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Exhibit 2
AGREEMENT AND PLAN OF MERGER
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THIS AGREEMENT AND PLAN OF MERGER ("Agreement") is entered into as of
the 3rd day of December, 1997, by and between CITIZENS BANCSHARES, INC.
("Bancshares"), a corporation organized and existing under the laws of the State
of Ohio and registered as a bank holding company under the Bank Holding Company
Act of 1956, as amended (the "BHCA"), and CENTURY FINANCIAL CORPORATION
("Century"), a corporation organized and existing under the laws of the
Commonwealth of Pennsylvania and registered as a bank holding company under the
BHCA.
NOW THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties hereto agree as follows:
PLAN OF AFFILIATION
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Pursuant to this Agreement, Bancshares and Century have agreed to a
plan of affiliation intended to result in a tax-free plan of reorganization
pursuant to Section 368(a) of the Internal Revenue Code of 1986, as amended (the
"Code"). Upon consummation of the transactions contemplated by this Agreement,
at the Effective Time (as hereinafter defined), Century will be merged with and
into Bancshares pursuant to the terms and conditions set forth herein (the
"Merger"). Upon consummation of the Merger, the separate existence of Century
shall cease and Bancshares shall continue as the surviving corporation.
ARTICLE I
THE MERGER; STATUS AND CONVERSION OF SECURITIES;
EXCHANGE OF CERTIFICATES
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Section 1.1. EFFECTIVE TIME. As soon as practicable after each of the
conditions set forth in Article VIII of this Agreement have been satisfied or
waived, Bancshares will file or cause to be filed a certificate of merger with
the Secretary of State of the State of Ohio and Century shall file or cause to
be filed articles of merger with the Department of State of the
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Commonwealth of Pennsylvania, which shall in each case be in the form
required by and executed in accordance with applicable laws and regulations. The
Merger shall become effective at the time of the later of such filings (the
"Effective Time").
Section 1.2. CONVERSION OF CENTURY COMMON SHARES INTO BANCSHARES COMMON
SHARES.
(a) At the Effective Time, each issued and outstanding share of Century
common stock, par value $.835 per share ("Century Common Shares"), other than
treasury shares and Century Common Shares as to which dissenters' rights have
been exercised (collectively, "Excluded Stock"), thereupon and without further
action shall be converted into .425 Bancshares common shares, without par value
("Bancshares Common Shares"), subject to adjustment as set forth below (the
"Exchange Ratio"):
(i) If the Average NMS Closing Price (as defined below) is greater
than $67.50, then each outstanding Century Common Share will
be converted into that number of Bancshares Common Shares that
results from dividing $28.70 by the Average NMS Closing Price;
provided, however, that if prior to the effective time of the
Merger, Bancshares publicly announces that it has agreed to a
transaction in which control of Bancshares will be acquired by
another company, then in no event will the exchange ratio be
less than .3976; or
(ii) If the Average NMS Closing Price is less than $56.50, but
greater than or equal to $54.25, then each outstanding Century
Common Share will be converted into that number of Bancshares
Common Share that results from dividing $24.00 by the Average
NMS Closing Price; or
(iii) If the Average NMS Closing Price is less than $54.25, then
each outstanding Century Common Share will be converted into
.4424 Bancshares Common Shares.
The term "NMS Closing Price" shall mean the price per share of the last
sale of Bancshares Common Shares reported on the NASDAQ National Market System
at the close of the trading day by the National Association of Securities
Dealers, Inc. The term "Average NMS Closing Price" shall mean the arithmetic
mean of the NMS Closing Prices for the ten (10) trading days immediately
preceding the fifth (5th) trading day prior to the consummation of the
Affiliation.
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(b) At the Effective Time, all rights with respect to Century Common
Shares pursuant to stock options ("Century Options") granted by Century under
the Century Financial Corporation Stock Option Plan, which are outstanding at
the Effective Time, whether or not then exercisable, shall be converted into and
become rights with respect to Bancshares Common Shares, and Bancshares shall
assume each Century Option in accordance with the terms of the stock option plan
under which it was issued and the stock option agreement by which it is
evidenced. From and after the Effective Time, (i) each Century Option assumed by
Bancshares may be exercised solely for Bancshares Common Shares; (ii) the number
of shares of Bancshares Common Shares subject to each Century Option shall be
equal to the number of Century Common Shares subject to such Century Option
immediately prior to the Effective Time multiplied by the Exchange Ratio and
(iii) the per share exercise price under each such Century Option shall be
adjusted by dividing the per share exercise price under each such option by the
Exchange Ratio and rounding to the nearest cent; PROVIDED, HOWEVER, that the
terms of each Century Option shall, in accordance with its terms, be subject to
further adjustment as appropriate to reflect any stock split, stock dividend,
recapitalization or other similar transaction subsequent to the Effective Time.
It is intended that the foregoing assumption shall be undertaken in a manner
that will not constitute a "modification" as defined in Section 425 of the Code
as to any stock option which is an "incentive stock option."
(c) No certificates or scrip representing fractional Bancshares Common
Shares shall be issued upon the surrender for exchange of Century certificates,
and such fractional share interests will not entitle the owner thereof to vote
or to any rights of a shareholder of Bancshares. Notwithstanding any other
provision of this Agreement, each holder of Century Common Shares converted into
Bancshares Common Shares in the Merger who would otherwise be entitled to
receive a fraction of a Bancshares Common Share (after taking into account all
Century certificates delivered for exchange by such holder) shall receive, in
lieu thereof, cash
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(without interest) in an amount equal to such fractional part of a Bancshares
Common Share multiplied by the Average NMS Closing Price. Such purchases of
fractional interests are merely intended as a mechanism for "rounding off"
fractional shares and do not constitute separately bargained for consideration
in connection with the transactions contemplated by this Agreement.
(d) If after the date hereof and prior to the Effective Time,
Bancshares or Century shall declare a stock dividend or make distributions upon
or subdivide, split-up, reclassify, or combine its common stock or preferred
stock or declare a dividend or make a distribution of its common stock or
preferred stock in any security convertible into or exchangeable for its common
stock or preferred stock, then the Exchange Ratio shall be appropriately
adjusted. Nothing contained in this Section 1.2(d) shall be deemed to permit any
action which is otherwise prohibited by this Agreement.
Section 1.3. EXCHANGE OF CERTIFICATES. After the Effective Time, each
holder of an outstanding certificate or certificates for Century Common Shares
converted to Bancshares Common Shares shall be entitled to receive a certificate
or certificates representing the number of whole Bancshares Common Shares into
which such holder's Century Common Shares shall have been converted and, if
applicable, a cash payment in lieu of any fractional share determined in
accordance with this Agreement. In order to effect such surrender and exchange,
each such holder of Century Common Shares shall surrender the outstanding
certificate(s) therefor to Bancshares' designated exchange agent (the "Exchange
Agent"). As soon as reasonably practicable after the Effective Time, Bancshares
shall mail, or cause to be mailed, to each holder of record of Century Common
Shares (i) notice that the Merger has been consummated and instructions for
effecting the surrender of their Century certificates in exchange for
certificates representing Bancshares common shares and (ii) a letter of
transmittal which may be used to surrender Century certificates to the Exchange
Agent. Upon surrender of a Century certificate(s) for cancellation to the
Exchange Agent, together with a properly completed and duly executed
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letter of transmittal and such other documents as may reasonably be requested,
the holder of such Century certificate shall be entitled to receive, and the
Exchange Agent shall promptly deliver as soon as reasonably practicable, in
exchange therefor a certificate representing that number of whole of Bancshares
Common Shares which such holder has the right to receive in respect of the
Century certificate(s) surrendered pursuant hereto (after taking into account
all Century Common Shares then held by such holder), and the Century
certificate(s) so surrendered shall forthwith be canceled. In the event of a
lost certificate, the Century shareholder shall provide, in lieu of the lost
certificate, (i) a request for a replacement certificate(s); (ii) an indemnity
agreement and (iii) other reasonable items (including an affidavit and a surety
bond) requested by Century in accordance with Article VI, Section 6.02 of
Century's By-Laws. Pending such surrender and exchange, such holder's
certificate(s) for Century Common Shares shall be deemed, for all corporate
purposes (other than as set forth in Section 1.4 of this Agreement), to evidence
the number of whole Bancshares Common Shares into which such Century Common
Shares shall have been converted pursuant to the Merger. The Exchange Agent
shall, upon receipt of the duly endorsed Century certificate or certificate with
a duly endorsed separate assignment, issue the Bancshares' Common Shares
certificate to the surrendering Century certificate holder, together with any
cash payment in lieu of fractional shares, as applicable. In the event of a
transfer of ownership of Century Common Shares that are not registered in the
transfer records of Century, a certificate representing the proper number of
Bancshares Common Shares may be issued to a transferee if the Century
certificate representing such Century Common Shares is presented to the Exchange
Agent, accompanied by all documents required by Bancshares to evidence and
effect such transfer and by evidence that any applicable stock transfer taxes
have been paid.
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Section 1.4. PAYMENT OF DIVIDENDS. Unless and until any such
outstanding certificate(s) for Century Common Shares shall be so surrendered, no
dividend (cash or stock) payable to holders of record of Bancshares Common
Shares as of any date subsequent to the Effective Time shall be paid to the
holder of such outstanding certificate(s). Upon the surrender of the Century
Common Share certificate(s), Bancshares shall pay to the record holder of
Bancshares Common Shares issued in exchange therefor, the amount of dividends,
if any, but without interest, that have theretofore become payable to such
record holder.
Section 1.5. EFFECTS OF THE MERGER. At the Effective Time:
(a) Century shall be merged with and into Bancshares and the separate
existence of Century shall cease and Bancshares shall be the "Surviving
Corporation";
(b) the Articles of Incorporation of Bancshares as in effect
immediately prior to the Effective Time shall be the Articles of Incorporation
of the Surviving Corporation;
(c) the Regulations of Bancshares as in effect immediately prior to the
Effective Time (as amended as provided for in subsection (iv) below and to
reflect such other amendments thereto as may be contemplated by this Agreement)
shall be the Regulations of the Surviving Corporation; and
(d) the maximum allowable number of directors of the Surviving
Corporation, as specified in the Regulations of the Surviving Corporation, shall
be changed so as to permit the election of those persons listed in Section 4.9
hereof at the Effective Time.
(e) At and after the Effective Time, the Merger will have the effects
set forth in Section 1701.82 of the Ohio Revised Code and Section 1929 of the
Pennsylvania Business Corporation Law of 1988, as amended, including that the
Surviving Corporation will be responsible for all obligations of Century.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES BY BANCSHARES
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Bancshares hereby represents and warrants to Century that, with respect
to Bancshares and The Citizens Banking Company, as applicable, except to the
extent set forth in the Disclosure Schedules delivered to Century at the signing
of this Agreement, which are attached hereto and made a part hereof, the
following are true and correct on the date of this Agreement and shall be true
and correct on the Closing Date (as hereinafter defined):
Section 2.1. DUE ORGANIZATION AND GOOD STANDING. Bancshares is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Ohio and is registered as a bank holding company under the
BHCA and has full corporate authority and power to carry on its business as it
is now being conducted. The Citizens Banking Company ("Citizens") is a
corporation duly organized, validly existing, and in good standing as a state
banking association under the banking laws of the State of Ohio and is duly
authorized to conduct the banking business in which it is engaged.
Section 2.2. AUTHORITY FOR TRANSACTION. The execution and performance
of this Agreement by Bancshares and its delivery to Century have been duly
authorized by all requisite corporate action , other than approval by
Bancshares' shareholders. This Agreement is valid and binding upon Bancshares
and enforceable against Bancshares in accordance with its terms.
Section 2.3. BANCSHARES COMMON SHARES TO BE ISSUED. The Bancshares
Common Shares to be issued to Century shareholders pursuant to this Agreement,
when so issued, will have been duly authorized and validly issued by Bancshares
and will be fully paid and nonassessable.
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Section 2.4. BANCSHARES COMMON SHARES OUTSTANDING.
(a) STOCK. The authorized capital stock of Bancshares consists
of (i) 12,000,000 Bancshares Common Shares, without par value, of which, as of
the date of this Agreement 5,899,790 shares are issued and outstanding and 2,250
shares are held in the treasury and (ii) 200,000 serial preferred shares, par
value $10.00 per share, none of which are issued and outstanding and none of
which are held in the treasury. Each outstanding Bancshares Common Share is duly
authorized, validly issued, fully paid and nonassessable.
(b) OPTIONS AND OTHER SECURITIES. Except as set forth in
Schedule 2.4(b) hereto, no options, warrants or other rights to purchase,
agreements or other obligations to issue, or other rights to convert any
obligation into any shares of Bancshares Common Shares have been authorized,
granted or entered into by Bancshares. Other than as set forth in Section
2.4(a), there are no Bancshares debt or equity securities authorized or
outstanding.
Section 2.5. BOOKS AND RECORDS. The books of account, minute books,
stock record books, and other records of Bancshares, all of which have been made
available to Century, are complete and correct in all material respects and have
been maintained in accordance with sound business practices and the requirements
of Section 13(b)(2) of the Securities Exchange Act of 1934, as amended,
including the maintenance of an adequate system of internal controls. The minute
books of Bancshares contain accurate and complete records of all meetings held
of, and corporate action taken by, the shareholders, the Board of Directors, and
committees of the Board of Directors of Bancshares, and no meeting of any such
shareholders, Board of Directors, or committee has been held for which minutes
have not been prepared and are not contained in such minute books (except, as of
the date hereof, for the minutes of the Bancshares Board of Directors held on
November 19, 1997 to approve the execution and delivery of this Agreement, which
minutes have not yet been prepared).
