EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
DATED AS OF
OCTOBER 23, 2002
BY AND BETWEEN
METROPOLITAN FINANCIAL CORP.
AND
SKY FINANCIAL GROUP, INC.
TABLE OF CONTENTS
PAGE
----
ARTICLE I Certain Definitions........................................................................1
1.01 Certain Definitions............................................................................1
ARTICLE II The Merger.................................................................................7
2.01 The Parent Merger..............................................................................7
2.02 The Subsidiary Merger..........................................................................7
2.03 Effectiveness of the Parent Merger.............................................................7
2.04 Effective Date and Effective Time..............................................................7
ARTICLE III Consideration; Exchange Procedures.........................................................8
3.01 Merger Consideration...........................................................................8
3.02 Rights as Shareholders; Stock Transfers.......................................................14
3.03 Fractional Shares.............................................................................15
3.04 Exchange Procedures...........................................................................15
3.05 Anti-Dilution Provisions......................................................................16
3.06 Options.......................................................................................16
ARTICLE IV Actions Pending Acquisition...............................................................16
4.01 Forbearances of Metropolitan..................................................................16
4.02 Forbearances of Sky...........................................................................19
ARTICLE V Representations and Warranties............................................................19
5.01 Disclosure Schedules..........................................................................19
5.02 Standard......................................................................................20
5.03 Representations and Warranties of Metropolitan................................................20
5.04 Representations and Warranties of Sky.........................................................31
ARTICLE VI Covenants.................................................................................37
6.01 Reasonable Best Efforts.......................................................................37
6.02 Shareholder Approval..........................................................................37
6.03 Registration Statement........................................................................37
6.04 Press Releases................................................................................38
6.05 Access; Confidentiality.......................................................................38
6.06 Acquisition Proposals.........................................................................39
6.07 Affiliate Agreements..........................................................................40
i
TABLE OF CONTENTS
(continued)
PAGE
----
6.08 Takeover Laws.................................................................................40
6.09 Certain Policies..............................................................................40
6.10 NASDAQ Listing or Notification................................................................40
6.11 Regulatory Applications.......................................................................41
6.12 Indemnification...............................................................................41
6.13 Opportunity of Employment; Employee Benefits..................................................42
6.14 Notification of Certain Matters...............................................................43
6.15 Successor to Certain Obligations..............................................................43
6.16 Tax Treatment.................................................................................43
6.17 No Breaches of Representations and Warranties.................................................43
6.18 Consents......................................................................................43
6.19 Insurance Coverage............................................................................43
6.20 Correction of Information.....................................................................43
6.21 Disposition of Certain Metropolitan Assets....................................................43
6.22 Supplemental Assurances.......................................................................44
6.23 Reimbursement to Metropolitan Shareholders....................................................44
ARTICLE VII Conditions to Consummation of the Merger..................................................45
7.01 Conditions to Each Party's Obligation to Effect the Merger....................................45
7.02 Conditions to Obligation of Metropolitan......................................................45
7.03 Conditions to Obligation of Sky...............................................................47
ARTICLE VIII Termination...............................................................................48
8.01 Termination...................................................................................48
8.02 Effect of Termination and Abandonment; Enforcement of Agreement...............................50
8.03 Termination Fee...............................................................................50
ARTICLE IX Miscellaneous.............................................................................51
9.01 Survival......................................................................................51
9.02 Waiver; Amendment.............................................................................51
9.03 Counterparts..................................................................................51
9.04 Governing Law.................................................................................51
9.05 Expenses......................................................................................51
ii
TABLE OF CONTENTS
(continued)
PAGE
----
9.06 Notices.......................................................................................51
9.07 Entire Understanding; No Third Party Beneficiaries............................................52
9.08 Interpretation; Effect........................................................................53
9.09 Waiver of Jury Trial..........................................................................53
Exhibit A Form of Metropolitan Affiliate Agreement
Exhibit B Matters Considered Not to Have a Material Adverse Effect on Metropolitan
Pursuant to Section 8.01(b)
Schedule B-1 Summary of Xxxxx Loans
Exhibit C Peer Group Commercial Financial Institutions for Index pursuant to Section 8.01(e)
iii
This AGREEMENT AND PLAN OF MERGER, dated as of October 23, 2002 (this
"Agreement"), is by and between Metropolitan Financial Corp. ("Metropolitan")
and Sky Financial Group, Inc. ("Sky").
RECITALS
A. Metropolitan. Metropolitan is a savings and loan holding company
within the meaning of the Home Owners' Loan Act and an Ohio corporation, having
its principal place of business in Highland Hills, Ohio.
B. Sky. Sky is a financial holding company and an Ohio corporation,
having its principal place of business in Bowling Green, Ohio.
C. Intentions of the Parties. It is the intention of the parties to
this Agreement that the business combinations contemplated hereby be treated as
a "reorganization" under Section 368(a) of the Internal Revenue Code of 1986, as
amended.
D. Board Action. The respective Boards of Directors of each of Sky and
Metropolitan have determined that it is in the best interests of their
respective companies and their shareholders to consummate the strategic business
combinations provided for herein.
NOW, THEREFORE, in consideration of the foregoing premises and of the
mutual covenants, representations, warranties and agreements contained herein,
intending to be legally bound hereby, the parties agree as follows:
ARTICLE I
Certain Definitions
1.01 Certain Definitions. The following terms are used in this
Agreement with the meanings set forth below:
"Acquisition Proposal" means any tender or exchange offer, proposal for
a merger, consolidation or other business combination involving Metropolitan or
any of its Subsidiaries, or any proposal or offer to acquire in any manner a
substantial equity interest in, or a substantial portion of the assets or
deposits of, Metropolitan or any of its Subsidiaries, other than the
transactions contemplated by this Agreement.
"Agreement" means this Agreement, as amended or modified from time to
time in accordance with Section 9.02.
"All Cash Election" has the meaning set forth in Section 3.01(c)(ii).
"All Stock Election" has the meaning set forth in Section 3.01(c)(i).
"Agreement to Merge" has the meaning set forth in Section 2.02.
1
"Artwork Collection" means the collection of art and related assets
owned by the Bank as of September 30, 2002, as set forth in Disclosure Schedule
3.01(b)(ii).
"Bank" means Metropolitan Bank and Trust Company, an Ohio chartered
savings and loan association and a wholly-owned subsidiary of Metropolitan.
"Cash Exchange Ratio" has the meaning set forth in Section 3.01.
"Code" means the Internal Revenue Code of 1986, as amended.
"Compensation and Benefit Plans" has the meaning set forth in Section
5.03(m)(i).
"Consultants" has the meaning set forth in Section 5.03(m)(i).
"Control Shareholder" shall mean Xxxxxx X. Xxxx and any of his
affiliates, as that term is defined under the federal securities laws and
regulations.
"Directive" means the Supervisory Directive issued to Metropolitan by
OTS dated July 8, 2002.
"Directors" has the meaning set forth in Section 5.03(m)(i).
"Disclosure Schedule" has the meaning set forth in Section 5.01.
"Effective Date" means the date on which the Effective Time occurs, as
provided for in Section 2.04.
"Effective Time" means the effective time of the Merger, as provided
for in Section 2.04.
"Election" has the meaning set forth in Section 3.01(f).
"Election Deadline" has the meaning set forth in Section 3.01(f).
"Election Form/Letter of Transmittal" has the meaning set forth in
Section 3.01(f).
"Election Period" has the meaning set forth in Section 3.01(f).
"Employees" has the meaning set forth in Section 5.03(m)(i). All
references herein to "employees of Metropolitan" or "Metropolitan employees"
shall be deemed to mean employees of Bank.
"Environmental Laws" means all applicable local, state and federal
environmental, health and safety laws and regulations, including, without
limitation, the Resource Conservation and Recovery Act, the Comprehensive
Environmental Response, Compensation and Liability Act, the Clean Water Act, the
Federal Clean Air Act, and the Occupational Safety and Health Act, each as
amended, regulations promulgated thereunder, and state counterparts.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" has the meaning set forth in Section 5.03(m)(iii).
2
"ERISA Affiliate Plan" has the meaning set forth in Section
5.03(m)(iii).
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder.
"Exchange Agent" has the meaning set forth in Section 3.04.
"Exchange Fund" has the meaning set forth in Section 3.04.
"FDIA" has the meaning set forth in Section 5.03(dd).
"FDIC" means the Federal Deposit Insurance Corporation.
"FRB" shall mean the Federal Reserve Board.
"GAAP" shall mean generally accepted accounting principles as adopted
for U.S. accounting principles, practices and methods.
"Governmental Authority" means any court, administrative agency or
commission or other federal, state or local governmental authority or
instrumentality.
"Indemnified Party" has the meaning set forth in Section 6.12(a).
"Information" has the meaning set forth in Section 6.22.
"IRS" has the meaning set forth in Section 5.03(m)(ii).
The term "knowledge" means, with respect to a party hereto, actual
knowledge of any officer of that party with the title of not less than a senior
vice president or that party's in-house counsel, if any.
"Lien" means any charge, mortgage, pledge, security interest,
restriction, claim, lien, or encumbrance.
"Material Adverse Effect" means, with respect to Sky or Metropolitan,
any effect that (i) is material and adverse to the financial position, results
of operations or business of Sky and its Subsidiaries taken as a whole, or
Metropolitan and its Subsidiaries taken as a whole, respectively, or (ii) would
materially impair the ability of either Sky or Metropolitan to perform its
obligations under this Agreement or otherwise materially threaten or materially
impede the consummation of the Merger and 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 banking and similar laws of
general applicability or interpretations thereof by courts or governmental
authorities or other changes affecting depository institutions generally,
including changes in general economic conditions and changes in prevailing
interest and deposit rates, (b) any modifications or changes to valuation
policies and practices in connection with the Merger or restructuring charges
taken in connection with the Merger, in each case in accordance with generally
accepted accounting principles, (c) changes resulting from expenses (such as
legal, accounting and investment bankers' fees) incurred in connection with this
Agreement or
3
the transactions contemplated herein, and (d) actions or omissions of a party
that have been waived in accordance with Section 9.02 hereof.
"Merger" collectively refers to the Parent Merger and the Subsidiary
Merger, as set forth in Section 2.01 and Section 2.02, respectively.
"Merger Consideration" has the meaning set forth in Section 3.01.
"Metropolitan" has the meaning set forth in the preamble to this
Agreement.
"Metropolitan Affiliate" has the meaning set forth in Section 6.07.
"Metropolitan Articles" means the Articles of Incorporation of
Metropolitan.
"Metropolitan Board" means the Board of Directors of Metropolitan.
"Metropolitan Code" means the Amended and Restated Code of Regulations
of Metropolitan.
"Metropolitan Common Shares" means the common stock, par value $0.01
per share, of Metropolitan.
"Metropolitan Financial Statements" has the meaning set forth in
Section 5.03(q)(i).
"Metropolitan Meeting" has the meaning set forth in Section 6.02.
"Metropolitan Off Balance Sheet Transaction" has the meaning set forth
in Section 5.03(u).
"Metropolitan SEC Documents" has the meaning set forth in Section
5.03(g).
"Metropolitan Shares" means Metropolitan Common Shares.
"Metropolitan Stock Option" has the meaning set forth in Section 3.06.
"Metropolitan Stock Plans" means the option plans and agreements of
Metropolitan and its Subsidiaries pursuant to which rights to purchase
Metropolitan Common Shares are outstanding immediately prior to the Effective
Time pursuant to the Metropolitan 1997 Stock Option Plan, and the Metropolitan
Stock Purchase Plan.
"Mixed Election" has the meaning set forth in Section 3.01(c)(iii).
"NASD" means The National Association of Securities Dealers.
"NASDAQ" means The NASDAQ Stock Market, Inc.'s National Market System.
"New Certificates" has the meaning set forth in Section 3.04.
"ODFI" means the Ohio Department of Commerce, Division of Financial
Institutions.
4
"OGCL" means the Ohio General Corporation Law.
"Old Certificates" has the meaning set forth in Section 3.04.
"OSS" means the Office of the Secretary of State of the State of Ohio.
"OTS" means the Office of Thrift Supervision, an office within the U.S.
Department of Treasury.
"Parent Merger" has the meaning set forth in Section 2.01.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Pension Plan" has the meaning set forth in Section 5.03(m)(ii).
"Person" means any individual, bank, corporation, partnership,
association, joint-stock company, business trust or unincorporated organization.
"Previously Disclosed" by a party shall mean information set forth in
its Disclosure Schedule. Disclosure of any information, agreement, or other item
in a party's Disclosure Schedule referenced by a particular Section in this
Agreement shall, should the existence of such information, agreement, or other
item or its contents be relevant to any other Section, be deemed to be disclosed
with respect to that Section whether or not an explicit cross-reference appears
in the Disclosure Schedule.
"Proxy Statement/Prospectus" has the meaning set forth in Section
6.03(a).
"Proxy Statement" has the meaning set forth in Section 6.03(a).
"Registration Statement" has the meaning set forth in Section 6.03(a).
"Regulatory Authority" shall mean any federal or state governmental
agency or authority charged with the supervision or regulation of financial
institutions (or their holding companies) or issuers of securities or engaged in
the issuance of deposits (including, without limitation, the OTS, ODFI, FRB and
the FDIC) or the supervision or regulation of it or any of its subsidiaries.
"Rights" means, with respect to any Person, securities or obligations
convertible into or exercisable or exchangeable for, or giving any person any
right to subscribe for or acquire, or any options, calls or commitments relating
to, or any stock appreciation right or other instrument the value of which is
determined in whole or in part by reference to the market price or value of,
shares of capital stock of such person.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations thereunder.
"Sky Articles" means the Articles of Incorporation of Sky, as amended.
5
"Sky Bank" means the Sky Bank, an Ohio banking corporation that is a
wholly-owned subsidiary of Sky.
"Sky Board" means the Board of Directors of Sky.
"Sky Code" means the Amended and Restated Code of Regulations of Sky.
"Sky Common Shares" means the common stock, without par value, of Sky.
"Sky's Financial Statements" has the meaning set forth in Section
5.04(l)(i).
"Sky Off Balance Sheet Transaction" has the meaning set forth in
Section 5.04(o).
"Sky Preferred Shares" means the serial preferred stock, par value
$10.00 per share, of Sky.
"Sky SEC Documents" has the meaning set forth in Section 5.04(g)(i).
"Sky Shares" means the Sky Common Shares and Sky Preferred Shares.
"Stock Exchange Ratio" has the meaning set forth in Section 3.01.
"Subsidiary" and "Significant Subsidiary" have the meanings ascribed to
them in Rule 1-02 of Regulation S-X of the SEC.
"Subsidiary Merger" has the meaning set forth in Section 2.02.
"Supervisory Agreements" has the meaning set forth in Section 7.01(b).
"Surviving Corporation" has the meaning set forth in Section 2.01.
"Takeover Laws" has the meaning set forth in Section 5.03(o).
"Tax" and "Taxes" means all federal, state, local or foreign taxes,
charges, fees, levies or other assessments, however denominated, including,
without limitation, all net income, gross income, gains, gross receipts, sales,
use, ad valorem, goods and services, capital, production, transfer, franchise,
windfall profits, license, withholding, payroll, employment, disability,
employer health, excise, estimated, severance, stamp, occupation, property,
environmental, unemployment or other taxes, custom duties, fees, assessments or
charges of any kind whatsoever, together with any interest and any penalties,
additions to tax or additional amounts imposed by any taxing authority whether
arising before, on or after the Effective Date.
"Tax Returns" means any return, amended return or other report
(including elections, declarations, disclosures, schedules, estimates and
information returns) required to be filed with respect to any Tax.
"Treasury Stock" shall mean Metropolitan Shares held by Metropolitan or
any of its Subsidiaries or by Sky or any of its Subsidiaries, in each case other
than in a fiduciary capacity or as a result of debts previously contracted in
good faith.
6
ARTICLE II
The Merger
2.01 The Parent Merger. At the Effective Time, (i) Metropolitan shall
be merged with and into Sky (the "Parent Merger"), and (ii) the separate
corporate existence of Metropolitan shall cease and Sky shall survive and
continue to exist as an Ohio corporation (Sky, as the surviving corporation in
the Parent Merger, sometimes being referred to herein as the "Surviving
Corporation"). The Sky Articles, as in effect immediately prior to the Effective
Time, shall be the Articles of Incorporation of the Surviving Corporation, and
the Amended and Restated Code of Regulations of Sky, as in effect immediately
prior to the Effective Time, shall be the Code of Regulations of the Surviving
Corporation. Sky may at any time prior to the Effective Time change the method
of effecting the Merger (including, without limitation, the provisions of this
Article II) if and to the extent it deems such change to be necessary,
appropriate or desirable; provided, however, that no such change shall (i) alter
or change the amount or kind of consideration to be issued to holders of
Metropolitan Shares as provided for in Article III of this Agreement (subject to
adjustment as provided in Sections 3.05 and 8.01(e)), (ii) adversely affect the
tax treatment of Metropolitan's shareholders as a result of receiving the Merger
Consideration, or (iii) materially impede or delay consummation of the
transactions contemplated by this Agreement.
2.02 The Subsidiary Merger. At the time determined by Sky and specified
by Sky Bank in its Certificate of Merger filed with the OSS (which shall not be
earlier than the Effective Time), Bank shall merge with and into Sky Bank (the
"Subsidiary Merger") pursuant to an agreement to merge (the "Agreement to
Merge") to be executed by Bank and Sky Bank and filed with the OSS, as required.
Upon consummation of the Subsidiary Merger, the separate corporate existence of
Bank shall cease and Sky Bank shall survive and continue to exist as a state
banking corporation. (The Parent Merger and the Subsidiary Merger shall
sometimes collectively be referred to as the "Merger".)
2.03 Effectiveness of the Parent Merger. Subject to the satisfaction or
waiver of the conditions set forth in Article VII, the Parent Merger shall
become effective upon the occurrence of the filings in the office of the OSS of
a certificate of merger in accordance with Section 1701.81 of the OGCL, or such
later date and time as may be set forth in such filings.
2.04 Effective Date and Effective Time. Subject to the satisfaction or
waiver of the conditions set forth in Article VII, the parties shall cause the
effective date of the Parent Merger (the "Effective Date") to occur on the later
of (i) the fifth business day of the month occurring after the last of the
conditions set forth in Article VII shall have been satisfied or waived in
accordance with the terms of this Agreement; provided, however, that no such
election shall cause the Effective Date to fall after the date specified in
Section 8.01(c) hereof or after the date or dates on which any Regulatory
Authority approval or any extension thereof expires, (ii) April 7, 2003 or (iii)
such other date to which the parties may agree in writing. The time on the
Effective Date when the Parent Merger shall become effective is referred to as
the "Effective Time."
