Exhibit 2.3
AGREEMENT AND PLAN OF MERGER
BETWEEN
PEOPLES BUILDING, LOAN AND SAVINGS COMPANY
AND
HARVEST HOME FINANCIAL CORPORATION
DATED AS OF SEPTEMBER 30, 1999
AGREEMENT AND PLAN OF MERGER
TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS.............................................................................. 1
ARTICLE II THE MERGER............................................................................... 6
2.1 The Merger............................................................................... 6
2.2 Effective Time; Closing.................................................................. 7
2.3 Treatment of Capital Stock............................................................... 7
2.4 Shareholder Rights; Stock Transfers...................................................... 8
2.5 Dissenting Shares........................................................................ 8
2.6 Options.................................................................................. 8
2.7 Exchange Procedures...................................................................... 9
2.8 Additional Actions....................................................................... 11
ARTICLE III REPRESENTATIONS AND WARRANTIES
OF THE COMPANY.......................................................................... 11
3.1 Capital Structure........................................................................ 11
3.2 Organization, Standing and Authority of the Company...................................... 12
3.3 Ownership of the Company Subsidiaries.................................................... 12
3.4 Organization, Standing and Authority of
the Bank............................................................................... 12
3.5 Authorized and Effective Agreement....................................................... 13
3.6 Securities Documents and Regulatory Reports.............................................. 14
3.7 Financial Statements..................................................................... 14
3.8 Material Adverse Change.................................................................. 15
3.9 Environmental Matters.................................................................... 15
3.10 Tax Matters.............................................................................. 16
3.11 Legal Proceedings........................................................................ 17
3.12 Compliance with Laws..................................................................... 17
3.13 Certain Information...................................................................... 18
3.14 Employee Benefit Plans................................................................... 18
3.15 Certain Contracts........................................................................ 19
3.16 Brokers and Finders...................................................................... 20
3.17 Insurance................................................................................ 20
3.18 Properties............................................................................... 21
3.19 Labor.................................................................................... 21
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3.20 Affiliates............................................................................... 21
3.21 Year 2000 Compliance..................................................................... 21
3.22 Disclosures.............................................................................. 22
ARTICLE IV REPRESENTATIONS AND WARRANTIES
OF PEOPLES............................................................................. 22
4.1 Capital Structure........................................................................ 22
4.2 Organization, Standing and Authority of Peoples and the Holding
Company ............................................................................... 22
4.3 Ownership of the Peoples Subsidiaries.................................................... 23
4.4 Authorized and Effective Agreement....................................................... 23
4.5 Regulatory Reports....................................................................... 24
4.6 Financial Statements..................................................................... 25
4.7 Material Adverse Change.................................................................. 25
4.8 Environmental Matters.................................................................... 25
4.9 Tax Matters.............................................................................. 26
4.10 Legal Proceedings........................................................................ 27
4.11 Compliance with Laws..................................................................... 27
4.12 Certain Information...................................................................... 28
4.13 Employee Benefit Plans................................................................... 28
4.14 Certain Contracts........................................................................ 29
4.15 Brokers and Finders...................................................................... 30
4.16 Insurance................................................................................ 30
4.17 Properties............................................................................... 30
4.18 Labor.................................................................................... 30
4.19 Ownership of Company Common Stock........................................................ 31
4.20 Year 2000 Compliance..................................................................... 31
4.21 Disclosures.............................................................................. 31
ARTICLE V COVENANTS................................................................................ 32
5.1 Reasonable Best Efforts.................................................................. 32
5.2 Shareholder and Member Meetings.......................................................... 32
5.3 Regulatory Matters....................................................................... 32
5.4 Investigation and Confidentiality........................................................ 33
5.5 Press Releases........................................................................... 34
5.6 Business of the Parties.................................................................. 34
5.7 Certain Actions.......................................................................... 38
5.8 Current Information...................................................................... 38
5.9 Indemnification; Insurance............................................................... 38
5.10 Directors................................................................................ 40
5.11 Employees and Employee Benefit Plans..................................................... 40
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5.12 Bank Merger.............................................................................. 43
5.13 Organization of the Holding Company...................................................... 43
5.14 Affiliates' Letters...................................................................... 44
5.15 Accountants' Letters..................................................................... 44
5.16 Integration of Policies.................................................................. 44
5.17 Disclosure Supplements................................................................... 44
5.18 Failure to Fulfill Conditions............................................................ 44
ARTICLE VI CONDITIONS PRECEDENT..................................................................... 45
6.1 Conditions Precedent - Peoples and the Company........................................... 45
6.2 Conditions Precedent - The Company....................................................... 46
6.3 Conditions Precedent - Peoples........................................................... 47
ARTICLE VII TERMINATION, WAIVER AND AMENDMENT........................................................ 48
7.1 Termination.............................................................................. 48
7.2 Effect of Termination.................................................................... 49
7.3 Survival of Representations, Warranties
and Covenants.......................................................................... 49
7.4 Waiver................................................................................... 49
7.5 Amendment or Supplement.................................................................. 50
ARTICLE VIII MISCELLANEOUS.................................................................................... 50
8.1 Expenses; Termination Fees............................................................... 50
8.2 Entire Agreement......................................................................... 52
8.3 No Assignment............................................................................ 52
8.4 Notices.................................................................................. 52
8.5 Alternative Structure.................................................................... 53
8.6 Interpretation........................................................................... 53
8.7 Counterparts............................................................................. 53
8.8 Governing Law............................................................................ 54
Exhibit A Form of Shareholder Agreement
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AGREEMENT AND PLAN OF MERGER
Agreement and Plan of Merger (the "Agreement"), dated as of September
30, 1999, by and among People's Building, Loan and Savings Company ("Peoples"),
an Ohio chartered savings and loan association, and Harvest Home Financial
Corporation (the "Company"), an Ohio corporation.
W I T N E S S E T H:
WHEREAS, the Boards of Directors of Peoples and the Company have
determined to consummate the business combination transactions provided for
herein, subject to the terms and conditions set forth herein; and
WHEREAS, the parties desire to provide for certain undertakings,
conditions, representations, warranties and covenants in connection with the
transactions contemplated hereby.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, the parties hereto do hereby agree as
follows:
ARTICLE I
DEFINITIONS
The following terms shall have the meanings ascribed to them for all
purposes of this Agreement.
"Application for Conversion" shall mean the application submitted by
Peoples to the OTS pursuant to the HOLA and the regulations of the OTS
thereunder and to the Division pursuant to the laws and regulations of the State
of Ohio in connection with the Conversion, as amended and supplemented.
"Bank" shall mean Harvest Home Savings Bank, an Ohio chartered savings
bank and a wholly-owned subsidiary of the Company.
"BHCA" shall mean the Bank Holding Company Act of 1956, as amended.
"Bank Merger" shall have the meaning set forth in Section 5.12 hereof.
"Bank Merger Agreement" shall have the meaning set forth in Section
5.12 hereof.
"Certificate of Merger" shall have the meaning set forth in Section
2.2 hereof.
"Closing" shall have the meaning set forth in Section 2.2 hereof.
"Closing Date" shall have the meaning set forth in Section 2.2 hereof.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Commission" shall mean the Securities and Exchange Commission.
"Company Affiliate" shall mean any person who is deemed, for purposes
of Rule 145 under the Securities Act, to be an "affiliate" of the Company.
"Company Common Stock" shall mean the common stock, no par value, of
the Company.
"Company Employee Plans" shall have the meaning set forth in Section
3.14(a) hereof.
"Company Financial Statements" shall mean (i) the consolidated
statements of financial condition (including related notes and schedules, if
any) of the Company as of September 30, 1998, 1997 and 1996 and the consolidated
statements of earnings, changes in stockholders' equity and cash flows
(including related notes and schedules, if any) of the Company for each of the
three years ended September 30, 1998, 1997 and 1996 as filed by the Company in
its Securities Documents, and (ii) the consolidated statements of financial
condition of the Company (including related notes and schedules, if any) and the
consolidated statements of earnings, changes in stockholders' equity and cash
flows (including related notes and schedules, if any) of the Company included in
the Securities Documents filed by the Company with respect to the periods ended
subsequent to September 30, 1998.
"Company Options" shall mean options to purchase shares of Company
Common Stock granted pursuant to the Company Option Plan.
"Company Option Plan" shall mean the Company's Stock Option and
Incentive Plan as in effect as of the date hereof.
"Conversion" shall mean (i) the amendment of Peoples' Constitution to
authorize the issuance of capital stock and otherwise to conform to the
requirements of a stock savings bank chartered under the laws of the United
States, (ii) the issuance of Holding Company Common Stock to eligible account
holders of Peoples and Oakley and others in connection therewith, and (iii) the
purchase by the Holding Company of all of the capital stock of Peoples to be
sold by Peoples in connection with its conversion from mutual to stock form.
"Dissenting Shares" shall have the meaning set forth in Section 2.5
hereof.
"Division" shall mean the Ohio Department of Commerce, Division of
Financial Institutions.
"DGCL" shall mean the General Corporation Law of the State of Delaware,
as amended.
"DOJ" shall mean the United States Department of Justice.
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"Effective Time" shall mean the date and time specified pursuant to
Section 2.2 hereof as the effective time of the Merger.
"Environmental Claim" means any written notice from any Governmental
Entity or third party alleging potential liability (including, without
limitation, potential liability for investigatory costs, cleanup costs,
governmental response costs, natural resources damages, property damages,
personal injuries or penalties) arising out of, based on, or resulting from the
presence, or release into the environment, of any Materials of Environmental
Concern.
"Environmental Laws" means any federal, state or local law, statute,
ordinance, rule, regulation, code, license, permit, authorization, approval,
consent, order, judgment, decree, injunction or agreement with any governmental
entity relating to (i) the protection, preservation or restoration of the
environment (including, without limitation, air, water vapor, surface water,
groundwater, drinking water supply, surface soil, subsurface soil, plant and
animal life or any other natural resource), and/or (ii) the use, storage,
recycling, treatment, generation, transportation, processing, handling,
labeling, production, release or disposal of Materials of Environment Concern.
The term Environmental Law includes without limitation (i) the Comprehensive
Environmental Response, Compensation and Liability Act, as amended, 42 U.S.C.
ss.9601, ET SEQ; the Resource Conservation and Recovery Act, as amended, 42
U.S.C. ss.6901, ET SEQ; the Clean Air Act, as amended, 42 U.S.C. ss.7401, ET
SEQ; the Federal Water Pollution Control Act, as amended, 33 U.S.C. ss.1251, ET
SEQ; the Toxic Substances Control Act, as amended, 15 U.S.C. ss.9601, ET SEQ;
the Emergency Planning and Community Right to Know Act, 42 U.S.C. ss.1101, ET
SEQ; the Safe Drinking Water Act, 42 U.S.C. ss.300f, ET SEQ; and all comparable
state and local laws, and (ii) any common law (including without limitation
common law that may impose strict liability) that may impose liability or
obligations for injuries or damages due to, or threatened as a result of, the
presence of or exposure to any Materials of Environmental Concern.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"ESOP" shall mean the Company's Employee Stock Ownership Plan and
Trust.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"FDIA" shall mean the Federal Deposit Insurance Act, as amended.
"FDIC" shall mean the Federal Deposit Insurance Corporation or any
successor thereto.
"FHLB" shall mean Federal Home Loan Bank.
"Form S-1" shall mean the registration statement on Form S-1 (or on any
successor or other appropriate form) to be filed by the Holding Company in
connection with the issuance of shares of Holding Company Common Stock in
connection with the Merger and the Conversion, as amended and supplemented.
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"FRB" shall mean the Board of Governors of the Federal Reserve System.
"Governmental Entity" shall mean any federal or state court,
administrative agency or commission or other governmental authority or
instrumentality.
"Holding Company" shall mean a business corporation which shall be
organized by Peoples under the DGCL for the purposes of becoming the holding
company of Peoples upon consummation of the Conversion and acquiring the Company
pursuant to the terms of this Agreement.
"Holding Company Common Stock" shall mean the common stock, par value
$.01 per share, of the Holding Company.
"HOLA" shall mean the Home Owners' Loan Act, as amended.
"Initial Public Offering Price" shall mean the price per share at which
Holding Company Common Stock is ultimately sold by the Holding Company to
eligible account holders of Peoples and Oakley and others in connection with the
Conversion.
"Material Adverse Effect" shall mean, (i) with respect to the Company,
any effect that is material and adverse to the financial condition, results of
operations or business of the Company and the Bank taken as whole, (ii) with
respect to Peoples, any effect that is material and adverse to the financial
condition, results of operations, or business of Peoples or (iii) materially
impairs the ability of either the Company or the Bank, on the one hand, or the
Holding Company or Peoples, on the other hand, to consummate the Merger or any
of the other transactions contemplated by this Agreement, provided, however,
that Material Adverse Effect shall not be deemed to include the impact of (a)
changes in laws and regulations or interpretations thereof that are generally
applicable to the banking or savings industries, (b) changes in generally
accepted accounting principles that are generally applicable to the banking or
savings industries, (c) expenses incurred in connection with the transactions
contemplated hereby including the proposed merger of Oakley with and into
Peoples, (d) actions or omissions of a party (or any of its Subsidiaries) taken
with the prior informed written consent of the other party or parties in
contemplation of the transactions contemplated hereby or (e) changes
attributable to or resulting from changes in general economic conditions,
including changes in the prevailing level of interest rates.
"Materials of Environmental Concern" means pollutants, contaminants,
wastes, toxic substances, petroleum and petroleum products and any other
materials regulated under Environmental Laws.
"Member" shall mean any person, firm or entity qualifying as a member
of Peoples or Oakley in accordance with their respective Constitution and
Bylaws.
"Merger" shall have the meaning set forth in Section 2.1(a) hereof.
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"NASD" shall mean the National Association of Securities Dealers, Inc.
"Oakley" shall mean The Oakley Improved Building & Loan Company.
"ORC" shall mean the Ohio Revised Code.
"OTS" shall mean the Office of Thrift Supervision of the U.S.
Department of the Treasury or any successor thereto.
"PBGC" shall mean the Pension Benefit Guaranty Corporation, or any
successor thereto.
"Peoples Employee Plans" shall have the meaning set forth in Section
4.14(a) hereof.
"Peoples Financial Statements" shall mean (i) the consolidated
statements of condition (including related notes and schedules, if any) of
Peoples as of June 30, 1999, 1998 and 1997 and the consolidated statements of
income, retained income and cash flows (including related notes and schedules,
if any) of Peoples for each of the three years ended June 30, 1999, 1998 and
1997, and (ii) the consolidated statements of condition of Peoples (including
related notes and schedules, if any) and the consolidated statements of income,
retained income and cash flows (including related notes and schedules, if any)
of Peoples with respect to the periods ended subsequent to June 30, 1999.
"Previously Disclosed" shall mean disclosed (i) in a disclosure
schedule dated the date hereof delivered from the disclosing party to the other
party specifically referring to the appropriate section of this Agreement and
describing in reasonable detail the matters contained therein, or (ii) a
supplement to the disclosure schedule dated after the date hereof from the
disclosing party specifically referring to this Agreement and describing in
reasonable detail the matters contained therein and delivered by the other party
pursuant to Section 5.17 hereof.
"Prospectus" shall mean the prospectus to be delivered to (i)
shareholders of the Company in connection with the offering of Holding Company
Common Stock in connection with the Merger pursuant to this Agreement and (ii)
eligible account holders of Peoples and Oakley and others in connection with the
offering of Holding Company Common Stock in connection with the Conversion, as
amended and supplemented.
"Proxy Statements" shall mean the proxy statements to be delivered to
(i) shareholders of the Company in connection with the solicitation of their
approval of this Agreement and the transactionscontemplated hereby and (ii)
members of Peoples and Oakley in connection with the solicitation of their
approval of the Conversion and the transactions contemplated thereby, as amended
and supplemented.
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"Rights" shall mean warrants, options, rights, convertible securities
and other arrangements or commitments which obligate an entity to issue or
dispose of any of its capital stock or other ownership interests.
"SAIF" means the Savings Association Insurance Fund administered by the
FDIC or any successor thereto.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Securities Documents" shall mean all reports, offering circulars,
proxy statements, registration statements and all similar documents filed, or
required to be filed, pursuant to the Securities Laws.
