, Parent and
each of its subsidiaries have complied in all material respects with all
applicable laws. Parent and each of its subsidiaries has all permits,
licenses, certificates of authority, orders and approvals of, and has made all
filings, applications and registrations with, federal, state, local and
foreign governmental or regulatory bodies that are required in order to permit
it to carry on its business as it is presently conducted; all such permits,
licenses, certificates of authority, orders and approvals are in full force and
effect, and, to the best knowledge of Parent, no suspension or cancellation of
any of them is threatened.
SECTION 4.20. Fees. Other than financial advisory services referred to in
Section 4.6, neither Parent nor any of its subsidiaries, nor any of their
respective officers, directors, employees or agents, has employed any broker
or finder or incurred any liability for any financial advisory fees, brokerage
fees, commissions, or finder's fees, and no broker or finder has acted
directly or indirectly for Parent or any subsidiary of Parent, in connection
with the Plan or the transactions contemplated hereby.
SECTION 4.21. Environmental Matters.
(a) Except as will not, individually or in the aggregate, have a
Material Adverse Effect on Parent, with respect to Parent and
each of its subsidiaries:
(i) Each of Parent and its subsidiaries, the Participation
Facilities, and the Loan Properties (each as defined
below) are, and have been, in substantial compliance
with all Environmental Laws (as defined below);
(ii) There is no suit, claim, action, demand, executive or
administrative order, directive, investigation or
proceeding pending or threatened, before any court,
governmental agency or board or other forum against it
or any of its subsidiaries or any Participation
Facility (A) for alleged noncompliance (including by
any predecessor) with, or liability under, any
Environmental Law or (B) relating to the presence of or
release into the environment of any Hazardous Material
(as defined below) or oil, whether or not occurring at
or on a site owned,
32
38
leased or operated by it or any of its subsidiaries or
any Participation Facility;
(iii) There is no suit, claim, action, demand, executive or
administrative order, directive, investigation or
proceeding pending or threatened, before any court,
governmental agency or board or other forum relating to
or against any Loan Property (or Parent or any of its
subsidiaries in respect of such Loan Property) (A)
relating to alleged noncompliance (including by any
predecessor) with, or liability under, any
Environmental Law or (B) relating to the presence of or
release into the environment of any Hazardous Material
or oil whether or not occurring at or on a site owned,
leased or operated by a Loan Property;
(iv) There is no reasonable basis for any suit, claim,
action, demand, executive or administrative order,
directive or proceeding of a type described in Section
3.21(a)(ii) or (iii);
(v) The properties currently or formerly owned or operated
by Parent or any of its subsidiaries (including,
without limitation, soil, groundwater or surface water
on, under or adjacent to the properties, and buildings
thereon) do not contain any Hazardous Material (as
defined below) other than as permitted under applicable
Environmental Law (provided, however, that with respect
to properties formerly owned or operated by Parent or
any of its subsidiaries, such representation is limited
to the period Parent or any such subsidiary owned or
operated such properties);
(vi) None of it or any of its subsidiaries has received any
notice, demand letter, executive or administrative
order, directive or request for information from any
Federal, state, local or foreign governmental entity or
any third party indicating that it may be in violation
of, or liable under, any Environmental Law;
(vii) There are no underground storage tanks on, in or under
any properties or Participation Facility and no
underground storage tanks have been closed or removed
from any properties or Participation Facility which are
or have been in the ownership of it or any of its
subsidiaries;
(viii) During the period of (A) its or any of its
subsidiaries, ownership or operation of any of their
respective current properties, (B) its or any of its
subsidiaries, participation in the management of any
Participation Facility, or (C) its or any of its
subsidiaries, holding of
33
39
a security interest in a Loan Property, there has been
no contamination by or release of Hazardous Material or
oil in, on, under or affecting such properties. Prior
to the period of (x) its or any of its subsidiaries'
ownership or operation of any of their respective
current properties, (y) its or any of its subsidiaries,
participation in the management of any Participation
Facility, or (z) its or any of its subsidiaries,
holding of a security interest in a Loan Property,
there was no contamination by or release of Hazardous
Material or oil in, on, under or affecting any such
property, Participation Facility or Loan Property; and
(ix) None of it or its subsidiaries participates in the
management of a Loan Property or Participation Facility
to an extent that it would be deemed an "owner or
operator" as defined in 42 U.S.C. Section 9601 or any
similar Environmental Law.
(b) The following definitions apply for purposes of this Section 4.21: (i)
"Loan Property" means any property in which the applicable party (or a
subsidiary of it) holds a security interest, and, where required by the
context, includes the owner or operator of such property, but only with respect
to such property; (ii) "Participation Facility" means any facility in which the
applicable party (or a subsidiary of it) participates in the management
(including all property held as trustee or in any other fiduciary or agency
capacity) and, where required by the context, includes the owner or operator of
such property; (iii) "Environmental Law" has the meaning set forth in Section
3.21(b); and (iv) "Hazardous Material" has the meaning set forth in Section
3.21(b).
SECTION 4.22. Allowance. The allowance for possible loan losses shown on
Parent's unaudited balance sheet as of September 30, 1996 was, and the
allowance for possible loan losses shown on the balance sheets in its Parent
Reports for periods ending after the date of this Plan will be, adequate, as of
the date thereof, under generally accepted accounting principles applicable to
banks and bank holding companies. The Other Real Estate Owned included in any
non-performing assets of Parent or any of its subsidiaries is carried net of
reserves at the lower of cost or market value based on current independent
appraisals.
SECTION 4.23. Material Interest of Certain Persons. Except as disclosed
in Parent's Proxy Statement for its 1996 Annual Meeting of Stockholders, no
officer or director of Parent, or any "associate" (as such term is defined
in Rule 12b-2 under the Securities Exchange Act) of any such officer or
director, has any material interest in any material contract or property (real
or personal), tangible or intangible, used in or pertaining to the business of
Parent or any of its subsidiaries other than loan relationships established in
the ordinary course of business which were made on substantially the same terms
as comparable transactions made with unrelated parties prevailing at the time of
such transactions.
34
40
SECTION 4.24. Insurance. Parent and its subsidiaries are presently
insured, and since December 31, 1993, have been insured, for reasonable amounts
with financially sound and reputable insurance companies, against such risks as
companies engaged in a similar business would, in accordance with good business
practice, customarily be insured. All of the insurance policies and bonds
maintained by Parent and its subsidiaries are in full force and effect, Parent
and its subsidiaries are not in default thereunder and all material claims
thereunder have been filed in due and timely fashion. Since December 31, 1993,
no claim by Parent or any of its subsidiaries on or in respect of an insurance
policy or bond has been declined or refused by the relevant insurer or insurers.
In the best judgment of Parent's management, such insurance coverage is adequate
and will be available in the future under terms and conditions substantially
similar to those in effect on the date hereof. Between the date hereof and the
Effective Time, Parent and its subsidiaries will maintain the levels of
insurance coverage in effect on the date hereof.
SECTION 4.25. Investment Securities. Except for pledges to secure public
and trust deposits and reverse repurchase agreements entered into in
arm's-length transactions pursuant to normal commercial terms and conditions and
other pledges required by law, none of the investments reflected in the
consolidated balance sheet of Parent included in Parent's Report on Form 10-Q
for the quarter ended September 30, 1996, and none of the material investments
made by it or any of its subsidiaries since December 31, 1995, is subject to any
restriction (contractual, statutory or otherwise) that would materially impair
the ability of the entity holding such investment freely to dispose of such
investment at any time.
SECTION 4.26. Pooling of Interests. As of the date of this Plan, Parent
has no reason to believe that the Merger will not qualify as a "pooling of
interests" for accounting purposes.
SECTION 4.27. Derivatives. Neither Parent nor any of its subsidiaries is
currently a party to any interest rate swap, cap, floor, option agreement, other
interest rate risk management arrangement or agreement or derivative-type
security or derivative arrangement or agreement.
SECTION 4.28. Registration Obligations. Except as contemplated by the
terms of this Plan, neither Parent nor any of its subsidiaries is under any
obligation, contingent or otherwise, to register any of its securities under the
Securities Act of 1933, as amended.
SECTION 4.29. Books and Records. The books and records of Parent and its
subsidiaries have been, and are being, maintained in accordance with applicable
legal and accounting requirements and reflect in all material respects the
substance of events and transactions that should be included therein.
SECTION 4.30. Corporate Documents. Parent has delivered to the Company
true and complete copies of (i) its articles of incorporation and by-laws and
(ii) the charter and by-laws of each subsidiary of Parent.
35
41
SECTION 4.31. Parent Action. The Board of Directors of Parent has adopted
resolutions recommending that this Plan be approved by the shareholders of
Parent and directing that this Plan be submitted for consideration by Parent's
shareholders at the Parent Meeting.
SECTION 4.32. Fair Lending; Community Reinvestment Act. As of the date
hereof, with the exception of routine investigation of consumer complaints,
neither Parent nor any of its subsidiaries has been advised that it is or may be
in violation of the Equal Credit Opportunity Act or the Fair Housing Act or any
similar federal or state statute. Each of Parent's subsidiaries received a CRA
rating of "1" or "outstanding" in its most recent CRA examination.
SECTION 4.33. No Omission of Material Fact. No representation or warranty
by Parent in this Plan or under any documents, instruments, certificates or
schedules delivered or to be delivered pursuant hereto or in connection with the
transactions contemplated hereby contains any untrue statement of material fact,
or omits to state a material fact necessary to make the statements or facts
contained herein or therein not misleading. None of the information regarding
Parent or any of its subsidiaries or the transactions contemplated hereby
supplied or to be supplied by Parent or any of its subsidiaries for inclusion in
any documents or filings to be filed with any regulatory authority in connection
with the transactions contemplated hereby will contain any untrue statement of
material fact, or omit to state a material fact necessary to make the statements
or facts contained therein not misleading.
SECTION 4.34. Conduct of Business. Since September 30, 1996, except as
contemplated by this Plan, neither Parent nor any of its subsidiaries has taken
any action which would have violated Section 2.4 had such Section been in effect
since September 30, 1996.