7
ARTICLE III
Consideration; Exchange Procedures
3.01 Merger Consideration.
(a) Subject to the provisions of this Agreement, at the
Effective Time, automatically by virtue of the Parent Merger and
without any action on the part of any Person, each share[ (excluding
Treasury Stock and Metropolitan Common Shares held by Sky) ]of
Metropolitan Common Shares issued and outstanding immediately prior to
the Effective Time shall, by virtue of the Merger and on the Effective
Date, be converted at the election of the holder thereof (in accordance
with the election and allocation procedures set forth in Section
3.01(c), (f), (i), and (j)) into either (i) Sky Common Shares based
upon a fixed exchange ratio of 0.2554 of Sky Common Shares for each
Metropolitan Common Share (subject to adjustment as set forth in
Section 3.01 and Sections 3.05 and 8.01(e), the "Stock Exchange
Ratio"); (ii) cash, at the rate of $4.70 for each Metropolitan Common
Share (subject to adjustment as set forth in this Section 3.01 and
Section 3.05, the "Cash Exchange Ratio"); or (iii) a combination of
such Sky Common Shares and cash, as more fully set forth in Section
3.01(c)(iii).
It is understood and agreed that the aggregate consideration
will be a mixture of Sky Common Shares and cash, with a minimum of 55%
and a maximum of 70% of the Metropolitan Common Shares being exchanged
for Sky Common Shares. Accordingly, the total consideration payable by
Sky to Metropolitan shareholders in connection with the Merger shall
consist of no less than 2,269,293 Sky Common Shares and no more than
2,888,191 Sky Common Shares and cash of no less than $22,778,550, and
no more than $34,167,825, as adjusted pursuant to subsection b(vi)
below (collectively, the "Merger Consideration"), and subject to
adjustment for Common Shares issued pursuant to the Metropolitan Stock
Plans, and for cash paid in lieu of fractional shares in accordance
with Section 3.03. In addition, in the event the closing price of Sky
Common Shares on the business day immediately preceding the Effective
Date is less than $12.53, the form of Merger Consideration may be
adjusted by Sky in order to ensure that the Merger is treated as a
tax-free reorganization as defined in Section 368(a)(1)(A) of the Code.
(b) Adjustments to the Merger Consideration. It is understood
and agreed that the Merger Consideration will be:
(i) increased by the amount, if any, reimbursed to
Metropolitan or the Bank by the Control Shareholder pursuant
to the Directive, less assumed tax at thirty-four percent
(34%) of the reimbursed amount;
(ii) increased in an amount equal to the
consideration received by Metropolitan or the Bank from the
disposition of the Artwork Collection (taken as a whole) for
more than its aggregate book value, calculated in accordance
with GAAP as of September 30, 2002, less tax calculated at an
assumed tax rate of thirty-four percent (34%) of the amount of
the net proceeds from the sale received by Metropolitan in
excess of book value;
8
(iii) decreased, in the event and to the extent that
the aggregate book value of the assets set forth in Item 6 of
Exhibit B attached hereto (less specific valuation or
impairment allowances), calculated in accordance with GAAP, on
the month-end date immediately preceding the Effective Date is
more than $4 million less than the aggregate book value of
such assets (less specific valuation or impairment allowance),
calculated in accordance with GAAP, as of September 30, 2002
(which is $45,972,087). For purposes of this subparagraph
(iii), the calculation of any decrease in book value shall
exclude (y) any decrease attributable to (A) the amount of any
principal payment on any loan or security, (B) up to $350,000
per month (on a cumulative basis) of amortization of mortgage
servicing rights, (C) the net sales proceeds for any asset
sold, and (z) the amount of any tax benefit or detriment
derived from a provision, write-off, write-down or gain or
loss on sale relating to such assets calculated at an assumed
tax rate of thirty-four percent (34%); and
(iv) decreased by either (A) the amount by which the
carrying value of Metropolitan's corporate headquarters
(calculated in accordance with GAAP) as of the month-end
immediately preceding the Effective Date is less than $15.067
million, or (B) in the event of a sale of Metropolitan's
corporate headquarters prior to the Effective Date, the amount
by which the net loss resulting from such sale, based upon a
carrying value of $25.067 million, exceeds $10 million.
(v) A calculation of the total proposed adjustment to
the Merger Consideration under subsections (i) through (iv)
above (the "Proposed Adjustment") shall be made by
Metropolitan and provided to Sky, along with all work papers,
within two (2) business days before the Effective Date.
Thereafter, Sky will have two (2) business days in which to
advise Metropolitan if it agrees with the Proposed Adjustment.
In the event Sky does not agree with the Proposed Adjustment,
the parties agree to appoint a mutually acceptable independent
accounting firm to review the specific items in dispute and
within five (5) business days the determination of such firm
shall be made and be final and binding upon Metropolitan and
Sky and shall constitute the final adjustment to the Merger
Consideration ("Final Adjustment").
(vi) If the Final Adjustment is a positive number,
then the portion of the Final Adjustment payable to each
Metropolitan shareholder participating in the Merger will be
paid in cash. Each such shareholder will receive cash in an
amount equal to the Final Adjustment divided by the number of
Metropolitan shares outstanding pursuant to Section 5.03(b),
multiplied by the number of Metropolitan Common Shares owned
by such shareholder. If the Final Adjustment is a negative
number, then the aggregate Merger Consideration paid by Sky to
Metropolitan shareholders participating in the Merger will be
decreased by such amount. In such event:
(A) Metropolitan shareholders making the All
Stock Election under Section 3.01(c)(i) shall have
their consideration per share reduced by the quotient
of (x) the Final Adjustment divided by (y) the number
of Metropolitan shares outstanding pursuant to
Section 5.03(b) (the
9
"Reduction Per Share"). This reduction in Merger
Consideration will be effected by reducing the number
of shares paid to such shareholders in an amount
equal to the product of (x) the quotient of the
Reduction Per Share divided by the closing price of
Sky Common Shares as reported in The Wall Street
Journal for the average of five (5) NASDAQ trading
days immediately preceding the Effective Date, times
(y) the number of Metropolitan Common Shares owned by
such shareholder.
(B) Metropolitan shareholders making the All
Cash Election under Section 3.01(c)(ii) and the Mixed
Election under Section 3.01(c)(iii) shall have their
consideration per share reduced by the Reduction Per
Share. This reduction in Merger Consideration will be
effected by reducing the cash portion paid to such
shareholders in an amount equal to the product of (x)
the Reduction Per Share times (y) the number of
Metropolitan Common Shares owned by such shareholder.
(c) Election as to Outstanding Metropolitan Common Shares. The
Metropolitan shareholders will have the following options in connection
with the exchange of their Metropolitan Common Shares in connection
with the Merger:
(i) AT THE OPTION OF THE HOLDER, all of such holder's
Metropolitan Common Shares deposited with the Exchange Agent
shall be converted into and become Sky Common Shares at the
Stock Exchange Ratio (such election, the "All Stock
Election"), provided that:
(A) Fractional shares will not be issued and
cash (payable by check) will be paid in lieu thereof
as provided in Section 3.03; and
(B) Giving effect to Section 3.01(c)(i),
(ii), and (iii), in no event shall, in the aggregate,
less than fifty-five percent (55%) nor more than
seventy percent (70%) of Metropolitan Common Shares
issued and outstanding on the Effective Date be
converted into and become Sky Common Shares; or
(ii) AT THE OPTION OF THE HOLDER, all of such
holder's Metropolitan Common Shares deposited with the
Exchange Agent shall be converted into and become cash
(payable by check) at the Cash Exchange Ratio (such election,
the "All Cash Election"), provided that:
(A) Giving effect to Section 3.01(c)(i),
(ii), and (iii), in no event shall, in the aggregate,
less than thirty percent (30%) nor more than
forty-five percent (45%) of such Metropolitan Common
Shares issued and outstanding on the Effective Date
be converted into and become cash; or
(iii) AT THE OPTION OF THE HOLDER, between fifty-five
(55%) and seventy percent (70%) of such holder's aggregate
number of Metropolitan Common Shares shall be converted into
and become Sky Common Shares at the rate of the Stock Exchange
Ratio and between thirty percent (30%) and forty-five percent
(45%) of such holder's aggregate number of shares of
Metropolitan
10
Common Shares deposited with the Exchange Agent shall be
converted into and become cash (payable by check) at the rate
of the Cash Exchange Ratio (such election, the "Mixed
Election"), provided that:
(A) Fractional shares will not be issued and
cash (payable by check) will be paid in lieu thereof
as provided in Section 3.03; and
(B) Giving effect to Section 3.01(c)(i),
(ii), and (iii), in no event shall, in the aggregate,
less than fifty-five percent (55%) nor more than
seventy percent (70%) of such Metropolitan Common
Shares issued and outstanding on the Effective Date
be converted into and become Sky Common Shares; and
(C) Giving effect to Section 3.01(c)(i),
(ii), and (iii), in no event shall, in the aggregate,
less than thirty percent (30%) nor more than
forty-five percent (45%) of such Metropolitan Common
Shares issued and outstanding on the Effective Date
be converted into and become cash; or
(iv) IF NO ELECTION (AS DEFINED IN SECTION 3.01(f))
IS MADE BY THE HOLDER BY THE ELECTION DEADLINE (AS DEFINED IN
SECTION 3.01(f)), all of such holder's Metropolitan Common
Shares shall be converted into the right to receive Sky Common
Shares as set forth in Section 3.01(c)(i), cash as set forth
in Section 3.01(c)(ii), or any combination of Sky Common
Shares and cash as determined by Sky or, at Sky's direction,
by the Exchange Agent at the Stock Exchange Ratio and the Cash
Exchange Ratio, as applicable; provided, however, that
fractional shares shall not be issued and cash will be paid in
lieu thereof as provided in Section 3.03. Such shares of
Metropolitan Common Shares shall be allocated by the Exchange
Agent pro rata among non-electing holders based upon the
number of Metropolitan Common Shares for which an election has
not been received by the Election Deadline in order to (A)
achieve the overall ratio of between fifty-five percent (55%)
and seventy (70%) of Metropolitan Common Shares to be
converted into Sky Common Shares and between thirty percent
(30%) and forty-five percent (45%) of Metropolitan Common
Shares to be converted into cash, and (B) to the greatest
extent possible, satisfy the elections made by Metropolitan
shareholders. Notice of such allocation shall be provided
promptly to each shareholder whose Metropolitan Common Shares
are allocated pursuant to this Section 3.01(c)(iv).
(d) Treasury Shares and Shares Held by Sky. Each Metropolitan
Common Share held as Treasury Stock or held by Sky immediately prior to
the Effective Time shall be canceled and retired at the Effective Time
and no consideration shall be issued in exchange therefor.
(e) Outstanding Sky Common Shares. Each Sky Common Share
issued and outstanding immediately prior to the Effective Time shall
remain issued and outstanding and unaffected by the Merger.
11
(f) Procedures for Election. An election form and other
appropriate transmittal materials in such form as Metropolitan and Sky
shall mutually agree (the "Election Form/Letter of Transmittal") shall
be mailed to shareholders of Metropolitan prior to the Election Period
(defined below). The "Election Period" shall be such period of time as
Metropolitan and Sky shall mutually agree, within which Metropolitan
shareholders may validly elect the form of Merger Consideration set
forth in Section 3.01(c) (the "Election") that they will receive,
occurring between (i) the date of the mailing by Metropolitan of the
Proxy Statement for the special meeting of shareholders of Metropolitan
at which this Agreement is presented for approval and (ii) five days
prior to the Effective Date. The "Election Deadline" shall be the time,
specified by Sky after consultation with Metropolitan, on the last day
of the Election Period.
(g) Perfection of the Election. An Election shall be
considered to have been validly made by a Metropolitan shareholder only
if (i) the Exchange Agent (as defined in Section 3.04) shall have
received an Election Form/Letter of Transmittal properly completed and
executed by such shareholder, accompanied by a certificate or
certificates representing the Metropolitan Common Shares as to which
such Election is being made, duly endorsed in blank or otherwise in
form acceptable for transfer on the books of Metropolitan, or
containing an appropriate guaranty of delivery in the form customarily
used in transactions of this nature from a member of a national
securities exchange or a member of the NASD or a commercial bank or
trust company in the United States and (ii) such Election Form/Letter
of Transmittal and such certificate(s) or such guaranty of delivery
shall have been received by the Exchange Agent prior to the Election
Deadline.
(h) Withdrawal of Shares. Any Metropolitan shareholder may at
any time prior to the Election Deadline revoke its election and either
(i) submit a new Election Form/Letter of Transmittal in accordance with
the procedures in Section 3.01(g), or (ii) withdraw the certificate(s)
for Metropolitan Common Shares deposited therewith by providing written
notice that is received by the Exchange Agent by 5:00 p.m., local time
for the Exchange Agent, on the business day prior to the Election
Deadline. Elections may be similarly revoked if the Effective Date does
not occur by June 30, 2003. In the event of the termination of this
Agreement, the Exchange Agent shall return any certificates deposited
by the holder of Metropolitan Common Shares to such holder at the
address and to the person set forth in the Election Form/Letter of
Transmittal.
(i) Reduction of Shares Deposited for Cash. If more than
forty-five percent (45%) of the total number of Metropolitan Common
Shares issued and outstanding have, at the Election Deadline, been
deposited with the Exchange Agent for cash pursuant to the All Cash
Election or the Mixed Election and not withdrawn pursuant to Section
3.01(h), the Exchange Agent will promptly eliminate from the shares
deposited pursuant to the All Cash Election (subject to the limitations
described in Section 3.01(i)(iv)), a sufficient number of such shares
so that the total number of shares remaining on deposit for cash
pursuant to the All Cash Election and the Mixed Election does not
exceed forty-five percent (45%) of the Metropolitan Common Shares
issued and outstanding on the Effective Date. The holders of
Metropolitan Common Shares who have elected to have their shares
converted pursuant to the Mixed Election shall not be required to have
less than fifty-five percent (55%) nor more than seventy percent (70%)
12
of their Metropolitan Common Shares converted into Sky Common Shares.
After giving effect to Section 3.01(c)(iv), such elimination will be
effected as follows:
(i) Subject to the limitations described in Section
3.01(i)(iv), the Exchange Agent will eliminate from the shares
deposited pursuant to the All Cash Election, and will add or
cause to be added to the shares deposited for Sky Common
Shares pursuant to the All Stock Election, on a pro rata basis
in relation to the total number of shares deposited pursuant
to the All Cash Election minus the number of shares so
deposited by the holders described in Section 3.01(i)(iv)(A)
and the number of shares so deposited by the administrators of
Metropolitan's 401(k) plan, such whole number of Metropolitan
Common Shares on deposit for cash pursuant to the All Cash
Election as may be necessary so that the total number of
shares remaining on deposit for cash pursuant to All Cash
Election or the Mixed Election is forty-five percent (45%) of
the Metropolitan Common Shares issued and outstanding on the
Effective Date;
(ii) All Metropolitan Common Shares that are
eliminated pursuant to Section 3.01(i)(i) from the shares
deposited for cash shall be converted into Sky Common Shares
as provided by Section 3.01(c)(i);
(iii) Notice of such allocation shall be provided
promptly to each shareholder whose Metropolitan Common Shares
are eliminated from the shares on deposit for cash pursuant to
Section 3.01(i)(i); and
(iv) Notwithstanding the foregoing:
(A) the holders of 100 or fewer Metropolitan
Common Shares of record on the date of this Agreement
who have elected the All Cash Election shall not be
required to have any of their Metropolitan Common
Shares converted into Sky Common Shares;
(B) the administrators of the Metropolitan
Shares 401(k) plan shall not be required to have any
of the Metropolitan Common Shares held in such plans
converted into Sky Common Shares if the appropriate
administrator has elected the All Cash Election, and
shall not be required to have less than fifty-five
percent (55%) nor more than seventy percent (70%) of
the Metropolitan Common Shares held in such plans
converted into Sky Common Shares if the appropriate
administrator has elected the Mixed Election.
(j) Increase of Shares Deposited for Cash. If fewer than
thirty percent (30%) of the total number of Metropolitan Common Shares
issued and outstanding have, at the Election Deadline, been deposited
with the Exchange Agent for cash pursuant to the All Cash Election or
the Mixed Election and not withdrawn pursuant to Section 3.01(h), Sky
will promptly add, or cause to be added by the Exchange Agent, to such
deposited shares, a sufficient number of Metropolitan Common Shares
deposited for Sky Common Shares pursuant to the All Stock Election
(subject to the limitation described in Section 3.01(j)(iv)) so that
the total number of Metropolitan Common Shares on deposit
13
for cash pursuant to the All Cash Election or the Mixed Election on the
Effective Date is not less than thirty percent (30%) of the
Metropolitan Common Shares issued and outstanding on the Effective
Date. The holders of Metropolitan Common Shares who have elected to
have their shares converted pursuant to the Mixed Election shall not be
required to have more than thirty percent (30%) of their Metropolitan
Common Shares converted into cash. After giving effect to Section
3.01(c)(iv), such addition will be effected as follows:
(i) Subject to the limitation described in Section
3.01(j)(iv), Sky will add or cause to be added to the shares
deposited for cash pursuant to the All Cash Election or the
Mixed Election, and the Exchange Agent will eliminate or cause
to be eliminated from the shares deposited for Sky Common
Shares pursuant to the All Stock Election, on a pro rata basis
in relation to the total number of Metropolitan Common Shares
deposited for Sky Common Shares pursuant to the All Stock
Election minus the number of shares so deposited by the
administrators of Metropolitan's 401(k) plan, such whole
number of Metropolitan Common Shares not then on deposit for
cash as may be necessary so that the number of shares
remaining on deposit for cash is thirty percent (30%) of the
Metropolitan Common Shares issued and outstanding on the
Effective Date;
(ii) All Metropolitan Common Shares that are added
pursuant to Section 3.01(j)(i) to the shares deposited for
cash shall be converted into cash as provided by Section
3.01(c)(ii);
(iii) Notice of such allocation shall be provided
promptly to each shareholder whose Metropolitan Common Shares
are added to the shares on deposit for cash pursuant to
Section 3.01(j)(i); and
(iv) Notwithstanding the foregoing, the
administrators of the Metropolitan's 401(k) plan shall not be
required to have any of the Metropolitan Common Shares held in
such plans converted into cash if the appropriate
administrator has elected the All Stock Election, and shall
not be required to have less than thirty percent (30%) nor
more than forty-five percent (45%) of the shares of
Metropolitan Common Shares held in such plans converted into
cash if the administrator has elected the Mixed Election.