"Securities Laws" shall mean the Securities Act; the Exchange Act; the
Investment Company Act of 1940, as amended; the Investment Advisers Act of 1940,
as amended; the Trust Indenture Act of 1939, as amended, and the rules and
regulations of the Commission promulgated thereunder.
"Subsidiary" and "Significant Subsidiary" shall have the meanings set
forth in Rule 1-02 of Regulation S-X of the Commission.
"Surviving Bank" shall have the meaning set forth in section 5.12
hereof.
Other terms used herein are defined in the preamble and elsewhere in
this Agreement.
ARTICLE II
THE MERGER
2.1 THE MERGER
(a) Subject to the terms and conditions of this Agreement, at the
Effective Time (as defined in Section 2.2 hereof), the Company shall be merged
with and into the Holding Company (the "Merger") in accordance with the
provisions of Section 251 of the DGCL and Title 17 Chapter 1701 of the ORC. The
Holding Company shall be the surviving corporation (hereinafter sometimes called
the "Surviving Corporation") of the Merger, and shall continue its corporate
existence under the laws of the State of Delaware. The name of the Surviving
Corporation shall be as stated in the Certificate of Incorporation of the
Holding Company immediately prior to the Effective Time. Upon consummation of
the Merger, the separate corporate existence of the Company shall terminate.
(b) From and after the Effective Time, the Merger shall have the
effects set forth in Section 259 of the DGCL.
(c) The Certificate of Incorporation and Bylaws of the Holding Company,
as in effect immediately prior to the Effective Time, shall be the Certificate
of Incorporation and Bylaws of the
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Surviving Corporation, respectively, until altered, amended or repealed in
accordance with their terms and applicable law.
(d) The authorized capital stock of the Surviving Corporation shall be
as stated in the Certificate of Incorporation of the Holding Company immediately
prior to the Effective Time.
(e) The directors and officers of the Holding Company immediately prior
to the Effective Time, together with the directors and officers elected pursuant
to Section 5.10(a) and 5.11(e) hereof, shall be the directors and officers of
the Surviving Corporation, each to hold office in accordance with the
Certificate of Incorporation and Bylaws of the Surviving Corporation as well as
the provisions hereof.
2.2 EFFECTIVE TIME; CLOSING
The Merger shall become effective upon the occurrence of the filing of
a certificate of merger with the Secretary of State of the State of Delaware and
with the Secretary of State of the State of Ohio (the "Certificate of Merger"),
unless a later date and time is specified as the effective time in such
Certificate of Merger (the "Effective Time"). The Effective Time will occur
simultaneously with, or immediately after, the consummation of the Conversion. A
closing (the "Closing") shall take place immediately prior to the Effective Time
at 10:00 a.m., Central Time, following the satisfaction or waiver, to the extent
permitted hereunder, of the conditions to the consummation of the Merger
specified in Article VI of this Agreement (other than the delivery of
certificates, opinions and other instruments and documents to be delivered at
the Closing) (the "Closing Date"), at such place and at such time as the parties
may mutually agree upon. At the Closing, there shall be delivered to Peoples and
the Holding Company, on the one hand, and the Company, on the other hand, the
opinions, certificates and other documents required to be delivered under
Article VI hereof.
2.3 TREATMENT OF CAPITAL STOCK
Subject to the provisions of this Agreement, at the Effective Time,
automatically by virtue of the Merger and without any action on the part of any
shareholder:
(i) each share of Holding Company Common Stock issued and
outstanding immediately prior to the Effective Time (consisting of
shares issued or to be issued by the Holding Company in connection with
the Conversion) shall be unchanged and shall remain issued and
outstanding;
(ii) each share of Company Common Stock owned by the Company
(including treasury shares) or the Holding Company or any of their
respective Subsidiaries (other than shares held in a fiduciary capacity
for the benefit of third parties or as a result of debts previously
contracted) shall be cancelled and retired and shall not represent
capital stock of the Holding Company and shall not be exchanged for
shares of Holding Company Common Stock, or other consideration; and
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(iii) each share of Company Common Stock which under the terms
of Section 2.7 hereof is to be converted into the right to receive
shares of Holding Company Common Stock shall be converted into and
become the right to receive .9 share of Holding Company Common Stock
and $9.00 in cash (the "Merger Consideration"), provided however that
if the Initial Public Offering Price is not $10.00 per share, the .9 of
a share of Holding Company Common Stock shall be adjusted to provide
for a ratio that will yield a cash equivalent of $9.00.
2.4 SHAREHOLDER RIGHTS; STOCK TRANSFERS
At the Effective Time, holders of Company Common Stock shall cease to
be and shall have no rights as shareholders of the Company, other than to
receive the consideration provided under Section 2.3 hereof. After the Effective
Time, there shall be no transfers on the stock transfer books of the Company or
the Surviving Corporation of shares of Company Common Stock and if certificates
evidencing such shares are presented for transfer after the Effective Time, they
shall be cancelled against delivery of certificates for whole shares of Holding
Company Common Stock or cash (without interest) as herein provided.
2.5 DISSENTING SHARES
Each outstanding share of Company Common Stock the holder of which has
perfected his right to dissent under the ORC and has not effectively withdrawn
or lost such right as of the Effective Time (the "Dissenting Shares") shall not
be converted into or represent a right to receive shares of Holding Company
Common Stock and the holder thereof shall be entitled only to such rights as are
granted by the ORC. Any payments made in respect of Dissenting Shares shall be
made by the Surviving Corporation. If any dissenting shareholder shall
effectively withdraw or lose (through failure to perfect or otherwise) his right
to such payment at or prior to the Effective Time, such holder's shares of
Company Common Stock shall be converted into a right to receive the Merger
Consideration. If such holder shall effectively withdraw or lose (through
failure to perfect or otherwise) his right to such payment after the Effective
Time, each share of Company Common Stock of such holder shall be converted into
the right to receive the Merger Consideration.
2.6 OPTIONS
(a) At the Effective Time, each Company Option which is then
outstanding and unexercised immediately prior thereto, whether or not then
vested or exercisable, shall be cancelled and all rights thereunder shall be
extinguished. As consideration for such cancellation, the Holding Company shall
make payment immediately prior to the Effective Time to each holder of a Company
Option of an amount determined by multiplying (x) the number of shares of
Company Common Stock underlying such Company Option by (y) an amount equal to
the excess (if any) of (i) the Merger Consideration, over (ii) the exercise
price per share of such Company Option, provided, however, that no such payment
shall be made to a holder unless and until such holder has executed and
delivered to the Company an instrument in such form prescribed by the Holding
Company and reasonably satisfactory to the Company accepting such payment in
full settlement of his or her rights relative to the Company Option. Prior to
the Effective Time, the Company shall take or cause to be taken all actions
required under the Company Option Plan to provide for the foregoing.
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2.7 EXCHANGE PROCEDURES
(a) The Holding Company shall designate an exchange agent, reasonably
acceptable to the Company, to act as agent (the "Exchange Agent") for purposes
of conducting the exchange procedure as described herein. No later than seven
business days following the Effective Time, the Holding Company shall cause the
Exchange Agent to mail or make available to each holder of record of a
certificate or certificates which immediately prior to the Effective Time
represented issued and outstanding shares of Company Common Stock (i) a notice
and letter of transmittal (which shall specify that delivery shall be effected
and risk of loss and title to the certificates theretofore representing shares
of Company Common Stock shall pass only upon proper delivery of such
certificates to the Exchange Agent) advising such holder of the effectiveness of
the Merger and the procedure for surrendering to the Exchange Agent such
certificate or certificates which immediately prior to the Effective Time
represented issued and outstanding shares of Company Common Stock in exchange
for the consideration set forth in Section 2.3 hereof deliverable in respect
thereof pursuant to this Agreement.
(b) At the Effective Time, the Holding Company shall issue to the
Exchange Agent the number of shares of Holding Company Common Stock and cash
issuable in the Merger, which shall be held by the Exchange Agent in trust for
the holders of Company Common Stock. The Exchange Agent shall promptly
distribute Holding Company Common Stock and cash as provided herein. The
Exchange Agent shall not be entitled to vote or exercise any rights of ownership
with respect to the shares of Holding Company Common Stock held by it from time
to time hereunder, except that it shall receive and hold all dividends or other
distributions paid or distributed with respect to such shares for the account of
the persons entitled thereto.
(c) Each holder of an outstanding certificate or certificates which
prior thereto represented shares of Company Common Stock who surrenders such
certificate or certificates to the Exchange Agent will, upon acceptance thereof
by the Exchange Agent, be entitled to a certificate or certificates representing
the number of full shares of Holding Company Common Stock into which the
aggregate number of shares of Company Common Stock previously represented by
such certificate or certificates surrendered shall have been converted pursuant
to this Agreement and any other distribution theretofore paid with respect to
Holding Company Common Stock issuable in the Merger, in each case without
interest. The Exchange Agent shall accept such certificates upon compliance with
such reasonable terms and conditions as the Exchange Agent may impose to effect
an orderly exchange thereof in accordance with normal exchange practices. Each
outstanding certificate which prior to the Effective Time represented Company
Common Stock and which is not surrendered to the Exchange Agent in accordance
with the procedures provided for herein shall, except as otherwise herein
provided, until duly surrendered to the Exchange Agent be deemed to evidence
ownership of the number of shares of Holding Company Common Stock into which the
aggregate number of shares of Company Common Stock previously represented by
such certificate shall have been converted pursuant to the terms of this
Agreement. After the Effective Time, there shall be no further transfer on the
records of the Company of certificates representing shares of Company Common
Stock and if such certificates are presented to the Company for transfer, they
9
shall be cancelled against delivery of certificates for Holding Company Common
Stock or cash as hereinabove provided. No dividends which have been declared
will be remitted to any person entitled to receive shares of Holding Company
Common Stock under this Section 2.7 until such person surrenders the certificate
or certificates representing Company Common Stock, at which time such dividends
shall be remitted to such person, without interest.
(d) The Holding Company shall not be obligated to deliver a certificate
or certificates representing shares of Holding Company Common Stock to which a
holder of Company Common Stock would otherwise be entitled as a result of the
Merger until such holder surrenders the certificate or certificates representing
the shares of Company Common Stock for exchange as provided in this Section 2.7,
or, in default thereof, an appropriate affidavit of loss and indemnity agreement
and/or a bond as may be required in each case by the Holding Company. If any
certificates evidencing shares of Holding Company Common Stock are to be issued
in a name other than that in which the certificate evidencing Company Common
Stock surrendered in exchange therefor is registered, it shall be a condition of
the issuance thereof that the certificate so surrendered shall be properly
endorsed or accompanied by an executed form of assignment separate from the
certificate and otherwise in proper form for transfer and that the person
requesting such exchange pay to the Exchange Agent any transfer or other tax
required by reason of the issuance of a certificate for shares of Holding
Company Common Stock in any name other than that of the registered holder of the
certificate surrendered or otherwise establish to the satisfaction of the
Exchange Agent that such tax has been paid or is not payable.
(e) Any portion of the shares of Holding Company Common Stock and cash
delivered to the Exchange Agent by the Holding Company pursuant to Section
2.7(b) that remains unclaimed by the shareholders of the Company for six months
after the Effective Time shall be delivered by the Exchange Agent to the Holding
Company. Any shareholders of the Company who have not theretofore complied with
Section 2.7(c) shall thereafter look only to the Holding Company for the Merger
Consideration deliverable in respect of each share of Company Common Stock such
shareholder holds as determined pursuant to this Agreement 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 shares of Holding Company Common Stock and cash 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 the Holding Company (and to the extent not in its
possession shall be delivered to it), free and clear of all claims or interest
of any person previously entitled to such property. Neither the Exchange Agent
nor any party to this Agreement shall be liable to any holder of Company Common
Stock represented by any certificate for any consideration paid to a public
official pursuant to applicable abandoned property, escheat or similar laws. The
Holding Company and the Exchange Agent shall be entitled to rely upon the stock
transfer books of the Company to establish the identity of those persons
entitled to receive consideration specified in this Agreement, which books shall
be conclusive with respect thereto. In the event of a dispute with respect to
ownership of stock represented by any certificate, the Holding Company and the
Exchange Agent
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shall be entitled to deposit any consideration represented thereby in escrow
with an independent third party and thereafter be relieved with respect to any
claims thereto.
(f) Notwithstanding any other provision hereof, no fractional shares of
Holding Company Common Stock shall be issued to holders of Company Common Stock.
In lieu thereof, each holder of shares of Company Common Stock entitled to a
fraction of a share of Holding Company Common Stock shall, at the time of
surrender of the certificate or certificates representing such holder's shares,
receive an amount of cash (without interest) equal to the amount determined by
multiplying the fractional share interest to which such holder would otherwise
be entitled by the Initial Public Offering Price. No such holder shall be
entitled to dividends, voting rights or any other rights in respect of
fractional shares.
2.8 ADDITIONAL ACTIONS
If, at any time after the Effective Time, the Surviving Corporation
shall consider that any further assignments or assurances in law or any other
acts are necessary or desirable to (i) vest, perfect or confirm, of record or
otherwise, in the Surviving Corporation its right, title or interest in, to or
under any of the rights, properties or assets of the Company acquired or to be
acquired by the Surviving Corporation as a result of, or in connection with, the
Merger, or (ii) otherwise carry out the purposes of this Agreement, the Company
and its proper officers and directors shall be deemed to have granted to the
Surviving Corporation an irrevocable power of attorney to execute and deliver
all such proper deeds, assignments and assurances in law and to do all acts
necessary or proper to vest, perfect or confirm title to and possession of such
rights, properties or assets in the Surviving Corporation and otherwise to carry
out the purposes of this Agreement; and the proper officers and directors of the
Surviving Corporation are fully authorized in the name of the Company or
otherwise to take any and all such action.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Peoples as follows, except as
Previously Disclosed:
3.1 CAPITAL STRUCTURE
The authorized capital stock of the Company consists of 2,000,000
shares of Company Common Stock and no preferred stock. As of the date hereof,
875,289 shares of Company Common Stock are issued and outstanding and 116,586
shares of Company Common Stock are held in treasury. All outstanding shares of
Company Common Stock have been duly authorized and validly issued and are fully
paid and nonassessable, and none of the outstanding shares of Company Common
Stock has been issued in violation of the preemptive rights of any person, firm
or entity. Except for Company Options to acquire not more than 84,947 shares of
Company Common Stock
11
as of the date hereof, a schedule of which has been Previously Disclosed, there
are no Rights authorized, issued or outstanding with respect to the capital
stock of the Company.
3.2 ORGANIZATION, STANDING AND AUTHORITY OF THE COMPANY
The Company is a corporation duly organized and validly existing under
the laws of the State of Ohio with full corporate power and authority to own or
lease all of its properties and assets and to carry on its business as now
conducted and is duly licensed or qualified to do business in each jurisdiction
in which its ownership or leasing of property or the conduct of its business
requires such licensing or qualification, except where the failure to be so
licensed, qualified or in good standing would not have a Material Adverse Effect
on the Company. The Company is duly registered as a bank holding company under
the BHCA and the regulations of the FRB thereunder. The Company has heretofore
delivered to Peoples true and complete copies of the Articles of Incorporation
and Code of Regulations of the Company as in effect as of the date hereof.
3.3 OWNERSHIP OF THE COMPANY SUBSIDIARIES
The Bank is the Company's only Significant Subsidiary. Except for (x)
capital stock of the Bank, (y) securities and other interests held in a
fiduciary capacity and beneficially owned by third parties or taken in
consideration of debts previously contracted and (z) securities and other
interests which are Previously Disclosed, the Company does not own or have the
right to acquire, directly or indirectly, any outstanding capital stock or other
voting securities or ownership interests of any corporation, bank, savings
association, partnership, joint venture or other organization, other than
investment securities representing not more than 5% of any entity. The
outstanding shares of capital stock of the Bank have been duly authorized and
validly issued, are fully paid and nonassessable, and are directly owned by the
Company free and clear of all liens, claims, encumbrances, charges, pledges,
restrictions or rights of third parties of any kind whatsoever. No rights are
authorized, issued or outstanding with respect to the capital stock or other
ownership interests of the Bank and there are no agreements, understandings or
commitments relating to the right of the Company to vote or to dispose of such
capital stock.