ARTICLE V. ADDITIONAL AGREEMENTS
SECTION 5.1. Acquisition Proposals. The Company agrees that neither it nor
any of its subsidiaries nor any of the respective officers and directors of the
Company or its subsidiaries shall, and the Company shall direct and use its best
efforts to cause its employees, agents and representatives (including, without
limitation, any investment banker, attorney or accountant retained by it or any
of its subsidiaries) not to, initiate, solicit or encourage, directly or
indirectly, any inquiries or the making of any proposal or offer (including,
without limitation, any proposal or offer to shareholders of the Company) with
respect to a merger, consolidation or similar transaction involving, or any
purchase of all or any significant portion of the assets or any equity
securities of, the Company or any of its subsidiaries (any such proposal or
offer being hereinafter referred to as an "Acquisition Proposal") or, if the
Company's Board of Directors determines, upon receipt of a written opinion of
its outside counsel, that it is required to take the following action in order
to fulfill their fiduciary duties to the Company's shareholders under the State
Corporation Law, engage in any negotiations concerning, or provide any
confidential information or data to, or have any discussions with, any person
relating to an Acquisition Proposal, or otherwise facilitate any effort or
attempt to
36
42
make or implement an Acquisition Proposal. The Company will immediately cease
and cause to be terminated any existing activities, discussions or negotiations
with any parties conducted heretofore with respect to any of the foregoing and
enforce any confidentiality agreements to which it or any of its subsidiaries is
a party. The Company will take the necessary steps to inform the appropriate
individuals or entities referred to in the first sentence hereof of the
obligations undertaken in this Section 5.1. The Company will notify (describing
the relevant facts) Parent immediately if any such inquiries or proposals are
received by, any such information is requested from, or any such negotiations or
discussions are sought to be initiated or continued with, the Company.
SECTION 5.2. Certain Policies of the Company. At the request of Parent,
the Company shall modify and change its loan, litigation and real estate
valuation policies and practices (including loan classifications and levels of
reserves) after the date on which all required regulatory approvals are received
and prior to the Effective Time so as to be consistent on a mutually
satisfactory basis with those of Parent and generally accepted accounting
principles. The Company's representations, warranties and covenants contained in
this Plan shall not be deemed to be untrue or breached in any respect for any
purpose as a consequence of any modifications or changes undertaken solely on
account of this Section 5.2 nor shall the conditions set forth in Section 5.13
of this Plan be deemed to have occurred by virtue thereof.
SECTION 5.3. Access and Information. Upon reasonable notice, each of the
Company and Parent shall (and shall cause its subsidiaries to) afford to the
other party and its representatives (including, without limitation, directors,
officers and employees of the other party and its affiliates, and counsel,
accountants and other advisors retained by the other party and its affiliates)
such access (including, without limitation, for the purpose of conducting
supplemental due diligence reviews) during normal business hours throughout the
period prior to the Effective Time, except that with respect to the Company,
during the Due Diligence Period (as defined in Section 7.1(g)) access shall be
provided each calendar day during the periods requested by Parent, to the
books, records (including, without limitation, loan and credit files, tax
returns and work papers of independent auditors), properties, personnel and to
such other information as such party may reasonably request; provided, however,
that no investigation pursuant to this Section 5.3 shall affect or be deemed to
modify any representation or warranty made herein. The Company and Parent will
not, and each will cause its representatives not to, use any information
obtained pursuant to this Section 5.3 for any purpose unrelated to the
consummation of the transactions contemplated by this Plan. Subject to the
requirements of law, the Company and Parent will keep confidential, and will
cause its representatives to keep confidential, all information and documents
obtained pursuant to this Section 5.3 unless such information (i) was already
known to the Company or Parent, as the case may be, or an affiliate of the
Company or Parent, (ii) becomes available to the Company or Parent, as the case
may be, or an affiliate of the Company or Parent, as the case may be, from other
sources not known by such party to be bound by a confidentiality agreement,
(iii) is disclosed with the prior written approval of the Company or Parent, as
the case may be, or (iv) is or becomes readily ascertainable from published
information or trade sources. In the event that this Plan is terminated or the
transactions contemplated by this Plan shall otherwise fail to be consummated,
each party shall promptly cause all copies of documents or extracts thereof
containing information and data as
37
43
to another party hereto (or an affiliate of any party hereto) to be returned to
the party which furnished the same.
SECTION 5.4. Certain Filings, Consents and Arrangements. Parent, Merger
Sub and the Company shall, and Parent and the Company shall cause their
respective subsidiaries to, (a) as soon as practicable make any filings and
applications required to be filed in order to obtain all approvals, consents and
waivers of governmental authorities necessary or appropriate for the
consummation of the transactions contemplated hereby, (b) cooperate with one
another (i) in promptly determining what filings are required to be made or
approvals, consents or waivers are required to be obtained under any relevant
federal, state or foreign law or regulation and (ii) in promptly making any such
filings (including, at the Effective Time, the filing of a Certificate of Merger
pursuant to the State Corporation Law), furnishing information required in
connection therewith and seeking timely to obtain any such approvals, consents
or waivers and (c) deliver to the other copies of the publicly available
portions of all such filings and applications promptly after they are filed.
SECTION 5.5. Antitakeover Statutes. The Company shall take all actions
necessary (i) to exempt the Company and the Plan from the requirements of any
state antitakeover law by action of its Board of Directors or otherwise and
(ii), upon the request of Parent, to assist in any challenge by Parent to the
applicability to the Merger of any state antitakeover law.
(a) From and after the Effective Time through the sixth anniversary of the
Effective Date, Parent agrees to indemnify and hold harmless each present and
former director and officer of the Company and its subsidiaries determined as
of the Effective Time (the "Indemnified Parties"), against any costs or
expenses (including reasonable attorneys, fees), judgments, fines, losses,
claims, damages or liabilities (collectively, "Costs") incurred in connection
with any claim, action, suit, proceeding or investigation, whether civil,
criminal, administrative or investigative, arising out of matters existing or
occurring at or prior to the Effective Time, whether asserted or claimed prior
to, at or after the Effective Time, to the extent to which such Indemnified
Parties were entitled under the State Corporation Law and the Company's
articles of incorporation or by-laws in effect on the date hereof, and Parent
shall also advance expenses as incurred to the extent permitted under the State
Corporation Law and the Company's articles of incorporation and by-laws.
(b) Any Indemnified Party wishing to claim indemnification under Section
5.6(a), upon learning of any such claim, action, suit, proceeding or
investigation, shall as promptly as possible notify Parent thereof, but the
failure to so notify shall not relieve Parent of any liability it may have to
such Indemnified Party if such failure does not materially prejudice the
indemnifying party. In the event of any such claim, action, suit, proceeding
or investigation (whether arising before or after the Effective Time), (i)
Parent shall have the right to assume the defense thereof and Parent shall not
be liable to such Indemnified Parties for any legal expenses of other counsel
or any other expenses subsequently incurred by such Indemnified Parties in
connection with the defense thereof, except that if Parent elects not to assume
such defense or counsel for the Indemnified Parties advises that
38
44
there are issues which raise conflicts of interest between Parent and the
Indemnified Parties, the Indemnified Parties may retain counsel satisfactory to
them, and Parent shall pay the reasonable fees and expenses of one such counsel
for the Indemnified Parties in any jurisdiction unless the use of one counsel
for such Indemnified parties would present such counsel with a conflict of
interest, (ii) the Indemnified Parties will cooperate in the defense of any such
matter and (iii) Parent shall not be liable for any settlement effected without
its prior written consent; and provided, further, that Parent shall not have any
obligation hereunder to any Indemnified Party when and if a court of competent
jurisdiction shall ultimately determine, and such determination shall have
become final and nonappealable, that the indemnification of such Indemnified
Party in the manner contemplated hereby is not permitted or is prohibited by
applicable law.
SECTION 5.7. Additional Agreements. Subject to the terms and conditions
herein provided, each of the parties hereto agrees to use its reasonable efforts
to take promptly, or cause to be taken promptly, all actions and to do promptly,
or cause to be done promptly, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Plan as soon as practicable, including using
efforts to obtain all necessary actions or non-actions, extensions, waivers,
consents and approvals from all applicable governmental entities, effecting all
necessary registrations, applications and filings (including, without
limitation, filings under any applicable state securities laws) and obtaining
any required contractual consents and regulatory approvals.
SECTION 5.8. Publicity. The initial press release announcing this Plan
shall be a joint press release and thereafter the Company and Parent shall
consult with each other in issuing any press releases or otherwise making public
statements with respect to the other or the transactions contemplated hereby and
in making any filings with any governmental entity or with any national
securities exchange with respect thereto.
SECTIONN 5.9. Regulatory Matters.
(a) Parent and the Company shall promptly prepare and file with the SEC
the Joint Proxy Statement and Parent shall promptly prepare and file with the
SEC the S-4, in which the Joint Proxy Statement will be included as a
prospectus. Each of the Company and Parent shall use all reasonable efforts to
have the S-4 declared effective under the Securities Act as promptly as
practicable after such filing, and the Company and Parent shall thereafter mail
or deliver the Joint Proxy Statement to their respective shareholders. Parent
shall also use all reasonable efforts to obtain all necessary state securities
law or "Blue Sky" permits and approvals required to carry out the transactions
contemplated by this Plan, and the Company shall furnish all information
concerning the Company and the holders of the Company Common Stock as may be
reasonably requested in connection with any such action.
(b) The parties hereto shall cooperate with each other and use their best
efforts to promptly prepare and file all necessary documentation, to effect all
applications, notices, petitions and filings, to obtain as promptly as
practicable all permits, consents, approvals and authorizations
39
45
of all third parties and Governmental Entities which are necessary or advisable
to consummate the transactions contemplated by this Plan (including, without
limitation, the Merger), and to comply with the terms and conditions of all such
permits, consents, approvals and authorizations of all such Governmental
Entities. The Company and Parent shall have the right to review in advance,
and, to the extent practicable, each will consult the other on, in each case
subject to applicable laws relating to the exchange of information, all the
information relating to Parent or the Company, as the case may be, and any of
their respective subsidiaries, which appear in any filing made with, or written
materials submitted to, any third party or any Governmental Entity in connection
with the transactions contemplated by this Plan. In exercising the foregoing
right, each of the parties hereto shall act reasonably and as promptly as
practicable. The parties hereto agree that they will consult with each other
with respect to the obtaining of all permits, consents, approvals and
authorizations of all third parties and Governmental Entities necessary or
advisable to consummate the transactions contemplated by this Plan and each
party will keep the other apprised of the status of matters relating to
completion of the transactions contemplated herein.
(c) The Company and Parent shall, upon request, furnish each other with
all information concerning themselves, their subsidiaries, directors, officers
and shareholders and such other matters as may be reasonably necessary or
advisable in connection with the Joint Proxy Statement, the S-4 or any other
statement, filing, notice or application made by or on behalf of the Company,
Parent or any of their respective subsidiaries to any Governmental Entity in
connection with the Merger and the other transactions contemplated by this
Plan.
(d) The Company and Parent shall promptly advise each other upon receiving
any communication from any Governmental Entity whose consent or approval is
required for consummation of the transactions contemplated by this Plan which
causes such party to believe that there is a reasonable likelihood that any
regulatory approval will not be obtained or that the receipt of any such
approval will be materially delayed.