3.02 Rights as Shareholders; Stock Transfers. At the Effective Time,
holders of Metropolitan Common Shares shall cease to be, and shall have no
rights as, shareholders of Metropolitan, other than to receive any dividend or
other distribution with respect to such Metropolitan Common Shares with a record
date occurring prior to the Effective Time and the consideration provided under
this Article III. After the Effective Time, there shall be no transfers on the
stock transfer books of Metropolitan or the Surviving Corporation of any
Metropolitan Shares.
3.03 Fractional Shares. Notwithstanding any other provision hereof, no
fractional Sky Common Shares and no certificates or scrip therefor, or other
evidence of ownership thereof, will be issued in the Merger; instead, Sky shall
pay to each holder of Metropolitan Common Shares who would otherwise be entitled
to a fractional Sky Common Shares (after taking into account
14
all Old Certificates delivered by such holder) an amount in cash (without
interest) determined by multiplying such fractional Sky Common Share to which
the holder would be entitled by the last sale price of Sky Common Shares (as
reported by the NASDAQ, as reported in The Wall Street Journal or, if not
reported therein, in another authoritative source) for the average of ten NASDAQ
trading days immediately preceding the Effective Date.
3.04 Exchange Procedures.
(a) At or prior to the Effective Time, Sky shall deposit, or
shall cause to be deposited, with The Bank of New York (in such
capacity, the "Exchange Agent"), for the benefit of the holders of
certificates formerly representing Metropolitan Common Shares ("Old
Certificates"), for exchange in accordance with this Article III,
certificates representing the Sky Common Shares ("New Certificates")
and an estimated amount of cash (such cash and New Certificates,
together with any dividends or distributions with a record date
occurring on or after the Effective Date with respect thereto (without
any interest on any such cash, dividends or distributions), being
hereinafter referred to as the "Exchange Fund") to be paid pursuant to
this Article III in exchange for outstanding Metropolitan Common
Shares.
(b) As promptly as practicable after the Effective Date, Sky
shall cause the New Certificates into which shares of a shareholder's
Metropolitan Common Shares are converted on the Effective Date and/or
any check in respect of cash to be paid as part of the Merger
Consideration and in respect of any fractional share interests or
dividends or distributions which such person shall be entitled to
receive to be delivered to such shareholder upon delivery to the
Exchange Agent of Old Certificates representing such Metropolitan
Common Shares (or an indemnity affidavit reasonably satisfactory to Sky
and the Exchange Agent, if any of such certificates are lost, stolen or
destroyed) owned by such shareholder. No interest will be paid on any
such cash to be paid in lieu of fractional share interests or in
respect of dividends or distributions that any such person shall be
entitled to receive pursuant to this Article III upon such delivery.
(c) Notwithstanding the foregoing, neither the Exchange Agent,
if any, nor any party hereto shall be liable to any former holder of
Metropolitan Common Shares for any amount properly delivered to a
public official pursuant to applicable abandoned property, escheat or
similar laws.
(d) No dividends or other distributions with respect to Sky
Common Shares with a record date occurring on or after the Effective
Date shall be paid to the holder of any unsurrendered Old Certificate
representing Metropolitan Common Shares converted in the Merger into
the right to receive such Sky Common Shares until the holder thereof
shall be entitled to receive New Certificates in exchange therefor in
accordance with the procedures set forth in this Section 3.04. After
becoming so entitled in accordance with this Section 3.04, the record
holder thereof also shall be entitled to receive any such dividends or
other distributions, without any interest thereon, which theretofor had
become payable with respect to Sky Common Shares such holder had the
right to receive upon surrender of the Old Certificates.
15
(e) Any portion of the Exchange Fund that remains unclaimed by
the shareholders of Metropolitan for nine months after the Effective
Time shall be paid to Sky. Any shareholders of Metropolitan who have
not theretofore complied with this Article III shall thereafter look
only to Sky for payment of the Sky Common Shares, cash in lieu of any
fractional shares and unpaid dividends and distributions on Sky Common
Shares deliverable in respect of each Metropolitan Common Shares such
shareholder holds as determined pursuant to this Agreement, in each
case, without any interest thereon.
3.05 Anti-Dilution Provisions. In the event Sky changes (or establishes
a record date for changing) the number of Sky Common Shares issued and
outstanding between the date hereof and the Effective Date as a result of a
stock split, stock dividend, recapitalization, reclassification, split up,
combination, exchange of shares, readjustment or similar transaction with
respect to the outstanding Sky Common Shares and the record date therefor shall
be prior to the Effective Date, the Stock Exchange Ratio and the Cash Exchange
Ratio shall be proportionately adjusted.
3.06 Options. There are currently outstanding options to purchase
1,437,488 Metropolitan Common Shares under the Metropolitan Stock Plans (each, a
"Metropolitan Stock Option"). Of the total amount of outstanding Metropolitan
Stock Options, there are currently outstanding 468,837 Metropolitan Stock
Options with a strike price below $4.70 per share, and there are currently
outstanding 968,651 Metropolitan Stock Options with a strike price above $4.70
per share. On the Effective Date, each outstanding Metropolitan Stock Option
that has a strike price below $4.70 per share shall be terminated in exchange
for a cash payment by Sky to each holder of a Metropolitan Stock Option in an
amount equal to the Cash Exchange Ratio minus the applicable exercise price per
share for Metropolitan Common Shares covered by any such Metropolitan Stock
Option, multiplied by the number of Metropolitan Common Shares covered by such
Metropolitan Stock Option. On the Effective Date, each of such outstanding
Metropolitan Stock Option with a strike price above $4.70 per share shall be
terminated and no cash payment shall be made by Sky therefor. At or prior to the
Effective Time, Metropolitan shall use its best efforts with respect to the
Metropolitan Stock Plans to permit the termination of the outstanding
Metropolitan Stock Options pursuant to this Section 3.06.
ARTICLE IV
Actions Pending Acquisition
4.01 Forbearances of Metropolitan. From the date hereof until the
Effective Time, except as expressly contemplated by this Agreement and/or
disclosed on the Disclosure Schedule, without the prior written consent of Sky,
which consent shall not be unreasonably withheld, Metropolitan will not, and
will cause each of its Subsidiaries not to:
(a) Ordinary Course. Conduct the business of Metropolitan and
its Subsidiaries other than in the ordinary and usual course or fail to
use reasonable efforts to preserve intact their business organizations
and assets and maintain their rights, franchises and existing relations
with customers, suppliers, employees and business associates, or
voluntarily take any action which, at the time taken, is reasonably
likely to
16
have an adverse affect upon Metropolitan's ability to perform any of
its material obligations under this Agreement.
(b) Capital Stock. Other than pursuant to Rights Previously
Disclosed and outstanding on the date hereof, (i) issue, sell or
otherwise permit to become outstanding, or authorize the creation of,
any additional Metropolitan Common Shares or any Rights, (ii) enter
into any agreement with respect to the foregoing, (iii) permit any
additional Metropolitan Common Shares to become subject to new grants
of employee or director stock options, other Rights or similar
stock-based employee rights, or (iv) permit any purchases of
Metropolitan Common Shares to be made under the Metropolitan Stock
Purchase Plan after November 1, 2002.
(c) Dividends, Etc. Make, declare, pay or set aside for
payment any dividend, except that dividends may be paid from wholly
owned subsidiaries to Metropolitan provided such dividends are not
prohibited under the Directive or the Supervisory Agreements to which
Metropolitan or its Subsidiaries is a party or directly or indirectly
adjust, split, combine, redeem, reclassify, purchase or otherwise
acquire, any shares of its capital stock.
(d) Compensation; Employment Agreements; Etc. Enter into or
amend or renew any employment, consulting, severance or similar
agreements or arrangements with any director, officer or employee of
Metropolitan or its Subsidiaries, or grant any salary or wage increase
or increase any employee benefit (including incentive or bonus
payments), except (i) for normal individual increases in compensation
to employees in the ordinary course of business consistent with past
practice, (ii) for other changes that are required by applicable law,
and (iii) to satisfy Previously Disclosed contractual obligations
existing as of the date hereof.
(e) Benefit Plans. Enter into, establish, adopt or amend
(except (i) as may be required by applicable law, (ii) to satisfy
Previously Disclosed contractual obligations existing as of the date
hereof or (iii) the regular annual renewal of insurance contracts) any
pension, retirement, stock option, stock purchase, savings, profit
sharing, deferred compensation, consulting, bonus, group insurance or
other employee benefit, incentive or welfare contract, plan or
arrangement, or any trust agreement (or similar arrangement) related
thereto, in respect of any director, officer or employee of
Metropolitan or its Subsidiaries, or take any action to accelerate the
vesting or exercisability of stock options, restricted stock or other
compensation or benefits payable thereunder.
(f) Dispositions. Sell, transfer, mortgage, encumber or
otherwise dispose of or discontinue any of its assets, deposits,
business or properties except in the ordinary course of business, or
except as otherwise provided in Section 6.21 of this Agreement.
(g) Acquisitions. Acquire (other than by way of foreclosures
or acquisitions of control in a bona fide fiduciary capacity or in
satisfaction of debts previously contracted in good faith, in each case
in the ordinary and usual course of business consistent with past
practice) all or any portion of, the assets, business, deposits or
properties of any other entity; or acquire mortgage servicing rights
except in connection
17
with existing correspondent lending relationships in the ordinary
course of business consistent with past practice.
(h) Governing Documents. Amend the Metropolitan Articles,
Metropolitan Code or the Articles of Incorporation or Regulations (or
similar governing documents) of any of Metropolitan's Subsidiaries,
except for immaterial Regulation amendments Previously Disclosed to
Sky.
(i) Accounting Methods. Implement or adopt any change in its
accounting principles, practices or methods, other than as may be
required by GAAP, including, but not limited to, any method of
accounting for or determining reserves, write-downs or write-offs of
any of Metropolitan's assets or liabilities.
(j) Contracts. Except in the ordinary course of business
consistent with past practice, enter into or terminate any material
contract (as defined in Section 5.03(k)) or amend or modify in any
material respect any of its existing material contracts.
(k) Claims. Except in the ordinary course of business
consistent with past practice, settle any claim, action or proceeding,
except for any claim, action or proceeding that does not involve
precedent for other material claims, actions or proceedings and that
involve solely money damages in an amount, individually or in the
aggregate for all such settlements, that is immaterial to Metropolitan
and its Subsidiaries, taken as a whole.
(l) Adverse Actions. (a) Take any action while knowing that
such action would, or is reasonably likely to, prevent or impede the
Merger from qualifying as a reorganization within the meaning of
Section 368(a) of the Code; or (b) knowingly take any action that is
intended or is reasonably likely to result in (i) any of its
representations and warranties set forth in this Agreement being or
becoming untrue in any material respect at any time at or prior to the
Effective Time, (ii) any of the conditions to the Merger set forth in
Article VII not being satisfied or (iii) a material violation of any
provision of this Agreement except, in each case, as may be required by
applicable law or regulation.
(m) Risk Management. Except pursuant to applicable law or
regulation, (i) implement or adopt any material change in its interest
rate risk management and other risk management policies, procedures or
practices; (ii) fail to follow its existing policies or practices with
respect to managing its exposure to interest rate and other risk; or
(iii) fail to use commercially reasonable means to avoid any material
increase in its aggregate exposure to interest rate risk.
(n) Extensions of Credit; Indebtedness. Except in accordance
with Disclosure Schedule 4.01(n), extend credit or incur any
indebtedness for borrowed money other than in the ordinary course of
business.
(o) Compliance with Supervisory Agreements and Directive. Fail
to use its best efforts to comply with the Supervisory Agreements and
the Directive.
(p) Commitments. Agree or commit to do any of the foregoing.
18
4.02 Forbearances of Sky. From the date hereof until the Effective
Time, except as expressly contemplated by this Agreement, without the prior
written consent of Metropolitan, which consent will not be unreasonably
withheld, Sky will not, and will cause each of its Subsidiaries not to:
(a) Ordinary Course. Conduct the business of Sky and its
Subsidiaries other than in the ordinary and usual course or fail to use
reasonable efforts to preserve intact their business organizations and
assets (other than as previously discussed with Metropolitan) and
maintain their rights, franchises and existing relations with
customers, suppliers, employees and business associates, or voluntarily
take any action that, at the time taken, is reasonably likely to have
an adverse effect upon Sky's ability to perform any of its material
obligations under this Agreement.
(b) Preservation. Fail to use reasonable efforts to preserve
intact in any material respect their business organizations and assets
and maintain their rights, franchises and existing relations with
customers, suppliers, employees and business associates.
(c) Accounting Methods. Implement or adopt any change in its
accounting principles, practices or methods, other than as may be
required by generally accepted accounting principles.
(d) Adverse Actions. (a) Take any action while knowing that
such action would, or is reasonably likely to, prevent or impede the
Merger from qualifying as a reorganization within the meaning of
Section 368(a) of the Code; or (b) knowingly take any action that is
intended or is reasonably likely to result in (i) any of its
representations and warranties set forth in this Agreement being or
becoming untrue in any material respect at any time at or prior to the
Effective Time, (ii) any of the conditions to the Merger set forth in
Article VII not being satisfied or (iii) a material violation of any
provision of this Agreement except, in each case, as may be required by
applicable law or regulation.
(e) Risk Management. Except pursuant to applicable law or
regulation, (i) fail to follow its existing policies or practices with
respect to managing its exposure to interest rate and other risk, or
(ii) fail to use commercially reasonable means to avoid any material
increase in its aggregate exposure to interest rate risk.
(f) Commitments. Agree or commit to do any of the foregoing.
ARTICLE V
Representations and Warranties
5.01 Disclosure Schedules. On or prior to the date hereof, Sky has
delivered to Metropolitan a schedule and Metropolitan has delivered to Sky a
schedule (respectively, its "Disclosure Schedule") setting forth, among other
things, items, the disclosure of which are necessary or appropriate either in
response to an express disclosure requirement contained in a provision hereof or
as an exception to one or more representations or warranties contained in
Section 5.03 or 5.04 or to one or more of its respective covenants contained in
Article IV and
19
Article VI; provided, however, that (a) no such item is required to be set forth
in a Disclosure Schedule as an exception to a representation or warranty if its
absence would not be reasonably likely to result in the related representation
or warranty being deemed untrue or incorrect under the standard established by
Section 5.02, and (b) the mere inclusion of an item in a Disclosure Schedule as
an exception to a representation or warranty shall not be deemed an admission by
a party that such item represents a material exception or fact, event or
circumstance or that such item is reasonably likely to have or result in a
Material Adverse Effect on the party making the representation. Metropolitan's
representations, warranties and covenants contained in this Agreement shall not
be deemed to be untrue, incorrect or to have been breached as a result of
effects on Metropolitan arising solely from actions taken in compliance with a
written request of Sky.
5.02 Standard. No representation or warranty of Metropolitan or Sky
contained in Section 5.03 or 5.04 shall be deemed untrue or incorrect, and no
party hereto shall be deemed to have breached a representation or warranty, as a
consequence of the existence of any fact, event or circumstance unless such
fact, circumstance or event, individually or taken together with all other
facts, events or circumstances inconsistent with any representation or warranty
contained in Section 5.03 or 5.04 has had, or is reasonably likely to have, a
Material Adverse Effect.
5.03 Representations and Warranties of Metropolitan. Subject to
Sections 5.01 and 5.02 and except as Previously Disclosed, Metropolitan hereby
represents and warrants to Sky:
(a) Organization, Standing and Authority. Metropolitan is a
corporation duly organized, validly existing and in good standing under
the laws of the State of Ohio and any foreign jurisdictions where its
ownership or leasing of property or assets or the conduct of its
business requires it to be so qualified. Metropolitan is a savings and
loan holding company within the meaning of the Home Owners' Loan Act.
Bank is a savings association that is duly organized, validly existing
and in good standing under the laws of the State of Ohio. Metropolitan
is duly qualified to do business and is in good standing in the State
of Ohio and any foreign jurisdictions where its ownership or leasing of
property or assets or the conduct of its business requires it to be so
qualified.
(b) Capital Structure of Metropolitan. The authorized capital
stock of Metropolitan consists solely of 40,000,000 shares, of which
5,000,000 were shares of Class A Serial Preferred Stock, of which none
were outstanding as of October 23, 2002, 5,000,000 were shares of Class
B Serial Preferred Stock, of which none were issued as of October 23,
2002, and 30,000,000 shares are common shares, without par value, of
which 16,151,074 shares were outstanding as of October 23, 2002. The
outstanding Metropolitan Common Shares have been duly authorized, are
validly issued and outstanding, fully paid and nonassessable, and are
not subject to any preemptive rights (and were not issued in violation
of any preemptive rights). As of October 23, 2002, (i) there were no
Metropolitan Common Shares authorized and reserved for issuance, (ii)
Metropolitan did not have any Rights issued or outstanding with respect
to Metropolitan Common Shares, and (iii) Metropolitan did not have any
commitment to authorize, issue or sell any Metropolitan Common Shares
or Rights, except pursuant to this Agreement and the Metropolitan Stock
Plans. The number of Metropolitan Common Shares which were issuable and
reserved for issuance upon exercise of Metropolitan Stock Options as of
the date hereof is set forth in Metropolitan's Disclosure Schedule.
20
(c) Subsidiaries.
(i) (A) Metropolitan has Previously Disclosed a list
of all of its Subsidiaries together with the jurisdiction of
organization of each such Subsidiary, (B) it owns, directly or
indirectly, all the issued and outstanding equity securities
of each of its Subsidiaries, (C) no equity securities of any
of its Subsidiaries are or may become required to be issued
(other than to it or its wholly-owned Subsidiaries) by reason
of any Right or otherwise, (D) there are no contracts,
commitments, understandings or arrangements by which any of
such Subsidiaries is or may be bound to sell or otherwise
transfer any equity securities of any such Subsidiaries (other
than to it or its wholly-owned Subsidiaries), (E) there are no
contracts, commitments, understandings, or arrangements
relating to its rights to vote or to dispose of such
securities and (F) all the equity securities of each
Subsidiary held by Metropolitan or its Subsidiaries are fully
paid and nonassessable (except pursuant to 12 U.S.C. Section
55) and are owned by Metropolitan or its Subsidiaries free and
clear of any Liens.
(ii) Metropolitan does not own beneficially, directly
or indirectly, any equity securities or similar interests of
any Person, or any interest in a partnership or joint venture
of any kind, other than its Subsidiaries.