3.4 ORGANIZATION, STANDING AND AUTHORITY OF THE BANK
The Bank is (i) duly organized, validly existing and in good standing
under the laws of Ohio, (ii) has full power and authority to own or lease all of
its properties and assets and to carry on its business as now conducted, and
(ii) is duly licensed or qualified to do business and is in good standing in
each jurisdiction in which its ownership or leasing of property or the conduct
of its business requires such qualification, except where the failure to be so
licensed, qualified or in good standing would not have a Material Adverse Effect
on the Company. The deposit accounts of the Bank are insured by the SAIF to the
maximum extent permitted by the FDIA and the Bank has paid all deposit insurance
premiums and assessments required by the FDIA and the regulations thereunder.
The Company has heretofore delivered or made available to Peoples true and
complete copies of the Constitution and Bylaws of the Bank as in effect as of
the date hereof.
12
3.5 AUTHORIZED AND EFFECTIVE AGREEMENT
(a) The Company has all requisite corporate power and authority to
enter into this Agreement and (subject to receipt of all necessary governmental
approvals and the approval of the Company's shareholders of this Agreement) to
perform all of its obligations under this Agreement. The execution and delivery
of this Agreement and the consummation of the transactions contemplated hereby
have been duly and validly authorized by all necessary corporate action in
respect thereof on the part of the Company, except for the approval of this
Agreement by the Company's shareholders. This Agreement has been duly and
validly executed and delivered by the Company and, assuming due authorization,
execution and delivery by Peoples, constitutes a legal, valid and binding
obligation of the Company which is enforceable against the Company in accordance
with its terms, subject, as to enforceability, to bankruptcy, insolvency and
other laws of general applicability relating to or affecting creditors' rights
and to general equity principles.
(b) Neither the execution and delivery of this Agreement, nor
consummation of the transactions contemplated hereby (including the Merger and
the Bank Merger), nor compliance by the Company with any of the provisions
hereof (i) does or will conflict with or result in a breach of any provisions of
the Articles of Incorporation or Code of Regulations of the Company or the
Constitution and Bylaws of the Bank, (ii) violate, conflict with or result in a
breach of any term, condition or provision of, or constitute a default (or an
event which, with notice or lapse of time, or both, would constitute a default)
under, or give rise to any right of termination, cancellation or acceleration
with respect to, or result in the creation of any lien, charge or encumbrance
upon any property or asset of the Company or the Bank pursuant to, any material
note, bond, mortgage, indenture, deed of trust, license, lease, agreement or
other instrument or obligation to which the Company or the Bank is a party, or
by which any of their respective properties or assets may be bound or affected,
or (iii) subject to receipt of all required governmental and shareholder
approvals, violate any order, writ, injunction, decree, statute, rule or
regulation applicable to the Company or the Bank.
(c) To the best knowledge of the Company and the Bank, except for (i)
the filing of applications with and the approvals of the OTS and the Division,
(ii) the filing and effectiveness of the Form S-1 and the Proxy Statement
relating to the meeting of shareholders of the Company to be held pursuant to
Section 5.2 hereof with the Commission, (iii) the approval of this Agreement by
the requisite vote of the shareholders of the Company, (iv) the filing of the
Certificate of Merger with the Secretaries of State of each of the States of
Delaware and Ohio pursuant to the DGCL and the ORC, respectively, in connection
with the Merger, (v) the filing of Articles of Combination with the OTS in
connection with the Bank Merger and, (vi) review of the Merger by the DOJ under
federal antitrust laws, no consents or approvals of or filings or registrations
with any Governmental Entity or with any third party are necessary on the part
of the Company or the Bank in connection with (x) the execution and delivery by
the Company of this Agreement and the consummation by the Company of the
transactions contemplated hereby and (y) the execution and delivery by the Bank
of the Bank Merger Agreement and the consummation of the transactions
contemplated thereby.
13
(d) As of the date hereof, neither the Company nor the Bank is aware of
any reasons relating to the Company or the Bank (including without limitation
Community Reinvestment Act compliance) why all consents and approvals shall not
be procured from all regulatory agencies having jurisdiction over the
transactions contemplated by this Agreement and the Bank Merger Agreement as
shall be necessary for (i) consummation of the transactions contemplated by this
Agreement and the Bank Merger Agreement and (ii) the continuation by the Holding
Company and Peoples after the Effective Time of the business of the Company and
the Bank, respectively, as such business is carried on immediately prior to the
Effective Time, free of any conditions or requirements which, in the reasonable
opinion of the Company, could have a Material Adverse Effect on the Holding
Company or Peoples or materially impair the value of the Company and the Bank to
the Holding Company and Peoples, respectively.
3.6 SECURITIES DOCUMENTS AND REGULATORY REPORTS
(a) Since January 1, 1996, the Company has timely filed with the
Commission and the NASD all Securities Documents required by the Securities Laws
and such Securities Documents complied in all material respects with the
Securities Laws and did not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading.
(b) Since January 1, 1996, each of the Company and the Bank has duly
filed with the FDIC, the Commission, the FRB and any other applicable federal or
state banking authority, as the case may be, the reports required to be filed
under applicable laws and regulations and such reports were in all material
respects complete and accurate and in compliance with the requirements of
applicable laws and regulations. In connection with the most recent examinations
of the Company and the Bank by the FRB, the FDIC or the Division, neither the
Company nor the Bank was required to correct or change any action, procedure or
proceeding which the Company or the Bank believes has not been corrected or
changed as required as of the date hereof and which could have a Material
Adverse Effect on the Company.
3.7 FINANCIAL STATEMENTS
(a) The Company has previously delivered or made available to Peoples
accurate and complete copies of the Company Financial Statements which, in the
case of the consolidated statements of financial condition of the Company as of
September 30, 1998, 1997 and 1996 and the consolidated statements of earnings,
changes in stockholders' equity and cash flows for each of the three years ended
December 31, 1998, 1997 and 1996, are accompanied by the audit reports of Xxxxx
Xxxxxxxx LLP, independent certified public accountants with respect to the
Company. The Company Financial Statements referred to herein, as well as the
Company Financial Statements to be delivered pursuant to Section 5.8 hereof,
fairly present or will fairly present, as the case may be, the consolidated
financial condition of the Company as of the respective dates set forth therein,
and the
14
consolidated income, changes in stockholders' equity and cash flows of the
Company for the respective periods or as of the respective dates set forth
therein.
(b) Each of the Company Financial Statements referred to in Section
3.7(a) has been or will be, as the case may be, prepared in accordance with
generally accepted accounting principles consistently applied during the periods
involved, except as stated therein. The audits of the Company and the Bank have
been conducted in all material respects in accordance with generally accepted
auditing standards. The books and records of the Company and the Bank are being
maintained in material compliance with applicable legal and accounting
requirements, and such books and records accurately reflect in all material
respects all dealings and transactions in respect of the business, assets,
liabilities and affairs of the Company and the Bank.
(c) Except and to the extent (i) reflected, disclosed or provided for
in the consolidated statement of financial condition of the Company as of
September 30, 1998 (including related notes), (ii) of liabilities incurred since
September 30, 1998 in the ordinary course of business and (iii) of liabilities
incurred in connection with consummation of the transactions contemplated by
this Agreement, neither the Company nor the Bank has any liabilities, whether
absolute, accrued, contingent or otherwise, material to the financial condition,
results of operations or business of the Company on a consolidated basis.
3.8 MATERIAL ADVERSE CHANGE
Since June 30, 1999, (i) the Company and its Subsidiaries have
conducted their respective businesses in the ordinary and usual course
(excluding the incurrence of expenses in connection with this Agreement and the
transactions contemplated hereby) and (ii) no event has occurred or circumstance
arisen that, individually or in the aggregate, has had or is reasonably likely
to have a Material Adverse Effect on the Company.
3.9 ENVIRONMENTAL MATTERS
(a) To the best of the Company's knowledge, the Company and the Bank
are in compliance with all Environmental Laws, except for any violations of any
Environmental Law which would not, singly or in the aggregate, have a Material
Adverse Effect on the Company. Neither the Company nor the Bank has received any
communication alleging that the Company or the Bank is not in such compliance
and, to the best knowledge of the Company, there are no present circumstances
that would prevent or interfere with the continuation of such compliance.
(b) To the best of the Company's knowledge, none of the properties
owned, leased or operated by the Company or the Bank has been or is in violation
of or liable under any Environmental Law, except any such violations or
liabilities which would not singly or in the aggregate have a Material Adverse
Effect on the Company.
15
(c) To the best of the Company's knowledge, there are no past or
present actions, activities, circumstances, conditions, events or incidents that
could reasonably form the basis of any Environmental Claim or other claim or
action or governmental investigation that could result in the imposition of any
liability arising under any Environmental Law against the Company or the Bank or
against any person or entity whose liability for any Environmental Claim the
Company or the Bank has or may have retained or assumed either contractually or
by operation of law, except such which would not have a Material Adverse Effect
on the Company.
(d) The Company has not conducted any environmental studies during the
past five years with respect to any properties owned by it or the Bank as of the
date hereof.
3.10 TAX MATTERS
(a) The Company and the Bank have timely filed all federal, state and
local (and, if applicable, foreign) income, franchise, bank, excise, real
property, personal property and other tax returns required by applicable law to
be filed by them (including, without limitation, estimated tax returns, income
tax returns, information returns and withholding and employment tax returns) and
have paid, or where payment is not required to have been made, have set up an
adequate reserve or accrual for the payment of, all taxes required to be paid in
respect of the periods covered by such returns and, as of the Effective Time,
will have paid, or where payment is not required to have been made, will have
set up an adequate reserve or accrual for the payment of, all material taxes for
any subsequent periods ending on or prior to the Effective Time. Neither the
Company nor the Bank will have any material liability for any such taxes in
excess of the amounts so paid or reserves or accruals so established.
(b) All federal, state and local (and, if applicable, foreign) income,
franchise, bank, excise, real property, personal property and other tax returns
filed by the Company and the Bank are complete and accurate in all material
respects. Neither the Company nor the Bank is delinquent in the payment of any
tax, assessment or governmental charge or has requested any extension of time
within which to file any tax returns in respect of any fiscal year or portion
thereof which have not since been filed. The federal, state and local income tax
returns of the Company and the Bank have been examined by the applicable tax
authorities (or are closed to examination due to the expiration of the
applicable statute of limitations) and no deficiencies for any tax, assessment
or governmental charge have been proposed, asserted or assessed (tentatively or
otherwise) against the Company or the Bank as a result of such examinations or
otherwise which have not been settled and paid. There are currently no
agreements in effect with respect to the Company or the Bank to extend the
period of limitations for the assessment or collection of any tax. As of the
date hereof, no audit, examination or deficiency or refund litigation with
respect to such return is pending or, to the best of the Company's knowledge,
threatened.
(c) Except as Previously Disclosed, neither the Company nor the Bank
(i) is a party to any agreement providing for the allocation or sharing of
taxes, (ii) is required to include in income any adjustment pursuant to Section
481(a) of the Code by reason of a voluntary change in accounting
16
method initiated by the Company or the Bank (nor does the Company have any
knowledge that the Internal Revenue Service has proposed any such adjustment or
change of accounting method) or (iii) has filed a consent pursuant to Section
341(f) of the Code or agreed to have Section 341(f)(2) of the Code apply.
3.11 LEGAL PROCEEDINGS
There are no actions, suits, claims, governmental investigations or
proceedings instituted, pending or, to the best knowledge of the Company,
threatened against the Company or the Bank or against any asset, interest or
right of the Company or the Bank, or against any officer, director or employee
of either of them that in any such case, if decided adversely, would have a
Material Adverse Effect on the Company. Neither the Company nor the Bank is a
party to any order, judgment or decree which has or could reasonably be expected
to have a Material Adverse Effect on the Company.
3.12 COMPLIANCE WITH LAWS
(a) Each of the Company and the Bank 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 them to
carry on their respective businesses as it is presently being conducted and the
absence of which could reasonably be expected to have a Material Adverse Effect
on the Company; 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 the same is threatened.
(b) Neither the Company nor the Bank is in violation of its respective
Articles of Incorporation, Constitution, Code of Regulations or Bylaws, or of
any applicable federal, state or local law or ordinance or any order, rule or
regulation of any federal, state, local or other governmental agency or body
(including, without limitation, all banking (including all regulatory capital
requirements), securities, municipal securities, safety, health, environmental,
zoning, anti-discrimination, antitrust, and wage and hour laws, ordinances,
orders, rules and regulations), or in default with respect to any order, writ,
injunction or decree of any court, or in default under any order, license,
regulation or demand of any governmental agency, any of which violations or
defaults could reasonably be expected to have a Material Adverse Effect on the
Company; and neither the Company nor the Bank has received any notice or
communication from any federal, state or local governmental authority asserting
that the Company or the Bank is in violation of any of the foregoing which could
reasonably be expected to have a Material Adverse Effect on the Company. Neither
the Company nor the Bank is subject to any regulatory or supervisory cease and
desist order, agreement, written directive, memorandum of understanding or
written commitment (other than those of general applicability to savings banks
or holding companies thereof issued by governmental authorities), and neither of
them has received any written communication requesting that it enter into any of
the foregoing.
17
3.13 CERTAIN INFORMATION
None of the information relating to the Company and the Bank supplied
or to be supplied by them for inclusion in (i) the Form S-1, including the
Prospectus, at the time the Form S-1 and any amendment thereto becomes effective
under the Securities Act, will contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, (ii) the
Application for Conversion, at the time the Application for Conversion and any
amendment thereto is approved by the OTS under the HOLA and the regulations of
the OTS thereunder, will contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, and (iii) the
Proxy Statements, as of the date or dates such Proxy Statements are mailed to
shareholders of the Company and Members of Peoples and Oakley and up to and
including the date or dates of the meetings of shareholders and Members to which
such Proxy Statements relate, will contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading,
provided that information as of a later date shall be deemed to modify
information as of an earlier date.
3.14 EMPLOYEE BENEFIT PLANS
(a) The Company has Previously Disclosed all stock option, employee
stock purchase and stock bonus plans, qualified pension or profit-sharing plans,
any deferred compensation, consultant, bonus or group insurance contract or any
other incentive, health and welfare or employee benefit plan or agreement
maintained for the benefit of employees or former employees of the Company or
the Bank, whether written or oral, (the "Company Employee Plans"), and the
Company has previously furnished or made available to Peoples accurate and
complete copies of the same together with, in the case of qualified plans, (i)
the most recent actuarial and financial reports prepared with respect thereto,
(ii) the most recent annual reports filed with any governmental agency with
respect thereto, and (iii) all rulings and determination letters and any open
requests for rulings or letters that pertain thereto.
(b) None of the Company, the Bank, any Company Employee Plan
constituting an "employee pension benefit plan" within the meaning of Section
3(2) of ERISA ("Company Pension Plan") or, to the best of the Company's
knowledge, any fiduciary of such Company Pension Plan, has incurred any material
liability to the PBGC or the Internal Revenue Service with respect to any such
Company Pension Plan. To the best of the Company's knowledge, no reportable
event under Section 4043(b) of ERISA has occurred with respect to any Company
Pension Plan.
(c) Neither the Company nor the Bank participates in or has incurred
any liability under Section 4201 of ERISA for a complete or partial withdrawal
from a multi-employer plan (as such term is defined in ERISA).
18
(d) A favorable determination letter has been issued by the Internal
Revenue Service with respect to each Company Pension Plan which is intended to
qualify under Section 401 of the Code to the effect that such Company Pension
Plan is qualified under Section 401 of the Code, and the trust associated with
such Company Pension Plan is tax exempt under Section 501 of the Code. No such
letter has been revoked or, to the best of the Company's knowledge, is
threatened to be revoked, and the Company does not know of any ground on which
such revocation may be based. Neither the Company nor the Bank has any liability
under any such Company Pension Plan that is not reflected on the consolidated
statement of financial condition of the Company at September 30, 1998 or the
notes thereto included in the Company Financial Statements, other than
liabilities incurred in the ordinary course of business in connection therewith
subsequent to the date thereof.
(e) To the best of the Company's knowledge, no prohibited transaction
(which shall mean any transaction prohibited by Section 406 of ERISA and not
exempt under Section 408 of ERISA or Section 4975 of the Code) has occurred with
respect to any Company Employee Plan which would result in the imposition,
directly or indirectly, of a material excise tax under Section 4975 of the Code
or otherwise have a Material Adverse Effect on the Company.