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Section 2.6. FINANCIAL STATEMENTS; NO MATERIAL ADVERSE CHANGE.
Bancshares has furnished to Century (a) consolidated balance sheets of
Bancshares and its subsidiaries as of December 31, 1995 and 1996, respectively,
and consolidated statements of income, consolidated statements of cash flows and
consolidated statements of changes in shareholders' equity for the years ended
December 31, 1994, 1995 and 1996, respectively, all as certified by Xxxxx,
Xxxxxx and Company LLP, Bancshares' independent auditors, and (b) unaudited
consolidated balance sheets and income statements of Bancshares and its
subsidiaries for the periods ended March 31, 1997, June 30, 1997 and September
30, 1997. The aforesaid financial statements have been prepared in conformity
with generally accepted accounting principles applied on a consistent basis and
present fairly the consolidated financial position of Bancshares as of the dates
thereof and for the periods covered thereby, except in the case of the interim
financial statements, normal year-end adjustments and the absence of notes
thereto. Since the date of the 1996 consolidated balance sheet (the "Bancshares
Balance Sheet"), there has not been any material adverse change in the financial
condition, results of operations, assets, or business of Bancshares and its
subsidiaries taken as a whole.
2.7. TITLE TO PROPERTIES; ENCUMBRANCES. A complete and accurate list of
all real property, leaseholds, or other interests therein other than as a
mortgagee or secured party owned by Bancshares and Citizens has been made
available to Century. Bancshares and Citizens have made available to Century
copies of the deeds and other instruments (as recorded) by which Bancshares and
Citizens acquired such real property and interests, and copies of all title
insurance policies, opinions, abstracts, and surveys in the possession of
Bancshares and Citizens and relating to such property or interests. Bancshares
and Citizens, respectively, own (with good and marketable title in the case of
real property, subject only to the matters permitted by the following sentence)
all the properties and assets (whether real, personal, or mixed and whether
tangible or intangible) that they purport to own located in the facilities owned
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operated by Bancshares or Citizens or reflected as owned in the books and
records of Bancshares, including all of the properties and assets reflected in
the Bancshares Balance Sheet (except for assets held under capitalized leases
disclosed or not required to be disclosed and personal property sold since the
Bancshares Balance Sheet, as the case may be, in the ordinary course of
business), and all of the properties and assets purchased or otherwise acquired
by Bancshares and Citizens since the Bancshares Balance Sheet. Each property and
asset reflected on the Bancshares Balance Sheet having a fair market value of at
least $100,000 is free and clear of all encumbrances and is not, in the case of
real property, subject to any rights of way, building use restrictions,
exceptions, variances, reservations, or limitations of any nature except, with
respect to all such properties and assets, (a) mortgages or security interests
shown on the Bancshares Balance Sheet as securing specified liabilities or
obligations, with respect to which no default (or event that, with notice or
lapse of time or both, would constitute a default) exists, (b) mortgages or
security interests incurred in connection with the purchase of property or
assets (such mortgages and security interests being limited to the property or
assets so acquired), with respect to which no default (or event that, with
notice or lapse of time or both, would constitute a default) exists, (c) liens
for current taxes not yet due, and (d) with respect to real property, (i) minor
imperfections of title, if any, none of which is substantial in amount,
materially detracts from the value or impairs the use of the property subject
thereto, or impairs the operations of Bancshares or Citizens, (ii) rights of
way, easements, building use restrictions, exceptions, variances, reservations
and limitations that are a matter of public record; and (iii) zoning laws and
other land use restrictions that do not impair the present or anticipated use of
the property subject thereto. All buildings owned by Bancshares and Citizens lie
wholly within the boundaries of the real property owned by Bancshares and do not
encroach upon the property of, or otherwise conflict with the property rights
of, any other third party.
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Section 2.8. LOANS AND INVESTMENTS . All loans and leases made or
purchased by Bancshares and its financial institution subsidiaries that are
reflected on the Bancshares Balance Sheet or on the accounting records of
Bancshares as of the Closing Date (collectively, the "Loans") represent or will
represent valid obligations arising from loans actually made or purchased by
Bancshares and its financial institution subsidiaries in the ordinary course of
business and, to Bancshares' Knowledge, no loan with a principal balance in
excess of $50,000 is subject to any defense or counterclaim. Unless paid prior
to the Closing Date, the Loans, on an aggregate basis, are collectible net of
the aggregate reserves shown on the Bancshares Balance Sheet of Bancshares as of
its date and the Closing Date, as applicable (which reserves are adequate and
calculated in a manner consistent with past practice.) There is no contest or
claim under any Loan relating to the amount or validity of such Loan which Loans
are in the aggregate material to the business or financial condition of
Bancshares. Except as set forth in Schedule 2.8, there are no loans of
Bancshares and its financial institution subsidiaries, the present principal
balance of which is in excess of $50,000, that have been classified orally or in
writing by internal loan review personnel as "Other Loans Specifically
Mentioned," "Substandard," "Doubtful," or "Loss," as of December 1, 1997. Except
for pledges to secure public and trust deposits, none of the investments
reflected in the Bancshares Balance Sheet under the heading "Investment
Securities," and none of the investments made by Bancshares since December 31,
1996, is subject to any restriction, whether contractual or statutory, which
impairs the ability of Bancshares and its financial institution subsidiaries
freely to dispose of such investment at any time. Except as set forth on
Schedule 2.8, Bancshares and its financial institution subsidiaries are not
parties to any repurchase agreement. Schedule 2.8 contains a list of all
securities held by Bancshares, delineating whether they are held in the
"available for sale" category, "held to maturity" category or in a trading
account.
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Section 2.9. NO UNDISCLOSED LIABILITIES. Except as set forth in
Schedule 2.9, Bancshares and Citizens have no material liability or obligation
of any nature (whether known or unknown and whether absolute, accrued,
contingent, or otherwise) except for liabilities or obligations reflected or
reserved against in the Bancshares Balance Sheet and current liabilities
incurred in the ordinary course of business since the date thereof.
Section 2.10. ABSENCE OF CONFLICTS. To the best of Bancshares'
Knowledge, neither the execution, performance or delivery of this Agreement by
Bancshares nor the consummation of the transactions contemplated hereby will
result in a violation or breach of, or permit any third party to modify or
rescind any term or provision of, or constitute a default under, any indenture,
mortgage, deed of trust, promissory note or other contract, license or other
agreement to which Bancshares or Citizens is a party or to which any of its
respective properties is subject or will result in a breach of Bancshares'
Articles of Incorporation or Regulations, which violation, breach, modification,
rescission or default would reasonably be expected to have a material adverse
effect on Bancshares and its subsidiaries taken as a whole. Except for the Board
of Governors of the Federal Reserve System, and, if applicable the FDIC and the
office of the Comptroller of the Currency the Securities and Exchange
Commission, the Ohio Secretary of State, the Department of State of the
Commonwealth of Pennsylvania, the Pennsylvania Department of Banking, the
necessary state Blue Sky approvals (collectively the "Approvals") and the
approval of this Agreement and the Merger by Bancshares' shareholders,
Bancshares is not or will not be required to give any notice or to obtain any
consent from any third party in connection with the execution and delivery of
this Agreement or the consummation of the Merger.
Section 2.11 ABSENCE OF CERTAIN CHANGES AND EVENTS. Except as set forth
on Schedule 2.11, since the date of the Bancshares Balance Sheet, Bancshares has
conducted its business only in the ordinary course of business and there has not
been any:
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(a) change in Bancshares' authorized or issued capital stock; grant of any
stock option or right to purchase shares of capital stock of Bancshares;
issuance of any security convertible into such capital stock; grant of any
registration rights; purchase, redemption, retirement, or other
acquisition by Bancshares of any shares of any such capital stock; or
declaration or payment of any dividend or other distribution or payment in
respect of shares of capital stock;
(b) amendment to Bancshares' Articles of Incorporation or Regulations;
(c) payment or increase by Bancshares or Citizens of any bonuses, salaries, or
other compensation to any shareholder, director, or (except in the
ordinary course of business) officer or employee or entry into any
employment, severance, or similar contract with any director, officer, or
employee;
(d) adoption of, or increase in the payments to or benefits under, any profit
sharing, bonus, deferred compensation, savings, insurance, pension,
retirement, or other employee benefit plan for or with any employees of
Bancshares or Citizens;
(e) damage to or destruction or loss of any asset or property of Bancshares,
whether or not covered by insurance involving a loss in excess of $25,000;
(f) entry into, termination of, or receipt of notice of termination of (i) any
license, distributorship, dealer, sales representative, joint venture,
credit, or similar agreement, or (ii) any contract or transaction
involving a total remaining commitment by or to Bancshares of at least
$100,000;
(g) sale, lease, or other disposition of any asset or property of Bancshares
or mortgage, pledge, or imposition of any lien or other encumbrance on any
material asset or property of Bancshares, other than in the ordinary
course of business;
(h) cancellation or waiver of any claims or rights with a value to Bancshares
in excess of $100,000;
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(i) material change in the accounting methods used by Bancshares; or
(j) agreement, whether oral or written, by Bancshares to do any of the
foregoing.
Section 2.12. COMPLIANCE WITH LAWS; LICENSES. Except as set forth in
Schedule 2.12 hereof, Bancshares and Citizens are not engaged in or a party to,
(as a defendant), nor do they have any reasonable basis to anticipate, any legal
action, investigation, arbitration, or other proceeding before any court,
administrative agency, arbitrator or other forum, which either individually or
in the aggregate would have or could be reasonably expected to have a material
adverse effect on Bancshares and its subsidiaries taken as a whole. Bancshares
and Citizens have not been charged with nor to their Knowledge are they under
investigation with respect to, and Bancshares and Citizens have no basis to
anticipate any charge or investigation with respect to, any violation of any
provision of federal, state, or other applicable law or administrative
regulation (including, without limitation, the Bank Secrecy Act, the Community
Reinvestment Act and applicable consumer protection and disclosure laws, rules
and regulations) which may materially adversely affect the financial condition,
results of operations, assets, or business of Bancshares or Citizens. There is
no litigation, proceeding, or governmental investigation pending or to
Bancshares' Knowledge, threatened (or which Bancshares or Citizens has any
reasonable basis to anticipate) which relates to any of the transactions
contemplated by this Agreement. Bancshares and Citizens have responded to and
satisfied all exceptions, if any, arising out of any federal, state or other
regulatory examination. Bancshares and Citizens possess all material licenses,
franchises, permits and other governmental authorizations and all material
patents, trademarks, service marks, trade names, copyrights or rights thereto
necessary for the continued conduct of Bancshares' or Citizens' banking business
without material interference or interruption.
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Section 2.13. BROKERAGE AND FINDER'S FEES. Except for fees payable to
its financial advisor, Sandler X'Xxxxx & Partners, L.P. ("Sandler X'Xxxxx"),
Bancshares 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.
Section 2.14. ACCOUNTING MATTERS. Neither Bancshares nor, to its best
Knowledge, any of its affiliates, has through the date of this Agreement taken
or agreed to take any action that would prevent Bancshares from accounting for
the business combination contemplated by this Agreement as a "pooling of
interests".
Section 2.15. COMPLIANCE WITH SECURITIES LAWS. To the best of its
Knowledge, Bancshares is in compliance with all federal and state securities
laws and regulations, including but not limited to all filing requirements,
except to the extent that additional filings will be required in connection with
the transactions contemplated by this Agreement. All information provided in
such filings is accurate and complete, in all material respects, to the extent
required by such laws and regulations.
Section 2.16. OWNERSHIP OF CENTURY COMMON SHARES. Except for
Bancshares' right to acquire shares of Century common stock pursuant to that
certain Stock Option Agreement dated November 17, 1997, neither Bancshares, nor
any of its affiliates or associates beneficially owns, directly or indirectly,
more than 4.9% of the outstanding Century Common Shares.
Section 2.17. INSURANCE OF DEPOSITS. The deposits of Citizens are
insured by the Federal Deposit Insurance Corporation in accordance with the
Federal Deposit Insurance Act ("FDIA"). Citizens has paid all assignments and
filed all reports required under the FDIA and is in compliance with all
regulatory requirements imposed in connection with the insurance of its
deposits.
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Section 2.18. AUTHORIZATION FOR THIS AGREEMENT. Other than as
contemplated in Articles VI and VII hereof, no authorization, approval or
consent of any governmental department, bureau or agency, or other public board
or authority is required for the consummation by Bancshares or Citizens of the
transactions contemplated by this Agreement.
Section 2.19. BOARD APPROVAL; SUBMISSION TO SHAREHOLDERS. The Board of
Directors of Bancshares has unanimously approved this Agreement, and will direct
that this Agreement be submitted to a vote of Bancshares shareholders at either
its 1998 annual meeting or at a special meeting of the shareholders to be called
for that purpose, all in accordance with and as required by law and in
accordance with the Articles of Incorporation and Regulations of Bancshares.
Section 2.20. MATERIAL MISSTATEMENTS OR OMISSIONS. No representation or
warranty by Bancshares or Citizens in this Agreement or any document, statement,
certificate, schedule or exhibit furnished or to be furnished to Bancshares by
or on behalf of Bancshares or Citizens pursuant hereto contains, or will when
furnished contain, any untrue statement of material fact, or omits or will then
omit to state, a material fact necessary to make the statement(s) of facts
contained therein (in light of the circumstances under which they were made),
not misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES BY CENTURY
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Century hereby represents and warrants to Bancshares that, with respect
to Century and Century National Bank Trust Company ("CNB"), as applicable,
except to the extent set forth in the Disclosure Schedules delivered to
Bancshares at the signing of this Agreement, which are attached hereto and made
a part hereof, the following are true and correct on the date of this Agreement
and shall be true and correct on the Closing Date:
Section 3.1. OUTSTANDING SECURITIES OF CENTURY.