SECTION 5.10. Shareholders' Meeting. Each of Parent and Company shall take
all action necessary, in accordance with applicable law and its articles of
incorporation and by-laws, to convene a meeting of its shareholders as promptly
as practicable for the purpose of approving the issuance of Parent Shares
pursuant to this Plan and approving this Plan, respectively. The Board of
Directors of the Company and Parent shall unanimously recommend that this Plan
be approved by the shareholders of each of the Company and Parent, as
applicable; provided, however, that the Board of Directors of either the Company
or Parent may withdraw its recommendation and make no recommendation with
respect to the Plan, if either board determines, upon receipt of a written
opinion of its outside counsel, that it is required to do so in order to fulfill
its respective fiduciary duties to its shareholders under the State Corporation
Law. Notwithstanding the preceding sentence, the Company shall not in any way
be relieved of its obligation to convene a meeting of its shareholders as
promptly as practicable for the purpose of approving this Plan.
40
46
SECTION 5.11. Affiliates; Publication of Combined Financial Results.
(a) Each of the Company and Parent shall use its best efforts to cause
each director, executive officer and other person who is an "affiliate" (for
purposes of Rule 145 under the Securities Act and for purposes of qualifying
the Merger for "pooling of interests" accounting treatment) of such party to
deliver to the other party hereto, as soon as practicable after the date of
this Plan, and prior to the date of the shareholders meetings called by the
Company and Parent to approve this Plan, a written agreement, in the form of
Annex 2 hereto, providing that such person will not sell, pledge, transfer or
otherwise dispose of any shares of the Company Common Stock or Parent Common
Stock held by such "affiliate" and, in the case of the "affiliates" of the
Company, the shares of Parent Common Stock to be received by such "affiliate"
in the Merger, except in compliance with the applicable provisions of the
Securities Act and the rules and regulations thereunder; and during the period
commencing 30 days prior to the Merger and ending at the time of the
publication of financial results covering at least 30 days of combined
operations of the Company and Parent.
(b) Parent shall use its best efforts to publish as promptly as reasonably
practical but in no event later than 90 days after the end of the first month
after the Effective Time in which there are at least 30 days of post-Merger
combined operations (which month may be the month in which the Effective Time
occurs), combined sales and net income figures as contemplated by and in
accordance with the terms of SEC Accounting Series Release No. 135.
SECTION 5.12. Authorization, Reservation and Listing. By appropriate
resolution, a certified copy of which shall be provided to the Company, the
Board of Directors of Parent shall, prior to the Effective Time, authorize and
reserve the required number of shares of Parent Common Stock to be issued
pursuant to the Plan of Merger. Parent shall cause the shares of Parent Common
Stock to be issued in the Merger to be approved for listing on The Nasdaq Stock
Market, subject to official notice of issuance, prior to the Effective Time.
SECTION 5.13. Notification of Certain Matters.
(a) Each party shall give prompt notice to the others of: (i) any notice
of, or other communication relating to, a default or event that, with notice or
lapse of time or both, would become a default, received by it or any of its
subsidiaries subsequent to the date of this Plan and prior to the Effective
Time, under any contract material to the financial condition, properties,
businesses or results of its operations, to which it or any subsidiary is a
party or is subject; and (ii) any Material Adverse Effect or the occurrence of
any event which, so far as reasonably can be foreseen at the time of its
occurrence, is reasonably likely to result in any such Material Adverse Effect.
Each of the Company, Parent and Merger Sub shall give prompt notice to the
other party of any notice or other communication from any third party alleging
that the consent of such third party is or may be required in connection with
the transactions contemplated by this Plan.
41
47
(b) From and after the due date hereof to the Effective Time and at and as
of the Effective Time, the Company shall supplement or amend any of its
representations and warranties which apply to the period after the date hereof
by delivering monthly updates to the Company Disclosure Letter ("Disclosure
Letter Updates") to Parent with respect to any matter hereafter arising which,
in its good faith judgment, would render any such representation or warranty
after the date of this Plan materially inaccurate or incomplete as a result of
such matter arising. The Disclosure Letter Updates shall be provided to Parent
on or before the 25th day of each calendar month. Within twenty (20) days after
receipt of any Disclosure Letter Update (or if cure is promptly commenced by the
Company, but is not effected within thirty (30) days after receipt of any
Disclosure Letter Update (the "Cure Period")), Parent may exercise its right to
terminate this Plan pursuant to Section 7.1(f) hereof, if the information in
such Disclosure Letter Update together with the information in any or all of the
Disclosure Letter Updates previously provided Parent, indicates that a Material
Adverse Effect with respect to the Company has occurred or is reasonably likely
to occur which either has not or cannot be cured within the Cure Period, or (ii)
which does not result primarily from changes in the general level of interest
rates.
SECTION 5.14. Board of Directors of Parent and Subsidiary. Parent will
take such action as may be necessary so that the number of directors of Parent
shall be increased by one (1) subsequent to the Effective Time and so that the
number of directors of its Michigan banking subsidiary will be increased by two
(2) subsequent to the Effective Time. One (1) individual designated by the
Board of Directors of the Company within thirty (30) days prior to the Effective
Time and acceptable to Parent in accordance with the policies of Parent with
respect to the service of directors shall be added to the Board of Directors of
Parent subsequent to the Effective Time and two (2) individuals designated by
the Board of Directors of the Company within thirty (30) days prior to the
Effective Time and acceptable to Parent in accordance with the policies of its
Michigan banking subsidiary with respect to the service of directors shall be
added to the Board of Directors of its Michigan banking subsidiary subsequent to
the Effective Time. Such individuals shall hold office for the terms which
shall coincide with the remaining terms of the classes to which they are added.
SECTION 5.15. Retirement Plans. For purposes of crediting periods of
service for eligibility and vesting, but not for benefit accrual purposes, under
Parent's qualified defined benefit pension plan (the "Parent Retirement Plan")
and the Parent's Amended and Restated Section 401(k) Plan (the "Parent 401(k)
Plan), and for purposes of crediting periods of service for eligibility for
other employee benefits provided to employees of Parent, employees of the
Company who otherwise would be eligible to participate in such plans and benefit
programs after the Effective Time shall be given credit for service with the
Company prior to the Effective Time.
SECTION 5.16. Employment Agreements. Parent agrees to cause to be honored
the employment agreements of the Company with Xxxxx X. Xxxx and Xxxxxx X. Xxxxx
in effect as of the date hereof and further agrees to cause to be honored the
nonqualified retirement benefit which the Company has committed to provide Xxxxx
Xxxxxx, all of which are identified in the Company Disclosure Letter.
42
48
SECTION 5.17. Director Deferral Plan. Notwithstanding anything to the
contrary contained in this Plan, at or prior to the Effective Time, the Company
and its subsidiaries shall take such actions as are necessary or reasonably
requested by Parent to terminate the Director Plan and the deferred compensation
agreements entered into between the Company, or its subsidiaries, and any of its
or their directors (the "Deferred Compensation Agreements") as of the Effective
Date. Provided that as of the Effective Time, any Participant (as defined in
the Director Plan) in the Director Plan shall (i) be considered to be a
participant under Parent's Second Amended and Restated Director Deferred
Compensation Plan, as amended (the "Parent Director Plan") and (ii) have the
balance of his or her Deferred Compensation Account (as defined in the Director
Plan) immediately credited for the benefit of such Participant in the Parent
Director Plan. Thereafter, each such Participant shall be deemed a participant
under the Parent Director Plan. Any Options outstanding at the time of the
termination of the Director Plan shall not be affected by such termination but,
to the extent not exercised, shall be treated as provided in Section 1.5 of this
Plan. Except as provided herein, the termination of the Director Plan will not
affect any amounts, reflected in the books and records of the Company, (i) due
to each participant in the Director Plan and (ii) due to each director, who has
entered into a Deferred Compensation Agreement under such plan. The Company
shall provide to Parent, within ten (10) calendar days of the date hereof, the
name of each director subject to the Director Plan, the number of options issued
to such director and the terms related thereto and the amount of all director
fees deferred under the Director Plan.
ARTICLE VI. CONDITIONS TO CONSUMMATION
SECTION 6.1. Conditions to All Parties' Obligations. The respective
obligations of Parent, Merger Sub and the Company to effect the Merger shall be
subject to the satisfaction or waiver prior to the Effective Time of the
following conditions:
(a) The Plan and the transactions contemplated hereby shall have been
approved by the requisite vote of the shareholders of the Company and Parent in
accordance with their respective articles of incorporation and applicable law.
(b) Parent, Merger Sub, the Company and each of their respective
subsidiaries shall have procured, if required in the opinion of counsel for
Parent, the approvals, consents or waivers with respect to the Plan and the
transactions contemplated hereby by (i) the Reserve Bank of Chicago, (ii) the
appropriate State Regulators, and (iii) the Federal Reserve Board, and all
applicable statutory waiting periods shall have expired; and the parties shall
have procured all other regulatory approvals, consents or waivers of
governmental authorities or other persons that, in the opinion of counsel for
Parent , are necessary or appropriate for the consummation of the transactions
contemplated by the Plan; provided, however, that no approval, consent or
waiver referred to in this Section 6.1(b) shall be deemed to have been received
if it shall include any condition or requirement that, individually or in the
aggregate, (i) would result in a Material Adverse Effect on Parent, (ii)
imposes any requirement upon Parent, the Company or their respective
subsidiaries to (x) dispose of any asset
43
49
which is material to Parent or the Company, (y) materially restrict or curtail
the current business operations or activities of Parent or the Company or (z)
raise an amount of capital, the issuance and sale of which, in the absence of
the Merger and the other transactions contemplated by this Plan, would in
Parent's judgment be materially burdensome in light of Parent's capital raising
policies or (iii) would reduce the benefits of the transactions contemplated by
the Plan to Parent in so significant a manner that Parent, in its judgment,
would not have entered into this Plan had such condition or requirement been
known at the date hereof.
(c) The S-4 shall have become effective under the Securities Act and no
stop order suspending the effectiveness of the S-4 shall have been issued and
no proceedings for that purpose shall have been initiated or threatened by the
SEC.
(d) Parent and the Company shall each have received a letter from their
respective independent accountants addressed to Parent or the Company, as the
case may be, to the effect that the Merger will qualify for "pooling of
interests" accounting treatment.
(e) All other requirements prescribed by law which are necessary to the
consummation of the transactions contemplated by this Plan shall have been
satisfied.
(f) No party hereto shall be subject to any order, decree or injunction of
a court or agency of competent jurisdiction which enjoins or prohibits the
consummation of the Merger or any other transaction contemplated by this Plan,
and no litigation or proceeding shall be pending against Parent or the Company
or any of their subsidiaries brought by any governmental agency seeking to
prevent consummation of the transactions contemplated hereby.
(g) No statute, rule, regulation, order, injunction or decree shall have
been enacted, entered, promulgated, interpreted, applied or enforced by any
governmental authority which prohibits, restricts or makes illegal consummation
of the Merger or any other transaction contemplated by this Plan.