(f) Full payment has been made (or proper accruals have been
established) of all contributions which are required for periods prior to the
date hereof, and full payment will be so made (or proper accruals will be so
established) of all contributions which are required for periods after the date
hereof and prior to the Effective Time, under the terms of each Company Employee
Plan or ERISA; no accumulated funding deficiency (as defined in Section 302 of
ERISA or Section 412 of the Code), whether or not waived, exists with respect to
any Company Pension Plan, and there is no "unfunded current liability" (as
defined in Section 412 of the Code) with respect to any Company Pension Plan.
(g) To the best of the Company's knowledge, the Company Employee Plans
have been operated in compliance in all material respects with the applicable
provisions of ERISA, the Code, all regulations, rulings and announcements
promulgated or issued thereunder and all other applicable governmental laws and
regulations.
(h) There are no pending or, to the best knowledge of the Company,
threatened claims (other than routine claims for benefits) by, on behalf of or
against any of the Company Employee Plans or any trust related thereto or any
fiduciary thereof.
3.15 CERTAIN CONTRACTS
(a) Except as Previously Disclosed, neither the Company nor the Bank is
a party to, is bound or affected by, receives, or is obligated to pay, benefits
under (i) any agreement, arrangement or commitment, including without limitation
any agreement, indenture or other instrument, relating to the borrowing of money
by the Company or the Bank (other than in the case of the Bank deposits, FHLB
advances, federal funds purchased and securities sold under agreements to
repurchase in the ordinary course of business) or the guarantee by the Company
or the Bank of any obligation, other
19
than by the Bank in the ordinary course of its banking business, (ii) any
agreement, arrangement or commitment relating to the employment of a consultant
or the employment, election or retention in office of any present or former
director, officer or employee of the Company or the Bank, (iii) any agreement,
arrangement or understanding pursuant to which any payment (whether of severance
pay or otherwise) became or may become due to any director, officer or employee
of the Company or the Bank upon execution of this Agreement or upon or following
consummation of the transactions contemplated by this Agreement (either alone or
in connection with the occurrence of any additional acts or events); (iv) any
agreement, arrangement or understanding pursuant to which the Company or the
Bank is obligated to indemnify any director, officer, employee or agent of the
Company or the Bank; (v) any agreement, arrangement or understanding to which
the Company or the Bank is a party or by which any of the same is bound which
limits the freedom of the Company or the Bank to compete in any line of business
or with any person, (vi) any assistance agreement, supervisory agreement,
memorandum of understanding, consent order, cease and desist order or condition
of any regulatory order or decree with or by the OTS, the FDIC or any other
regulatory agency, or (vii) any other agreement, arrangement or understanding
which would be required to be filed as an exhibit to the Company's Annual Report
on Form 10-K under the Exchange Act and which has not been so filed.
(b) Neither the Company nor the Bank is in default or in
non-compliance, which default or non-compliance could reasonably be expected to
have a Material Adverse Effect on the Company, under any contract, agreement,
commitment, arrangement, lease, insurance policy or other instrument to which it
is a party or by which its assets, business or operations may be bound or
affected, whether entered into in the ordinary course of business or otherwise
and whether written or oral, and there has not occurred any event that with the
lapse of time or the giving of notice, or both, would constitute such a default
or non-compliance.
3.16 BROKERS AND FINDERS
Except for Xxxxxxx Xxxx & Company, neither the Company nor the Bank nor
any of their respective directors, officers or employees, has employed any
broker or finder or incurred any liability for any broker or finder fees or
commissions in connection with the transactions contemplated hereby.
3.17 INSURANCE
Each of the Company and the Bank is 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 and has maintained all insurance required by
applicable laws and regulations.
20
3.18 PROPERTIES
All real and personal property owned by the Company or the Bank or
presently used by any of them in its respective business is in an adequate
condition (ordinary wear and tear excepted) and is sufficient to carry on the
business of the Company and the Bank in the ordinary course of business
consistent with their past practices. The Company has good and marketable title
free and clear of all liens, encumbrances, charges, defaults or equities (other
than equities of redemption under applicable foreclosure laws) to all of its
material properties and assets, real and personal, except (i) liens for current
taxes not yet due or payable (ii) pledges to secure deposits and other liens
incurred in the ordinary course of its banking business, (iii) such
imperfections of title, easements and encumbrances, if any, as are not material
in character, amount or extent and (iv) as reflected on the consolidated
statement of condition of the Company as of June 30, 1999 included in the
Company Financial Statements. All real and personal property which is material
to the Company's business on a consolidated basis and leased or licensed by the
Company or the Bank is held pursuant to leases or licenses which are valid and
enforceable in accordance with their respective terms and such leases will not
terminate or lapse prior to the Effective Time.
3.19 LABOR
No work stoppage involving the Company or the Bank is pending or, to
the best knowledge of the Company, threatened. Neither the Company nor the Bank
is involved in or, to the best knowledge of the Company, threatened with or
affected by, any labor dispute, arbitration, lawsuit or administrative
proceeding involving the employees of the Company or the Bank which could have a
Material Adverse Effect on the Company. Employees of the Company and the Bank
are not represented by any labor union nor are any collective bargaining
agreements otherwise in effect with respect to such employees, and to the best
of the Company's knowledge, there have been no efforts to unionize or organize
any employees of the Company or the Bank during the past five years.
3.20 AFFILIATES
The Company has Previously Disclosed to Peoples a schedule of each
person that, to the best of its knowledge, is deemed to be a Company Affiliate.
3.21 YEAR 2000 COMPLIANCE.
To the actual knowledge of the Company, all hardware, firmware,
software and computer systems owned, used or licensed by the Company and the
Bank, including but not limited to system and application programs, files, data
bases and computer services, are Year 2000 Compliant (as defined below). For
purposes of this Agreement, "Year 2000 Compliant" means that the hardware,
firmware, software and computer systems (i) will correctly and accurately
address, produce, store, process and calculate data involving dates beginning
with January 1, 2000 and will not produce abnormally ending or incorrect results
involving such dates as used in any forward or regression dated based functions;
(ii) will provide that all "date"-related functionalities and data fields
include
21
the indication of century and millennium, and will perform calculations which
involve a four-digit year; and (iii) will be interoperable with other Year 2000
Compliant hardware or software owned, used or licensed by the Company and the
Bank which may deliver records to, receive records from or otherwise interact
with such hardware or software in the course of processing records or data.
3.22 DISCLOSURES
None of the representations and warranties of the Company or any of the
written information or documents furnished or to be furnished by the Company to
Peoples in connection with or pursuant to this Agreement or the consummation of
the transactions contemplated hereby, when considered as a whole, contains or
will contain any untrue statement of a material fact, or omits or will omit to
state any material fact required to be stated or necessary to make any such
information or document, in light of the circumstances, not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PEOPLES
Peoples represents and warrants to the Company as follows, except as
Previously Disclosed:
4.1 CAPITAL STRUCTURE
As of the date hereof, Peoples is an Ohio chartered savings and loan
association in mutual form and, as a result, has no authorized or outstanding
capital stock. Upon consummation of the Conversion, Peoples will be a duly
organized federal savings bank in stock form and will have authorized capital
stock as set forth in its Charter. Immediately prior to the Conversion, Oakley
will merge with and into Peoples with Peoples as the surviving entity.
4.2 ORGANIZATION, STANDING AND AUTHORITY OF PEOPLES AND THE HOLDING COMPANY
(a) Peoples is a savings and loan association duly organized, validly
existing and in good standing under the laws of the State of Ohio, with full
corporate power and authority to own or lease all of its properties and assets
and to carry on its business as now conducted, and Peoples is duly licensed or
qualified to do business and is in good standing in each jurisdiction in which
its ownership or leasing of property or the conduct of its business requires
such licensing or qualification, except where the failure to be so licensed,
qualified or in good standing would not have a Material Adverse Effect on
Peoples. The deposit accounts of Peoples are insured by the SAIF to the maximum
extent permitted by the FDIA, and Peoples has paid all premiums and assessments
required by the FDIA and the regulations thereunder. Peoples has heretofore
delivered to the Company true and complete copies of the Constitution, Articles
of Incorporation and Bylaws of Peoples as in effect as of the date hereof.
(b) At the Effective Time, the Holding Company will be duly organized,
and validly existing under the DGCL.
22
4.3 OWNERSHIP OF THE PEOPLES SUBSIDIARIES
Peoples does not have any Subsidiaries. Except for (y) securities and
other interests held in a fiduciary capacity and beneficially owned by third
parties or taken in consideration of debts previously contracted and (z)
securities and other interests which are Previously Disclosed, Peoples does not
own or have the right to acquire, directly or indirectly, any outstanding
capital stock or other voting securities or ownership interests of any
corporation, bank, savings association, partnership, joint venture or other
organization, other than investment securities representing not more than 5% of
any entity.
4.4 AUTHORIZED AND EFFECTIVE AGREEMENT
(a) Peoples has, and following its organization the Holding Company
will have, all requisite corporate power and authority to enter into this
Agreement and (subject to receipt of all necessary governmental approvals and
the approval of the Conversion by the Members of Peoples and Oakley) to perform
all of its respective obligations under this Agreement. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly and validly authorized by all necessary corporate action
in respect thereof on the part of Peoples, except for the approval of the
Conversion by the Members of Peoples and Oakley, and promptly following
organization of the Holding Company and its execution and delivery of an
instrument of accession pursuant to Section 5.13 of this Agreement, the
execution and delivery of this Agreement by the Holding Company and the
consummation of the transactions contemplated hereby will have been duly and
validly authorized by all necessary corporate action in respect thereof on the
part of the Holding Company. This Agreement has been duly and validly executed
and delivered by Peoples and upon its execution and delivery of an instrument of
accession pursuant to Section 5.13 of this Agreement, this Agreement will have
been duly and validly executed and delivered by the Holding Company and,
assuming due authorization, execution and delivery by the Company, this
Agreement constitutes or will constitute, as applicable, a legal, valid and
binding obligation of Peoples and the Holding Company which is enforceable
against Peoples and the Holding Company in accordance with its terms, subject,
as to enforceability, to bankruptcy, insolvency and other laws of general
applicability relating to or affecting creditors' rights and to general equity
principles.
(b) Neither the execution and delivery of this Agreement, nor
consummation of the transactions contemplated hereby (including the Merger and
the Bank Merger) nor compliance by Peoples or, upon its organization, the
Holding Company, with any of the provisions hereof (i) does or will conflict
with or result in a breach of any provisions of the Constitution, Articles of
Incorporation, Bylaws or similar organizational documents of Peoples, or upon
its organization the Holding Company, except that Peoples will not be authorized
to issue capital stock until consummation of the Conversion, (ii) violate,
conflict with or result in a breach of any term, condition or provision of, or
constitute a default (or an event which, with notice or lapse of time, or both,
would constitute a default) under, or give rise to any right of termination,
cancellation or acceleration with respect to, or result in the creation of any
lien, charge or encumbrance upon any
23
property or asset of Peoples or upon its organization the Holding Company
pursuant to, any material note, bond, mortgage, indenture, deed of trust,
license, lease, agreement or other instrument or obligation to which Peoples or
upon its organization the Holding Company is a party, or by which any of their
respective properties or assets may be bound or affected, or (iii) subject to
receipt of all required governmental and Member approvals, violate any order,
writ, injunction, decree, statute, rule or regulation applicable to Peoples or
upon its organization the Holding Company.
(c) To the best knowledge of Peoples, except for (i) the filing of
applications and notices with and the approvals of the OTS and the Division,
(ii) the filing and effectiveness of the Form S-1 with the Commission, (iii)
compliance with applicable state securities or "blue sky" laws and the NASD
Bylaws in connection with the issuance of Holding Company Common Stock in
connection with the Merger and the Conversion, (iv) the approval of the
Conversion by the requisite vote of the Members of Peoples and Oakley, (v) the
filing of a Certificate of Merger with the Secretaries of State of the States of
Delaware and Ohio pursuant to the DGCL and the ORC, respectively, in connection
with the Merger, (vi) review of the Merger by the DOJ under federal antitrust
laws and (vii) the filing of Articles of Combination with the OTS in connection
with the Bank Merger, no consents or approvals of or filings or registrations
with any Governmental Entity or with any third party are necessary on the part
of Peoples or the Holding Company in connection with the (x) execution and
delivery by Peoples of this Agreement, the execution and delivery by the Holding
Company of an instrument of accession to this Agreement pursuant to Section 5.13
hereof and the consummation by Peoples and the Holding Company of the
transactions contemplated hereby and (y) the execution and delivery by Peoples
of the Bank Merger Agreement and the consummation by Peoples of the transactions
contemplated thereby.
(d) As of the date hereof, Peoples is not aware of any reasons relating
to Peoples (including without limitation Community Reinvestment Act compliance)
why all consents and approvals shall not be procured from all regulatory
agencies having jurisdiction over the transactions contemplated by this
Agreement and the Bank Merger Agreement as shall be necessary for (i)
consummation of the transactions contemplated by this Agreement and the Bank
Merger Agreement and (ii) the continuation by the Holding Company and Peoples
after the Effective Time of the business of each of the Company and the Bank as
such business is carried on immediately prior to the Effective Time, free of any
conditions or requirements which in the reasonable opinion of Peoples could have
a Material Adverse Effect on the Holding Company or Peoples or materially impair
the value of the Company and the Bank to the Holding Company and Peoples,
respectively.
4.5 REGULATORY REPORTS
Since January 1, 1996, Peoples has duly filed with the OTS the reports
required to be filed under applicable laws and regulations and such reports were
in all material respects complete and accurate and in compliance with the
requirements of applicable laws and regulations. In connection with the most
recent examinations of Peoples by the OTS and the Division, Peoples was not
required to correct or change any action, procedure or proceeding which Peoples
believes has not been
24
corrected or changed as required as of the date hereof and which could have a
Material Adverse Effect on Peoples.
4.6 FINANCIAL STATEMENTS
(a) Peoples has previously delivered or made available to the Company
accurate and complete copies of the Peoples Financial Statements, which are
accompanied by the audit reports of Kennedy, Kraft, Xxxxxx & Xxx, independent
certified public accountants with respect to Peoples. The Peoples Financial
Statements, as well as the Peoples Financial Statements to be delivered pursuant
to Section 5.8 hereof, fairly present or will fairly present, as the case may
be, the financial condition of Peoples as of the respective dates set forth
therein, and the income, changes in retained income and cash flows of Peoples
for the respective periods or as of the respective dates set forth therein.
(b) Each of the Peoples Financial Statements and the Peoples Financial
Statements to be delivered pursuant to Section 5.8 hereof has been or will be,
as the case may be, prepared in accordance with generally accepted accounting
principles consistently applied during the periods involved, except as stated
therein. The audits of Peoples have been conducted in all material respects in
accordance with generally accepted auditing standards. The books and records of
Peoples are being maintained in material compliance with applicable legal and
accounting requirements, and all such books and records accurately reflect in
all material respects all dealings and transactions in respect of the business,
assets, liabilities and affairs of Peoples.
(c) Except as Previously Disclosed or to the extent (i) reflected,
disclosed or provided for in the statement of condition of Peoples as of June
30, 1999 (including related notes), (ii) of liabilities incurred since June 30,
1999 in the ordinary course of business and (iii) of liabilities in connection
with consummation of the transaction contemplated by this Agreement, Peoples has
any liabilities, whether absolute, accrued, contingent or otherwise, material to
the financial condition, results of operations or business of Peoples.
4.7 MATERIAL ADVERSE CHANGE
Since June 30, 1999, (i) Peoples has conducted its business in the
ordinary and usual course (excluding the incurrence of expenses in connection
with the Merger with Oakley, the Conversion and with this Agreement and the
transactions contemplated hereby) and (ii) no event has occurred or circumstance
arisen that, individually or in the aggregate, has had or is reasonably likely
to have a Material Adverse Effect on Peoples.
4.8 ENVIRONMENTAL MATTERS
(a) To the best of Peoples' knowledge, Peoples is in compliance with
all Environmental Laws, except for any violations of any Environmental Law which
would not, singly or in the aggregate, have a Material Adverse Effect on
Peoples. Peoples has not received any communication alleging that Peoples is not
in such compliance and, to the best knowledge of Peoples, there are no present
circumstances that would prevent or interfere with the continuation of such
compliance.
25
(b) To the best of Peoples' knowledge, none of the properties owned,
leased or operated by Peoples has been or is in violation of or liable under any
Environmental Law, except any such violations or liabilities which would not
singly or in the aggregate have a Material Adverse Effect on Peoples.