(a) STOCK. The authorized capital stock of Century consists
solely of 8,000,000 Century Common Shares, par value $.835 per share, of which
5,082,148 shares are
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issued and outstanding and 26,661 are held in the treasury as of the date of
this Agreement. Each outstanding Century Common Share is duly authorized,
validly issued, fully paid, and nonassessable.
(b) OPTIONS AND OTHER SECURITIES. Except as set forth on
Schedule 3.1(b) hereto, no options, warrants or other rights to purchase,
agreements or other obligations to issue, or other rights to convert any
obligation into any shares of Century Common Shares have been authorized,
granted or entered into by Century. Other than as set forth in Section 3.1(a),
there are no Century debt or equity securities authorized or outstanding. Except
as set forth on Schedule 3.1(b), Century does not have, nor will it have at any
time from the execution of this Agreement through the time of Closing (as
hereinafter defined), any obligations or commitments related to the Common
Shares that may require Century to issue or change the number of its issued or
authorized Common Shares.
Section 3.2. DUE ORGANIZATION AND GOOD STANDING. Century is a
corporation duly organized, validly existing, and in good standing under the
laws of the Commonwealth of Pennsylvania and is registered as a bank holding
company under the BHCA and has full corporate authority and power to carry on
its business as it is now being conducted. CNB is a national banking association
duly organized, validly existing, and in good standing under the banking laws of
the United States and is duly authorized to conduct the banking business in
which it is engaged.
Section 3.3. AUTHORITY FOR TRANSACTION. The execution of this Agreement
and its delivery to Bancshares have been authorized by all requisite corporate
action, other than approval by Century shareholders. This Agreement is valid and
binding upon Century, and enforceable against Century in accordance with its
terms.
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Section 3.4. BOOKS AND RECORDS. The books of account, minute books,
stock record books, and other records of Century, all of which have been made
available to Bancshares, are complete and correct in all material respects and
have been maintained in accordance with sound business practices and the
requirements of Section 13(b)(2) of the Securities Exchange Act of 1934, as
amended, including the maintenance of an adequate system of internal controls.
The minute books of Century contain accurate and complete records of all
meetings held of, and corporate action taken by, the shareholders, the Board of
Directors, and committees of the Board of Directors of Century, and no meeting
of any such shareholders, Board of Directors, or committee has been held for
which minutes have not been prepared and are not contained in such minute books,
except for the minutes of the meeting of Century's Board of Directors held on
December 2, 1997 to approve this Agreement, which minutes have not yet been
prepared.
Section 3.5. ABSENCE OF CONFLICTS. To the best of Century's Knowledge,
except as set forth on Schedule 3.5 hereto, neither the execution, delivery or
performance of this Agreement by Century, nor the consummation of the
transactions contemplated hereby will result in a violation or breach of, or
permit any third party to modify or rescind any term or provision of, or
constitute a default under, any indenture, mortgage, deed of trust, promissory
note or other contract, license or other agreement to which Century or CNB is a
party or to which any of their properties are subject or will result in a breach
of Century's or CNB's Articles of Incorporation or By-Laws, which violation,
breach, modification, rescission or default would reasonably be expected to have
a material adverse effect on Century and its subsidiaries taken as a whole.
Except for the Approvals and the approval of this Agreement and the Merger by
the Century shareholders, Century and CNB are not or will not be required to
give any notice or to obtain any consent from any third party in connection with
the execution and delivery of this Agreement or the consummation of the Merger.
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Section 3.6. FINANCIAL STATEMENTS. Century has delivered to Bancshares
(a) consolidated financial statements for each of the fiscal years ended
December 31, 1993, 1994, 1995 and 1996, respectively, consisting of balance
sheets and the related statements of income and retained earnings and cash flows
for the fiscal years ended on such date, all as certified by S.R. Xxxxxxxxx
X.X., Century's independent auditors, and (b) unaudited consolidated financial
statements for the interim periods ended March 31, 1997, June 30, 1997 and
September 30, 1997, consisting of balance sheets and the related statements of
income. The aforesaid financial statements, as of the dates thereof and for the
periods covered thereby, have been prepared in conformity with generally
accepted accounting principles, consistently applied throughout the periods
indicated, and fairly present the financial position of Century as of the dates
thereof and the results of operations and cash flows for the periods indicated,
except in the case of the interim financial statements, normal year-end
adjustments and the absence of notes thereto. Since the date of the 1996
Consolidated Balance Sheet (the "Century Balance Sheet"), there has not been any
material adverse change in the financial condition, results of operations,
assets or business of Century and its subsidiaries taken as a whole.
Section 3.7. TITLE TO PROPERTIES; ENCUMBRANCES. Century has previously
delivered a complete and accurate list, contained in the Information Memorandum
and Supplemental Appendices dated October, 1997 and prepared by Xxxxxxxxx
Associates, Inc. (the "Xxxxxxxxx Information Memorandum"), of all real property,
leaseholds, or other interests therein other than as a mortgagee or secured
party owned by Century and CNB. Century and CNB have made available to
Bancshares copies of the deeds and other instruments (as recorded) by which
Century and CNB acquired such real property and interests, and copies of all
title insurance policies, opinions, abstracts, and surveys in the possession of
Century and CNB and relating to such property or interests. Century and CNB
respectively own (with good and marketable title in the case of real property,
subject only to the matters permitted by the following sentence) all
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the properties and assets (whether real, personal, or mixed and whether tangible
or intangible) that they purport to own located in the facilities owned or
operated by Century or CNB or reflected as owned in the books and records of
Century or CNB, including all of the properties and assets reflected in the
Century Balance Sheet (except for assets held under capitalized leases disclosed
in the Xxxxxxxxx Information Memorandum and personal property sold since the
Century Balance Sheet, as the case may be, in the ordinary course of business),
and all of the properties and assets purchased or otherwise acquired by Century
and CNB since the Century Balance Sheet. Each property and asset reflected on
the Century Balance Sheet having a fair market value of at least $50,000 is free
and clear of all encumbrances and is not, in the case of real property, subject
to any rights of way, building use restrictions, exceptions, variances,
reservations, or limitations of any nature except, with respect to all such
properties and assets, (a) mortgages or security interests shown on the Century
Balance Sheet as securing specified liabilities or obligations, with respect to
which no default (or event that, with notice or lapse of time or both, would
constitute a default) exists, (b) mortgages or security interests incurred in
connection with the purchase of property or assets (such mortgages and security
interests being limited to the property or assets so acquired), with respect to
which no default (or event that, with notice or lapse of time or both, would
constitute a default) exists, (c) liens for current taxes not yet due, and (d)
with respect to real property, (i) minor imperfections of title, if any, none of
which is substantial in amount, materially detracts from the value or impairs
the use of the property subject thereto, or impairs the operations of Century or
CNB, (ii) rights of way, easements, building use restrictions, exceptions,
variances, reservations and limitations that are a matter of public record, and
(iii) zoning laws and other land use restrictions that do not impair
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the present or anticipated use of the property subject thereto. All buildings
owned by Century and CNB lie wholly within the boundaries of the real property
owned by Century and CNB and do not encroach upon the property of, or otherwise
conflict with the property rights of, any other third party.
Section 3.8. CONTRACTS.
(a) Schedule 3.8(a) contains a complete and accurate list, and Century has
delivered to Bancshares true and complete copies, of:
(i) each contract (other than Loans entered into by CNB in the
ordinary course of business) that involves performance of
services by Century or CNB of an amount or value in excess of
$25,000;
(ii) each contract (other than Loans entered into by CNB in the
ordinary course of business) that involves performance of
services or delivery of goods or materials to Century or CNB
of an amount or value in excess of $25,000;
(iii) each contract that was not entered into in the ordinary course
of business and that involves expenditures or receipts of
Century or CNB in excess of $25,000;
(iv) each lease, rental or occupancy agreement, license,
installment and conditional sale agreement, and other contract
affecting the ownership of, leasing of, title to, use of, or
any leasehold or other interest in, any real or personal
property (except personal property leases and installment and
conditional sales agreements having a value per item or
aggregate payments of less than $25,000 and with terms of less
than one year);
(v) each joint venture, partnership, and other contract (however
named) involving a sharing of profits, losses, costs, or
liabilities by Century or CNB with any other person, third
party or entity;
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(vi) each contract containing covenants that in any way purport to
restrict the business activity of Century or CNB or any
affiliate of Century or CNB or limit the freedom of Century or
CNB or any affiliate of Century or CNB to engage in any line
of business or to compete with any person, third party or
entity;
(vii) each power of attorney that is currently effective and
outstanding;
(viii) each contract entered into other than in the ordinary course
of business that contains or provides for an express
undertaking by Century or CNB to be responsible for
consequential damages;
(ix) each contract for capital expenditures in excess of $25,000;
(x) each written warranty, guaranty, and/or other similar
undertaking with respect to contractual performance extended
by Century or CNB other than in the ordinary course of
business; and
(xi) each amendment, supplement, and modification (whether oral or
written) in respect of any of the foregoing.
(b) Except as set forth on 3.8(b), to Century's Knowledge, no officer,
director, agent, employee, consultant, or contractor of Century or CNB
is bound by any contract that purports to limit the ability of such
officer, director, agent, employee, consultant, or contractor to engage
in or continue any conduct, activity, or practice relating to the
business of Century or CNB.
(c) Except as set forth on Schedule 3.8(c), each contract identified or
required to be identified on Schedule 3.8(a) is in full force and
effect and is valid and enforceable in accordance with its terms.
(d) Except with respect to Loans (as defined in Section 3.10) and leases in
the ordinary course of business and except as set forth on Schedule
3.8(d):
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(i) Century and CNB are, and at all times since December 31, 1992
have been, in full compliance with all applicable terms and
requirements of each contract under which Century or CNB have
or had any obligation or liability or by which Century or CNB
or any of the assets owned or used by Century or CNB are or
were bound and the breach of which would reasonably be
expected to have a material adverse effect on Century and its
subsidiaries taken as a whole;
(ii) to Century's Knowledge, each other person, third party or
entity that has or had any obligation or liability under any
contract under which Century or CNB have or had any rights is,
and at all times since December 31, 1992 has been, in full
compliance with all applicable terms and requirements of such
contract;
(iii) to Century's Knowledge, no event has occurred or circumstance
exists that (with or without notice or lapse of time) may
contravene, conflict with, or result in a violation or breach
of, or give Century or CNB or any other person, third party or
entity the right to declare a default or exercise any remedy
under, or to accelerate the maturity or performance of, or to
cancel, terminate, or modify any contract; and
(iv) Century and CNB have not given to or received from any other
person, third party or entity, at any time since December 31,
1992, any notice or other communication (whether oral or
written) regarding any actual, alleged, possible, or potential
violation or breach of, or default under, any contract.
(e) Except with respect to Loans and leases in the ordinary course of
business, there are no renegotiations of, attempts to renegotiate, or
outstanding rights to renegotiate any material amounts paid or payable
to Century or CNB, as applicable, under current or completed contracts
with any person, third party or entity and, to the Knowledge of
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Century or CNB, no such person, third party or entity has made written
demand for such renegotiation.
(f) The contracts relating to the provision of services by Century or CNB
have been entered into in the ordinary course of business and have been
entered into without the commission of any act alone or in concert with
any other person, third party or entity, or any consideration having
been paid or promised, that is or would be in violation of any
applicable federal, state or local law, rule, regulation or statute.
Section 3.9. INSURANCE OF DEPOSITS. The deposits of CNB are insured by
the Federal Deposit Insurance Corporation in accordance with the FDIA. CNB has
paid all assessments and filed all reports required under the FDIA and is in
compliance with all regulatory requirements imposed in connection with the
insurance of its deposits.
Section 3.10. LOANS AND INVESTMENTS All loans and leases made or
purchased by Century and CNB that are reflected on the Century Balance Sheet or
on the accounting records of Century as of the Closing Date (collectively, the
"Loans") represent or will represent valid obligations arising from loans
actually made or purchased by Century and CNB that are or will be collectible in
the ordinary course of business (net of the applicable reserve for loan and
lease losses described in this Section 3.10), and, to Century's Knowledge,
except as set forth on Schedule 3.10 hereto, no loan with a principal balance in
excess of $25,000 is subject to any defense or counterclaim. The reserve for
possible loan and lease losses shown on the consolidated statement of condition
of Century and its subsidiaries as of September 30, 1997 is, and the reserves
for possible loan and lease losses on the consolidated balance sheets of Century
and its subsidiaries as of quarter ends subsequent to the date of this Agreement
will be adequate in all material respects under the requirements of generally
accepted accounting principles to provide for losses relating to the loan and
lease portfolios of Century and its subsidiaries, net of recoveries relating to
loans previously charged off, as of the respective dates of such balance
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sheets. There is no contest or claim under any Loan relating to the amount or
validity of such Loan which Loans are in the aggregate material to the business
or financial condition of Century and CNB. Except as set forth in Schedule 3.10,
there are no loans of Century and CNB, the present principal balance of which is
in excess of $25,000, that have been classified orally or in writing by internal
loan review personnel as "Other Loans Specifically Mentioned," "Substandard,"
"Doubtful," or "Loss," as of September 30, 1997. Except for pledges to secure
public and trust deposits, none of the investments reflected in the Century
Balance Sheet under the heading "Investment Securities," and none of the
investments made by Century and CNB since December 31, 1996, is subject to any
restriction, whether contractual or statutory, which impairs the ability of
Century and CNB freely to dispose of such investment at any time. Except as set
forth on Schedule 3.10, Century and CNB are not parties to any repurchase
agreement. Schedule 3.10 contains a list of all securities held by Century and
CNB as of October 31, 1997 (to be updated at Closing), delineating whether they
are held in the "available for sale" category, "held to maturity" category or in
a trading account.