(iii) Each of Metropolitan's Subsidiaries has been
duly organized and is validly existing in good standing under
the laws of the jurisdiction of its organization, and is duly
qualified to do business and in good standing in the
jurisdictions where its ownership or leasing of property or
the conduct of its business requires it to be so qualified.
(d) Corporate Power; Authorized and Effective Agreement. Each
of Metropolitan and its Subsidiaries has full corporate power and
authority to carry on its business as it is now being conducted and to
own all its properties and assets. Metropolitan has the corporate power
and authority to execute, deliver and perform its obligations under
this Agreement. Bank has the corporate power and authority to
consummate the Subsidiary Merger and the Agreement to Merge in
accordance with the terms of this Agreement.
(e) Corporate Authority. Subject to receipt of the requisite
adoption of this Agreement by the holders of a majority of the
outstanding Metropolitan Common Shares entitled to vote thereon (which
is the only shareholder vote required thereon), this Agreement and the
transactions contemplated hereby have been authorized by all necessary
corporate action of Metropolitan and the Metropolitan Board prior to
the date hereof. This Agreement is a valid and legally binding
obligation of Metropolitan, enforceable in accordance with its terms
(except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer and similar
laws of general applicability relating to or affecting creditors'
rights or by general equity principles). The Metropolitan Board has
received the written opinion of Xxxx, Xxxx & Co., Inc. to the effect
that as of the date hereof the consideration to be received by the
holders of Metropolitan Common Shares in the Merger is fair to the
holders of Metropolitan Common Shares from a financial point of view.
21
(f) Regulatory Filings; No Defaults.
(i) No consents or approvals of, or filings or
registrations with, any Governmental Authority or with any
third party are required to be made or obtained by
Metropolitan or any of its Subsidiaries in connection with the
execution, delivery or performance by Metropolitan of this
Agreement or to consummate the Merger except for (A) filings
of applications, notices and the Agreement to Merge, as
applicable, with Regulatory Authorities, (B) filings with the
SEC and state securities authorities, and (C) the filings of
the certificate of merger with the OSS pursuant to the OGCL.
As of the date hereof, Metropolitan is not aware of any reason
why the approvals set forth in Section 7.01(b) will not be
received without the imposition of a condition, restriction or
requirement of the type described in Section 7.01(b).
(ii) Subject to receipt of the regulatory and
shareholder approvals referred to above and expiration of
related regulatory waiting periods, and required filings under
federal and state securities laws, the execution, delivery and
performance of this Agreement and the consummation of the
transactions contemplated hereby do not and will not (A)
constitute a breach or violation of, or a default under, or
give rise to any Lien, any acceleration of remedies or any
right of termination under, any law, rule or regulation or any
judgment, decree, order, governmental permit or license, or
agreement, indenture or instrument of Metropolitan or of any
of its Subsidiaries or to which Metropolitan or any of its
Subsidiaries or properties is subject or bound, (B) constitute
a breach or violation of, or a default under, the Metropolitan
Articles or the Metropolitan Code, or (C) require any consent
or approval under any such law; rule, regulation, judgment,
decree, order, governmental permit or license, agreement,
indenture or instrument.
(g) Financial Reports and SEC Documents; Material Adverse
Effect. (i) Metropolitan's Annual Reports on Form 10-K for the fiscal
years ended December 31, 2000 and 2001 and all other reports,
registration statements, definitive proxy statements or information
statements filed or to be filed by it or any of its Subsidiaries
subsequent to December 31, 2000 under the Securities Act, or under
Section 13, 14, or 15(d) of the Exchange Act, in the form filed or to
be filed (collectively, "Metropolitan SEC Documents") with the SEC, as
of the date filed, (A) complied or will comply in all material respects
with the applicable requirements under the Securities Act or the
Exchange Act, as the case may be, and (B) did not and will not contain
any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading; and each of the consolidated balance sheets contained in or
incorporated by reference into any such SEC Document (including the
related notes and schedules thereto) fairly presents, or will fairly
present, the consolidated financial position of Metropolitan and its
Subsidiaries as of its date, and each of the consolidated statements of
income, changes in shareholders' equity, and cash flows in such
Metropolitan SEC Documents (including any related notes and schedules
thereto) fairly presents, or will fairly present, the consolidated
results of operations, changes in shareholders' equity and cash flows,
as the case may be, of Metropolitan and its Subsidiaries for the
periods to which they relate, in each case in accordance with
22
generally accepted accounting principles consistently applied during
the periods involved, except in each case as may be noted therein,
subject to normal year-end audit adjustments and the absence of
footnotes in the case of unaudited statements.
(i) Since December 31, 2000, Metropolitan and its
Subsidiaries have not incurred any material liability not
disclosed in the Metropolitan SEC Documents.
(ii) Since December 31, 2000, except as disclosed in
the Metropolitan SEC Documents, (A) Metropolitan and its
Subsidiaries have conducted their respective businesses in the
ordinary and usual course consistent with past practice
(excluding matters related to this Agreement and the
transactions contemplated hereby) and (B) no event has
occurred or circumstance arisen that, individually or taken
together with all other facts, circumstances and events
(described in any paragraph of Section 5.03 or otherwise), is
reasonably likely to have a Material Adverse Effect with
respect to Metropolitan.
(h) Litigation. Except as Previously Disclosed, no material
litigation, claim or other proceeding before any court or governmental
agency is pending against Metropolitan or any of its Subsidiaries and,
to Metropolitan's knowledge, no such litigation, claim or other
proceeding has been threatened.
(i) Regulatory Matters.
(i) Except as Previously Disclosed, neither
Metropolitan nor any of its Subsidiaries or properties is a
party to or is subject to any order, decree, agreement,
memorandum of understanding or similar arrangement with, or a
commitment letter or similar submission to, or extraordinary
supervisory letter from any Regulatory Authorities.
(ii) Except as Previously Disclosed, neither it nor
any of its Subsidiaries has been advised by any Regulatory
Authority that such Regulatory Authority is contemplating
issuing or requesting (or is considering the appropriateness
of issuing or requesting) any such order, decree, agreement,
memorandum of understanding, commitment letter, supervisory
letter or similar submission.
(j) Compliance with Laws. Except as Previously Disclosed, each
of Metropolitan and its Subsidiaries:
(i) is in compliance with all applicable federal,
state, local and foreign statutes, laws, regulations,
ordinances, rules, judgments, orders or decrees applicable
thereto or to the employees conducting such businesses,
including, without limitation, the Equal Credit Opportunity
Act, the Fair Housing Act, the Community Reinvestment Act, the
Home Mortgage Disclosure Act and all other applicable fair
lending laws and other laws relating to discriminatory
business practices;
23
(ii) has all permits, licenses, authorizations,
orders and approvals of, and has made all filings,
applications and registrations with, all Regulatory
Authorities and Governmental Authorities that are required in
order to permit them to own or lease their properties and to
conduct their businesses as presently conducted; all such
permits, licenses, certificates of authority, orders and
approvals are in full force and effect and, to Metropolitan's
knowledge, no suspension or cancellation of any of them is
threatened; and
(iii) has received, since December 31, 2000, no
notification or communication from any Regulatory Authority or
Governmental Authority (A) asserting that Metropolitan or any
of its Subsidiaries is not in compliance with any of the
statutes, regulations, or ordinances that such Regulatory
Authority or Governmental Authority enforces or (B)
threatening to revoke any license, franchise, permit, or
governmental authorization (nor, to Metropolitan's knowledge,
do any grounds for any of the foregoing exist).
(k) Material Contracts; Defaults. Except for this Agreement
and those agreements and other documents filed as exhibits to the
Metropolitan SEC Documents or as Previously Disclosed, neither it nor
any of its Subsidiaries is a party to, bound by or subject to any
agreement, contract, arrangement, commitment or understanding (whether
written or oral) (i) that is a "material contract" within the meaning
of Item 601(b)(10) of the SEC's Regulation S-K or (ii) that restricts
or limits in any way the conduct of business by it or any of its
Subsidiaries (including without limitation a non-compete or similar
provision). Neither it nor any of its Subsidiaries is in default under
any contract, agreement, commitment, arrangement, lease, insurance
policy or other instrument to which it is a party, by which its
respective assets, business, or operations may be bound or affected in
any way, or under which it or its respective assets, business, or
operations receive benefits, 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.
(l) No Brokers. No action has been taken by Metropolitan that
would give rise to any valid claim against any party hereto for a
brokerage commission, finder's fee or other like payment with respect
to the transactions contemplated by this Agreement, except for a fee to
be paid to Xxxx, Xxxx & Co., Inc.
(m) Employee Benefit Plans. (i) Section 5.03(m)(i) of
Metropolitan's Disclosure Schedule contains a complete and accurate
list of all existing bonus, incentive, deferred compensation, pension,
retirement, profit-sharing, thrift, savings, employee stock ownership,
stock bonus, stock purchase, restricted stock, stock option, severance,
welfare and fringe benefit plans, employment or severance agreements
and all similar practices, policies and arrangements maintained or
contributed to by Metropolitan or any of its Subsidiaries and in which
any employee or former employee (the "Employees"), consultant or former
consultant (the "Consultants") or director or former director (the
"Directors") of Metropolitan or any of its Subsidiaries participates or
to which any such Employees, Consultants or Directors are a party (the
"Compensation and Benefit Plans"). Neither Metropolitan nor any of its
Subsidiaries has any commitment to create any additional Compensation
and Benefit Plan or to modify or change any existing
24
Compensation and Benefit Plan, except as otherwise contemplated by
Section 4.01(e) of this Agreement.
(i) Each Compensation and Benefit Plan has been
operated and administered in all material respects in
accordance with its terms and with applicable law, including,
but not limited to, ERISA, the Code, the Securities Act, the
Exchange Act, the Age Discrimination in Employment Act, or any
regulations or rules promulgated thereunder, and all filings,
disclosures and notices required by ERISA, the Code, the
Securities Act, the Exchange Act, the Age Discrimination in
Employment Act and any other applicable law have been timely
made. Each Compensation and Benefit Plan that is an "employee
pension benefit plan" within the meaning of Section 3(2) of
ERISA (a "Pension Plan") and that is intended to be qualified
under Section 401(a) of the Code has received a favorable
determination letter (including a determination that the
related trust under such Compensation and Benefit Plan is
exempt from tax under Section 501(a) of the Code) from the
Internal Revenue Service ("IRS"), and Metropolitan is not
aware of any circumstances likely to result in revocation of
any such favorable determination letter. There is no material
pending or, to the knowledge of Metropolitan, threatened legal
action, suit or claim relating to the Compensation and Benefit
Plans other than routine claims for benefits thereunder.
Neither Metropolitan nor any of its Subsidiaries has engaged
in a transaction, or omitted to take any action, with respect
to any Compensation and Benefit Plan that would reasonably be
expected to subject Metropolitan or any of its Subsidiaries to
a tax or penalty imposed by either Section 4975 of the Code or
Section 502 of ERISA, assuming for purposes of Section 4975 of
the Code that the taxable period of any such transaction
expired as of the date hereof.
(ii) No liability (other than for payment of premiums
to the PBGC that have been made or will be made on a timely
basis) under Title IV of ERISA has been or is expected to be
incurred by Metropolitan or any of its Subsidiaries with
respect to any ongoing, frozen or terminated "single-employer
plan," within the meaning of Section 4001(a)(15) of ERISA,
currently or formerly maintained by any of them, or any
single-employer plan of any entity (an "ERISA Affiliate") that
is considered one employer with Metropolitan under Section
4001(a)(14) of ERISA or Section 414(b) or (c) of the Code (an
"ERISA Affiliate Plan"). None of Metropolitan, any of its
Subsidiaries nor any ERISA Affiliate has contributed, or has
been obligated to contribute, to a multiemployer plan under
Subtitle E of Title IV of ERISA at any time since September
26, 1980. No notice of a "reportable event", within the
meaning of Section 4043 of ERISA for which the 30-day
reporting requirement has not been waived, has been required
to be filed for any Compensation and Benefit Plan or by any
ERISA Affiliate Plan within the 12-month period ending on the
date hereof, and no such notice will be required to be filed
as a result of the transactions contemplated by this
Agreement. The PBGC has not instituted proceedings to
terminate any Pension Plan or ERISA Affiliate Plan and, to
Metropolitan's knowledge, no condition exists that presents a
material risk that such proceedings will be instituted. To the
knowledge of Metropolitan, there is no pending investigation
or enforcement action by the PBGC, the Department of Labor or
IRS or any other governmental agency with
25
respect to any Compensation and Benefit Plan. Under each
Pension Plan and ERISA Affiliate Plan that is a "defined
benefit plan" within the meaning of ERISA Section 3(35), as of
the date of the most recent actuarial valuation performed
prior to the date of this Agreement, the actuarially
determined present value of all "benefit liabilities", within
the meaning of Section 4001(a)(16) of ERISA (as determined on
the basis of the actuarial assumptions contained in such
actuarial valuation of such Pension Plan or ERISA Affiliate
Plan), did not exceed the then current value of the assets of
such Pension Plan or ERISA Affiliate Plan and since such date
there has been neither an adverse change in the financial
condition of such Pension Plan or ERISA Affiliate Plan nor any
amendment or other change to such Pension Plan or ERISA
Affiliate Plan that would increase the amount of benefits
thereunder that reasonably could be expected to change such
result.
(iii) All contributions required to be made under the
terms of any Compensation and Benefit Plan or ERISA Affiliate
Plan have been timely made in cash or have been reflected on
Metropolitan's Financial Statements (as defined in Section
5.03(q)(i) below) as of December 31, 2001. Neither any Pension
Plan nor any ERISA Affiliate Plan has an "accumulated funding
deficiency" (whether or not waived) within the meaning of
Section 412 of the Code or Section 302 of ERISA and all
required payments to the PBGC with respect to each Pension
Plan or ERISA Affiliate Plan have been made on or before their
due dates. None of Metropolitan, any of its Subsidiaries nor
any ERISA Affiliate (x) has provided, or would reasonably be
expected to be required to provide, security to any Pension
Plan or to any ERISA Affiliate Plan pursuant to Section
401(a)(29) of the Code, and (y) has taken any action, or
omitted to take any action, that has resulted, or would
reasonably be expected to result, in the imposition of a lien
under Section 412(n) of the Code or pursuant to ERISA.
(iv) Neither Metropolitan nor any of its Subsidiaries
has any obligations to provide retiree health and life
insurance or other retiree death benefits under any
Compensation and Benefit Plan, other than benefits mandated by
Section 4980B of the Code. There has been no communication to
Employees by Metropolitan or any of its Subsidiaries that
would reasonably be expected to promise or guarantee such
Employees retiree health or life insurance or other retiree
death benefits on a permanent basis.
(v) Metropolitan and its Subsidiaries do not maintain
any Compensation and Benefit Plans covering foreign Employees.
(vi) With respect to each Compensation and Benefit
Plan, if applicable, Metropolitan has provided or made
available to Sky, true and complete copies of existing: (A)
Compensation and Benefit Plan documents and amendments
thereto; (B) trust instruments and insurance contracts; (C)
two most recent Forms 5500 filed with the IRS; (D) most recent
actuarial report and financial statement; (E) the most recent
summary plan description; (F) forms filed with the PBGC within
the past year (other than for premium payments); (G) most
recent determination letter issued by the IRS; (H) any Form
5310 or Form 5330 filed
26
within the past year with the IRS; and (I) most recent
nondiscrimination tests performed under ERISA and the Code
(including 401(k) and 401(m) tests).
(vii) Except as disclosed on Section 5.03(m)(viii) of
Metropolitan's Disclosure Schedule, the consummation of the
transactions contemplated by this Agreement would not,
directly or indirectly (including, without limitation, as a
result of any termination of employment prior to or following
the Effective Time) reasonably be expected to (A) entitle any
Employee, Consultant or Director to any payment (including
severance pay or similar compensation) or any increase in
compensation, (B) result in the vesting or acceleration of any
benefits under any Compensation and Benefit Plan or (C) result
in any material increase in benefits payable under any
Compensation and Benefit Plan.
(viii) Neither Metropolitan nor any of its
Subsidiaries maintains any compensation plans, programs or
arrangements the payments under which would not reasonably be
expected to be deductible as a result of the limitations under
Section 162(m) of the Code and the regulations issued
thereunder.
(ix) Except as disclosed on Section 5.03(m)(x) of
Metropolitan's Disclosure Schedule, as a result, directly or
indirectly, of the transactions contemplated by this Agreement
(including, without limitation, as a result of any termination
of employment prior to or following the Effective Time), none
of Sky, Metropolitan or the Surviving Corporation, or any of
their respective Subsidiaries will be obligated to make a
payment that would be characterized as an "excess parachute
payment" to an individual who is a "disqualified individual"
(as such terms are defined in Section 280G of the Code) of
Metropolitan on a consolidated basis, without regard to
whether such payment is reasonable compensation for personal
services performed or to be performed in the future.
(n) Labor Matters. Neither Metropolitan nor any of its
Subsidiaries is a party to or is bound by any collective bargaining
agreement, contract or other agreement or understanding with a labor
union or labor organization, nor is Metropolitan or any of its
Subsidiaries the subject of a proceeding asserting that it or any such
Subsidiary has committed an unfair labor practice (within the meaning
of the National Labor Relations Act) or seeking to compel Metropolitan
or any such Subsidiary to bargain with any labor organization as to
wages or conditions of employment, nor is there any strike or other
labor dispute involving it or any of its Subsidiaries pending or, to
Metropolitan's knowledge, threatened, nor is Metropolitan aware of any
activity involving its or any of its Subsidiaries' employees seeking to
certify a collective bargaining unit or engaging in other
organizational activity.
(o) Takeover Laws. Metropolitan has taken all action required
to be taken by it in order to exempt this Agreement and the
transactions contemplated hereby from, and this Agreement and the
transactions contemplated hereby are exempt from, the requirements of
any "moratorium," "control share," "fair price," "affiliate
transaction," "business combination" or other antitakeover laws and
regulations of any state (collectively, "Takeover Laws") applicable to
it.
27
(p) Environmental Matters. To Metropolitan's knowledge,
neither the conduct nor operation of Metropolitan or its Subsidiaries
nor any condition of any property presently or previously owned, leased
or operated by any of them (including, without limitation, in a
fiduciary or agency capacity), or on which any of them holds a Lien,
violates or violated Environmental Laws and to Metropolitan's
knowledge, no condition has existed or event has occurred with respect
to any of them or any such property that, with notice or the passage of
time, or both, is reasonably likely to result in liability under
Environmental Laws. To Metropolitan's knowledge, neither Metropolitan
nor any of its Subsidiaries has received any notice from any person or
entity that Metropolitan or its Subsidiaries or the operation or
condition of any property ever owned, leased, operated, or held as
collateral or in a fiduciary capacity by any of them are or were in
violation of or otherwise are alleged to have liability under any
Environmental Law, including, but not limited to, responsibility (or
potential responsibility) for the cleanup or other remediation of any
pollutants, contaminants, or hazardous or toxic wastes, substances or
materials at, on, beneath, or originating from any such property.