(c) To the best of Peoples' knowledge, there are no past or present
actions, activities, circumstances, conditions, events or incidents that could
reasonably form the basis of any Environmental Claim or other claim or action or
governmental investigation that could result in the imposition of any liability
arising under any Environmental Law against Peoples or against any person or
entity whose liability for any Environmental Claim Peoples has or may have
retained or assumed either contractually or by operation of law, except such
which would not have a Material Adverse Effect on Peoples.
(d) Peoples has not conducted any environmental studies during the past
five years with respect to any properties owned by it as of the date hereof.
4.9 TAX MATTERS
(a) Peoples has timely filed all federal, state and local (and, if
applicable, foreign) income, franchise, bank, excise, real property, personal
property and other tax returns required by applicable law to be filed by them
(including, without limitation, estimated tax returns, income tax returns,
information returns and withholding and employment tax returns) and have paid,
or where payment is not required to have been made, have set up an adequate
reserve or accrual for the payment of, all taxes required to be paid in respect
of the periods covered by such returns and, as of the Effective Time, will have
paid, or where payment is not required to have been made, will have set up an
adequate reserve or accrual for the payment of, all taxes for any subsequent
periods ending on or prior to the Effective Time. Peoples will not have any
material liability for any such taxes in excess of the amounts so paid or
reserves or accruals so established.
(b) All federal, state and local (and, if applicable, foreign) income,
franchise, bank, excise, real property, personal property and other tax returns
filed by Peoples are complete and accurate in all material respects. Peoples is
not delinquent in the payment of any tax, assessment or governmental charge or
has requested any extension of time within which to file any tax returns in
respect of any fiscal year or portion thereof which have not since been filed.
The federal, state and local income tax returns of Peoples have been examined by
the applicable tax authorities (or are closed to examination due to the
expiration of the applicable statute of limitations) and no deficiencies for any
tax, assessment or governmental charge have been proposed, asserted or assessed
(tentatively or otherwise) against Peoples as a result of such examinations or
otherwise which have not been settled and paid. There are currently no
agreements in effect with respect to Peoples to extend the period of limitations
for the assessment or collection of any tax. As of the date hereof, no audit,
examination or deficiency or refund litigation with respect to such return is
pending or, to the best of Peoples' knowledge, threatened.
26
(c) Peoples (i) is not a party to any agreement providing for the
allocation or sharing of taxes, (ii) is not required to include in income any
adjustment pursuant to Section 481(a) of the Code by reason of a voluntary
change in accounting method initiated by Peoples (nor does Peoples have any
knowledge that the Internal Revenue Service has proposed any such adjustment or
change of accounting method) and (iii) has not filed a consent pursuant to
Section 341(f) of the Code or agreed to have Section 341(f)(2) of the Code
apply.
4.10 LEGAL PROCEEDINGS
There are no actions, suits, claims, governmental investigations or
proceedings instituted, pending or to the best knowledge of Peoples threatened
against Peoples or against any asset, interest or right of Peoples, or against
any officer, director or employee of Peoples that in any such case, if decided
adversely, would have a Material Adverse Effect on Peoples. Peoples is not a
party to any order, judgment or decree which has or could reasonably be expected
to have a Material Adverse Effect on Peoples.
4.11 COMPLIANCE WITH LAWS
(a) Peoples 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 being conducted and the absence of which could reasonably be expected
to have a Material Adverse Effect on Peoples; all such permits, licenses,
certificates of authority, orders and approvals are in full force and effect;
and to the best knowledge of Peoples, no suspension or cancellation of any of
the same is threatened.
(b) Peoples is not in violation of its Constitution, Articles of
Incorporation or Bylaws, or of any applicable federal, state or local law or
ordinance or any order, rule or regulation of any federal, state, local or other
governmental agency or body (including, without limitation, all banking
(including all regulatory capital requirements), securities, municipal
securities, safety, health, environmental, zoning, anti- discrimination,
antitrust, and wage and hour laws, ordinances, orders, rules and regulations),
or in default with respect to any order, writ, injunction or decree of any
court, or in default under any order, license, regulation or demand of any
governmental agency, any of which violations or defaults could reasonably be
expected to have a Material Adverse Effect on Peoples; and Peoples has not
received any notice or communication from any federal, state or local
governmental authority asserting that Peoples is in violation of any of the
foregoing which could reasonably be expected to have a Material Adverse Effect
on Peoples. Peoples is not subject to any regulatory or supervisory cease and
desist order, agreement, written directive, memorandum of understanding or
written commitment (other than those of general applicability to all savings
banks, savings associations or holding companies thereof, as applicable, issued
by governmental authorities), and Peoples has not received any written
communication requesting that it enter into any of the foregoing.
27
4.12 CERTAIN INFORMATION
None of the information relating to Peoples or the Holding Company
supplied by them and to be included in (i) the Form S-1, including the
Prospectus, will, at the time the Form S-1 and any amendment thereto becomes
effective under the Securities Act, contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading, (ii)
the Application for Conversion, at the time the Application for Conversion and
any amendment thereto is approved by the OTS under the HOLA and the regulations
of the OTS thereunder, will contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading, and (iii) the
Proxy Statements, as of the date or dates such Proxy Statements are mailed to
shareholders of the Company and Members of Peoples and Oakley and up to and
including the date or dates of the meetings of shareholders and Members to which
such Proxy Statements relate, will contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading,
provided that information as of a later date shall be deemed to modify
information as of an earlier date.
4.13 EMPLOYEE BENEFIT PLANS
(a) Peoples has Previously Disclosed all qualified pension or
profit-sharing plans, any deferred compensation, consultant, bonus or group
insurance contract or any other incentive, health and welfare or employee
benefit plan or agreement maintained for the benefit of employees or former
employees of Peoples (the "Peoples Employee Plans"), whether written or oral.
(b) None of Peoples, any Peoples Employee Plan constituting an
"employee pension benefit plan" within the meaning of Section 3(2) of ERISA
("Peoples Pension Plan") or to the best of Peoples's knowledge, any fiduciary of
a Peoples Pension Plan has incurred any material liability to the PBGC or the
Internal Revenue Service with respect to any such Peoples Pension Plan. To the
best of Peoples's knowledge, no reportable event under Section 4043(b) of ERISA
has occurred with respect to any Peoples Pension Plan.
(c) Peoples does not participate in and have not incurred any liability
under Section 4201 of ERISA for a complete or partial withdrawal from a
multi-employer plan (as such term is defined in ERISA).
(d) A favorable determination letter has been issued by the Internal
Revenue Service with respect to each Peoples Pension Plan which is intended to
qualify under Section 401 of the Code to the effect that the Peoples Pension
Plan is qualified under Section 401 of the Code and the trust associated with
such Peoples Pension Plan is tax exempt under Section 501 of the Code. No such
letter has been revoked or, to the best of Peoples's knowledge, is threatened to
be revoked and Peoples does not know of any ground on which such revocation may
be based. Peoples does not have any liability under any such Peoples Pension
Plan that is not reflected on the statement of
28
condition of Peoples at June 30, 1999 or the notes thereto included in the
Peoples Financial Statements, other than liabilities incurred in the ordinary
course of business in connection therewith subsequent to the date thereof.
(e) To the best of Peoples's knowledge, no prohibited transaction
(which shall mean any transaction prohibited by Section 406 of ERISA and not
exempt under Section 408 of ERISA or Section 4975 of the Code) has occurred with
respect to any Peoples Employee Plan which would result in the imposition,
directly or indirectly, of a material excise tax under Section 4975 of the Code
or otherwise have a Material Adverse Effect on Peoples.
(f) Full payment has been made (or proper accruals have been
established) of all contributions which are required for periods prior to the
date hereof, and full payment will be so made (or proper accruals will be so
established) of all contributions which are required for periods after the date
hereof and prior to the Effective Time, under the terms of each Peoples Employee
Plan or ERISA; no accumulated funding deficiency (as defined in Section 302 of
ERISA or Section 412 of the Code), whether or not waived, exists with respect to
any Peoples Pension Plan, and there is no "unfunded current liability" (as
defined in Section 412 of the Code) with respect to any Peoples Pension Plan.
(g) To the best of Peoples's knowledge, the Peoples Employee Plans have
been operated in compliance in all material respects with the applicable
provisions of ERISA, the Code, all regulations, rulings and announcements
promulgated or issued thereunder and all other applicable governmental laws and
regulations.
(h) There are no pending or, to the best knowledge of Peoples,
threatened claims (other than routine claims for benefits) by, on behalf of or
against any of the Peoples Employee Plans or any trust related thereto or any
fiduciary thereof.
4.14 CERTAIN CONTRACTS
Peoples is not a party to, is not bound or affected by, does not
receive, nor is obligated to pay, benefits under (i) any agreement, arrangement
or understanding to which Peoples is a party or by which it is bound which
limits the freedom of Peoples to compete in any line of business or with any
person, (ii) any assistance agreement, supervisory agreement, memorandum of
understanding, consent order, cease and desist order or condition of any of
regulatory order or decree with or by the OTS, the FDIC, the Division or any
other regulatory agency, or (iii) any other agreement, arrangement or
understanding which would be required to be filed as an exhibit to the Annual
Report on Form 10-K under the Exchange Act (assuming Peoples was required to
file such reports under the Exchange Act).
(b) Peoples is not in default or in non-compliance, which default or
non-compliance could reasonably be expected to have a Material Adverse Effect on
Peoples, under any contract, agreement, commitment, arrangement, lease,
insurance policy or other instrument to which it is a party or by
29
which its assets, business or operations may be bound or affected, whether
entered into in the ordinary course of business or otherwise and whether written
or oral, and there has not occurred any event that with the lapse of time or the
giving of notice, or both, would constitute such a default or non-compliance.
4.15 BROKERS AND FINDERS
Except Xxxxxxx Xxxx & Company, neither of Peoples, the Holding Company,
nor any of their respective directors, officers or employees, has employed any
broker or finder or incurred any liability for any broker or finder fees or
commissions in connection with the transactions contemplated hereby.
4.16 INSURANCE
Peoples is 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 and has maintained all insurance required by applicable laws and
regulations.
4.17 PROPERTIES
All real and personal property owned by Peoples or presently used by it
in its business is in an adequate condition (ordinary wear and tear excepted)
and is sufficient to carry on its business in the ordinary course of business
consistent with its past practices. Peoples has good and marketable title free
and clear of all liens, encumbrances, charges, defaults or equities (other than
equities of redemption under applicable foreclosure laws) to all of its material
properties and assets, real and personal, except (i) liens for current taxes not
yet due or payable (ii) pledges to secure deposits and other liens incurred in
the ordinary course of its banking business, (iii) such imperfections of title,
easements and encumbrances, if any, as are not material in character, amount or
extent and (iv) as reflected on the statement of condition of Peoples as of June
30, 1999 included in the Peoples Financial Statements. All real and personal
property which is material to Peoples's business on a consolidated basis and
leased or licensed by Peoples is held pursuant to leases or licenses which are
valid and enforceable in accordance with their respective terms and such leases
will not terminate or lapse prior to the Effective Time.
4.18 LABOR
No work stoppage involving Peoples is pending or, to the best knowledge
of Peoples, threatened. Peoples is not involved in or to the best knowledge of
Peoples threatened with or affected by, any labor dispute, arbitration, lawsuit
or administrative proceeding involving its employees which could have a Material
Adverse Effect on Peoples. Employees of Peoples are not represented by any labor
union nor are any collective bargaining agreements otherwise in effect with
30
respect to such employees, and to the best of Peoples' knowledge, there have
been no efforts to unionize or organize any employees of Peoples during the past
five years.
4.19 OWNERSHIP OF COMPANY COMMON STOCK
As of the date hereof, neither Peoples nor, to its best knowledge, any
of its affiliates or associates (as such terms are defined under the Exchange
Act), (i) beneficially own, directly or indirectly, or (ii) are parties to any
agreement, arrangement or understanding for the purpose of acquiring, holding,
voting or disposing of, in each case, shares of Company Common Stock which in
the aggregate represent 5% or more of the outstanding shares of Company Common
Stock (other than shares held in a fiduciary capacity and beneficially owned by
third parties or shares taken in consideration of debts previously contracted).
4.20 YEAR 2000 COMPLIANCE.
To the actual knowledge of Peoples, all hardware, firmware, software
and computer systems owned, used or licensed by Peoples, including but not
limited to system and application programs, files, data bases and computer
services, are Year 2000 Compliant (as defined below). For purposes of this
Agreement, "Year 2000 Compliant" means that the hardware, firmware, software and
computer systems (i) will correctly and accurately address, produce, store,
process and calculate data involving dates beginning with January 1, 2000 and
will not produce abnormally ending or incorrect results involving such dates as
used in any forward or regression dated based functions; (ii) will provide that
all "date"-related functionalities and data fields include the indication of
century and millennium, and will perform calculations which involve a four-digit
year; and (iii) will be interoperable with other Year 2000 Compliant hardware or
software owned, used or licensed by Peoples which may deliver records to,
receive records from or otherwise interact with such hardware or software in the
course of processing records or data.
4.21 DISCLOSURES
None of the representations and warranties of Peoples or any of the
written information or documents furnished or to be furnished by Peoples to the
Company in connection with or pursuant to this Agreement or the consummation of
the transactions contemplated hereby, when considered as a whole, contains or
will contain any untrue statement of a material fact, or omits or will omit to
state any material fact required to be stated or necessary to make any such
information or document, in light of the circumstances, not misleading.
31
ARTICLE V
COVENANTS
5.1 REASONABLE BEST EFFORTS
Subject to the terms and conditions of this Agreement, each of the
Company and Peoples (i) shall use its reasonable best efforts in good faith to
take, or cause to be taken, all actions, and to do, or cause to be done, all
things necessary or advisable under applicable laws and regulations so as to
permit and otherwise enable consummation of the Conversion and the Merger as
promptly as reasonably practicable, it being the intention of the parties that
the Conversion be consummated prior to the Effective Time and that the Bank
Merger be consummated following the Effective Time in accordance with Section
5.12 hereof, and (ii) shall cooperate fully with each other to that end.
5.2 SHAREHOLDER AND MEMBER MEETINGS
(a) The Company shall take all action necessary to properly call and
convene a meeting of its shareholders as soon as practicable after the date
hereof to consider and vote upon this Agreement and the transactions
contemplated hereby. The Board of Directors of the Company will recommend that
the shareholders of the Company approve this Agreement and the transactions
contemplated hereby, provided that the Board of Directors of the Company may
fail to make such recommendation, or withdraw, modify or change any such
recommendation, if such Board of Directors, after having consulted with and
considered the advice of outside counsel, has determined that the making of such
recommendation, or the failure to withdraw, modify or change such
recommendation, would constitute a breach of the fiduciary duties of such
directors under applicable law.
(b) Peoples shall take all action necessary to properly call and
convene a meeting of its Members as soon as practicable to consider and vote
upon the Conversion and the transactions contemplated thereby. The Board of
Directors of Peoples will recommend that the Members of Peoples approve the
Conversion and the transactions contemplated thereby.
5.3 REGULATORY MATTERS
(a) The parties hereto shall promptly cooperate with each other in the
preparation and filing of the Form S-1, the Prospectus and the Proxy Statements
relating to the meetings of shareholders of the Company and the Members of
Peoples to be held pursuant to Section 5.2 of this Agreement (the "Company Proxy
Statement" and the "Peoples Proxy Statement," respectively) under the Securities
Act and the Exchange Act, as applicable. Each of the Holding Company, Peoples
and the Company shall use its reasonable best efforts to have the Form S-1
declared effective under the Securities Act and the Company Proxy Statement
approved for mailing in definitive form under the Exchange Act as promptly as
practicable after such filings and the receipt of conditional approval of the
Application for Conversion by the OTS and the Division, and thereafter the
Company shall promptly mail to its shareholders the Company Proxy Statement and
Prospectus and Peoples shall
32
promptly mail, or in the case of the Prospectus make available, to its Members
the Peoples Proxy Statement and the Prospectus. The Holding Company also shall
use its reasonable best efforts to obtain all necessary state securities law or
"blue sky" permits and approvals required to carry out the issuance of Holding
Company Common Stock in connection with the Merger and the Conversion. 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
of the foregoing actions.