Section 3.11. INSURANCE POLICIES. All premiums due on all insurance
policies (copies of which have been previously delivered to Bancshares), have
been paid, and such policies will continue to remain in force through the
Effective Time. Schedule 3.11 also contains a description of all claims in
excess of $25,000 currently pending under such insurance policies, together with
a list of all other claims in excess of $25,000 which have been filed during the
last three (3) years and a description of the disposition thereof.
Section 3.12. EMPLOYMENT CONTRACTS AND EMPLOYEE BENEFIT PLANS. A
complete list (as of November 29, 1997) of all employees of Century or CNB,
their respective dates of hire, cash compensation, compensation pursuant to
participation in each of the Plans and the amount of any indebtedness to CNB has
been delivered to Bancshares. On or before the Closing Date, Century and CNB
shall fully accrue for (in accordance with generally accepted accounting
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principles) all amounts payable under any of the Plans. Century and CNB has also
delivered to Bancshares a list of all employees who are currently entitled to
perquisites (including, but not limited to, automobiles and club memberships) as
well as a brief description of each such perquisite. Since the date of such
list, no employment contract or Plan has been instituted, agreed to, or changed
by Century or CNB, nor has there been any increase in the compensation payable
or to become payable by Century or CNB to any employee, whose total compensation
for services rendered currently exceeds $15,000 annually.
Section 3.13. COMPLIANCE OF EMPLOYEE BENEFIT PLANS WITH ERISA AND
INTERNAL REVENUE CODE.
(a) As used in this Section 3.13, the following terms have the meanings set
forth below.
"Company Other Benefit Obligation" means an Other Benefit Obligation
owed, adopted, or followed by Century or an ERISA Affiliate of Century.
"Company Plan" means all Plans of which Century or an ERISA Affiliate
of Century is or was a Plan Sponsor, or to which Century or an ERISA Affiliate
of Century otherwise contributes or has contributed, or in which Century or an
ERISA Affiliate of Century otherwise participates or has participated. All
references to Plans are to Company Plans unless the context requires otherwise.
"Company VEBA" means a VEBA whose members include employees of Century
or any ERISA Affiliate of Century.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and regulations and rules revised pursuant to such Act.
"ERISA Affiliate" means, with respect to Century, any trade or business
(whether or not incorporated) that is part of the same controlled group, or
under common control with, or part of an affiliated service group that includes
Century within the meaning of IRC Section 414 and or IRC Section 4001(a)(14).
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"Multiemployer Plan" has the meaning given in ERISA Sections 3(37)(A)
and 4001(a)(3).
"Other Benefit Obligations" means all obligations, arrangements, or
customary practices, whether or not legally enforceable, to provide benefits,
other than salary, as compensation for services rendered, to present or former
officers, directors, employees, or agents, other than obligations, arrangements,
and practices that are Plans. Other Benefit Obligations include consulting
agreements under which the compensation paid does not depend upon the amount of
service rendered, sabbatical policies, severance payment policies, and fringe
benefits within the meaning of IRC Section 132.
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
thereto.
"Pension Plan" has the meaning given in ERISA Section 3(2)(A).
"Plan" has the meaning given in ERISA Section 3(3).
"Plan Sponsor" has the meaning given in ERISA Section 3(16)(B).
"Qualified Plan" means any Plan that meets or purports to meet the
requirements of IRC Section 401(a).
"Title IV Plans" means all Pension Plans that are subject to Title IV
of ERISA, 29 U.S.C. Section 1301 et seq., other than Multiemployer Plans.
"VEBA" means a voluntary employees' beneficiary association under IRC
Section 501(c)(9).
"Welfare Plan" has the meaning given in ERISA Section 3(1).
(b) (i) Schedule 3.13(b)(i) contains a complete and accurate list of
all Company Plans, Company Other Benefit Obligations, and
Company VEBAs existing on the date of this Agreement, and
identifies as such all Company Plans that are (A) defined
benefit Pension Plans, (B) Qualified Plans, (C) Title IV
Plans, or (D) Multiemployer Plans.
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(ii) Schedule 3.13(b)(ii) contains a complete and accurate list of
(A) all ERISA Affiliates of Century, and (B) all Plans of
which any such ERISA Affiliate is or was a Plan Sponsor, in
which any such ERISA Affiliate participates or has
participated, or to which any such ERISA Affiliate contributes
or has contributed.
(iii) Schedule 3.13(b)(iii) sets forth, for each Multiemployer Plan,
as of its last valuation date, the amount of potential
withdrawal liability of Century or CNB and the Century's ERISA
Affiliates, calculated according to information made available
pursuant to ERISA Section 4221(e).
(iv) Schedule 3.13(b)(iv) sets forth a calculation of the liability
of Century for post-retirement benefits other than pensions,
made in accordance with Financial Accounting Statement 106 of
the Financial Accounting Standards Board, regardless of
whether Century is required by this Statement to disclose such
information.
(v) Schedule 3.13(b)(v) sets forth the financial cost of all
obligations owed under any Company Plan or Company Other
Benefit Obligation that is not subject to the disclosure and
reporting requirements of ERISA.
(c) Century has delivered to Bancshares, or will deliver to Bancshares
within ten days of the date of this Agreement:
(i) all documents that set forth the terms of each Company Plan,
Company Other Benefit Obligation, or Company VEBA and of any
related trust, including (A) all plan descriptions and summary
plan descriptions of Company Plans for which Century or any
ERISA Affiliate of Century is required to prepare, file, and
distribute, and (B) all summaries and descriptions furnished
to participants and beneficiaries regarding Company Plans,
Company Other Benefit Obligations, and
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Company VEBAs for which a plan description or summary plan
description is not required;
(ii) all personnel, payroll, and employment manuals and policies;
(iii) all collective bargaining agreements pursuant to which
contributions have been made or obligations incurred
(including both pension and welfare benefits) by Century and
the ERISA Affiliates of Century, and all collective bargaining
agreements pursuant to which contributions are being made or
obligations are owed by such entities;
(iv) a written description of any Company Plan or Company Other
Benefit Obligation that is not otherwise in writing;
(v) all registration statements filed with the SEC with respect to
any Company Plan and Company Other Benefit Obligation;
(vi) all insurance policies purchased by or to provide benefits
under any Company Plan and Company Other Benefit Obligation;
(vii) all contracts with third party administrators, actuaries,
investment managers, consultants, and other independent
contractors that relate to any Company Plan, Company Other
Benefit Obligation, or Company VEBA;
(viii) all reports submitted within the four years preceding the date
of this Agreement by third party administrators, actuaries,
investment managers, consultants, or other independent
contractors with respect to any Company Plan, Company Other
Benefit Obligation, or Company VEBA;
(ix) copies of all forms of notifications to employees of their
rights under ERISA Section 601 et seq. and IRC Section 4980B;
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(x) the Form 5500 filed in each of the most recent six plan years
with respect to each Company Plan and Company Other Benefit
Obligation, including all schedules thereto and the opinions
of independent accountants;
(xi) copies of all forms of notices that were given by Century or
any ERISA Affiliate of Century or any Company Plan to the IRS,
the U.S. Department of Labor, the PBGC, or any participant or
beneficiary, pursuant to statute, regulation or otherwise
within the four years preceding the date of this Agreement,
including notices that are expressly mentioned elsewhere in
this Section 3.13;
(xii) copies of all forms of notices that were given by the IRS, the
PBGC, or the Department of Labor to Century, any ERISA
Affiliate of Century, or any Company Plan within the four
years preceding the date of this Agreement;
(xiii) with respect to Qualified Plans and VEBAs, the most recent
determination letter for each Plan of Century that is a
Qualified Plan and exemption in response to the filing of IRS
Form 1024 for each Company VEBA; and
(xiv) with respect to Title IV Plans, the Form PBGC-1 filed for each
of the three most recent plan years.
(d) Except as set forth in Schedule 3.13(d):
(i) Century and Century's ERISA Affiliates has performed all of
their respective obligations under all Company Plans, Company
Other Benefit Obligations, and Company VEBAs. Century has made
appropriate entries in its financial records and statements
for all obligations and liabilities under such Company Plans,
Company VEBAs, and Company Other Benefit Obligations that have
accrued but are not due.
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(ii) No statement, either written or oral, has been made by Century
to any Person with regard to any Company Plan or Company Other
Benefit Obligation that was not in accordance with the Company
Plan or Company Other Benefit Obligation and that could have
an adverse economic consequence to Century.
(iii) Century, with respect to all Company Plans, Company Other
Benefits Obligations, and Company VEBAs, is, and each Company
Plan, Company Other Benefit Obligation, and Company VEBA is,
in substantial compliance with ERISA, the IRC, and other
applicable Laws including the provisions of such Laws
expressly mentioned in this Section 3.13, and with any
applicable collective bargaining agreement.
(A) No transactions prohibited by ERISA Section 406 and
no "prohibited transaction" under IRC Section 4975(c)
have occurred with respect to any Company Plan.
(B) Century has no liability to, and no ERISA Affiliate
of Century has any liability to, the IRS with respect
to any Plan, including any liability imposed by
Chapter 43 of the IRC.
(C) Century has no liability to, and no ERISA Affiliate
of Century has any liability to, the PBGC with
respect to any Plan or has any liability under ERISA
Section 502 or Section 4071.
(D) All filings required by ERISA and the IRC as to each
Company Plan, Company VEBA, and Company Other Benefit
Obligation have been timely filed, and all notices
and disclosures to participants required by either
ERISA or the IRC have been timely provided, except
where the failure to file or provide would not have a
material adverse effect on Century.
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(E) All contributions and payments made or accrued with
respect to all Company Plans, Company Other Benefit
Obligations, and Company VEBAs are deductible under
IRC Section 162 or Section 404. No amount, or any
asset of any Company Plan or Company VEBA, is
subject to tax as unrelated business taxable income.
(iv) Each Company Plan and Company Other Benefit Obligation can be
terminated within thirty days, without payment of any
additional contribution or amount and without the vesting or
acceleration of any benefits promised by such Plan.
(v) Since December 31, 1996, there has been no establishment or
amendment of any Company Plan, Company VEBA, or Company Other
Benefit Obligation.
(vi) No event has occurred or circumstance exists that could result
in a material increase in premium costs of Company Plans and
Company Other Benefit Obligations that are insured, or a
material increase in benefit costs of such Company Plans and
Company Other Benefit Obligations that are self-insured.
(vii) Other than claims for benefits submitted by participants or
beneficiaries, no claim against, or legal proceeding
involving, any Company Plan, Company Other Benefit Obligation,
or Company VEBA is pending or, to Century's Knowledge, is
Threatened.
(viii) Each Company Plan that is a Qualified Plan of Century is
qualified in form and operation under IRC Section 401(a); each
trust for each such Qualified Plan is exempt from federal
income tax under IRC Section 501(a). Each Company VEBA is
exempt from federal income tax and qualifies under IRC Section
501(c)(9). No event has occurred or circumstance exists that
will or could give rise to disqualification or loss of
tax-exempt status of any such Qualified Plan or trust or
Company VEBA.
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(ix) With respect to each Company Plan that is a Qualified Plan,
Century and each ERISA Affiliate of Century has met the
minimum funding standard, and has made all contributions
required, under ERISA Section 302 and IRC Section 412.
(x) Century has paid all amounts due to the PBGC pursuant to ERISA
Section 4007.
(xi) Neither Century nor any ERISA Affiliate of Century has ceased
operations at any facility or has withdrawn from any Title IV
Plan or has engaged in a transaction in a manner that would
subject to any entity or the Surviving Corporation to
liability under ERISA Section 4062(e), Section 4063, or
Section 4065.
(xii) Neither Century nor any ERISA Affiliate of Century has filed a
notice of intent to terminate any Plan or has adopted any
amendment to terminate a Plan. The PBGC has not instituted
proceedings to terminate any Company Plan. No event has
occurred or circumstance exists that may constitute grounds
under ERISA Section 4042 for the termination of, or the
appointment of a trustee to administer, any Company Plan.
(xiii) No amendment has been made, or is reasonably expected to be
made, to any Plan that has required or could require the
provision of security under ERISA Section 307 or IRC Section
401(a)(29).
(xiv) No accumulated funding deficiency, whether or not waived,
exists with respect to any Company Plan; no event has occurred
or circumstance exists that may result in an accumulated
funding deficiency as of the last day of the current plan year
of any such Company Plan.
(xv) The actuarial report for each Company Plan that is a Title IV
Plan of Century and each ERISA Affiliate of Century fairly
presents the financial condition and the results of operations
of each such Title IV Plan in accordance with GAAP.
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(xvi) Since the last valuation date for each Company Plan that is a
Title IV Plan of Century and each ERISA Affiliate of Century,
no event has occurred or circumstance exists that would
increase the amount of benefits under any such Plan or that
would cause the excess of Plan assets over benefit liabilities
(as defined in ERISA Section 4001) to decrease, or the amount
by which benefit liabilities exceed assets to increase.
(xvii) No reportable event (as defined in ERISA Section 4043 and in
regulations issued thereunder) has occurred.
(xviii) Century has no Knowledge of any facts or circumstances that
may give rise to any liability of Century, any ERISA Affiliate
of Century or the Surviving Corporation to the PBGC under
Title IV of ERISA.