SECTION 6.2. Conditions to the Obligations of Parent and Merger Sub. The
obligations of Parent and Merger Sub to effect the Merger shall be subject to
the satisfaction or waiver prior to the Effective Time of the following
additional conditions:
(a) Each of the representations and warranties of the Company contained in
this Plan shall have been true on the date hereof and shall be true in all
material respects on the Effective Date as if made on such date (or on the date
when made in the case of any representation or warranty which specifically
relates to an earlier date); the Company shall have performed, in all material
respects, each of its covenants and agreements contained in this Plan; and
Parent shall have received a certificate signed by the Chief Executive Officer
and the Chief Financial officer of the Company, dated the Effective Date, to
the foregoing effect.
44
50
(b) Parent shall have received a written opinion, dated the Effective
Date, from Xxxxxx & Xxxxxx Attorneys, P.C., counsel to the Company, in form and
substance satisfactory to Parent.
(c) Parent shall have received a written opinion from Xxxxxx Xxxxxxx PLLC,
in form and substance satisfactory to Parent, to the effect that the Merger
will constitute a reorganization within the meaning of Section 368 of the Code.
(d) Parent shall have received the fairness opinion referred to in Section
4.6 prior to the date of the Parent shareholder meeting and such fairness
opinion shall not have been withdrawn.
(e) The Company shall not have experienced any event, change or occurrence
that has had a material adverse effect upon the financial condition of the
Company and its subsidiaries taken as a whole.
SECTION 6.3. Conditions to the Obligation of the Company. The obligation
of the Company to effect the Merger shall be subject to the satisfaction or
waiver prior to the Effective Time of the following additional conditions:
(a) Each of the representations and warranties of Parent and Merger Sub
contained in this Plan shall have been true on the date hereof and shall be
true in all material respects on the Effective Date as if made on such date (or
on the date when made in the case of any representation or warranty which
specifically relates to an earlier date); Parent and Merger Sub shall have
performed, in all material respects, each of its covenants and agreements
contained in this Plan; and the Company shall have received certificates signed
by the Chief Financial Officer of Parent, dated the Effective Date, to the
foregoing effect.
(b) The Company shall have received a written opinion from Xxxxxx & Xxxxxx
Attorneys, P.C. in form and substance satisfactory to the Company, to the
effect that the Merger will constitute a reorganization within the meaning of
Section 368 of the Code.
(c) The fairness opinion referred to in Section 3.6 shall not have been
withdrawn.
(d) The Company shall have received a written opinion, dated the Effective
Date, from Xxxxxx Xxxxxxx PLLC, in form and substance satisfactory to the
Company.
45
51
(e) Parent shall not have experienced any event, change or occurence that
has had a material adverse effect upon the financial condition of Parent and
its subsidiaries taken as a whole.
ARTICLE VII. TERMINATION
SECTION 7.1. Termination. This Plan may be terminated, and the Merger
abandoned, prior to the Effective Date, either before or after its approval by
the shareholders of the Company or Parent;
(a) by mutual consent of the Boards of Directors of Parent and the
Company; or
(b) by either Parent or the Company, if any of the conditions to such
party's obligation to consummate the transactions contemplated in this Plan
shall have become impossible to satisfy if, but only if, such party has used
its best efforts and acted in good faith in attempting to satisfy all such
conditions and if such party is not then in breach or default in any material
respect of this Plan; or
(c) by the Board of Directors of Parent if (i) there has been a material
breach or default by the Company of any representation or warranty or in the
observance of its convenants and agreements contained in this Plan of which
notice has been given in writing by Parent and which has not been cured within
thirty (30) business days of receipt of such notice; or (ii) the Effective Time
has not occurred prior to September 30, 1997 without fault on the part of
Parent, or (iii) a public announcement with respect to an Acquisition Proposal
shall have been made by any person other than Parent or an affiliate of Parent
and the Board of Directors of the Company shall have (A) failed to publicly
reject or oppose such Acquisition Proposal within ten (10) days of the public
announcement of such proposal, plan or intention or (B) shall have modified,
amended or withdrawn its recommended approval of this Plan and the Merger to
the Company's shareholders; or
(d) by the Board of Directors of the Company if (i) there has been a
material breach or default by Parent of any representation or warranty or in
the observance of its covenants and agreements contained in this Plan of which
notice has been given in writing by the Company and which has not been cured
within thirty (30) business days of receipt of such notice; or (ii) the
Effective Time has not occurred prior to September 30, 1997 without fault on
the part of the Company; or
(e) by the Board of Directors of either Parent or the Company (i) if any
shareholder approval of the Company required for consummation of the Merger
shall not have been obtained by reason of the failure to obtain the required
vote at a duly held meeting of shareholders or at any adjournment or
postponement thereof; or (ii) if any shareholder approval of Parent required
for consummation of the Merger shall not have been obtained by reason of the
failure to obtain the required vote at a duly held meeting of shareholders or
at any adjournment or postponement thereof
46
52
or (iii) if any Regulatory Agency has denied approval for the Merger and, if
such denial is appealable, neither Parent nor the Company has filed a petition
seeking review of such order of denial or taken other similar action under
applicable law, within thirty (30) days after the issuance or entry by the
governmental agency of such order of denial; or
(f) by Parent pursuant to Section 5.13(b); or
(g) by Parent, at its sole discretion, at any time within twenty-two (22)
calendar days from the date Parent is advised in writing by Xxxxxx Xxxxxxxx
that its audit work papers for the Company's 1996 calendar year financial
results are available, in accordance with Section 5.3, for review by Parent and
its designees, and, if such advice is not provided by Xxxxxx Xxxxxxxx, at any
time prior to the Effective Time (the "Due Diligence Period"); or
(h) by the Company or Parent pursuant to Section 1.2(b).
SECTION 7.2. Effect of Termination. Subject to the provisions of Section
1.2(b), in the event of the termination of this Plan as provided in Section 7.1,
written notice thereof shall forthwith be given to the other party or parties
specifying the provision hereof pursuant to which such termination is made, and
this Plan shall forthwith become null and void, and there shall be no liability
on the part of Parent, Merger Sub, the Company, or any of their officers or
directors except (i) for fraud or willful and material breach of this Plan and
(ii) that Sections 5.3, 7.2, 9.2, 9.6 and 9.7 hereof shall survive any
termination of this Plan.
ARTICLE VIII. EFFECTIVE DATE AND EFFECTIVE TIME
SECTION 8.1. Effective Date and Effective Time. On such date as Parent
selects, which shall be within 30 days after the last to occur of the expiration
of all applicable waiting periods in connection with approvals of governmental
authorities occurs and the receipt of all approvals of governmental authorities
and all conditions to the consummation of the Merger are satisfied or waived, or
on such earlier or later date as may be agreed in writing by the parties, a
certificate of merger shall be executed in accordance with all appropriate legal
requirements and shall be filed as required by law, and the Merger provided for
herein shall become effective upon such filing or on such date and at such time
as may be specified in such certificate of merger. The date and time of such
filing or such later effective date is herein called the "Effective Date". The
"Effective Time" of the Merger shall be the time of such filing or as set forth
in such certificate of merger.
47
53
ARTICLE IX. OTHER MATTERS
SECTION 9.1. Certain Definitions; Interpretation. As used in this Plan,
the following terms shall have the meanings indicated:
"material" means material with respect to the entity in question and its
respective subsidiaries, taken as a whole.
"Material Adverse Effect", with respect to a person, means any condition,
event, change or occurrence that is reasonably likely to have a material
adverse effect upon (A) the condition (financial or other), properties,
assets, business, results of operations or prospects of such person and its
subsidiaries, taken as a whole, or (B) the ability of such person to
perform its obligations under, and to consummate the transactions
contemplated by, this Plan.
"person" includes an individual, corporation, partnership, association,
trust or unincorporated organization.
"subsidiary", with respect to a person, means any other person controlled
by such person.
When a reference is made in this Plan to Sections or Annexes, such reference
shall be to a Section of, or Annex to, this Plan unless otherwise indicated.
The table of contents and headings contained in this Plan are for ease of
reference only and shall not affect the meaning or interpretation of this Plan.
Whenever the words "include", "includes", or "including" are used in this
Plan, they shall be deemed followed by the words "without limitation". Any
singular term in this Plan shall be deemed to include the plural, and any
plural term the singular.
SECTION 9.2. Survival. Only those agreements and covenants of the parties
that are by their terms applicable in whole or in part after the Effective Time,
including the Stock Option Agreement, shall survive the Effective Time. All
other representations, warranties, agreements and covenants shall be deemed to
be conditions of the Plan and shall not survive the Effective Time.
SECTION 9.3. Waiver. Prior to the Effective Time, any provision of this
Plan may be: (i) waived by the party benefitted by the provision; or (ii)
amended or modified at any time (including the structure of the transaction) by
an agreement in writing between the parties hereto, except that, after the vote
by the shareholders of the Company, no amendment may be made that would
contravene the applicable sections of the State Corporation Law.
SECTION 9.4. Counterparts. This Plan may be executed and delivered in
counterparts each of which shall be deemed to constitute an original, but all of
which together shall constitute one and the same instrument.
48
54
SECTION 9.5. Governing Law. This Plan shall be governed by, and
interpreted in accordance with, the laws of the State of Michigan.
SECTION 9.6. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATED TO THIS PLAN OR THE TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 9.7. Expenses. Each party hereto will bear all expenses incurred by
it in connection with this Plan and the transactions contemplated hereby;
provided, however, that Parent and the Company shall share equally all fees and
expenses, other than accountants; attorneys' and filing fees, incurred in
connection with the printing and filing of the S-4 and the Joint Proxy Statement
(including any preliminary materials related thereto and any amendments or
supplements thereof).
SECTION 9.8. Notices. All notices, requests, acknowledgments and other
communications hereunder to a party shall be in writing and shall be deemed to
have been duly given when delivered by hand, telecopy, telegram, telex or
facsimile (confirmed in writing) to such party at its address set forth below or
such other address as such party may specify by notice to the other party
hereto.
If to the Company, to:
CB Financial Corporation
Xxx Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxx
With copies to:
Xxxxxx & Xxxxxx Attorneys, P.C.
000 Xxxx Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Facsimile:(000) 000-0000
Attention:Xxxxxx X. Xxxxxx, Esq.
49
55
If to Parent or Merger Sub, to:
Citizens Banking Corporation
Xxx Xxxxxxxx Xxxxxxx Xxxxxx
Xxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxxx
With copies to:
Xxxxxx Xxxxxxx PLLC
0000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxxx Xxxxx, Xxxxxxxx 00000-0000
Facsimile: (000) 000-0000
Attention: Xxx X. Xxxxxxxxxxx, Xx., Esq.