(b) The parties hereto shall cooperate with each other and use their
reasonable best efforts to promptly prepare and file all necessary
documentation, to effect all applications, notices, petitions and filings, and
to obtain as promptly as practicable all permits, consents, approvals and
authorizations of all Governmental Entities and third parties which are
necessary or advisable to consummate the transactions contemplated by this
Agreement (including without limitation the Conversion, the Merger and the Bank
Merger). Peoples and the Company shall have the right to review in advance, and
to the extent practicable each will consult with the other on, in each case
subject to applicable laws relating to the exchange of information, all the
information which appears 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 Agreement. 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 Agreement and each party will keep the other
apprised of the status of matters relating to completion of the transactions
contemplated herein.
(c) Peoples and the Company shall, upon request, furnish each other
with all information concerning themselves and their directors and officers and,
with respect to the Company, its shareholders, and such other matters as may be
reasonably necessary or advisable in connection with the Form S-1 or any other
statement, filing, notice or application made by or on behalf of Peoples, the
Holding Company, the Company or the Bank to any Governmental Entity in
connection with the Conversion, the Merger, the Bank Merger and the other
transactions contemplated hereby.
(d) Peoples and the Company shall promptly furnish each other with
copies of written communications received by Peoples or the Company and the
Bank, as the case may be, from, or delivered by any of the foregoing to, any
Governmental Entity in respect of the transactions contemplated hereby.
5.4 INVESTIGATION AND CONFIDENTIALITY
(a) Each party shall permit the other party and its representatives
reasonable access to its properties and personnel, and shall disclose and make
available to such other party all books, papers and records relating to the
assets, stock ownership, properties, operations, obligations and liabilities of
it and with respect to the Company, the Bank, including, but not limited to, all
books of account (including the general ledger), tax records, minute books of
meetings of boards of directors (and any
33
committees thereof) and shareholders, organizational documents, bylaws, material
contracts and agreements, filings with any regulatory authority, accountants'
work papers, litigation files, loan files, plans affecting employees, and any
other business activities or prospects in which the other party may have a
reasonable interest, provided that such access shall be reasonably related to
the transactions contemplated hereby and, in the reasonable opinion of the
respective parties providing such access, not unduly interfere with normal
operations. Peoples, the Company and the Bank shall make their respective
directors, officers, employees and agents and authorized representatives
(including counsel and independent public accountants) available to confer with
the other party and its representatives, provided that such access shall be
reasonably related to the transactions contemplated hereby and shall not unduly
interfere with normal operations.
(b) All information furnished previously in connection with the
transactions contemplated by this Agreement or pursuant hereto shall be treated
as the sole property of the party furnishing the information until consummation
of the transactions contemplated hereby and, if such transactions shall not
occur, the party receiving the information shall either destroy or return to the
party which furnished such information all documents or other materials
containing, reflecting or referring to such information, shall use its best
efforts to keep confidential all such information, and shall not directly or
indirectly use such information for any competitive or other commercial
purposes. The obligation to keep such information confidential shall continue
for five years from the date the proposed transactions are abandoned but shall
not apply to (i) any information which (x) the party receiving the information
can establish was already in its possession prior to the disclosure thereof by
the party furnishing the information; (y) was then generally known to the
public; or (z) became known to the public through no fault of the party
receiving the information; or (ii) disclosures pursuant to a legal requirement
or in accordance with an order of a court of competent jurisdiction, provided
that the party which is the subject of any such legal requirement or order shall
use its best efforts to give the other party at least ten business days prior
notice thereof.
5.5 PRESS RELEASES
Peoples and the Company shall agree with each other as to the form and
substance of any press release related to this Agreement or the transactions
contemplated hereby, and consult with each other as to the form and substance of
other public disclosures which may relate to the transactions contemplated by
this Agreement, provided, however, that nothing contained herein shall prohibit
either party, following notification to the other party, from making any
disclosure which is required by law or regulation.
5.6 BUSINESS OF THE PARTIES
(a) During the period from the date of this Agreement and continuing
until the Effective Time, except as expressly contemplated or permitted by this
Agreement or with the prior written consent of Peoples, the Company and the Bank
shall carry on their respective businesses in the ordinary course consistent
with past practice. During such period, the Company also will use all reasonable
efforts to (x) preserve its business organization and that of the Bank intact,
(y) keep
34
available to itself and Peoples the present services of the employees of the
Company and the Bank and (z) preserve for itself and Peoples the goodwill of the
customers of the Company and the Bank and others with whom business
relationships exist. Without limiting the generality of the foregoing, except
with the prior written consent of Peoples or as expressly contemplated hereby,
between the date hereof and the Effective Time, the Company shall not, and shall
cause the Bank not to:
(i) declare, set aside, make or pay any dividend or other
distribution (whether in cash, stock or property or any combination
thereof) in respect of the Company Common Stock, except for regular
quarterly cash dividends at a rate per share of Company Common Stock
not in excess of $.11 per share and except, in the event the Effective
Time occurs more than 45 days after the commencement of any calendar
quarter but prior to the normal dividend payment date for such calendar
quarter, a pro rata cash dividend based on the Company's normal
quarterly cash dividend rate; provided, however, that nothing contained
herein shall be deemed to affect the ability of the Bank to pay
dividends on its capital stock to the Company;
(ii) issue any shares of its capital stock, other than upon
exercise of the Company Options referred to in Section 3.1 hereof, or
issue, grant, modify or authorize any Rights; purchase any shares of
Company Common Stock; or effect any recapitalization, reclassification,
stock dividend, stock split or like change in capitalization;
(iii) amend its Articles of Incorporation, Constitution, Code
of Regulations, Bylaws or similar organizational documents; impose, or
suffer the imposition, on any share of stock or other ownership
interest held by the Company in the Bank of any lien, charge or
encumbrance or permit any such lien, charge or encumbrance to exist; or
waive or release any material right or cancel or compromise any
material debt or claim;
(iv) increase the rate of compensation of any of its
directors, officers or employees, or pay or agree to pay any bonus or
severance to, or provide any other new employee benefit or incentive
to, any of its directors, officers or employees, except (i) as may be
required pursuant to Previously Disclosed commitments existing on the
date hereof, (ii) as may be required by law and (iii) merit increases
in accordance with past practices, normal cost-of-living increases
and normal increases related to promotions or increased job
responsibilities;
(v) enter into or, except as may be required by law, modify
any pension, retirement, stock option, stock purchase, stock
appreciation right, savings, profit sharing, deferred compensation,
supplemental retirement, consulting, bonus, group insurance or other
employee benefit, incentive or welfare contract, plan or arrangement,
or any trust agreement related thereto, in respect of any of its
directors, officers or employees; or make any contributions to any of
the Company's Pension
35
Plan or ESOP (other than as required by law or regulation or in a
manner and amount consistent with past practices);
(vi) enter into (w) any transaction, agreement, arrangement or
commitment not made in the ordinary course of business, (x) any
agreement, indenture or other instrument relating to the borrowing of
money by the Company or the Bank or guarantee by the Company or the
Bank of any such obligation, except in the case of the Bank for
deposits, FHLB advances, federal funds purchased and securities sold
under agreements to repurchase in the ordinary course of business
consistent with past practice, (y) any agreement, arrangement or
commitment relating to the employment of an employee or consultant, or
amend any such existing agreement, arrangement or commitment, provided
that the Company and the Bank may employ an employee or consultant in
the ordinary course of business if the employment of such employee or
consultant is terminable by the Company or the Bank at will without
liability, other than as required by law; or (z) any contract,
agreement or understanding with a labor union;
(vii) change its method of accounting in effect for the year
ended September 30, 1999, except as required by changes in laws or
regulations or generally accepted accounting principles, or change any
of its methods of reporting income and deductions for federal income
tax purposes from those employed in the preparation of its federal
income tax return for such year, except as required by changes in laws
or regulations;
(viii) make any capital expenditures in excess of $50,000
individually or $100,000 in the aggregate, other than pursuant to
binding commitments existing on the date hereof and other than
expenditures necessary to maintain existing assets in good repair; or
enter into any new lease of real property or any new lease of personal
property providing for annual payments exceeding $15,000;
(ix) file any applications or make any contract with respect
to branching or site location or relocation;
(x) acquire in any manner whatsoever (other than to realize
upon collateral for a defaulted loan) control over or any equity
interest in any business or entity, except for investments in
marketable equity securities in the ordinary course of business and not
exceeding 5% of the outstanding shares of any class;
(xi) enter or agree to enter into any agreement or arrangement
granting any preferential right to purchase any of its assets or rights
or requiring the consent of any party to the transfer and assignment of
any such assets or rights;
36
(xii) change or modify in any material respect any of its
lending or investment policies, except to the extent required by law or
an applicable regulatory authority;
(xiii) take any action that would prevent or impede the Merger
or the Conversion from qualifying as a reorganization within the
meaning of Section 368 of the Code;
(xiv) enter into any futures contract, option contract,
interest rate caps, interest rate floors, interest rate exchange
agreement or other agreement for purposes of hedging the exposure of
its interest-earning assets and interest-bearing liabilities to changes
in market rates of interest;
(xv) take any action that would result in any of the
representations and warranties of the Company contained in this
Agreement not to be true and correct in any material respect at the
Effective Time or that would cause any of the conditions of Sections
6.1 or 6.3 hereof not to be satisfied; or
(xvi) agree to do any of the foregoing.
(b) During the period from the date of this Agreement and continuing
until the Effective Time, except with the prior written consent of the Company
or as expressly contemplated hereby, Peoples shall carry on its business in the
ordinary course consistent with past practice. During the period between the
date hereof and the Effective Time, Peoples will use all reasonable efforts to
(x) preserve its business organization intact, and (y) preserve for itself and
the Company the goodwill of the customers of Peoples and others with whom
business relationships exist. Without limiting the generality of the foregoing,
except with the prior written consent of the Company or as expressly
contemplated hereby, between the date hereof and the Effective Time, Peoples
shall not:
(i) take any action that would prevent or impede the Merger or
the Conversion from qualifying as a reorganization within the meaning
of Section 368 of the Code;
(ii) take any action that would result in any of the
representations and warranties of Peoples contained in this Agreement
not to be true and correct in any material respect at the Effective
Time or that would cause any of the conditions of Sections 6.1 or 6.2
hereof not to be satisfied; or
(iii) agree to do any of the foregoing.
37
5.7 CERTAIN ACTIONS
The Company and the Bank shall not solicit or encourage inquiries or
proposals with respect to, furnish any information relating to, or participate
in any negotiations or discussions concerning, any acquisition, purchase of all
or a substantial portion of the assets of, or any equity interest in, the
Company or the Bank (other than with Peoples or an affiliate thereof), provided,
however, that the Board of Directors of the Company may furnish such information
or participate in such negotiations or discussions if such Board of Directors,
after having consulted with and considered the advice of outside counsel, has
determined that the failure to do the same may cause the members of such Board
of Directors to breach their fiduciary duties under applicable law. The Company
will promptly inform Peoples orally and in writing of any such request for
information or of any such negotiations or discussions, as well as instruct its
and the Bank's directors, officers, representatives and agents to refrain from
taking any action prohibited by this Section 5.7.
5.8 CURRENT INFORMATION
During the period from the date of this Agreement to the Effective
Time, each of Peoples and the Company shall, upon the request of the other
party, cause one or more of its designated representatives to confer on a
monthly or more frequent basis with representatives of the other party regarding
its financial condition, operations and business and matters relating to the
completion of the transactions contemplated hereby. As soon as reasonably
available, but in no event more than 45 days after the end of each calendar
quarter ending after the date of this Agreement (other than the quarter ending
September 30, 1999), the Company will deliver to Peoples its quarterly report on
Form 10-Q under the Exchange Act, and, as soon as reasonably available, but in
no event more than 90 days after September 30, 1999, the Company will deliver to
Peoples its Annual Report on Form 10-K for 1999. As soon as reasonably
available, but in no event more than 90 days after September 30, 1999, Peoples
will deliver to the Company audited statements of condition (including related
notes and schedules, if any) of Peoples as of September 30, 1999 and 1998 and
statements of income, changes in net worth and cash flows (including related
notes and schedules, if any) of Peoples for each of the years in the three-year
period ended September 30, 1999. Peoples also will deliver to the Company each
Thrift Financial Report ("TFR") report filed by Peoples with the OTS
concurrently with the filing of such call report. Within 25 days after the end
of each month, the Company and Peoples will deliver to the other party an
unaudited consolidated statement of condition and an unaudited consolidated
statement of income, without related notes, for such month prepared in
accordance with generally accepted accounting principles.
5.9 INDEMNIFICATION; INSURANCE
(a) From and after the Effective Time through the third anniversary of
the Effective Time, the Holding Company (the "Indemnifying Party") shall provide
indemnification to any present or former director, officer or employee of the
Company and the Bank, in each case determined as of the Effective Time (the
"Indemnified Parties"), with respect to any costs or expenses (including
reasonable attorneys' fees), judgments, fines, losses, claims, damages or
liabilities incurred in
38
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, if first asserted or
claimed prior to the date hereof and Previously Disclosed, if first asserted or
claimed between the date hereof and the Effective Time and disclosed pursuant to
Section 5.17 hereof or if first asserted or claimed after the Effective Time, to
the fullest extent, if any, that such Indemnified Party would have been entitled
to indemnification by the Company or the Bank under the Articles of
Incorporation, Constitution or Bylaws of the Company or the Bank as Previously
Disclosed, provided, however, that all rights to indemnification in respect of
any claim asserted or made within such period shall continue until the final
disposition of such claim, and provided, further, that nothing contained herein
shall extend or be deemed a waiver of any applicable statute of limitations in
respect of any claim or claim for indemnification. Without limiting the
foregoing, all limitations of liability existing in favor of the Indemnified
Parties in the Articles of Incorporation, Constitution or Bylaws of the Company
or the Bank, arising out of matters existing or occurring at or prior to the
Effective Time shall survive the Merger and shall continue in full force and
effect.
(b) Any Indemnified Party wishing to claim indemnification under
Section 5.9(a), upon learning of any such claim, action, suit, proceeding or
investigation, shall promptly notify the Indemnifying Party, but the failure to
so notify shall not relieve the Indemnifying Party 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) the
Indemnifying Party shall have the right to assume the defense thereof and the
Indemnifying Party 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 the
Indemnifying Party elects not to assume such defense or counsel for the
Indemnified Parties advises that there are issues which raise conflicts of
interest between the Indemnifying Party and the Indemnified Parties, the
Indemnified Parties may retain counsel which is reasonably satisfactory to the
Indemnifying Party, and the Indemnifying Party shall pay, promptly as statements
therefor are received, the reasonable fees and expenses of such counsel for the
Indemnified Parties (which may not exceed one firm in any jurisdiction unless
the use of one counsel for such Indemnified Parties would present such counsel
with a conflict of interest) in accordance with the obligations set forth in
Section 5.9(a) hereof, (ii) the Indemnified Parties will cooperate in the
defense of any such matter, (iii) the Indemnifying Party shall not be liable for
any settlement effected without its prior written consent and (iv) the
Indemnifying Party shall have no obligation hereunder in the event a federal
banking agency or a court of competent jurisdiction shall ultimately determine,
and such determination shall have become final and nonappealable, that
indemnification of an Indemnified Party in the manner contemplated hereby is
prohibited by applicable law.
(c) The Holding Company shall maintain the Company's existing
directors' and officers' liability insurance policy (or purchase an insurance
policy providing coverage on substantially the same terms and conditions) for
acts or omissions occurring prior to the Effective Time by persons who are
currently covered by such insurance policy maintained by the Company and the
Bank for a period of three years following the Effective Time, provided,
however, that in no event shall the
39
Holding Company be required to expend on an annual basis more than 125% of the
amount paid by the Company and the Bank as of the date hereof for such insurance
coverage (the "Insurance Amount") to maintain or procure such insurance
coverage, and further provided that if the Holding Company is unable to maintain
or obtain the insurance called for hereby, the Holding Company shall use all
reasonable efforts to obtain as much comparable insurance as is available for
the Insurance Amount. At the request of the Holding Company, the Company shall
use reasonable efforts to procure the insurance coverage referred to in the
preceding sentence prior to the Effective Time.
(d) In the event that the Holding Company or any of its respective
successors or assigns (i) consolidates with or merges into any other person and
shall not be the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers all or substantially all of its
properties and assets to any person, then, and in each such case the successors
and assigns of such entity shall assume the obligations set forth in this
Section 5.9, which obligations are expressly intended to be for the irrevocable
benefit of, and shall be enforceable by, each director and officer covered
hereby.