(xix) Neither Century nor any ERISA Affiliate of Century has ever
established, maintained, or contributed to or otherwise
participated in, or had an obligation to maintain, contribute
to, or otherwise participate in, any Multiemployer Plan.
(xx) Neither Century nor any ERISA Affiliate of Century has
withdrawn from any Multiemployer Plan with respect to which
there is any outstanding liability as of the date of this
Agreement. No event has occurred or circumstance exists that
presents a risk of the occurrence of any withdrawal from, or
the participation, termination, reorganization, or insolvency
of, any Multiemployer Plan that could result in any liability
of either Century or the Surviving Corporation to a
Multiemployer Plan.
(xxi) Neither Century nor any ERISA Affiliate of Century has
received notice from any Multiemployer Plan that it is in
reorganization or is insolvent, that increased contributions
may be required to avoid a reduction in plan benefits or the
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imposition of any excise tax, or that such Multiemployer Plan
intends to terminate or has terminated.
(xxii) No Multiemployer Plan to which Century or any ERISA Affiliate
of Century contributes or has contributed is a party to any
pending merger or asset or liability transfer or is subject
to any proceeding brought by the PBGC.
(xxiii) Except to the extent required under ERISA Section 601 et seq.
and IRC Section 4980B, Century provides no health or welfare
benefits for any retired or former employee, officer,
director, or any other person, or is obligated to provide
health or welfare benefits to any active employee, officer,
director, or any other person, following such employee's
retirement or other termination of service.
(xxiv) Century has the right to modify and terminate benefits to
retirees under the Company Plans and Company Other Benefit
Obligations with respect to both retired and active employees.
(xxv) Century has complied with the provision of ERISA Section 601
et seq. and IRC Section 4980B.
(xxvi) No payment that is owed or may become due to any director,
officer, employee, or agent of Century or subject to tax under
IRC Section 280G or Section 4999; nor will Century be required
to "gross up" or otherwise compensate any such person because
of the imposition of any excise tax on a payment to such
person.
(xxvii) The consummation of the Merger will not result in the payment,
vesting, or acceleration of any benefit under any Company Plan
or Company Other Benefit Obligation.
Section 3.14. NO UNDISCLOSED LIABILITIES. Except as set forth in
Schedule 3.14, Century and CNB have no material liability or obligation of any
nature (whether known or unknown and whether absolute, accrued, contingent, or
otherwise) except for liabilities or obligations reflected
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or reserved against in the Century Balance Sheet and current liabilities
incurred in the ordinary course of business since the date thereof.
Section 3.15. ABSENCE OF CERTAIN CHANGES AND EVENTS. Except as set
forth on Schedule 3.15, since the date of the Century Balance Sheet, each of
Century and CNB has conducted their business only in the ordinary course of
business and there has not been any:
(a) change in Century's authorized or issued capital stock; grant of any
stock option or right to purchase shares of capital stock of Century;
issuance of any security convertible into such capital stock; grant of
any registration rights; purchase, redemption, retirement, or other
acquisition by Century of any shares of any such capital stock; or
declaration or payment of any dividend or other distribution or payment
in respect of shares of capital stock;
(b) amendment to Articles of Incorporation or By-Laws of Century or CNB;
(c) any increase in the salary or bonus paid to employees of Century or
CNB, other than increases which, in the aggregate, were consistent with
the increases awarded in prior years and which, individually, were
consistent with management's reasonable evaluation of an individual's
performance and management's determination of the market level of
compensation for the individual's services; provided, however, that (i)
the aggregate salary increases shall not exceed four percent (4%) of
the aggregate payroll of CNB and (ii) aggregate bonuses shall not
exceed 4.5% of the 1997 after-tax net income of Century.
(d) adoption of, or increase in the payments to or benefits under, any
profit sharing, deferred compensation, savings, insurance, pension,
retirement, or other employee benefit plan for or with any employees of
Century or CNB;
(e) damage to or destruction or loss of any asset or property of Century or
CNB, whether or not covered by insurance involving a loss in excess of
$25,000;
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(f) entry into, termination of, or receipt of notice of termination of (i)
any license, distributorship, dealer, sales representative, joint
venture, credit, or similar agreement, or (ii) any contract or
transaction (other than Loans entered into by CNB in the ordinary
course of business) involving a total remaining commitment by or to
Century or CNB of at least $25,000;
(g) sale, lease, or other disposition of any asset or property (other than
OREO properties) of Century or CNB or mortgage, pledge, or imposition
of any lien or other encumbrance on any material asset or property of
Century or CNB, other than in the ordinary course of business;
(h) cancellation or waiver of any claims or rights with a value to Century
or CNB in excess of $25,000;
(i) material change in the accounting methods used by Century or CNB; or
(j) agreement, whether oral or written, by Century or CNB to do any of the
foregoing.
Section 3.16. TAXES.
(a) Century and CNB have filed or caused to be filed (on a timely basis
since 1992) all tax returns that are or were required to be filed by
them (either separately or as a member of a group of corporations),
pursuant to applicable federal, state and local laws. Century and CNB
(either separately or as a member of a group of corporations) has made
available to Bancshares copies of all such tax returns relating to
income or franchise taxes filed since 1992. Century and CNB have paid,
or made provision for the payment of all taxes that have or may have
become due pursuant to those tax returns or otherwise, or pursuant to
any assessment received by Century or CNB, except such taxes if any, as
are listed on Schedule 3.16 and are being contested in good faith and
as to which adequate reserves (determined in accordance with GAAP) have
been provided in the Century Balance Sheet.
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(b) The United States federal and state franchise tax returns of Century
have been audited by the IRS or relevant state tax authorities or are
closed by the applicable statute of limitations for all taxable years
through 1992. Schedule 3.16 contains a complete and accurate list of
all audits since 1992 of all such tax returns, including a reasonably
detailed description of the nature and outcome of each audit. All
deficiencies proposed as a result of such audits have been paid,
reserved against, settled, or, as described on Schedule 3.16, are being
contested in good faith by appropriate proceedings. Schedule 3.16
describes all adjustments to the United States federal income tax
returns filed by Century and CNB for all taxable years since 1992, and
the resulting deficiencies proposed by the IRS in excess of $5,000.
Except as described on Schedule 3.16, Century and CNB have not given or
been requested to give waivers or extensions (or is or would be subject
to a waiver or extension given by any other third party) of any statute
of limitations relating to the payment of taxes of Century or CNB or
for which Century or CNB may be liable.
(c) The charges, accruals, and reserves with respect to taxes on the books
of Century or CNB are adequate (determined in accordance with GAAP) and
are at least equal to Century's or CNB's liability for taxes. There
exists no proposed tax assessment against Century or CNB except as
disclosed in the Century's Balance Sheet or on Schedule 3.16. All taxes
that Century and CNB are or was required by applicable federal, state
or local law to withhold or collect have been duly withheld or
collected and, to the extent required, have been paid to the proper
federal, state or local governmental authority.
(d) All tax returns filed by Century and CNB are true, correct, and
complete.
Section 3.17. COMPLIANCE WITH LAWS; LICENSES. Except as set forth on
Schedule 3.17, Century and CNB are not engaged in or a party to (as a
defendant), nor do they have any reasonable basis to anticipate, any legal
action, investigation, arbitration, or other proceeding
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before any court, administrative agency, arbitrator or other forum, which
individually or in the aggregate would reasonably be expected to have a material
adverse effect on Century and its subsidiaries taken as a whole. Century and CNB
have not been charged with nor to their Knowledge are they under investigation
with respect to, and Century and CNB have no basis to anticipate any charge or
investigation with respect to, any violation of any provision of federal, state,
or other applicable law or administrative regulation (including, without
limitation, the Bank Secrecy Act, the Community Reinvestment Act and applicable
consumer protection and disclosure laws, rules and regulations) which may
materially adversely affect the financial condition, results of operations,
assets, or business of Century or CNB. There is no litigation, proceeding, or
governmental investigation pending or, to Century's Knowledge, threatened (or
which Century or CNB have any reasonable basis to anticipate) which relates to
any of the transactions contemplated by this Agreement or the Agreement of
Merger. Century and CNB have responded to and satisfied all exceptions, if any,
arising out of any federal, state or other regulatory examination. Century and
CNB possess all material licenses, franchises, permits and other governmental
authorizations and all material patents, trademarks, service marks, trade names,
copyrights or rights thereto necessary for the continued conduct of Century's
and CNB's banking business without material interference or interruption.
Section 3.18. NO BROKERAGE AND FINDER'S FEES. Except for the fees
payable to its financial advisor, Xxxxxxxxx & Associates, Inc. ("Xxxxxxxxx"),
neither Century nor CNB have 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.
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Section 3.19. AUTHORIZATION FOR THIS AGREEMENT. Other than as
contemplated in Articles VI and VII hereof, no authorization, approval, or
consent of any governmental department, bureau or agency, or other public board
or authority is required for the consummation by Century or CNB of the
transactions contemplated by this Agreement.
Section 3.20. BOARD APPROVAL; SUBMISSION TO SHAREHOLDERS. The Board of
Directors of Century has unanimously approved this Agreement, and will direct
that this Agreement be submitted to a vote of Century's shareholders at either
its 1998 annual meeting or at a special meeting of shareholders to be called for
that purpose, all in accordance with and as required by law and in accordance
with the Articles of Incorporation and By-Laws of Century.
Section 3.21. CERTAIN TRANSACTIONS. Except as set forth in Schedule
3.21, Century and CNB have no business relationships or business transactions
(other than indebtedness incurred in the ordinary course of business on credit
and other terms generally available to CNB customers which indebtedness is not
"past due"), with or to any of their Related Persons, their officers or
directors, or any of such officers' or directors' Related Persons. For the
purposes of this Section 3.21, "Related Person" shall mean, with respect to a
particular individual, (a) each other member of such individual's Family, (b)
any Person that is directly or indirectly controlled by such individual or one
or more members of such individual's Family, (c) any Person in which such
individual or members of such individual's Family hold (individually or in the
aggregate) a Material Interest, and (d) any Person with respect to which such
individual or one or more members of such individual's Family serves as a
director, officer, partner, executor, or trustee (or in a similar capacity).
With respect to a specified Person other than an individual, "Related Person"
shall mean (a) any Person that directly or indirectly controls, is directly or
indirectly controlled by, or is directly or indirectly under common control with
such specified Person, (b) any Person that holds a Material Interest in such
specified Person, (c) each Person that serves as a director, officer, partner,
executor, or trustee of such specified Person
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(or in a similar capacity), (d) any Person in which such specified Person holds
a Material Interest, (e) any Person with respect to which such specified Person
serves as a general partner or a trustee (or in a similar capacity), and (f) any
Related Person of any individual described in clause (b) or (c). For purposes of
the definition of "Related Person," (A) the "Family" of an individual includes
(i) the individual, (ii) the individual's spouse and former spouses, (iii) any
other natural person who is related to the individual or the individual's spouse
within the second degree, and (iv) any other natural person who resides with
such individual, (B) "Material Interest" means direct or indirect beneficial
ownership (as defined in Rule 13d-3 under the Securities Exchange Act of 1934,
as amended) of voting securities or other voting interests representing at least
5% of the outstanding voting power of a Person or equity securities or other
equity interests representing at least 5% of the outstanding equity securities
or equity interests in a Person, and (C) "Person" means any individual,
corporation, general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union or other entity
or governmental entity.
Section 3.22. NO VIOLATION OF ENVIRONMENTAL LAWS. The business as
currently being conducted by Century and CNB and all real property in which
Century or CNB has an interest, complies in all material respects with any
applicable law or regulation relating to air, water, or noise pollution or the
production, storage, treatment, labeling, transportation, or disposition of
wastes or hazardous or toxic substances or waste materials.
Section 3.23. ACCOUNTING MATTERS. Neither Century or CNB nor, to their
best Knowledge, any of their affiliates, have through the date of this Agreement
taken or agreed to take any action that would prevent Bancshares from accounting
for the business combination contemplated by this Agreement as a "pooling of
interests".
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Section 3.24. COMPLIANCE WITH SECURITIES LAWS. To the best of its
Knowledge, Century is in compliance with all federal and state securities laws
and regulations, including but not limited to all filing requirements, except to
the extent that additional filings will be required in connection with the
transactions contemplated by this Agreement. All information provided in such
filings is accurate and complete, in all material respects, to the extent
required by such laws and regulations.
Section 3.25. MATERIAL MISSTATEMENTS OR OMISSIONS. No representation or
warranty by Century or CNB in this Agreement or any document, statement,
certificate, schedule, or exhibit furnished or to be furnished to Bancshares by
or on behalf of Century or CNB pursuant hereto contains, or will when furnished
contain, any untrue statement of a material fact, or omits, or will then omit to
state, a material fact necessary to make the statement(s) of facts contained
therein (in light of the circumstances under which they were made), not
misleading.
ARTICLE IV
COVENANTS OF BANCSHARES
-----------------------
Bancshares covenants and agrees with Century, as follows:
Section 4.1. NO BREACHES OF REPRESENTATIONS AND WARRANTIES. Between the
date of this Agreement and the Effective Time, without the written consent of
Century, Bancshares will not do any act or suffer any omission of any nature
whatsoever which would cause any of the representations or warranties made in
Article II of this Agreement to become untrue or incorrect in any material
respect.
Section 4.2. INFORMATION REGARDING BANCSHARES. Bancshares shall furnish
to Century all information concerning Bancshares and its subsidiaries required
by applicable securities or corporation laws to be set forth in the proxy
materials required to be delivered by Century to its shareholders in connection
with this Agreement and the transactions contemplated hereby.