(q) Tax Matters. (i) All Tax Returns that are required to be
filed by or with respect to Metropolitan and its Subsidiaries have been
duly filed, (ii) all Taxes shown to be due on the Tax Returns referred
to in clause (i) have been paid in full, (iii) except as Previously
Disclosed, the Tax Returns referred to in clause (i) have been examined
by the IRS or the appropriate state, local or foreign taxing authority
or the period for assessment of the Taxes in respect of which such Tax
Returns were required to be filed has expired, (iv) all deficiencies
asserted or assessments made as a result of such examinations have been
paid in full, (v) no issues that have been raised by the relevant
taxing authority in connection with the examination of any of the Tax
Returns referred to in clause (i) are currently pending, and (vi) no
waivers of statutes of limitation have been given by or requested with
respect to any Taxes of Metropolitan or its Subsidiaries. Metropolitan
has made or will make available to Sky true and correct copies of the
United States federal income Tax Returns filed by Metropolitan and its
Subsidiaries for each of the three most recent fiscal years ended on or
before December 31, 2001. Neither Metropolitan nor any of its
Subsidiaries has any liability with respect to income, franchise or
similar Taxes that accrued on or before the end of the most recent
period covered by the Metropolitan SEC Documents filed prior to the
date hereof in excess of the amounts accrued with respect thereto that
are reflected in the financial statements included in the Metropolitan
SEC Documents filed on or prior to the date hereof ("Metropolitan's
Financial Statements"). As of the date hereof, neither Metropolitan nor
any of its Subsidiaries has any reason to believe that any conditions
exist that might prevent or impede the Merger from qualifying as a
reorganization within the meaning of Section 368(a) of the Code.
(i) No Tax is required to be withheld pursuant to
Section 1445 of the Code as a result of the transactions
contemplated by this Agreement.
(r) Risk Management Instruments. All material interest rate
swaps, caps, floors, option agreements, futures and forward contracts
and other similar risk management arrangements, whether entered into
for Metropolitan's own account, or for the account of one or more of
Metropolitan's Subsidiaries or their customers (all of which are listed
on Metropolitan's Disclosure Schedule), were entered into (i) in
accordance with prudent business practices and all applicable laws,
rules, regulations and regulatory
28
policies and (ii) with counterparties believed to be financially
responsible at the time; and each of them constitutes the valid and
legally binding obligation of Metropolitan or one of its Subsidiaries,
enforceable in accordance with its terms (except as enforceability may
be limited by applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer and similar laws of general
applicability relating to or affecting creditors' rights or by general
equity principles), and is in full force and effect. Neither
Metropolitan nor its Subsidiaries, nor to Metropolitan's knowledge any
other party thereto, is in breach of any of its obligations under any
such agreement or arrangement.
(s) Books and Records. The books and records of Metropolitan
and its Subsidiaries have been fully, properly and accurately
maintained in all material respects, have been maintained in accordance
with sound business practices and the requirements of Section 13(b)(2)
of the Exchange Act, and there are no material inaccuracies or
discrepancies of any kind contained or reflected therein and they
fairly reflect the substance of events and transactions included
therein.
(t) Insurance. Metropolitan's Disclosure Schedule sets forth
all of the insurance policies, binders, or bonds maintained by
Metropolitan or its Subsidiaries. Metropolitan and its Subsidiaries are
insured with reputable insurers against such risks and in such amounts
as the management of Metropolitan reasonably has determined to be
prudent in accordance with industry practices. All such insurance
policies are in full force and effect; Metropolitan and its
Subsidiaries are not in material default thereunder; and all claims
thereunder have been filed in due and timely fashion.
(u) Metropolitan Off Balance Sheet Transactions. Section
5.03(u) of Metropolitan's Disclosure Schedule sets forth a true and
complete list of all affiliated Metropolitan entities, including
without limitation all special purpose entities, limited purpose
entities and qualified special purpose entities, in which Metropolitan
or any of its Subsidiaries or any officer or director of Metropolitan
or any of its Subsidiaries has an economic or management interest.
Section 5.03(u) of Metropolitan's Disclosure Schedule also sets forth a
true and complete list of all transactions, arrangements, and other
relationships between or among any such Metropolitan affiliated entity,
Metropolitan, any of its Subsidiaries, and any officer or director of
Metropolitan or any of its Subsidiaries that are not reflected in the
consolidated financial statements of Metropolitan (each, a
"Metropolitan Off Balance Sheet Transaction"), along with the following
information with respect to each such Metropolitan Off Balance Sheet
Transaction: (i) the business purpose, activities, and economic
substance; (ii) the key terms and conditions; (iii) the potential risk
to Metropolitan or any of its Subsidiaries; (iv) the amount of any
guarantee, line of credit, standby letter of credit or commitment, or
any other type of arrangement, that could require Metropolitan or any
of its Subsidiaries to fund any obligations under any such transaction;
and (v) any other information that could have a Material Adverse Effect
on Metropolitan or any of its Subsidiaries.
(v) Disclosure. The representations and warranties contained
in this Section 5.03 do not contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements and information contained in this Section 5.03 not
misleading.
29
(w) Material Adverse Change. Metropolitan has not, on a
consolidated basis, suffered a change in its business, financial
condition or results of operations since December 31, 2000, except as
disclosed in the Metropolitan SEC Documents, that has had a Material
Adverse Effect on Metropolitan.
(x) Absence of Undisclosed Liabilities. Neither Metropolitan
nor any of its Subsidiaries has any liability (contingent or otherwise)
that is material to Metropolitan on a consolidated basis, or that, when
combined with all liabilities as to similar matters would be material
to Metropolitan on a consolidated basis, except as disclosed in
Metropolitan's Financial Statements.
(y) Properties. Metropolitan and its Subsidiaries have good
and marketable title, free and clear of all liens, encumbrances,
charges, defaults or equitable interests to all of the properties and
assets, real and personal, reflected on Metropolitan's Financial
Statements as being owned by Metropolitan as of December 31, 2001 or
acquired after such date, except (i) statutory liens for amounts not
yet due and payable, (ii) pledges to secure deposits and borrowings and
other liens incurred in the ordinary course of banking business, (iii)
such imperfections of title, easements, encumbrances, liens, charges,
defaults or equitable interests, if any, as do not affect the use of
properties or assets subject thereto or affected thereby or otherwise
materially impair business operations at such properties, (iv)
dispositions and encumbrances in the ordinary course of business, and
(v) liens on properties acquired in foreclosure or on account of debts
previously contracted. All leases pursuant to which Metropolitan or any
of its Subsidiaries, as lessee, leases real or personal property
(except for leases that have expired by their terms or that
Metropolitan or any such Subsidiary has agreed to terminate since the
date hereof) are valid without default thereunder by the lessee or, to
Metropolitan's knowledge, the lessor.
(z) Loans. Each loan reflected as an asset in Metropolitan's
Financial Statements and each balance sheet date subsequent thereto,
other than loans the unpaid balance of which does not exceed $250,000
in the aggregate, (i) is evidenced by notes, agreements or other
evidences of indebtedness that are true, genuine and what they purport
to be, (ii) to the extent secured, has been secured by valid liens and
security interests that have been perfected, and (iii) is the legal,
valid and binding obligation of the obligor named therein, enforceable
in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent conveyance and other laws of general applicability relating
to or affecting creditors' rights and to general equity principles.
Except as Previously Disclosed, as of December 31, 2001, Bank is not a
party to a loan, including any loan guaranty, with any director,
executive officer or 5% shareholder of Metropolitan or any of its
Subsidiaries or any person, corporation or enterprise controlling,
controlled by or under common control with any of the foregoing. All
loans and extensions of credit that have been made by Bank and that are
subject either to Section 22(g) or (h) of the Federal Reserve Act, as
amended, comply therewith.
(aa) Allowance for Loan Losses. The allowance for loan losses
reflected on Metropolitan's Financial Statements, as of their
respective dates, is adequate in all material respects under the
requirements of generally accepted accounting principles to provide for
reasonably anticipated losses on outstanding loans.
00
(xx) Xxxxxxxxxx Agreements. With respect to all agreements
pursuant to which Metropolitan or any of its Subsidiaries has purchased
securities subject to an agreement to resell, if any, Metropolitan or
such Subsidiary, as the case may be, has a valid, perfected first lien
or security interest in or evidence of ownership in book entry form of
the government securities or other collateral securing the repurchase
agreement, and the value of such collateral equals or exceeds the
amount of the debt secured thereby.
(cc) Deposit Insurance. The deposits of Bank are insured by
the FDIC in accordance with The Federal Deposit Insurance Act ("FDIA"),
and Bank has paid all assessments and filed all reports required by the
FDIA.
(dd) The Metropolitan Board has approved, for purposes of
Chapter 1704 of the Ohio Interested Shareholder Transactions Law, the
Merger Agreement and that certain voting agreement by and between Sky
and Control Shareholder, dated as of the date hereof.
5.04 Representations and Warranties of Sky. Subject to Sections 5.01
and 5.02 and except as Previously Disclosed in a paragraph of its Disclosure
Schedule corresponding to the relevant paragraph below, Sky hereby represents
and warrants to Metropolitan as follows:
(a) Organization, Standing and Authority. Sky is a corporation
duly organized, validly existing and in good standing under the laws of
the State of Ohio. Sky is duly qualified to do business and is in good
standing in the State of Ohio and any foreign jurisdictions where its
ownership or leasing of property or assets or the conduct of its
business requires it to be so qualified. Sky is registered as a bank
holding company under the Bank Holding Company Act of 1956, as amended.
Sky Bank is a state banking association duly organized, validly
existing and in good standing under the laws of the State of Ohio. Sky
Bank is duly qualified to do business and is in good standing in the
State of Ohio and any foreign jurisdictions where its ownership or
leasing of property or assets or the conduct of its business requires
it to be so qualified.
(b) Sky Shares.
(i) The authorized capital stock of Sky consists of
160,000,000 shares, of which (A) 150,000,000 shares are Sky
Common Shares, without par value, of which 87,527,714 shares
were outstanding as of October 1, 2002, and (B) 10,000,000
shares are Sky Preferred Shares, par value $10.00 per share,
of which no shares were outstanding as of October 1, 2002. As
of October 1, 2002, except as set forth in its Disclosure
Schedule, Sky does not have any Rights issued or outstanding
with respect to Sky Common Shares and Sky does not have any
commitment to authorize, issue or sell any Sky Common Shares
or Rights, except pursuant to this Agreement. The outstanding
Sky Common Shares have been duly authorized and are validly
issued and outstanding, fully paid and nonassessable, and
subject to no preemptive rights (and were not issued in
violation of any preemptive rights).
(ii) The Sky Common Shares to be issued in exchange
for Metropolitan Common Shares in the Merger, when issued in
accordance with the
31
terms of this Agreement, will be duly authorized, validly
issued, fully paid and nonassessable and subject to no
preemptive rights.
(c) Subsidiaries. Sky has Previously Disclosed a list of all
its Subsidiaries together with the jurisdiction or organization of each
Subsidiary. Each of Sky's Subsidiaries has been duly organized and is
validly existing in good standing under the laws of the jurisdiction of
its organization, and is duly qualified to do business and is in good
standing in the jurisdictions where its ownership or leasing of
property or the conduct of its business requires it to be so qualified
and, except as Previously Disclosed, it owns, directly or indirectly,
all the issued and outstanding equity securities of each of its
Significant Subsidiaries.
(d) Corporate Power. Each of Sky and its Subsidiaries has the
corporate power and authority to carry on its business as it is now
being conducted and to own all its properties and assets; and Sky has
the corporate power and authority to execute, deliver and perform its
obligations under this Agreement and to consummate the transactions
contemplated hereby.
(e) Corporate Authority; Authorized and Effective Agreement.
This Agreement and the transactions contemplated hereby have been
authorized by all necessary corporate action of Sky and the Sky Board
prior to the date hereof and no shareholder approval is required on the
part of Sky. The Agreement to Merge, when executed by Sky Bank, shall
have been approved by the Board of Directors of Sky Bank and by the Sky
Board, as the sole shareholder of Sky Bank. This Agreement is a valid
and legally binding agreement of Sky, enforceable in accordance with
its terms (except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer
and similar laws of general applicability relating to or affecting
creditors rights or by general equity principles).
(f) Regulatory Approvals; No Defaults.
(i) No consents or approvals of, or filings or
registrations with, any Governmental Authority or with any
third party are required to be made or obtained by Sky or any
of its Subsidiaries in connection with the execution, delivery
or performance by Sky of this Agreement or to consummate the
Merger except for (A) the filing of applications, notices or
the Agreement to Merge, as applicable, with the Regulatory
Authorities; (B) the filing and declaration of effectiveness
of the Registration Statement; (C) the filing of the
certificate of merger with the OSS pursuant to the OGCL; (D)
such filings as are required to be made or approvals as are
required to be obtained under the securities or "Blue Sky"
laws of various states in connection with the issuance of Sky
Common Shares in the Merger; and (E) receipt of the approvals
set forth in Section 7.01(b). As of the date hereof, Sky is
not aware of any reason why the approvals set forth in Section
7.01(b) will not be received without the imposition of a
condition, restriction or requirement of the type described in
Section 7.01(b).
(ii) Subject to the satisfaction of the requirements
referred to in the preceding paragraph and expiration of the
related waiting periods, and required
32
filings under federal and state securities laws, the
execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby do not
and will not (A) constitute a breach or violation of, or a
default under, or give rise to any Lien, any acceleration of
remedies or any right of termination under, any law, rule or
regulation or any judgment, decree, order, governmental permit
or license, or agreement, indenture or instrument of Sky or of
any of its Subsidiaries or to which Sky or any of its
Subsidiaries or properties is subject or bound, (B) constitute
a breach or violation of, or a default under, the Articles of
Incorporation or Code of Regulations (or similar governing
documents) of Sky or any of its Subsidiaries, or (C) require
any consent or approval under any such law, rule, regulation,
judgment, decree, order, governmental permit or license,
agreement, indenture or instrument.
(g) Financial Reports and SEC Documents; Material
Adverse Effect.
(i) Sky's Annual Report on Form 10-K for the fiscal
year ended December 31, 2001 and 2000, and all other reports,
registration statements, definitive proxy statements or
information statements filed or to be filed by it or any of
its Subsidiaries with the SEC subsequent to December 31, 2000
under the Securities Act, or under Section 13, 14 or 15(d) of
the Exchange Act, in the form filed or to be filed
(collectively, "Sky SEC Documents") as of the date filed, (A)
complied or will comply in all material respects with the
applicable requirements under the Securities Act or the
Exchange Act, as the case may be, and (B) did not and will not
contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; and
each of the balance sheets or statements of condition
contained in or incorporated by reference into any such Sky
SEC Document (including the related notes and schedules
thereto) fairly presents, or will fairly present, the
financial position of Sky and its Subsidiaries as of its date,
and each of the statements of income or results of operations
and changes in shareholders' equity and cash flows or
equivalent statements in such Sky SEC Documents (including any
related notes and schedules thereto) fairly presents, or will
fairly present, the results of operations, changes in
shareholders' equity and cash flows, as the case may be, of
Sky and its Subsidiaries for the periods to which they relate,
in each case in accordance with generally accepted accounting
principles consistently applied during the periods involved,
except in each case as may be noted therein, subject to normal
year-end audit adjustments and the absence of footnotes in the
case of unaudited statements.
(ii) Since December 31, 2000, no event has occurred
or circumstance arisen that, individually or taken together
with all other facts, circumstances and events (described in
any paragraph of Section 5.04 or otherwise), is reasonably
likely to have a Material Adverse Effect with respect to Sky,
except as disclosed in the Sky SEC Documents.
33
(h) Litigation; Regulatory Action.
(i) Except as Previously Disclosed, no material
litigation, claim or other proceeding before any court or
governmental agency is pending against Sky or any of its
Subsidiaries and, to the best of Sky's knowledge, no such
litigation, claim or other proceeding has been threatened.
(ii) Except as Previously Disclosed, neither Sky nor
any of its Subsidiaries or properties is a party to or is
subject to any order, decree, agreement, memorandum of
understanding or similar arrangement with, or a commitment
letter or similar submission to, or extraordinary supervisory
letter from a Regulatory Authority, nor has Sky or any of its
Subsidiaries been advised by a Regulatory Authority that such
agency is contemplating issuing or requesting (or is
considering the appropriateness of issuing or requesting) any
such order, decree, agreement, memorandum of understanding,
commitment letter, supervisory letter or similar submission.
(i) Compliance with Laws. Each of Sky and its Subsidiaries:
(i) is in material compliance with all applicable
federal, state, local and foreign statutes, laws, regulations,
ordinances, rules, judgments, orders or decrees applicable
thereto or to the employees conducting such businesses,
including, without limitation, the Equal Credit Opportunity
Act, the Fair Housing Act, the Community Reinvestment Act, the
Home Mortgage Disclosure Act and all other applicable fair
lending laws and other laws relating to discriminatory
business practices;
(ii) has all material permits, licenses,
authorizations, orders and approvals of, and has made all
material filings, applications and registrations with, all
Regulatory Authorities and Governmental Authorities that are
required in order to permit them to conduct their businesses
substantially as presently conducted; all such permits,
licenses, certificates of authority, orders and approvals are
in full force and effect and, to the best of its knowledge, no
suspension or cancellation of any of them is threatened; and
(iii) has received, since December 31, 2000, no
notification or communication from any Regulatory Authority or
Governmental Authority (A) asserting that Sky or any of its
Subsidiaries is not in material compliance with any of the
statutes, regulations, or ordinances that such Regulatory
Authority or Governmental Authority enforces or (B)
threatening to revoke any license, franchise, permit, or
governmental authorization (nor, to Sky's knowledge, do any
grounds for any of the foregoing exist).
(j) Brokerage and Finder's Fees. Except for fees payable to
its financial advisor, Sandler X'Xxxxx & Partners, L.P., Sky has not
employed any broker, finder, or agent, or agreed to pay or incurred any
brokerage fee, finder's fee, commission or other similar form of
compensation in connection with this Agreement or the transactions
contemplated hereby.