5.10 DIRECTORS
Each of Peoples and the Holding Company agrees to take all action
necessary to appoint or elect, effective as of the Effective Time, Xxxx X.
Xxxxxxxx as a director of the Holding Company and the Surviving Bank to a
three-year class ending at the Annual Meeting in 2002.
5.11 EMPLOYEES AND EMPLOYEE BENEFIT PLANS
(a) All employees of the Company or the Bank as of the Effective Time
(collectively, "Company Employees") shall become employees of the Holding
Company or a Holding Company Subsidiary as of the Effective Time, provided that,
other than as provided by Section 5.11(g) hereof, the Holding Company or a
Holding Company Subsidiary shall have no obligation to continue the employment
of any such person and nothing contained in this Agreement shall give any
employee of the Holding Company or a Holding Company Subsidiary a right to
continuing employment with the Holding Company or a Holding Company Subsidiary
after the Effective Time. To the extent that the Holding Company or a Holding
Company Subsidiary terminates the employment of any Company Employee (other than
those employees who receive payments pursuant to Section 5.11(d) hereof), other
than for cause, within six months following the Effective Time, the Holding
Company shall, or shall cause a Holding Company Subsidiary to, provide severance
benefits in a cash amount equal to such employee's regular salary for a one-week
period (as in effect immediately prior to the Effective Time) multiplied by the
total number of whole years of such employee's employment with a minimum of four
weeks severance pay and a maximum of 26 weeks of severance pay.
(b) Each Company Employee who remains employed by the Holding Company
or a Holding Company Subsidiary following the Effective Time (each, a
"Continuing Employee") shall be entitled to participate in (i) such of the
employee benefit plans, deferred compensation arrangements, bonus or incentive
plans and other compensation and benefit plans that the Holding
40
Company or a Holding Company Subsidiary may continue for the benefit of
Continuing Employees following the Effective Time and (ii) whatever employee
benefit plans and other compensation and benefit plans (other than any stock
option or restricted stock grant plan implemented by the Holding Company) that
the Holding Company or a Holding Company Subsidiary may maintain for the benefit
of its similarly situated employees on an equitably equivalent basis, if such
Continuing Employee is not otherwise then participating in a similar plan
described in Section 5.11(c) hereof. The parties hereto acknowledge that
Continuing Employees shall be eligible to participate in the stock option plan
implemented by the Holding Company subsequent to the Effective Time ("New Option
Plan") (subject to receipt of necessary corporate, regulatory and stockholder
approval) based upon the same criteria as other employees of Peoples or the
Holding Company and the level of grants shall give due regard to, among other
factors, relative levels of title, duties, salary and other compensation and
benefits.
(c) (i) At the Effective Time, the Holding Company or a Holding Company
Subsidiary shall become the plan sponsor of each Company Employee Plan in effect
prior to such time. The Company agrees to take or cause to be taken such actions
as the Holding Company or a Holding Company Subsidiary may reasonably request to
give effect to such assumption. The Holding Company or a Holding Company
Subsidiary shall have the right and power at any time following the Effective
Time to amend or terminate or cease benefit accruals under any Company Employee
Plan or cause it to be merged with or its assets and liabilities to be
transferred to a similar plan maintained by it.
(ii) For purposes of its employee benefit plans, the Holding
Company and a Holding Company Subsidiary shall treat Continuing Employees as new
employees, but shall amend its plans to provide credit for purposes of vesting
and eligibility to participate, for each Continuing Employee's service with the
Company and the Bank to the extent that such service was recognized for similar
purposes under the Company Employee Plans immediately prior to the Effective
Time. Continuing Employees and their covered dependents will not be deprived of
any partial or complete coverage under any employee plan of the Holding Company
or a Holding Company Subsidiary (which provides the type of benefits similar to
benefits under any Company Employee Plan) because of any waiting period or
pre-existing condition or previous medical treatments, except to the extent that
such pre-existing condition or previous medical treatments were excluded from
coverage under a Company Employee Plan, in which case this Section 5.11(c)(ii)
shall not require coverage for such pre-existing condition or previous medical
treatments. To the extent that the initial period of coverage for Continuing
Employees under any employee benefit plan of the Holding Company or a Holding
Company Subsidiary that is an "employee welfare benefit plan" as defined in
Section 3(1) of ERISA overlaps with the 12 months coverage period of an
applicable Company Employee Plan, Continuing Employees shall be given credit
during the initial period of coverage for any deductibles and coinsurance
payments made by Continuing Employees under any Company Employee Plan during
any partial period.
(d) At the Effective Time, the employment agreements between the
Company and the three executives listed on Disclosure Schedule 5.11(d) hereto
shall be cancelled in consideration of
41
the execution of new employment agreements between each of such executives and
Peoples and/or the Holding Company.
(e) In the sole discretion of the Holding Company or a Holding Company
Subsidiary, as applicable, payments made by it in satisfaction of obligations of
the Company or the Bank under any Company Employee Plan shall be subject to the
recipient's delivery to the Holding Company or a Holding Company Subsidiary, as
applicable, of (i) a written acknowledgement signed by such recipient that the
payment or payments to be made to him or her is in full and complete
satisfaction of all liabilities and obligations thereunder of the Company, the
Bank, the Holding Company or any Holding Company Subsidiary, and each of their
respective affiliates, directors, officers, employees and agents, and (ii) a
release by such recipient of all such parties from further liability in
connection with the particular Company Employee Plan.
(f) The Company's Employee Stock Ownership Plan (the "Company ESOP")
shall be terminated effective one day prior to the Effective Time. As soon as
practicable after the Effective Time (but not prior to the publication of
financial results covering at least 30 days of combined operations after the
Merger), the trustees of the Company ESOP shall, if necessary, convert to cash a
portion of the Holding Company Common Stock received by the Company ESOP in the
Merger with respect to unallocated Company Common Stock in order to repay the
entire outstanding balance of the Company ESOP loan in accordance with ERISA,
the rules and regulations promulgated thereunder, the Code, the rules,
regulations promulgated thereunder, and any precedential rulings issued by the
Internal Revenue Service ("IRS"). As soon as practicable after the retirement of
the Company ESOP loan (but not later than 90 days after the publication of
financial results covering at least 30 days of combined operations after the
Merger), the trustees of the Company ESOP shall allocate the remaining Holding
Company Common Stock and cash received by the Company ESOP in the Merger with
respect to unallocated shares of Company Common Stock to the accounts of all
Company ESOP participants (whether or not such participants are then actively
employed) and beneficiaries in proportion to the account balance of such
participants and beneficiaries as they existed as of the Effective Time (and, if
required, to the accounts of former participants or their beneficiaries) as
investment earnings of the Company ESOP except as restricted by applicable law.
The Company and/or Peoples and the Holding Company shall exercise best efforts
to implement procedures that will assure the full allocation of the remaining
suspense account to such participants or their beneficiaries. Upon the election
of any participant, his or her benefit that constitutes an "eligible rollover
distribution" (as defined in Section 402(f)(2)(A) of the Code) under the Company
ESOP may (i) in the sole discretion of Peoples and the Holding Company, be
rolled over to any qualified Peoples or Holding Company (or any Subsidiary
thereof) benefit plan, other than an employee stock ownership plan of the
Holding Company or Peoples, or (ii) be rolled over to any individual retirement
account and, provided further, that any such distribution shall not occur until
receipt of a favorable termination ruling from the IRS.
The foregoing actions relating to termination of the Company ESOP will
be adopted conditioned upon the consummation of the Merger and upon receiving
(i) a favorable determination letter from the IRS with regard to the continued
qualification of the Company ESOP after any
42
required amendments necessary to implement the actions thereof set forth above
and (ii) the receipt of a favorable termination letter as to the termination of
the Company ESOP. The Company, the Bank, and the Holding Company will cooperate
in submitting appropriate requests for any such determination and termination
letters to the IRS and will use their best efforts to seek the issuance of such
letters as soon as practicable following the date hereof. The Company and the
Holding Company will adopt such additional amendments to the Company ESOP as may
be reasonably required by the IRS as a condition to granting such favorable
determination and termination letters provided that such amendments do not
substantially change the terms outlined herein or would result in a material
adverse change in the business, operations, assets, financial condition or
prospects of the Company or the Bank or result in an additional material
liability to the Holding Company or Peoples.
(g) As of the Effective Time, the Holding Company and/or Peoples shall
offer employment to Xxxx X. Xxxxxxxx, Xxxxxx X. Xxxxxxxx and Xxxxxx X'Xxxxx
pursuant to the terms of employment agreements to be reasonably agreed upon.
5.12 BANK MERGER
Peoples, the Holding Company and the Company shall take, and the
Company shall cause the Bank to take, all necessary and appropriate actions,
including causing the Bank and Peoples to enter into a merger agreement (the
"Bank Merger Agreement"), to cause the Bank to merge with and into Peoples (the
"Bank Merger") immediately after the Effective Time, or at such other time
thereafter as may be determined by the Holding Company and Peoples in their sole
discretion, in accordance with the requirements of all applicable laws of the
United States and regulations of the OTS thereunder and the laws of the State of
Ohio and the regulations of the Division thereunder. Peoples shall be the
surviving corporation in the Bank Merger (the "Surviving Bank"), and shall
continue its corporate existence under the laws of the United States as a
wholly-owned subsidiary of the Holding Company. The name of the Surviving Bank
shall be determined by the Board of Directors of Peoples. The directors and
executive officers of the Surviving Bank upon consummation of the Bank Merger
shall be the directors and executive officers of Peoples immediately prior to
the consummation of the Bank Merger, except as provided in Section 5.10 of this
Agreement. Upon consummation of the Bank Merger, the separate corporate
existence of the Bank shall cease.
5.13 ORGANIZATION OF THE HOLDING COMPANY
Prior to the Effective Time, Peoples shall cause the Holding Company to
be organized under the DGCL. Following the organization of the Holding Company
and prior to the Effective Time, the Board of Directors shall approve this
Agreement and the transaction contemplated hereby, and Peoples shall cause the
Holding Company to execute and deliver an appropriate instrument of accession to
this Agreement, whereupon the Holding Company shall become a party to, and be
bound by, this Agreement.
43
5.14 AFFILIATES' LETTERS
The Company shall use its reasonable best efforts to cause each person
who is a Company Affiliate to execute and deliver to the Holding Company within
60 days of the date hereof an agreement in the form of Exhibit A hereto.
5.15 ACCOUNTANTS' LETTERS
Each of the Company and Peoples shall use its reasonable best efforts
to be delivered to the other party a letter of its respective independent public
accountants, dated (i) the date on which the Form S-1 becomes effective under
the Securities Act and (ii) a date shortly prior to the Effective Time, and
addressed to such other party, in form and substance customary for "comfort"
letters delivered by independent accountants in accordance with Statement of
Financial Accounting Standards No. 72.
5.16 INTEGRATION OF POLICIES
During the period from the date of this Agreement to the Effective
Time, the Company and the Bank shall, and shall cause their directors, officers
and employees to, cooperate and assist Peoples in the formulation of a plan of
integration for Peoples and the Company and the Bank with respect to their
combined operations subsequent to the Effective Time.
5.17 DISCLOSURE SUPPLEMENTS
From time to time prior to the Effective Time, each party shall
promptly supplement or amend any materials Previously Disclosed and delivered to
the other party pursuant hereto with respect to any matter hereafter arising
which, if existing, occurring or known at the date of this Agreement, would have
been required to be set forth or described in materials Previously Disclosed to
the other party or which is necessary to correct any information in such
materials which has been rendered materially inaccurate thereby; no such
supplement or amendment to such materials shall be deemed to have modified the
representations, warranties and covenants of the parties for the purpose of
determining whether the conditions set forth in Article VI hereof have been
satisfied.
5.18 FAILURE TO FULFILL CONDITIONS
In the event that either of the parties hereto determines that a
condition to its respective obligations to consummate the transactions
contemplated may not be fulfilled on or prior to the termination of this
Agreement, it will promptly notify the other party. Each party will promptly
inform the other party of any facts applicable to it that would be likely to
prevent or materially delay approval of the Merger, the Conversion or any of the
other transactions contemplated hereby by any Governmental Entity or third party
or which would otherwise prevent or materially delay consummation of such
transactions.
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ARTICLE VI
CONDITIONS PRECEDENT
6.1 CONDITIONS PRECEDENT - PEOPLES AND THE COMPANY
The respective obligations of Peoples and the Company to effect the
Merger shall be subject to satisfaction of the following conditions at or prior
to the Effective Time.
(a) All corporate action necessary to authorize the execution and
delivery of this Agreement and consummation of the Merger and the other
transactions contemplated hereby shall have been duly and validly taken by
Peoples, the Holding Company, and the Company, including without limitation
approval of this Agreement by the requisite vote of the shareholders of the
Company.
(b) All approvals and consents from any Governmental Entity the
approval or consent of which is required for the consummation of the Merger and
the other transactions contemplated hereby shall have been received and all
statutory waiting periods in respect thereof shall have expired; and Peoples,
the Holding Company, the Company and the Bank shall have procured all other
approvals, consents and waivers of each person (other than the Governmental
Entities referred to above) whose approval, consent or waiver is necessary to
the consummation of the Merger and the other transactions contemplated hereby
and the failure of which to obtain would have the effects set forth in the
following proviso clause; provided, however, that no approval or consent
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, would so materially reduce the economic or business benefits of the
transactions contemplated by this Agreement to Peoples or the Company that had
such condition or requirement been known, Peoples or the Company, in its
reasonable judgment, would not have entered into this Agreement.
(c) None of Peoples, the Holding Company, the Company or the Bank shall
be subject to any statute, rule, regulation, injunction or other order or decree
which shall have been enacted, entered, promulgated or enforced by any
governmental or judicial authority which prohibits, restricts or makes illegal
consummation of the Merger or the other transactions contemplated hereby.
(d) The Form S-1 shall have become effective under the Securities Act,
and Peoples shall have received all state securities laws or "blue sky" permits
and other authorizations or there shall be exemptions from registration
requirements necessary to issue the Holding Company Common Stock in connection
with the Merger, and neither the Form S-1 nor any such permit, authorization or
exemption shall be subject to a stop order or threatened stop order by the
Commission or any state securities authority.
(e) The shares of Holding Company Common Stock to be issued in
connection with the Merger and the Conversion shall have been approved for
listing on the Nasdaq Stock Market's National Market.
45
(f) Peoples shall have received the written opinion of Elias, Matz,
Xxxxxxx & Xxxxxxx L.L.P., special counsel to Peoples, to the effect that for
federal income tax purposes the Merger will constitute a reorganization within
the meaning of Section 368(a) of the Code, and the Company shall have received
the written opinion of Xxxxxx, Xxxxxxxx & Xxxxxx to such effect and to the
effect that (i) no gain or loss will be recognized by the shareholders of the
Company who receive Holding Company Common Stock in exchange for their Company
Common Stock in the Merger; (ii) the tax basis of a shareholder in the Holding
Company Common Stock received in the Merger in exchange for his or her Company
Common Stock will be the same as the tax basis of the Company Common Stock
surrendered in exchange therefor; and (iii) the holding period of the shares of
Holding Company Common Stock received in the Merger will include the holding
period of the shares of Company Common Stock surrendered therefor, provided that
such Company Common Stock was held as a capital asset by such shareholder. Each
such opinion shall be based on such written representations from Peoples, the
Company and others as such independent public accountants and counsel shall
reasonably request as to factual matters.
(g) The Conversion shall have been consummated in accordance with the
terms of Section 5.1 of this Agreement and applicable laws and regulations.
(h) Holders of not more than 15% of the outstanding Company Common
Stock shall have elected to exercise dissenters' or appraisal rights under the
ORC.
(i) The merger of Oakley with and into Peoples shall have been
consummated in accordance with all applicable laws and regulations (the
"Acquisition").
6.2 CONDITIONS PRECEDENT - THE COMPANY
The obligations of the Company to effect the Merger shall be subject to
satisfaction of the following conditions at or prior to the Effective Time
unless waived by the Company pursuant to Section 7.4 hereof.