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Section 4.3. CORRECTION OF INFORMATION. Bancshares shall promptly
correct and supplement any information furnished under this Agreement to Century
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.
Section 4.4. CONSENTS. Bancshares shall use its best efforts to obtain
any required consents to the transactions contemplated by this Agreement.
Section 4.5. ACCESS TO INFORMATION. Between the date of this Agreement
and the Closing Date, to the extent reasonable under the circumstances, the
officers of Bancshares will confer with the representatives of Century and will
furnish to Century either orally or by means of such records, documents, and
memoranda as are reasonably available or capable of preparation (all of which
Century will be permitted to make copies of) and such other information as
Century may reasonably request. Bancshares will confer with representatives of
Xxxxxxxxx, will cooperate to the fullest extent reasonably possible with
Xxxxxxxxx, and will furnish such records, documents, memoranda and all such
other information as Xxxxxxxxx may reasonably request in order for Xxxxxxxxx to
prepare and provide a "fairness opinion".
Section 4.6. ACCOUNTING AND TAX TREATMENT. Bancshares agrees not to
take any actions subsequent to the date of this Agreement that would adversely
affect the ability of Bancshares to treat the Merger as a "pooling-of-interests"
in accordance with GAAP or the characterization of the Merger as a tax-free
reorganization under Section 368(a) of the IRC, and Bancshares 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 of Bancshares to treat the Merger as a "pooling-of-interests" for
accounting purposes or for the Merger to be characterized as a tax-free
reorganization under Section 368(a) of the IRC.
Section 4.7. NASDAQ LISTING. Bancshares will file a listing
application, or a NASDAQ Notification Form for Change in the Number of Shares
Outstanding, as required by
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NASDAQ, at the time prescribed by applicable rules and regulations. In addition,
Bancshares will use its best efforts to maintain its listing on the NASDAQ
National Stock Market.
Section 4.8. SHAREHOLDER APPROVAL. Bancshares shall take all action
necessary in accordance with applicable law and its Articles of Incorporation
and Regulations to duly call and hold a meeting of its shareholders, to be held
as promptly as practicable after the Registration Statement is declared
effective by the SEC, to consider and vote on the adoption and approval of the
Merger. The Board of Directors of Bancshares shall recommend that its
shareholders adopt and approve the Merger and shall take all lawful action
(including the solicitation from shareholders of proxies in favor of such
adoption and approval) to secure the vote or consent of shareholders required to
adopt and approve the Merger unless otherwise required by the applicable
fiduciary duties of the directors of Bancshares as determined by such Board of
Directors in good faith after consultation with and based upon advice of
independent legal counsel.
Section 4.9. POST-AFFILIATION BOARD STRUCTURE DIRECTOR NOMINEES.
(a) Bancshares shall cause the Nominating Committee of its Board
of Directors to nominate for election to Bancshares' Board of
Directors three members of Century's Board of Directors,
namely, Del X. Xxxxxxxx, Xxxxxxx X. Xxxxx, and Xxxxxx X. Xxxx,
XX and, at the Effective Time, such individuals shall have
been elected by Bancshares shareholders to serve on the Board
of Directors of Bancshares, and one of them shall have been
designated by Bancshares for membership on the Executive
Committee of the Board of Directors.
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(b) To the extent Messrs. Xxxxxxxx, Xxxxx or Tosh shall have been
nominated to serve on Bancshares' Board of Directors for terms
less than 3 years, the Bancshares' Nominating Committee shall,
upon the expiration of any such individual's term, nominate
such individual to serve for a subsequent three year term.
(c) Effective at the Effective Time, four members of Century's
Board of Directors, namely, Del X. Xxxxxxxx, Xxxxxxx X. Xxxxx,
Xxxxxx X. Xxxx, XX and Xxxxxx X. Xxxx shall have been elected
by Bancshares (as the sole shareholder of Citizens), to serve
on the Board of Directors of Citizens; provided, however, that
until the CNB Merger, such persons shall be entitled to
receive meeting (and not retainer) fees from Citizens. Messrs.
Goedeker, Homan, Tosh and Xxxx shall also continue to serve on
the Board of Directors of CNB until the CNB Merger (as defined
in Section 4.11).
(d) Effective at the Effective Time, three members of Bancshares'
Board of Directors designated by Bancshares shall have been
elected by Bancshares (as the sole shareholder of CNB) to
serve on the Board of Directors of CNB; provided, however,
that such persons shall only be entitled to receive meeting
(and not retainer) fees from CNB.
(e) From the Effective Time until the CNB Merger, the current
members of the CNB Board of Directors shall continue to serve
on the CNB Board of Directors and receive the same retainer
and meeting fees as in effect on the date of this Agreement.
Section 4.10. FORMATION OF CENTURY ADVISORY BOARD. At the Effective
Time of the CNB Merger, the members of the CNB Board of Directors who are not
also members of
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Citizens' Board of Directors shall be given the opportunity to serve on an
advisory board to Citizens - Century Division to be known as the "Century
Advisory Board".
Section 4.11. CNB MERGER WITH CITIZENS; CENTURY NAME. It is understood
and agreed that for at least a six (6) month period from the Closing Date, CNB
shall be operated as a separate banking subsidiary of Bancshares. Thereafter,
Bancshares, in its discretion shall effectuate a merger of CNB with and into
Citizens (the "CNB Merger"). Following the Closing Date, the "Century" name will
continue to be featured in all CNB signage and literature and following the CNB
Merger, Bancshares would anticipate given the notable recognition associated
with the "Century" name that it would continue to be used as appropriate in the
markets serviced by CNB.
Section 4.12. OPPORTUNITY OF EMPLOYMENT; EMPLOYEE BENEFITS. Bancshares
shall offer the existing employees of Century and CNB the opportunity to
continue as employees of CNB on the Closing Date for a period ending December
31, 1998; subject, however, to the right to terminate any such employees for
"cause". It is understood and agreed that nothing in this Section 4.12 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; provided, that employees shall have the right
to enforce the first sentence of Section 4.12 through December 31, 1998.
Prior to the CNB Merger, a committee comprised of three (3) employees
of each of CNB and Citizens will be formed to evaluate and make recommendations
to the Bancshares' Board of Directors with respect to the merger of their
respective employee benefit plans.
At the time of the CNB Merger, the Employees Retirement Plan of Century
National Bank and Trust Company, as amended and restated effective January 1,
1989 ("Merged Plan") shall be merged into the Employees Retirement Plan for
Citizens Bancshares, Inc. ("Bancshares
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Plan"). As of the date the plans are merged, Bancshares Plan shall provide
accrued benefits to all former participants in the Merged Plan that are equal to
the total of (1) and (2) below:
(1) The accrued benefits for all employment service prior to the
date the plans are merged shall equal the benefits accrued
under the Merged Plan as of the date the plans are merged.
These accrued benefits shall continue to provide (i) any early
retirement benefit or Early Retirement Type subsidy (as
defined by IRS Section 411(d)(6)) and (ii) all optional forms
of benefit provided by the Merged Plan.
(2) Benefits shall be accrued with respect to all employment
service on and after the date of the plans are merged, subject
to all of the provisions of the Bancshares Plan, including,
but not limited to, eligibility for benefits and benefit
amounts. The amount of such further accrual of benefits shall,
however, be based solely on employment service on and after
the date the Plans are merged.
Solely for purposes of determining Years of Vesting Service, the
Bancshares Plan shall recognize all years of service with Century and its
predecessors that were credited under the Merged Plan for eligibility and
vesting purposes; such service shall not, however, be recognized for purposes of
determining the accrual of benefits under paragraph (2) above.
All Century and CNB employees who become employees of Citizens or one
of Bancshares' other affiliates upon the consummation of the CNB Merger shall
have their years of service with Century and its predecessors credited for
eligibility and vesting purposes but not for accrual of benefit purposes under
all Bancshares' Employee Benefit Plans (as defined in Section 3(3) of ERISA) and
other fringe benefit programs (including vacation), except with respect to
Bancshares' ESOP Plan. Nothing in this paragraph shall be construed as limiting
Citizens' ability to amend or terminate any such Plan or program (including
vacation) prior to, coincident with or subsequent to the consummation of the CNB
merger.
ARTICLE V
COVENANTS OF CENTURY
--------------------
Century hereby covenants and agrees with Bancshares as follows:
Section 5.1. NO BREACHES OF REPRESENTATIONS AND WARRANTIES. Between the
date of this Agreement and the Effective Time, without the written consent of
Bancshares, Century will not
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do any act or suffer any omission of any nature whatsoever which would cause any
of the representations or warranties made in Article III of this Agreement to
become untrue or incorrect in any material respect.
Section 5.2. CARRY ON BUSINESS IN NORMAL MANNER. From the date of this
Agreement to the Closing Date, Century and CNB shall carry on their business in
substantially the same manner as heretofore and, without the written consent of
Bancshares, Century and CNB shall not (a) do any of the things which they
represent and warrant herein have not been done since December 31, 1996 or the
date hereof, as the case may be, except as necessary to carry out this Agreement
on the part of Century and CNB; (b) engage in any transaction which would be
inconsistent with any other representation or warranty of Century (or with
respect to CNB, as applicable) set forth herein or which would cause a breach of
any such representation or warranty if made at or immediately following such
transaction; or (c) engage in any lending activities other than in the ordinary
course of business consistent with past practice. Century shall send to
Bancshares via facsimile transmission a copy of all loan presentations made to
CNB's loan committee at the same time as such presentations are transmitted to
said committee, to enable one of Bancshares senior loan committee members to
review, comment and make reasonable recommendations to the loan committee with
respect to such loan presentations. Century and CNB shall consult with
Bancshares prior to hiring any full-time employees other than replacement
employees for positions then existing. Century will use its best efforts to keep
its (and CNB's) business organizations intact, to keep available the services of
present employees, and to preserve the goodwill of customers, suppliers, and
others having business relations with them.
Section 5.2. ACCESS TO INFORMATION. Between the date of this Agreement
and the Closing Date, to the extent reasonable under the circumstances, the
officers of Century will confer with the representatives of Bancshares and will
furnish to Bancshares either orally or by means of
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such records, documents, and memoranda as are reasonably available or capable of
preparation (all of which Bancshares will be permitted to make copies of) and
such other information as Bancshares may reasonably request. Century will confer
with the representatives of Sandler, X'Xxxxx, will cooperate to the fullest
extent reasonably possible with Sandler X'Xxxxx and will furnish such records,
documents, memoranda and all such other information as Sandler X'Xxxxx may
reasonably request in order for Sandler, X'Xxxxx to prepare and provide a
fairness opinion.
Section 5.3. CONSENTS. Century shall use its best efforts to obtain any
required consents to the transactions contemplated by this Agreement.
Section 5.4. INSURANCE COVERAGE. Century shall cause the policies of
insurance listed in the Disclosure Schedule to remain in effect between the date
of this Agreement and the Closing Date.
Section 5.5. COMPLIANCE WITH SECURITIES LAWS. Century shall cooperate
with Bancshares in doing all things necessary to comply with the state and
federal securities laws applicable to the transactions contemplated by this
Agreement.
Section 5.6. SHAREHOLDER APPROVAL. Century shall take all action
necessary in accordance with applicable law and its Articles of Incorporation
and By-Laws to duly call and hold a meeting of its shareholders, to be held as
promptly as practicable after the Registration Statement is declared effective
by the SEC, to consider and vote on the adoption and approval of the Merger. The
Board of Directors of Century shall recommend that its shareholders adopt and
approve the Merger and shall take all lawful action (including the solicitation
from shareholders of proxies in favor of such adoption and approval) to secure
the vote or consent of shareholders required to adopt and approve the Merger
unless otherwise necessary under the applicable fiduciary duties of the
directors of Century as determined by such Board of Directors in good faith
after consultation with and based upon advice of independent legal counsel.
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Section 5.7. CORRECTION OF INFORMATION. Century and CNB shall promptly
correct and supplement any information furnished under this Agreement to
Bancshares 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.
Section 5.8. OTHER OFFERS. On and after the date hereof, except with
the written consent of Bancshares, Century shall not directly or indirectly
solicit or encourage (nor shall Century permit any of its officers, directors,
employees or agents directly or indirectly to solicit or encourage), including
by way of furnishing information, any inquiries or proposals for a merger,
consolidation, share exchange or similar transaction involving Century or for
the acquisition of the shares or all or substantially all of the assets or
business of Century, or discuss with or enter into conversations with any
person, other than Century shareholders or employees, concerning any such
merger, consolidation, share exchange, acquisition or other transaction, other
than the share exchange with Bancshares', provided, that to the extent the Board
of Directors of Century determines in good faith, after consultations with
independent legal counsel that it is required by its fiduciary duties to do so,
Century may furnish to a third party, upon written request, the Xxxxxxxxx
Information Memorandum. Century will promptly notify Bancshares orally (to be
confirmed in writing as soon as practicable thereafter) of all of the relevant
details relating to any inquiries or proposals that it may receive relating to
any such matters, including actions it intends to take with respect to such
matters.
Section 5.9. DIVIDENDS. On and after the date hereof, Century shall not
declare, set aside, pay or make any dividend or other distribution or payment
(whether in cash, stock or property) with respect to, or purchase or redeem, any
shares of its capital stock other than (i) regular quarterly cash dividends each
in an amount not to exceed $.11 per share and (ii) the repurchase of Century
Common Shares by Century in the market in amounts necessary to satisfy
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its obligations under Century's Dividend Reinvestment Plan and Employee Stock
Purchase Plan. It is agreed by the parties hereto that they will cooperate to
assure that as a result of the Merger, during any quarter, there shall not be a
payment of both a Bancshares and Century dividend. The parties further agree
that if the Closing Date is at the end of a fiscal quarter, then they will
cooperate to assure that the Century shareholders receive the dividend, if any,
declared by Century rather than the dividend for that quarter, if any, declared
by Bancshares.