34
(k) Takeover Laws. Sky has taken all action required to be
taken by it in order to exempt this Agreement and the transactions
contemplated hereby from, and this Agreement and the transactions
contemplated hereby are exempt from, the requirements of any Takeover
Laws applicable to Sky.
(l) Tax Matters. (i) All Tax Returns that are required to be
filed by or with respect to Sky and its Subsidiaries have been duly
filed, (ii) all Taxes shown to be due on the Tax Returns referred to in
clause (i) have been paid in full as required, (iii) except as
Previously Disclosed, the Tax Returns referred to in clause (i) have
been examined by the IRS or the appropriate state, local or foreign
taxing authority or the period for assessment of the Taxes in respect
of which such Tax Returns were required to be filed has expired (iv)
except as Previously Disclosed, all deficiencies asserted or
assessments made as a result of such examinations have been paid in
full, (v) no issues that have been raised by the relevant taxing
authority in connection with the examination of any of the Tax Returns
referred to in clause (i) are currently pending, and (vi) except as
Previously Disclosed, no waivers of statutes of limitation have been
given by or requested with respect to any Taxes of Sky or its
Subsidiaries. Neither Sky nor any of its Subsidiaries has any liability
with respect to income, franchise or similar Taxes that accrued on or
before the end of the most recent period covered by the Sky SEC
Documents filed prior to the date hereof in excess of the amounts
accrued with respect thereto that are reflected in the financial
statements included in the Sky SEC Documents filed on or prior to the
date hereof ("Sky's Financial Statements"). As of the date hereof, Sky
has no reason to believe that any conditions exist that might prevent
or impede the Merger from qualifying as a reorganization with the
meaning of Section 368(a) of the Code.
(m) Books and Records. The books and records of Sky and its
Subsidiaries have been fully, properly and accurately maintained in all
material respects, have been maintained in accordance with sound
business practices and the requirements of Section 13(b)(2) of the
Exchange Act, and there are no material inaccuracies or discrepancies
of any kind contained or reflected therein, and they fairly present the
substance of events and transactions included therein.
(n) Insurance. Sky's Disclosure Schedule sets forth all of the
insurance policies, binders, or bonds maintained by Sky or its
Subsidiaries. Sky and its Subsidiaries are insured with reputable
insurers against such risks and in such amounts as the management of
Sky reasonably has determined to be prudent in accordance with industry
practices. All such insurance policies are in full force and effect;
Sky and its Subsidiaries are not in material default thereunder; and
all claims thereunder have been filed in due and timely fashion.
(o) Sky Off Balance Sheet Transactions. Section 5.04(o) of
Sky's Disclosure Schedule sets forth a true and complete list of all
affiliated Sky entities, including without limitation all special
purpose entities, limited purpose entities and qualified special
purpose entities, in which Sky or any of its Subsidiaries or any
officer or director of Sky or any of its Subsidiaries has an economic
or management interest. Section 5.04(o) of Sky's Disclosure Schedule
also sets forth a true and complete list of all material transactions,
arrangements, and other relationships between or among any such Sky
affiliated entity, Sky, any of its Subsidiaries, and any officer or
director of Sky or any of
35
its Subsidiaries that are not reflected in the consolidated financial
statements of Sky (each, a "Sky Off Balance Sheet Transaction"), along
with the following information with respect to each such Sky Off
Balance Sheet Transaction: (i) the business purpose, activities, and
economic substance; (ii) the key terms and conditions; (iii) the
potential material risk to Sky or any of its Subsidiaries; (iv) the
amount of any guarantee, line of credit, standby letter of credit or
commitment, or any other type of arrangement, that could require Sky or
any of its Subsidiaries to fund any obligations under any such
transaction; and (v) any other information that could have a Material
Adverse Effect on Sky or any of its Subsidiaries.
(p) Contracts. Neither Sky nor any of its Subsidiaries is in
default under any contract, agreement, commitment, arrangement, lease,
insurance policy or other instrument to which it is a party, by which
its respective assets, business, or operations may be bound or affected
in any way, or under which it or its respective assets, business, or
operations receive benefits, 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.
(q) Disclosure. The representations and warranties contained
in this Section 5.04 do not contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements and information contained in this Section 5.04 not
misleading.
(r) Risk Management Instruments. All material interest rate
swaps, caps, floors, option agreements, futures and forward contracts
and other similar risk management arrangements, whether entered into
for Sky's own account, or for the account of one or more of its
Subsidiaries or their customers, were entered into (i) in accordance
with prudent business practices and all applicable laws, rules,
regulations and regulatory policies and with counterparties believed to
be financially responsible at the time; and each of them constitutes
the valid and legally binding obligation of Sky or one of its
Subsidiaries, enforceable in accordance with its terms (except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar laws of
general applicability relating to or affecting creditors' rights or by
general equity principles), and is in full force and effect. Neither
Sky nor its Subsidiaries, nor to Sky's knowledge any other party
thereto, is in breach of any of its obligations under any such
agreement or arrangement in any material respect.
(s) Material Adverse Change. Sky has not, on a consolidated
basis, suffered a change in its business, financial condition or
results of operations since December 31, 2000 that has had a Material
Adverse Effect on Sky, except as described in the Sky SEC Documents.
(t) Allowance for Loan Losses. The allowance for loan losses
reflected on Sky's Financial Statements, as of their respective dates,
is adequate in all material respects under the requirements of
generally accepted accounting principles to provide for reasonably
anticipated losses on outstanding loans.
(u) Repurchase Agreements. With respect to all agreements
pursuant to which Sky or any of its Subsidiaries has purchased
securities subject to an agreement to
36
resell, if any, Sky or such Subsidiary, as the case may be, has a
valid, perfected first lien or security interest in or evidence of
ownership in book entry form of the government securities or other
collateral securing the repurchase agreement, and the value of such
collateral equals or exceeds the amount of the debt secured thereby.
(v) Deposit Insurance. The deposits of Sky Bank are insured by
the FDIC in accordance with the FDIA, and Sky Bank has paid all
assessments and filed all reports required by the FDIA.
ARTICLE VI
Covenants
6.01 Reasonable Best Efforts. Subject to the terms and conditions of
this Agreement, each of Metropolitan and Sky agrees to use its reasonable best
efforts in good faith to take, or cause to be taken, all actions, and to do, or
cause to be done, all things necessary, proper or desirable, or advisable under
applicable laws, so as to permit consummation of the Merger as promptly as
practicable and otherwise to enable consummation of the transactions
contemplated hereby and shall cooperate fully with the other party hereto to
that end.
6.02 Shareholder Approval. Metropolitan agrees to take, in accordance
with applicable law and the Metropolitan Articles and Metropolitan Code, all
action necessary to convene an appropriate meeting of its shareholders to
consider and vote upon the adoption of this Agreement and any other matters
required to be approved or adopted by Metropolitan's shareholders for
consummation of the Merger (including any adjournment or postponement, the
"Metropolitan Meeting"), as promptly as practicable after the Registration
Statement is declared effective. Each of Metropolitan's current directors shall
recommend that Metropolitan's shareholders adopt this Agreement at the
Metropolitan Meeting (and each director agrees to vote their Metropolitan Shares
in favor of the transaction) unless the Metropolitan Board, after consultation
with independent legal counsel, determines in good faith that it is probable
that such recommendation would be a breach of its fiduciary duties under
applicable Ohio law and Metropolitan's Articles.
6.03 Registration Statement.
(a) Sky agrees to prepare pursuant to all applicable laws,
rules and regulations a registration statement on Form S-4 (the
"Registration Statement") to be filed by Sky with the SEC in connection
with the issuance of Sky Common Shares in the Merger (including the
proxy statement and prospectus and other proxy solicitation materials
of Metropolitan constituting a part thereof (the "Proxy Statement") and
all related documents). Metropolitan agrees to cooperate, and to cause
its Subsidiaries to cooperate, with Sky, its counsel and its
accountants, in preparation of the Registration Statement and the Proxy
Statement; and provided that Metropolitan and its Subsidiaries have
cooperated as required above, Sky agrees to file the Proxy Statement
and the Registration Statement (together, the "Proxy
Statement/Prospectus") with the SEC as promptly as reasonably
practicable. Each of Metropolitan and Sky agrees to use all reasonable
efforts to cause the Proxy Statement/Prospectus to be declared
effective under the Securities Act as promptly as reasonably
practicable after filing thereof. Sky also agrees to use all
37
reasonable efforts to obtain, prior to the effective date of the
Registration Statement, all necessary state securities law or "Blue
Sky" permits and approvals required to carry out the transactions
contemplated by this Agreement. Metropolitan agrees to furnish to Sky
all information concerning Metropolitan, its Subsidiaries, officers,
directors and shareholders as may be reasonably requested in connection
with the foregoing.
(b) Each of Metropolitan and Sky agrees, as to itself and its
Subsidiaries, that none of the information supplied or to be supplied
by it for inclusion or incorporation by reference in (i) the
Registration Statement will, at the time the Registration Statement and
each amendment or supplement thereto, if any, becomes effective under
the Securities Act, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and (ii) the
Proxy Statement and any amendment or supplement thereto will, at the
date of mailing to the Metropolitan shareholders and at the time of the
Metropolitan Meeting, as the case may be, contain any untrue statement
of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading or any statement that, in the light of the circumstances
under which such statement is made, will be false or misleading with
respect to any material fact, or that will omit to state any material
fact necessary in order to make the statements therein not false or
misleading or necessary to correct any statement in any earlier
statement in the Proxy Statement or any amendment or supplement
thereto. Each of Metropolitan and Sky further agrees that if it shall
become aware prior to the Effective Date of any information furnished
by it that would cause any of the statements in the Proxy Statement to
be false or misleading with respect to any material fact, or to omit to
state any material fact necessary to make the statements therein not
false or misleading, to promptly inform the other party thereof and to
take the necessary steps to correct the Proxy Statement.
(c) Sky agrees to advise Metropolitan, promptly after Sky
receives notice thereof, of the time when the Registration Statement
has become effective or any supplement or amendment has been filed, of
the issuance of any stop order or the suspension of the qualification
of Sky Shares for offering or sale in any jurisdiction, of the
initiation or threat of any proceeding for any such purpose, or of any
request by the SEC for the amendment or supplement of the Registration
Statement or for additional information.
6.04 Press Releases. Each of Metropolitan and Sky agrees that it will
not, without the prior approval of the other party, issue any press release or
written statement for general circulation relating to the transactions
contemplated hereby, except as otherwise required by applicable law or
regulation or NASDAQ rules.
6.05 Access; Confidentiality.
(a) Each of Metropolitan and Sky agrees that upon reasonable
notice and subject to applicable laws relating to the exchange of
information, it shall afford the other party and the other party's
officers, employees, counsel, accountants and other authorized
representatives, such access during normal business hours throughout
the period prior to the Effective Time to the books, records
(including, without limitation, tax returns and work papers of
independent auditors), properties, personnel and to such other
information
38
as any party may reasonably request and, during such period, it shall
furnish promptly to such other party (i) a copy of each material
report, schedule and other document filed by it pursuant to federal or
state securities or banking laws, and (ii) all other information
concerning the business, properties and personnel of it as the other
may reasonably request.
(b) Each agrees that it will not, and will cause its
representatives not to, use any information obtained pursuant to this
Section 6.05 (as well as any other information obtained prior to the
date hereof in connection with the entering into of this Agreement) for
any purpose unrelated to the consummation of the transactions
contemplated by this Agreement. Except for the use of information in
connection with the Registration Statement described in Section 6.03
hereof and any other governmental filings required in order to complete
the transactions contemplated by this Agreement, all information
(collectively, the "Information") received by each of Metropolitan and
Sky, pursuant to the terms of this Agreement shall be kept in strictest
confidence; provided that, subsequent to the filing of the Registration
Statement with the SEC, this Section 6.25 shall not apply to
information included in the Registration Statement or to be included in
the Proxy Statement/Prospectus to be sent to the shareholders of
Metropolitan and Sky under Section 6.03. Metropolitan and Sky agree
that the Information will be used only for the purpose of completing
the transactions contemplated by this Agreement. Subject to the
requirements of law, each party will keep confidential, and will cause
its representatives to keep confidential, all Information and documents
obtained (as well as any other Information obtained prior to the date
hereof in connection with the entering into of this Agreement) unless
such Information (i) was already known to such party, (ii) becomes
available to such party from other sources not known by such party to
be bound by a confidentiality obligation, (iii) is disclosed with the
prior written approval of the party to which such information pertains
or (iv) is or becomes readily ascertainable from published information
or trade sources. In the event that this Agreement is terminated or the
transactions contemplated by this Agreement shall otherwise fail to be
consummated, each party shall promptly cause all copies of documents or
extracts thereof containing Information and data as to another party
hereto to be returned to the party that furnished the same. No
investigation by either party of the business and affairs of the other
shall affect or be deemed to modify or waive any representation,
warranty, covenant or agreement in this Agreement, or the conditions to
either party's obligation to consummate the transactions contemplated
by this Agreement.
(c) During the period from the date of this Agreement to the
Effective Time, each party shall promptly furnish the other with copies
of all monthly and other interim financial statements produced in the
ordinary course of business as the same shall become available.
6.06 Acquisition Proposals. Metropolitan agrees that it shall not, and
shall cause its Subsidiaries and its and its Subsidiaries' officers, directors,
agents, advisors and affiliates not to, solicit or encourage inquiries or
proposals with respect to, or engage in any negotiations concerning, or provide
any confidential information to, or have any discussions with, any person
relating to, any Acquisition Proposal, except to the extent that the
Metropolitan Board, after consultation with independent legal counsel,
determines in good faith that it is probable that the failure to take such
action would be a breach of its fiduciary duties under applicable Ohio law
39
and Metropolitan's Articles. It shall immediately cease and cause to be
terminated any activities, discussions or negotiations conducted prior to the
date of this Agreement with any parties other than Sky with respect to any of
the foregoing and shall use its reasonable best efforts to enforce any
confidentiality or similar agreement relating to an Acquisition Proposal.
Metropolitan shall promptly advise Sky following the receipt by Metropolitan of
any Acquisition Proposal and the substance thereof (including the identity of
the person making such Acquisition Proposal), and advise Sky of any material
developments with respect to such Acquisition Proposal promptly upon the
occurrence thereof.
6.07 Affiliate Agreements. Not later than the 15th day prior to the
mailing of the Proxy Statement, Metropolitan shall deliver to Sky a schedule of
each person that, to the best of its knowledge, is or is reasonably likely to
be, as of the date of the Metropolitan Meeting, deemed to be an "affiliate" of
Metropolitan (each, a "Metropolitan Affiliate") as that term is used in Rule 145
under the Securities Act. Metropolitan shall cause each person who may be deemed
to be a Metropolitan Affiliate to execute and deliver to Metropolitan on or
before the date of mailing of the Proxy Statement an agreement in the form
attached hereto as Exhibit A.
6.08 Takeover Laws. No party hereto shall take any action that would
cause the transactions contemplated by this Agreement to be subject to
requirements imposed by any Takeover Law and each of them shall take all
necessary steps within its control to exempt (or ensure the continued exemption
of) the transactions contemplated by this Agreement from, or if necessary
challenge the validity or applicability of, any applicable Takeover Law, as now
or hereafter in effect.
6.09 Certain Policies. Prior to the Effective Date, Metropolitan shall,
consistent with generally accepted accounting principles and on a basis mutually
satisfactory to it and Sky, modify and change its loan, litigation and real
estate valuation policies and practices (including loan classifications and
levels of reserves) as well as other management and operating policies and
practices so as to be applied on a basis that is consistent with that of Sky;
provided, however, that Metropolitan shall not be obligated to take any such
action pursuant to this Section 6.09 earlier than thirty days prior to the
Effective Date, and unless and until Sky acknowledges that all conditions to its
obligation to consummate the Merger have been satisfied and certifies to
Metropolitan that Sky's representations and warranties, subject to Section 5.02,
are true and correct as of such date and that Sky is otherwise in material
compliance with this Agreement. Metropolitan's representations, warranties and
covenants contained in this Agreement shall not be deemed to be untrue or
breached in any respect for any purpose as a consequence of any modifications or
changes undertaken solely on account of this Section 6.09. No action shall be
required to be taken by Metropolitan pursuant to this Section 6.09 if, in the
opinion of Metropolitan's independent auditors, such action would contravene
GAAP. In addition, any action taken by Metropolitan pursuant to this Section
6.09 shall not be taken into account for purposes of any adjustments otherwise
required by Section 3.01(b) of this Agreement.
6.10 NASDAQ Listing or Notification. As required by NASDAQ, Sky shall
file a NASDAQ Notification Form for Listing of Additional Shares and/or Change
in the Number of Shares Outstanding, with respect to the shares of Sky Common
Shares to be issued to the holders of Metropolitan Common Shares in the Merger.
40
6.11 Regulatory Applications.
(a) Sky and Metropolitan and their respective Subsidiaries
shall cooperate and use their respective reasonable best efforts to
prepare, within 45 days of the execution of this Agreement, all
documentation and requests for regulatory approval, to timely effect
all filings and to obtain all permits, consents, approvals and
authorizations of all third parties and Governmental Authorities and
Regulatory Authorities necessary to consummate the transactions
contemplated by this Agreement. Each of Sky and Metropolitan shall have
the right to review in advance, and to the extent practicable each will
consult with the other, in each case subject to applicable laws
relating to the exchange of information, with respect to, and shall be
provided in advance so as to reasonably exercise its right to review in
advance, all material written information submitted to any third party
or any Governmental Authority or Regulatory Authority in connection
with the transactions contemplated by this Agreement. In exercising the
foregoing right, each of the parties hereto agrees to act reasonably
and as promptly as practicable. Each party hereto agrees that it will
consult with the other party hereto with respect to the obtaining of
all material permits, consents, approvals and authorizations of all
third parties and Governmental Authorities or Regulatory Authorities
necessary or advisable to consummate the transactions contemplated by
this Agreement and each party will keep the other party apprised of the
status of material matters relating to completion of the transactions
contemplated hereby.
(b) Each party agrees, upon request, to furnish the other
party with all information concerning itself, its Subsidiaries,
directors, officers and shareholders and such other matters as may be
reasonably necessary or advisable in connection with any filing, notice
or application made by or on behalf of such other party or any of its
Subsidiaries to any third party, Governmental Authority or Regulatory
Authority.