SECTION 9.9. Entire Agreement; Etc. This Plan and the Stock Option
Agreement represents the entire understanding of the parties hereto with
reference to the transactions contemplated hereby and supersedes any and all
other oral or written agreements heretofore made. All terms and provisions of
the Plan shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and assigns. Except as to Sections 5.6,
5.15 and 5.16 (which may only be enforced by any person who is not a party to
this Plan after the Effective Time), nothing in this Plan is intended to confer
upon any other person any rights or remedies of any nature whatsoever under or
by reason of this Plan.
SECTION 9.10. Assignment. This Plan may not be assigned by any party
hereto without the written consent of the other parties, except that Parent and
Merger Sub may assign all or any of their rights hereunder to any subsidiary
thereof provided that no such assignment shall relieve the assigning party of
its obligations hereunder.
[this space intentionally left blank]
50
56
IN WITNESS WHEREOF, the parties hereto have caused this Plan to be
executed by their duly authorized officers as of the day and year first above
written.
CITIZENS BANKING CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President and Chief Executive Officer
POLARIS ACQUISITION, INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
-----------------------------------------------
Name:Xxxxxx X. Xxxxxxxxx
Title:Secretary
CB FINANCIAL CORPORATION
By: /s/ Xxxxx X. Xxxx
-----------------------------------------------
Name: Xxxxx X. Xxxx
Title: Chairman and Chief Executive Officer
51
57
ANNEX 1
STOCK OPTION AGREEMENT
58
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of the 27th day of January, 1997 (this
"Agreement"), between Citizens Banking Corporation ("Grantee") and CB Financial
Corporation ("Issuer").
WITNESSETH:
WHEREAS, Grantee and Issuer, among others, are parties to an Agreement and
Plan of Merger, dated as of the 27th day of January, 1997 (the "Plan"), which
was executed by the parties hereto, among others; and
WHEREAS, as a condition and inducement to Grantee's not terminating the
Plan and in consideration therefor, Issuer is granting Grantee the option (as
defined below);
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements set forth herein and in the Plan, the parties hereto agree as
follows:
SECTION 1. Grant of Option. Issuer hereby grants to Grantee an
unconditional, irrevocable option (the "Option") to purchase, subject to the
terms hereof, up to 557,409 fully paid and nonassessable shares of common stock,
par value $7.50 per share ("Common Stock"), of Issuer at a price per share equal
to $37.66 (the "Initial Price"); provided, however, that in the event Issuer
issues or agrees to issue (other than pursuant to options to issue Common Stock
in effect as of the date hereof) any shares of Common Stock at a price less than
the Initial Price (as adjusted pursuant to Section 5(b)), such price shall be
equal to such lesser price (such price, as adjusted as hereinafter provided, the
"Option Price"). The number of shares of Common Stock that may be received upon
the exercise of the Option and the Option Price are subject to adjustment as
herein set forth.
SECTION 2. Exercise of Option.
(a) Grantee may exercise the Option, in whole or part, at any time and
from time to time following the occurrence of a Purchase Event (as defined
below); provided that the Option shall terminate and be of no further force and
effect upon the earliest to occur of (i) the time immediately prior to the
Effective Time, (ii) 12 months after the first occurrence of a Purchase Event,
(iii) 18 months after the termination of the Plan following the occurrence of a
Preliminary Purchase Event (as defined below), (iv) termination of the Plan in
accordance with the terms thereof prior to the occurrence of a Purchase Event
or a Preliminary Purchase Event (other than a termination of the Plan by Parent
pursuant to Section 7.1(c)(i) thereof) or (v) 12 months after the termination
of the Plan by Parent pursuant to Section 7.1(c)(i) thereof. The events
described in clauses (i)-(v) in the preceding sentence are hereinafter
collectively referred to as an "Exercise Termination Event."
(b) The term "Preliminary Purchase Event" shall mean any of the following
events or transactions occurring after the date hereof:
59
(i) Issuer or any of its subsidiaries (each an "Issuer
Subsidiary") without having received Grantee's prior written
consent, shall have entered into an agreement to engage in
an Acquisition Transaction (as defined below) with any
person (the term "person" for purposes of this Agreement
having the meaning assigned thereto in Sections 3(a)(9) and
13(d)(3) of the Securities Exchange Act of 1934 (the
"Securities Exchange Act"), and the rules and regulations
thereunder) other than Grantee or any of its subsidiaries
(each a "Grantee Subsidiary") or the Board of Directors of
Issuer shall have modified, amended or withdrawn its
recommendation or approval of the Plan or recommended that
the shareholders of Issuer approve or accept any Acquisition
Transaction with any person other than Grantee or any
Grantee Subsidiary. For purposes of this Agreement,
"Acquisition Transaction" shall mean (x) a merger or
consolidation, or any similar transaction, involving Issuer
or any of Issuer's bank subsidiaries ("Material
Subsidiaries"), (y) a purchase, lease or other acquisition
of all or substantially all of the assets of Issuer or any
Material Subsidiary or (z) a purchase or other acquisition
(including by way of merger, consolidation, share exchange
or otherwise) of securities representing 10% or more of the
voting power of Issuer or a Material Subsidiary; provided
that the term "Acquisition Transaction" does not include any
internal merger or consolidation involving only Issuer
and/or Issuer Subsidiaries;
(ii) Any person (other than Grantee or any Grantee Subsidiary)
shall have acquired beneficial ownership or the right to
acquire beneficial ownership of 10% or more of the
outstanding shares of Common Stock (the term "beneficial
ownership" for purposes of this Agreement having the meaning
assigned thereto in Section 13(d) of the Securities Exchange
Act, and the rules and regulations thereunder);
(iii) Any person other than Grantee or any Grantee Subsidiary
shall have made a bona fide proposal to Issuer or its
shareholders, by public announcement or written
communication that is or becomes the subject of public
disclosure, to engage in an Acquisition Transaction
(including, without limitation, any situation in which any
person other than Grantee or any subsidiary of Grantee shall
have commenced (as such term is defined in Rule 14d-2 under
the Exchange Act) or shall have filed a registration
statement under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to, a tender offer or
exchange offer to purchase any shares of Issuer Common Stock
such that, upon consummation of such offer, such person
would own or control 10% or more of the then outstanding
shares of Issuer Common Stock (such an offer being referred
to herein as a "Tender Offer" or an "Exchange Offer",
respectively));
60
(iv) After a proposal is made by a third party to Issuer or its
shareholders to engage in an Acquisition Transaction, Issuer
shall have breached any covenant or obligation contained in
the Plan and such breach would entitle Grantee to terminate
the Plan or the holders of Issuer Common Stock shall not
have approved the Plan at the meeting of such stockholders
held for the purpose of voting on the Plan, such meeting
shall not have been held or shall have been canceled prior
to termination of the Plan or Issuer's Board of Directors
shall have withdrawn or modified in a manner adverse to
Grantee the recommendation of Issuer's Board of Directors
with respect to the Plan; or
(v) Any person other than Grantee or any Grantee Subsidiary,
other than in connection with a transaction to which Grantee
has given its prior written consent, shall have filed an
application or notice with the Board of Governors of the
Federal Reserve System (the "Federal Reserve Board") or
other governmental authority or regulatory or administrative
agency or commission (each, a "Governmental Authority") for
approval to engage in an Acquisition Transaction.
(c) The term "Purchase Event" shall mean either of the following events or
transactions occurring after the date hereof:
(i) The acquisition by any person other than Grantee or any
Grantee Subsidiary of beneficial ownership of 25% or more of
the then outstanding Common Stock; or
(ii) The occurrence of a Preliminary Purchase Event described in
Section 2(b)(i) except that the percentage referred to in
clause (z) shall be 25%.
(d) Issuer shall notify Grantee promptly in writing of the occurrence of
any Preliminary Purchase Event or Purchase Event; provided, however, that the
giving of such notice by Issuer shall not be a condition to the right of
Grantee to exercise the option.
(e) In the event that Grantee is entitled to and wishes to exercise the
option, it shall send to Issuer a written notice (the "Option Notice" and the
date of which being hereinafter referred to as the "Notice Date") specifying
(i) the total number of shares of Common Stock it will purchase pursuant to
such exercise and (ii) a period of time (that shall not be less than three
business days nor more than thirty business days) running from the Notice Date
(the "Closing Date") and a place at which the closing of such purchase shall
take place; provided, that, if prior notification to or approval of the Federal
Reserve Board or any other Governmental Authority is required in connection
with such purchase (each, a "Notification" or an "Approval," as the case may
be), (a) Grantee shall promptly file, or cause to be filed, the required notice
or application for approval ("Notice/Application"), (b) Grantee shall
expeditiously process, or cause to be expeditiously processed, the
Notice/Application and (c) for the purpose of determining the Closing Date
pursuant to clause (ii) of this sentence, the period of time that otherwise
would run from the Notice Date shall
61
instead run from the later of (x) in connection with any Notification, the date
on which any required notification periods have expired or been terminated and
(y) in connection with any Approval, the date on which such approval has been
obtained and any requisite waiting period or periods shall have expired. For
purposes of Section 2(a), any exercise of the option shall be deemed to occur on
the Notice Date relating thereto. On or prior to the Closing Date, Grantee
shall have the right to revoke its exercise of the Option in the event that the
transaction constituting a Purchase Event that gives rise to such right to
exercise shall not have been consummated.
(f) At the closing referred to in Section 2(e), Grantee shall pay to
Issuer the aggregate purchase price for the shares of Common Stock specified in
the Option Notice in immediately available funds by wire transfer to a bank
account designated by Issuer; provided, however, that failure or refusal of
Issuer to designate such a bank account shall not preclude Grantee from
exercising the option.
(g) At such closing, simultaneously with the delivery of immediately
available funds as provided in Section 2(f), Issuer shall deliver to Grantee a
certificate or certificates representing the number of shares of Common Stock
specified in the Option Notice and, if the option should be exercised in part
only, a new option evidencing the rights of Grantee thereof to purchase the
balance of the shares of Common Stock purchasable hereunder.
(h) Certificates for Common Stock delivered at a closing hereunder shall
be endorsed with a restrictive legend substantially as follows:
The transfer of the shares represented by this certificate is subject
to resale restrictions arising under the Securities Act of 1933, as
amended, and to certain provisions of an agreement between Citizens
Banking Corporation and CB Financial Corporation ("Issuer") dated as
of the 27th day of January, 1997. A copy of such agreement is on file
at the principal office of Issuer and will be provided to the holder
hereof without charge upon receipt by Issuer of a written request
therefor.
It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act in the above legend shall be removed by delivery of
substitute certificate(s) without such reference if Grantee shall have delivered
to Issuer a copy of a letter from the staff of the Securities and Exchange
Commission (the "SEC"), or an opinion of counsel, in form and substance
satisfactory to Issuer, to the effect that such legend is not required for
purposes of the Securities Act; (ii) the reference to the provisions of this
Agreement in the above legend shall be removed by delivery of substitute
certificates without such reference, if the shares have been sold or transferred
in compliance with the provisions of this Agreement and under circumstances that
do not require the retention of such reference; and (iii) the legend shall be
removed in its entirety if the conditions in the preceding clauses (i) and (ii)
are both satisfied. In addition, such certificates shall bear any other legend
as may be required by law.