(a) The representations and warranties of Peoples set forth in Article
IV hereof shall be true and correct in all material respects as of the date of
this Agreement and as of the Closing Date as though made on and as of the
Closing Date, or on the date when made in the case of a representation and
warranty which specifically relates to an earlier date. Notwithstanding the
preceding sentence, except for the representations and warranties contained in
the first sentence of Section 4.13, any inaccuracies in the representations and
warranties of Peoples shall not prevent the satisfaction of the condition
contained in this Section 6.2(a) unless the cumulative effect of all such
inaccuracies, taken in the aggregate, represent a Material Adverse Effect on
Peoples. In applying the preceding sentence, the determination of whether a
representation and warranty of Peoples is inaccurate shall be made without
regard to any language in Article IV which would otherwise qualify such
representation and warranty individually by reference to materiality or a
Material Adverse Effect.
46
(b) Peoples shall have performed in all material respects all
obligations and complied with all covenants required to be performed and
complied with by it pursuant to this Agreement on or prior to the Effective
Time.
(c) Peoples shall have delivered to the Company a certificate, dated
the date of the Closing and signed by its Chief Executive Officer and by its
Chief Financial Officer, to the effect that the conditions set forth in Sections
6.2(a) and 6.2(b) have been satisfied.
(d) No proceeding initiated by any Governmental Entity seeking an
order, injunction or decree issued by any court or agency of competent
jurisdiction or other legal restraint or prohibition preventing the consummation
of the Merger or the other transactions contemplated hereby shall be pending.
(e) Peoples shall have furnished the Company with such certificates of
its respective officers or others and such other documents to evidence
fulfillment of the conditions set forth in Sections 6.1 and 6.2 as such
conditions relate to Peoples as the Company may reasonably request.
6.3 CONDITIONS PRECEDENT - PEOPLES
The obligations of Peoples to effect the Merger shall be subject to
satisfaction of the following conditions at or prior to the Effective Time
unless waived by Peoples pursuant to Section 7.4 hereof.
(a) The representations and warranties of the Company set forth in
Article III hereof shall be true and correct in all material respects as of the
date of this Agreement and as of the Closing Date as though made on and as of
the Closing Date, or on the date when made in the case of a representation and
warranty which specifically relates to an earlier date. Notwithstanding the
preceding sentence, except for the representations and warranties contained in
the second and fourth sentences of Section 3.1 and the first sentence of Section
3.13, any inaccuracies in the representations and warranties of the Company
shall not prevent the satisfaction of the condition contained in this Section
6.3(a) unless the cumulative effect of all such inaccuracies, taken in the
aggregate, represent a Material Adverse Effect on the Company. In applying the
preceding sentence, the determination of whether a representation and warranty
of the Company is inaccurate shall be made without regard to any language in
Article III which would otherwise qualify such representation and warranty
individually by reference to materiality or a Material Adverse Effect.
(b) The Company shall have performed in all material respects all
obligations and covenants required to be performed by it pursuant to this
Agreement on or prior to the Effective Time.
(c) The Company shall have delivered to Peoples a certificate, dated
the date of the Closing and signed by its President and by its Executive Vice
President, to the effect that the conditions set forth in Sections 6.3(a) and
6.3(b) have been satisfied.
47
(d) No proceeding initiated by any Governmental Entity seeking an
order, injunction or decree issued by any court or agency of competent
jurisdiction or other legal restraint or prohibition preventing the consummation
of the Merger or the other transactions contemplated hereby shall be pending.
(e) The Company shall have furnished Peoples with such certificates of
its officers or others and such other documents to evidence fulfillment of the
conditions set forth in Sections 6.1 and 6.3 as such conditions relate to the
Company as Peoples may reasonably request.
ARTICLE VII
TERMINATION, WAIVER AND AMENDMENT
7.1 TERMINATION
This Agreement may be terminated:
(a) at any time on or prior to the Effective Time, by the mutual
consent in writing of the parties hereto;
(b) at any time on or prior to the Effective Time, by Peoples in
writing if the Company has, or by the Company in writing if Peoples has, in any
material respect, breached (i) any material covenant or undertaking contained
herein or (ii) any representation or warranty contained herein, in any case if
such breach would have a Material Adverse Effect on the party and has not been
cured by the earlier of 30 days after the date on which written notice of such
breach is given to the party committing such breach or the Effective Time;
(c) at any time, by either Peoples or the Company in writing, (i) if
any application for prior approval of a Governmental Entity which is necessary
to consummate the Acquisition, the Merger, the Conversion or the other
transactions contemplated hereby is denied or withdrawn at the request or
recommendation of the Governmental Entity which must grant such approval, unless
within the 25-day period following such denial or withdrawal a petition for
rehearing or an amended application has been filed with the applicable
Governmental Entity, provided, however, that no party shall have the right to
terminate this Agreement pursuant to this clause (i) if such denial or request
or recommendation for withdrawal shall be due to the failure of the party
seeking to terminate this Agreement to perform or observe the covenants and
agreements of such party set forth herein, or (ii) if any Governmental Entity of
competent jurisdiction shall have issued a final nonappealable order enjoining
or otherwise prohibiting the consummation of the Acquisition, the Merger, the
Conversion or the other transactions contemplated by this Agreement;
(d) at any time, by either Peoples or the Company in writing, if (i)
the shareholders of the Company do not approve this Agreement after a vote taken
thereon at a meeting duly called for such purpose (or at any adjournment
thereof) or (ii) the Members of Peoples and Oakley do not approve the Conversion
after a vote taken thereon at a meeting duly called for such purpose (or at any
48
adjournment thereof), unless in any case the failure of such occurrence shall be
due to the failure of the party seeking to terminate to perform or observe in
any material respect its agreements set forth herein to be performed or observed
by such party at or before the Effective Time; and
(e) by either Peoples or the Company in writing if the Effective Time
has not occurred by the close of business on September 30, 2000, provided that
this right to terminate shall not be available to any party whose failure to
perform an obligation in breach of such party's obligations under this Agreement
has been the cause of, or resulted in, the failure of the Merger to be
consummated by such date.
(f) by Peoples in the event of a Purchase Event (as defined in Section
8.1 hereof).
For purposes of this Section 7.1, termination by Peoples also shall be
deemed to be termination on behalf of the Holding Company.
7.2 EFFECT OF TERMINATION
In the event that this Agreement is terminated pursuant to Section 7.1
hereof, this Agreement shall become void and have no effect, except that (i) the
provisions relating to confidentiality set forth in Section 5.4(b) and expenses
and the termination fees set forth in Section 8.1, and this Section 7.2, shall
survive any such termination and (ii) a termination pursuant to Section 7.1(b),
(c), (d) or (e) shall not relieve the breaching party from liability for willful
breach of any covenant, undertaking, representation or warranty giving rise to
such termination.
7.3 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS
All representations, warranties and covenants in this Agreement or in
any instrument delivered pursuant hereto or thereto shall expire on, and be
terminated and extinguished at, the Effective Time other than covenants that by
their terms are to be performed after the Effective Time (including without
limitation the covenants set forth in Sections 5.9, 5.10, 5.11 and 5.12 hereof),
provided that no such representations, warranties or covenants shall be deemed
to be terminated or extinguished so as to deprive Peoples or the Company (or any
director, officer or controlling person of either thereof) of any defense at law
or in equity which otherwise would be available against the claims of any
person, including, without limitation, any shareholder or former shareholder of
either Peoples or the Company.
7.4 WAIVER
Each party hereto by written instrument signed by an executive officer
of such party, may at any time (whether before or after approval of this
Agreement by the shareholders of the Company) extend the time for the
performance of any of the obligations or other acts of the other party hereto
and may waive (i) any inaccuracies of the other party in the representations or
warranties contained in this Agreement or any document delivered pursuant
hereto, (ii) compliance with any of the
49
covenants, undertakings or agreements of the other party, (iii) to the extent
permitted by law, satisfaction of any of the conditions precedent to its
obligations contained herein or (iv) the performance by the other party of any
of its obligations set forth herein, provided that any such waiver granted, or
any amendment or supplement pursuant to Section 7.5 hereof executed after
shareholders of the Company have approved this Agreement shall not modify either
the amount or form of the consideration to be provided hereby to the holders of
Company Common Stock upon consummation of the Merger or otherwise materially
adversely affect such shareholders without the approval of the shareholders who
would be so affected.
7.5 AMENDMENT OR SUPPLEMENT
This Agreement may be amended or supplemented at any time by mutual
agreement of the parties hereto, subject to the proviso to Section 7.4 hereof.
Any such amendment or supplement must be in writing and authorized by or under
the direction of their respective Boards of Directors.
ARTICLE VIII
MISCELLANEOUS
8.1 EXPENSES; TERMINATION FEES
(a) Each party hereto shall bear and pay all costs and expenses
incurred by it in connection with the transactions contemplated by this
Agreement, including fees and expenses of its own financial consultants,
investment bankers, accountants and counsel, provided that notwithstanding
anything to the contrary contained in this Agreement, neither Peoples nor the
Company shall be released from any liabilities or damages arising out of its
willful breach of any provision of this Agreement.
(b) Except as provided below, if this Agreement is terminated for any
reason, Peoples shall pay to the Company within five days after such termination
in immediately available funds, the sum of $200,000 as an agreed-upon break up
fee. Provided, however, no break up fee shall be payable by Peoples to the
Company if any of the following shall occur: (i) this Agreement is properly
terminated by Peoples pursuant to 7.1(b) or (f); (ii) the Company refuses to
convene its shareholders' meeting to vote on this Agreement or such
shareholders' meeting is held and the Company shareholders do not approve this
Agreement by the required vote; (iii) this Agreement is terminated because the
closing condition set forth in Section 6.3(c) or (d) can not be satisfied; or
(v) the Company exercises a right of termination prior to September 30, 2000.
(c) The Company shall pay Peoples, and Peoples shall be entitled to
payment of, a fee (the "Fee") upon the occurrence of a Purchase Event (as
defined herein) so long as the Purchase Event occurs prior to a Fee Termination
Event (as defined herein). Such payment shall be made to Peoples in immediately
available funds within five business days after the occurrence of a Purchase
Event. The Fee shall be equal to $500,000. A Fee Termination Event shall be the
first to occur of
50
the following: (i) the Effective Date, (ii) termination of this Agreement in
accordance with the terms hereof prior to the occurrence of a Purchase Event
(other than a termination of this Agreement by Peoples pursuant to Section
7.1(b) hereof as a result of a willful breach of any representation, warranty,
covenant or agreement of the Company or the Bank or pursuant to Section 7.1(f)
as a result of a Purchase Event) or (iii) 12 months following a termination of
this Agreement by Peoples pursuant to Section 7.1(b) hereof unless a Purchase
Event shall have occurred prior thereto.
(d) The term "Purchase Event" shall mean any of the following events or
transactions occurring after the date hereof:
(i) The Company or the Bank, without having received Peoples'
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 Exchange Act
and the rules and regulations thereunder) other than Peoples or any
affiliate of Peoples (the term "affiliate" for purposes of this
Agreement having the meaning assigned thereto in Rule 405 under the
Securities Act) or the Board of Directors of the Company shall have
recommended that the shareholders of the Company approve or accept any
Acquisition Transaction with any person other than Peoples or any
affiliate of Peoples. For purposes of this Agreement, "Acquisition
Transaction" shall mean (x) a merger or consolidation, or any similar
transaction, involving the Company or the Bank, (y) a purchase, lease
or other acquisition of all or substantially all of the assets of the
Company or the Bank, or (z) a purchase or other acquisition (including
by way of merger, consolidation, share exchange or otherwise) of
securities representing 25% or more of the voting power of the Company
or the Bank; provided that the term "Acquisition Transaction" does not
include any internal merger or consolidation involving only the Company
and/or any Subsidiary including the Bank;
(ii) After a bona fide proposal is made by any person other
than Peoples or any affiliate of Peoples to the Company or its
shareholders to engage in an Acquisition Transaction, (A) the Company
or the Bank shall have breached any covenant or obligation contained
in this Agreement and such breach would entitle Peoples to terminate
this Agreement or (B) the holders of the Company Common Stock shall
not have approved this Agreement at the meeting of such shareholders
held for the purpose of voting on this Agreement or (C) the meeting
of the holders of the Company Common Stock to approve this Agreement
shall not have been held or shall have been canceled prior to
termination of this Agreement or (D) the Board of Directors of the
Company shall have withdrawn or modified in a manner adverse to
Peoples the recommendation of the Board of Directors of the Company
with respect to this Agreement.
If more than one of the transactions giving rise to a Purchase Event
under this Section is undertaken or effected, then all such transactions shall
give rise to only one Purchase Event.
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(e) The Company shall give written notice to Peoples within 24 hours of
the occurrence of a Purchase Event known to the Company; however, the giving of
such notice by the Company shall not be a condition to the right of Peoples to
obtain the Fee.
8.2 ENTIRE AGREEMENT
This Agreement contains the entire agreement among the parties with
respect to the transactions contemplated hereby and supersedes all prior
arrangements or understandings with respect thereto, written or oral, other than
documents referred to herein and therein. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the parties hereto
and thereto and their respective successors. Nothing in this Agreement,
expressed or implied, is intended to confer upon any party, other than the
parties hereto, and their respective successors, any rights, remedies,
obligations or liabilities other than as set forth in Sections 5.9, 5.10 and
5.11 hereof.
8.3 NO ASSIGNMENT
None of the parties hereto may assign any of its rights or obligations
under this Agreement to any other person.
8.4 NOTICES
All notices or other communications which are required or permitted
hereunder shall be in writing and sufficient if delivered personally, telecopied
(with confirmation) or sent by overnight mail service or by registered or
certified mail (return receipt requested), postage prepaid, addressed as
follows:
If to Peoples:
Peoples Building, Loan and Savings Company
00 X. Xxxxxxxx
Xxxxxxx, Xxxx 00000
Attn: Xxxxx X. Xxxxxxxx
President
Fax: (000) 000-0000
With a required copy to:
Elias, Matz, Xxxxxxx & Xxxxxxx L.L.P.
000 00xx Xxxxxx, X.X.
Xxxxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxx, Esq. or Xxxx X. Xxxxxxxxx, Esq.
Fax: (000) 000-0000
52
If to the Company:
Harvest Home Financial Corporation
0000 Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxx 00000
Attn: Xxxx X. Xxxxxxxx
President and Managing Officer
Fax: (000) 000-0000
With a required copy to:
Xxxxxx, Xxxxxxxx & Xxxxxx
000 Xxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxxx, Xxxx 00000
Attn: Xxxxx X. Xxxxxx, Esq.
Fax: (000) 000-0000
8.5 ALTERNATIVE STRUCTURE
Notwithstanding any provision of this Agreement to the contrary,
Peoples may, with the written consent of the Company, which shall not be
unreasonably withheld, elect, subject to the filing of all necessary
applications and the receipt of all required regulatory approvals, to modify the
structure of the acquisition of the Company set forth herein, provided that (i)
the federal income tax consequences of any transactions created by such
modification shall not be other than those set forth in Section 6.1(f) hereof,
(ii) consideration to be paid to the holders of the Company Common Stock is not
thereby changed in kind or reduced in amount as a result of such modification
and (iii) such modification will not materially delay or jeopardize receipt of
any required regulatory approvals or any other condition to the obligations of
Peoples set forth in Sections 6.1 and 6.3 hereof.
8.6 INTERPRETATION
The captions contained in this Agreement are for reference purposes
only and are not part of this Agreement.
8.7 COUNTERPARTS
This Agreement may be executed in any number of counterparts, and each
such counterpart shall be deemed to be an original instrument, but all such
counterparts together shall constitute but one agreement.
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8.8 GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
the laws of the State of Ohio applicable to agreements made and entirely to be
performed within such jurisdiction.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in counterparts by their duly authorized officers and their corporate
seal to be hereunto affixed and attested by their officers thereunto duly
authorized, all as of the day and year first above written.
HARVEST HOME FINANCIAL CORPORATION
Attest:
/s/Xxxxxx X. Xxxxxxxx By: /s/Xxxx X. Xxxxxxxx
------------------------- ---------------------------
Name: Xxxxxx X. Xxxxxxxx Name: Xxxx X. Xxxxxxxx
Title: Executive Vice President Title: President and
Managing Officer
PEOPLES BUILDING LOAN
& SAVINGS COMPANY
Attest:
/s/Xxxxx X. Xxxx By: /s/Xxxxx X. Xxxxxxxx
-------------------------- --------------------------------
Name: Xxxxx X. Xxxx Name: Xxxxx X. Xxxxxxxx
Title: Corporate Secretary Title: President and
Chief Executive Officer
55