6.12 Indemnification.
(a) Following the Effective Date, Sky shall indemnify, defend
and hold harmless the present and former directors, officers and
employees of Metropolitan and its Subsidiaries (each, an "Indemnified
Party") against all costs or expenses (including reasonable attorneys'
fees), judgments, fines, losses, claims, damages or liabilities
incurred in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or
investigative, arising out of actions or omissions occurring on or
prior to the Effective Time (including, without limitation, the
transactions contemplated by this Agreement) to the fullest extent that
Metropolitan is permitted to indemnify (and advance expenses to) its
directors, officers, and employees under the laws of the State of Ohio,
the Metropolitan Articles and the Metropolitan Code as in effect on the
date hereof; provided that any determination required to be made with
respect to whether an officer's, director's or employee's conduct
complies with the standards set forth under Ohio law, the Metropolitan
Articles and the Metropolitan Code shall be made by independent counsel
(which shall not be counsel that provides material services to Sky)
selected by Sky and reasonably acceptable to such officer, director or
employee.
(b) For a period of five years from the Effective Time, Sky
shall procure directors' and officers' liability insurance that serves
to reimburse the present and former
41
officers and directors of Metropolitan or any of its Subsidiaries
(determined as of the Effective Time) (as opposed to Metropolitan) with
respect to claims against such directors and officers arising from
facts or events that occurred before the Effective Time, providing
coverage of $10 million, and coverage at least as favorable as coverage
contained in Metropolitan's current directors' and officers' liability
coverage.
(c) Any Indemnified Party wishing to claim indemnification
under Section 6.12(a), upon learning of any claim, action, suit,
proceeding or investigation described above, shall promptly notify Sky
thereof; provided that the failure so to notify shall not affect the
obligations of Sky under Section 6.12(a) unless and to the extent that
Sky is actually prejudiced as a result of such failure.
(d) If Sky or any of its successors or assigns shall
consolidate with or merge into any other entity and shall not be the
continuing or surviving entity of such consolidation or merger or shall
transfer all or substantially all of its assets to any entity, then and
in each case, proper provision shall be made so that the successors and
assigns of Sky shall assume the obligations set forth in this Section
6.12.
6.13 Opportunity of Employment; Employee Benefits.
(a) Sky will endeavor to retain as many current officers and
employees as is commercially reasonable and possible, consistent with
the Sky Workforce Redesign Process and Sky's regional banking template;
provided however, that the retention by Sky of Metropolitan's senior
officers shall be determined by Sky in its sole discretion. It is
understood and agreed that nothing in this Section 6.13 or elsewhere in
this Agreement shall be deemed to be a contract of employment or be
construed to give said employees any rights other than as employees at
will under applicable law and said employees shall not be deemed to be
third-party beneficiaries of this provision.
(b) From and after the Effective Time, Metropolitan employees
shall continue to participate in the Metropolitan employee benefit
plans in effect at the Effective Time unless and until Sky, in its sole
discretion, shall determine that Metropolitan employees shall, subject
to applicable eligibility requirements, participate in employee benefit
plans of Sky and that all or some of the Metropolitan plans shall be
terminated or merged into certain employee benefit plans of Sky.
Metropolitan employees continuing to be employed by Sky shall receive
credit for service at Metropolitan for eligibility and vesting purposes
under Sky's employee benefit plans (but not for benefit calculation
purposes), except as otherwise required by law or regulation. Any
employees terminated by Sky shall be paid for all of their unused
vacation time and shall be entitled to elect so-called "COBRA" in
accordance with, and subject to, the provisions of Code Section
4980B(f).
(c) Sky agrees to make all severance, change of control or
similar payments to any Metropolitan employees, subject to employment
contracts and retention agreements as are specifically set forth in
Disclosure Schedule 6.13(c); provided, however, that such payments are
permitted under any of the Supervisory Agreements or the Directive.
Notwithstanding the foregoing, Sky shall pay severance to Metropolitan
officers and employees terminated as a result of the Merger in
accordance with Sky's severance policy as of the Effective Date, giving
credit for service at Metropolitan; provided, however, that those
Metropolitan officers or employees eligible to receive severance under
both of (i) Metropolitan's severance policy and/or Retention Pay Plan
and (ii) Sky's severance
42
policies shall only receive the severance payment payable under either
the Metropolitan Retention Pay Plan, if the Metropolitan officer or
employee is a participant therein, or Sky's severance policy as of the
Effective Date.
6.14 Notification of Certain Matters. Each of Metropolitan and Sky
shall give prompt notice to the other of any fact, event or circumstance known
to it that (i) is reasonably likely, individually or taken together with all
other facts, events and circumstances known to it, to result in any Material
Adverse Effect with respect to it or (ii) would cause or constitute a material
breach of any of its representations, warranties, covenants or agreements
contained herein.
6.15 Successor to Certain Obligations. Sky hereby acknowledges that as
a result of the Merger it shall succeed to the obligations of Metropolitan under
the 8.60% Cumulative Trust Preferred Securities of Metropolitan Capital Trust I,
the 9.50% Cumulative Trust Preferred Securities of Metropolitan Capital Trust
II, and the 9-5/8% Subordinated Notes due January 1, 2005.
6.16 Tax Treatment. Each of Sky and Metropolitan agrees not to take any
actions subsequent to the date of this Agreement that would adversely affect the
ability of Metropolitan and its shareholders to characterize the Merger as a
tax-free reorganization under Section 368(a) of the Code, and each of Sky and
Metropolitan agrees to take such action as may be reasonably required, if such
action may be reasonably taken to reverse the impact of any past actions which
would adversely impact the ability for the Merger to be characterized as a
tax-free reorganization under Section 368(a) of the Code.
6.17 No Breaches of Representations and Warranties. Between the date of
this Agreement and the Effective Time, without the written consent of the other
party, each of Sky and Metropolitan will not do any act or suffer any omission
of any nature whatsoever that would cause any of the representations or
warranties made in Article V of this Agreement to become untrue or incorrect in
any material respect.
6.18 Consents. Each of Sky and Metropolitan shall use its best efforts
to obtain any required consents to the transactions contemplated by this
Agreement.
6.19 Insurance Coverage. Metropolitan shall cause the policies of
insurance listed in the Disclosure Schedule to remain in effect between the date
of this Agreement and the Effective Date.
6.20 Correction of Information. Each of Sky and Metropolitan shall
promptly correct and supplement any information furnished under this Agreement
so that such information shall be correct and complete in all material respects
at all times, and shall include all facts necessary to make such information
correct and complete in all material respects at all times.
6.21 Disposition of Certain Metropolitan Assets.
(a) Corporate Headquarters. In the event that prior to the
Effective Date, Metropolitan receives a written offer from a third
party ("Offer") to purchase its
43
corporate headquarters, Metropolitan will immediately advise Sky of
said Offer and the terms thereof. Thereafter, Sky will be granted a
right of first refusal to purchase the corporate headquarters at the
price and on the terms and conditions set forth in the Offer; provided
however that the sale to Sky may be consummated, at Sky's option, after
the Effective Date (or, if applicable, the termination date). If Sky
does not exercise its right to purchase the corporate headquarters
within ten business days of notice by Metropolitan of an Offer,
Metropolitan may sell the corporate headquarters pursuant to the Offer.
(b) Mortgage Servicing Rights and Certain Other Assets. In the
event that prior to the Effective Date, Metropolitan wishes to sell its
mortgage servicing rights or any of the assets listed on Item 6 of
Exhibit B hereto and Sky does not consent to such sale pursuant to
Section 4.01(d) hereof, then it is understood and agreed that the
retention of the asset by Metropolitan shall not result in a negative
purchase price adjustment under Section 3.01(b) hereof and for purposes
of calculating any adjustment under Section 301(b)(iii), the aggregate
book value of such mortgage servicing rights shall be calculated as if
the sale had taken place (i) at a gain or at a loss with respect to
purchased mortgage servicing rights and (ii) only if at a loss with
respect to originated mortgage servicing rights.
6.22 Supplemental Assurances.
(a) On the date the Registration Statement becomes effective
and on the Effective Date, Metropolitan shall deliver to Sky a
certificate signed by its principal executive officer and its principal
financial officer to the effect, to such officers' knowledge, that the
information contained in the Registration Statement relating to the
business and financial condition and affairs of Metropolitan, does not
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading.
(b) On the date the Registration Statement becomes effective
and on the Effective Date, Sky shall deliver to Metropolitan a
certificate signed by its chief executive officer and its chief
financial officer to the effect, to such officers' knowledge, that the
Registration Statement (other than the information contained therein
relating to the business and financial condition and affairs of
Metropolitan) does not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading.
6.23 Reimbursement to Metropolitan Shareholders. It is understood and
agreed that amounts reimbursed by Control Shareholder to Metropolitan pursuant
to the Directive that are received after the Effective Date shall be held by Sky
for the benefit of those persons who are Metropolitan shareholders as of the
Election Deadline and shall be distributed by Sky to said shareholders as soon
as reasonably practicable net of any reasonable expenses and taxes calculated at
an assumed tax rate of thirty-four percent (34%) incurred by Sky.
44
ARTICLE VII
Conditions to Consummation of the Merger
7.01 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each of Sky and Metropolitan to consummate the Merger
is subject to the fulfillment or written waiver by Sky and Metropolitan prior to
the Effective Time of each of the following conditions:
(a) Shareholder Approval. This Agreement shall have been duly
adopted by the requisite vote of Metropolitan's shareholders.
(b) Regulatory Approvals. All regulatory approvals required to
consummate the transactions contemplated hereby shall have been
obtained and shall remain in full force and effect and all statutory
waiting periods in respect thereof shall have expired and no such
approvals shall contain (i) any conditions, restrictions or
requirements that the Sky Board reasonably determines would either
before or after the Effective Time have or will have a Material Adverse
Effect on Sky and its Subsidiaries taken as a whole after giving effect
to the consummation of the Merger, or (ii) any conditions, restrictions
or requirements that are not customary and usual for approvals of such
type and that the Sky Board reasonably determines would either before
or after the Effective Date be unduly burdensome, including, with
respect to both (i) and (ii) above, any conditions, restrictions or
requirements arising out of the Supervisory Agreement dated July 26,
2001, by and between the Bank and ODFI, the Supervisory Agreement dated
July 26, 2001, by and between Metropolitan and OTS (collectively, the
"Supervisory Agreements"), and the Directive, except for any
conditions, restrictions or requirements arising out of Sky's decision
to keep the Bank as a separate subsidiary for a period of time after
the Merger.
(c) No Injunction. No Regulatory Authority or Governmental
Authority of competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any statute, rule, regulation,
judgment, decree, injunction or other order (whether temporary,
preliminary or permanent) that is in effect and prohibits consummation
of the transactions contemplated by this Agreement.
(d) Registration Statement. The Registration Statement shall
have become effective under the Securities Act and no stop order
suspending the effectiveness of the Registration Statement shall have
been issued and no proceedings for that purpose shall have been
initiated or threatened by the SEC.
(e) Blue Sky Approvals. All permits and other authorizations
under state securities laws necessary to consummate the transactions
contemplated hereby and to issue the Sky Common Shares to be issued in
the Merger shall have been received and be in full force and effect.
7.02 Conditions to Obligation of Metropolitan. The obligation of
Metropolitan to consummate the Merger is also subject to the fulfillment or
written waiver by Metropolitan prior to the Effective Time of each of the
following conditions:
45
(a) Representations and Warranties. The representations and
warranties of Sky set forth in this Agreement shall be true and
correct, subject to Section 5.02, as of the date of this Agreement and
as of the Effective Date as though made on and as of the Effective Date
(except that representations and warranties that by their terms speak
as of the date of this Agreement or some other date shall be true and
correct as of such date), and Metropolitan shall have received a
certificate, dated the Effective Date, signed on behalf of Sky by the
Chief Executive Officer and the Chief Financial Officer of Sky to such
effect.
(b) Performance of Obligations of Sky. Sky shall have
performed in all material respects all obligations required to be
performed by them under this Agreement at or prior to the Effective
Time, and Metropolitan shall have received a certificate, dated the
Effective Date, signed on behalf of Sky by the Chief Executive Officer
and the Chief Financial Officer of Sky to such effect.
(c) Tax Opinion. Metropolitan shall have received an opinion
of Luse, Gorman, Xxxxxxxx & Xxxxxx, P.C., dated the Effective Date, to
the effect that, on the basis of facts, representations and assumptions
set forth in such opinion, (i) the Merger constitutes a
"reorganization" within the meaning of Section 368(a) of the Code and
(ii) no gain or loss will be recognized by shareholders of Metropolitan
who receive Sky Common Shares in exchange for Metropolitan Common
Shares, other than the gain or loss to be recognized as to cash
received in lieu of fractional share interests and cash received in
exchange for Metropolitan Common Shares. In rendering its opinion, such
counsel may require and rely upon representations contained in letters
from Metropolitan and Sky.
(d) Opinion of Sky's Counsel. Metropolitan shall have received
an opinion of Squire, Xxxxxxx & Xxxxxxx L.L.P., counsel to Sky, dated
the Effective Date, to the effect that, on the basis of the facts,
representations and assumptions set forth in the opinion, (i) Sky is a
corporation duly organized and in good standing under the laws of the
State of Ohio, (ii) this Agreement has been duly executed by Sky and
constitutes the binding obligation of Sky, enforceable in accordance
with its terms against Sky, except as the same may be limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium, and other similar laws relating to or affecting the
enforcement of creditors' rights generally, by general equitable
principles (regardless of whether enforceability is considered in a
proceeding in equity or at law) and by an implied covenant of good
faith and fair dealing, (iii) that the Sky Common Shares to be issued
as part of the Merger Consideration, when issued, shall be duly
authorized, fully paid and non-assessable, and (iv) that, assuming
approval of Metropolitan's shareholders, upon the filing of the
Certificate of Merger with the OSS, the Merger shall become effective.
(e) Fairness Opinion. Metropolitan shall have received a
fairness opinion from Xxxx, Xxxx & Co., Inc., financial advisor to
Metropolitan, dated as of a date reasonably proximate to the date of
the Proxy Statement, stating that the Merger Consideration to be paid
to Metropolitan's shareholders is fair to the shareholders of
Metropolitan from a financial point of view.
46
7.03 Conditions to Obligation of Sky. The obligation of Sky to
consummate the Merger is also subject to the fulfillment or written waiver by
Sky prior to the Effective Time of each of the following conditions:
(a) Representations and Warranties. The representations and
warranties of Metropolitan set forth in this Agreement shall be true
and correct, subject to Section 5.02, as of the date of this Agreement
and as of the Effective Date as though made on and as of the Effective
Date (except that representations and warranties that by their terms
speak as of the date of this Agreement or some other date shall be true
and correct as of such date), and Sky shall have received a
certificate, dated the Effective Date, signed on behalf of Metropolitan
by the Chief Executive Officer and the Chief Financial Officer of
Metropolitan to such effect.
(b) Performance of Obligations of Metropolitan. Metropolitan
shall have performed in all material respects all obligations required
to be performed by it under this Agreement at or prior to the Effective
Time, and Sky shall have received a certificate, dated the Effective
Date, signed on behalf of Metropolitan by the Chief Executive Officer
and the Chief Financial Officer of Metropolitan to such effect.
(c) Opinion of Metropolitan's Counsel. Sky shall have received
an opinion of Luse, Gorman, Xxxxxxxx & Xxxxxx, P.C., counsel to
Metropolitan, dated the Effective Date, to the effect that, on the
basis of the facts, representations and assumptions set forth in the
opinion, (i) Metropolitan is a corporation duly organized and in good
standing under the laws of Ohio, (ii) this Agreement has been duly
executed by Metropolitan and constitutes a binding obligation on
Metropolitan, enforceable in accordance with its terms against
Metropolitan, except as the same may be limited by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium, and
other similar laws relating to or affecting the enforcement of
creditors' rights generally, by general equitable principles
(regardless of whether enforceability is considered in a proceeding in
equity or at law) and by an implied covenant of good faith and fair
dealing and (iii) that, assuming approval of Metropolitan's
shareholders, upon the filing of the Certificate of Merger with the
OSS, the Merger shall become effective.
(d) Affiliate Agreements. Sky shall have received the
agreements referred to in Section 6.07 from each affiliate of
Metropolitan.
(e) Tax Opinion. Sky shall have received an opinion of Squire,
Xxxxxxx & Xxxxxxx L.L.P., dated the Effective Date, in form and in
substance reasonably acceptable to it, to the effect that, on the basis
of the facts, representations and assumptions set forth in such
opinion, (i) the Merger constitutes a "reorganization" within the
meaning of Section 368(a) of the Code. In rendering its opinion, such
counsel may require and rely upon representations contained in letters
from Metropolitan and Sky.
(f) Purchase of Artwork. Control Shareholder shall have
purchased any of the remaining Artwork Collection at no less than
aggregate book value (calculated in accordance with GAAP) as reflected
on Schedule 3.01(b)(ii).
47
ARTICLE VIII
Termination
8.01 Termination. This Agreement may be terminated, and the Acquisition
may be abandoned:
(a) Mutual Consent. At any time prior to the Effective Time,
by the mutual consent of Sky and Metropolitan, if the Board of
Directors of each so determines by vote of a majority of the members of
its entire Board.
(b) Breach. At any time prior to the Effective Time, by Sky or
Metropolitan, if its Board of Directors so determines by vote of a
majority of the members of its entire Board, in the event of either:
(i) a breach by the other party of any representation or warranty
contained herein (subject to the standard set forth in Section 5.02),
which breach cannot be or has not been cured within 30 days after the
giving of written notice to the breaching party of such breach; or (ii)
a breach by the other party of any of the covenants or agreements
contained herein, which breach cannot be or has not been cured within
30 days after the giving of written notice to the breaching party of
such breach, provided that such breach (whether under (i) or (ii))
would be reasonably likely, individually or in the aggregate with other
breaches, to result in a Material Adverse Effect. Notwithstanding the
foregoing, it is understood and agreed that, for purposes of Sky
exercising its right of termination pursuant to this Section 8.01(b),
none of the matters described on Exhibit B hereto shall be considered
to have had a Material Adverse Effect on Metropolitan.
(c) Delay. At any time prior to the Effective Time, by Sky or
Metropolitan, if its Board of Directors so determines by vote of a
majority of the members of its entire Board, in the event that the
Merger is not consummated by July 31, 2003, except to the extent that
the failure of the Merger then to be consummated arises out of or
results from the knowing action or inaction of the party seeking to
terminate pursuant to this Section 8.01(c).