62
(i) Upon the giving by Grantee to Issuer of an Option Notice and the
tender of the applicable purchase price in immediately available funds on the
Closing Date, Grantee shall be deemed to be the holder of record of the number
of shares of Common Stock specified in the Option Notice, notwithstanding that
the stock transfer books of Issuer shall then be closed or that certificates
representing such shares of Common Stock shall not then actually be delivered
to Grantee. Issuer shall pay all expenses and any and all United States
federal, state, foreign and local taxes and other charges that may be payable
in connection with the preparation, issue and delivery of stock certificates
under this Section 2 in the name of Grantee.
SECTION 3. Agreements of Issuer. Issuer agrees: (i) that it shall at all
times until the termination of this Agreement have reserved for issuance upon
the exercise of the option that number of authorized and reserved shares of
Common Stock equal to the maximum number of shares of Common Stock at any time
and from time to time issuable hereunder, all of which shares will, upon
issuance pursuant hereto, be duly authorized, validly issued, fully paid,
nonassessable, and delivered free and clear of all claims, liens, encumbrances
and security interests and not subject to any preemptive rights; (ii) that it
will not, by amendment of its articles of incorporation or through
reorganization, consolidation, merger, dissolution or sale of assets, or by any
other voluntary act, avoid or seek to avoid the observance or performance of
any of the covenants, stipulations or conditions to be observed or performed
hereunder by Issuer; (iii) promptly to take all action as may from time to time
be required (including (x) complying with all premerger notification, reporting
and waiting period requirements specified in 15 U.S.C. Section 18a and
regulations promulgated thereunder and (y) in the event, under the Bank Holding
Company Act of 1956, as amended ("BHC Act"), or the Change in Bank Control Act
of 1978, as amended, or any state banking law, prior approval of or notice to
the Federal Reserve Board or to any other Governmental Authority is necessary
before the Option may be exercised, cooperating with Grantee in preparing such
applications or notices and providing such information to each such
Governmental Authority as it may require) in order to permit Grantee to
exercise the option and Issuer duly and effectively to issue shares of Common
Stock pursuant hereto; and (iv) to take all action provided herein to protect
the rights of Grantee against dilution.
SECTION 4. Exchange of Option. This Agreement (and the Option granted
hereby) are exchangeable, without expense, at the option of Grantee, upon
presentation and surrender of this Agreement at the principal office of Issuer,
for other agreements providing for Options of different denominations entitling
the holder thereof to purchase, on the same terms and subject to the same
conditions as are set forth herein, in the aggregate the same number of shares
of Common Stock purchasable hereunder. The terms "Agreement" and "Option" as
used herein include any agreements and related options for which this Agreement
(and the Option granted hereby) may be exchanged. Upon receipt by Issuer of
evidence reasonably satisfactory to it of the loss, theft, destruction or
mutilation of this Agreement, and (in the case of loss, theft or destruction)
of reasonably satisfactory indemnification, and upon surrender and cancellation
of this Agreement, if mutilated, Issuer will execute and deliver a new
Agreement of like tenor and date. Any such new Agreement executed and
delivered shall constitute an additional contractual obligation on the part of
Issuer, whether or not the Agreement so lost, stolen, destroyed or mutilated
shall at any time be enforceable by anyone.
63
SECTION 5. Adjustment Upon Changes in Capitalization. The number of
shares of Common Stock purchasable upon the exercise of the option shall be
subject to adjustment from time to time as follows:
(a) In the event of any change in the Common Stock by reason of stock
dividends, split-ups, mergers, recapitalizations, combinations, subdivisions,
conversions, exchanges of shares or the like, the type and number of shares of
Common Stock purchasable upon exercise hereof shall be appropriately adjusted
and proper provision shall be made so that, in the event that any additional
shares of Common Stock are to be issued or otherwise to become outstanding as a
result of any such change (other than pursuant to an exercise of the option),
the number of shares of Common Stock that remain subject to the Option shall be
increased so that, after such issuance and together with shares of Common Stock
previously issued pursuant to the exercise of the Option (as adjusted on
account of any of the foregoing changes in the Common Stock), it equals 19.9%
of the number of shares of Common Stock then issued and outstanding.
(b) Whenever the number of shares of Common Stock purchasable upon
exercise hereof is adjusted as provided in this Section 5, the Option Price
shall be adjusted by multiplying the Option Price by a fraction, the numerator
of which shall be equal to the number of shares of Common Stock purchasable
prior to the adjustment and the denominator of which shall be equal to the
number of shares of Common Stock purchasable after the adjustment.
SECTION 6. Registration Rights.
(a) At any time after the occurrence of a Purchase Event, Issuer shall, at
the request of Grantee (whether on its own behalf or on behalf of any
subsequent holder of the Option (or part thereof) or any of the shares of
Common Stock issued pursuant hereto), promptly prepare, file and keep current a
shelf registration statement under the Securities Act covering any shares
issued and issuable pursuant to the Option and shall use its best efforts to
cause such registration statement to become effective, and to remain current
and effective for a period not in excess of 180 days from the day such
registration statement first becomes effective, in order to permit the sale or
other disposition of any shares of Common Stock issued upon total or partial
exercise of the Option ("Option Shares") in accordance with any plan of
disposition requested by Grantee; provided, however, that Issuer may postpone
filing a registration statement relating to a registration request by Grantee
under this Section 6 for a period of time (not in excess of 30 days) if in its
judgment such filing would require the disclosure of material information that
Issuer has a bona fide business purpose for preserving as confidential.
Grantee shall have the right to demand two such registrations. The foregoing
notwithstanding, if, at the time of any request by Grantee for registration of
option Shares as provided above, Issuer is in the process of registration with
respect to an underwritten public offering of shares of Common Stock, and if in
the good faith judgment of the managing underwriter or managing underwriters,
or, if none, the sole underwriter or underwriters, of such offering the
offering or inclusion of the Option Shares would interfere materially with the
successful marketing of the shares of Common Stock offered by Issuer, the
number of Option Shares otherwise to be covered in the registration statement
contemplated hereby may be reduced; provided, however, that after any such
required reduction the number of Option Shares to be included in such offering
for the account of Grantee shall constitute at least 33 1/3%
64
of the total number of shares of Grantee and Issuer covered in such registration
statement; provided further, however, that if such reduction occurs, then Issuer
shall file a registration statement for the balance as promptly as practicable
thereafter as to which no reduction pursuant to this Section 6(a) shall be
permitted or occur and the Grantee shall thereafter be entitled to one
additional registration statement. Grantee shall provide all information
reasonably requested by Issuer for inclusion in any registration statement to be
filed hereunder. In connection with any such registration, Issuer and Grantee
shall provide each other with representations, warranties, indemnities and other
agreements customarily given in connection with such registrations. If requested
by Grantee in connection with such registration, Issuer and Grantee shall become
a party to any underwriting agreement relating to the sale of such shares, but
only to the extent of obligating themselves in respect of representations,
warranties, indemnities and other agreements customarily included in such
underwriting agreements. Notwithstanding the foregoing, if Grantee revokes any
exercise notice or fails to exercise any option with respect to any exercise
notice pursuant to Section 2(e), Issuer shall not be obligated to continue any
registration process with respect to the sale of Option Shares issuable upon the
exercise of such Option and Grantee shall not be deemed to have demanded
registration of Option Shares.
(b) In the event that Grantee requests Issuer to file a registration
statement following the failure to obtain any approval required to exercise the
Option as described in Section 9, the closing of the sale or other disposition
of the Common Stock or other securities pursuant to such registration statement
shall occur substantially simultaneously with the exercise of the Option.
SECTION 7. Repurchase of Option.
(a) Upon the occurrence of a Purchase Event that occurs prior to an
Exercise Termination Event, (i) at the request (the date of such request being
the "Option Repurchase Request Date") of Grantee, Issuer shall repurchase the
Option from Grantee at a price (the "Option Repurchase Price") equal to the
amount by which (A) the market/offer price (as defined below) exceeds (B) the
Option Price, multiplied by the number of shares for which the Option may then
be exercised and (ii) at the request (the date of such request being the
"Option Share Repurchase Request Date") of the owner of Option Shares from time
to time (the "Owner"), Issuer shall repurchase such number of the Option Shares
from the Owner as the Owner shall designate at a price (the "Option Share
Repurchase Price") equal to the market/offer price multiplied by the number of
Option Shares so designated. The term "market/offer price" shall mean the
highest of (i) the price per share of Common Stock at which a tender offer or
exchange offer therefor has been made after the date hereof and on or prior to
the Option Repurchase Request Date or the Option Share Repurchase Request Date,
as the case may be, (ii) the price per share of Common Stock paid or to be paid
by any third party pursuant to an agreement with Issuer (whether by way of a
merger, consolidation or otherwise), (iii) the highest last sale price for
shares of Common Stock within the 360-day period ending on the Option
Repurchase Request Date or the Option Share Repurchase Request Date, as the
case may be, listed on either the OTC Bulletin Board, The Nasdaq Stock Market
or such other principal market or exchange on which the Common Stock is traded
(as reported by The Wall Street Journal, or, if not reported thereby, another
authoritative source), (iv) in the event of a sale of all or substantially all
of Issuer's assets, the sum of the price paid in such sale for such assets and
the current market value of the remaining assets of Issuer as determined by a
nationally-recognized independent investment banking firm selected by Grantee
or the Owner, as the case may be, divided by the number of shares of Common
Stock of Issuer outstanding at the time of such sale. In determining the
market/offer price, the value of consideration other than cash shall be the
value determined by a nationally-recognized
65
independent investment banking firm selected by Grantee or the Owner, as the
case may be, whose determination shall be conclusive and binding on all parties.
(b) Grantee or the Owner, as the case may be, may exercise its right to
require Issuer to repurchase the Option and/or any Option Shares pursuant to
this Section 7 by surrendering for such purpose to Issuer, at its principal
office, a copy of this Agreement or certificates for option Shares, as
applicable, accompanied by a written notice or notices stating that Grantee or
the Owner, as the case may be, elects to require Issuer to repurchase the
Option and/or the Option Shares in accordance with the provisions of this
Section 7. As promptly as practicable, and in any event within five business
days after the surrender of the Option and/or certificates representing Option
Shares and the receipt of such notice or notices relating thereto, Issuer shall
deliver or cause to be delivered to Grantee the Option Repurchase Price or to
the Owner the Option Share Repurchase Price or the portion thereof that Issuer
is not then prohibited from so delivering under applicable law and regulation
or as a consequence of administrative policy.