Section 5.10. ACCOUNTING AND TAX TREATMENT. Century agrees not to take
any actions subsequent to the date of this Agreement that would adversely affect
the ability of Century to treat the Merger as a "pooling-of-interests" in
accordance with GAAP or the characterization of the Merger as a tax-free
reorganization under Section 368(a) of the IRC, and Century 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
of Century to treat the Merger as a "pooling-of-interests" for accounting
purposes or for the Merger to be characterized as a tax-free reorganization
under Section 368(a) of the IRC.
Section 5.11. LARGE DEPOSITS. Prior to the Closing, CNB will have
provided Bancshares with a list of (i) all certificates of deposit, checking,
savings or other deposits in excess of $100,000; and (ii) all customers with
aggregate deposits in excess of $500,000.
ARTICLE VI
JOINT COVENANTS OF CENTURY, CNB AND BANCSHARES
----------------------------------------------
Section 6.1. CONFIDENTIALITY. Except for the use of information in
connection with the Registration Statement described in Section 7.1 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 Century and Bancshares 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 Securities and
Exchange Commission, this Section
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6.1 shall not apply to information included in the Registration Statement or to
be included in the official proxy/prospectus to be sent to the shareholders of
each of Century and Bancshares under Section 7.1 (individually, a
"Prospectus/Proxy Statement" and collectively, the "Prospectus/Proxy
Statements"). Century and Bancshares agree that the Information will be used
only for the purpose of completing the transactions contemplated by this
Agreement and the Agreement of Merger. Century and Bancshares agree to hold the
Information in strictest confidence and shall not use, and shall not disclose
directly or indirectly any of such Information except when, after and to the
extent such Information (i) is or becomes generally available to the public
other than through the failure of Century or Bancshares, as the case may be, to
fulfill its obligations hereunder, (ii) was already known to the party receiving
the Information on a nonconfidential basis prior to the disclosure or (iii) is
subsequently disclosed to the party receiving the Information on a
nonconfidential basis by a third party having no obligation of confidentiality
to the party disclosing the Information. It is agreed and understood that the
obligations of Century and Bancshares contained in this Section 6.1 shall
survive the Closing. In the event the transactions contemplated by this
Agreement are not consummated, Century and Bancshares agree to return all copies
of the Information provided to the other promptly.
Section 6.2. REGULATORY APPROVALS. As promptly as practicable after the
date hereof, each of Bancshares and Century shall use its best efforts,
separately and jointly with the other party, in good faith to take or cause to
be taken all such steps as shall be necessary or advisable to obtain all
consents and approvals of governmental authorities as are required by law or
otherwise to effect the Merger, including without limitation the Approvals and
shall do any and all acts and things reasonably necessary or advisable in order
to cause the Merger to be completed on the terms provided in this Agreement as
soon as reasonably practicable thereafter.
Section 6.3. ANNOUNCEMENTS. Except as may be required by law or as
otherwise contemplated herein, no party shall make any public announcements or
filing or disclosure to
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third parties of the transaction contemplated herein or the other party's
involvement therein without the prior written approval of the other party. The
restrictions contained in this Section shall not apply to disclosures made by
either party to its stockholders, suppliers or customers to the extent
appropriate to consummate the transactions contemplated by this Agreement. Each
party shall endeavor to give the other at least one (1) business day's prior
notice of announcements to the public, which notice shall be accompanied by a
copy of the text of the proposed disclosure.
ARTICLE VII
REGISTRATION OF BANCSHARES COMMON SHARES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED
--------------------------------------------
Section 7.1. REGISTRATION STATEMENT. Bancshares and Century acknowledge
that the transactions contemplated hereby are subject to the provisions of the
Securities Act of 1933, as amended (the "Act") and Rule 145 thereunder.
Bancshares agrees to prepare and file, as soon as practicable after the
execution of this Agreement, a registration statement on Form S-4 (the
"Registration Statement") under and pursuant to the provisions of the Act for
the purposes of (i) filing the Prospectus/Proxy Statements to be used by Century
and Bancshares to obtain the approval of their respective shareholders of the
transactions contemplated by this Agreement and (ii) registering the Bancshares
Common Shares to be issued in connection with the transactions contemplated
hereby. Century agrees to provide promptly to Bancshares, information concerning
the business and financial condition and affairs of Century as may be required
or appropriate for inclusion in the Registration Statement and to cause its
counsel and auditors to cooperate with Bancshares' counsel and auditors in the
preparation of such Registration Statement. Bancshares agrees to use its best
efforts to have such Registration Statement declared effective under the Act as
soon as may be practicable and each of Bancshares and Century agrees to
distribute its respective Prospectus/Proxy Statement contained in such
Registration Statement to its respective shareholders not less than twenty (20)
business days prior to the scheduled
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meeting of its shareholders that will be held to consider approval of this
Agreement. Except to the extent permitted by Rule 145(b) under the Act,
Bancshares and Century agree not to publish any communication other than the
Prospectus/Proxy Statements, in respect of this Agreement or the transactions
contemplated hereby. Any communication by either party under Rule 145(b) will be
made only upon the written approval of the other. Bancshares and Century agree
that, between the date the Registration Statement becomes effective and the
Closing Date, they will keep each other advised on a current basis of material
developments concerning their respective businesses, including any event which
would cause their respective Prospectus/Proxy Statement to contain an untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein not misleading. Bancshares shall not be required to
maintain the effectiveness of the Registration Statement for the purpose of
resale of Bancshares Common Shares by Century shareholders who may be deemed to
be affiliates of Century, as such term is defined in Rule 145 promulgated under
the Act (individually, an "Affiliate" and collectively, the "Affiliates").
Section 7.2. AFFILIATES' CERTIFICATES. Each Affiliate of Century shall
furnish to Bancshares a letter representing that such Affiliate will not sell,
assign, or transfer any of the Bancshares Common Shares received by such
Affiliate as a result of the transactions contemplated by this Agreement, except
pursuant to (a) registration under the Act or (b) a transaction permitted by
Rule 145 under the Act, or (c) a transaction in which, in the opinion of Squire,
Xxxxxxx & Xxxxxxx L.L.P. or other counsel satisfactory to Bancshares, or in
accordance with a "no action" letter from the staff of the Securities and
Exchange Commission, the Bancshares Common Shares are not required to be
registered under the Act; and in the event of sale or other disposition pursuant
to Rule 145 such Affiliate will supply reasonably satisfactory evidence of
compliance with such Rule to Bancshares. With respect to such representations,
each Affiliate shall agree to hold harmless and indemnify Bancshares and
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Bancshares' officers and directors from and against any losses, claims, damages,
expenses (including reasonable attorneys' fees), or liabilities to which
Bancshares or any officer or director of Bancshares may become subject under the
Act or otherwise as a result of the untruth, breach, or failure of such
representations. Each Affiliate shall further agree that the certificate or
certificates representing the Bancshares Common Shares issued to such Affiliate
upon the consummation of the Share Exchange may bear the following restrictive
legend:
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.
Bancshares covenants and agrees to remove the foregoing restrictive
legend from the certificate or certificates representing the Bancshares Common
Shares issued to an Affiliate and to cancel any stop order instructions with
respect thereto upon receipt of advice from its counsel that such actions are
appropriate under the then-existing circumstances.
Section 7.3. BLUE SKY REGISTRATION. Bancshares shall, to the extent
required by applicable state securities or "blue sky" laws, as promptly as
practicable after the furnishing by Century of all information regarding Century
required or desirable to be reflected therein, file with applicable state
securities or blue sky administrators, and use its best efforts to cause to
become effective or be approved, all registration statements or applications
required to be so filed with respect to the issuance of the Bancshares Common
Shares in connection with the Agreement of Merger.
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Section 7.4. SUPPLEMENTAL ASSURANCES.
(a) On the date the Registration Statement becomes effective
and on the Closing Date, Century shall deliver to Bancshares 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 Century, 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 Closing Date, Bancshares shall deliver to Century a certificate
signed by the chief executive officer and by the chief financial officer of
Bancshares 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 Century) 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.
ARTICLE VIII
CONDITIONS
----------
Section 8.1. CONDITIONS TO BANCSHARES' OBLIGATIONS. The obligation of
Bancshares to consummate the transactions contemplated by this Agreement, shall
be subject to the following conditions, except as Bancshares may waive the same
in writing:
(a) NO MATERIAL ADVERSE CHANGE. From December 31, 1996, to the
Closing Date, there shall have been no material adverse change in the financial
condition, results of operations, business, or assets of Century or CNB, and
there shall have been no occurrence or circumstances which would reasonably be
expected to result in any such material adverse change.
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(b) CONDUCT OF BUSINESS IN ORDINARY COURSE. From December 31,
1996, to the Closing Date, Century and CNB will have conducted business only in
the ordinary and usual course except for matters expressly referred to in this
Agreement or the Disclosure Schedule, matters incident to carrying out this
Agreement and such further matters as may be consented to in writing by
Bancshares.
(c) OPINION OF CENTURY'S COUNSEL. Century's counsel, Xxxxxxxx,
Ingersoll Professional Corporation, shall have delivered to Bancshares its
opinion, dated the Closing Date, to the effect that (i) Century is a bank
holding company duly registered under the BHCA and a corporation duly organized
under the laws of the Commonwealth of Pennsylvania and is in good standing under
the laws of the Commonwealth of Pennsylvania, (ii) CNB is a national banking
association duly organized under the laws of the United States and is in good
standing under the laws of the United States, (iii) this Agreement has been duly
executed by Century and constitutes a binding obligation of Century, enforceable
in accordance with its terms against Century, (iv) assuming that the merger is
duly authorized by Bancshares and its shareholders and that Bancshares has taken
all action required to be taken by it prior to the Effective Time, upon the
filing of the Certificate of Merger with the Secretary of State of Ohio and the
Articles of Merger with the Department of State of the Commonwealth of
Pennsylvania in accordance with Section 1.1., the Merger will become effective
under Pennsylvania law.
(d) ACCURACY OF REPRESENTATIONS AND WARRANTIES AND COMPLIANCE
WITH COVENANTS ON CLOSING DATE. The representations and warranties made herein
by Century and CNB in Article III hereof shall be correct in all material
respects on and as of the Closing Date, with the same force and effect as though
such representations and warranties were being made on and as of the Closing
Date (except for representations and warranties made as of an earlier date,
which representations and warranties shall have been correct in all material
respects as of such earlier date), and Century and CNB shall have fully complied
with all the terms and
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conditions hereof, and Century and CNB shall have delivered to Bancshares a
certificate to that effect, which certificate shall be signed by the President
of each of Century and CNB and shall be in a form reasonably satisfactory to
Bancshares.
(e) AFFILIATES' CERTIFICATES. Bancshares shall have received
from each Affiliate a certificate in the form specified in Section 7.2 hereof.
(f) OFFICERS' CERTIFICATES REGARDING REGISTRATION STATEMENT.
Bancshares shall have received from Century the officers' certificates required
pursuant to Section 7.4(a) hereof.
(g) FAIRNESS OPINION. The receipt of a fairness opinion from
Sandler X'Xxxxx dated as of a date reasonably proximate to the Effective Date of
the Registration Statement stating that as of the date of such opinion, the
transactions contemplated by this Agreement fair to the Bancshares shareholders
from a financial point of view.
(h) DISSENTERS' RIGHTS. Holders of Century Common Shares that
shall have taken such actions as are required by the Pennsylvania Business
Corporation Law of 1988, as amended, to assert dissenters' rights, combined with
fractional shares for which cash is paid and any shares that are deemed to be in
contemplation of the combination when determining whether the
pooling-of-interests method of accounting is appropriate under GAAP, may not
exceed ten percent (10%) of the issued and outstanding Century Common Shares.
(i) NO DEFAULT. There shall have occurred no event
constituting a default under any material indenture, agreement, note, mortgage,
guaranty or other writing which evidences or relates to any loan of money to, or
indebtedness for money borrowed by Century or CNB which materially adversely
affects Century's or CNB's financial condition.
(j) ACCOUNTING TREATMENT. Bancshares shall have received from
Xxxxx, Xxxxxx and Company LLP, a letter dated the Closing Date, in substance
reasonably acceptable to Bancshares, stating its opinion that based upon the
information furnished that the transactions contemplated by this Agreement
should be accounted for by Bancshares as a "pooling of
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interests" for financial statement reporting purposes and that such accounting
treatment is in accordance with generally accepted accounting principles.
(k) EMPLOYMENT AGREEMENTS. Each of Xxxxxx X. Bezinger, Xxxxx
X. Xxxxxxxxx and C. Xxxxx Xxxxxx shall have entered into employment agreements
with CNB in the respective forms attached hereto as Exhibits A, B and C to this
Agreement, which agreements shall be assumed by Bancshares on the Closing Date,
and Xxxxxx X. Xxxx, XX, shall have entered into an Employment Agreement in the
form attached hereto as Exhibit D, which shall go into effect at the Effective
Time.
Section 8.2. CONDITIONS TO CENTURY'S OBLIGATIONS. The obligation of
Century to consummate the transactions contemplated by this Agreement shall be
subject to the following conditions, except as Century may waive the same in
writing:
(a) NO MATERIAL ADVERSE CHANGE. From December 31, 1996,
through the Closing Date, there shall have been no material adverse change in
the financial condition, results of operation, business or assets of Bancshares
and there shall have been no occurrence or circumstance (whether arising
heretofore or hereafter) which might reasonably be expected to result in any
such material adverse change.