(d) No Approval. By Metropolitan or Sky, if its Board of
Directors so determines by a vote of a majority of the members of its
entire Board, in the event (i) the approval of any Governmental
Authority or any of the Regulatory Authorities required for
consummation of the Merger and the other transactions contemplated by
this Agreement shall have been denied by final nonappealable action of
such Governmental Authority or Regulatory Authority; (ii) the
Metropolitan shareholders fail to adopt this Agreement at the
Metropolitan Meeting; or (iii) as of the Effective Date, any of the
closing conditions have not been met as required by Article VII hereof.
(e) Sky Common Shares. By Metropolitan, in the event that:
(i) the Average NMS Closing Price (as defined below)
of Sky Common Shares is less than $16.56; and ---
(ii) (A) the number obtained by dividing the Average
NMS Closing Price of Sky Common Shares by $18.40 is less than
(B) the number obtained by
48
dividing the Final Index Price (as defined below) by the
Initial Index Price (as defined below) and then multiplying
the quotient in this clause (ii)(B) by 0.80.
For purposes of this Section 8.01(e), the following terms have
the meanings indicated below:
"Average NMS Closing Price" shall mean the arithmetic
mean of the NMS Closing Prices for the ten trading days immediately
preceding the fifth trading day prior to the receipt of final federal
regulatory approval of the Merger.
"Final Index Price" means the sum of the Final Prices
for each company comprising the Index Group multiplied by the
appropriate weight.
"Final Price," with respect to any company belonging
to the Index Group, means the arithmetic mean of the daily closing
sales prices of a share of common stock of such company, as reported on
the consolidated transaction reporting system for the market or
exchange on which such common stock is principally traded, for the same
ten trading days used in calculating the Average NMS Closing Price of
Sky Common Shares (i.e., the valuation date).
"Index Group" means the 25 financial institution
holding companies listed on Exhibit C attached hereto, the common stock
of all of which shall be publicly traded and as to which there shall
not have been a publicly announced proposal at any time during the
period beginning on the date of the Agreement and ending on the
valuation date for any such company to be acquired. In the event that
the common stock of any such company ceases to be publicly traded or a
proposal to acquire any such company is announced at any time during
the period beginning on the date of this Agreement and ending on the
valuation date, such company will be removed from the Index Group, and
the weights attributed to the remaining companies will be adjusted
proportionately for purposes of determining the Final Index Price and
the Initial Index Price. The 25 financial institution holding companies
and the weights attributed to them are listed on Exhibit C.
"Initial Index Price" means the sum of each per share
closing price of the common stock of each company comprising the Index
Group multiplied by the applicable weighting, as such prices are
reported on the consolidated transactions reporting system for the
market or exchange on which such common stock is principally traded, on
the trading day immediately preceding the public announcement of the
Agreement.
"NMS Closing Price" shall mean the price per share of
the last sale of Sky Common Shares reported on the NASDAQ National
Market System at the close of the trading day by the NASD.
Prior to Metropolitan exercising its right of termination
under this Section 8.01(e), in the event that both of the conditions
specified in Sections 8.01(e)(i) and (ii) are met, Sky may, at its
option (the "Fill Option"), for a period of ten business days
commencing on the date the parties determine the conditions have been
met, offer to distribute to Metropolitan's shareholders, in connection
with the Merger Consideration, the number of shares of Sky Common
Shares or cash necessary for the Stock Exchange Ratio to equal
49
$16.56 divided by the Average NMS Closing Price of Sky Common Shares
(the "Fill Offer"). In the event Sky determines not to exercise the
Fill Option, it will so advise Metropolitan in writing, and thereafter,
for a period of three business days Metropolitan may exercise its right
to terminate this Agreement pursuant to this Section 8.01(e).
If Sky or any company belonging to the Index Group declares or
effects a stock dividend, reclassification, recapitalization, split-up,
combination, exchange of shares or similar transaction between the date
of the Agreement and the valuation date, the prices for the common
stock of such company will be appropriately adjusted.
(f) Diminution of Metropolitan's Equity Capital. By Sky, in
the event that Metropolitan's total equity capital (calculated in
accordance with GAAP) as of September 30, 2002, which is $50,342,000,
decreases by an amount equal to or greater than $5 million as of the
month-end immediately preceding the Effective Date, provided, however,
that the calculation of such diminution in Metropolitan's equity
capital shall not give effect to: (i) the reduction in the carrying
value of Metropolitan's corporate headquarters required pursuant to
GAAP or the sale of Metropolitan's corporate headquarters subject to
the provisions of this Agreement; (ii) the effects of changes in
interest rates relating to the impact of FAS 115; and (iii) any further
impairment, deterioration and/or required change in the valuation of
the following assets: (A) Xxxxxxx Enterprises, Inc.'s portion of BPA
Commercial Capital Mortgage Pass-Thru Certificates Series 1998-1; (B)
the County of Franklin Ohio Multifamily Housing Revenue Refunding Bonds
Series 1998 (Stonebridge Apartments); (C) any loan guaranteed in whole
or in part by Xxxx X. Xxxxx, Xx. (as set forth in Schedule B-1 hereto);
or (D) mortgage serving rights.
(g) Other Transactions. By Metropolitan or by Sky, in the
event that Metropolitan receives an Acquisition Proposal pursuant to
Section 6.06 hereof and enters into an agreement with respect to such
Acquisition Proposal, subject however, to the payment by Metropolitan
of the termination fee specified in Section 8.03 hereof.
8.02 Effect of Termination and Abandonment; Enforcement of Agreement.
In the event of termination of this Agreement and the abandonment of the Merger
pursuant to this Article VIII, no party to this Agreement shall have any
liability or further obligation to any other party hereunder except (i) as set
forth in Sections 8.03 and 9.01; and (ii) that termination will not relieve a
breaching party from liability for any willful breach of this Agreement giving
rise to such termination. Notwithstanding anything contained herein to the
contrary, the parties hereto agree that irreparable damage will occur in the
event that a party breaches any of its obligations, duties, covenants and
agreements contained herein. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches or threatened
breaches of this Agreement and to enforce specifically the terms and provisions
of this Agreement in any court of the United States or any state having
jurisdiction, this being in addition to any other remedy to which they are
entitled by law or in equity.
8.03 Termination Fee. Metropolitan shall pay to Sky a termination fee
in the amount of $2,200,000 if:
50
(a) this Agreement is terminated by Sky pursuant to Section
8.01(b)(ii) or by Sky or Metropolitan pursuant to Section 8.01(d)(ii)
or 8.01(g); and prior to such termination, an Acquisition Proposal with
respect to Metropolitan was commenced, publicly proposed or publicly
disclosed; and within 18 months after such termination, Metropolitan
shall have entered into an agreement relating to an Acquisition
Proposal or any Acquisition Proposal shall have been consummated; or
(b) after receiving an Acquisition Proposal, the Metropolitan
Board does not take action within the time period set forth in Section
8.01(c) to convene the Metropolitan Meeting and recommend that
Metropolitan shareholders adopt this Agreement; and within 18 months
after such receipt, Metropolitan shall have entered into an agreement
relating to an Acquisition Proposal or any Acquisition Proposal shall
have been consummated.
Upon payment of the fee described in this Section 8.03,
Metropolitan shall have no further liability to Sky at law or in equity
with respect to such termination under Section 8.01(b)(ii) or
8.01(d)(ii), or with respect to this Agreement.
ARTICLE IX
Miscellaneous
9.01 Survival. No representations, warranties, agreements and covenants
contained in this Agreement shall survive the Effective Time (other than
Sections 6.05(b), 6.12, 6.13, 6.16, 6.21(a), 6.23 and this Article IX which
shall survive the Effective Time) or the termination of this Agreement if this
Agreement is terminated prior to the Effective Time (other than Sections
6.03(b), 6.04, 6.05(b), 8.02, and this Article IX which shall survive such
termination).
9.02 Waiver; Amendment. Prior to the Effective Time, any provision of
this Agreement may be (i) waived by the party benefited by the provision, or
(ii) amended or modified at any time, by an agreement in writing between the
parties hereto executed in the same manner as this Agreement, except that after
the Metropolitan Meeting, this Agreement may not be amended if it would violate
Section 1701.78(G) of the OGCL or the federal securities laws.
9.03 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to constitute an original.
9.04 Governing Law. This Agreement shall be governed by, and
interpreted in accordance with, the laws of the State of Ohio applicable to
contracts made and to be performed entirely within such State (except to the
extent that mandatory provisions of federal law are applicable).
9.05 Expenses. Each party hereto will bear all expenses incurred by it
in connection with this Agreement and the transactions contemplated hereby,
except that printing and mailing expenses shall be shared equally between
Metropolitan and Sky. All fees to be paid to Regulatory Authorities and the SEC
in connection with the transactions contemplated by this Agreement shall be
borne by Sky.
51
9.06 Notices. All notices, requests and other communications hereunder
to a party shall be in writing and shall be deemed given if personally
delivered, telecopied (with confirmation) or mailed by registered or certified
mail (return receipt requested) to such party at its address set forth below or
such other address as such party may specify by notice to the parties hereto.
If to Metropolitan, to:
Metropolitan Financial Corp.
00000 Xxxxxxxxx Xxxx.
Xxxxxxxx Xxxxx, Xxxx
Attn: Xxxxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
With a copy to:
Xxxx Xxxxxx Xxxxxxxx & Xxxxxx
0000 Xxxxxxxxx Xxxxxx
X.X. Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Attn: Xxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
If to Sky, to:
Sky Financial Group, Inc.
000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxx Xxxxx, XX 00000
Attn: X. Xxxxxxx Xxxxxx, Esq.
Facsimile: (000) 000-0000
with a copy to:
Squire, Xxxxxxx & Xxxxxxx L.L.P.
0000 Xxx Xxxxx
000 Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000-0000
Attn: M. Xxxxxxxx Xxxxxx, Esq.
Facsimile: (000) 000-0000
9.07 Entire Understanding; No Third Party Beneficiaries. This Agreement
and all schedules and exhibits attached hereto, together with that certain
voting agreement by and among Sky and the Control Shareholder and his
affiliates, executed copies of which have been delivered to Sky prior to the
execution of the Agreement, represent the entire understanding of the parties
hereto
52
with reference to the transactions contemplated hereby and thereby and this
Agreement supersedes any and all other oral or written agreements heretofore
made (other than any such separate agreement). Except for Sections 3.01, 6.12
and 6.15 hereof, nothing in this Agreement, whether express or implied, is
intended to confer upon any person, other than the parties hereto or their
respective successors, any rights, remedies, obligations or liabilities under or
by reason of this Agreement.
9.08 Interpretation; Effect. When a reference is made in this Agreement
to Sections, Exhibits or Schedules, such reference shall be to a Section of, or
Exhibit or Schedule to, this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and are not part of this Agreement. Whenever the words "include",
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation."
9.09 Waiver of Jury Trial. Each of the parties hereto hereby
irrevocably waives any and all right to trial by jury in any legal proceeding
arising out of or related to this Agreement or the transactions contemplated
hereby.
[Remainder of page intentionally left blank]
53
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in counterparts by their duly authorized officers, all as of the day
and year first above written.
METROPOLITAN FINANCIAL CORP.
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
SKY FINANCIAL GROUP, INC.
By:
------------------------------------------
Name: Xxxxx X. Xxxxx
Title: Chairman, President and CEO
54
EXHIBIT A
FORM OF METROPOLITAN AFFILIATE AGREEMENT
_____________, 2002
Sky Financial Group, Inc.
000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxx Xxxxx, Xxxx 00000
Ladies and Gentlemen:
I have been advised that as of the date hereof I may be deemed to be an
"affiliate" of Metropolitan Financial Corp. ("Metropolitan"), as that term is
defined for purposes of Paragraphs (c) and (d) of Rule 145 of the Rules and
Regulations (the "Rules and Regulations") of the Securities and Exchange
Commission (the "Commission") promulgated under the Securities Act of 1933, as
amended (the "Act").
Pursuant to the terms of the Agreement and Plan of Merger by and
between Sky Financial Group, Inc. ("Sky") and Metropolitan dated as of October
___, 2002 (the "Merger Agreement"), providing for the merger of Metropolitan
with and into Sky (the "Merger"), and as a result of the Merger, I may receive
Sky common shares ("Sky Common Shares") in exchange for Metropolitan common
shares ("Metropolitan Common Shares") owned by me at the Effective Time (as
defined and determined pursuant to the Merger Agreement). This letter is being
delivered pursuant to Section 6.07 of the Merger Agreement. I represent and
warrant to Sky that in such event:
A. I will not sell, assign or transfer the Sky Common Shares that I
receive as aforesaid in violation of the Act or the Rules and Regulations.
B. I have carefully read this letter and the Merger Agreement and have
discussed their requirements and other applicable limitations upon my ability to
sell, transfer or otherwise dispose of the Sky Common Shares, to the extent I
feel necessary, with my counsel or counsel for Metropolitan. I understand that
Sky is relying on the representations I am making in this letter and I hereby
agree to hold harmless and indemnify Sky and its officers and directors from and
against any losses, claims, damages, expenses (including reasonable attorneys'
fees), or liabilities ("Losses") to which Sky or any officer or director of Sky
may become subject under the Act or otherwise as a result of the untruth,
breach, or failure of such representations.
C. I have been advised that the issuance of the Sky Financial Common
Shares issued to me pursuant to the Merger will have been registered with the
Commission under the Act on a Registration Statement on Form S-4. However, I
have also been advised that since I may be deemed to be an affiliate under the
Rules and Regulations at the time the Merger was submitted for a vote of the
shareholders of Metropolitan, that the Sky Common Shares must be held by me
indefinitely unless (i) my subsequent distribution of Sky Common Shares has been
registered
A-1
_____________, 2002
Page 2
under the Act; (ii) a sale of the Sky Common Shares is made in conformity with
the volume and other applicable limitations of a transaction permitted by Rule
145 promulgated by the Commission under the Act and as to which Sky has received
satisfactory evidence of the compliance and conformity with said Rule, or (iii)
a transaction in which, in the opinion of Squire, Xxxxxxx & Xxxxxxx L.L.P. (or
other counsel reasonably acceptable to Sky) or in accordance with a no-action
letter from the Commission, some other exemption from registration is available
with respect to any such proposed sale, transfer or other disposition of the Sky
Common Shares.
D. I also understand that stop transfer instructions will be given to
Sky's transfer agent with respect to any Sky Common Shares that I receive in the
Merger and that there will be placed on the certificates for such Sky Common
Shares, a legend stating in substance:
"The shares represented by this certificate have been issued
or transferred to the registered holder as a result of a transaction to
which Rule 145 under the Securities Act of 1933, as amended (the
"Act"), applies. The shares represented by this certificate may not be
sold, transferred or assigned, and the issuer shall not be required to
give effect to any attempted sale, transfer or assignment, except
pursuant to (i) an effective registration statement under the Act, (ii)
a transaction permitted by Rule 145 and as to which the issuer has
received reasonable and satisfactory evidence of compliance with the
provisions of Rule 145, or (iii) a transaction in which, in the opinion
of Squire, Xxxxxxx & Xxxxxxx L.L.P. or other counsel satisfactory to
the issuer or in accordance with a "no action" letter from the staff of
the Securities and Exchange Commission, such shares are not required to
be registered under the Act."
A-2
_____________, 2002
Page 3
It is understood and agreed that the legend set forth in Paragraph D
above shall be promptly removed and any stop order instructions with respect
thereto shall be canceled upon receipt of advice from Squire, Xxxxxxx & Xxxxxxx
L.L.P., or other counsel satisfactory to Sky (which shall include Xxxx Xxxxxx
Xxxxxxxx & Schick, Thompson, Xxxx, LLP, Fried, Frank, Harris, Xxxxxxx &
Xxxxxxxx, and Xxxxx X. Xxxxxx) that such actions are appropriate under the
then-existing circumstances. Such advice of Squire, Xxxxxxx & Xxxxxxx L.L.P.
shall be given promptly at no cost to such affiliate, upon receipt of reasonably
satisfactory evidence of compliance with Rule 145.
Very truly yours,
Date: , 2002
------------------------------ ---------------------------------
(Name of Affiliate)
PLEASE PRINT YOUR NAME HERE:
---------------------------------
Accepted this _____ day of
__________, 2002
SKY FINANCIAL GROUP, INC.
By
---------------------------------------------
Xxxxx X. Xxxxx, Chairman, President and CEO
A-3
EXHIBIT B
MATTERS CONSIDERED NOT TO HAVE
A MATERIAL ADVERSE EFFECT ON
METROPOLITAN PURSUANT TO SECTIONS 7.03(A) AND 8.01(B)
For purposes of Sections 7.03(a) and 8.01(b) only, Material
Adverse Effect shall not include any direct or indirect effect of (1)
additional OTS and/or ODFI enforcement actions resulting from the
Bank's, Metropolitan's or any affiliate's failure to timely fulfill any
requirement of the July 2001 Supervisory Agreements and/or the
Directive, or requiring further action by the Bank, Metropolitan or any
affiliate with respect to the matters subject of the Supervisory
Agreement or Directive; (2) Metropolitan's deferral of trust preferred
securities distributions, (3) any event of default under any debt
obligations of Metropolitan, (4) the reduction of the carrying value of
Metropolitan's corporate headquarters required pursuant to GAAP or the
sale of Metropolitan's corporate headquarters with the consent of Sky;
(5) the effects of changes in interest rates; and (6) any further
impairment, deterioration and/or required change in valuation of the
following assets:
B-1
EXHIBIT C
PEER GROUP COMMERCIAL FINANCIAL INSTITUTIONS FOR
INDEX PURSUANT TO SECTION 8.01(E)
Holding Company Weighting
--------------- ---------
AMCORE Financial, Inc. 1.44%
Associated Banc-Corp. 4.42%
Charter One Financial, Inc. 13.50%
Citizens Banking Corporation 2.61%
Commerce Bancshares, Inc. 3.81%
Community First Bankshares, Inc. 2.31%
First Commonwealth Financial Corporation 3.43%
First Midwest Bancorp, Inc. 2.81%
FirstMerit Corporation 4.96%
Xxxxxx Financial Corporation 6.03%
Huntington Bancshares Incorporated 14.19%
M&T Bank Corporation 5.38%
NBT Bancorp, Inc. 1.94%
North Fork Bancorporation 9.58%
Old National Bancorp 3.57%
Park National Corporation .81%
Provident Financial Group, Inc. 2.84%
Republic Bancorp Inc. 3.11%
S&T Bancorp, Inc. 1.56%
Susquehanna Bancshares, Inc. 2.30%
TCF Financial Corporation 4.38%
UMB Financial Corporation 1.29%
United Bankshares, Inc. 2.49%
WesBanco, Inc. 1.23%
-----
TOTAL 100.00%
C-1