(c) Issuer hereby undertakes to use its best efforts to obtain all
required regulatory and legal approvals and to file any required notices as
promptly as practicable in order to accomplish any repurchase contemplated by
this Section 7. Nonetheless, to the extent that Issuer is prohibited under
applicable law or regulation, or as a consequence of administrative policy,
from repurchasing any Option and/or any Option Shares in full, Issuer shall
promptly so notify Grantee and/or the Owner and thereafter deliver or cause to
be delivered, from time to time, to Grantee and/or the Owner, as appropriate,
the portion of the Option Repurchase Price and the Option Share Repurchase
Price, respectively, that it is no longer prohibited from delivering, within
five business days after the date on which Issuer is no longer so prohibited;
provided, however, that if Issuer at any time after delivery of a notice of
repurchase pursuant to Section 7(b) is prohibited under applicable law or
regulation, or as a consequence of administrative policy, from delivering to
Grantee and/or the Owner, as appropriate, the Option Repurchase Price or the
Option Share Repurchase Price, respectively, in full, Grantee or the Owner, as
appropriate, may revoke its notice of repurchase of the Option or the Option
Shares either in whole or in part whereupon, in the case of a revocation in
part, Issuer shall promptly (i) deliver to Grantee and/or the Owner, as
appropriate, that portion of the Option Purchase Price or the Option Share
Repurchase Price that Issuer is not prohibited from delivering after taking
into account any such revocation and (ii) deliver, as appropriate, either (A)
to Grantee, a new Agreement evidencing the right of Grantee to purchase that
number of shares of Common Stock equal to the number of shares of Common Stock
purchasable immediately prior to the delivery of the notice of repurchase less
the number of shares of Common Stock covered by the portion of the Option
repurchased or (B) to the Owner, a certificate for the number of Option Shares
covered by the revocation.
(d) Issuer shall not enter into any agreement with any party (other than
Grantee or a Grantee Subsidiary) for an Acquisition Transaction unless the
other party thereto assumes all the obligations of Issuer pursuant to this
Section 7 in the event that Grantee or the Owner elects, in its sole
discretion, to require such other party to perform such obligations.
66
SECTION 8. Substitution of Option.
(a) In the event that prior to an Exercise Termination Event, Issuer shall
enter into an agreement (i) to consolidate or merge with any person, other than
Grantee or a Grantee Subsidiary, and shall not be the continuing or surviving
corporation of such consolidation or merger, (ii) to permit any person, other
than Grantee or a Grantee Subsidiary, to merge into Issuer and Issuer shall be
the continuing or surviving corporation, but, in connection with such merger,
the then outstanding shares of Common Stock shall be changed into or exchanged
for stock or other securities of any other person or cash or any other property
or the then outstanding shares of Common Stock shall after such merger
represent less than 50% of the outstanding shares and share equivalents of the
merged company, or (iii) to sell or otherwise transfer all or substantially all
of its or any Material Subsidiary's assets to any person, other than Grantee or
a Grantee Subsidiary, then, and in each such case, the agreement governing such
transaction shall make proper provision so that the Option shall, upon the
consummation of such transaction and upon the terms and conditions set forth
herein, be converted into, or exchanged for, an option (the "Substitute
Option"), at the election of Grantee, of either (x) the Acquiring Corporation
(as defined below) or (y) any person that controls the Acquiring Corporation
(the Acquiring Corporation and any such controlling person being hereinafter
referred to as the "Substitute Option Issuer").
(b) The Substitute Option shall be exercisable for such number of shares
of the Substitute Common Stock (as is hereinafter defined) as is equal to the
market/offer price (as defined in Section 7) multiplied by the number of shares
of the Issuer Common Stock for which the Option was theretofore exercisable,
divided by the Average Price (as is hereinafter defined). The exercise price
of the Substitute Option per share of the Substitute Common Stock (the
"Substitute Purchase Price") shall then be equal to the Option Price multiplied
by a fraction in which the numerator is the number of shares of the Issuer
Common Stock for which the Option was theretofore exercisable and the
denominator is the number of shares for which the Substitute Option is
exercisable.
(c) The Substitute Option shall otherwise have the same terms as the
Option, provided that if the terms of the Substitute Option cannot, for legal
reasons, be the same as the option, such terms shall be as similar as possible
and in no event less advantageous to Grantee, and provided further that the
terms of the Substitute Option shall include (by way of example and not
limitation) provisions for the repurchase of the Substitute Option and
Substitute Common Stock by the Substitute Option Issuer on the same terms and
conditions as provided in Section 7.
(d) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (i) the continuing or
surviving corporation of a consolidation or merger with
Issuer (if other than Issuer), (ii) Issuer in a merger in
which Issuer is the continuing or surviving person, and
(iii) the transferee of all or any substantial part of the
Issuer's assets (or the assets of any of Issuer's Material
Subsidiaries).
(ii) "Substitute Common Stock" shall mean the common stock issued
by the Substitute Option Issuer upon exercise of the
Substitute Option.
67
(iii) "Average Price" shall mean the average closing price of a
share of the Substitute Common Stock for the one year
immediately preceding the consolidation, merger or sale in
question, but in no event higher than the closing price of
the shares of the Substitute Common Stock on the day
preceding such consolidation, merger or sale; provided that
if Issuer is the issuer of the Substitute Option, the
Average Price shall be computed with respect to a share of
common stock issued by Issuer, the person merging into
Issuer or by any company which controls or is controlled by
such merging person, as Grantee may elect.
(e) In no event, pursuant to any of the foregoing paragraphs, shall the
Substitute Option be exercisable for more than 19.9% of the aggregate of the
shares of the Substitute Common Stock outstanding immediately prior to the
issuance of the Substitute Option. In the event that the Substitute Option
would be exercisable for more than 19.9% of the aggregate of the shares of
Substitute Common Stock but for this clause (e), the Substitute Option Issuer
shall make a cash payment to Grantee equal to the excess of (i) the value of
the Substitute Option without giving effect to the limitation in this clause
(e) over (ii) the value of the Substitute Option after giving effect to the
limitation in the clause (e). This difference in value shall be determined by
a nationally recognized investment banking firm selected by Grantee and the
Substitute Option Issuer.
SECTION 9. Approvals. Notwithstanding Sections 2, 6 and 7, if Grantee has
given the notice referred to in one or more of such Sections, the exercise of
the rights specified in any such Section shall be extended (a) if the exercise
of such rights requires obtaining regulatory approvals (including any required
waiting periods) to the extent necessary to obtain all regulatory approvals for
the exercise of such rights, and (b) to the extent necessary to avoid liability
under Section 16(b) of the Securities Exchange Act by reason of such exercise;
provided that in no event shall any closing date occur more than 18 months
after the related Notice Date, and, if the closing date shall not have occurred
within such period due to the failure to obtain any required approval by the
Federal Reserve Board or any other Governmental Authority despite the best
efforts of Issuer or the Substitute Option Issuer, as the case may be, to
obtain such approvals, the exercise of the Option shall be deemed to have been
rescinded as of the related Notice Date. In the event (a) Grantee receives
official notice that an approval of the Federal Reserve Board or any other
Governmental Authority required for the purchase and sale of the Option Shares
will not be issued or granted or (b) a closing date has not occurred within 18
months after the related Notice Date due to the failure to obtain any such
required approval, Grantee shall be entitled to exercise the option in
connection with the resale of the Option Shares pursuant to a registration
statement as provided in Section 6. Nothing contained in this Agreement shall
restrict Grantee from specifying alternative means of exercising rights
pursuant to Sections 2, 6 or 7 hereof in the event that the exercising of any
such rights shall not have occurred due to the failure to obtain any required
approval referred to in this Section 9.
SECTION 10. Representations and Warranties of Issuer. Issuer hereby
represents and warrants to Grantee as follows:
68
(a) Issuer has the requisite corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly approved by the Board of
Directors of Issuer and no other corporate proceedings on the part of Issuer
are necessary to authorize this Agreement or to consummate the transactions so
contemplated. This Agreement has been duly executed and delivered by, and
constitutes a valid and binding obligation of, Issuer, enforceable against
Issuer in accordance with its terms.
(b) Issuer has taken all necessary corporate action to authorize and
reserve and to permit it to issue, and at all times from the date hereof
through the termination of this Agreement in accordance with its terms will
have reserved for issuance upon the exercise of the Option, that number of
shares of Common Stock equal to the maximum number of shares of Common Stock at
any time and from time to time issuable hereunder, and all such shares, upon
issuance pursuant hereto, will be duly authorized, validly issued, fully paid,
nonassessable, and will be delivered free and clear of all claims, liens,
encumbrances and security interests and not subject to any preemptive rights.
SECTION 11. Assignment.
(a) Neither of the parties hereto may assign any of its rights or delegate
any of its obligations under this Agreement or the Option created hereunder to
any other person without the express written consent of the other party, except
that Grantee may assign this Agreement to a wholly owned subsidiary of Grantee
and Grantee may assign its rights hereunder in whole or in part after the
occurrence of a Preliminary Purchase Event; provided, however, that until the
date at which the Federal Reserve Board has approved an application by Grantee
under the BHC Act to acquire the shares of Common Stock subject to the Option,
Grantee may not assign its rights under the Option, other than to a wholly
owned subsidiary of Grantee, except in (i) a widely dispersed public
distribution, (ii) a private placement in which no one party acquires the right
to purchase in excess of 2% of the voting shares of Issuer, (iii) an assignment
to a single party (e.g., a broker or investment banker) for the purpose of
conducting a widely dispersed public distribution on Grantee's behalf, or (iv)
any other manner approved by the Federal Reserve Board. The term "Grantee" as
used in this Agreement shall also be deemed to refer to Grantee's permitted
assigns.
(b) Any assignment of rights of Grantee to any permitted assignee of
Grantee hereunder shall bear the restrictive legend at the beginning thereof
substantially as follows:
The transfer of the option represented by this assignment and the
related option agreement is subject to resale restrictions arising
under the Securities Act of 1933, as amended, and to certain
provisions of an agreement between Citizens Banking Corporation and CB
Financial Corporation, ("Issuer") dated as of the 27th day of January,
1997. A copy of such agreement is on file at the principal office of
Issuer and will be provided to any permitted assignee of the option
without change upon receipt by Issuer of a written request therefor.
69
It is understood and agreed that (i) the reference to the resale restrictions of
the Securities Act in the above legend shall be removed by delivery of
substitute assignments without such reference if Grantee shall have delivered to
Issuer a copy of a letter from the staff of the SEC, or an opinion of counsel,
in form and substance satisfactory to Issuer, to the effect that such legend is
not required for purposes of the Securities Act; (ii) the reference to the
provisions of this Agreement in the above legend shall be removed by delivery of
substitute assignments without such reference if the Option has been sold or
transferred in compliance with the provisions of this Agreement and under
circumstances that do not require the retention of such reference; and (iii) the
legend shall be removed in its entirety if the conditions in the preceding
clauses (i) and (ii) are both satisfied. In addition, such assignments shall
bear any other legend as may be required by law.