(b) OPINION OF BANCSHARES' COUNSEL. Bancshares' general
counsel, Xxxx Xxxx, Esq., shall have delivered to Century an opinion dated the
Closing Date to the effect that (i) Bancshares is a corporation duly organized
and in good standing under the State of Ohio, (ii) Citizens is a corporation
duly organized and in good standing as a state banking association under the
laws of the State of Ohio, (iii) this Agreement has been duly executed by
Bancshares and constitutes the binding obligation of Bancshares, enforceable
into in accordance with its terms against Bancshares, (iv) assuming that the
Merger is duly authorized by Century and its shareholders and that Century has
taken all action required to be taken by it prior to the Effective Time, upon
the filing of the Certificate of Merger with the Secretary of State of the
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State of Ohio and the Articles of Merger with the Department of State and the
Commonwealth of Pennsylvania in accordance with Section 1.1, the Merger will
become effective and each Century Common Share outstanding will be converted
into Bancshares Common Shares in accordance with Section 1.2 hereof, and (v) all
of the Bancshares Common Shares to be issued to the shareholders of Century have
been validly authorized.
(c) ACCURACY OF REPRESENTATIONS AND WARRANTIES AND COMPLIANCE
WITH COVENANTS ON CLOSING DATE. The representations and warranties made herein
by Bancshares shall be correct in all material respects on and as of the Closing
Date, with the same force and effect as though such representations and
warranties were being made on and as of the Closing Date (provided, however,
that nothing herein contained shall be construed to place any limitations upon
the issuance of additional shares or other securities of Bancshares) and
Bancshares shall have fully complied with all the terms and conditions hereof,
and Bancshares shall have delivered to Century a certificate to that effect,
which certificate shall be signed by the President of Bancshares and shall be in
a form reasonably satisfactory to Century.
(d) OFFICERS' CERTIFICATES REGARDING REGISTRATION STATEMENT.
Bancshares shall have furnished to Century the officers' certificates required
pursuant to Section 7.4(b) hereof.
(e) FAIRNESS OPINION. The receipt of a fairness opinion from
Xxxxxxxxx dated as of a date reasonably proximate to the Effective Date of the
Registration Statement stating that as of the date of such opinion, the
transaction contemplated by this Agreement is fair to the Century shareholders
from a financial point of view.
(f) TAX OPINION. Century shall have obtained an opinion of its
counsel, reasonably satisfactory in form and substance to it and dated as of
Closing, to the effect that (i) the Merger will constitute a tax-free
reorganization within the meaning of Section 368(a)(1)(A) of the IRC, (ii) no
gain or loss will be recognized by Century as a consequence of the Merger,
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and (iii) no gain or loss will be recognized by the shareholders of Century
pursuant to the terms of the Merger (except for the effect of any cash received
pursuant to dissenters' rights.)
(g) ACCOUNTING TREATMENT. Bancshares shall have received from
Xxxxx, Xxxxxx and Company LLP, a letter dated the Closing Date, in substance
reasonably acceptable to Bancshares, stating its opinion that based upon the
information furnished that the transactions contemplated by this Agreement
should be accounted for by Bancshares as a "pooling of interests" for financial
statement reporting purposes and that such accounting treatment is in accordance
with generally accepted accounting principles.
Section 8.3. CONDITIONS TO THE OBLIGATIONS OF ALL PARTIES. The
respective obligations of Bancshares, Century and CNB to consummate the
transactions contemplated by this Agreement and the Agreement of Merger shall be
subject to the following conditions, except as any of them may waive the same in
writing:
(a) ORDERS, INJUNCTIONS, ETC. No temporary outstanding order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Merger shall be in effect, nor shall any proceeding seeking
any of the foregoing be pending.
(b) NO ADVERSE GOVERNMENTAL ACTION. On or before the Closing
Date, no action shall have been taken or threatened by any governmental entity
which makes consummation of the Merger illegal.
(c) COMMON SHARE REGISTRATION. The Bancshares Common Shares
into which the Century Common Shares are to be converted pursuant to this
Agreement and shall have been registered with the Securities and Exchange
Commission and no stop order shall be threatened or in effect with respect
thereto.
(d) BLUE SKY LAWS. Pursuant to Section 7.3 hereof, Bancshares
shall have filed such registration statements or applications as may be required
under applicable blue sky
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laws and such registration statements or applications shall have become
effective or approved and no stop order shall be threatened or in effect with
respect thereto.
(e) SHAREHOLDER ACTION. Prior to the Closing Date, this
Agreement shall have been approved by the affirmative vote of the holders of a
majority of the outstanding Century Common Shares and the affirmative vote of
two-thirds of the outstanding Bancshares Common Shares.
(f) REGULATORY APPROVALS. All Approvals necessary for the
consummation of the transactions contemplated by this Agreement shall have been
obtained and be in force.
Section 8.4. CLOSING DATE. The closing ("Closing") of the transactions
contemplated by this Agreement shall occur on a date mutually agreed to by
Bancshares and Century as soon as reasonably practicable after satisfaction of
all the conditions set forth in Sections 8.l, 8.2 and 8.3 hereof and the
expiration of all waiting periods imposed by any and all regulatory authorities
(the "Closing Date").
ARTICLE IX
TERMINATION AND ABANDONMENT
---------------------------
Section 9.1. RIGHT TO TERMINATION. This Agreement may be terminated and
the Merger abandoned prior to the Closing Date in the following manner:
(a) MUTUAL CONSENT. By mutual consent of Century and
Bancshares, authorized by their respective Boards of Directors; or
(b) BY CENTURY. If the Average NMS Closing Price is less than
$46.50, then Century may terminate this Agreement; or
(c) BY CENTURY. If (i) the Average NMS Closing Price is less
than $54.25, and (ii) Bancshares' Average NMS Closing Price is more than ten
(10) percent lower than the average of the NMS Closing Price of an index of
selected, publicly traded, peer group, commercial banking institutions in Ohio,
Pennsylvania and West Virginia, then Century may
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terminate this Agreement in accordance with the procedures set forth in Exhibit
E hereto.
(d) BY BANCSHARES OR CENTURY. By either Bancshares or Century
(i) in the event the transactions contemplated by this Agreement are not
consummated on or before September 30, 1998 or (ii) in the event of a material
breach by the other party (provided, however, that the terminating party is not
in material breach of this Agreement), which breach is not cured after thirty
(30) days written notice hereof to the breaching party.
Section 9.2. EFFECT OF TERMINATION. If for any reason this Agreement
and the Agreement of Merger shall be terminated and the Merger abandoned as
provided in Section 9.1, this Agreement shall become null and void, without any
further action by the shareholders of either of the parties. In the event of any
such termination, the Directors of Bancshares and Century shall each direct
their officers not to file this Agreement or a certificate or articles of
merger, as the case may be) in the offices of the Secretary of State of the
State of Ohio or the Department of State of the Commonwealth of Pennsylvania,
notwithstanding favorable action by the shareholders of Century and Bancshares.
In the event of any such termination, neither party hereto nor any of its
respective shareholders, directors, or officers shall have any obligation to the
other in damages or for costs, expenses, or otherwise in connection with this
Agreement or the transactions contemplated herein, other than (i) the return to
Century, by Bancshares, of all such copies of Century's records as may have been
provided to Bancshares, under Section 5.2 or other Sections of this Agreement,
and the return to Bancshares, by Century, of all such copies of Bancshares'
records as may have been provided to Century, under Section 5.2 or other
Sections of this Agreement or (ii) with respect to any liabilities or damages
incurred or suffered by a party as the result of a material breach by the other
party of this Agreement pursuant to Section 9.1(d)(ii) hereof.
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ARTICLE X
MISCELLANEOUS
-------------
Section 10.1. NO SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties contained in this Agreement and in any
certificate delivered hereunder, other than those contained in Section 2.3
hereof, shall expire on the Closing Date and thereafter neither Bancshares nor
Century shall have any further liability or obligation with respect thereto.
Section 10.2. REPRESENTATIONS TO THE KNOWLEDGE OF A PARTY. Whenever a
representation or warranty is made herein as being "to the knowledge of" a party
hereto or the officers or directors thereof, it is understood that an officer
has made or caused to be made by personnel or representatives competent to
determine the accuracy thereof (and the results thereof reported to him) an
investigation which is appropriate to determine the accuracy of such
representation or warranty.
Section 10.3. NOTICES. Any notice required or permitted to be given
under this Agreement shall be in writing and mailed, first class postage prepaid
and addressed as follows:
(a) If to Century:
Xxxxxx X. Xxxx, XX, President and
Chief Executive Officer
Century Financial Corporation
Xxx Xxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
With copies to:
Xxxxxxx X. Xxxxxxx
Xxxxxxxx Xxxxxxxxx Professional Corporation
One Oxford Centre
000 Xxxxx Xxxxxx
Xxxxxxxxxx, XX 00000-0000
(b) If to Bancshares:
Citizens Bancshares, Inc.
00 Xxxx Xxxx Xxxxxx
Xxxxxxxxxxx, Xxxx 00000
Attention: Xxxxx X. Xxxxx
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With copies to:
M. Xxxxxxxx Xxxxxx, Esq.
Squire, Xxxxxxx & Xxxxxxx L.L.P.
0000 Xxx Xxxxx
000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000-0000
or at such other address or addresses as the party addressed may from time to
time designate in writing. Any such notice shall be deemed given when received.
Section 10.4. ENTIRE AGREEMENT AND MODIFICATIONS. This Agreement and
all exhibits and schedules attached thereto, together with that certain Stock
Option Agreement dated November 17, 1997 (the "Option Agreement"), constitute
the entire agreement between Bancshares and Century with respect to the subject
matter hereof, and supersede any prior oral or written agreement and any other
written or oral representations, including but not limited to the letter of
intent dated November 17, 1997. Each of Century and Bancshares shall have the
right, with the prior consent of the other, from time to time prior to the
Closing Date, to supplement its Disclosure Schedules with respect to any matter
hereafter arising that, if existing or known as of the date of this Agreement,
would have been required to be set forth or described in the Disclosure
Schedules. This Agreement may be amended only by instrument in writing executed
by the parties hereto and thereto and authorized as provided herein or therein.
Except as provided in Section 10.5, nothing expressed or implied in this
Agreement is intended, or shall be construed, to confer upon or give any person,
firm, or corporation other than the parties hereto and their respective
shareholders any rights or remedies under or by reason of this Agreement. The
captions in this Agreement are for convenience only and shall not be considered
a part of or affect the construction or interpretation of any provision of this
Agreement.
Section 10.5. DIRECTORS' AND OFFICERS' INSURANCE. After the Effective
Time, Bancshares shall, and shall cause the Surviving Corporation to indemnify,
defend and hold harmless the
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present and former officers, directors, employees and agents of Century and CNB
(each, an "Indemnified Party") after the Effective Time against all losses,
expenses, claims damages or liabilities arising out of actions or omissions
occurring on or prior to the Effective Time (including, without limitation, the
transactions contemplated by this Agreement) to the full extent then permitted
under Pennsylvania law and by Century's Articles of Incorporation and Bylaws as
in effect on the date hereof, including provisions relating to advances of
expenses incurred in the defense of any action or suit. In addition, Bancshares
shall maintain Century's existing directors' and officers' liability insurance
(the "D&O Insurance") covering persons who are currently covered by Century's
D&O Insurance for a period of three (3) years after the Effective Time on terms
no less favorable than those in effect on the date hereof; PROVIDED, HOWEVER,
that Bancshares may substitute therefor policies providing at least comparable
coverage containing terms and conditions no less favorable than those in effect
on the date hereof.
Section 10.6. EXECUTION OF COUNTERPARTS. For the convenience of the
parties and to facilitate any required filing, this Agreement may be executed in
one or more counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same document.
Section 10.7. EXPENSES. Except as otherwise provided in the Option
Agreement, the parties hereto each shall bear their own expenses incurred in
connection with this Agreement, including, without limitation, all fees of their
respective legal counsel, financial advisers and accountants.
Section 10.8. CONSTRUCTION. This Agreement shall be construed and
enforced in accordance with the laws of the State of Ohio.
Section 10.9. EXCHANGE AGENT. Citizens Bancshares, Inc., 00 Xxxx Xxxx
Xxxxxx, Xxxxxxxxxxx, Xxxx, as transfer agent for the Bancshares Common Shares
(or such other bank or
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trust company as Bancshares selects) shall act as Exchange Agent in respect of
the conversion of Century Common Shares into Bancshares Common Shares.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers thereunder duly authorized, all as of the
date first above written.
CITIZENS BANCSHARES, INC.
Attest:
By: /S/ Xxxxxx X. Xxxxxx By: /S/ Xxxxx X. Xxxxx
-------------------------------- --------------------------------
Xxxxxx X. Xxxxxx, Xxxxx X. Xxxxx, President and
Assistant Secretary Chief Executive Officer
Attest: CENTURY FINANCIAL CORPORATION
By: /S/ Xxxxxx X. Xxxxxxxxx By: /s/ Del X. Xxxxxxxx
-------------------------------- --------------------------------
Xxxxxx X. Xxxxxxxxx, Secretary Del X. Xxxxxxxx, Chairman
By: /s/ Xxxxxx X. Xxxx XX
---------------------------------
Xxxxxx X. Xxxx XX
President and Chief Executive
Officer
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DISCLOSURE SCHEDULES AND EXHIBITS (omitted)
(Copies will be provided to the Securities and Exchange Commission upon
request.)
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