SECTION 12. Consents. Each of Grantee and Issuer will use its reasonable
efforts to make all filings with, and to obtain consents of, all third parties
and Governmental Authorities necessary for the consummation of the transactions
contemplated by this Agreement, including, without limitation, making
application, if necessary, for listing of the shares of Common Stock issuable
hereunder on any exchange or quotation system and applying to the Federal
Reserve Board under the BHC Act and to state and foreign banking authorities for
approval to acquire the shares issuable hereunder.
SECTION 13. Specific Performance. The parties hereto acknowledge that
damages would be an inadequate remedy for a breach of this Agreement by either
party hereto and that the obligations of the parties shall hereto be enforceable
by either party hereto through injunctive or other equitable relief. Both
parties further agree to waive any requirement for the securing or posting of
any bond in connection with the obtaining of any such equitable relief and that
this provision is without prejudice to any other rights that the parties hereto
may have for any failure to perform this Agreement.
SECTION 14. Severability. If any term, provision, covenant or restriction
contained in this Agreement is held by a court or a federal or state regulatory
agency of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, provisions and covenants and restrictions contained in
this Agreement shall remain in full force and effect, and shall in no way be
affected, impaired or invalidated. If for any reason such court or regulatory
agency determines that Grantee is not permitted to acquire, or Issuer is not
permitted to repurchase pursuant to Section 7, the full number of shares of
Common Stock provided in Section 1 (as adjusted pursuant hereto), it is the
express intention of Issuer to allow Grantee to acquire or to require Issuer to
repurchase such lesser number of shares as may be permissible, without any
amendment or modification hereof.
SECTION 15. Notices. All notices, requests, claims, demands and other
communications hereunder shall be deemed to have been duly given when delivered
in person, by cable, telegram, telecopy or telex, or by registered or certified
mail (postage prepaid, return receipt requested) at the respective addresses of
the parties set forth in the Plan.
SECTION 16. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Michigan.
70
SECTION 17. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement and shall be effective at the time
of execution.
SECTION 18. Expenses. Except as otherwise expressly provided herein, each
of the parties hereto shall bear and pay all costs and expenses incurred by it
or on its behalf in connection with the transactions contemplated hereunder,
including fees and expenses of its own financial consultants, investment
bankers, accountants and counsel.
SECTION 19. Entire Agreement; No Third-Party Beneficiary. Except as
otherwise expressly provided herein or in the Plan, this Agreement contains the
entire agreement between the parties with respect to the transactions
contemplated hereunder and supersedes all prior arrangements or understandings
with respect thereof, written or oral. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the parties hereto
and their respective successors and permitted assigns. Nothing in this
Agreement, expressed or implied, is intended to confer upon any party, other
than the parties hereto, and their respective successors except as assigns, any
rights, remedies, obligations or liabilities under or by reason of this
Agreement, except as expressly provided herein.
SECTION 20. Definitions. Capitalized terms used in this Agreement and not
defined herein but defined in the Plan shall have the meanings assigned thereto
in the Plan.
SECTION 21. Conflict With Plan. Nothing contained in this Agreement shall
be deemed to authorize Issuer or Grantee to breach any provision of the Plan.
SECTION 22. Majority in Interest. In the event that any selection or
determination is to be made by Grantee or the Owner hereunder and at the time
of such selection or determination there is more than one Grantee or Owner,
such selection shall be made by a majority in interest of such Grantees or
Owners.
SECTION 23. Further Assurances. In the event of any exercise of the
option by Grantee, Issuer and such Grantee shall execute and deliver all other
documents and instruments and take all other action that may be reasonably
necessary in order to consummate the transactions provided for by such
exercise.
SECTION 24. Shareholder Rights. Except to the extent Grantee exercises
the Option, Grantee shall have no rights to vote or receive dividends or have
any other rights as a shareholder with respect to shares of Common Stock
covered hereby.
SECTION 25. Descriptive Headings. The descriptive headings contained
herein are for convenience of reference only and shall not affect in any way
the meaning or interpretation of this Agreement.
[this space intentionally left blank]
71
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by their officers thereunto duly authorized, all as of
the date first above written.
CB FINANCIAL CORPORATION
By:____________________________________________
Name: Xxxxx X. Xxxx
Title: Chairman and Chief Executive Officer
CITIZENS BANKING CORPORATION
By:____________________________________________
Name: Xxxxxx X. Xxxxxx
Title: President and Chief Executive Officer
72
ANNEX 2
AFFILIATE LETTER
73
[AFFILIATE LETTER]
[Date]
Citizens Banking Corporation
Xxx Xxxxxxxx Xxxxxxx Xxxxxx
Xxxxx, Xxxxxxxx 00000
Gentlemen:
This letter agreement (this "Agreement") is being delivered in accordance
with Section 5.11 of the Agreement and Plan of Merger, dated as of January 27,
1997 (the "Merger Agreement"), by and among Citizens Banking Corporation
("Parent"), Polaris Acquisition, Inc., a wholly-owned subsidiary of Parent
("Merger Sub") and CB Financial Corporation (the "Company"). The Merger
Agreement provides, among other things, for the merger of Merger Sub with and
into the Company (the "Merger"), pursuant to which each share of the common
stock, par value $7.50 per share ("Company Common Stock"), of the Company will
be converted into shares of common stock of Parent ("Parent Common Stock," and,
together with the Company Common Stock, the "Common Stock"), on the basis
described in the Merger Agreement.
1. The undersigned ("Shareholder") hereby represents, warrants, covenants
and agrees as follows:
(a) Shareholder has full power to execute this Agreement and to make
the representations, warranties, covenants and agreements herein and to perform
its obligations hereunder.
(b) Shareholder understands that as of the date of this letter it may
be deemed to be an "affiliate" of [the Company] [Parent] as such term is (i)
used in Rule 145 of the General Rules and Regulations (the "Rules and
Regulations") of the Securities and Exchange Commission (the "SEC") under the
Securities Act of 1933 (the "Securities Act"), or (ii) used in and for purposes
of Accounting Series, Releases 130 and 135 of the SEC (an "Affiliate").
(c) Shareholder is the beneficial or record owner of shares of Common
Stock and/or options, warrants or other rights exercisable for or convertible
into shares of Common Stock (collectively, the "Rights"), (all such shares and
Rights, including any hereafter acquired, the "Shares").
(d) Shareholder will not sell, transfer or otherwise dispose of or
offer or agree to sell, transfer or dispose of or in any other way reduce
Shareholder's risk of ownership or investment in (any of the foregoing, a
"Disposition") any of the shares of Parent Common Stock issued to the
74
undersigned in the Merger pursuant to the terms of the Merger Agreement (the
"Parent Shares") in violation of the Securities Act or the Rules and
Regulations.
(e) Shareholder understands that the issuance of Parent Common Stock
pursuant to the Merger has been registered with the SEC under the Securities Act
on a Registration Statement on Form S-4 and that, because at the time the Merger
Agreement is submitted to a vote of the stockholders of the Company, Shareholder
may be deemed to be an Affiliate of [the Company] [Parent] and the distribution
by Shareholder of any shares of Parent Common Stock has not been registered
under the Securities Act, Shareholder may not make any Disposition of the Parent
Shares unless (i) such Disposition has been registered under the Securities Act,
(ii) such Disposition is made in conformity with Rule 145 promulgated by the SEC
under the Securities Act, or (iii) Parent has received an opinion of counsel,
which opinion and counsel shall be reasonably acceptable to Parent, to the
effect that such Disposition is otherwise exempt from registration under the
Securities Act.
(f) Shareholder understands that stop transfer instructions will be
given to all transfer agents for the Parent Common Stock (with respect to Parent
Shares) and that there will be placed on the certificates evidencing the Parent
Shares, or any replacements or substitutions 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 BE TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF AN
AGREEMENT DATED , 1997 BETWEEN THE REGISTERED HOLDER HEREOF AND
CITIZENS BANKING CORPORATION AND, A COPY OF WHICH AGREEMENT IS ON
FILE AT THE PRINCIPAL OFFICES OF CITIZENS BANKING CORPORATION.
(g) Shareholder also understands that unless a Disposition of the
Parent Shares has been registered under the Securities Act or is made in
conformity with the provisions of Rule 145, Parent reserves the right to put the
following legend on the certificates evidencing any of the Parent Shares issued
to any transferee of Shareholder:
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
75
SHARES MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT
IN ACCORDANCE WITH AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT OF 1933.
(h) It is understood and agreed that the legends set forth in
Sections 1(f) and 1(g) above shall be removed by delivery of substitute
certificates without such legend if Shareholder has delivered to Parent (i) an
opinion of counsel (or other evidence), which opinion and counsel (or such other
evidence) shall be reasonably satisfactory to Parent, or a letter from the staff
of the SEC, to the effect that such legend is not required for purposes of the
Rules and Regulations or the Securities Act or (ii) evidence or representations
satisfactory to Parent that the Parent Shares represented by such certificates
are being or have been sold in a transaction made in conformity with Rule
145(d).
2. Shareholder understands that the Merger will be accounted for using the
"pooling-of-interests" method and that such treatment for financial accounting
purposes is dependent upon the accuracy of certain of the representations and
warranties, and the compliance by Shareholder with certain of the covenants and
agreements, set forth herein. Accordingly, Shareholder further hereby
covenants and agrees (in addition to the other covenants and agreements in this
Agreement) that it will not make any Disposition: (i) of the Shares in the
30-day period immediately preceding the Effective Time or (ii) of the Parent
Shares after the Effective Time until Parent shall have publicly released a
report including the combined financial results of Parent and the Company for a
period of at least 30 days of combined operations of Parent and the Company.
Shareholder understands that stop transfer instructions will be given to the
transfer agents of Parent and the Company in order to prevent any breach of the
covenants and agreements made by Shareholder in this Section 2, although such
stop transfer instructions will be promptly rescinded upon the publication of
the financial report referred to in clause (ii) of the immediately preceding
sentence.
3. Shareholder further understands and agrees that the representations,
warranties, covenants and agreements of Shareholder set forth herein are for
the benefit of Parent, the Company and the Surviving Corporation (as defined in
the Merger Agreement) in the Merger and will be relied upon by such entities
and their respective counsel and accountants.
76
4. This Agreement will be binding upon and enforceable against
administrators, executors, representatives, heirs, legatees and devisees of
Shareholder and any pledgees holding the Shares as collateral. If the Merger
Agreement is terminated in accordance with its terms prior to the Effective
Time, this Agreement will thereupon automatically terminate.
Very truly yours,
______________________________
Name:
Address:______________________
______________________
______________________
AGREED TO AND ACCEPTED:
CITIZENS BANKING CORPORATION
By:___________________________
Name:
Title:
