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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
September 28, 1998
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(Date of earliest event reported)
Fidelity Financial of Ohio, Inc.
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(Exact name of registrant as specified in its charter)
Ohio 0-27868 31-1455721
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(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
4555 Montgomery Road, Cincinnati, Ohio 45212
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(Address of principal executive offices) (Zip Code)
(513) 351-6666
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name, former address and former fiscal year,
if changed since last report)
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Item 5. Other Events
This Current Report on Form 8-K/A amends the Current Report on Form 8-K
filed by Fidelity Financial of Ohio, Inc. ("Fidelity") on September 29, 1998 to
file certain documents relating to the matters discussed therein.
As previously reported, on September 28, 1998, Fidelity and Glenway
Financial Corporation ("Glenway") announced a merger of equals, forming a $835
million savings bank with 17 branches in Southwestern Ohio. Fidelity is the
holding company for Fidelity Federal Savings Bank ("Fidelity Bank"), and Glenway
is the holding company for Centennial Savings Bank ("Centennial Bank").
Pursuant to an Agreement of Merger among Fidelity, Fidelity Acquisition
Corporation ("Merger Corporation") and Glenway, dated as of September 28, 1998
(the "Agreement"), the merger of equals will involve the merger of Glenway into
Merger Corporation (the "Merger"), which will result in each shareholder of
Glenway receiving 1.50 shares of Fidelity common stock in exchange for each
share of Glenway common stock and cash in lieu of fractional shares, followed
immediately by the merger of Fidelity Bank into Centennial Bank (the "Bank
Merger"). Consummation of the Merger and the Bank Merger is subject to a number
of conditions, including, but not limited to, (i) the approval of the Agreement
and the transactions contemplated thereby by the respective shareholders of
Fidelity and Glenway and (ii) the receipt of requisite regulatory approvals. The
Merger and the Bank Merger are expected to be completed in the first quarter of
1999. A copy of the Agreement is filed as Exhibit 2.1 hereto and is incorporated
herein by reference.
The Board of Directors of the combined company will consist of seven
representatives designated by Fidelity and five representatives designated by
Glenway. John R. Reusing will be the Chairman of the Board of Fidelity and
President of Centennial Bank and Robert R. Sudbrook will be the President and
Chief Executive Officer of Fidelity and Chairman of the Board and Chief
Executive Officer of Centennial Bank.
In connection with the Agreement, Fidelity and Glenway entered into a
Stock Option Agreement, dated as of September 28, 1998, pursuant to which
Glenway granted Fidelity an option to purchase up to 456,349 shares of Glenway's
common stock (subject to adjustment as set forth therein), which represents
19.9% of Glenway's outstanding shares of common stock, at a purchase price of
$17.25 per share (subject to adjustment as set forth therein). In addition, in
connection with the Agreement, Fidelity and Glenway entered into another Stock
Option Agreement, dated as of September 28, 1998, pursuant to which Fidelity
granted Glenway an option to purchase up to 1,114,793 shares of Fidelity's
common stock (subject to adjustment as set forth therein), which represents
19.9% of Fidelity's outstanding shares of common stock, at a purchase price of
$12.15 per share (subject to adjustment as set forth therein). The options will
become exercisable upon the occurrence of certain events, as specified in the
Stock Option Agreements, none of which has occurred as of the date hereof.
Copies of the Stock Option Agreements are filed as Exhibits 10.1 and 10.2 hereto
and are incorporated herein by reference.
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On the date of execution of the Agreement, Fidelity and Glenway issued
a joint press release announcing such execution, and on the next day Fidelity
and Glenway made a presentation to analysts to elaborate on the strategic
rationale and financial implications of the transaction. A copy of the press
release and the investor presentation were filed as Exhibits 99.1 and 99.2,
respectively, to the Current Report on Form 8-K filed by Fidelity on September
29, 1998 and are incorporated herein by reference.
The foregoing descriptions of and references to all of the
above-mentioned agreements and documents are qualified in their entirety by
reference to the complete texts of the agreements and documents which are filed
herewith and incorporated by reference herein as exhibits to this Current Report
on Form 8-K.
The press release and the investor presentation incorporated herein by
reference contain forward-looking statements that involve risk and uncertainty.
It should be noted that a variety of factors could cause the combined company's
actual results and experience to differ materially from the anticipated results
or other expectations expressed in the combined company's forward-looking
statements. The risks and uncertainties that may affect the operations,
performance, development, growth projections and results of the combined
company's business include, but are not limited to, the growth of the economy,
interest rate movements, timely development by the combined company of
technology enhancements for its products and operating systems, the impact of
competitive products, services and pricing, customer based requirements, Federal
and state legislation, acquisition cost savings and revenue enhancements and
similar matters. Readers of this Current Report on Form 8-K, including the
exhibits hereto, are cautioned not to place undue reliance on forward-looking
statements which are subject to influence by the named risk factors and
unanticipated future events. Actual results, accordingly, may differ materially
from management expectations.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Not applicable.
(b) Not applicable.
(c) The following exhibits are included with this Report:
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Exhibit Number Description
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2.1 Agreement of Merger, dated as of September 28, 1998, among
Fidelity, Merger Corporation and Glenway (including the Agreement
of Merger, dated as of September 28, 1998, between Fidelity Bank
and Centennial Bank and attached as Exhibit A thereto)
10.1 Stock Option Agreement, dated as of September 28, 1998, between
Fidelity (as grantee) and Glenway (as issuer)
10.2 Stock Option Agreement, dated as of September 28, 1998, between
Fidelity (as issuer) and Glenway (as grantee)
10.3 Stockholder Agreement, dated as of September 28, 1998, among
Fidelity and certain stockholders of Glenway
10.4 Stockholder Agreement, dated as of September 28, 1998, among
Glenway and certain stockholders of Fidelity
10.5 Form of letter agreement between affiliates of Glenway and
Fidelity
10.6 Form of letter agreement between affiliates of Fidelity and
Glenway
99.1 Press Release, dated September 28, 1998(1)
99.2 Investor Presentation(1)
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(1) Incorporated by reference to the Current Report on Form 8-K filed by
Fidelity on September 29, 1998.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FIDELITY FINANCIAL OF OHIO, INC.
By: /s/ John R. Reusing
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Name: John R. Reusing
Title: President and Chief Executive Officer
Date: October 1, 1998
Exhibit 2.1
AGREEMENT OF MERGER
among
FIDELITY FINANCIAL OF OHIO, INC.,
FIDELITY ACQUISITION CORPORATION
and
GLENWAY FINANCIAL CORPORATION
dated as of September 28, 1998
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AGREEMENT OF MERGER
TABLE OF CONTENTS
<TABLE>
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Page
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ARTICLE I - DEFINITIONS............................................................................2
ARTICLE II - THE MERGER............................................................................6
2.1 The Merger..........................................................................6
2.2 Effective Time; Closing.............................................................7
2.3 Treatment of Capital Stock..........................................................7
2.4 Stockholder Rights; Stock Transfers.................................................7
2.5 Fractional Shares...................................................................8
2.6 Exchange Procedures.................................................................8
2.7 Anti-Dilution Provisions............................................................9
2.8 Options.............................................................................9
2.9 Dissenting Shares..................................................................10
2.10 Additional Actions.................................................................10
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF THE COMPANY.......................................11
3.1 Capital Structure..................................................................11
3.2 Organization, Standing and Authority of GFCO.......................................11
3.3 Ownership of GFCO Subsidiaries.....................................................11
3.4 Organization, Standing and Authority of the GFCO Subsidiaries......................12
3.5 Authorized and Effective Agreement.................................................12
3.6 Securities Documents and Regulatory Reports........................................13
3.7 Financial Statements...............................................................14
3.8 Material Adverse Change............................................................14
3.9 Environmental Matters..............................................................15
3.10 Tax Matters........................................................................15
3.11 Legal Proceedings..................................................................16
3.12 Compliance with Laws...............................................................16
3.13 Deposit Insurance and Other Regulatory Matters.....................................17
3.14 Certain Information .......................................17
3.15 Employee Benefit Plans.............................................................17
3.16 Certain Contracts..................................................................19
3.17 Brokers and Finders................................................................20
3.18 Insurance..........................................................................20
3.19 Properties.........................................................................20
3.20 Labor..............................................................................21
3.21 Loans; Nonperforming and Classified Assets; Allowance for Loan Losses..............21
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3.22 Administration of Fiduciary Accounts...............................................22
3.23 Derivative Transactions............................................................22
3.24 Year 2000..........................................................................22
3.25 Required Vote; Antitakeover Provisions.............................................22
3.26 Fairness Opinion...................................................................23
3.27 Accounting for the Merger; Reorganization..........................................23
3.28 Disclosures........................................................................23
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF THE AND MERGER CORPORATION.........................23
4.1 Capital Structure of FFOH..........................................................23
4.2 Organization, Standing and Authority of FFOH.......................................24
4.3 Ownership of FFOH Subsidiaries.....................................................24
4.4 Organization, Standing and Authority of FFOH Subsidiaries..........................24
4.5 Authorized and Effective Agreement.................................................25
4.6 Securities Documents and Regulatory Reports........................................26
4.7 Financial Statements...............................................................26
4.8 Material Adverse Change............................................................27
4.9 Environmental Matters..............................................................27
4.10 Tax Matters........................................................................28
4.11 Legal Proceedings..................................................................29
4.12 Compliance with Laws...............................................................29
4.13 Deposit Insurance and Other Regulatory Matters.....................................29
4.14 Certain Information................................................................30
4.15 Employee Benefit Plans.............................................................30
4.16 Certain Contracts..................................................................32
4.17 Brokers and Finders................................................................32
4.18 Insurance..........................................................................32
4.19 Properties.........................................................................33
4.20 Labor..............................................................................33
4.21 Loans; Nonperforming and Classified Assets; Allowance for Loan Losses..............33
4.22 Administration of Fiduciary Accounts...............................................34
4.23 Derivative Transactions............................................................34
4.24 Year 2000..........................................................................34
4.25 Ownership of GFCO Common Stock.....................................................35
4.26 Required Vote; Antitakeover Provisions.............................................35
4.27 Fairness Opinion...................................................................35
4.28 Accounting for the Merger; Reorganization..........................................35
4.29 Disclosures........................................................................36
ARTICLE V - COVENANTS.............................................................................36
5.1 Reasonable Best Efforts............................................................36
</TABLE>
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5.2 Shareholder Meetings...............................................................36
5.3 Regulatory Matters.................................................................36
5.4 Investigation and Confidentiality..................................................37
5.5 Press Releases.....................................................................38
5.6 Business of the Parties............................................................38
5.7 Current Information................................................................43
5.8 Indemnification; Insurance.........................................................43
5.9 Directors, Officers and Employees; Employee Benefit Plans
and Arrangements................................................................45
5.10 Certain Policies; Integration......................................................46
5.11 Stock Exchange Listing.............................................................46
5.12 The Bank Merger....................................................................46
5.13 Affiliates; Restrictions on Resale.................................................47
5.14 Disclosure Supplements.............................................................47
5.15 Failure to Fulfill Conditions......................................................47
5.16 Amendment of the Articles of Incorporation and Bylaws of FFOH......................47
ARTICLE VI - CONDITIONS PRECEDENT.................................................................48
6.1 Conditions Precedent - FFOH, Merger Corporation and GFCO...........................48
6.2 Conditions Precedent - GFCO........................................................50
6.3 Conditions Precedent - FFOH and Merger Corporation ................................51
ARTICLE VII - TERMINATION, WAIVER AND AMENDMENT...................................................52
7.1 Termination........................................................................52
7.2 Effect of Termination..............................................................53
7.3 Survival of Representations, Warranties and Covenants..............................53
7.4 Waiver.............................................................................53
7.5 Amendment or Supplement............................................................53
ARTICLE VIII - MISCELLANEOUS......................................................................54
8.1 Expenses...........................................................................54
8.2 Entire Agreement...................................................................54
8.3 Assignment; Successors.............................................................54
8.4 Notices............................................................................55
8.5 Interpretation.....................................................................56
8.6 Counterparts.......................................................................56
8.7 Governing Law......................................................................56
Signatures........................................................................................57
</TABLE>
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EXHIBITS
Exhibit A Form of Merger Agreement between Fidelity Federal Savings Bank and
Centennial Savings Bank
Exhibit B Form of GFCO Stock Option Agreement
Exhibit C Form of GFCO Stockholder Agreement
Exhibit D Form of FFOH Stock Option Agreement
Exhibit E Form of FFOH Stockholder Agreement
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AGREEMENT OF MERGER
Agreement of Merger (the "Agreement"), dated as of September 28, 1998,
by and among Fidelity Financial of Ohio, Inc. ("FFOH"), an Ohio corporation,
Fidelity Acquisition Corporation ("Merger Corporation"), an Ohio corporation and
a wholly-owned subsidiary of FFOH, and Glenway Financial Corporation ("GFCO"), a
Delaware corporation.
W I T N E S S E T H:
WHEREAS, the Boards of Directors of FFOH, Merger Corporation and GFCO
have determined that it is in the best interests of their respective companies
and their shareholders to consummate the business combination transactions
provided for herein, including the merger of GFCO with and into Merger
Corporation, subject to the terms and conditions set forth herein; and
WHEREAS, the parties desire to provide for certain undertakings,
conditions, representations, warranties and covenants in connection with the
transactions contemplated hereby; and
WHEREAS, as a condition and inducement to FFOH's willingness to enter
into the Agreement, (i) GFCO is concurrently entering into a Stock Option
Agreement with FFOH (the "GFCO Stock Option Agreement"), in substantially the
form attached hereto as Exhibit B, pursuant to which GFCO is granting to FFOH
the option to purchase shares of GFCO Common Stock (as defined herein) under
certain circumstances and (ii) certain stockholders of GFCO are concurrently
entering into a Stockholder Agreement with FFOH (the "GFCO Stockholder
Agreement"), in substantially the form attached hereto as Exhibit C, pursuant to
which, among other things, such stockholders will agree to vote their shares of
GFCO Common Stock in favor of this Agreement and the transactions contemplated
hereby; and
WHEREAS, as a condition and inducement to GFCO's willingness to enter
into the Agreement, (i) FFOH is concurrently entering into a Stock Option
Agreement with GFCO (the "FFOH Stock Option Agreement"), in substantially the
form attached hereto as Exhibit D, pursuant to which FFOH is granting to GFCO
the option to purchase shares of FFOH Common Stock (as defined herein) under
certain circumstances and (ii) certain stockholders of FFOH are concurrently
entering into a Stockholder Agreement with GFCO (the "FFOH Stockholder
Agreement"), in substantially the form attached hereto as Exhibit E, pursuant to
which, among other things, such stockholders will agree to vote their shares of
FFOH Common Stock in favor of this Agreement and the transactions contemplated
hereby.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, the parties hereto do hereby agree as
follows:
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ARTICLE I
DEFINITIONS
The following terms shall have the meanings ascribed to them for all
purposes of this Agreement.
"Affiliate" shall have the meaning specified in Section 5.13 hereof.
"Bank" shall mean Fidelity Federal Savings Bank, a federally-chartered
savings bank and a wholly-owned subsidiary of Merger Corporation.
"Bank Merger" shall have the meaning set forth in Section 5.12 hereof.
"Bank Merger Agreement" shall have the meaning set forth in Section
5.12 hereof.
"Centennial" shall mean Centennial Savings Bank, an Ohio-chartered
savings bank and a wholly-owned subsidiary of GFCO.
"Certificates of Merger" shall have the meaning set forth in Section
2.2 hereof.
"Certificates" shall have the meaning set forth in Section 2.4 hereof.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Commission" shall mean the Securities and Exchange Commission.
"Confidentiality Agreement" shall mean the Mutual Confidentiality
Agreement dated August 21, 1998, between GFCO and FFOH.
"CSLSC" means Centennial Savings and Loan Service Corporation, an Ohio
corporation and a wholly-owned subsidiary of Centennial.
"DGCL" shall mean the Delaware General Corporation Law.
"Division" shall mean the Division of Financial Institutions of the
Ohio Department of Commerce or any successor thereto.
"Effective Time" shall mean the date and time specified pursuant to
Section 2.2 hereof as the effective time of the Merger.
"Environmental Claim" means any written notice from any Governmental
Entity or third party alleging potential liability (including, without
limitation, potential liability for investigatory costs, cleanup costs,
governmental response costs, natural resources damages, property damages,
personal injuries or penalties) arising out of, based on, or resulting from the
presence, or release into the environment, of any Materials of Environmental
Concern.
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"Environmental Laws" shall mean any federal, state or local
environmental law or regulation, including without limitation the Comprehensive
Environmental Response, Compensation and Liability Act, the Resource
Conservation and Recovery Act, the Clean Air Act, the Clean Water Act and the
Occupational Safety and Health Act, each as amended, regulations promulgated
thereunder, and state and local counterparts.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Exchange Ratio" shall have the meaning set forth in Section 2.3(c)
hereof.
"FDIA" shall mean the Federal Deposit Insurance Act, as amended.
"FDIC" shall mean the Federal Deposit Insurance Corporation or any
successor thereto.
"FFIEC" shall mean the Federal Financial Institutions Examination
Council.
"FFOH Common Stock" shall mean the common stock, par value $.10 per
share, of FFOH.
"FFOH Dissenting Shares" shall have the meaning set forth in Section
2.9 hereof.
"FFOH Employee Plans" shall have the meaning set forth in Section
4.15(a) hereof.
"FFOH Employee Stock Benefit Plans" shall mean the following employee
benefit plans of FFOH: 1992 Stock Incentive Plan, 1992 Directors' Stock Option
Plan, Management Recognition Plan, Employee Stock Ownership Plan, Fidelity
Federal Savings Bank 401(k) Retirement Plan, 1997 Stock Option Plan and 1997
Management Recognition Plan and Trust.
"FFOH Financial Statements" shall mean (i) the consolidated statements
of financial condition (including related notes and schedules, if any) of FFOH
as of December 31, 1997, 1996 and 1995 and the consolidated statements of
earnings, stockholders' equity and cash flows (including related notes and
schedules, if any) of FFOH for each of the three years ended December 31, 1997,
1996 and 1995 as filed by FFOH in its Securities Documents, and (ii) the
consolidated statements of financial condition of FFOH (including related notes
and schedules, if any) and the consolidated statements of earnings,
stockholders' equity and cash flows (including related notes and schedules, if
any) of FFOH included in the Securities Documents filed by FFOH with respect to
the quarterly and annual periods ended subsequent to December 31, 1997.
"FFOH Preferred Stock" shall mean the shares of serial preferred stock,
par value $.10 per share, of FFOH.
"FHLB" shall mean Federal Home Loan Bank.
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"Form S-4" shall mean the registration statement on Form S-4 (or on any
successor or other appropriate form) to be filed by FFOH in connection with the
issuance of shares of FFOH Common Stock pursuant to the Merger, including the
Proxy Statement which forms a part thereof, as amended and supplemented.
"GFCO Common Stock" shall mean the common stock, par value $0.01 per
share, of GFCO.
"GFCO Employee Plans" shall have the meaning set forth in Section
3.15(a) hereof.
"GFCO ESOP" shall mean GFCO's Employee Stock Ownership Plan.
"GFCO Financial Statements" shall mean (i) the consolidated statements
of financial condition (including related notes and schedules, if any) of GFCO
as of June 30, 1998, 1997 and 1996 and the consolidated statements of earnings,
stockholders' equity and cash flows (including related notes and schedules, if
any) of GFCO for each of the three years ended June 30, 1998, 1997 and 1996 as
filed by GFCO in its Securities Documents, and (ii) the consolidated statements
of financial condition of GFCO (including related notes and schedules, if any)
and the consolidated statements of earnings, stockholders' equity and cash flows
(including related notes and schedules, if any) of GFCO included in the
Securities Documents filed by GFCO with respect to the quarterly and annual
periods ended subsequent to June 30, 1998.
"GFCO 401(k) Plan shall mean GFCO's 401(k) Profit Sharing Plan.
"GFCO Bank Incentive Plan" shall mean Centennial Savings Bank Bank
Incentive Plan.
"GFCO Options" shall mean options to purchase shares of GFCO Common
Stock granted pursuant to GFCO Stock Option Plan.
"GFCO Preferred Stock" shall mean the shares of serial preferred stock,
par value $0.01 per share, of GFCO.
"GFCO Stock Option Plan" shall mean the GFCO's Stock Option and
Incentive Plan.
"Governmental Entity" shall mean any federal or state court,
administrative agency or commission or other governmental authority or
instrumentality.
"HOLA" shall mean the Home Owners' Loan Act.
"Lien" shall mean any charge, mortgage, pledge, security interest,
restriction, claim, lien or encumbrance.
"Loan" shall have the meaning set forth in Section 3.21(a) hereof.
"Material Adverse Effect" shall mean, with respect to FFOH or GFCO,
respectively, any effect that (i) is material and adverse to the financial
condition, results of operations or business of
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FFOH and its Subsidiaries taken as whole or GFCO and its Subsidiaries taken as a
whole, as applicable, or (ii) materially impairs the ability of the GFCO, FFOH
or any of their respective banking subsidiaries to consummate the transactions
contemplated by this Agreement and the Bank Merger Agreement, provided, however,
that Material Adverse Effect shall not be deemed to include (a) the impact of
changes in laws and regulations or interpretations thereof that are generally
applicable to the banking industry or generally accepted accounting principles
that are generally applicable to the banking industry, (b) reasonable expenses
incurred in connection with the transactions contemplated hereby and (c) actions
or omissions of a party (or any of its Subsidiaries) taken with the prior
written consent of the other party in contemplation of the transactions
contemplated hereby.
"Materials of Environmental Concern" means pollutants, contaminants,
wastes, toxic substances, petroleum and petroleum products and any other
materials regulated under Environmental Laws.
"Merger" shall have the meaning set forth in Section 2.1(a) hereof.
"NASD" shall mean the National Association of Securities Dealers, Inc.,
or any successor thereto.
"OGCL" shall mean the Ohio General Corporation Law.
"OTS" shall mean the Office of Thrift Supervision of the U.S.
Department of the Treasury and its predecessor, the Federal Home Loan Bank
Board, or any successor thereto.
"PBGC" shall mean the Pension Benefit Guaranty Corporation, or any
successor thereto.
"Previously Disclosed" shall mean disclosed (i) in a disclosure
schedule dated the date hereof delivered from the disclosing party to the other
party specifically referring to the appropriate section of this Agreement and
describing in reasonable detail the matters contained therein, or (ii) in a
disclosure schedule dated after the date hereof from the disclosing party
specifically referring to this Agreement and describing in reasonable detail the
matters contained therein and delivered by the other party pursuant to Section
5.14 hereof.
"Proxy Statement" shall mean the joint prospectus/proxy statement
contained in the Form S-4, as amended or supplemented, and to be delivered to
shareholders of FFOH and GFCO in connection with the solicitation of their
approval of this Agreement and the transactions contemplated hereby.
"Rights" shall mean warrants, options, rights, convertible securities
and other arrangements or commitments which obligate an entity to issue or
dispose of any of its capital stock or other ownership interests in the entity.
"SAIF" means the Savings Association Insurance Fund administered by the
FDIC or any successor thereto.
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"Securities Act" shall mean the Securities Act of 1933, as amended.
"Securities Documents" shall mean all reports, offering circulars,
proxy statements, registration statements and all similar documents filed, or
required to be filed, pursuant to the Securities Laws.
"Securities Laws" shall mean the Securities Act; the Exchange Act; the
Investment Company Act of 1940, as amended; the Investment Advisers Act of 1940,
as amended; the Trust Indenture Act of 1939, as amended; and the rules and
regulations of the Commission promulgated pursuant to such laws.
"SGFSC" shall mean Spring Garden Financial Service Corp., an Ohio
corporation and a wholly-owned subsidiary of the Bank.
"Subsidiary" shall mean any corporation, bank, savings association,
partnership, joint venture or other organization more than 10% of the stock or
ownership interest of which is owned, directly or indirectly, by an entity.
"Surviving Corporation" shall have the meaning specified in Section
2.1(a) hereof.
Other terms used herein are defined in the preamble and elsewhere in
this Agreement.
ARTICLE II
THE MERGER
2.1 The Merger
(a) Subject to the terms and conditions of this Agreement, at the
Effective Time (as defined in Section 2.2 hereof), GFCO shall be merged with and
into Merger Corporation (the "Merger") in accordance with the applicable
provisions of the OGCL and the DGCL. Merger Corporation shall be the surviving
corporation (hereinafter sometimes called the "Surviving Corporation") of the
Merger, and shall continue its corporate existence under the laws of the State
of Ohio. The name of the Surviving Corporation shall continue to be "Fidelity
Merger Corporation" and the Surviving Corporation will continue to operate as a
wholly owned subsidiary of FFOH. Upon consummation of the Merger, the separate
corporate existence of GFCO shall terminate.
(b) From and after the Effective Time, the Merger shall have the
effects set forth in Section 1701.82 of the OGCL and Section 259 of the DGCL.
(c) Upon consummation of the Merger, the Articles of Incorporation,
Code of Regulations and Bylaws of Merger Corporation, as in effect immediately
prior to the Effective Time, shall be the Articles of Incorporation, Code of
Regulations and Bylaws of the Surviving Corporation, respectively, until
altered, amended or repealed in accordance with their terms and applicable law.
(d) The authorized capital stock of the Surviving Corporation shall be
as stated in the Articles of Incorporation of Merger Corporation immediately
prior to the Effective Time.
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2.2 Effective Time; Closing
The Merger shall become effective upon the occurrence of the filing of
(i) a certificate of merger with the Secretary of State of the State of Ohio
pursuant to the OGCL and (ii) a certificate of merger with the Secretary of the
State of Delaware pursuant to the DGCL, unless a later date and time is
specified as the effective time (the "Effective Time") in such certificates of
merger (collectively, the "Certificates of Merger"). A closing (the "Closing")
shall take place immediately prior to the Effective Time at 10:00 a.m., Eastern
Time, on or before the fifth business day following the satisfaction or waiver,
to the extent permitted hereunder, of the conditions to the consummation of the
Merger specified in Article VI of this Agreement (other than the delivery of
certificates, opinions and other instruments and documents to be delivered at
the Closing), at the principal executive offices of FFOH in Cincinnati, Ohio, or
at such other place, at such other time, or on such other date as the parties
may mutually agree upon. At the Closing, there shall be delivered to FFOH and
GFCO the opinions, certificates and other documents required to be delivered
under Article VI hereof.
2.3 Treatment of Capital Stock
Subject to the provisions of this Agreement, at the Effective Time,
automatically by virtue of the Merger and without any action on the part of any
stockholder:
(a) subject to Section 2.9 hereof, each share of FFOH Common Stock
issued and outstanding immediately prior to the Effective Time shall be
unchanged and shall remain issued and outstanding;
(b) each share of Merger Corporation common stock issued and
outstanding immediately prior to the Effective Time shall be unchanged and shall
remain issued and outstanding; and
(c) subject to Section 2.5 hereof, each share of GFCO Common Stock
issued and outstanding immediately prior to the Effective Time (other than
shares held by FFOH, GFCO or any of their respective wholly-owned Subsidiaries
(other than shares held in a fiduciary capacity that are beneficially owned by
third parties or as a result of debts previously contracted) which shall be
canceled and retired without consideration) shall become and be converted into
the right to receive 1.50 shares of FFOH Common Stock (subject to possible
adjustment as set forth in Section 2.7 hereof, the "Exchange Ratio").
2.4 Stockholder Rights; Stock Transfers
At the Effective Time, each holder of a certificate or certificates
representing outstanding shares of GFCO Common Stock (the "Certificates") shall
cease to have any rights with respect thereto, except the right to receive, upon
the surrender of any such Certificates in accordance with Section 2.6 hereof,
certificates representing the number of whole shares of FFOH Common Stock, and
any cash in lieu of a fractional share interest, into which such shares of GFCO
Common Stock shall have been converted pursuant to Section 2.3 hereof, without
interest. After the Effective Time, there shall be no further registration of
transfers on the stock transfer books of GFCO of shares of GFCO Common Stock
which were outstanding immediately prior to the Effective Time. If, after
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the Effective Time, Certificates are presented to FFOH or the Exchange Agent for
any reason, they shall be canceled and exchanged as provided in Section 2.6
hereof, except as otherwise provided by law.
2.5 Fractional Shares
(a) No certificates or scrip representing fractional shares of FFOH
Common Stock shall be issued upon the surrender for exchange of a Certificate or
Certificates, and such fractional share interests shall not entitle the owner
thereof to vote or to any other rights as a stockholder of FFOH.
(b) Notwithstanding any other provision of this Agreement, each holder
of shares of GFCO Common Stock converted into shares of FFOH Common Stock
pursuant to the Merger who would otherwise have been entitled to receive a
fraction of a share of FFOH Common Stock (after taking into account all
Certificates delivered by such holder) shall, at the time of surrender of the
Certificate or Certificates representing such holder's shares of GFCO Common
Stock receive an amount of cash (without interest) equal to the product arrived
at by multiplying such fraction of a share of FFOH Common Stock by the closing
price of a share of FFOH Common Stock on the Nasdaq Stock Market's National
Market on the business day preceding the Effective Time (as reported in The Wall
Street Journal, or if not reported therein, in another authoritative source),
rounded to the nearest whole cent.
2.6 Exchange Procedures
(a) At or after the Effective Time, each holder of a Certificate or
Certificates, upon surrender of the same to an agent, duly appointed by FFOH
(the "Exchange Agent"), shall be entitled to receive in exchange therefor a
certificate or certificates representing the number of whole shares of FFOH
Common Stock into which the shares of GFCO Common Stock theretofore represented
by the Certificate or Certificates so surrendered shall have been converted as
provided in Section 2.3(c) hereof. Not later than five business days, the
Exchange Agent shall mail to each holder of record of an outstanding Certificate
which is to be exchanged for FFOH Common Stock as provided in Section 2.3 hereof
a form of letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to such Certificate shall pass, only upon
delivery of such Certificate to the Exchange Agent) advising such holder of the
terms of the exchange effected by the Merger and of the procedure for
surrendering to the Exchange Agent such Certificate in exchange for a
certificate or certificates evidencing FFOH Common Stock and any cash in lieu of
any fractional share interest. Notwithstanding anything in this Agreement to the
contrary, Certificates surrendered for exchange by any Affiliate of GFCO (as
defined in Section 5.13(a) hereof) shall not be exchanged for certificates
representing shares of FFOH Common Stock in accordance with the terms of this
Agreement until FFOH has received a written agreement from such person as
specified in Section 5.13(b).
(b) No holder of a Certificate shall be entitled to receive any
dividends in respect of FFOH Common Stock into which such shares shall have been
converted by virtue of the Merger until the Certificate representing such shares
is surrendered in exchange for a certificate or certificates representing shares
of FFOH Common Stock. In the event that dividends are declared and paid by FFOH
in respect of FFOH Common Stock after the Effective Time but prior to any
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holder's surrender of Certificates, dividends payable to such holder in respect
of shares of FFOH Common Stock not then issued shall accrue (without interest).
Any such dividends shall be paid (without interest) upon surrender of the
Certificates. FFOH shall be entitled, after the Effective Time, to treat
Certificates as evidencing ownership of the number of whole shares of FFOH
Common Stock into which the shares of GFCO Common Stock represented by such
Certificates shall have been converted pursuant to this Agreement,
notwithstanding the failure on the part of the holder thereof to surrender such
Certificates.
(c) FFOH shall not be obligated to deliver a certificate or
certificates representing shares of FFOH Common Stock to which a holder of GFCO
Common Stock would otherwise be entitled as a result of the Merger until such
holder surrenders a Certificate or Certificates for exchange as provided in this
Section 2.6, or, in default thereof, an appropriate affidavit of loss and
indemnity agreement and/or a bond in an amount as may be reasonably required in
each case by FFOH. If any certificate evidencing shares of FFOH Common Stock is
to be issued in a name other than that in which the Certificate surrendered in
exchange therefor is registered, it shall be a condition of the issuance thereof
that the Certificate so surrendered shall be properly endorsed and otherwise in
proper form for transfer and that the person requesting such exchange pay to the
Exchange Agent any transfer or other tax required by reason of the issuance of a
certificate for shares of FFOH Common Stock in any name other than that of the
registered holder of the Certificate surrendered or otherwise establish to the
satisfaction of the Exchange Agent that such tax has been paid or is not
payable.
2.7 Anti-Dilution Provisions
If, between the date hereof and the Effective Time, the shares of FFOH
Common Stock shall be changed into a different number or class of shares by
reason of any reclassification, recapitalization, split-up, combination,
exchange of shares or readjustment, or a stock dividend thereon shall be
declared with a record date within said period, the Exchange Ratio shall be
adjusted accordingly.
2.8 Options
(a) At the Effective Time, each GFCO Option which is then outstanding,
whether or not exercisable, shall cease to represent a right to acquire shares
of GFCO Common Stock and shall be converted automatically into an option to
purchase shares of FFOH Common Stock, and FFOH shall assume each GFCO Option, in
accordance with the terms of the GFCO Stock Option Plan and the stock option
agreement by which it is evidenced, including without limitation all such terms
pertaining to the acceleration and vesting of the holder's exercise rights
thereunder, except that from and after the Effective Time, (i) FFOH and the
Compensation Committee of its Board of Directors shall be substituted for GFCO
and the committee of GFCO's Board of Directors (including, if applicable, the
entire Board of Directors of GFCO) administering the GFCO Stock Option Plan,
(ii) each GFCO Option may be exercised solely for shares of FFOH Common Stock,
(iii) the number of shares of FFOH Common Stock subject to such GFCO Option
shall be equal to the number of shares of GFCO Common Stock subject to such GFCO
Option immediately prior to the Effective Time multiplied by the Exchange Ratio,
provided that any fractional shares of FFOH Common Stock resulting from such
multiplication shall be rounded down to the nearest share, and (iv) the per
share
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exercise price under each such GFCO Option shall be adjusted by dividing the per
share exercise price under each such GFCO Option by the Exchange Ratio, provided
that such exercise price shall be rounded up to the nearest cent.
Notwithstanding clauses (iii) and (iv) of the preceding sentence, each GFCO
Option which is an "incentive stock option" shall be adjusted as required by
Section 424 of the Code, and the regulations promulgated thereunder, so as not
to constitute a modification, extension or renewal of the option within the
meaning of Section 424(h) of the Code. FFOH and GFCO agree to take all necessary
steps to effect the foregoing provisions of this Section 2.8(a).
(b) Within 30 days after the Effective Time, FFOH shall file a
registration statement on Form S-3 or Form S-8, as the case may be (or any
successor or other appropriate forms), with respect to the shares of FFOH Common
Stock subject to the options referred to in paragraph (a) of this Section 2.8
and shall use its best efforts to maintain the current status of the prospectus
or prospectuses contained therein for so long as such options remain outstanding
in the case of a Form S-8 or, in the case of a Form S-3, until the shares
subject to such options may be sold without a further holding period under Rule
144 under the Securities Act.
2.9 Dissenting Shares
Each outstanding share of FFOH Common Stock the holder of which has
perfected his right to dissent under the OGCL and has not effectively withdrawn
or lost such right as of the Effective Time (the "FFOH Dissenting Shares") shall
be entitled to such rights as are granted by the OGCL. FFOH shall give GFCO
prompt notice upon receipt by FFOH of any such written demands for payment of
the fair value of such shares of FFOH Common Stock and of withdrawals of such
demands and any other instruments provided pursuant to the OGCL (any shareholder
duly making such demand being hereinafter called a "Dissenting FFOH
Shareholder"). Any payments made in respect of FFOH Dissenting Shares shall be
made by the Surviving Corporation. If any FFOH Dissenting Shareholder shall
effectively withdraw or lose (through failure to perfect or otherwise) his right
to such payment, such holder's shares of FFOH Common Stock shall remain issued,
outstanding and unchanged in accordance with the applicable provisions of this
Agreement.
2.10 Additional Actions
If, at any time after the Effective Time, the Surviving Corporation
shall consider that any further assignments or assurances in law or any other
acts are necessary or desirable to (i) vest, perfect or confirm, of record or
otherwise, in the Surviving Corporation its right, title or interest in, to or
under any of the rights, properties or assets of GFCO acquired or to be acquired
by the Surviving Corporation as a result of, or in connection with, the Merger,
or (ii) otherwise carry out the purposes of this Agreement, GFCO, and its proper
officers and directors, shall be deemed to have granted to the Surviving
Corporation an irrevocable power of attorney to execute and deliver all such
proper deeds, assignments and assurances in law and to do all acts necessary or
proper to vest, perfect or confirm title to and possession of such rights,
properties or assets in the Surviving Corporation and otherwise to carry out the
purposes of this Agreement, and the proper officers and directors of the
Surviving Corporation are fully authorized in the name of the Surviving
Corporation or otherwise to take any and all such action.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
GFCO represents and warrants to FFOH as follows:
3.1 Capital Structure
The authorized capital stock of GFCO consists of 3,000,000 shares of
GFCO Common Stock and 500,000 shares of GFCO Preferred Stock. As of the date
hereof, there are 2,293,210 shares of GFCO Common Stock issued and outstanding,
81,528 shares of GFCO Common Stock are directly or indirectly held as treasury
stock by GFCO and no shares of GFCO Preferred Stock are issued and outstanding.
All outstanding shares of GFCO Common Stock have been duly authorized and
validly issued and are fully paid and nonassessable, and none of the outstanding
shares of GFCO Common Stock has been issued in violation of the preemptive
rights of any person, firm or entity. Except for (i) 93,889 shares of GFCO
Common Stock issuable upon exercise of outstanding stock options which have been
granted pursuant to the GFCO Stock Option Plan, as Previously Disclosed, and
(ii) shares of GFCO Common Stock issuable pursuant to the terms of GFCO Stock
Option Agreement, there are no Rights authorized, issued or outstanding with
respect to the capital stock of GFCO. GFCO has not repurchased any shares of
GFCO Common Stock during the two years preceding the date hereof, except for any
such repurchases (including the number of shares, date repurchased, repurchase
price and the purpose thereof) as are Previously Disclosed.
3.2 Organization, Standing and Authority of GFCO
GFCO is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware with full corporate power and
authority to own or lease all of its properties and assets and to carry on its
business as now conducted and is duly licensed or qualified to do business and
is in good standing in each jurisdiction in which its ownership or leasing of
property or the conduct of its business requires such licensing or
qualification, except where the failure to be so licensed, qualified or in good
standing would not have a Material Adverse Effect on GFCO. GFCO is duly
registered as a savings and loan holding company under the HOLA and the
regulations of the OTS thereunder. GFCO has heretofore delivered or made
available to FFOH true and complete copies of the Certificate of Incorporation
and Bylaws of GFCO as in effect as of the date hereof.
3.3 Ownership of GFCO Subsidiaries
The only direct or indirect Subsidiaries of GFCO are Centennial and
CSLSC (the "GFCO Subsidiaries"). Except for (i) capital stock of the GFCO
Subsidiaries, (ii) stock in the FHLB of Cincinnati, (iii) securities and other
interests taken in consideration of debts previously contracted and (iv) the
operative provisions of the FFOH Stock Option Agreement, GFCO does not own or
have the right to acquire, directly or indirectly, any outstanding capital stock
or other voting securities or ownership interests of any corporation, bank,
savings association, partnership, joint venture or other organization. The
outstanding shares of capital stock or other ownership interests of each of the
GFCO Subsidiaries have been duly authorized and validly issued, are fully paid
and nonassessable, and are directly or indirectly owned by GFCO free and clear
of all Liens or rights of third parties
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of any kind whatsoever. No Rights are authorized, issued or outstanding with
respect to the capital stock or other ownership interests of any GFCO Subsidiary
and there are no agreements, understandings or commitments relating to the right
of GFCO to vote or to dispose of said shares or other ownership interests.
3.4 Organization, Standing and Authority of the GFCO Subsidiaries
Centennial is a savings bank duly organized, validly existing and in
good standing under Chapter 1161 of the Ohio Revised Code, and CSLSC is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Ohio. Each of the GFCO Subsidiaries (i) has full power and
authority to own or lease all of its properties and assets and to carry on its
business as now conducted, and (ii) is duly licensed or qualified to do business
and is in good standing in each jurisdiction in which its ownership or leasing
of property or the conduct of its business requires such qualification, except
where the failure to be so licensed, qualified or in good standing would not
have a Material Adverse Effect on GFCO. GFCO has heretofore delivered or made
available to FFOH true and complete copies of the Articles of Incorporation,
Constitution and Bylaws of Centennial and the Articles of Incorporation, Code of
Regulations and Bylaws of CSLSC as in effect as of the date hereof.
3.5 Authorized and Effective Agreement
(a) GFCO has all requisite corporate power and authority to enter into
this Agreement and (subject to receipt of all necessary governmental approvals
and expiration of applicable waiting periods and the approval of GFCO's
shareholders of this Agreement) to perform all of its obligations under this
Agreement. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly and validly authorized by
all necessary corporate action in respect thereof on the part of GFCO, except
for the approval of this Agreement by GFCO's shareholders. This Agreement has
been duly and validly executed and delivered by GFCO and, assuming due
authorization, execution and delivery by FFOH and Merger Corporation,
constitutes a legal, valid and binding obligation of GFCO which is enforceable
against GFCO in accordance with its terms, subject, as to enforceability, to
bankruptcy, insolvency and other laws of general applicability relating to or
affecting creditors' rights and to general equity principles.
(b) Neither the execution and delivery of this Agreement, nor
consummation of the transactions contemplated hereby (including the Merger and
the Bank Merger), nor compliance by GFCO with any of the provisions hereof (i)
does or will conflict with or result in a breach of any provisions of the
Certificate of Incorporation or Bylaws of GFCO or the equivalent documents of
any GFCO Subsidiary, (ii) violate, conflict with or result in a breach of any
term, condition or provision of, or constitute a default (or an event which,
with notice or lapse of time, or both, would constitute a default) under, or
give rise to any right of termination, cancellation or acceleration with respect
to, or result in the creation of any Lien upon any property or asset of GFCO or
any GFCO Subsidiary pursuant to, any material note, bond, mortgage, indenture,
deed of trust, license, lease, agreement or other instrument or obligation to
which GFCO or any GFCO Subsidiary is a party, or by which any of their
respective properties or assets may be bound or affected, or (iii) subject to
receipt of all required governmental and shareholder approvals, violate any
order, writ, injunction, decree, statute, rule or regulation applicable to GFCO
or any GFCO Subsidiary.
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(c) Except for (i) the filing of applications and notices with, and the
consents and approvals of, as applicable, the OTS, the FDIC and the Division,
(ii) the filing and effectiveness of the Form S-4 with the Commission, (iii)
compliance with applicable state securities or "blue sky" laws in connection
with the issuance of FFOH Common Stock pursuant to this Agreement, (iv) the
approval of this Agreement by the requisite vote of the shareholders of GFCO and
FFOH, (v) the filing of the Certificates of Merger with the Secretary of State
of the States of Ohio and Delaware pursuant to the OGCL and DGCL, respectively,
in each case in connection with the Merger and (vi) the filing of a Certificate
of Merger with the Division and the Secretary of the State of Ohio in connection
with the Bank Merger, and except for such filings, authorizations or approvals
which are Previously Disclosed, no consents or approvals of or filings or
registrations with any Governmental Entity or with any third party are necessary
on the part of GFCO or any GFCO Subsidiary in connection with (i) the execution
and delivery by GFCO of this Agreement and the consummation by GFCO of the
transactions contemplated hereby and (ii) the execution and delivery by
Centennial of the Bank Merger Agreement and the consummation by Centennial of
the transactions contemplated thereby.
(d) As of the date hereof, neither GFCO nor any of the GFCO
Subsidiaries is aware of any reasons (relating to GFCO or any of the GFCO
Subsidiaries (including, without limitation, Community Reinvestment Act
compliance)) why all consents and approvals shall not be procured from all
Governmental Entities having jurisdiction over the transactions contemplated by
this Agreement as shall be necessary for (i) consummation of the transactions
contemplated by this Agreement and the Bank Merger Agreement and (ii) the
continuation by FFOH after the Effective Time of the business of each of FFOH,
GFCO and their respective Subsidiaries as such business is carried on
immediately prior to the Effective Time, free of any conditions or requirements
which, in the reasonable opinion of GFCO, could reasonably be expected to have a
Material Adverse Effect on FFOH or GFCO or materially impair the value of GFCO
and the GFCO Subsidiaries.
3.6 Securities Documents and Regulatory Reports
(a) GFCO has previously delivered or made available to FFOH a complete
copy of all Securities Documents filed by GFCO pursuant to the Securities Laws
or mailed by GFCO to its shareholders as a class since January 1, 1994. GFCO has
timely filed with the Commission all Securities Documents required by the
Securities Laws and such Securities Documents complied in all material respects
with the Securities Laws and did not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading, provided that information as of a
later date shall be deemed to modify information as of an earlier date.
(b) Since January 1, 1994, each of GFCO and Centennial has duly filed
with the OTS, the FDIC and the Division, as the case may be, in correct form the
reports required to be filed under applicable laws and regulations and such
reports were in all material respects complete and accurate and in compliance
with the requirements of applicable laws and regulations, and GFCO has
previously delivered or made available to FFOH accurate and complete copies of
all such reports. In connection with the most recent examinations of GFCO or a
GFCO Subsidiary by the OTS, the
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FDIC and the Division, neither GFCO nor any GFCO Subsidiary was required to
correct or change any action, procedure or proceeding which has not been
corrected or changed as required.
3.7 Financial Statements
(a) GFCO has previously delivered or made available to FFOH accurate
and complete copies of the GFCO Financial Statements which, in the case of the
consolidated statements of financial condition of GFCO as of June 30, 1998, 1997
and 1996 and the consolidated statements of earnings, stockholders' equity and
cash flows for each of the three years ended June 30, 1998, 1997 and 1996, are
accompanied by the audit reports of Grant Thornton LLP, independent public
accountants with respect to the GFCO. The GFCO Financial Statements referred to
herein, as well as the GFCO Financial Statements to be delivered pursuant to
Section 5.7 hereof, fairly present or will fairly present, as the case may be,
the consolidated financial condition of GFCO as of the respective dates set
forth therein, and the consolidated results of operations, stockholders' equity
and cash flows of GFCO for the respective periods or as of the respective dates
set forth therein.
(b) Each of the GFCO Financial Statements has been or will be, as the
case may be, prepared in accordance with generally accepted accounting
principles consistently applied during the periods involved, except as stated
therein. The audits of GFCO and the GFCO Subsidiaries have been conducted in all
material respects in accordance with generally accepted auditing standards. The
books and records of GFCO and the GFCO Subsidiaries are being maintained in
material compliance with applicable legal and accounting requirements, and such
books and records accurately reflect in all material respects all dealings and
transactions in respect of the business, assets, liabilities and affairs of GFCO
and the GFCO Subsidiaries.
(c) Except to the extent (i) reflected, disclosed or provided for in
the consolidated statement of financial condition of GFCO as of June 30, 1998
(including related notes) and (ii) of liabilities incurred since June 30, 1998
in the ordinary course of business, neither GFCO nor any GFCO Subsidiary has any
liabilities, whether absolute, accrued, contingent or otherwise, which could
reasonably be expected to have a Material Adverse Effect on GFCO.
3.8 Material Adverse Change
(a) Since June 30, 1998, (i) GFCO and the GFCO Subsidiaries have
conducted their respective businesses in the ordinary and usual course
(excluding the incurrence of expenses in connection with this Agreement and the
transactions contemplated hereby) and (ii) no event has occurred or circumstance
arisen that, individually or in the aggregate, has had or could reasonably be
expected to have a Material Adverse Effect on GFCO.
(b) Except as Previously Disclosed, neither GFCO nor any of the GFCO
Subsidiaries has taken or permitted any of the actions set forth in Section
5.6(a) hereof between June 30, 1998 and the date hereof.
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3.9 Environmental Matters
(a) To the best of GFCO's knowledge, GFCO and the GFCO Subsidiaries are
in compliance with all Environmental Laws, except for any violations of any
Environmental Law which would not, singly or in the aggregate, have a Material
Adverse Effect on GFCO. Neither GFCO nor any GFCO Subsidiary has received any
written communication alleging that GFCO or any GFCO Subsidiary is not in such
compliance and, to the best knowledge of GFCO, there are no present
circumstances that would prevent or interfere with the continuation of such
compliance.
(b) To the best of GFCO's knowledge, none of the properties owned,
leased or operated by GFCO or GFCO's Subsidiaries has been or is in violation of
or liable under any Environmental Law, except any such violations or liabilities
which would not, singly or in the aggregate, have a Material Adverse Effect on
GFCO.
(c) To the best of GFCO's knowledge, there are no past or present
actions, activities, circumstances, conditions, events or incidents that could
reasonably form the basis of any Environmental Claim or other claim or action or
governmental investigation that could result in the imposition of any liability
arising under any Environmental Law against GFCO or any GFCO Subsidiary or
against any person or entity whose liability for any Environmental Claim GFCO or
any GFCO Subsidiary has or may have retained or assumed either contractually or
by operation of law, except such which would not have a Material Adverse Effect
on GFCO.
(d) Except as Previously Disclosed, GFCO has not conducted any
environmental studies during the past five years with respect to any properties
owned by it or any GFCO Subsidiary as of the date hereof or which secure loans
of a GFCO Subsidiary as of the date hereof.
3.10 Tax Matters
(a) GFCO and the GFCO Subsidiaries, and each of their predecessors,
have timely filed all federal, state and local (and, if applicable, foreign)
income, franchise, bank, excise, real property, personal property and other tax
returns required by applicable law to be filed by them (including, without
limitation, estimated tax returns, income tax returns, information returns and
withholding and employment tax returns) and have paid, or where payment is not
required to have been made, have set up an adequate reserve or accrual for the
payment of, all taxes required to be paid in respect of the periods covered by
such returns and, as of the Effective Time, will have paid, or where payment is
not required to have been made, will have set up an adequate reserve or accrual
for the payment of, all taxes for any subsequent periods ending on or prior to
the Effective Time. Neither GFCO nor any of the GFCO Subsidiaries will have any
material liability for any such taxes in excess of the amounts so paid or
reserves or accruals so established.
(b) All federal, state and local (and, if applicable, foreign) income,
franchise, bank, excise, real property, personal property and other tax returns
filed by GFCO and the GFCO Subsidiaries are complete and accurate in all
material respects. Neither GFCO nor any of the GFCO Subsidiaries is delinquent
in the payment of any tax, assessment or governmental charge, and none of them
has requested any extension of time within which to file any tax returns in
respect of any fiscal year or portion thereof which have not since been filed.
Except as Previously Disclosed, the
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federal, state and local income tax returns of GFCO and the GFCO Subsidiaries
have been examined by the applicable tax authorities (or are closed to
examination due to the expiration of the applicable statute of limitations) and
no deficiencies for any tax, assessment or governmental charge have been
proposed, asserted or assessed (tentatively or otherwise) against GFCO or any
GFCO Subsidiary as a result of such examinations or otherwise which have not
been settled and paid. There are currently no agreements in effect with respect
to GFCO or any GFCO Subsidiary to extend the period of limitations for the
assessment or collection of any tax. As of the date hereof, no audit,
examination or deficiency or refund litigation with respect to such return is
pending or, to the best of GFCO's knowledge, threatened.
(c) Except as Previously Disclosed, none of GFCO or the GFCO
Subsidiaries (i) is a party to any agreement providing for the allocation or
sharing of taxes, (ii) is required to include in income any adjustment pursuant
to Section 481(a) of the Code by reason of a voluntary change in accounting
method initiated by GFCO or the GFCO Subsidiaries (nor does GFCO have any
knowledge that the Internal Revenue Service has proposed any such adjustment or
change of accounting method) or (iii) has filed a consent pursuant to Section
341(f) of the Code or agreed to have Section 341(f)(2) of the Code apply.
3.11 Legal Proceedings
Except as Previously Disclosed, there are no actions, suits, claims,
governmental investigations or proceedings instituted, pending or, to the best
knowledge of GFCO, threatened against GFCO or any GFCO Subsidiary or against any
asset, interest or right of GFCO or any of GFCO Subsidiaries, or against any
officer, director or employee of any of them that in any such case, if decided
adversely, could reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on GFCO. Neither GFCO nor any GFCO
Subsidiary is a party to any order, judgment or decree which has or could
reasonably be expected to have a Material Adverse Effect on GFCO.
3.12 Compliance with Laws
(a) GFCO and each of the GFCO Subsidiaries has all permits, licenses,
certificates of authority, orders and approvals of, and has made all filings,
applications and registrations with, federal, state, local and foreign
governmental or regulatory bodies that are required in order to permit it to
carry on its business as it is presently being conducted and the absence of
which could reasonably be expected to have a Material Adverse Effect on GFCO;
all such permits, licenses, certificates of authority, orders and approvals are
in full force and effect; and to the best knowledge of GFCO, no suspension or
cancellation of any of the same is threatened.
(b) Neither GFCO nor any of GFCO Subsidiaries is in violation of its
respective Certificate of Incorporation or Bylaws or equivalent documents, or of
any applicable federal, state or local law or ordinance or any order, rule or
regulation of any federal, state, local or other governmental agency or body
(including, without limitation, all banking (including, without limitation, all
regulatory capital requirements), securities, municipal securities, safety,
health, environmental, zoning, anti-discrimination, antitrust, and wage and hour
laws, ordinances, orders, rules and regulations), or in default with respect to
any order, writ, injunction or decree of any court,
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or in default under any order, license, regulation or demand of any governmental
agency, any of which violations or defaults could reasonably be expected to have
a Material Adverse Effect on GFCO; and neither GFCO nor any GFCO Subsidiary has
received any written notice or communication from any federal, state or local
governmental authority asserting that GFCO or any GFCO Subsidiary is in
violation of any of the foregoing which could reasonably be expected to have a
Material Adverse Effect on GFCO. Neither GFCO nor any GFCO Subsidiary is subject
to any regulatory or supervisory cease and desist order, agreement, written
directive, memorandum of understanding or written commitment (other than those
of general applicability to all savings institutions or holding companies
thereof issued by governmental authorities), and none of them has received any
written communication requesting that they enter into any of the foregoing.
3.13 Deposit Insurance and Other Regulatory Matters
(a) The deposit accounts of Centennial are insured by the SAIF to the
maximum extent permitted by the FDIA, and Centennial has paid all premiums and
assessments required by the FDIA and the regulations thereunder.
(b) Centennial is a member in good standing of the FHLB of Cincinnati
and owns the requisite amount of stock in the FHLB of Cincinnati.
(c) Centennial has at all relevant times qualified as a "domestic
building and loan association," as such term is defined in Section 7701(a)(19)
of the Code, for purposes of Section 593 of the Code.
3.14 Certain Information
None of the information relating to GFCO and the GFCO Subsidiaries
supplied or to be supplied for inclusion or incorporation by reference in (i)
the Form S-4 will, at the time the Form S-4 and any amendment thereto becomes
effective under the Securities Act, contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading, and
(ii) the Proxy Statement, as of the date(s) such Proxy Statement is mailed to
shareholders of GFCO and FFOH and up to and including the date(s) of the
meetings of shareholders to which such Proxy Statement relates, will contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading, provided that information as of a later date shall be
deemed to modify information as of an earlier date. The Proxy Statement mailed
by FFOH and GFCO to their respective shareholders in connection with the
meetings of shareholders at which this Agreement will be considered by such
shareholders will comply as to form in all material respects with the Exchange
Act and the rules and regulations promulgated thereunder.
3.15 Employee Benefit Plans
(a) GFCO has Previously Disclosed all stock option, employee stock
purchase and stock bonus plans, qualified pension or profit-sharing plans, any
fringe benefit, incentive, deferred compensation, consultant, bonus or group
insurance contract, plan or arrangement, or any other
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welfare plan (as defined under Section 3(1) of ERISA), employee pension benefit
plan (as defined under Section 3(2) of ERISA) or agreement maintained for the
benefit of employees or former employees of GFCO or any GFCO Subsidiary (the
"GFCO Employee Plans"), and GFCO has previously furnished or made available to
FFOH accurate and complete copies of the same together with (i) the most recent
actuarial and financial reports prepared with respect to any qualified plans,
(ii) the most recent annual reports filed with any governmental agency with
respect to each GFCO Employee Plan, and (iii) all rulings and determination
letters and any open requests for rulings or letters that pertain to any
qualified plan.
(b) None of GFCO, any GFCO Subsidiary, any pension plan maintained by
any of them and qualified under Section 401 of the Code or, to the best of
GFCO's knowledge, any fiduciary of such plan has incurred any material liability
to the PBGC or the Internal Revenue Service with respect to any employees of
GFCO or any GFCO Subsidiary. To the best of GFCO's knowledge, no reportable
event under Section 4043(b) of ERISA has occurred with respect to any such
pension plan.
(c) Neither GFCO nor any GFCO Subsidiary participates in or has
incurred any liability under Section 4201 of ERISA for a complete or partial
withdrawal from a multi-employer plan (as such term is defined in ERISA), and
neither GFCO nor any GFCO Subsidiary (or their respective successors) will incur
any liability in the event of a complete withdrawal from any multi-employer plan
of which GFCO or any of its Subsidiaries is a participant as of the date hereof
in connection with the transactions contemplated hereby.
(d) A favorable determination letter has been issued by the Internal
Revenue Service with respect to each GFCO Employee Plan which is an "employee
pension benefit plan" (as defined in Section 3(2) of ERISA) (a "GFCO Pension
Plan") which is intended to qualify under Section 401 of the Code to the effect
that such plan is qualified under Section 401 of the Code and the trust
associated with such employee pension plan is tax exempt under Section 501 of
the Code. No such letter has been revoked or, to the best of GFCO's knowledge,
is threatened to be revoked and GFCO does not know of any ground on which such
revocation may be based. Neither GFCO nor any GFCO Subsidiary has any liability
under any such plan that is not reflected on the consolidated statement of
financial condition of GFCO at June 30, 1998 included in the GFCO Financial
Statements, other than liabilities incurred in the ordinary course of business
in connection therewith subsequent to the date thereof.
(e) No prohibited transaction (which shall mean any transaction
prohibited by Section 406 of ERISA and not exempt under Section 408 of ERISA or
Section 4975 of the Code) has occurred with respect to any GFCO Employee Plan
which would result in the imposition, directly or indirectly, of a material
excise tax under Section 4975 of the Code or otherwise have a Material Adverse
Effect on GFCO.
(f) Full payment has been made (or proper accruals have been
established) of all contributions which are required for periods prior to the
date hereof, and full payment will be so made (or proper accruals will be so
established) of all contributions which are required for periods after the date
hereof and prior to the Effective Time, under the terms of each GFCO Employee
Plan or ERISA; no accumulated funding deficiency (as defined in Section 302 of
ERISA or Section 412
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of the Code), whether or not waived, exists with respect to any GFCO Pension
Plan, and there is no "unfunded current liability" (as defined in Section 412 of
the Code) with respect to any GFCO Pension Plan.
(g) GFCO Employee Plans have been operated in compliance in all
material respects with the applicable provisions of the GFCO Employee Plans,
ERISA, the Code, all regulations, rulings and announcements promulgated or
issued thereunder and all other applicable governmental laws and regulations.
(h) There are no pending or, to the best knowledge of GFCO, threatened
claims (other than routine claims for benefits) by, on behalf of or against any
of GFCO Employee Plans or any trust related thereto or any fiduciary thereof
relating to a GFCO Employee Plan.
(i) Except as Previously Disclosed, the consummation of the
transactions contemplated by this Agreement would not, directly or indirectly
(including, without limitation, as a result of any termination of employment
prior to or following the Effective Time) reasonably be expected to (i) entitle
any director, officer, employee or consultant of or to GFCO or any GFCO
Subsidiary to any payment (including severance pay or similar compensation) or
any increase in compensation, (ii) result in the vesting or acceleration of any
benefits under any GFCO Employee Plan or (iii) result in any material increase
in benefits payable under any GFCO Employee Plan.
(j) Neither GFCO nor any of its Subsidiaries maintains any compensation
plans, programs or arrangements the payments under which would not reasonably be
expected to be deductible as a result of the limitations under Section 162(m) of
the Code and the regulations issued thereunder.
(k) As a result, directly or indirectly, of the transactions
contemplated by this Agreement (including, without limitation, as a result of
any termination of employment prior to or following the Effective Time), none of
GFCO, FFOH or any of their respective Subsidiaries will be obligated to make a
payment that would be characterized as an "excess parachute payment" to an
individual who is a "disqualified individual" (as such terms are defined in
Section 280G of the Code), without regard to whether such payment is reasonable
compensation for personal services performed or to be performed in the future.
3.16 Certain Contracts
(a) Except as Previously Disclosed, none of GFCO or the GFCO
Subsidiaries is a party to, is bound or affected by, receives, or is obligated
to pay, benefits under (i) any agreement, arrangement or commitment, including
without limitation any agreement, indenture or other instrument, relating to the
borrowing of money by GFCO or any GFCO Subsidiary (other than deposits, federal
funds purchased, FHLB advances and securities sold under agreements to
repurchase) or the guarantee by GFCO or any GFCO Subsidiary of any obligation,
(ii) any agreement, arrangement or commitment relating to the employment of a
consultant or the employment, election or retention in office of any present or
former director, officer or employee of GFCO or any GFCO Subsidiary, (iii) any
agreement, arrangement or understanding pursuant to which GFCO or any GFCO
Subsidiary is obligated to indemnify any existing or former director,
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officer, employee or agent of GFCO or any GFCO Subsidiary, (iv) any agreement,
arrangement or understanding to which GFCO or any GFCO Subsidiary is a party or
by which any of the same is bound which limits the freedom of GFCO or any GFCO
Subsidiary to compete in any line of business or with any person, or (v) any
other agreement, arrangement or understanding which would be required to be
filed as an exhibit to GFCO's Annual Report on Form 10-KSB under the Exchange
Act and which has not been so filed.
(b) Neither GFCO nor any GFCO Subsidiary is in default or in
non-compliance, which default or non-compliance could reasonably be expected to
have a Material Adverse Effect on GFCO, under any contract, agreement,
commitment, arrangement, lease, insurance policy or other instrument to which it
is a party or by which its assets, business or operations may be bound or
affected, whether entered into in the ordinary course of business or otherwise
and whether written or oral, and there has not occurred any event that with the
lapse of time or the giving of notice, or both, would constitute such a default
or non-compliance.
3.17 Brokers and Finders
Except for an agreement with Stifel, Nicolaus & Company, Incorporated,
as Previously Disclosed, neither GFCO nor any GFCO Subsidiary, nor any of their
respective directors, officers or employees, has employed any broker or finder
or incurred any liability for any broker or finder fees or commissions in
connection with the transactions contemplated hereby.
3.18 Insurance
GFCO and each GFCO Subsidiary is insured for reasonable amounts with
financially sound and reputable insurance companies against such risks as
companies engaged in a similar business would, in accordance with good business
practice, customarily be insured and has maintained all insurance required by
applicable laws and regulations. Neither GFCO nor any of GFCO Subsidiaries has
received any notice of cancellation or notice of a material amendment of any
such insurance policy or bond or is in default under such policy or bond, no
coverage thereunder is being disputed and all material claims thereunder have
been filed in a timely fashion.
3.19 Properties
All real and personal property owned by GFCO or any of the GFCO
Subsidiaries or presently used by any of them in their respective business is in
an adequate condition (ordinary wear and tear excepted) and is sufficient to
carry on the business of GFCO and the GFCO Subsidiaries in the ordinary course
of business consistent with their past practices. GFCO and the GFCO Subsidiaries
have good and marketable title free and clear of all Liens (other than equities
of redemption under applicable foreclosure laws) to all of the material
properties and assets, real and personal, reflected on the consolidated
statement of financial condition of GFCO as of June 30, 1998 included in the
GFCO Financial Statements or acquired after such date, except (i) Liens for
current taxes not yet due or payable, (ii) pledges to secure deposits and other
Liens incurred in the ordinary course of its banking business, (iii) such
imperfections of title, easements and encumbrances, if any, as are not material
in character, amount or extent and (iv) as reflected on the consolidated
statement of financial condition of GFCO as of June 30, 1998 included in the
GFCO Financial Statements. All
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real and personal property which is material to GFCO's business on a
consolidated basis and leased or licensed by GFCO or any GFCO Subsidiary is held
pursuant to leases or licenses which are valid and enforceable in accordance
with their respective terms and such leases will not terminate or lapse prior to
the Effective Time.
3.20 Labor
No work stoppage involving GFCO or any GFCO Subsidiary is pending or,
to the best knowledge of GFCO, threatened. Neither GFCO nor any GFCO Subsidiary
is involved in, or threatened with or affected by, any labor dispute,
arbitration, lawsuit or administrative proceeding involving the employees of
GFCO or any GFCO Subsidiary which reasonably could be expected to have a
Material Adverse Effect on GFCO. Employees of GFCO and the GFCO Subsidiaries are
not represented by any labor union nor are any collective bargaining agreements
otherwise in effect with respect to such employees, and to the best of GFCO's
knowledge, there have been no efforts to unionize or organize any employees of
GFCO or any GFCO Subsidiary during the past five years.
3.21 Loans; Nonperforming and Classified Assets; Allowance for Loan Losses
(a) Each loan agreement, note or borrowing arrangement, including
without limitation portions of outstanding lines of credit and loan commitments
(collectively, "Loans"), on the books and records of GFCO and its Subsidiaries,
was made and has been serviced in all material respects in accordance with
customary lending standards in the ordinary course of business, is evidenced in
all material respects by appropriate and sufficient documentation and, to the
best knowledge of GFCO, constitutes the legal, valid and binding obligation of
the obligor named therein, subject to bankruptcy, insolvency, fraudulent
conveyance and other laws of general applicability relating to or affecting
creditor's rights and to general equity principles.
(b) GFCO has Previously Disclosed as to GFCO and each GFCO Subsidiary
as of June 30, 1998: (i) any written or, to GFCO's knowledge, oral Loan under
the terms of which the obligor is 60 or more days delinquent in payment of
principal or interest, or to the best of GFCO's knowledge, in default of any
other material provision thereof; (ii) each Loan which has been classified as
"substandard," "doubtful," "loss" or "special mention" (or words of similar
import) by GFCO, a GFCO Subsidiary or an applicable regulatory authority; (iii)
a listing of the real estate owned acquired by foreclosure or by deed-in-lieu
thereof, including the book value thereof; and (iv) each Loan with any director,
executive officer or five percent or greater stockholder of GFCO or a GFCO
Subsidiary, or to the best knowledge of GFCO, any person, corporation or
enterprise controlling, controlled by or under common control with any of the
foregoing.
(c) The allowance for loan losses reflected on GFCO's consolidated
statements of financial condition included in GFCO Financial Statements is, or
will be in the case of subsequently delivered GFCO Financial Statements, as the
case may be, in the opinion of GFCO's management, adequate in all material
respects as of their respective dates under the requirements of generally
accepted accounting principles to provide for reasonably anticipated losses on
outstanding loans, net of recoveries.
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3.22 Administration of Fiduciary Accounts
GFCO and each of its Subsidiaries has properly administered all
accounts for which it acts as a fiduciary, including but not limited to accounts
for which it serves as a trustee, agent, custodian, personal representative,
guardian, conservator or investment advisor, in accordance with the terms of the
governing documents and applicable laws and regulations, except for failures to
so administer which would not have a Material Adverse Effect on GFCO. Neither
GFCO nor any of its Subsidiaries, nor any of their respective directors,
officers or employees, has committed any breach of trust with respect to any
such fiduciary account and the records for each such fiduciary account are true
and correct and accurately reflect the assets of such fiduciary account, except
for breaches of trust and failures to maintain records which would not,
individually or in the aggregate, have a Material Adverse Effect on GFCO.
3.23 Derivative Transactions
Except as Previously Disclosed, between June 30, 1998 and the date
hereof, neither GFCO nor any of its Subsidiaries entered into any futures
contract, option contract, interest rate caps, interest rate floors, interest
rate exchange agreement or other derivative instruments.
3.24 Year 2000
Neither GFCO nor any of its Subsidiaries has received or has reason to
believe that it will receive a rating of less than "satisfactory" on any Year
2000 Report of Examination of any Governmental Entity. GFCO has disclosed or
made available to FFOH a complete and accurate copy of its plan, including an
estimate of the anticipated associated costs, for addressing the issues set
forth in the statements of the FFIEC dated May 5, 1997, entitled "Year 2000
Project Management Awareness," and December 17, 1997, entitled "Safety and
Soundness Guidelines Concerning the Year 2000 Business Risk," as such issues
affect it and its Subsidiaries, and such plan is in material compliance with the
schedule set forth in the FFIEC statements.
3.25 Required Vote; Antitakeover Provisions
(a) The affirmative vote of the holders of a majority of the issued and
outstanding shares of GFCO Common Stock is the only vote of stockholders of GFCO
required to approve this Agreement and the transactions contemplated hereby on
behalf of GFCO.
(b) To the best of our knowledge, FFOH is not an "interested
stockholder" of GFCO as defined in Section 203(c)(5) of the DGCL (assuming the
accuracy of the representation and warranty of FFOH contained in Section 4.25
hereof) and, as a result, the provisions of Section 203 of the DGCL do not apply
to the Merger and the other transactions contemplated hereby.
(c) The Board of Directors of GFCO has taken all necessary action so
that the provisions of Article Eight of GFCO's Certificate of Incorporation do
not and will not apply to this Agreement and GFCO Stock Option Agreement and the
transactions contemplated hereby and thereby.
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3.26 Fairness Opinion
GFCO has received an opinion of Stifel, Nicolaus & Company,
Incorporated to the effect that, as of the date hereof, the consideration to be
received by the stockholders of GFCO pursuant to this Agreement is fair from a
financial point of view to the holders of GFCO Common Stock.
3.27 Accounting for the Merger; Reorganization
As of the date hereof, GFCO does not have any reason to believe that
the Merger will fail to qualify, as a result of any action or omission by GFCO
or any GFCO Subsidiary, (i) for pooling-of-interests accounting treatment under
generally accepted accounting principles or (ii) as a reorganization under
Section 368(a) of the Code.
3.28 Disclosures
None of the representations and warranties of GFCO or any of the
written information or documents furnished or to be furnished by GFCO to FFOH in
connection with or pursuant to this Agreement or the consummation of the
transactions contemplated hereby, when considered as a whole, contains or will
contain any untrue statement of a material fact, or omits or will omit to state
any material fact required to be stated or necessary to make any such
information or document, in light of the circumstances, not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF FFOH
AND MERGER CORPORATION
FFOH and Merger Corporation represent and warrant to GFCO as follows:
4.1 Capital Structure of FFOH
The authorized capital stock of FFOH consists of 15,000,000 shares of
FFOH Common Stock and 5,000,000 shares of FFOH Preferred Stock. As of the date
hereof, there are 5,601,977 shares of FFOH Common Stock issued and outstanding,
no shares of FFOH Common Stock which are directly or indirectly held as treasury
stock by FFOH, and no shares of FFOH Preferred Stock issued and outstanding. All
outstanding shares of FFOH Common Stock have been duly authorized and validly
issued and are fully paid and nonassessable, and none of the outstanding shares
of FFOH Common Stock has been issued in violation of the preemptive rights of
any person, firm or entity. Except for (i) 220,009 shares of FFOH Common Stock
issuable upon exercise of stock options which have been granted pursuant to the
1992 Stock Incentive Plan, the 1992 Directors' Stock Option Plan and the 1997
Stock Option Plan, as Previously Disclosed, (ii) shares of FFOH Common Stock
issuable pursuant to the terms of the FFOH Stock Option Agreement and (iii) the
operative provisions of this Agreement, there are no Rights authorized, issued
or outstanding with respect to the capital stock of FFOH. FFOH has not
repurchased any shares of FFOH Common Stock during the two years preceding the
date hereof, except for any such repurchases (including the number of shares,
date repurchased, repurchase price and the purpose thereof) as are Previously
Disclosed.
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FFOH Common Stock to be issued in connection with the Merger is duly authorized
and, when issued in accordance with the terms hereof, will be validly issued and
fully paid and nonassessable.
4.2 Organization, Standing and Authority of FFOH
FFOH is a corporation duly organized, validly existing and in good
standing under the laws of the State of Ohio with full corporate power and
authority to own or lease all of its properties and assets and to carry on its
business as now conducted and is duly licensed or qualified to do business and
is in good standing in each jurisdiction in which its ownership or leasing of
property or the conduct of its business requires such licensing or
qualification, except where the failure to be so licensed, qualified or in good
standing would not have a Material Adverse Effect on FFOH. FFOH is duly
registered as a savings and loan holding company under the HOLA and the
regulations of the OTS thereunder. FFOH has heretofore delivered or made
available to GFCO true and complete copies of the Articles of Incorporation,
Code of Regulations and Bylaws of FFOH as in effect as of the date hereof.
4.3 Ownership of FFOH Subsidiaries
The only direct or indirect Subsidiaries of FFOH are Merger
Corporation, the Bank and SGFSC (the "FFOH Subsidiaries"). Except for (i)
capital stock of the FFOH Subsidiaries, (ii) stock in the FHLB of Cincinnati,
(iii) securities and other interests taken in consideration of debts previously
contracted and (iv) the operative provisions of this Agreement and the GFCO
Stock Option Agreement, FFOH does not own or have the right to acquire, directly
or indirectly, any outstanding capital stock or other voting securities or
ownership interests of any corporation, bank, savings association, partnership,
joint venture or other organization. The outstanding shares of capital stock or
other ownership interests in each of the FFOH Subsidiaries have been duly
authorized and validly issued, are fully paid and nonassessable, and are
directly or indirectly owned by FFOH free and clear of all Liens or rights of
third parties of any kind whatsoever. No Rights are authorized, issued or
outstanding with respect to the capital stock or other ownership interests of
any FFOH Subsidiary and there are no agreements, understandings or commitments
relating to the right of FFOH to vote or to dispose of said shares or other
ownership interests.
4.4 Organization, Standing and Authority of FFOH Subsidiaries
The Bank is a savings bank duly organized, validly existing and in good
standing under the laws of the United States, and Merger Corporation and SGFSC
are corporations duly organized, validly existing and in good standing under the
laws of the State of Ohio. Each of the FFOH Subsidiaries (i) has full power and
authority to own or lease all of its properties and assets and to carry on its
business as now conducted, and (ii) is duly licensed or qualified to do business
and is in good standing in each jurisdiction in which its ownership or leasing
of property or the conduct of its business requires such qualification, except
where the failure to be so licensed, qualified or in good standing would not
have a Material Adverse Effect on FFOH. FFOH has heretofore delivered or made
available to GFCO true and complete copies of the Charter and Bylaws of the Bank
and the Articles of Incorporation, Code of Regulations and Bylaws of each of
Merger Corporation and SGFSC as in effect as of the date hereof.
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4.5 Authorized and Effective Agreement
(a) Each of FFOH and Merger Corporation has all requisite corporate
power and authority to enter into this Agreement and (subject to receipt of all
necessary governmental approvals and the approval of FFOH's shareholders of this
Agreement and the other transactions contemplated hereby) to perform all of its
obligations under this Agreement. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action in respect thereof on the
part of FFOH and Merger Corporation, except for the approval of this Agreement
and the other transactions contemplated hereby by FFOH's shareholders. This
Agreement has been duly and validly executed and delivered by each of FFOH and
Merger Corporation and, assuming due authorization, execution and delivery by
GFCO, constitutes a legal, valid and binding obligation of FFOH and Merger
Corporation which is enforceable against FFOH and Merger Corporation in
accordance with its terms, subject, as to enforceability, to bankruptcy,
insolvency and other laws of general applicability relating to or affecting
creditors' rights and to general equity principles.
(b) Neither the execution and delivery of this Agreement, nor
consummation of the transactions contemplated hereby (including the Merger and
the Bank Merger), nor compliance by FFOH or Merger Corporation with any of the
provisions hereof (i) does or will conflict with or result in a breach of any
provisions of the Articles of Incorporation, Code of Regulations or Bylaws of
FFOH, Merger Corporation or SGFSC or the Charter or Bylaws of the Bank, (ii)
violate, conflict with or result in a breach of any term, condition or provision
of, or constitute a default (or an event which, with notice or lapse of time, or
both, would constitute a default) under, or give rise to any right of
termination, cancellation or acceleration with respect to, or result in the
creation of any Lien upon any property or asset of FFOH or the FFOH Subsidiaries
pursuant to, any material note, bond, mortgage, indenture, deed of trust,
license, lease, agreement or other instrument or obligation to which FFOH or the
FFOH Subsidiaries is a party, or by which any of their respective properties or
assets may be bound or affected, or (iii) subject to receipt of all required
governmental and shareholder approvals, violate any order, writ, injunction,
decree, statute, rule or regulation applicable to FFOH or the FFOH Subsidiaries.
(c) Except for (i) the filing of applications and notices with, and the
consents and approvals of, as applicable, the OTS and the Division, (ii) the
filing and effectiveness of the Form S-4 with the Commission, (iii) compliance
with applicable state securities or "blue sky" laws in connection with the
issuance of FFOH Common Stock pursuant to this Agreement, (iv) the approval of
this Agreement by the requisite vote of the shareholders of GFCO and FFOH, (v)
the filing of the Certificates of Merger with the Secretary of State of the
States of Ohio and Delaware, pursuant to the OGCL and DGCL, respectively, in
each case in connection with the Merger and (vi) the filing of a Certificate of
Merger with the Secretary of the State of Ohio in connection with the Bank
Merger, and except for such filings, authorizations or approvals which are
Previously Disclosed, no consents or approvals of or filings or registrations
with any Governmental Entity or with any third party are necessary on the part
of FFOH or the FFOH Subsidiaries in connection with (i) the execution and
delivery by FFOH and Merger Corporation of this Agreement and the consummation
by FFOH and Merger Corporation of the transactions contemplated hereby and (ii)
the execution and delivery by the Bank of the Bank Merger Agreement and the
consummation by the Bank of the transactions contemplated thereby.
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(d) As of the date hereof, none of FFOH or the FFOH Subsidiaries is
aware of any reasons (relating to FFOH or the FFOH Subsidiaries (including,
without limitation, Community Reinvestment Act compliance)) why all consents and
approvals shall not be procured from all Governmental Entities having
jurisdiction over the transactions contemplated by this Agreement as shall be
necessary for (i) consummation of the transactions contemplated by this
Agreement and the Bank Merger Agreement and (ii) the continuation by FFOH after
the Effective Time of the business of each of FFOH, GFCO and their respective
Subsidiaries as such business is carried on immediately prior to the Effective
Time, free of any conditions or requirements which, in the reasonable opinion of
FFOH, could have a Material Adverse Effect on FFOH or GFCO or materially impair
the value of GFCO and the GFCO Subsidiaries to FFOH.
4.6 Securities Documents and Regulatory Reports
(a) FFOH has previously delivered or made available to GFCO a complete
copy of all Securities Documents filed by FFOH or the Bank pursuant to the
Securities Laws or mailed by FFOH or the Bank to its respective shareholders as
a class since January 1, 1994. FFOH has timely filed with the Commission (and
the Bank has timely filed with the OTS) all Securities Documents required by the
Securities Laws and such Securities Documents complied in all material respects
with the Securities Laws and did not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading, provided that information as of a
later date shall be deemed to modify information as of an earlier date.
(b) Since January 1, 1994, each of FFOH and the Bank has duly filed
with the OTS and the FDIC, as the case may be, in correct form the reports
required to be filed under applicable laws and regulations and such reports were
in all material respects complete and accurate and in compliance with the
requirements of applicable laws and regulations, and FFOH has previously
delivered or made available to GFCO accurate and complete copies of all such
reports. In connection with the most recent examinations of FFOH or a FFOH
Subsidiary by the OTS or the FDIC, neither FFOH nor any FFOH Subsidiary was
required to correct or change any action, procedure or proceeding which has not
been corrected or changed as required.
4.7 Financial Statements
(a) FFOH has previously delivered or made available to GFCO accurate
and complete copies of the FFOH Financial Statements which, in the case of the
consolidated statements of financial condition of FFOH as of December 31, 1997,
1996 and 1995 and the consolidated statements of earnings, stockholders' equity
and cash flows for each of the three years ended December 31, 1997, 1996 and
1995, are accompanied by the audit reports of Grant Thornton LLP, independent
public accountants with respect to FFOH. The FFOH Financial Statements referred
to herein, as well as the FFOH Financial Statements to be delivered pursuant to
Section 5.7 hereof, fairly present or will fairly present, as the case may be,
the consolidated financial condition of FFOH as of the respective dates set
forth therein, and the consolidated results of operations, stockholders' equity
and cash flows of FFOH for the respective periods or as of the respective dates
set forth therein.
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(b) Each of the FFOH Financial Statements has been or will be, as the
case may be, prepared in accordance with generally accepted accounting
principles consistently applied during the periods involved, except as stated
therein. The audits of FFOH and the FFOH Subsidiaries have been conducted in all
material respects in accordance with generally accepted auditing standards. The
books and records of FFOH and the FFOH Subsidiaries are being maintained in
material compliance with applicable legal and accounting requirements, and all
such books and records accurately reflect in all material respects all dealings
and transactions in respect of the business, assets, liabilities and affairs of
FFOH and the FFOH Subsidiaries.
(c) Except to the extent (i) reflected, disclosed or provided for in
the consolidated statement of financial condition of FFOH as of June 30, 1998
(including related notes) and (ii) of liabilities incurred since June 30, 1998
in the ordinary course of business, none of FFOH or the FFOH Subsidiaries has
any liabilities, whether absolute, accrued, contingent or otherwise, which could
reasonably be expected to have a Material Adverse Effect on FFOH.
4.8 Material Adverse Change
(a) Since June 30, 1998, (i) FFOH and the FFOH Subsidiaries have
conducted their respective businesses in the ordinary and usual course
(excluding the incurrence of expenses in connection with this Agreement and the
transactions contemplated hereby) and (ii) no event has occurred or circumstance
arisen that, individually or in the aggregate, has had or could reasonably be
expected to have a Material Adverse Effect on FFOH.
(b) Except as Previously Disclosed, none of FFOH or the FFOH
Subsidiaries has taken or permitted any of the actions set forth in Section
5.6(b) hereof between June 30, 1998 and the date hereof.
4.9 Environmental Matters
(a) To the best of FFOH's knowledge, FFOH and the FFOH Subsidiaries are
in compliance with all Environmental Laws, except for any violations of any
Environmental Law which would not, singly or in the aggregate, have a Material
Adverse Effect on FFOH. None of FFOH or the FFOH Subsidiaries has received any
written communication alleging that FFOH or the FFOH Subsidiaries is not in such
compliance and, to the best knowledge of FFOH, there are no present
circumstances that would prevent or interfere with the continuation of such
compliance.
(b) To the best of FFOH's knowledge, none of the properties owned,
leased or operated by FFOH or the FFOH Subsidiaries has been or is in violation
of or liable under any Environmental Law, except any such violations or
liabilities which would not singly or in the aggregate, have a Material Adverse
Effect on FFOH.
(c) To the best of FFOH's knowledge, there are no past or present
actions, activities, circumstances, conditions, events or incidents that could
reasonably form the basis of any Environmental Claim or other claim or action or
governmental investigation that could result in the imposition of any liability
arising under any Environmental Law against FFOH or the FFOH Subsidiaries or
against any person or entity whose liability for any Environmental Claim FFOH or
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any of the FFOH Subsidiaries has or may have retained or assumed either
contractually or by operation of law, except such which would not have a
Material Adverse Effect on FFOH.
(d) Except as Previously Disclosed, FFOH has not conducted any
environmental studies during the past five years with respect to any properties
owned by it or an FFOH Subsidiaries as of the date hereof or which secure loans
of an FFOH Subsidiary as of the date hereof.
4.10 Tax Matters
(a) FFOH, the FFOH Subsidiaries, and each of their predecessors, have
timely filed all federal, state and local (and, if applicable, foreign) income,
franchise, bank, excise, real property, personal property and other tax returns
required by applicable law to be filed by them (including, without limitation,
estimated tax returns, income tax returns, information returns and withholding
and employment tax returns) and, except as Previously Disclosed, have paid, or
where payment is not required to have been made, have set up an adequate reserve
or accrual for the payment of, all taxes required to be paid in respect of the
periods covered by such returns and, as of the Effective Time, will have paid,
or where payment is not required to have been made, will have set up an adequate
reserve or accrual for the payment of, all taxes for any subsequent periods
ending on or prior to the Effective Time. None of FFOH or the FFOH Subsidiaries
will have any material liability for any such taxes in excess of the amounts so
paid or reserves or accruals so established.
(b) All federal, state and local (and, if applicable, foreign) income,
franchise, bank, excise, real property, personal property and other tax returns
filed by FFOH and the FFOH Subsidiaries are complete and accurate in all
material respects. None of FFOH or the FFOH Subsidiaries is delinquent in the
payment of any tax, assessment or governmental charge, and none of them has
requested any extension of time within which to file any tax returns in respect
of any fiscal year or portion thereof which have not since been filed. Except as
Previously Disclosed, the federal, state and local income tax returns of FFOH
and the FFOH Subsidiaries have been examined by the applicable tax authorities
(or are closed to examination due to the expiration of the applicable statute of
limitations) and no deficiencies for any tax, assessment or governmental charge
have been proposed, asserted or assessed (tentatively or otherwise) against FFOH
or the FFOH Subsidiaries as a result of such examinations or otherwise which
have not been settled and paid. There are currently no agreements in effect with
respect to FFOH or the FFOH Subsidiaries to extend the period of limitations for
the assessment or collection of any tax. As of the date hereof, no audit,
examination or deficiency or refund litigation with respect to such return is
pending or, to the best of FFOH's knowledge, threatened.
(c) None of FFOH or the FFOH Subsidiaries (i) is a party to any
agreement providing for the allocation or sharing of taxes, (ii) is required to
include in income any adjustment pursuant to Section 481(a) of the Code by
reason of a voluntary change in accounting method initiated by FFOH or the FFOH
Subsidiaries (nor does FFOH have any knowledge that the Internal Revenue Service
has proposed any such adjustment or change of accounting method) or (iii) has
filed a consent pursuant to Section 341(f) of the Code or agreed to have Section
341(f)(2) of the Code apply.
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4.11 Legal Proceedings
There are no actions, suits, claims, governmental investigations or
proceedings instituted, pending or, to the best knowledge of FFOH, threatened
against FFOH or the FFOH Subsidiaries or against any asset, interest or right of
FFOH or the FFOH Subsidiaries, or against any officer, director or employee of
any of them that in any such case, if decided adversely, could reasonably be
expected to have individually or in the aggregate, a Material Adverse Effect on
FFOH. None of FFOH or the FFOH Subsidiaries is a party to any order, judgment or
decree which has or could reasonably be expected to have a Material Adverse
Effect on FFOH.
4.12 Compliance with Laws
(a) Each of FFOH and the FFOH Subsidiaries has all permits, licenses,
certificates of authority, orders and approvals of, and has made all filings,
applications and registrations with, federal, state, local and foreign
governmental or regulatory bodies that are required in order to permit it to
carry on its business as it is presently being conducted and the absence of
which could reasonably be expected to have a Material Adverse Effect on FFOH;
all such permits, licenses, certificates of authority, orders and approvals are
in full force and effect; and to the best knowledge of FFOH, no suspension or
cancellation of any of the same is threatened.
(b) None of FFOH or the FFOH Subsidiaries is in violation of its
respective Articles of Incorporation, Code of Regulations, Charter, Bylaws or
equivalent documents, or of any applicable federal, state or local law or
ordinance or any order, rule or regulation of any federal, state, local or other
governmental agency or body (including, without limitation, all banking
(including, without limitation, all regulatory capital requirements),
securities, municipal securities, safety, health, environmental, zoning,
anti-discrimination, antitrust, and wage and hour laws, ordinances, orders,
rules and regulations), or in default with respect to any order, writ,
injunction or decree of any court, or in default under any order, license,
regulation or demand of any governmental agency, any of which violations or
defaults could reasonably be expected to have a Material Adverse Effect on FFOH;
and none of FFOH or the FFOH Subsidiaries has received any written notice or
communication from any federal, state or local governmental authority asserting
that FFOH or the FFOH Subsidiaries is in violation of any of the foregoing which
could reasonably be expected to have a Material Adverse Effect on FFOH. None of
FFOH or the FFOH Subsidiaries is subject to any regulatory or supervisory cease
and desist order, agreement, written directive, memorandum of understanding or
written commitment (other than those of general applicability to all savings
institutions or holding companies thereof issued by governmental authorities),
and none of them has received any written communication requesting that it enter
into any of the foregoing.
4.13 Deposit Insurance and Other Regulatory Matters
(a) The deposit accounts of the Bank are insured by the SAIF to the
maximum extent permitted by the FDIA, and the Bank has paid all premiums and
assessments required by the FDIA and the regulations thereunder.
(b) The Bank is a member in good standing of the FHLB of Cincinnati and
owns the requisite amount of stock in the FHLB of Cincinnati.
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(c) The Bank has at all relevant times qualified as a "domestic
building and loan association," as such term is defined in Section 7701(a)(19)
of the Code, for purposes of Section 593 of the Code.
4.14 Certain Information
None of the information relating to FFOH and the FFOH Subsidiaries to
be included or incorporated by reference in (i) the Form S-4 will, at the time
the Form S-4 and any amendment thereto becomes effective under the Securities
Act, contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, and (ii) the Proxy Statement, as of
the date(s) such Proxy Statement is mailed to shareholders of FFOH and GFCO and
up to and including the date(s) of the meetings of shareholders to which such
Proxy Statement relates, will contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading, provided that
information as of a later date shall be deemed to modify information as of an
earlier date. The Proxy Statement mailed by FFOH and GFCO to their respective
shareholders in connection with the meetings of shareholders at which this
Agreement will be considered by such shareholders will comply as to form in all
material respects with the Securities Act and the Exchange Act and the rules and
regulations promulgated thereunder. The Proxy Statement will comply as to form
in all material respects with the Securities Act.
4.15 Employee Benefit Plans
(a) FFOH has Previously Disclosed all stock option, employee stock
purchase and stock bonus plans, qualified pension or profit-sharing plans, any
fringe benefit, incentive, deferred compensation, consultant, bonus or group
insurance contract, plan or arrangement, or any other welfare plan (as defined
in Section 3(1) of ERISA), employee pension benefit plan (as defined under
Section 3(2) of ERISA) or agreement maintained for the benefit of employees or
former employees of FFOH or the FFOH Subsidiaries (the "FFOH Employee Plans"),
and FFOH has previously furnished or made available to GFCO accurate and
complete copies of the same together with (i) the most recent actuarial and
financial reports prepared with respect to any qualified plans, (ii) the most
recent annual reports filed with any governmental agency with respect to each
FFOH Employee Plan, and (iii) all rulings and determination letters and any open
requests for rulings or letters that pertain to any qualified plan.
(b) None of FFOH, the FFOH Subsidiaries, any pension plan maintained by
any of them and qualified under Section 401 of the Code or, to the best of
FFOH's knowledge, any fiduciary of such plan has incurred any material liability
to the PBGC or the Internal Revenue Service with respect to any employees of
FFOH or the FFOH Subsidiaries. To the best of FFOH's knowledge, no reportable
event under Section 4043(b) of ERISA has occurred with respect to any such
pension plan.
(c) None of FFOH or the FFOH Subsidiaries participates in or has
incurred any liability under Section 4201 of ERISA for a complete or partial
withdrawal from a multi-employer plan (as such term is defined in ERISA), and
none of FFOH or the FFOH Subsidiaries (or their respective
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successors) will incur any liability in the event of a complete withdrawal from
any multi-employer plan of which FFOH or any of its Subsidiaries is a
participant as of the date hereof in connection with the transactions
contemplated hereby.
(d) A favorable determination letter has been issued by the Internal
Revenue Service with respect to each FFOH Employee Plan which is an "employee
pension benefit plan" (as defined in Section 3(2) of ERISA) (an "FFOH Pension
Plan") which is intended to qualify under Section 401 of the Code to the effect
that such plan is qualified under Section 401 of the Code and the trust
associated with such employee pension plan is tax exempt under Section 501 of
the Code. No such letter has been revoked or, to the best of FFOH's knowledge,
is threatened to be revoked and FFOH does not know of any ground on which such
revocation may be based. None of FFOH or the FFOH Subsidiaries has any liability
under any such plan that is not reflected on the consolidated statement of
financial condition of FFOH at June 30, 1998 included in the FFOH Financial
Statements, other than liabilities incurred in the ordinary course of business
in connection therewith subsequent to the date thereof.
(e) No prohibited transaction (which shall mean any transaction
prohibited by Section 406 of ERISA and not exempt under Section 408 of ERISA or
Section 4975 of the Code) has occurred with respect to any FFOH Employee Plan
which would result in the imposition, directly or indirectly, of a material
excise tax under Section 4975 of the Code or otherwise have a Material Adverse
Effect on FFOH.
(f) Full payment has been made (or proper accruals have been
established) of all contributions which are required for periods prior to the
date hereof, and full payment will be so made (or proper accruals will be so
established) of all contributions which are required for periods after the date
hereof and prior to the Effective Time, under the terms of each FFOH Employee
Plan or ERISA; no accumulated funding deficiency (as defined in Section 302 of
ERISA or Section 412 of the Code), whether or not waived, exists with respect to
any FFOH Pension Plan, and there is no "unfunded current liability" (as defined
in Section 412 of the Code) with respect to any FFOH Pension Plan.
(g) The FFOH Employee Plans have been operated in compliance in all
material respects with the applicable provisions of the FFOH Employee Plans,
ERISA, the Code, all regulations, rulings and announcements promulgated or
issued thereunder and all other applicable governmental laws and regulations.
(h) There are no pending or, to the best knowledge of FFOH, threatened
claims (other than routine claims for benefits) by, on behalf of or against any
of FFOH Employee Plans or any trust related thereto or any fiduciary thereof
relating to any of the FFOH Employee Plans.
(i) As a result, directly or indirectly, of the transactions
contemplated by this Agreement (including, without limitation, as a result of
any termination of employment prior to or following the Effective Time), none of
FFOH or any of the FFOH Subsidiaries will be obligated to make a payment that
would be characterized as an "excess parachute payment" to an individual who is
a "disqualified individual" (as such terms are defined in Section 280G of the
Code), without regard
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to whether such payment is reasonable compensation for personal services
performed or to be performed in the future.
4.16 Certain Contracts
(a) Except as Previously Disclosed, none of FFOH or the FFOH
Subsidiaries is a party to, is bound or affected by, receives, or is obligated
to pay, benefits under (i) any agreement, arrangement or commitment, including
without limitation any agreement, indenture or other instrument, relating to the
borrowing of money by FFOH or the FFOH Subsidiaries (other than deposits,
federal funds purchased, FHLB advances and securities sold under agreements to
repurchase) or the guarantee by FFOH or the FFOH Subsidiaries of any obligation,
(ii) any agreement, arrangement or commitment relating to the employment of a
consultant or the employment, election or retention in office of any present or
former director, officer or employee of FFOH or the FFOH Subsidiaries, (iii) any
agreement, arrangement or understanding pursuant to which any payment (whether
of severance pay or otherwise) became or may become due to any director, officer
or employee of FFOH or the FFOH Subsidiaries upon execution of this Agreement or
upon or following consummation of the transactions contemplated by this
Agreement (either alone or in connection with the occurrence of any additional
acts or events), (iv) any agreement, arrangement or understanding pursuant to
which FFOH or the FFOH Subsidiaries is obligated to indemnify any existing or
former director, officer, employee or agent of FFOH or the FFOH Subsidiaries,
(v) any agreement, arrangement or understanding to which FFOH or the FFOH
Subsidiaries is a party or by which any of the same is bound which limits the
freedom of FFOH or the FFOH Subsidiaries to compete in any line of business or
with any person, or (vi) any other agreement, arrangement or understanding which
would be required to be filed as an exhibit to FFOH's Annual Report on Form 10-K
under the Exchange Act and which has not been so filed.
(b) None of FFOH or the FFOH Subsidiaries is in default or in
non-compliance, which default or non-compliance could reasonably be expected to
have a Material Adverse Effect on FFOH, under any contract, agreement,
commitment, arrangement, lease, insurance policy or other instrument to which it
is a party or by which its assets, business or operations may be bound or
affected, whether entered into in the ordinary course of business or otherwise
and whether written or oral, and there has not occurred any event that with the
lapse of time or the giving of notice, or both, would constitute such a default
or non-compliance.
4.17 Brokers and Finders
Except for an agreement with Sandler O'Neill & Partners, L.P., as
Previously Disclosed, none of FFOH or the FFOH Subsidiaries, nor any of their
respective directors, officers or employees, has employed any broker or finder
or incurred any liability for any broker or finder fees or commissions in
connection with the transactions contemplated hereby.
4.18 Insurance
FFOH and each FFOH Subsidiary are insured for reasonable amounts with
financially sound and reputable insurance companies against such risks as
companies engaged in a similar business would, in accordance with good business
practice, customarily be insured and has maintained all
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insurance required by applicable laws and regulations. None of FFOH or the FFOH
Subsidiaries has received any notice of cancellation or notice of a material
amendment of any such insurance policy or bond or is in default under such
policy or bond, no coverage thereunder is being disputed and all material claims
thereunder have been filed in a timely fashion.
4.19 Properties
All real and personal property owned by FFOH or any of the FFOH
Subsidiaries or presently used by any of them in its respective business is in
an adequate condition (ordinary wear and tear excepted) and is sufficient to
carry on its business in the ordinary course of business consistent with their
past practices. FFOH and the FFOH Subsidiaries have good and marketable title
free and clear of all Liens (other than equities of redemption under applicable
foreclosure laws) to all of the material properties and assets, real and
personal, reflected on the consolidated statement of financial condition of FFOH
as of June 30, 1998 included in the FFOH Financial Statements or acquired after
such date, except (i) Liens for current taxes not yet due or payable, (ii)
pledges to secure deposits and other Liens incurred in the ordinary course of
its banking business, (iii) such imperfections of title, easements and
encumbrances, if any, as are not material in character, amount or extent and
(iv) as reflected on the consolidated statement of financial condition of FFOH
as of June 30, 1998 included in the FFOH Financial Statements. All real and
personal property which is material to FFOH's business on a consolidated basis
and leased or licensed by FFOH or any FFOH Subsidiary is held pursuant to leases
or licenses which are valid and enforceable in accordance with their respective
terms and such leases will not terminate or lapse prior to the Effective Time.
4.20 Labor
No work stoppage involving FFOH or any of the FFOH Subsidiaries is
pending or, to the best knowledge of FFOH, threatened. None of FFOH or the FFOH
Subsidiaries is involved in, or threatened with or affected by, any labor
dispute, arbitration, lawsuit or administrative proceeding involving its
employees which reasonably could be expected to have a Material Adverse Effect
on FFOH. Employees of FFOH and the FFOH Subsidiaries are not represented by any
labor union nor are any collective bargaining agreements otherwise in effect
with respect to such employees, and to the best of FFOH's knowledge, there have
been no efforts to unionize or organize any employees of FFOH or any of the FFOH
Subsidiaries during the past five years.
4.21 Loans; Nonperforming and Classified Assets; Allowance for Loan Losses
(a) Each Loan on the books and records of FFOH and its Subsidiaries,
was made and has been serviced in all material respects in accordance with
customary lending standards in the ordinary course of business, is evidenced in
all material respects by appropriate and sufficient documentation and, to the
best knowledge of FFOH, constitutes the legal, valid and binding obligation of
the obligor named therein, subject to bankruptcy, insolvency, fraudulent
conveyance and other laws of general applicability relating to or affecting
creditor's rights and to general equity principles.
(b) FFOH has Previously Disclosed as to FFOH and each FFOH Subsidiary
as of June 30, 1998: (i) any written or, to FFOH's knowledge, oral Loan under
the terms of which the obligor is 60 or more days delinquent in payment of
principal or interest, or to the best of FFOH's
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knowledge, in default of any other material provision thereof; (ii) each Loan
which has been classified as "substandard," "doubtful," "loss" or "special
mention" (or words of similar import) by FFOH, an FFOH Subsidiary or an
applicable regulatory authority; (iii) a listing of the real estate owned
acquired by foreclosure or by deed-in-lieu thereof, including the book value
thereof; and (iv) each Loan with any director, executive officer or five percent
or greater stockholder of FFOH or an FFOH Subsidiary, or to the best knowledge
of FFOH, any person, corporation or enterprise controlling, controlled by or
under common control with any of the foregoing.
(c) The allowance for loan losses reflected on FFOH's consolidated
statements of financial condition included in the FFOH Financial Statements is,
or will be in the case of subsequently delivered FFOH Financial Statements, as
the case may be, in the opinion of FFOH's management, adequate in all material
respects as of their respective dates under the requirements of generally
accepted accounting principles to provide for reasonably anticipated losses on
outstanding loans, net of recoveries.
4.22 Administration of Fiduciary Accounts
FFOH and each of its Subsidiaries has properly administered all
accounts for which it acts as a fiduciary, including but not limited to accounts
for which it serves as a trustee, agent, custodian, personal representative,
guardian, conservator or investment advisor, in accordance with the terms of the
governing documents and applicable laws and regulations, except for failures to
so administer which would not have a Material Adverse Effect on FFOH. Neither
FFOH nor any of its Subsidiaries, nor any of their respective directors,
officers or employees, has committed any breach of trust with respect to any
such fiduciary account and the records for each such fiduciary account are true
and correct and accurately reflect the assets of such fiduciary account, except
for breaches of trust and failures to maintain records which would not,
individually or in the aggregate, have a Material Adverse Effect on FFOH.
4.23 Derivative Transactions
Except as Previously Disclosed, between June 30, 1998 and the date
hereof, neither FFOH nor any of its Subsidiaries has entered into any futures
contract, option contract, interest rate caps, interest rate floors, interest
rate exchange agreements or other derivative instruments.
4.24 Year 2000
Neither FFOH nor any of its Subsidiaries has received or has reason to
believe that it will receive a rating of less than "satisfactory" on any Year
2000 Report of Examination of any Governmental Entity. FFOH has disclosed or
made available to GFCO a complete and accurate copy of its plan, including an
estimate of the anticipated associated costs, for addressing the issues set
forth in the statements of the FFIEC dated May 5, 1997, entitled "Year 2000
Project Management Awareness," and December 17, 1997, entitled "Safety and
Soundness Guidelines Concerning the Year 2000 Business Risk," as such issues
affect it and its Subsidiaries, and such plan is in material compliance with the
schedule set forth in the FFIEC statements.
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4.25 Ownership of GFCO Common Stock
Except for GFCO Stock Option Agreement, none of FFOH nor any of its
Subsidiaries, nor to FFOH's knowledge, any of its other affiliates or associates
(as such terms are defined under the Exchange Act), owns beneficially or of
record, directly or indirectly, or is a party to any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or disposing of,
shares of GFCO Common Stock (other than shares held in a fiduciary capacity that
are beneficially owned by third parties or as a result of debts previously
contracted) which in the aggregate represent 5% or more of the outstanding GFCO
Common Stock.
4.26 Required Vote; Antitakeover Provisions
(a) Subject to FFOH amending its Articles of Incorporation in
accordance with Section 5.16(a) hereof and subject to the presence of a quorum
at the meeting of the shareholders of FFOH called for the purpose of considering
and acting upon the Merger, a majority of the issued and outstanding shares of
FFOH Common Stock is necessary to approve the Merger and this Agreement and the
transactions contemplated hereby on behalf of FFOH.
(b) At least two-thirds of the Continuing Directors (as defined in the
Articles of Incorporation of FFOH) has approved the Merger and this Agreement
such that the provisions of (i) Paragraph A of Article XIV of the Articles of
Incorporation of FFOH and (ii) Paragraph A of Article XV of the Articles of
Incorporation of FFOH shall be inapplicable to the Merger and this Agreement and
the transactions contemplated hereby.
(c) The affirmative vote of the holders of two-thirds of the issued and
outstanding shares of common stock of Merger Corporation is necessary to approve
the Merger and this Agreement and the transaction contemplated hereby on behalf
of Merger Corporation.
(d) The board of directors of FFOH took action on September 22, 1998,
to approve GFCO as an "interested shareholder" for purposes of Chapter 1704 of
the Ohio Revised Code.
4.27 Fairness Opinion
FFOH has received an opinion of Sandler O'Neill & Partners, L.P. to the
effect that, as of the date hereof, the Exchange Ratio is fair from a financial
point of view to the holders of FFOH Common Stock.
4.28 Accounting for the Merger; Reorganization
As of the date hereof, FFOH does not have any reason to believe that
the Merger will fail to qualify, as a result of any action or omission by FFOH
or any FFOH Subsidiary, (i) for pooling-of-interests accounting treatment under
generally accepted accounting principles or (ii) as a reorganization under
Section 368(a) of the Code.
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4.29 Disclosures
None of the representations and warranties of FFOH or any of the
written information or documents furnished or to be furnished by FFOH to GFCO in
connection with or pursuant to this Agreement or the consummation of the
transactions contemplated hereby, when considered as a whole, contains or will
contain any untrue statement of a material fact, or omits or will omit to state
any material fact required to be stated or necessary to make any such
information or document, in light of the circumstances, not misleading.
ARTICLE V
COVENANTS
5.1 Reasonable Best Efforts
Subject to the terms and conditions of this Agreement, each of GFCO,
FFOH and Merger Corporation shall use its reasonable best efforts in good faith
to take, or cause to be taken, all actions, and to do, or cause to be done, all
things necessary or advisable under applicable laws and regulations so as to
permit consummation of the Merger and the Bank Merger as promptly as reasonably
practicable and to otherwise enable consummation of the transactions
contemplated hereby, and shall cooperate fully with the other party or parties
hereto to that end.
5.2 Shareholder Meetings
Each of FFOH and GFCO shall take all action necessary to properly call
and convene a meeting of its respective shareholders as soon as practicable
after the date hereof to consider and vote upon this Agreement and the
transactions contemplated hereby. The Board of Directors of FFOH and the Board
of Directors of GFCO will recommend that their respective shareholders approve
this Agreement and the transactions contemplated hereby. Notwithstanding the
foregoing, the Boards of Directors of FFOH or GFCO may fail to make such
recommendation, or withdraw, modify or change any such recommendation, if such
respective Board of Directors, after having consulted with and considered the
advice of outside counsel, has determined that the making of such
recommendation, or the failure to withdraw, modify or change such
recommendation, would constitute a breach of the fiduciary duties of such
directors under applicable law.
5.3 Regulatory Matters
(a) The parties hereto shall promptly cooperate with each other in the
preparation and filing of the Form S-4, including the Proxy Statement. Each of
FFOH and GFCO shall use its reasonable best efforts to have the Form S-4
declared effective under the Securities Act as promptly as practicable after
such filing, and FFOH and GFCO each shall thereafter promptly mail the Proxy
Statement to their respective shareholders. FFOH also shall use its best efforts
to obtain all necessary state securities law or "blue sky" permits and approvals
required to carry out the issuance of FFOH Common Stock pursuant to the Merger
and all other transactions contemplated by this Agreement, and GFCO shall
furnish all information concerning GFCO and the holders of GFCO Common Stock as
may be reasonably requested in connection with any such action.
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(b) The parties hereto shall cooperate with each other and use their
best efforts to prepare and file within 30 days of the date of this Agreement
all necessary documentation, to effect all applications, notices, petitions and
filings, and to obtain as promptly as practicable all permits, consents,
approvals and authorizations of all Governmental Entities and third parties
which are necessary or advisable to consummate the transactions contemplated by
this Agreement (including without limitation the Merger and the Bank Merger).
FFOH and GFCO shall have the right to review in advance, and to the extent
practicable each will consult with the other on, in each case subject to
applicable laws relating to the exchange of information, all the information
which appears in any filing made with or written materials submitted to any
third party or any Governmental Entity in connection with the transactions
contemplated by this Agreement. In exercising the foregoing right, each of the
parties hereto shall act reasonably and as promptly as practicable. The parties
hereto agree that they will consult with each other with respect to the
obtaining of all permits, consents, approvals and authorizations of all third
parties and Governmental Entities necessary or advisable to consummate the
transactions contemplated by this Agreement and each party will keep the other
apprised of the status of matters relating to completion of the transactions
contemplated herein.
(c) FFOH and GFCO shall, upon request, furnish each other with all
information concerning themselves, their respective Subsidiaries, directors,
officers and shareholders and such other matters as may be reasonably necessary
or advisable in connection with the Proxy Statement, the Form S-4 or any other
statement, filing, notice or application made by or on behalf of FFOH, GFCO or
any of their respective Subsidiaries to any Governmental Entity in connection
with the transactions contemplated by this Agreement and the Bank Merger
Agreement.
(d) FFOH and GFCO shall promptly furnish each other with copies of
written communications received by FFOH or GFCO, as the case may be, or any of
their respective Subsidiaries from, or delivered by any of the foregoing to, any
Governmental Entity in respect of the transactions contemplated by this
Agreement and the Bank Merger Agreement.
5.4 Investigation and Confidentiality
(a) Each of FFOH and GFCO shall permit the other party and its
representatives reasonable access to its properties and personnel, and shall
disclose and make available to such other party all books, papers and records
relating to the assets, stock ownership, properties, operations, obligations and
liabilities of it and its Subsidiaries, including, but not limited to, all books
of account (including the general ledger), tax records, minute books of meetings
of boards of directors (and any committees thereof) and shareholders,
organizational documents, bylaws, material contracts and agreements, filings
with any regulatory authority, accountants' work papers, litigation files, loan
files, plans affecting employees, and any other business activities or prospects
in which the other party may have a reasonable interest, provided that such
access shall be reasonably related to the transactions contemplated hereby and,
in the reasonable opinion of the respective parties providing such access, not
unduly interfere with normal operations. Each of FFOH and GFCO and their
respective Subsidiaries shall make their respective directors, officers,
employees and agents and authorized representatives (including counsel and
independent public accountants) available to confer with the other party and its
representatives, provided that such
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access shall be reasonably related to the transactions contemplated hereby and
shall not unduly interfere with normal operations.
(b) Each of GFCO and FFOH shall hold all information furnished by or on
behalf of the other party or any of such party's Subsidiaries or representatives
pursuant to Section 5.4(a) in confidence to the extent required by, and in
accordance with, the Confidentiality Agreement.
(c) No investigation by either of the parties hereto or their
respective representatives shall affect the representations, warranties,
covenants or agreements of the other party set forth herein.
5.5 Press Releases
FFOH and GFCO shall agree with each other as to the form and substance
of any press release related to this Agreement or the transactions contemplated
hereby, and consult with each other as to the form and substance of other public
disclosures which may relate to the transactions contemplated by this Agreement,
provided, however, that nothing contained herein shall prohibit either party,
following notification to the other party, from making any disclosure which is
required by law or regulation.
5.6 Business of the Parties
(a) During the period from the date of this Agreement and continuing
until the Effective Time, except as expressly contemplated or permitted by this
Agreement or with the prior written consent of FFOH, GFCO and GFCO Subsidiaries
shall carry on their respective businesses in the ordinary course consistent
with past practice. GFCO will use all reasonable efforts to (x) preserve its
business organization and that of the GFCO Subsidiaries intact, (y) keep
available to itself and FFOH the present services of the employees of GFCO and
the GFCO Subsidiaries and (z) preserve for itself and FFOH the goodwill of the
customers of GFCO and the GFCO Subsidiaries and others with whom business
relationships exist. Without limiting the generality of the foregoing, except
with the prior written consent of FFOH or as expressly contemplated hereby,
between the date hereof and the Effective Time, GFCO shall not, and shall cause
each GFCO Subsidiary not to:
(i) declare, set aside, make or pay any dividend or other
distribution (whether in cash, stock or property or any combination
thereof) in respect of GFCO Common Stock, other than (i) quarterly cash
dividends at a rate per share of GFCO Common Stock not in excess of
$.11 per share and with record and payment dates consistent with past
practice, provided that the declaration of the last quarterly dividend
by GFCO prior to the Effective Time and the payment thereof shall be
coordinated with, and subject to the approval of, FFOH so as to
preclude any duplication of dividend benefit and be consistent with the
condition set forth in Section 6.1(f) hereof (it being the intention of
the parties that the stockholders of GFCO receive dividends for any
particular quarter on either the GFCO Common Stock or the FFOH Common
Stock but not both), and (ii) dividends paid by a GFCO Subsidiary on
its capital stock to GFCO;
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(ii) issue any shares of its capital stock, other than
pursuant to (i) GFCO Options outstanding as of the date hereof pursuant
to the GFCO Stock Option Plan, as Previously Disclosed pursuant to
Section 3.1 hereof, and (ii) the GFCO Stock Option Agreement; issue,
grant, modify or authorize any Rights, other than pursuant to GFCO
Stock Option Agreement; or purchase any shares of GFCO Common Stock or
FFOH Common Stock;
(iii) effect any recapitalization, reclassification, stock
dividend, stock split or like change in capitalization;
(iv) amend its Certificate of Incorporation or Bylaws or
equivalent documents; impose, or suffer the imposition, on any share of
stock held by GFCO in any GFCO Subsidiary of any material Lien or
permit any such Lien to exist; or waive or release any material right
or cancel or compromise any material debt or claim;
(v) increase the rate of compensation of any of its directors,
officers or employees, or pay or agree to pay any bonus or severance
to, or accelerate the payment of any employment benefit or incentive
to, or provide any other new employee benefit or incentive to, any of
its directors, officers or employees, except (i) as may be required
pursuant to binding commitments existing on the date hereof as
Previously Disclosed and (ii) in the case of employees who are not
executive officers, such as may be granted in the ordinary course of
business consistent with past practice;
(vi) enter into or, except as may be required by law, modify
any pension, retirement, stock option, stock purchase, stock
appreciation right, savings, profit sharing, deferred compensation,
supplemental retirement, consulting, bonus, group insurance or other
employee benefit, incentive or welfare contract, plan or arrangement,
or any trust agreement related thereto, in respect of any of its
directors, officers or employees; or make any contributions to or on
behalf of any GFCO Employee Plan not in the ordinary course of business
consistent with past practice;
(vii) enter into (w) any agreement, arrangement or commitment
not made in the ordinary course of business, (x) any agreement,
indenture or other instrument relating to the borrowing of money by
GFCO or any GFCO Subsidiary or guarantee by GFCO or any GFCO Subsidiary
of any such obligation, except in the case of Centennial for deposits,
federal funds purchased, FHLB advances and securities sold under
agreements to repurchase in the ordinary course of business consistent
with past practice, (y) except as contemplated by Section 5.9 hereof,
any agreement, arrangement or commitment relating to the employment of,
or severance of, an employee, or amend any such existing agreement,
arrangement or commitment, provided that GFCO and any GFCO Subsidiary
may employ an employee if necessary to operate the business of GFCO or
a GFCO Subsidiary in the ordinary course of business consistent with
past practice and if the employment of such employee is terminable by
GFCO and any successor at will without liability, other than as
required by law, or (z) any contract, agreement or understanding with a
labor union;
(viii) change its method of accounting in effect for the year
ended June 30, 1998, except as required by changes in laws or
regulations or generally accepted accounting
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principles concurred in by its and FFOH's independent certified public
accountants, or change any of its methods of reporting income and
deductions for federal income tax purposes from those employed in the
preparation of its federal income tax return for the year ended June
30, 1998, except as required by changes in laws or regulations;
(ix) purchase or otherwise acquire, or sell or otherwise
dispose of, any assets or incur any liabilities other than in the
ordinary course of business consistent with past practice and policies;
(x) make any capital expenditures in excess of $25,000
individually or $200,000 in the aggregate, other than pursuant to
binding commitments existing on the date hereof and other than
expenditures necessary to maintain existing assets in good repair;
(xi) file any applications or make any contract with respect
to branching or site location or relocation;
(xii) acquire in any manner whatsoever (other than to realize
upon collateral for a defaulted loan) any business or entity or enter
into any new line of business;
(xiii) enter into any futures contract, option contract,
interest rate cap, interest rate floor, interest rate exchange
agreement or other agreement for purposes of hedging the exposure of
its interest-earning assets and interest-bearing liabilities to changes
in market rates of interest;
(xiv) enter or agree to enter into any agreement or
arrangement granting any preferential right to purchase any of its
assets or rights or requiring the consent of any party to the transfer
and assignment of any such assets or rights;
(xv) take any action that would prevent or impede the Merger
from qualifying (A) for pooling-of-interests accounting treatment under
generally accepted accounting principles or (B) as a reorganization
within the meaning of Section 368(a) of the Code;
(xvi) take any action that would or could reasonably be
expected to result in any of the representations and warranties of GFCO
contained in this Agreement not to be true and correct in any material
respect at or prior to the Effective Time, or in any of the conditions
to the Merger set forth in Article VI hereof not being satisfied or in
violation of any provision of this Agreement, except in each case as
may be required by applicable law; or
(xvii) agree to do any of the foregoing.
(b) During the period from the date of this Agreement and continuing
until the Effective Time, except as expressly contemplated or permitted by this
Agreement or with the prior written consent of GFCO, FFOH, Merger Corporation
and the Bank shall carry on their respective businesses in the ordinary course
consistent with past practice. FFOH will use all reasonable efforts to (x)
preserve its business organization and that of its Subsidiaries intact, (y) keep
available
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the present services of the employees of FFOH and its Subsidiaries and (z)
preserve the goodwill of the customers of FFOH and its Subsidiaries and others
with whom business relationships exist. Without limiting the generality of the
foregoing, except with the prior written consent of GFCO or as expressly
contemplated hereby, between the date hereof and the Effective Time, FFOH shall
not, and shall cause Merger Corporation and the Bank not to:
(i) declare, set aside, make or pay any dividend or other
distribution (whether in cash, stock or property or any combination
thereof) in respect of FFOH Common Stock, other than (i) quarterly cash
dividends at a rate per share of FFOH Common Stock not in excess of
$0.09 per share and with record and payment dates consistent with past
practice, and (ii) dividends paid by a FFOH Subsidiary on its capital
stock to FFOH;
(ii) issue any shares of its capital stock, other than in each
case pursuant to (i) Rights outstanding as of the date hereof pursuant
to FFOH Employee Stock Benefit Plans and (ii) the FFOH Stock Option
Agreement; issue, grant, modify or authorize any Rights other than
pursuant to the FFOH Stock Option Agreement; or purchase any shares of
GFCO Common Stock or FFOH Common Stock;
(iii) effect any recapitalization, reclassification, stock
split or like change in capitalization;
(iv) except as set forth in Section 5.16 hereof, amend its
Articles of Incorporation, Code of Regulations, Charter or other
governing instrument or Bylaws; impose, or suffer the imposition, on
any share of stock held by GFCO in any GFCO Subsidiary of any material
Lien or permit any such Lien to exist; or waive or release any material
right or cancel or compromise any material debt or claim;
(v) except as Previously Disclosed, increase the rate of
compensation of any of its directors, officers or employees, or pay or
agree to pay any bonus or severance to, or accelerate the payment of
any employment benefit or incentive to, or provide any other new
employee benefit or incentive to, any of its directors, officers or
employees, except (i) as may be required pursuant to binding
commitments existing on the date hereof as Previously Disclosed and
(ii) in the case of employees who are not executive officers, such as
may be granted in the ordinary course of business consistent with past
practice;
(vi) enter into or, except as may be required by law, modify
any pension, retirement, stock option, stock purchase, stock
appreciation right, savings, profit sharing, deferred compensation,
supplemental retirement, consulting, bonus, group insurance or other
employee benefit, incentive or welfare contract, plan or arrangement,
or any trust agreement related thereto, in respect of any of its
directors, officers or employees; or make any contributions to or on
behalf of any FFOH Employee Plan not in the ordinary course of business
consistent with past practice;
(vii) enter into (w) any agreement, arrangement or commitment
not made in the ordinary course of business, (x) any agreement,
indenture or other instrument relating to the borrowing of money by
FFOH or any FFOH Subsidiary or guarantee by FFOH or any
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FFOH Subsidiary of any such obligation, except in the case of the Bank
for deposits, federal funds purchased, FHLB advances and securities
sold under agreements to repurchase in the ordinary course of business
consistent with past practice, (y) except as contemplated by Section
5.9 hereof, any agreement, arrangement or commitment relating to the
employment of, or severance of, an employee, or amend any such existing
agreement, arrangement or commitment, provided that FFOH and any FFOH
Subsidiary may employ an employee if necessary to operate the business
of FFOH or an FFOH Subsidiary in the ordinary course of business
consistent with past practice and if the employment of such employee is
terminable by FFOH and any successor at will without liability, other
than as required by law, or (z) any contract, agreement or
understanding with a labor union;
(viii) change its method of accounting in effect for the year
ended December 31, 1997, except as required by changes in laws or
regulations or generally accepted accounting principles concurred in by
its and GFCO's independent certified public accountants, or change any
of its methods of reporting income and deductions for federal income
tax purposes from those employed in the preparation of its federal
income tax return for the year ended December 31, 1997, except as
required by changes in laws or regulations;
(ix) purchase or otherwise acquire, or sell or otherwise
dispose of, any assets or incur any liabilities other than in the
ordinary course of business consistent with past practice and policies;
(x) make any capital expenditures in excess of $25,000
individually or $200,000 in the aggregate, other than pursuant to
binding commitments existing on the date hereof and other than
expenditures necessary to maintain existing assets in good repair;
(xi) file any applications or make any contract with respect
to branching or site location or relocation;
(xii) acquire in any manner whatsoever (other than to realize
upon collateral for a defaulted loan) any business or entity or enter
into any new line of business;
(xiii) enter into any futures contract, option contract,
interest rate cap, interest rate floor, interest rate exchange
agreement or other agreement for purposes of hedging the exposure of
its interest-earning assets and interest-bearing liabilities to changes
in market rates of interest;
(xiv) enter or agree to enter into any agreement or
arrangement granting any preferential right to purchase any of its
assets or rights or requiring the consent of any party to the transfer
and assignment of any such assets or rights;
(xv) take any action that would prevent or impede the Merger
from qualifying (A) for pooling-of-interests accounting treatment under
generally accepted accounting principles or (B) as a reorganization
within the meaning of Section 368(a) of the Code;
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(xvi) take any action that would or could reasonably be
expected to result in any of the representations and warranties of FFOH
contained in this Agreement not to be true and correct in any material
respect at or prior to the Effective Time, or in any of the conditions
to the Merger set forth in Article VI hereof not being satisfied or in
violation of any provision of this Agreement, except in each case as
may be required by applicable law; or
(xvii) agree to do any of the foregoing.
(c) Neither GFCO nor FFOH shall, and each of them shall cause its
respective Subsidiaries not to, solicit or encourage inquiries or proposals with
respect to, furnish any information relating to, or participate in any
negotiations or discussions concerning, any acquisition, lease or purchase of
all or a substantial portion of the assets of, or any equity interest in, such
party or any of its Subsidiaries, provided, however, that the Board of Directors
of GFCO or FFOH, on behalf of GFCO and FFOH, respectively, may furnish such
information or participate in such negotiations or discussions if such Board of
Directors, after having consulted with and considered the advice of outside
counsel, has determined that the failure to do the same would cause the members
of such Board of Directors to breach their fiduciary duties under applicable
laws. Each of GFCO and FFOH will promptly inform the other party of any such
request for information or of any such negotiations or discussions, as well as
instruct its and its Subsidiaries' directors, officers, representatives and
agents to refrain from taking any action prohibited by this Section 5.6(c).
5.7 Current Information
During the period from the date of this Agreement to the Effective
Time, each party shall, upon the request of the other party, cause one or more
of its designated representatives to confer on a monthly or more frequent basis
with representatives of the other party regarding its financial condition,
operations and business and matters relating to the completion of the
transactions contemplated hereby. As soon as reasonably available, but in no
event more than 45 days after the end of each calendar quarter ending after the
date of this Agreement (other than the last quarter of each fiscal year ending
June 30, in the case of GFCO, and December 31, in the case of FFOH), GFCO and
FFOH will deliver to the other party its quarterly report on Form 10-Q (or Form
10-QSB) under the Exchange Act, and, as soon as reasonably available, but in no
event more than 90 days after the end of each fiscal year, GFCO and FFOH will
deliver to the other party its Annual Report on Form 10-K (or Form 10-KSB).
Within 25 days after the end of each month, GFCO and FFOH will deliver to the
other party a consolidated statement of financial condition and a consolidated
statement of earnings, without related notes, for such month prepared in
accordance with generally accepted accounting principles.
5.8 Indemnification; Insurance
(a) From and after the Effective Time through the fifth anniversary of
the Effective Time, FFOH (the "Indemnifying Party") shall indemnify and hold
harmless each present and former director, officer and employee of GFCO or any
GFCO Subsidiary determined as of the Effective Time (the "Indemnified Parties")
against any costs or expenses (including reasonable attorneys'
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fees), judgments, fines, losses, claims, damages or liabilities (collectively,
"Costs") incurred in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative, arising
out of matters existing or occurring at or prior to the Effective Time, whether
asserted or claimed prior to, at or after the Effective Time, to the fullest
extent to which such Indemnified Parties were entitled under the Certificate of
Incorporation or Bylaws of GFCO or equivalent documents of any GFCO Subsidiary,
as applicable, or applicable law or any agreement, arrangement or understanding
which has been Previously Disclosed by GFCO pursuant to Section 3.16(a)(iii)
hereof, in each case as in effect on the date hereof.
(b) Any Indemnified Party wishing to claim indemnification under
Section 5.8(a), upon learning of any such claim, action, suit, proceeding or
investigation, shall promptly notify the Indemnifying Party, but the failure to
so notify shall not relieve the Indemnifying Party of any liability it may have
to such Indemnified Party if such failure does not materially prejudice the
Indemnifying Party. In the event of any such claim, action, suit, proceeding or
investigation (whether arising before or after the Effective Time), (i) the
Indemnifying Party shall have the right to assume the defense thereof and the
Indemnifying Party shall not be liable to such Indemnified Parties for any legal
expenses of other counsel or any other expenses subsequently incurred by such
Indemnified Parties in connection with the defense thereof, except that if the
Indemnifying Party elects not to assume such defense or counsel for the
Indemnified Parties advises that there are issues which raise conflicts of
interest between the Indemnifying Party and the Indemnified Parties, the
Indemnified Parties may retain counsel which is reasonably satisfactory to the
Indemnifying Party, and the Indemnifying Party shall pay, promptly as statements
therefor are received, the reasonable fees and expenses of such counsel for the
Indemnified Parties (which may not exceed one firm in any jurisdiction), (ii)
the Indemnified Parties will cooperate in the defense of any such matter and
(iii) the Indemnifying Party shall not be liable for any settlement effected
without its prior written consent.
(c) FFOH shall use its reasonable best efforts to maintain GFCO's
existing directors' and officers' liability insurance policy (or a policy
providing coverage on substantially the same terms and conditions) for acts or
omissions occurring prior to the Effective Time by persons who are currently
covered by such insurance policy maintained by GFCO for a period of three years
following the Effective Time, provided, however, that in no event shall FFOH
expend, in order to obtain such insurance, any amount per annum in excess of
200% of the amount of the actual annual premium paid as of the date hereof by
GFCO for such insurance (the "Maximum Amount"), and provided further that if the
amount of the annual premium necessary to maintain or procure such insurance
coverage exceeds the Maximum Amount, FFOH shall use its reasonable best efforts
to maintain the most advantageous policy of directors' and officers' insurance
obtainable for an annual premium equal to the Maximum Amount.
(d) In the event that FFOH or any of its respective successors or
assigns (i) consolidates with or merges into any other person and shall not be
the continuing or surviving corporation or entity of such consolidation or
merger or (ii) transfers all or substantially all of its properties and assets
to any person, then, and in each such case the successors and assigns of such
entity shall assume the obligations set forth in this Section 5.8, which
obligations are expressly intended to be for the irrevocable benefit of, and
shall be enforceable by, each director and officer covered hereby.
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5.9 Directors, Officers and Employees; Employee Benefit Plans and
Arrangements
(a) Effective as of the Effective Time, Paul D. Staubach shall resign
as a director of FFOH.
(b) Effective as of the Effective Time, (i) the number of directors of
FFOH shall be increased by four and (ii) FFOH agrees to take all action
necessary to elect Robert R. Sudbrook, Edgar A. Rust, Daniel W. Geeding, Kenneth
C. Lichtendahl and John L. Torbeck as directors of FFOH.
(c) Effective as of the Effective Time, (i) the number of directors of
the Bank and Merger Corporation shall be increased by six, (ii) FFOH agrees to
take all action necessary to elect Joseph D. Hughes, Robert R. Sudbrook, Edgar
A. Rust, Daniel W. Geeding, Kenneth C. Lichtendahl and John L. Torbeck as
directors of the Bank and Merger Corporation and (iii) Ronald L. Goodfellow,
Albert W. Moeller, John P. Torbeck and Milton L. Van Schoik shall become
directors emeritus of FFOH for a term of 35 months and in which capacity they
will receive a fee for their service as directors emeritus of $1,000 per month.
(d) Effective as of the Effective Time, Robert R. Sudbrook shall be
elected as President and Chief Executive Officer of FFOH and Chairman of the
Board and Chief Executive Officer of the Bank and Mr. Sudbrook shall be entitled
to be compensated at a rate not less than the rate of compensation received by
him from Centennial immediately prior to the Effective Time.
(e) Effective as of the Effective Time, John R. Reusing shall be
elected as Chairman of the Board of FFOH and President of the Bank.
(f) Prior to the Effective Time, FFOH shall take all reasonable action
so that employees of GFCO and GFCO Subsidiaries shall be entitled to participate
in the FFOH Employee Plans of general applicability to the same extent as
similarly-situated employees of FFOH and its Subsidiaries as of the Effective
Time. For purposes of determining eligibility to participate in, the vesting of
benefits and for all other purposes (but not for benefit accrual) under the FFOH
Employee Plans, FFOH and the FFOH Employee Plans shall recognize years of
service with GFCO, any GFCO Subsidiary or any predecessor thereof or entity
acquired by GFCO or a GFCO Subsidiary as such service is recognized by and
reflected on the records of GFCO and the GFCO Employee Plans.
(g) All employees of GFCO or a GFCO Subsidiary as of the Effective Time
shall become employees of FFOH or an FFOH Subsidiary as of the Effective Time,
provided that, with respect to employees of GFCO or Centennial who are not
covered by employment agreements, FFOH shall have no obligation to continue the
employment of any such person and nothing contained in this Agreement shall give
any employee of GFCO or any GFCO Subsidiary who is not covered by an employment
agreement a right to continuing employment with FFOH or an FFOH Subsidiary after
the Effective Time.
(h) The parties hereto agree that the GFCO ESOP and the GFCO 401(k)
Plan shall either be terminated or merged with the comparable FFOH plans in
accordance with the terms thereof and applicable laws and regulations effective
as of the Effective Time in the case of the GFCO 401(k) Plan and as soon
thereafter as practicable in the case of the GFCO ESOP.
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(i) To enable the Merger to qualify for "pooling of interests"
accounting treatment, GFCO and Centennial will use their best efforts to cause
holders of GFCO Options pursuant to the GFCO Stock Option Plan to, as promptly
as practicable, waive the features of such GFCO Options that allow such options
to be converted into cash.
5.10 Certain Policies; Integration
(a) FFOH and GFCO shall confer and shall, consistent with generally
accepted accounting principles, establish such additional accruals and reserves
as may be necessary to conform their accounting and credit loss reserve
practices and methods with respect to the conduct of their combined businesses
following the Merger and to provide for the costs and expenses relating to the
consummation of the transactions contemplated by this Agreement; provided,
however, that neither party shall be required to take such action (i) if such
action is prohibited by applicable law or by generally accepted accounting
principles, (ii) if such action would have a Material Adverse Effect on such
party following consummation of the Merger and the Bank Merger or (iii) all
conditions precedent to the consummation of the transactions contemplated by
this Agreement set forth in Article VI hereof have been satisfied or waived. The
establishment of such accruals and reserves shall not, in and of itself,
constitute a breach of any representation or warranty of FFOH or GFCO contained
in this Agreement.
(b) During the period from the date of this Agreement to the Effective
Time, FFOH and GFCO each shall, and each shall cause its directors, officers and
employees to, cooperate with and assist in the formulation of a plan of
integration for FFOH and GFCO and their respective banking subsidiaries.
5.11 Stock Exchange Listing
FFOH shall cause the shares of FFOH Common Stock to be issued in
connection with the Merger to be approved for quotation on the Nasdaq Stock
Market's National Market, subject to official notice of issuance, as of or prior
to the Effective Time.
5.12 The Bank Merger
(a) FFOH and GFCO shall take all action necessary and appropriate,
including causing the entering into of an appropriate merger agreement (the
"Bank Merger Agreement"), to cause the Bank to merge with and into Centennial
(the "Bank Merger") in accordance with applicable laws and regulations and the
terms of the Bank Merger Agreement as soon as practicable after consummation of
the Merger. GFCO shall cause Centennial to enter into the Bank Merger Agreement
not later than one week from the date hereof. Centennial shall be the surviving
corporation in the Bank Merger, and shall continue its corporate existence under
the name "Centennial Bank" under the laws of the State of Ohio. Centennial will
become a wholly-owned subsidiary of Merger Corporation upon the receipt of all
requisite regulatory approvals. Upon consummation of the Bank Merger, the
separate corporate existence of the Bank shall cease. The directors and
executive officers of Centennial upon consummation of the Bank Merger shall be
as set forth in the Bank Merger Agreement.
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5.13 Affiliates; Restrictions on Resale
(a) GFCO has Previously Disclosed to FFOH, and FFOH has Previously
Disclosed to GFCO, a schedule of each person that, to the best of its knowledge,
is deemed to be an "affiliate" of GFCO and FFOH, respectively (each an
"Affiliate"), as that term is used in Rule 145 under the Securities Act or
Accounting Series Releases 130 and 135 of the Commission.
(b) Each of GFCO and FFOH shall use its reasonable best efforts to
cause each person who may be deemed to be an Affiliate of GFCO and FFOH,
respectively, to execute and deliver to FFOH as soon as practicable after the
date of this Agreement, and in any event prior to the date of the meeting(s) of
stockholders to be called pursuant to Section 5.2 hereof, a written agreement in
the forms previously agreed to by FFOH and GFCO.
5.14 Disclosure Supplements
From time to time prior to the Effective Time, each party shall
promptly supplement or amend any materials Previously Disclosed and delivered to
the other party pursuant hereto with respect to any matter hereafter arising
which, if existing, occurring or known at the date of this Agreement, would have
been required to be set forth or described in materials Previously Disclosed to
the other party or which is necessary to correct any information in such
materials which has been rendered materially inaccurate thereby; no such
supplement or amendment to such materials shall be deemed to have modified the
representations, warranties and covenants of the parties for the purpose of
determining whether the conditions set forth in Article VI hereof have been
satisfied.
5.15 Failure to Fulfill Conditions
In the event that either of the parties hereto determines that a
condition to its respective obligations to consummate the transactions
contemplated hereby cannot be fulfilled on or prior to the termination of this
Agreement, it will promptly notify the other party or parties. Each party will
promptly inform the other party or parties of any facts applicable to it that
would be likely to prevent or materially delay approval of the Merger or the
Bank Merger by any Governmental Entity or third party or which would otherwise
prevent or materially delay completion of the Merger or the Bank Merger.
5.16 Amendment of the Articles of Incorporation and Bylaws of FFOH
(a) FFOH shall take all steps necessary (including obtaining the
requisite approval of FFOH's shareholders) to amend its Articles of
Incorporation in order to provide that a majority of the issued and outstanding
shares of FFOH Common Stock may approve (i) an agreement of merger or
consolidation providing for the proposed merger or consolidation of FFOH with or
into one or more other corporations or (ii) a proposed combination or majority
share acquisition involving the issuance of shares of FFOH and requiring
shareholder approval.
(b) FFOH shall amend its Bylaws to provide that the following actions
must be approved by not less than two-thirds of the authorized number of
directors:
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(i) the hiring, termination, demotion, replacement, change of duties or
reduction of compensation of the Chairman of the Board, Chief Executive Officer,
Chief Financial Officer, President, Secretary, Treasurer, a Senior Vice
President or an Executive Vice President of FFOH, other than the changes
contemplated by this Agreement;
(ii) a change in the number of directors or filling any vacancy on the
board of directors, regardless of how such vacancy is created;
(iii) approval of, or recommendation to the shareholders of the
approval of, any merger, consolidation, combination, control share acquisition
or majority share acquisition to which FFOH is a party or any sale or other
transfer of all or substantially all of the assets of FFOH;
(iv) approval of, or recommendation to the shareholders of FFOH of the
approval of, any amendment to the Articles of Incorporation, Code of Regulations
or Bylaws of FFOH; or
(v) the appointment of directors to committees of the Board of
Directors of FFOH, any change in the members of any committee of the Board of
Directors of FFOH, the filling of any vacancies with respect to any committees
of the Board of Directors of FFOH and the discharge of any committee of the
Board of Directors of FFOH.
ARTICLE VI
CONDITIONS PRECEDENT
6.1 Conditions Precedent - FFOH, Merger Corporation and GFCO
The respective obligations of FFOH, Merger Corporation and GFCO to
effect the transactions contemplated by this Agreement shall be subject to
satisfaction of the following conditions at or prior to the Effective Time.
(a) All corporate action necessary to authorize the execution and
delivery of this Agreement and consummation of the transactions contemplated
hereby shall have been duly and validly taken by FFOH, Merger Corporation and
GFCO, including approval by the requisite vote of the respective shareholders of
FFOH and GFCO of this Agreement, and all corporate and shareholder action
necessary to authorize the execution and delivery of the Bank Merger Agreement
and consummation of the transactions contemplated thereby shall have been duly
and validly taken by Centennial and the Bank.
(b) All approvals and consents for the transactions contemplated hereby
and the Bank Merger Agreement from any Governmental Entity the approval or
consent of which is required for the consummation of the Merger, the Bank Merger
and the other transactions contemplated hereby shall have been received and all
statutory waiting periods in respect thereof shall have expired, provided,
however, that no approval, consent or waiver referred to in this Section 6.1(b)
shall be deemed to have been received if it shall include any condition or
requirement that, individually or in the aggregate, would so materially reduce
the economic or business benefits of the transactions contemplated by this
Agreement to FFOH and GFCO that had such condition or requirement been
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known neither GFCO nor FFOH, in its reasonable judgment, would have entered into
this Agreement.
(c) The consent, approval or waiver of each person (other than the
Governmental Entities referred to in Section 6.1(b) hereof) whose consent,
approval or waiver shall be required in connection with the Merger and the Bank
Merger under any loan or credit agreement, note, mortgage, indenture, lease,
license or other agreement or instrument to which GFCO, FFOH, or any of their
respective Subsidiaries is a party or is otherwise bound shall have been
obtained, except those consents or approvals for which failure to obtain would
not have, or could not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on GFCO and FFOH.
(d) None of FFOH, GFCO or their respective Subsidiaries shall be
subject to any statute, rule, regulation, injunction or other order or decree
which shall have been enacted, entered, promulgated or enforced by any
Governmental Entity which prohibits, restricts or makes illegal consummation of
the Merger or the Bank Merger or any of the other transactions contemplated
hereby.
(e) The Form S-4 shall have become effective under the Securities Act,
and FFOH shall have received all state securities laws or "blue sky" permits and
other authorizations or there shall be exemptions from registration requirements
necessary to issue FFOH Common Stock in connection with the Merger, and neither
the Form S-4 nor any such permit, authorization or exemption shall be subject to
a stop order or threatened stop order by the Commission or any state securities
authority.
(f) The shares of FFOH Common Stock to be issued in connection with the
Merger shall have been approved for listing on the Nasdaq Stock Market's
National Market, subject to official notice of issuance.
(g) Grant Thornton LLP shall have issued a letter dated as of the
Effective Time to FFOH and to GFCO to the effect that, based on a review of this
Agreement and related agreements and the facts and circumstances then known to
it, the Merger shall be accounted for as a pooling-of-interests under generally
accepted accounting principles, and FFOH shall have received from the Affiliates
of GFCO the agreements referred to in Section 5.13(b) hereof to the extent
necessary to ensure in the reasonable judgment of FFOH and GFCO that the Merger
shall be accounted for in such manner.
(h) There shall not be pending any proceeding initiated by any
Governmental Entity to seek an order, injunction or decree which prevents
consummation of the Merger or the Bank Merger.
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6.2 Conditions Precedent - GFCO
The obligations of GFCO to effect the transactions contemplated by this
Agreement shall be subject to satisfaction of the following conditions at or
prior to the Effective Time unless waived by GFCO pursuant to Section 7.4
hereof.
(a) The representations and warranties of FFOH and Merger Corporation
set forth in Article IV hereof shall be true and correct as of the date of this
Agreement and as of the Effective Time as though made on and as of the Effective
Time (or on the date when made in the case of any representation and warranty
which specifically relates to an earlier date), provided, however, that
notwithstanding anything herein to the contrary, this Section 6.2(a) shall be
deemed to have been satisfied even if such representations or warranties are not
true and correct (exclusive of any exception in such representations and
warranties relating to materiality or Material Adverse Effect) unless the
failure of any of the representations or warranties to be so true and correct
would have, or reasonably could be expected to have, individually or in the
aggregate, a Material Adverse Effect on FFOH.
(b) FFOH and Merger Corporation shall have performed in all material
respects all obligations and complied with all covenants required to be
performed and complied with by them pursuant to this Agreement on or prior to
the Effective Time.
(c) Each of FFOH and Merger Corporation shall have delivered to GFCO a
certificate, dated the date of the Closing and signed by its President and by
its Chief Financial Officer, to the effect that the conditions set forth in
Sections 6.2(a) and 6.2(b) have been satisfied.
(d) GFCO shall have received the written opinion of Vorys, Sater,
Seymour & Pease LLP (which shall be based on such written representations
(including without limitation the standard representations set forth in Revenue
Procedure 86-42, 1986-2 C.B. 722) from FFOH, GFCO and others as such counsel
shall reasonably request as to factual matters) to the effect that the Merger
will constitute a reorganization within the meaning of Section 368(a) of the
Code and to the effect that (i) except for cash received in lieu of fractional
share interests, holders of GFCO Common Stock who receive FFOH Common Stock in
the Merger will not recognize gain or loss for federal income tax purposes, (ii)
the basis of such FFOH Common Stock will equal the basis of GFCO Common Stock
for which it is exchanged, reduced by any amount allocable to a fractional share
interest for which cash is received, and (iii) the holding period of such FFOH
Common Stock will include the holding period of GFCO Common Stock for which it
is exchanged, assuming that such stock is a capital asset in the hands of the
holder thereof at the Effective Time.
(e) FFOH and/or Merger Corporation shall have furnished GFCO with such
certificates of its respective officers or others and such other documents to
evidence fulfillment of the conditions set forth in Sections 6.1 and 6.2 as GFCO
may reasonably request.
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6.3 Conditions Precedent - FFOH and Merger Corporation
The obligations of FFOH and Merger Corporation to effect the
transactions contemplated by this Agreement shall be subject to satisfaction of
the following conditions at or prior to the Effective Time unless waived by FFOH
or Merger Corporation pursuant to Section 7.4 hereof.
(a) The representations and warranties of GFCO set forth in Article III
hereof shall be true and correct as of the date of this Agreement and as of the
Effective Time as though made on and as of the Effective Time (or on the date
when made in the case of any representation and warranty which specifically
relates to an earlier date), provided, however, that notwithstanding anything
herein to the contrary, this Section 6.3(a) shall be deemed to have been
satisfied even if such representations or warranties are not true and correct
(exclusive of any exceptions in such representations and warranties relating to
materiality or Material Adverse Effect) unless the failure of any of the
representations or warranties to be so true and correct would have, or
reasonably could be expected to have, individually or in the aggregate, a
Material Adverse Effect on GFCO.
(b) GFCO shall have performed in all material respects all obligations
and covenants required to be performed by it pursuant to this Agreement on or
prior to the Effective Time.
(c) GFCO shall have delivered to FFOH a certificate, dated the date of
the Closing and signed by its President and by its Chief Financial Officer, to
the effect that the conditions set forth in Sections 6.3(a) and 6.3(b) have been
satisfied.
(d) FFOH shall have received the written opinion of Elias, Matz,
Tiernan & Herrick L.L.P. (which shall be based on such written representations
(including without limitation the standard representations set forth in Revenue
Procedure 86-42, 1986-2 C.B. 722) from FFOH, GFCO and others as such counsel
shall reasonably request as to factual matters) to the effect that the Merger
and the Bank Merger will constitute a reorganization within the meaning of
Section 368(a) of the Code and that, accordingly, for federal income tax
purposes no gain or loss will be recognized by FFOH, GFCO, the Bank or
Centennial (except to the extent that any such party may be required to
recognize income due to the recapture of bad debt reserves as a result of the
Bank Merger).
(e) GFCO shall have furnished FFOH with such certificates of its
officers or others and such other documents to evidence fulfillment of the
conditions set forth in Sections 6.1 and 6.3 as FFOH may reasonably request.
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ARTICLE VII
TERMINATION, WAIVER AND AMENDMENT
7.1 Termination
This Agreement may be terminated:
(a) at any time on or prior to the Effective Time, by the mutual
consent in writing of the parties hereto;
(b) at any time on or prior to the Effective Time, by either FFOH or
GFCO (provided that the terminating party is not then in material breach of any
representation, warranty, covenant or other agreement contained herein) in
writing if there shall have been a breach by the other party of (i) any covenant
or undertaking of it contained herein or (ii) any representation or warranty of
it contained herein, which in the case of GFCO would have, or could reasonably
be expected to have, a Material Adverse Effect on GFCO and in the case of FFOH
would have, or could reasonably be expected to have, a Material Adverse Effect
on FFOH, in any case if such breach has not been cured by the earlier of 30 days
after the date on which written notice of such breach is given to the party
committing such breach or the Effective Time;
(c) at any time, by any party hereto in writing, if any of the
applications for prior approval referred to in Section 5.3 hereof are denied or
withdrawn at the request or recommendation of the applicable Governmental Entity
or are approved in a manner which does not satisfy the requirements of Section
6.1(b) hereof, and the time period for appeals and requests for reconsideration
has run, or if any Governmental Entity of competent jurisdiction shall have
issued a final nonappealable order enjoining or otherwise prohibiting the Merger
or the Bank Merger;
(d) at any time, by any party hereto in writing, if the shareholders of
FFOH or GFCO do not approve this Agreement after a vote taken thereon at a
meeting duly called for such purpose (or at any adjournment thereof), unless the
failure of such occurrence shall be due to the failure of the party seeking to
terminate to perform or observe in any material respect its agreements set forth
herein to be performed or observed by such party at or before the Effective
Time;
(e) by either GFCO or FFOH in writing if the Effective Time has not
occurred by the close of business on June 30, 1999, provided that this right to
terminate shall not be available to any party whose failure to perform an
obligation in breach of such party's obligations under this Agreement has been
the cause of, or resulted in, the failure of the Merger and the other
transactions contemplated hereby to be consummated by such date; and
(f) by FFOH in writing if the Board of Directors of GFCO shall have
failed to recommend or withdrawn, modified or changed in a manner adverse to the
Merger its recommendation of this Agreement and the transactions contemplated
hereby pursuant to Section 5.2 hereof or by the Board of Directors of GFCO if
the Board of Directors of FFOH shall have failed to recommend or withdrawn,
modified or changed in a manner adverse to GFCO its
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recommendation of this Agreement and the transactions contemplated hereby
pursuant to Section 5.2 hereof.
7.2 Effect of Termination
In the event that this Agreement is terminated pursuant to Section 7.1
hereof, this Agreement shall become void and have no effect, except that (i) the
provisions relating to confidentiality and expenses set forth in Section 5.4 and
Section 8.1, respectively, and this Section 7.2 shall survive any such
termination and (ii) a termination pursuant to Section 7.1(b), (c), (d), (e) or
(f) shall not relieve the breaching party from liability for willful breach of
any covenant, undertaking, representation or warranty giving rise to such
termination.
7.3 Survival of Representations, Warranties and Covenants
All representations, warranties and covenants in this Agreement or in
any instrument delivered pursuant hereto or thereto shall expire on, and be
terminated and extinguished at, the Effective Time other than covenants that by
their terms are to be performed after the Effective Time (including without
limitation the covenants set forth in Sections 2.6, 2.8, 5.8 and 5.9 hereof),
provided that no such representations, warranties or covenants shall be deemed
to be terminated or extinguished so as to deprive FFOH or GFCO (or any director,
officer or controlling person thereof) of any defense at law or in equity which
otherwise would be available against the claims of any person, including,
without limitation, any shareholder or former shareholder of either FFOH or
GFCO.
7.4 Waiver
Each party hereto by written instrument signed by an executive officer
of such party, may at any time (whether before or after approval of this
Agreement by the shareholders of FFOH and GFCO) extend the time for the
performance of any of the obligations or other acts of the other party hereto
and may waive (i) any inaccuracies of the other party in the representations or
warranties contained in this Agreement or any document delivered pursuant
hereto, (ii) compliance with any of the covenants, undertakings or agreements of
the other party, (iii) to the extent permitted by law, satisfaction of any of
the conditions precedent to its obligations contained herein or (iv) the
performance by the other party of any of its obligations set forth herein,
provided that any such waiver granted, or any amendment or supplement pursuant
to Section 7.5 hereof executed after shareholders of FFOH or GFCO have approved
this Agreement shall not modify either the amount or form of the consideration
to be provided hereby to the holders of GFCO Common Stock upon consummation of
the Merger or otherwise materially adversely affect such shareholders without
the approval of the shareholders who would be so affected.
7.5 Amendment or Supplement
This Agreement may be amended or supplemented at any time by mutual
agreement of FFOH, Merger Corporation and GFCO, subject to the proviso to
Section 7.4 hereof. Any such amendment or supplement must be in writing and
authorized by the parties' respective Boards of Directors.
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ARTICLE VIII
MISCELLANEOUS
8.1 Expenses
(a) Except as set forth in paragraphs (b) and (c) of this Section 8.1,
each party hereto shall bear and pay all costs and expenses incurred by it in
connection with the transactions contemplated by this Agreement, including fees
and expenses of its own financial consultants, accountants and counsel, except
that expenses of printing the Form S-4 and the registration fees to be paid to
the Commission in connection therewith shall be shared equally between GFCO and
FFOH.
(b) GFCO shall pay the expenses reasonably incurred by FFOH in
connection with the transactions contemplated by this Agreement in the event
GFCO or its Subsidiaries shall (i) default in its obligations hereunder or (ii)
fail to recommend approval of the Merger to the GFCO shareholders pursuant to
Section 5.2 of this Agreement;
(c) FFOH shall pay the expenses reasonably incurred by GFCO in
connection with he transactions contemplated by this Agreement in the event FFOH
or Merger Corporation shall (i) default in its obligations hereunder or (ii)
fail to recommend approval of the Merger and the other transactions contemplated
hereby (including the amendment to FFOH's Articles of Incorporation in
accordance with Section 5.16(a) hereof) to the FFOH shareholders pursuant to
Section 5.2 of this Agreement;
(d) Notwithstanding any provision in this Agreement to the contrary, in
the event that any of the parties shall default in its obligations hereunder,
either of the non-defaulting parties may pursue any remedy available at law or
in equity to enforce its rights and shall be paid by the defaulting party for
all damages, costs and expenses, including without limitation legal, accounting,
investment banking and printing expenses, incurred or suffered by such
non-defaulting party in connection herewith or in the enforcement of its rights
hereunder.
8.2 Entire Agreement
This Agreement (including the agreements to be executed and delivered
pursuant hereto), the GFCO Stock Option Agreement, the FFOH Stock Option
Agreement, the GFCO Stockholder Agreement, the FFOH Stockholder Agreement and
the Confidentiality Agreement contain the entire agreement among the parties
with respect to the transactions contemplated hereby and supersede all prior
arrangements or understandings with respect thereto, written or oral, other than
documents referred to herein and therein. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the parties hereto
and thereto and their respective successors.
8.3 Assignment; Successors
A party hereto may not assign any of its rights or obligations under
this Agreement to any other person without the prior written consent of the
other party or parties. The terms and conditions of this Agreement shall inure
to the benefit of and be binding upon the parties hereto
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and their respective successors. Nothing in this Agreement, expressed or
implied, is intended to confer upon any party, other than the parties hereto,
and their respective successors, any rights, remedies, obligations or
liabilities, except as otherwise expressly provided in Sections 5.8 and 5.9
hereof.
8.4 Notices
All notices or other communications which are required or permitted
hereunder shall be in writing and sufficient if delivered personally, telecopied
(with confirmation) or sent by overnight mail service or by registered or
certified mail (return receipt requested), postage prepaid, addressed as
follows:
If to FFOH or Merger Corporation:
Fidelity Financial of Ohio, Inc.
4555 Montgomery Road
Cincinnati, Ohio 45212
Attn: John R. Reusing
President and Chief Executive Officer
Fax: 513-458-3473
With a required copy to:
Elias, Matz, Tiernan & Herrick L.L.P.
734 15th Street, N.W.
Washington, D.C. 20005
Attn: Jeffrey D. Haas, Esq.
Fax: 202-347-2172
If to GFCO:
Glenway Financial Corporation
5535 Glenway Avenue
Cincinnati, Ohio 45238
Attn: Robert R. Sudbrook
President and Chief Executive Officer
Fax: 513-922-3024
With a required copy to:
Vorys, Sater, Seymour & Pease LLP
221 East 4th Street
Cincinnati, Ohio 45201
Attn: Terri R. Abare, Esq.
Fax: 513-723-4056
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8.5 Interpretation
The table of contents and headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. The phrases "the date of this Agreement," "the
date hereof" and terms of similar import herein, unless the context otherwise
requires, shall be deemed to be the date first above written.
8.6 Counterparts
This Agreement may be executed in any number of counterparts, and each
such counterpart shall be deemed to be an original instrument, but all such
counterparts together shall constitute but one agreement.
8.7 Governing Law
This Agreement shall be governed by and construed in accordance with
the laws of the State of Ohio applicable to agreements made and entirely to be
performed within such jurisdiction.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in counterparts by their duly authorized officers and their corporate
seal to be hereunto affixed and attested by their officers thereunto duly
authorized, all as of the day and year first above written.
FIDELITY FINANCIAL OF OHIO, INC.
Attest:
/s/ Paul D. Staubach By: /s/ John R. Reusing
- --------------------------- -------------------------------
Name: Paul D. Staubach Name: John R. Reusing
Title: Senior Vice President, Chief Title: President and Chief Executive
Financial Officer and Secretary Officer
FIDELITY ACQUISITION CORPORATION
Attest:
/s/ Paul D. Staubach By: /s/ John R. Reusing
- --------------------------- -------------------------------
Name: Paul D. Staubach Name: John R. Reusing
Title: Senior Vice President, Chief Title: President and Chief Executive
Financial Officer and Secretary Officer
GLENWAY FINANCIAL CORPORATION
Attest:
/s/ Daniel W. Geeding By: /s/ Robert R. Sudbrook
- --------------------------- -------------------------------
Name: Daniel W. Geeding Name: Robert R. Sudbrook
Title: Secretary Title: President and Chief Executive
Officer
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EXHIBIT A
AGREEMENT OF MERGER
Agreement of Merger, dated as of September 28, 1998, by and between
Fidelity Federal Savings Bank (the "Bank") and Centennial Savings Bank
("Centennial").
WITNESSETH:
WHEREAS, Centennial is an Ohio-chartered savings bank and a
wholly-owned subsidiary of Glenway Financial Corporation ("GFCO"); and
WHEREAS, the Bank is a federally chartered savings bank and a
wholly-owned subsidiary of Fidelity Acquisition Corporation ("Merger
Corporation") which is in turn a wholly-owned subsidiary of Fidelity Financial
of Ohio, Inc. ("FFOH"); and
WHEREAS, FFOH, Merger Corporation and GFCO have entered into an
Agreement of Merger, dated as of September 28, 1998 (the "Agreement"), pursuant
to which GFCO will merge with and into Merger Corporation (the "Parent Merger");
and
WHEREAS, the Bank and Centennial desire to merge on the terms and
conditions herein provided immediately following the effective time of the
Parent Merger.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein contained, the parties hereto, intending to be
legally bound hereby, agree as follows:
1. The Merger. Subject to the terms and conditions of this Agreement of
Merger, at the Effective Time (as defined in Section 2 hereof), the Bank shall
merge with and into Centennial (the "Merger") under the laws of the State of
Ohio and the United States. Centennial shall be the surviving bank of the Merger
(the "Surviving Bank").
2. Effective Time. The Merger shall become effective on the date and at
the time that a Certificate of Merger is filed with the Secretary of State of
Ohio, unless a later date and time is specified as the effective time on such
Certificate of Merger (the "Effective Time").
3. Articles of Incorporation; Constitution; Bylaws. The Articles of
Incorporation, Constitution and Bylaws of Centennial in effect immediately prior
to the Effective Time shall be the Articles of Incorporation, Constitution and
Bylaws of the Surviving Bank, until altered, amended or repealed in accordance
with their terms and applicable law.
<PAGE>
4. Name; Offices. The name of the Surviving Bank shall be "Centennial
Bank." The main office of the Surviving Bank shall be the main office of
Centennial immediately prior to the Effective Time. All branch offices of the
Bank and Centennial which were in lawful operation immediately prior to the
Effective Time shall be the branch offices of the Surviving Bank upon
consummation of the Merger, subject to the opening or closing of any offices
which may be authorized by the Bank or Centennial and applicable regulatory
authorities after the date hereof. Schedule I hereto contains a list of each of
the deposit taking offices of the Bank and Centennial which shall be operated by
the Surviving Bank, subject to the opening or closing of any offices which may
be authorized by the Bank or Centennial and applicable regulatory authorities
after the date hereof.
5. Directors and Executive Officers. Upon consummation of the Merger,
(i) the directors of the Surviving Bank shall consist of 12 persons the names
and residence addresses of which are set forth as Schedule II hereto and (ii)
the executive officers of the Surviving Bank shall be the executive officers of
the Bank immediately prior to the Effective Time, except that Robert R. Sudbrook
shall be Chairman of the Board of Directors and Chief Executive Officer of the
Surviving Bank, John R. Reusing shall be the President of the Surviving Bank and
Elaine M. Schmidt shall be the Senior Vice President and Chief Operations
Officer of the Surviving Bank. Directors and officers of the Surviving Bank
shall serve for such terms as are specified in the Articles of Incorporation,
Constitution and Bylaws of the Surviving Bank.
6. Effects of the Merger. Upon consummation of the Merger, and in
addition to the effects set forth at 12. C.F.R. ss. 552.13 and Sections 1161.76
and 1701.82 of the Ohio Revised Code and other applicable law:
(i) all rights, franchises and interests of the Bank in and to every
type of property (real, personal and mixed), tangible and intangible, and
chooses in action shall be transferred to and vested in the Surviving Bank by
virtue of the Merger without any deed or other transfer, and the Surviving Bank,
without any order or other action on the part of any court or otherwise, shall
hold and enjoy all rights of property, franchises and interests, including
appointments, designations and nominations, and all other rights and interests
as trustee, executor, administrator, registrar of stocks and bonds, guardian of
estates, assignee, receiver and committee, and in every other fiduciary
capacity, in the same manner and to the same extent as such rights, franchises
and interest were held or enjoyed by the Bank immediately prior to the Effective
Time; and
(ii) the Surviving Bank shall be liable for all liabilities of the
Bank, fixed or contingent, including all deposits, accounts, debts, obligations
and contracts thereof, matured or unmatured, whether accrued, absolute,
contingent or otherwise, and whether or not reflected or reserved against on
balance sheets, books of account or records thereof, and all rights of creditors
or obligees and all liens on property of the Bank shall be preserved unimpaired.
In accordance with 12 C.F.R. ss. 563b.3(f), the Surviving Bank shall assume and
maintain the liquidation account established by the Bank in connection with its
conversion to stock form.
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(iii) Upon the consummation of the Merger, and as a result of the
Merger, each savings deposit or other account of the Bank then existing shall,
automatically and without further act of the Surviving Bank or the Bank or the
holder thereof, be canceled and extinguished. In substitution and exchange for
each passbook savings deposit so canceled and extinguished, the holder thereof
shall automatically receive from the Surviving Bank a Surviving Bank passbook
savings account with a beginning balance equal in dollar amount to the dollar
amount of the Bank passbook savings deposit account so canceled and extinguished
and otherwise on the same terms as other passbook savings accounts accepted by
the Surviving Bank at the time of the consummation of the Merger. In
substitution for each Bank savings deposit other than a passbook savings deposit
so canceled and extinguished, the holder thereof shall automatically receive
from the Surviving Bank a Surviving Bank savings account with a beginning
balance equal in dollar amount to the dollar amount of the Bank savings deposit
account so canceled and extinguished and otherwise having the same terms as the
Bank savings deposit so canceled and extinguished.
The holder of each Bank savings deposit or other account canceled and
extinguished in connection with the Merger shall forthwith be entered on the
records of the Surviving Bank as the holder of an appropriate Surviving Bank
savings deposit or other account in an amount determined as provided in this
Agreement of Merger. Until surrendered to the Surviving Bank, each passbook,
certificate of deposit or other account issued by the Bank and outstanding at
the effective time of the Merger shall be deemed, for all purposes, to evidence
a savings deposit or other account of the Surviving Bank.
Upon surrender of a passbook, certificate of deposit or other document
issued by the Bank which theretofore evidenced a Bank savings deposit or other
account, the Surviving Bank shall deliver in substitution therefor an account
book or other document evidencing the Surviving Bank savings deposit or other
account received by such person in accordance with this Agreement of Merger.
7. Effect on Shares of Stock.
(a) Each share of Acquiror Bank common stock issued and outstanding
immediately prior to the Effective Time shall be unchanged and shall remain
issued and outstanding.
(b) At the Effective Time, each share of Bank common stock issued and
outstanding prior to the Merger shall, by virtue of the Merger and without any
action on the part of the holder thereof, be canceled. Any shares of Bank common
stock held in the treasury of the Bank immediately prior to the Effective Time
shall be retired and canceled.
8. Additional Actions. If, at any time after the Effective Time, the
Surviving Bank shall consider that any further assignments or assurances in law
or any other acts are necessary or desirable to (i) vest, perfect or confirm, of
record or otherwise, in the Surviving Bank its rights, title or interest in, to
or under any of the rights, properties or assets of the Bank acquired or to be
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acquired by the Surviving Bank as a result of, or in connection with, the
Merger, or (ii) otherwise carry out the purposes of this Agreement of Merger,
the Bank and its proper officers and directors shall be deemed to have granted
to the Surviving Bank an irrevocable power of attorney to execute and deliver
all such proper deeds, assignments and assurances in law and to do all acts
necessary or proper to vest, perfect or confirm title to and possession of such
rights, properties or assets in the Surviving Bank and otherwise to carry out
the purposes of this Agreement of Merger; and the proper officers and directors
of the Surviving Bank are fully authorized in the name of the Bank or otherwise
to take any and all such action.
9. Counterparts. This Agreement of Merger may be executed in one or
more counterparts, each of which shall be deemed to be an original but all of
which together shall constitute one agreement.
10. Governing Law. This Agreement of Merger shall be governed in all
respects, including, but not limited to, validity, interpretation, effect and
performance, by the laws of the United States and, to the extent applicable, the
State of Ohio.
11. Amendment. Subject to applicable law, this Agreement of Merger may
be amended, modified or supplemented only by written agreement of the Acquiror
Bank and the Bank at any time prior to the Effective Time.
12. Waiver. Any of the terms or conditions of this Agreement of Merger
may be waived at any time by whichever of the parties hereto is, or the
shareholders of which are, entitled to the benefit thereof by action taken by
the Board of Directors of such waiving party.
13. Assignment. This Agreement of Merger may not be assigned by any
party hereto without the prior written consent of the other party.
14. Termination. This Agreement of Merger shall terminate upon the
termination of the Agreement in accordance with its terms.
15. Procurement of Approvals. This Agreement of Merger shall be subject
to the approval of GFCO, as the sole shareholder of Centennial, and Merger
Corporation, as the sole shareholder of the Bank, at meetings to be called and
held or by consent in lieu thereof in accordance with the applicable provisions
of law and their respective Charter, Articles of Incorporation, Constitution and
Bylaws (or a consent or consents in lieu thereof). The Acquiror Bank and the
Bank shall proceed expeditiously and cooperate fully in the procurement of any
other consents and approvals and in the taking of any other action, and the
satisfaction of all other requirements prescribed by law or otherwise necessary
for consummation of the Merger on the terms provided herein, including without
limitation the preparation and submission of such applications or other filings
for approval of or in connection with the Merger to the Ohio Department of
Commerce, Division of Financial Institutions, the Federal Deposit Insurance
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Corporation and the Office of Thrift Supervision as may be required by
applicable laws and regulations.
16. Conditions Precedent. The obligations of the parties under this
Agreement of Merger shall be subject to: (i) the approval of this Agreement of
Merger by GFCO, as the sole shareholder of Centennial, and Merger Corporation,
as the sole shareholder of the Bank, at meetings of shareholders duly called and
held (or by consent or consents in lieu thereof), in each case without any
exercise of such dissenters' rights as may be applicable; (ii) receipt of
approval of the Merger from all governmental and banking authorities whose
approval is required; (iii) receipt of any necessary regulatory approval to
operate the main office and the branch offices of the Bank as offices of the
Surviving Bank; and (iv) the consummation of the Parent Merger pursuant to the
Agreement on or before the Effective Time.
17. Effectiveness of Merger. Notwithstanding anything to the contrary
contained herein, the Merger shall not be deemed to be effective unless and
until the requirements of 12 C.F.R. ss. 552.13 and Section 1161.76 of the Ohio
Revised Code are met.
5
<PAGE>
IN WITNESS WHEREOF, each of the Acquiror Bank and the Bank has caused
this Agreement of Merger to be executed on its behalf by its duly authorized
officers.
FIDELITY FEDERAL SAVINGS BANK
Attest:
/s/ Paul D. Staubach By: /s/ John R. Reusing
- --------------------------------------- ---------------------------------
Name: Paul D. Staubach Name: John R. Reusing
Title: Senior Vice President, Chief Title: President and Chief Executive
Financial Officer and Secretary Officer
CENTENNIAL SAVINGS BANK
Attest:
/s/ Daniel W. Geeding By: /s/ Robert R. Sudbrook
- --------------------------------------- --------------------------------
Name: Daniel W. Geeding Name: Robert R. Sudbrook
Title: Secretary Title: President and Chief Executive
Officer
6
<PAGE>
SCHEDULE I
List of Offices of
the Surviving Corporation
-------------------------
Home Office:
5535 Glenway Avenue
Cincinnati, Ohio 45238
Branch Offices:
4555 Montgomery Road
Cincinnati, Ohio 45212
8434 Vine Street
Cincinnati, Ohio 45216
7136 Miami Avenue
Cincinnati, Ohio 45243
11100 Reading Road
Cincinnati, Ohio 45241
11700 Princeton Pike
Springdale, Ohio 45246
4144 Hunt Road
Blue Ash, Ohio 45236
5030 Delhi Avenue
Cincinnati, Ohio 45238
3316 Glenmore Avenue
Cincinnati, Ohio 45211
3777 Hamilton Cleves Road
Hamilton, Ohio 45013
8045 Colerain Avenue
Cincinnati, Ohio 45239
7
<PAGE>
4221 Glenway Avenue
Cincinnati, Ohio 45205
5681 Rapid Run
Cincinnati, Ohio 45238
3916 Harrison Avenue
Cincinnati, Ohio 45211
9090 Colerain Avenue
Cincinnati, Ohio 45251
7944 Beechmont Avenue
Cincinnati, Ohio 45255
10640 Loveland-Madeira Road
Loveland, Ohio 45140
8
<PAGE>
SCHEDULE II
<TABLE>
<CAPTION>
Term of
Office
Name of Director Residence Address Expires
- --------------------------------- -------------------------------------- --------------
<S> <C> <C>
Joseph D. Hughes 743 Huntersknoll Lane 1999
Cincinnati, Ohio 45230
David A. Luecke 6609 Powner Farm Drive 1999
Cincinnati, Ohio 45248
Michael W. Jordan 9266 Witherbone Court 1999
Cincinnati, Ohio 45242
Constantine N. Papadakis 103 Airdale Road 1999
Rosemont, Pennsylvania 19010
John R. Reusing 1307 Tara Ridge 1999
Milford, Ohio 45150
Thomas N. Spaeth 824 Farmsworth Drive 1999
Cincinnati, Ohio 45255
Robert W. Zumbiel 121 Sunset Drive 1999
Crestview Hills, Kentucky 41017
Robert R. Sudbrook 5581 Woodbridge Lane 1999
Cincinnati, Ohio 45069
Edgar A. Rust 5848 Bayou Court 1999
Cincinnati, Ohio 45248
Daniel W. Geeding 3584 Raymar Drive 1999
Cincinnati, Ohio 45208
Kenneth C. Lichtendahl 5889 Lawrence Road 1999
Cincinnati, Ohio 45248
John L. Torbeck 2275 Beechgrove Drive 1999
Cincinnati, Ohio 45233
</TABLE>
9
EXHIBIT B
STOCK OPTION AGREEMENT
Stock Option Agreement, dated as of September 28, 1998, between Fidelity
Financial of Ohio, Inc., an Ohio corporation ("Grantee"), and Glenway Financial
Corporation, a Delaware corporation ("Issuer").
W I T N E S S E T H:
WHEREAS, Grantee and Issuer have entered into an Agreement of Merger of
even date herewith (the "Merger Agreement"), providing for, among other things,
the merger of Issuer with and into a wholly-owned subsidiary of Grantee (the
"Merger");
WHEREAS, as a condition and an inducement to Grantee to enter into the
Merger Agreement, Issuer has agreed to grant Grantee the Option (as hereinafter
defined); and
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements set forth herein and in the Merger Agreement, the parties hereto
agree as follows:
1. (a) Issuer hereby grants to Grantee an unconditional, irrevocable
option (the "Option") to purchase, subject to the terms hereof, up to an
aggregate of 456,349 fully paid and nonassessable shares (the "Option Shares")
of common stock, par value $0.01 per share, of Issuer (the "Common Stock") at a
price per share equal to $17.25 (the "Option Price"); provided, however, that in
no event shall the number of shares for which this Option is exercisable exceed
19.9% of the issued and outstanding shares of Common Stock without giving effect
to any shares subject to or issued pursuant to the Option. The number of shares
of Common Stock that may be received upon the exercise of the Option and the
Option Price are subject to adjustment as herein set forth.
(b) In the event that any additional shares of Common Stock are issued or
otherwise become outstanding after the date of this Agreement (other than
pursuant to this Agreement and other than pursuant to an event described in
Section 5(a) hereof), including, without limitation, pursuant to stock option or
other employee plans or as a result of the exercise of conversion rights, the
number of shares of Common Stock subject to the Option shall be increased so
that, after such event, such number equals 19.9% of the number of shares of
Common Stock then issued and outstanding without giving effect to any shares
subject to or issued pursuant to the Option. Nothing contained in this Section
l(b) or elsewhere in this Agreement shall be deemed to authorize Issuer to issue
shares in breach of any provision of the Merger Agreement.
2. (a) The Holder (as hereinafter defined) may exercise the Option, in
whole or part, and from time to time, if, but only if, both an Initial
Triggering Event (as hereinafter defined) and a Subsequent Triggering Event (as
hereinafter defined) shall have occurred prior to the occurrence of
<PAGE>
an Exercise Termination Event (as hereinafter defined), provided that the Holder
shall have sent the written notice of the first exercise (as provided in
paragraph (e) of this Section 2) within 90 days following the first Subsequent
Triggering Event to occur (or such later period as provided in Section 10). Each
of the following shall be an Exercise Termination Event: (i) the Effective Time
(as defined in the Merger Agreement); (ii) termination of the Merger Agreement
in accordance with the provisions thereof if such termination occurs prior to
the occurrence of an Initial Triggering Event, except a termination by Grantee
pursuant to Section 7.1(b) of the Merger Agreement (unless the breach by Issuer
giving rise to such right of termination was non-volitional); or (iii) the
passage of 12 months after termination of the Merger Agreement if such
termination follows the occurrence of an Initial Triggering Event or is a
termination by Grantee pursuant to Section 7.1(b) of the Merger Agreement
(unless the breach by Issuer giving rise to such right of termination is
non-volitional), provided that if an Initial Triggering Event continues or
occurs beyond such termination and prior to the passage of such 12-month-period,
the Exercise Termination Event shall be 12 months from the expiration of the
Last Triggering Event but in no event more than 18 months after such
termination. The term "Last Triggering Event" shall mean the last "Initial
Triggering Event" to expire, and the term "Holder" shall mean the holder or
holders of the Option pursuant to this Agreement. Notwithstanding anything to
the contrary contained herein, the Option may not be exercised at any time when
Grantee shall be in willful material breach of any of its covenants or
agreements contained in the Merger Agreement such that Issuer shall be entitled
to terminate the Merger Agreement pursuant to Section 7.1(b) thereof as a result
of such a willful material breach.
(b) The term "Initial Triggering Event" shall mean any of the following
events or transactions occurring on or after the date hereof:
(i) Issuer or any Subsidiary of Issuer (an "Issuer Subsidiary"),
without having received Grantee's prior written consent, shall have entered into
an agreement to engage in an Acquisition Transaction (as hereinafter defined)
with any person (the term "person" for purposes of this Agreement having the
meaning assigned thereto in Sections 3(a)(9) and 13(d)(3) of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and the rules and regulations
thereunder), other than Grantee or any Subsidiary of Grantee (a "Grantee
Subsidiary") or the Board of Directors of Issuer (the "Issuer Board") shall have
recommended that the shareholders of Issuer approve or accept any Acquisition
Transaction with any person other than Grantee or a Grantee Subsidiary. For
purposes of this Agreement, (a) "Acquisition Transaction" shall mean (w) a
merger or consolidation, or any similar transaction, involving Issuer or any
Issuer Subsidiary (other than mergers, consolidations or similar transactions
(i) involving solely Issuer and/or one or more wholly-owned Subsidiaries of
Issuer, provided any such transaction is not entered into in violation of the
terms of the Merger Agreement, or (ii) in which the shareholders of Issuer
immediately prior to the completion of such transaction own at least 50% of the
Common Stock of Issuer (or the resulting or surviving entity in such
transaction) immediately after completion of such transaction, provided any such
transaction is not entered into in violation of the terms of the Merger
Agreement), (x) a purchase, lease or other acquisition of all or any substantial
part of the assets or deposits of Issuer or any Issuer Subsidiary, (y) a
purchase or other acquisition (including by way of merger, consolidation, share
exchange or otherwise) of securities representing 10% or more of the voting
-2-
<PAGE>
power of Issuer or any Issuer Subsidiary or (z) any substantially similar
transaction; and (b) "Subsidiary" shall have the meaning set forth in Rule 12b-2
under the 1934 Act;
(ii) Any person, other than Grantee or a Grantee Subsidiary, shall have
acquired beneficial ownership or the right to acquire beneficial ownership of
10% or more of the outstanding shares of Common Stock (the term "beneficial
ownership" for purposes of this Agreement having the meaning assigned thereto in
Section 13(d) of the 1934 Act, and the rules and regulations thereunder);
(iii) Any person, other than Grantee or a Grantee Subsidiary, shall have
made a bona fide proposal to Issuer or its stockholders by public announcement
or written communication that is or becomes the subject of public disclosure to
engage in an Acquisition Transaction;
(iv) The Issuer Board, without having received Grantee's prior written
consent, shall have withdrawn or modified, or publicly announced its interest to
withdraw or modify in any manner adverse in any respect to Grantee, its
recommendation that the stockholders of Issuer approve the transactions
contemplated by the Merger Agreement in anticipation of engaging in an
Acquisition Transaction, or Issuer or any Issuer Subsidiary shall have
authorized, recommended or proposed, or publicly announced its intention to
authorize, recommend or propose, an agreement to engage in an Acquisition
Transaction with any person other than Grantee or a Grantee Subsidiary;
(v) Any person other than Grantee or a Grantee Subsidiary shall have filed
with the Securities and Exchange Commission ("SEC") a registration statement or
tender offer materials with respect to a potential exchange or tender offer that
would constitute an Acquisition Transaction (or filed a preliminary proxy
statement with the SEC with respect to a potential vote by its stockholders to
approve the issuance of shares to be offered in such an exchange offer);
(vi) After an overture is made by any person, other than Grantee or a
Grantee Subsidiary, to Issuer or its stockholders to engage in an Acquisition
Transaction, Issuer shall have breached any covenant or obligation contained in
the Merger Agreement and such breach (x) would entitle Grantee to terminate the
Merger Agreement (whether immediately or after the giving of notice or passage
of time or both) and (y) shall not have been cured prior to the Notice Date (as
defined below); or
(vii) Any person other than Grantee or a Grantee Subsidiary shall have
filed an application or notice with the Office of Thrift Supervision (the "OTS")
or other federal or state bank regulatory or antitrust authority, which
application or notice has been accepted for processing, for approval to engage
in an Acquisition Transaction.
(c) The term "Subsequent Triggering Event" shall mean any of the following
events or transactions occurring after the date hereof:
(i) The acquisition by any person (other than Grantee or any Grantee
Subsidiary) of beneficial ownership of 25% or more of the then outstanding
Common Stock; or
-3-
<PAGE>
(ii) The occurrence of the Initial Triggering Event described in clause
(i) of subsection (b) of this Section 2, except that the percentage referred to
in clause (y) of the second sentence thereof shall be 20%.
(d) Issuer shall notify Grantee promptly in writing of the occurrence of
any Initial Triggering Event or Subsequent Triggering Event (together, a
"Triggering Event") of which it has notice, it being understood that the giving
of such notice by Issuer shall not be a condition to the right of the Holder to
exercise the Option.
(e) In the event the Holder is entitled to and wishes to exercise the
Option (or any portion thereof), it shall send to Issuer a written notice (the
date of which being herein referred to as the "Notice Date") specifying (i) the
total number of shares of Common Stock it will purchase pursuant to such
exercise and (ii) a place and date not earlier than three business days nor
later than 60 business days from the Notice Date for the closing of such
purchase (the "Closing"); provided that if prior notification to or approval of
the OTS or any other regulatory or antitrust agency is required in connection
with such purchase, the Holder shall promptly file the required notice or
application for approval, shall promptly notify Issuer of such filing and shall
expeditiously process the same and the period of time that otherwise would run
pursuant to this sentence shall run instead from the date on which any required
notification periods have expired or been terminated or such approvals have been
obtained and any requisite waiting period or periods shall have passed. Any
exercise of the Option shall be deemed to occur on the Notice Date relating
thereto. The term "business day" for purposes of this Agreement means any day,
excluding Saturdays, Sundays and any other day that is a legal holiday in the
State of Ohio or a day on which banking institutions in the State of Ohio are
authorized by law or executive order to close.
(f) At a Closing, the Holder shall (i) pay to Issuer the aggregate
purchase price for the shares of Common Stock purchased pursuant to the exercise
of the Option in immediately available funds by wire transfer to a bank account
designated by Issuer, and (ii) present and surrender this Agreement to Issuer at
its principal executive offices, provided that the failure or refusal of the
Issuer to designate such a bank account or accept surrender of this Agreement
shall not preclude the Holder from exercising the Option.
(g) At a Closing, simultaneously with the delivery of immediately
available funds as provided in subsection (f) of this Section 2, Issuer shall
deliver to the Holder a certificate or certificates representing the number of
shares of Common Stock purchased by the Holder and, if the Option should be
exercised in part only, a new Option evidencing the rights of the Holder thereof
to purchase the balance of the shares purchasable hereunder, and the Holder
shall deliver to Issuer a copy of this Agreement and a letter agreeing that the
Holder will not offer to sell or otherwise dispose of such shares in violation
of applicable law or the provisions of this Agreement.
(h) Certificates for Common Stock delivered at a Closing hereunder may be
endorsed (in the sole discretion of Issuer) with a restrictive legend that shall
read substantially as follows:
-4-
<PAGE>
"The transfer of the shares represented by this certificate is
subject to certain provisions of an agreement between the registered
holder hereof and Issuer and to resale restrictions arising under the
Securities Act of 1933, as amended. A copy of such agreement is on file at
the principal office of Issuer and will be provided to the holder hereof
without charge upon receipt by Issuer of a written request therefor."
It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act of 1933, as amended (the "1933 Act"), in the above legend
shall be removed by delivery of substitute certificate(s) without such reference
if the Holder shall have delivered to Issuer a copy of a letter from the staff
of the SEC, or an opinion of counsel, in form and substance reasonably
satisfactory to Issuer, to the effect that such legend is not required for
purposes of the 1933 Act; (ii) the reference to the provisions of this Agreement
in the above legend shall be removed by delivery of substitute certificate(s)
without such reference if the shares have been sold or transferred in compliance
with the provisions of this Agreement and under circumstances that do not
require the retention of such reference in the reasonable opinion of counsel to
the Holder; and (iii) the legend shall be removed in its entirety if the
conditions in the preceding clauses (i) and (ii) are both satisfied. In
addition, such certificates shall bear any other legend as may be required by
law.
(i) Upon the giving by the Holder to Issuer of the written notice of
exercise of the Option provided for under paragraph (e) of this Section 2, the
tender of the applicable purchase price in immediately available funds and the
tender of a copy of this Agreement to Issuer, the Holder shall be deemed,
subject to the receipt of any necessary regulatory approvals, to be the holder
of record of the shares of Common Stock issuable upon such exercise,
notwithstanding that the stock transfer books of Issuer shall then be closed or
that certificates representing such shares of Common Stock shall not then be
actually delivered to the Holder. Issuer shall pay all expenses, and any and all
United States federal, state and local taxes and other charges that may be
payable in connection with the preparation, issue and delivery of stock
certificates under this Section 2 in the name of the Holder or its assignee,
transferee or designee.
3. Issuer agrees: (i) that it shall at all times maintain, free from
preemptive rights, sufficient authorized but unissued or treasury shares of
Common Stock so that the Option may be exercised without additional
authorization of Common Stock after giving effect to all other options,
warrants, convertible securities and other rights to purchase Common Stock; (ii)
that it will not, by charter amendment or through reorganization, consolidation,
merger, dissolution or sale of assets, or by any other voluntary act, avoid or
seek to avoid the observance or performance of any of the covenants,
stipulations or conditions to be observed or performed hereunder by Issuer;
(iii) promptly to take all action as may from time to time be required
(including without limitation (x) complying with all applicable premerger
notification, reporting and waiting period requirements specified in 15 U.S.C.
Section 18a and regulations promulgated thereunder and (y) in the event, under
the Home Owners Loan Act ("HOLA"), or the Change in Bank Control Act of 1978, as
amended, or any state or other federal banking law, prior approval of or notice
to the OTS or to any state or other federal regulatory authority is necessary
before the Option may be exercised, cooperating fully with the Holder in
connection with the preparation of such applications or notices and providing
such information to
-5-
<PAGE>
the OTS or such state or other federal regulatory authority as they may require)
in order to permit the Holder to exercise the Option and Issuer duly and
effectively to issue shares of Common Stock pursuant hereto; and (iv) promptly
to take all action provided herein to protect the rights of the Holder against
dilution.
4. This Agreement and the Option granted hereby are exchangeable, without
expense, at the option of the Holder, upon presentation and surrender of this
Agreement at the principal office of Issuer, for other Agreements providing for
Options of different denominations entitling the holder thereof to purchase on
the same terms and subject to the same conditions as are set forth herein in the
aggregate the same number of shares of Common Stock purchasable hereunder. The
terms "Agreement" and "Option" as used herein include any Stock Option
Agreements and related Options for which this Agreement (and the Option granted
hereby) may be exchanged. Upon receipt by Issuer of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this
Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like
tenor and date. Any such new Agreement executed and delivered shall constitute
an additional contractual obligation on the part of Issuer, subject to the
aforementioned indemnification, if applicable, whether or not the Agreement so
lost, stolen, destroyed or mutilated shall at any time be enforceable by anyone.
5. In addition to the adjustment in the number of shares of Common Stock
that are purchasable upon exercise of the Option pursuant to Section 1 of this
Agreement, the number of Option Shares purchasable upon the exercise of the
Option and the Option Price shall be subject to adjustment from time to time as
provided in this Section 5.
(a) In the event of any change in, or distributions in respect of, the
Common Stock by reason of stock dividend, split-up, merger, recapitalization,
combination, subdivision, conversion, exchange of shares, distribution on or in
respect of the Common Stock or similar transaction, the type and number of
Option Shares shall be adjusted appropriately, and proper provision shall be
made in the agreements governing such transaction, so that Grantee shall receive
upon exercise of the Option the number and class of Option Shares that Grantee
would have held immediately after such event if the Option had been exercised
immediately prior to such event, or the record date therefor, as applicable.
(b) Whenever the number of Option Shares is adjusted as provided in this
Section 5, the Option Price shall be adjusted by multiplying the Option Price by
a fraction, the numerator of which shall be equal to the number of Option Shares
purchasable prior to the adjustment and the denominator of which shall be equal
to the number of Option Shares purchasable after the adjustment.
6. Upon the occurrence of a Subsequent Triggering Event that occurs prior
to an Exercise Termination Event, Issuer shall, at the request of Grantee
delivered within six months (or such later period as provided in Section 10)
following such Subsequent Triggering Event (whether on its own behalf or on
behalf of any subsequent holder of this Option (or part thereof) or any of the
Option
-6-
<PAGE>
Shares issued pursuant hereto), promptly prepare, file and keep current, with
respect to the Option and the Option Shares, a registration statement under the
1933 Act and qualify such Option and Option Shares for resale or other
disposition under applicable state securities laws, in each case in accordance
with any plan of disposition requested by Grantee. Issuer will use all
reasonable efforts to cause such registration statement promptly to become
effective and then to remain effective for such period not in excess of 180 days
from the day such registration statement first becomes effective or such shorter
time as may be reasonably necessary to effect such sales or other dispositions.
Grantee shall have the right to demand two such registrations. The Issuer shall
bear the costs of such registrations (including, but not limited to, Issuer's
attorneys' fees, printing costs and filing fees, except for underwriting
discounts or commissions, brokers' fees and the fees and disbursements of
Grantee's counsel related thereto). The foregoing notwithstanding, if, at the
time of any request by Grantee for registration of the Option or Option Shares
as provided above, Issuer is in registration with respect to an underwritten
public offering by Issuer of shares of Common Stock, and if in the good faith
judgment of the managing underwriter or managing underwriters, or, if none, the
sole underwriter or underwriters, of such offering, the inclusion of the Option
and/or Option Shares would interfere with the successful marketing of the shares
of Common Stock offered by Issuer, the number of shares represented by the
Option and/or the number of Option Shares otherwise to be covered in the
registration statement contemplated hereby may be reduced; provided, however,
that after any such required reduction the number of shares represented by the
Option and/or the number of Option Shares to be included in such offering for
the account of the Holder shall constitute at least 25% of the total number of
shares to be sold by the Holder and Issuer in the aggregate; and provided
further, however, that if such reduction occurs, then Issuer shall file a
registration statement for the balance as promptly as practicable thereafter as
to which no reduction pursuant to this Section 6 shall be permitted or occur.
Each such Holder shall provide all information reasonably requested by Issuer
for inclusion in any such registration statement to be filed hereunder. If
requested by any such Holder in connection with such registration, Issuer shall
become a party to any underwriting agreement relating to the sale of such
shares, but only to the extent of obligating itself in respect of
representations, warranties, indemnities and other agreements customarily
included in secondary offering underwriting agreements. Upon receiving any
request under this Section 6 from any Holder, Issuer agrees to send a copy
thereof to any other person known to Issuer to be entitled to registration
rights under this Section 6, in each case by promptly mailing the same, postage
prepaid, to the address of record of the persons entitled to receive such
copies. Notwithstanding anything to the contrary contained herein, in no event
shall the number of registrations that Issuer is obligated to effect be
increased by reason of the fact that there shall be more than one Holder as a
result of any assignment or division of this Agreement.
7. (a) Upon the occurrence of a Subsequent Triggering Event that occurs
prior to an Exercise Termination Event, (i) at the request of any Holder
delivered within 90 days following such occurrence (or such later period as
provided in Section 10), Issuer (or any successor thereto) shall repurchase the
Option from the Holder at a price (the "Option Repurchase Price") equal to the
amount by which (A) the Market/Offer Price (as defined below) exceeds (B) the
Option Price, multiplied by the number of shares for which the Option may then
be exercised, and (ii) at the request of the owner of Option Shares from time to
time (the "Owner"), delivered within 90 days
-7-
<PAGE>
following such occurrence (or such later period as provided in Section 10),
Issuer (or any successor thereto) shall repurchase such number of the Option
Shares from the Owner as the Owner shall designate at a price (the "Option Share
Repurchase Price") equal to the greater of (A) the Market/Offer Price and (B)
the average exercise price per share paid by the Owner for the Option Shares so
designated. The term "Market/Offer Price" shall mean the highest of (i) the
price per share of Common Stock at which a tender offer or exchange offer
therefor has been made, (ii) the price per share of Common Stock to be paid by
any person, other than Grantee or a Grantee Subsidiary, pursuant to an agreement
with Issuer of the kind described in Section 2(b)(i), (iii) the highest closing
price for shares of Common Stock within the shorter of the period from the date
of this Agreement up to the date on which such required repurchase of the Option
or Option Shares, as the case may be, occurs or the six-month period immediately
preceding the date of such required repurchase of the Option or Option Shares,
as the case may be, or (iv) in the event of a sale of all or any substantial
part of Issuer's assets or deposits, the sum of the price paid in such sale for
such assets or deposits and the current market value of the remaining assets of
Issuer as determined by a nationally-recognized investment banking firm selected
by a majority in interest of the Holders or the Owners, as the case may be, and
reasonably acceptable to Issuer, divided by the number of shares of Common Stock
of Issuer outstanding at the time of such sale. In determining the Market/Offer
Price, the value of consideration other than cash shall be determined by a
nationally-recognized investment banking firm selected by the Holder or Owner,
as the case may be, and reasonably acceptable to Issuer.
(b) Each Holder and Owner, as the case may be, may exercise its right to
require Issuer to repurchase the Option and any Option Shares pursuant to this
Section 7 by surrendering for such purpose to Issuer, at its principal office, a
copy of this Agreement or certificates for Option Shares, as applicable,
accompanied by a written notice or notices stating that such Holder or Owner, as
the case may be, elects to require Issuer to repurchase this Option and/or
Option Shares in accordance with the provisions of this Section 7. As promptly
as practicable, and in any event within five business days after the surrender
of the Option and/or certificates representing Option Shares and the receipt of
such notice or notices relating thereto, Issuer shall deliver or cause to be
delivered to the Holder the Option Repurchase Price and/or to the Owner the
Option Share Repurchase Price therefor or the portion thereof that Issuer is not
then prohibited under applicable law and regulation from so delivering.
(c) To the extent that Issuer is prohibited under applicable law or
regulation, or as a consequence of administrative policy, or as a result of a
written agreement or other binding obligation with a governmental or regulatory
body or agency, from repurchasing the Option and/or the Option Shares in full,
Issuer shall immediately so notify each Holder and/or each Owner and thereafter
deliver or cause to be delivered, from time to time, to such Holder and/or such
Owner, as appropriate, the portion of the Option Repurchase Price and the Option
Share Repurchase Price, respectively, that it is no longer prohibited from
delivering, within two business days after the date on which Issuer is no longer
so prohibited; provided, however, that if Issuer at any time after delivery of a
notice of repurchase pursuant to paragraph (b) of this Section 7 is prohibited
under applicable law or regulation, or as a consequence of administrative
policy, or as a result of a written
-8-
<PAGE>
agreement or other binding obligation with a governmental or regulatory body or
agency, from delivering to the Holder and/or the Owner, as appropriate, the
Option Repurchase Price and the Option Share Repurchase Price, respectively, in
part or in full (and Issuer hereby undertakes to use all reasonable efforts to
obtain all required regulatory and legal approvals and to file any required
notices as promptly as practicable in order to accomplish such repurchase), such
Holder or Owner may revoke its notice of repurchase of the Option and/or the
Option Shares either in whole or to the extent of the prohibition, whereupon, in
the latter case, Issuer shall promptly (i) deliver to the Holder and/or the
Owner, as appropriate, that portion of the Option Repurchase Price and/or the
Option Share Repurchase Price that Issuer is not prohibited from delivering with
respect to Options or Option Shares as to which the Holder or the Owner, as the
case may be, has not revoked its repurchase demand; and (ii) deliver, as
appropriate, either (A) to the Holder, a new Agreement evidencing the right of
the Holder to purchase that number of shares of Common Stock obtained by
multiplying the number of shares of Common Stock for which the surrendered
Agreement was exercisable at the time of delivery of the notice of repurchase by
a fraction, the numerator of which is the Option Repurchase Price less the
portion thereof theretofore delivered to the Holder and the denominator of which
is the Option Repurchase Price, and/or (B) to such Owner, a certificate for the
Option Shares it is then so prohibited from repurchasing.
8. (a) In the event that prior to an Exercise Termination Event, Issuer
shall enter into an agreement (i) to consolidate with or merge into any person,
other than Grantee or a Grantee Subsidiary, or engage in a plan of exchange with
any person, other than Grantee or a Grantee Subsidiary, and Issuer shall not be
the continuing or surviving corporation of such consolidation or merger or the
acquiror in such plan of exchange, (ii) to permit any person, other than Grantee
or a Grantee Subsidiary, to merge into Issuer or be acquired by Issuer in a plan
of exchange and Issuer shall be the continuing or surviving or acquiring
corporation, but, in connection with such merger or plan of exchange, the then
outstanding shares of Common Stock shall be changed into or exchanged for stock
or other securities of any other person or cash or any other property or the
then outstanding shares of Common Stock shall after such merger or plan of
exchange represent less than 50% of the outstanding shares and share equivalents
of the merged or acquiring company, or (iii) to sell or otherwise transfer all
or a substantial part of its or any Issuer Subsidiary's assets or deposits to
any person, other than Grantee or a Grantee Subsidiary, then, and in each such
case, the agreement governing such transaction shall make proper provision so
that the Option shall, upon the consummation of any such transaction and upon
the terms and conditions set forth herein, be converted into, or exchanged for,
an option (the "Substitute Option"), at the election of any Holder, of either
(x) the Acquiring Corporation (as hereinafter defined) or (y) any person that
controls the Acquiring Corporation.
(b) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (i) the continuing or
surviving person of a consolidation or merger with Issuer (if other than
Issuer), (ii) the acquiring person in a plan of exchange in which Issuer
is acquired, (iii) Issuer in a merger or plan of exchange in which
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Issuer is the continuing or surviving or acquiring person, and (iv) the
transferee of all or a substantial part of Issuer's assets or deposits (or
the assets or deposits of an Issuer Subsidiary).
(ii) "Substitute Common Stock" shall mean the common stock issued by
the issuer of the Substitute Option upon exercise of the Substitute
Option.
(iii) "Assigned Value" shall mean the Market/Offer Price, as defined
in Section 7.
(iv) "Average Price" shall mean the average closing price of a share
of the Substitute Common Stock for the one year immediately preceding the
consolidation, merger, share exchange or sale in question, but in no event
higher than the closing price of the shares of Substitute Common Stock on
the day preceding such consolidation, merger, share exchange or sale;
provided that if Issuer is the issuer of the Substitute Option, the
Average Price shall be computed with respect to a share of common stock
issued by the person merging into Issuer or by any company which controls
or is controlled by such person, as the Holder may elect.
(c) The Substitute Option shall have the same terms as the Option,
provided that if the terms of the Substitute Option cannot, for legal reasons,
be the same as the Option, such terms shall, to the extent legally permissible,
be as similar as possible to, and in no event less advantageous to the Holder
than, the terms of the Option. The issuer of the Substitute Option also shall
enter into an agreement with the then Holder or Holders of the Substitute Option
in substantially the same form as this Agreement (after giving effect for such
purpose to the provisions of Section 9), which agreement shall be applicable to
the Substitute Option.
(d) The Substitute Option shall be exercisable for such number of shares
of Substitute Common Stock as is equal to the Assigned Value multiplied by the
number of shares of Common Stock for which the Option was exercisable
immediately prior to the event described in the first sentence of Section 8(a),
divided by the Average Price. The exercise price of the Substitute Option per
share of Substitute Common Stock shall then be equal to the Option Price
multiplied by a fraction, the numerator of which shall be the number of shares
of Common Stock for which the Option was exercisable immediately prior to the
event described in the first sentence of Section 8(a) and the denominator of
which shall be the number of shares of Substitute Common Stock for which the
Substitute Option is exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs, shall the
Substitute Option be exercisable for more than 19.9% of the shares of Substitute
Common Stock outstanding prior to exercise of the Substitute Option. In the
event that the Substitute Option would be exercisable for more than 19.9% of the
shares of Substitute Common Stock outstanding prior to exercise but for this
paragraph (e), the issuer of the Substitute Option (the "Substitute Option
Issuer") shall make a cash payment to Holder equal to the excess of (i) the
value of the Substitute Option without giving effect to the limitation in this
paragraph (e) over (ii) the value of the Substitute Option after giving effect
to the limitation in this paragraph (e). This difference in value shall be
determined by a nationally-
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<PAGE>
recognized investment banking firm selected by a majority in interest of the
Holders and reasonably acceptable to the Acquiring Corporation.
(f) Issuer shall not enter into any transaction described in paragraph (a)
of this Section 8 unless the Acquiring Corporation and any person that controls
the Acquiring Corporation assume in writing all the obligations of Issuer
hereunder.
9. (a) At the request of the holder of the Substitute Option (the
"Substitute Option Holder"), the issuer of the Substitute Option Issuer shall
repurchase the Substitute Option from the Substitute Option Holder at a price
(the "Substitute Option Repurchase Price") equal to the amount by which (i) the
Highest Closing Price (as hereinafter defined) exceeds (ii) the exercise price
of the Substitute Option, multiplied by the number of shares of Substitute
Common Stock for which the Substitute Option may then be exercised, and at the
request of each owner (the "Substitute Share Owner") of shares of Substitute
Common Stock (the "Substitute Shares"), the Substitute Option Issuer shall
repurchase the Substitute Shares at a price (the "Substitute Share Repurchase
Price") equal to the greater of (A) the Highest Closing Price and (B) the
average exercise price per share paid by the Substitute Share Owner for the
Substitute Shares so designated, multiplied by the number of Substitute Shares
so designated. The term "Highest Closing Price" shall mean the highest closing
price for shares of Substitute Common Stock within the six-month period
immediately preceding the date the Substitute Option Holder gives notice of the
required repurchase of the Substitute Option or the Substitute Share Owner gives
notice of the required repurchase of the Substitute Shares, as applicable.
(b) Each Substitute Option Holder and Substitute Share Owner, as the case
may be, may exercise its respective right to require the Substitute Option
Issuer to repurchase the Substitute Option and the Substitute Shares pursuant to
this Section 9 by surrendering for such purpose to the Substitute Option Issuer,
at its principal office, the agreement for such Substitute Option (or, in the
absence of such an agreement, a copy of this Agreement) and/or certificates for
Substitute Shares accompanied by a written notice or notices stating that the
Substitute Option Holder or the Substitute Share Owner, as the case may be,
elects to require the Substitute Option Issuer to repurchase the Substitute
Option and/or the Substitute Shares in accordance with the provisions of this
Section 9. As promptly as practicable, and in any event within two business days
after the surrender of the Substitute Option and/or certificates representing
Substitute Shares and the receipt of such notice or notices relating thereto,
the Substitute Option Issuer shall deliver or cause to be delivered to the
Substitute Option Holder the Substitute Option Repurchase Price and/or to the
Substitute Share Owner the Substitute Share Repurchase Price therefor, or the
portion(s) thereof which the Substitute Option Issuer is not then prohibited
under applicable law and regulation from so delivering.
(c) To the extent that the Substitute Option Issuer is prohibited under
applicable law or regulation, or as a consequence of administrative policy, or
as a result of a written agreement or other binding obligation with a
governmental or regulatory body or agency, from repurchasing the Substitute
Option and/or the Substitute Shares in part or in full, the Substitute Option
Issuer following a request for repurchase pursuant to this Section 9 shall
immediately so notify the
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Substitute Option Holder and/or the Substitute Share Owner and thereafter
deliver or cause to be delivered, from time to time, to the Substitute Option
Holder and/or the Substitute Share Owner, as appropriate, the portion of the
Substitute Option Repurchase Price and/or the Substitute Share Repurchase Price,
respectively, which it is no longer prohibited from delivering, within two
business days after the date on which the Substitute Option Issuer is no longer
so prohibited; provided, however, that if the Substitute Option Issuer is at any
time after delivery of a notice of repurchase pursuant to subsection (b) of this
Section 9 prohibited under applicable law or regulation, or as a consequence of
administrative policy, or as a result of a written agreement or other binding
obligation with a governmental or regulatory body or agency, from delivering to
the Substitute Option Holder and/or the Substitute Share Owner, as appropriate,
the Substitute Option Repurchase Price and the Substitute Share Repurchase
Price, respectively, in full (and the Substitute Option Issuer shall use all
reasonable efforts to obtain all required regulatory and legal approvals as
promptly as practicable in order to accomplish such repurchase), the Substitute
Option Holder and/or Substitute Share Owner may revoke its notice of repurchase
of the Substitute Option or the Substitute Shares either in whole or to the
extent of the prohibition, whereupon, in the latter case, the Substitute Option
Issuer shall promptly (i) deliver to the Substitute Option Holder or Substitute
Share Owner, as appropriate, that portion of the Substitute Option Repurchase
Price or the Substitute Share Repurchase Price that the Substitute Option Issuer
is not prohibited from delivering; and (ii) deliver, as appropriate, either (A)
to the Substitute Option Holder, a new Substitute Option evidencing the right of
the Substitute Option Holder to purchase that number of shares of the Substitute
Common Stock obtained by multiplying the number of shares of the Substitute
Common Stock for which the surrendered Substitute Option was exercisable at the
time of delivery of the notice of repurchase by a fraction, the numerator of
which is the Substitute Option Repurchase Price less the portion thereof
theretofore delivered to the Substitute Option Holder and the denominator of
which is the Substitute Option Repurchase Price, and/or (B) to the Substitute
Share Owner, a certificate for the Substitute Option Shares it is then so
prohibited from repurchasing.
10. The 90-day or 6-month periods for exercise of certain rights under
Sections 2, 6, 7 and 12 shall be extended: (i) to the extent necessary to obtain
all regulatory approvals for the exercise of such rights (for so long as the
Holder, Owner, Substitute Option Holder or Substitute Share Owner, as the case
may be, is using its reasonable best efforts to obtain such regulatory
approvals), and for the expiration of all statutory waiting periods; (ii) during
the pendency of any temporary restraining order, injunction or other legal bar
to exercise of such rights; and (iii) to the extent necessary to avoid liability
under Section 16(b) of the 1934 Act by reason of such exercise.
11. (a) Issuer hereby represents and warrants to Grantee as follows:
(i) Issuer has full corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
Issuer Board and no other corporate proceedings on the part of Issuer are
necessary to authorize this Agreement or to consummate the transactions so
contemplated. This Agreement has been duly and validly executed and delivered by
Issuer and is a valid and legally binding
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<PAGE>
obligation of Issuer, enforceable against Issuer in accordance with its terms,
except that enforcement thereof may be limited by the receivership,
conservatorship and supervisory powers of bank regulatory agencies generally as
well as bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting enforcement of creditors rights generally and except that enforcement
thereof may be subject to general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law) and the
availability of equitable remedies.
(ii) Issuer has taken all necessary corporate action to authorize and
reserve and to permit it to issue, and at all times from the date hereof through
the termination of this Agreement in accordance with its terms will have
reserved for issuance upon the exercise of the Option, that number of shares of
Common Stock equal to the maximum number of shares of Common Stock at any time
and from time to time issuable hereunder, and all such shares, upon issuance
pursuant thereto, will be duly authorized, validly issued, fully paid,
nonassessable, and will be delivered free and clear of all claims, liens,
encumbrances and security interests and not subject to any preemptive rights.
(b) Grantee hereby represents and warrants to Issuer that:
(i) Grantee has full corporate power and authority to execute and deliver
this Agreement and, subject to any approvals or consents referred to herein, to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of Grantee
and no other corporate proceedings on the part of Grantee are necessary to
authorize this Agreement or to consummate the transactions so contemplated. This
Agreement has been duly executed and delivered by Grantee and is a valid and
legally binding obligation of Grantee.
(ii) The Option is not being, and any shares of Common Stock or other
securities acquired by Grantee upon exercise of the Option will not be, acquired
with a view to the public distribution thereof and will not be transferred or
otherwise disposed of except in a transaction registered or exempt from
registration under the Securities Act.
12. Neither of the parties hereto may assign any of its rights or
obligations under this Agreement or the Option created hereunder to any other
person, without the express written consent of the other party, except that in
the event a Subsequent Triggering Event shall have occurred prior to an Exercise
Termination Event, Grantee, subject to the express provisions hereof, may assign
in whole or in part its rights and obligations hereunder within six months
following such Subsequent Triggering Event; provided, however, that until the
date 15 days following the date on which the OTS approves an application by
Grantee under the HOLA to acquire the shares of Common Stock subject to the
Option, Grantee may not assign its rights under the Option except in (i) a
widely dispersed public distribution, (ii) a private placement in which no one
party acquires the right to purchase in excess of 2% of the voting shares of
Issuer, (iii) an assignment to a single party (e.g., a broker or investment
banker) for the sole purpose of conducting a widely dispersed public
distribution on Grantee's behalf or (iv) any other manner approved by the OTS.
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13. Each of Grantee and Issuer will use all reasonable efforts to make all
filings with, and to obtain consents of, all third parties and governmental
authorities necessary to the consummation of the transactions contemplated by
this Agreement, including, without limitation, applying to the OTS under the
HOLA for approval to acquire the shares issuable hereunder and applying for
listing or quotation of such shares on any exchange or quotation system on which
the Common Stock is then listed or quoted.
14. The parties hereto acknowledge that damages would be an inadequate
remedy for a breach of this Agreement by either party hereto and that the
obligations of the parties hereto shall be enforceable by either party hereto
through injunctive or other equitable relief.
15. If any term, provision, covenant or restriction contained in this
Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions and covenants and restrictions contained in this Agreement
shall remain in full force and effect, and shall in no way be affected, impaired
or invalidated. If for any reason such court or regulatory agency determines
that the Holder is not permitted to acquire, or Issuer or Substitute Option
Issuer, as the case may be, is not permitted to repurchase pursuant to Section 7
or Section 9, as the case may be, the full number of shares of Common Stock
provided in Section l(a) hereof (as adjusted pursuant to Section l(b) or Section
5 hereof), it is the express intention of Issuer (which shall be binding on the
Substitute Option Issuer) to allow the Holder to acquire or to require Issuer or
Substitute Option Issuer, as the case may be, to repurchase such lesser number
of shares as may be permissible, without any amendment or modification hereof.
16. All notices, requests, claims, demands and other communications
hereunder shall be deemed to have been duly given when delivered in person, by
fax, telecopy or by registered or certified mail (postage prepaid, return
receipt requested) at the respective addresses of the parties set forth in the
Merger Agreement.
17. This Agreement shall be governed by and construed in accordance with
the laws of the State of Ohio, without regard to the conflict of law principles
thereof.
18. This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which shall constitute one
and the same agreement.
19. Except as otherwise expressly provided herein, each of the parties
hereto shall bear and pay all costs and expenses incurred by it or on its behalf
in connection with the transactions contemplated hereunder, including fees and
expenses of its own financial consultants, investment bankers, accountants and
counsel.
20. Except as otherwise expressly provided herein or in the Merger
Agreement, this Agreement contains the entire agreement between the parties with
respect to the transactions contemplated hereunder and supersedes all prior
arrangements or understandings with respect
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thereof, written or oral. The terms and conditions of this Agreement shall inure
to the benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns. Nothing in this Agreement, express or implied,
is intended to confer upon any party, other than the parties hereto, and their
respective successors and permitted assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as expressly provided
herein.
21. Capitalized terms used in this Agreement and not defined herein shall
have the meanings assigned thereto in the Merger Agreement.
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all as of the
date first above written.
FIDELITY FINANCIAL OF OHIO, INC.
Attest:
/s/ Paul D. Staubach By: /s/ John R. Reusing
- ----------------------------------- --------------------------
Name: Paul D. Staubach Name: John R. Reusing
Title: Senior Vice President, Title: President and Chief
Chief Financial Officer Executive Officer
and Secretary
GLENWAY FINANCIAL CORPORATION
Attest:
/s/ Daniel W. Geeding By: /s/ Robert R. Sudbrook
- ----------------------------------- -------------------------
Name: Daniel W. Geeding Name: Robert R. Sudbrook
Title: Secretary Title: President and Chief
Executive Officer
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EXHIBIT D
STOCK OPTION AGREEMENT
Stock Option Agreement, dated as of September 28, 1998, between Fidelity
Financial of Ohio, Inc., an Ohio corporation ("Issuer"), and Glenway Financial
Corporation, a Delaware corporation ("Grantee").
W I T N E S S E T H:
WHEREAS, Issuer and Grantee have entered into an Agreement of Merger of
even date herewith (the "Merger Agreement"), providing for, among other things,
the merger of Grantee with and into a wholly-owned subsidiary of Issuer (the
"Merger");
WHEREAS, as a condition and an inducement to Grantee to enter into the
Merger Agreement, Issuer has agreed to grant Grantee the Option (as hereinafter
defined); and
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements set forth herein and in the Merger Agreement, the parties hereto
agree as follows:
1. (a) Issuer hereby grants to Grantee an unconditional, irrevocable
option (the "Option") to purchase, subject to the terms hereof, up to an
aggregate of 1,114,793 fully paid and nonassessable shares (the "Option Shares")
of common stock, par value $0.10 per share, of Issuer (the "Common Stock") at a
price per share equal to $12.15 (the "Option Price"); provided, however, that in
no event shall the number of shares for which this Option is exercisable exceed
19.9% of the issued and outstanding shares of Common Stock without giving effect
to any shares subject to or issued pursuant to the Option. The number of shares
of Common Stock that may be received upon the exercise of the Option and the
Option Price are subject to adjustment as herein set forth.
(b) In the event that any additional shares of Common Stock are issued or
otherwise become outstanding after the date of this Agreement (other than
pursuant to this Agreement and other than pursuant to an event described in
Section 5(a) hereof), including, without limitation, pursuant to stock option or
other employee plans or as a result of the exercise of conversion rights, the
number of shares of Common Stock subject to the Option shall be increased so
that, after such event, such number equals 19.9% of the number of shares of
Common Stock then issued and outstanding without giving effect to any shares
subject to or issued pursuant to the Option. Nothing contained in this Section
l(b) or elsewhere in this Agreement shall be deemed to authorize Issuer to issue
shares in breach of any provision of the Merger Agreement.
2. (a) The Holder (as hereinafter defined) may exercise the Option, in
whole or part, and from time to time, if, but only if, both an Initial
Triggering Event (as hereinafter defined) and a Subsequent Triggering Event (as
hereinafter defined) shall have occurred prior to the occurrence of
<PAGE>
an Exercise Termination Event (as hereinafter defined), provided that the Holder
shall have sent the written notice of the first exercise (as provided in
paragraph (e) of this Section 2) within 90 days following the first Subsequent
Triggering Event to occur (or such later period as provided in Section 10). Each
of the following shall be an Exercise Termination Event: (i) the Effective Time
(as defined in the Merger Agreement); (ii) termination of the Merger Agreement
in accordance with the provisions thereof if such termination occurs prior to
the occurrence of an Initial Triggering Event, except a termination by Grantee
pursuant to Section 7.1(b) of the Merger Agreement (unless the breach by Issuer
giving rise to such right of termination was non-volitional); or (iii) the
passage of 12 months after termination of the Merger Agreement if such
termination follows the occurrence of an Initial Triggering Event or is a
termination by Grantee pursuant to Section 7.1(b) of the Merger Agreement
(unless the breach by Issuer giving rise to such right of termination is
non-volitional), provided that if an Initial Triggering Event continues or
occurs beyond such termination and prior to the passage of such 12-month-period,
the Exercise Termination Event shall be 12 months from the expiration of the
Last Triggering Event but in no event more than 18 months after such
termination. The term "Last Triggering Event" shall mean the last "Initial
Triggering Event" to expire, and the term "Holder" shall mean the holder or
holders of the Option pursuant to this Agreement. Notwithstanding anything to
the contrary contained herein, the Option may not be exercised at any time when
Grantee shall be in willful material breach of any of its covenants or
agreements contained in the Merger Agreement such that Issuer shall be entitled
to terminate the Merger Agreement pursuant to Section 7.1(b) thereof as a result
of such a willful material breach.
(b) The term "Initial Triggering Event" shall mean any of the following
events or transactions occurring on or after the date hereof:
(i) Issuer or any Subsidiary of Issuer (an "Issuer Subsidiary"),
without having received Grantee's prior written consent, shall have entered into
an agreement to engage in an Acquisition Transaction (as hereinafter defined)
with any person (the term "person" for purposes of this Agreement having the
meaning assigned thereto in Sections 3(a)(9) and 13(d)(3) of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and the rules and regulations
thereunder), other than Grantee or any Subsidiary of Grantee (a "Grantee
Subsidiary") or the Board of Directors of Issuer (the "Issuer Board") shall have
recommended that the shareholders of Issuer approve or accept any Acquisition
Transaction with any person other than Grantee or a Grantee Subsidiary. For
purposes of this Agreement, (a) "Acquisition Transaction" shall mean (w) a
merger or consolidation, or any similar transaction, involving Issuer or any
Issuer Subsidiary (other than mergers, consolidations or similar transactions
(i) involving solely Issuer and/or one or more wholly-owned Subsidiaries of
Issuer, provided any such transaction is not entered into in violation of the
terms of the Merger Agreement, or (ii) in which the shareholders of Issuer
immediately prior to the completion of such transaction own at least 50% of the
Common Stock of Issuer (or the resulting or surviving entity in such
transaction) immediately after completion of such transaction, provided any such
transaction is not entered into in violation of the terms of the Merger
Agreement), (x) a purchase, lease or other acquisition of all or any substantial
part of the assets or deposits of Issuer or any Issuer Subsidiary, (y) a
purchase or other acquisition (including by way of merger, consolidation, share
exchange or otherwise) of securities representing 10% or more of the voting
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power of Issuer or any Issuer Subsidiary or (z) any substantially similar
transaction; and (b) "Subsidiary" shall have the meaning set forth in Rule 12b-2
under the 1934 Act;
(ii) Any person, other than Grantee or a Grantee Subsidiary, shall have
acquired beneficial ownership or the right to acquire beneficial ownership of
10% or more of the outstanding shares of Common Stock (the term "beneficial
ownership" for purposes of this Agreement having the meaning assigned thereto in
Section 13(d) of the 1934 Act, and the rules and regulations thereunder);
(iii) Any person, other than Grantee or a Grantee Subsidiary, shall have
made a bona fide proposal to Issuer or its stockholders by public announcement
or written communication that is or becomes the subject of public disclosure to
engage in an Acquisition Transaction;
(iv) The Issuer Board, without having received Grantee's prior written
consent, shall have withdrawn or modified, or publicly announced its interest to
withdraw or modify in any manner adverse in any respect to Grantee, its
recommendation that the stockholders of Issuer approve the transactions
contemplated by the Merger Agreement in anticipation of engaging in an
Acquisition Transaction, or Issuer or any Issuer Subsidiary shall have
authorized, recommended or proposed, or publicly announced its intention to
authorize, recommend or propose, an agreement to engage in an Acquisition
Transaction with any person other than Grantee or a Grantee Subsidiary;
(v) Any person other than Grantee or a Grantee Subsidiary shall have filed
with the Securities and Exchange Commission ("SEC") a registration statement or
tender offer materials with respect to a potential exchange or tender offer that
would constitute an Acquisition Transaction (or filed a preliminary proxy
statement with the SEC with respect to a potential vote by its stockholders to
approve the issuance of shares to be offered in such an exchange offer);
(vi) After an overture is made by any person, other than Grantee or a
Grantee Subsidiary, to Issuer or its stockholders to engage in an Acquisition
Transaction, Issuer shall have breached any covenant or obligation contained in
the Merger Agreement and such breach (x) would entitle Grantee to terminate the
Merger Agreement (whether immediately or after the giving of notice or passage
of time or both) and (y) shall not have been cured prior to the Notice Date (as
defined below); or
(vii) Any person other than Grantee or a Grantee Subsidiary shall have
filed an application or notice with the Office of Thrift Supervision (the "OTS")
or other federal or state bank regulatory or antitrust authority, which
application or notice has been accepted for processing, for approval to engage
in an Acquisition Transaction.
(c)The term "Subsequent Triggering Event" shall mean any of the following
events or transactions occurring after the date hereof:
(i) The acquisition by any person (other than Grantee or any Grantee
Subsidiary) of beneficial ownership of 25% or more of the then outstanding
Common Stock; or
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(ii) The occurrence of the Initial Triggering Event described in clause
(i) of subsection (b) of this Section 2, except that the percentage referred to
in clause (y) of the second sentence thereof shall be 20%.
(d) Issuer shall notify Grantee promptly in writing of the occurrence of
any Initial Triggering Event or Subsequent Triggering Event (together, a
"Triggering Event") of which it has notice, it being understood that the giving
of such notice by Issuer shall not be a condition to the right of the Holder to
exercise the Option.
(e) In the event the Holder is entitled to and wishes to exercise the
Option (or any portion thereof), it shall send to Issuer a written notice (the
date of which being herein referred to as the "Notice Date") specifying (i) the
total number of shares of Common Stock it will purchase pursuant to such
exercise and (ii) a place and date not earlier than three business days nor
later than 60 business days from the Notice Date for the closing of such
purchase (the "Closing"); provided that if prior notification to or approval of
the OTS or any other regulatory or antitrust agency is required in connection
with such purchase, the Holder shall promptly file the required notice or
application for approval, shall promptly notify Issuer of such filing and shall
expeditiously process the same and the period of time that otherwise would run
pursuant to this sentence shall run instead from the date on which any required
notification periods have expired or been terminated or such approvals have been
obtained and any requisite waiting period or periods shall have passed. Any
exercise of the Option shall be deemed to occur on the Notice Date relating
thereto. The term "business day" for purposes of this Agreement means any day,
excluding Saturdays, Sundays and any other day that is a legal holiday in the
State of Ohio or a day on which banking institutions in the State of Ohio are
authorized by law or executive order to close.
(f) At a Closing, the Holder shall (i) pay to Issuer the aggregate
purchase price for the shares of Common Stock purchased pursuant to the exercise
of the Option in immediately available funds by wire transfer to a bank account
designated by Issuer, and (ii) present and surrender this Agreement to Issuer at
its principal executive offices, provided that the failure or refusal of the
Issuer to designate such a bank account or accept surrender of this Agreement
shall not preclude the Holder from exercising the Option.
(g) At a Closing, simultaneously with the delivery of immediately
available funds as provided in subsection (f) of this Section 2, Issuer shall
deliver to the Holder a certificate or certificates representing the number of
shares of Common Stock purchased by the Holder and, if the Option should be
exercised in part only, a new Option evidencing the rights of the Holder thereof
to purchase the balance of the shares purchasable hereunder, and the Holder
shall deliver to Issuer a copy of this Agreement and a letter agreeing that the
Holder will not offer to sell or otherwise dispose of such shares in violation
of applicable law or the provisions of this Agreement.
(h) Certificates for Common Stock delivered at a Closing hereunder may be
endorsed (in the sole discretion of Issuer) with a restrictive legend that shall
read substantially as follows:
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"The transfer of the shares represented by this certificate is
subject to certain provisions of an agreement between the registered
holder hereof and Issuer and to resale restrictions arising under the
Securities Act of 1933, as amended. A copy of such agreement is on file at
the principal office of Issuer and will be provided to the holder hereof
without charge upon receipt by Issuer of a written request therefor."
It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act of 1933, as amended (the "1933 Act") in the above legend
shall be removed by delivery of substitute certificate(s) without such reference
if the Holder shall have delivered to Issuer a copy of a letter from the staff
of the SEC, or an opinion of counsel, in form and substance reasonably
satisfactory to Issuer, to the effect that such legend is not required for
purposes of the 1933 Act; (ii) the reference to the provisions of this Agreement
in the above legend shall be removed by delivery of substitute certificate(s)
without such reference if the shares have been sold or transferred in compliance
with the provisions of this Agreement and under circumstances that do not
require the retention of such reference in the reasonable opinion of counsel to
the Holder; and (iii) the legend shall be removed in its entirety if the
conditions in the preceding clauses (i) and (ii) are both satisfied. In
addition, such certificates shall bear any other legend as may be required by
law.
(i) Upon the giving by the Holder to Issuer of the written notice of
exercise of the Option provided for under paragraph (e) of this Section 2, the
tender of the applicable purchase price in immediately available funds and the
tender of a copy of this Agreement to Issuer, the Holder shall be deemed,
subject to the receipt of any necessary regulatory approvals, to be the holder
of record of the shares of Common Stock issuable upon such exercise,
notwithstanding that the stock transfer books of Issuer shall then be closed or
that certificates representing such shares of Common Stock shall not then be
actually delivered to the Holder. Issuer shall pay all expenses, and any and all
United States federal, state and local taxes and other charges that may be
payable in connection with the preparation, issue and delivery of stock
certificates under this Section 2 in the name of the Holder or its assignee,
transferee or designee.
3. Issuer agrees: (i) that it shall at all times maintain, free from
preemptive rights, sufficient authorized but unissued or treasury shares of
Common Stock so that the Option may be exercised without additional
authorization of Common Stock after giving effect to all other options,
warrants, convertible securities and other rights to purchase Common Stock; (ii)
that it will not, by charter amendment or through reorganization, consolidation,
merger, dissolution or sale of assets, or by any other voluntary act, avoid or
seek to avoid the observance or performance of any of the covenants,
stipulations or conditions to be observed or performed hereunder by Issuer;
(iii) promptly to take all action as may from time to time be required
(including without limitation (x) complying with all applicable premerger
notification, reporting and waiting period requirements specified in 15 U.S.C.
Section 18a and regulations promulgated thereunder and (y) in the event, under
the Home Owners Loan Act ("HOLA"), or the Change in Bank Control Act of 1978, as
amended, or any state or other federal banking law, prior approval of or notice
to the OTS or to any state or other federal regulatory authority is necessary
before the Option may be exercised, cooperating fully with the Holder in
connection with the preparation of such applications or notices and providing
such information to
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the OTS or such state or other federal regulatory authority as they may require)
in order to permit the Holder to exercise the Option and Issuer duly and
effectively to issue shares of Common Stock pursuant hereto; and (iv) promptly
to take all action provided herein to protect the rights of the Holder against
dilution.
4. This Agreement and the Option granted hereby are exchangeable, without
expense, at the option of the Holder, upon presentation and surrender of this
Agreement at the principal office of Issuer, for other Agreements providing for
Options of different denominations entitling the holder thereof to purchase on
the same terms and subject to the same conditions as are set forth herein in the
aggregate the same number of shares of Common Stock purchasable hereunder. The
terms "Agreement" and "Option" as used herein include any Stock Option
Agreements and related Options for which this Agreement (and the Option granted
hereby) may be exchanged. Upon receipt by Issuer of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this
Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like
tenor and date. Any such new Agreement executed and delivered shall constitute
an additional contractual obligation on the part of Issuer, subject to the
aforementioned indemnification, if applicable, whether or not the Agreement so
lost, stolen, destroyed or mutilated shall at any time be enforceable by anyone.
5. In addition to the adjustment in the number of shares of Common Stock
that are purchasable upon exercise of the Option pursuant to Section 1 of this
Agreement, the number of Option Shares purchasable upon the exercise of the
Option and the Option Price shall be subject to adjustment from time to time as
provided in this Section 5.
(a) In the event of any change in, or distributions in respect of, the
Common Stock by reason of stock dividend, split-up, merger, recapitalization,
combination, subdivision, conversion, exchange of shares, distribution on or in
respect of the Common Stock or similar transaction, the type and number of
Option Shares shall be adjusted appropriately, and proper provision shall be
made in the agreements governing such transaction, so that Grantee shall receive
upon exercise of the Option the number and class of Option Shares that Grantee
would have held immediately after such event if the Option had been exercised
immediately prior to such event, or the record date therefor, as applicable.
(b) Whenever the number of Option Shares is adjusted as provided in this
Section 5, the Option Price shall be adjusted by multiplying the Option Price by
a fraction, the numerator of which shall be equal to the number of Option Shares
purchasable prior to the adjustment and the denominator of which shall be equal
to the number of Option Shares purchasable after the adjustment.
6. Upon the occurrence of a Subsequent Triggering Event that occurs prior
to an Exercise Termination Event, Issuer shall, at the request of Grantee
delivered within six months (or such later period as provided in Section 10)
following such Subsequent Triggering Event (whether on its own behalf or on
behalf of any subsequent holder of this Option (or part thereof) or any of the
Option
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Shares issued pursuant hereto), promptly prepare, file and keep current, with
respect to the Option and the Option Shares, a registration statement under the
1933 Act and qualify such Option and Option Shares for resale or other
disposition under applicable state securities laws, in each case in accordance
with any plan of disposition requested by Grantee. Issuer will use all
reasonable efforts to cause such registration statement promptly to become
effective and then to remain effective for such period not in excess of 180 days
from the day such registration statement first becomes effective or such shorter
time as may be reasonably necessary to effect such sales or other dispositions.
Grantee shall have the right to demand two such registrations. The Issuer shall
bear the costs of such registrations (including, but not limited to, Issuer's
attorneys' fees, printing costs and filing fees, except for underwriting
discounts or commissions, brokers' fees and the fees and disbursements of
Grantee's counsel related thereto). The foregoing notwithstanding, if, at the
time of any request by Grantee for registration of the Option or Option Shares
as provided above, Issuer is in registration with respect to an underwritten
public offering by Issuer of shares of Common Stock, and if in the good faith
judgment of the managing underwriter or managing underwriters, or, if none, the
sole underwriter or underwriters, of such offering, the inclusion of the Option
and/or Option Shares would interfere with the successful marketing of the shares
of Common Stock offered by Issuer, the number of shares represented by the
Option and/or the number of Option Shares otherwise to be covered in the
registration statement contemplated hereby may be reduced; provided, however,
that after any such required reduction the number of shares represented by the
Option and/or the number of Option Shares to be included in such offering for
the account of the Holder shall constitute at least 25% of the total number of
shares to be sold by the Holder and Issuer in the aggregate; and provided
further, however, that if such reduction occurs, then Issuer shall file a
registration statement for the balance as promptly as practicable thereafter as
to which no reduction pursuant to this Section 6 shall be permitted or occur.
Each such Holder shall provide all information reasonably requested by Issuer
for inclusion in any such registration statement to be filed hereunder. If
requested by any such Holder in connection with such registration, Issuer shall
become a party to any underwriting agreement relating to the sale of such
shares, but only to the extent of obligating itself in respect of
representations, warranties, indemnities and other agreements customarily
included in secondary offering underwriting agreements. Upon receiving any
request under this Section 6 from any Holder, Issuer agrees to send a copy
thereof to any other person known to Issuer to be entitled to registration
rights under this Section 6, in each case by promptly mailing the same, postage
prepaid, to the address of record of the persons entitled to receive such
copies. Notwithstanding anything to the contrary contained herein, in no event
shall the number of registrations that Issuer is obligated to effect be
increased by reason of the fact that there shall be more than one Holder as a
result of any assignment or division of this Agreement.
7. (a) Upon the occurrence of a Subsequent Triggering Event that occurs
prior to an Exercise Termination Event, (i) at the request of any Holder
delivered within 90 days following such occurrence (or such later period as
provided in Section 10), Issuer (or any successor thereto) shall repurchase the
Option from the Holder at a price (the "Option Repurchase Price") equal to the
amount by which (A) the Market/Offer Price (as defined below) exceeds (B) the
Option Price, multiplied by the number of shares for which the Option may then
be exercised, and (ii) at the request of the owner of Option Shares from time to
time (the "Owner"), delivered within 90 days
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following such occurrence (or such later period as provided in Section 10),
Issuer (or any successor thereto) shall repurchase such number of the Option
Shares from the Owner as the Owner shall designate at a price (the "Option Share
Repurchase Price") equal to the greater of (A) the Market/Offer Price and (B)
the average exercise price per share paid by the Owner for the Option Shares so
designated. The term "Market/Offer Price" shall mean the highest of (i) the
price per share of Common Stock at which a tender offer or exchange offer
therefor has been made, (ii) the price per share of Common Stock to be paid by
any person, other than Grantee or a Grantee Subsidiary, pursuant to an agreement
with Issuer of the kind described in Section 2(b)(i), (iii) the highest closing
price for shares of Common Stock within the shorter of the period from the date
of this Agreement up to the date on which such required repurchase of the Option
or Option Shares, as the case may be, occurs or the six-month period immediately
preceding the date of such required repurchase of the Option or Option Shares,
as the case may be, or (iv) in the event of a sale of all or any substantial
part of Issuer's assets or deposits, the sum of the price paid in such sale for
such assets or deposits and the current market value of the remaining assets of
Issuer as determined by a nationally-recognized investment banking firm selected
by a majority in interest of the Holders or the Owners, as the case may be, and
reasonably acceptable to Issuer, divided by the number of shares of Common Stock
of Issuer outstanding at the time of such sale. In determining the Market/Offer
Price, the value of consideration other than cash shall be determined by a
nationally-recognized investment banking firm selected by the Holder or Owner,
as the case may be, and reasonably acceptable to Issuer.
(b) Each Holder and Owner, as the case may be, may exercise its right to
require Issuer to repurchase the Option and any Option Shares pursuant to this
Section 7 by surrendering for such purpose to Issuer, at its principal office, a
copy of this Agreement or certificates for Option Shares, as applicable,
accompanied by a written notice or notices stating that such Holder or Owner, as
the case may be, elects to require Issuer to repurchase this Option and/or
Option Shares in accordance with the provisions of this Section 7. As promptly
as practicable, and in any event within five business days after the surrender
of the Option and/or certificates representing Option Shares and the receipt of
such notice or notices relating thereto, Issuer shall deliver or cause to be
delivered to the Holder the Option Repurchase Price and/or to the Owner the
Option Share Repurchase Price therefor or the portion thereof that Issuer is not
then prohibited under applicable law and regulation from so delivering.
(c) To the extent that Issuer is prohibited under applicable law or
regulation, or as a consequence of administrative policy, or as a result of a
written agreement or other binding obligation with a governmental or regulatory
body or agency, from repurchasing the Option and/or the Option Shares in full,
Issuer shall immediately so notify each Holder and/or each Owner and thereafter
deliver or cause to be delivered, from time to time, to such Holder and/or such
Owner, as appropriate, the portion of the Option Repurchase Price and the Option
Share Repurchase Price, respectively, that it is no longer prohibited from
delivering, within two business days after the date on which Issuer is no longer
so prohibited; provided, however, that if Issuer at any time after delivery of a
notice of repurchase pursuant to paragraph (b) of this Section 7 is prohibited
under applicable law or regulation, or as a consequence of administrative
policy, or as a result of a written
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agreement or other binding obligation with a governmental or regulatory body or
agency, from delivering to the Holder and/or the Owner, as appropriate, the
Option Repurchase Price and the Option Share Repurchase Price, respectively, in
part or in full (and Issuer hereby undertakes to use all reasonable efforts to
obtain all required regulatory and legal approvals and to file any required
notices as promptly as practicable in order to accomplish such repurchase), such
Holder or Owner may revoke its notice of repurchase of the Option and/or the
Option Shares either in whole or to the extent of the prohibition, whereupon, in
the latter case, Issuer shall promptly (i) deliver to the Holder and/or the
Owner, as appropriate, that portion of the Option Repurchase Price and/or the
Option Share Repurchase Price that Issuer is not prohibited from delivering with
respect to Options or Option Shares as to which the Holder or the Owner, as the
case may be, has not revoked its repurchase demand; and (ii) deliver, as
appropriate, either (A) to the Holder, a new Agreement evidencing the right of
the Holder to purchase that number of shares of Common Stock obtained by
multiplying the number of shares of Common Stock for which the surrendered
Agreement was exercisable at the time of delivery of the notice of repurchase by
a fraction, the numerator of which is the Option Repurchase Price less the
portion thereof theretofore delivered to the Holder and the denominator of which
is the Option Repurchase Price, and/or (B) to such Owner, a certificate for the
Option Shares it is then so prohibited from repurchasing.
8. (a) In the event that prior to an Exercise Termination Event, Issuer
shall enter into an agreement (i) to consolidate with or merge into any person,
other than Grantee or a Grantee Subsidiary, or engage in a plan of exchange with
any person, other than Grantee or a Grantee Subsidiary, and Issuer shall not be
the continuing or surviving corporation of such consolidation or merger or the
acquiror in such plan of exchange, (ii) to permit any person, other than Grantee
or a Grantee Subsidiary, to merge into Issuer or be acquired by Issuer in a plan
of exchange and Issuer shall be the continuing or surviving or acquiring
corporation, but, in connection with such merger or plan of exchange, the then
outstanding shares of Common Stock shall be changed into or exchanged for stock
or other securities of any other person or cash or any other property or the
then outstanding shares of Common Stock shall after such merger or plan of
exchange represent less than 50% of the outstanding shares and share equivalents
of the merged or acquiring company, or (iii) to sell or otherwise transfer all
or a substantial part of its or any Issuer Subsidiary's assets or deposits to
any person, other than Grantee or a Grantee Subsidiary, then, and in each such
case, the agreement governing such transaction shall make proper provision so
that the Option shall, upon the consummation of any such transaction and upon
the terms and conditions set forth herein, be converted into, or exchanged for,
an option (the "Substitute Option"), at the election of any Holder, of either
(x) the Acquiring Corporation (as hereinafter defined) or (y) any person that
controls the Acquiring Corporation.
(b) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (i) the continuing or
surviving person of a consolidation or merger with Issuer (if other than
Issuer), (ii) the acquiring person in a plan of exchange in which Issuer
is acquired, (iii) Issuer in a merger or plan of exchange in which
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Issuer is the continuing or surviving or acquiring person, and (iv) the
transferee of all or a substantial part of Issuer's assets or deposits (or
the assets or deposits of an Issuer Subsidiary).
(ii) "Substitute Common Stock" shall mean the common stock issued by
the issuer of the Substitute Option upon exercise of the Substitute
Option.
(iii) "Assigned Value" shall mean the Market/Offer Price, as defined
in Section 7.
(iv) "Average Price" shall mean the average closing price of a share
of the Substitute Common Stock for the one year immediately preceding the
consolidation, merger, share exchange or sale in question, but in no event
higher than the closing price of the shares of Substitute Common Stock on
the day preceding such consolidation, merger, share exchange or sale;
provided that if Issuer is the issuer of the Substitute Option, the
Average Price shall be computed with respect to a share of common stock
issued by the person merging into Issuer or by any company which controls
or is controlled by such person, as the Holder may elect.
(c) The Substitute Option shall have the same terms as the Option,
provided that if the terms of the Substitute Option cannot, for legal reasons,
be the same as the Option, such terms shall, to the extent legally permissible,
be as similar as possible to, and in no event less advantageous to the Holder
than, the terms of the Option. The issuer of the Substitute Option also shall
enter into an agreement with the then Holder or Holders of the Substitute Option
in substantially the same form as this Agreement (after giving effect for such
purpose to the provisions of Section 9), which agreement shall be applicable to
the Substitute Option.
(d) The Substitute Option shall be exercisable for such number of shares
of Substitute Common Stock as is equal to the Assigned Value multiplied by the
number of shares of Common Stock for which the Option was exercisable
immediately prior to the event described in the first sentence of Section 8(a),
divided by the Average Price. The exercise price of the Substitute Option per
share of Substitute Common Stock shall then be equal to the Option Price
multiplied by a fraction, the numerator of which shall be the number of shares
of Common Stock for which the Option was exercisable immediately prior to the
event described in the first sentence of Section 8(a) and the denominator of
which shall be the number of shares of Substitute Common Stock for which the
Substitute Option is exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs, shall the
Substitute Option be exercisable for more than 19.9% of the shares of Substitute
Common Stock outstanding prior to exercise of the Substitute Option. In the
event that the Substitute Option would be exercisable for more than 19.9% of the
shares of Substitute Common Stock outstanding prior to exercise but for this
paragraph (e), the issuer of the Substitute Option (the "Substitute Option
Issuer") shall make a cash payment to Holder equal to the excess of (i) the
value of the Substitute Option without giving effect to the limitation in this
paragraph (e) over (ii) the value of the Substitute Option after giving effect
to the limitation in this paragraph (e). This difference in value shall be
determined by a nationally-
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recognized investment banking firm selected by a majority in interest of the
Holders and reasonably acceptable to the Acquiring Corporation.
(f) Issuer shall not enter into any transaction described in paragraph (a)
of this Section 8 unless the Acquiring Corporation and any person that controls
the Acquiring Corporation assume in writing all the obligations of Issuer
hereunder.
9. (a) At the request of the holder of the Substitute Option (the
"Substitute Option Holder"), the issuer of the Substitute Option Issuer shall
repurchase the Substitute Option from the Substitute Option Holder at a price
(the "Substitute Option Repurchase Price") equal to the amount by which (i) the
Highest Closing Price (as hereinafter defined) exceeds (ii) the exercise price
of the Substitute Option, multiplied by the number of shares of Substitute
Common Stock for which the Substitute Option may then be exercised, and at the
request of each owner (the "Substitute Share Owner") of shares of Substitute
Common Stock (the "Substitute Shares"), the Substitute Option Issuer shall
repurchase the Substitute Shares at a price (the "Substitute Share Repurchase
Price") equal to the greater of (A) the Highest Closing Price and (B) the
average exercise price per share paid by the Substitute Share Owner for the
Substitute Shares so designated, multiplied by the number of Substitute Shares
so designated. The term "Highest Closing Price" shall mean the highest closing
price for shares of Substitute Common Stock within the six-month period
immediately preceding the date the Substitute Option Holder gives notice of the
required repurchase of the Substitute Option or the Substitute Share Owner gives
notice of the required repurchase of the Substitute Shares, as applicable.
(b) Each Substitute Option Holder and Substitute Share Owner, as the case
may be, may exercise its respective right to require the Substitute Option
Issuer to repurchase the Substitute Option and the Substitute Shares pursuant to
this Section 9 by surrendering for such purpose to the Substitute Option Issuer,
at its principal office, the agreement for such Substitute Option (or, in the
absence of such an agreement, a copy of this Agreement) and/or certificates for
Substitute Shares accompanied by a written notice or notices stating that the
Substitute Option Holder or the Substitute Share Owner, as the case may be,
elects to require the Substitute Option Issuer to repurchase the Substitute
Option and/or the Substitute Shares in accordance with the provisions of this
Section 9. As promptly as practicable, and in any event within two business days
after the surrender of the Substitute Option and/or certificates representing
Substitute Shares and the receipt of such notice or notices relating thereto,
the Substitute Option Issuer shall deliver or cause to be delivered to the
Substitute Option Holder the Substitute Option Repurchase Price and/or to the
Substitute Share Owner the Substitute Share Repurchase Price therefor, or the
portion(s) thereof which the Substitute Option Issuer is not then prohibited
under applicable law and regulation from so delivering.
(c) To the extent that the Substitute Option Issuer is prohibited under
applicable law or regulation, or as a consequence of administrative policy, or
as a result of a written agreement or other binding obligation with a
governmental or regulatory body or agency, from repurchasing the Substitute
Option and/or the Substitute Shares in part or in full, the Substitute Option
Issuer following a request for repurchase pursuant to this Section 9 shall
immediately so notify the
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Substitute Option Holder and/or the Substitute Share Owner and thereafter
deliver or cause to be delivered, from time to time, to the Substitute Option
Holder and/or the Substitute Share Owner, as appropriate, the portion of the
Substitute Option Repurchase Price and/or the Substitute Share Repurchase Price,
respectively, which it is no longer prohibited from delivering, within two
business days after the date on which the Substitute Option Issuer is no longer
so prohibited; provided, however, that if the Substitute Option Issuer is at any
time after delivery of a notice of repurchase pursuant to subsection (b) of this
Section 9 prohibited under applicable law or regulation, or as a consequence of
administrative policy, or as a result of a written agreement or other binding
obligation with a governmental or regulatory body or agency, from delivering to
the Substitute Option Holder and/or the Substitute Share Owner, as appropriate,
the Substitute Option Repurchase Price and the Substitute Share Repurchase
Price, respectively, in full (and the Substitute Option Issuer shall use all
reasonable efforts to obtain all required regulatory and legal approvals as
promptly as practicable in order to accomplish such repurchase), the Substitute
Option Holder and/or Substitute Share Owner may revoke its notice of repurchase
of the Substitute Option or the Substitute Shares either in whole or to the
extent of the prohibition, whereupon, in the latter case, the Substitute Option
Issuer shall promptly (i) deliver to the Substitute Option Holder or Substitute
Share Owner, as appropriate, that portion of the Substitute Option Repurchase
Price or the Substitute Share Repurchase Price that the Substitute Option Issuer
is not prohibited from delivering; and (ii) deliver, as appropriate, either (A)
to the Substitute Option Holder, a new Substitute Option evidencing the right of
the Substitute Option Holder to purchase that number of shares of the Substitute
Common Stock obtained by multiplying the number of shares of the Substitute
Common Stock for which the surrendered Substitute Option was exercisable at the
time of delivery of the notice of repurchase by a fraction, the numerator of
which is the Substitute Option Repurchase Price less the portion thereof
theretofore delivered to the Substitute Option Holder and the denominator of
which is the Substitute Option Repurchase Price, and/or (B) to the Substitute
Share Owner, a certificate for the Substitute Option Shares it is then so
prohibited from repurchasing.
10. The 90-day or 6-month periods for exercise of certain rights under
Sections 2, 6, 7 and 12 shall be extended: (i) to the extent necessary to obtain
all regulatory approvals for the exercise of such rights (for so long as the
Holder, Owner, Substitute Option Holder or Substitute Share Owner, as the case
may be, is using its reasonable best efforts to obtain such regulatory
approvals), and for the expiration of all statutory waiting periods; (ii) during
the pendency of any temporary restraining order, injunction or other legal bar
to exercise of such rights; and (iii) to the extent necessary to avoid liability
under Section 16(b) of the 1934 Act by reason of such exercise.
11. (a) Issuer hereby represents and warrants to Grantee as follows:
(i) Issuer has full corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
Issuer Board and no other corporate proceedings on the part of Issuer are
necessary to authorize this Agreement or to consummate the transactions so
contemplated. This Agreement has been duly and validly executed and delivered by
Issuer and is a valid and legally binding
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obligation of Issuer, enforceable against Issuer in accordance with its terms,
except that enforcement thereof may be limited by the receivership,
conservatorship and supervisory powers of bank regulatory agencies generally as
well as bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting enforcement of creditors rights generally and except that enforcement
thereof may be subject to general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law) and the
availability of equitable remedies.
(ii) Issuer has taken all necessary corporate action to authorize and
reserve and to permit it to issue, and at all times from the date hereof through
the termination of this Agreement in accordance with its terms will have
reserved for issuance upon the exercise of the Option, that number of shares of
Common Stock equal to the maximum number of shares of Common Stock at any time
and from time to time issuable hereunder, and all such shares, upon issuance
pursuant thereto, will be duly authorized, validly issued, fully paid,
nonassessable, and will be delivered free and clear of all claims, liens,
encumbrances and security interests and not subject to any preemptive rights.
(b) Grantee hereby represents and warrants to Issuer that:
(i) Grantee has full corporate power and authority to execute and deliver
this Agreement and, subject to any approvals or consents referred to herein, to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of Grantee
and no other corporate proceedings on the part of Grantee are necessary to
authorize this Agreement or to consummate the transactions so contemplated. This
Agreement has been duly executed and delivered by Grantee and is a valid and
legally binding obligation of Grantee.
(ii) The Option is not being, and any shares of Common Stock or other
securities acquired by Grantee upon exercise of the Option will not be, acquired
with a view to the public distribution thereof and will not be transferred or
otherwise disposed of except in a transaction registered or exempt from
registration under the Securities Act.
12. Neither of the parties hereto may assign any of its rights or
obligations under this Agreement or the Option created hereunder to any other
person, without the express written consent of the other party, except that in
the event a Subsequent Triggering Event shall have occurred prior to an Exercise
Termination Event, Grantee, subject to the express provisions hereof, may assign
in whole or in part its rights and obligations hereunder within six months
following such Subsequent Triggering Event; provided, however, that until the
date 15 days following the date on which the OTS approves an application by
Grantee under the HOLA to acquire the shares of Common Stock subject to the
Option, Grantee may not assign its rights under the Option except in (i) a
widely dispersed public distribution, (ii) a private placement in which no one
party acquires the right to purchase in excess of 2% of the voting shares of
Issuer, (iii) an assignment to a single party (e.g., a broker or investment
banker) for the sole purpose of conducting a widely dispersed public
distribution on Grantee's behalf or (iv) any other manner approved by the OTS.
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13. Each of Grantee and Issuer will use all reasonable efforts to make all
filings with, and to obtain consents of, all third parties and governmental
authorities necessary to the consummation of the transactions contemplated by
this Agreement, including, without limitation, applying to the OTS under the
HOLA for approval to acquire the shares issuable hereunder and applying for
listing or quotation of such shares on any exchange or quotation system on which
the Common Stock is then listed or quoted.
14. The parties hereto acknowledge that damages would be an inadequate
remedy for a breach of this Agreement by either party hereto and that the
obligations of the parties hereto shall be enforceable by either party hereto
through injunctive or other equitable relief.
15. If any term, provision, covenant or restriction contained in this
Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions and covenants and restrictions contained in this Agreement
shall remain in full force and effect, and shall in no way be affected, impaired
or invalidated. If for any reason such court or regulatory agency determines
that the Holder is not permitted to acquire, or Issuer or Substitute Option
Issuer, as the case may be, is not permitted to repurchase pursuant to Section 7
or Section 9, as the case may be, the full number of shares of Common Stock
provided in Section l(a) hereof (as adjusted pursuant to Section l(b) or Section
5 hereof), it is the express intention of Issuer (which shall be binding on the
Substitute Option Issuer) to allow the Holder to acquire or to require Issuer or
Substitute Option Issuer, as the case may be, to repurchase such lesser number
of shares as may be permissible, without any amendment or modification hereof.
16. All notices, requests, claims, demands and other communications
hereunder shall be deemed to have been duly given when delivered in person, by
fax, telecopy or by registered or certified mail (postage prepaid, return
receipt requested) at the respective addresses of the parties set forth in the
Merger Agreement.
17. This Agreement shall be governed by and construed in accordance with
the laws of the State of Ohio, without regard to the conflict of law principles
thereof.
18. This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which shall constitute one
and the same agreement.
19. Except as otherwise expressly provided herein, each of the parties
hereto shall bear and pay all costs and expenses incurred by it or on its behalf
in connection with the transactions contemplated hereunder, including fees and
expenses of its own financial consultants, investment bankers, accountants and
counsel.
20. Except as otherwise expressly provided herein or in the Merger
Agreement, this Agreement contains the entire agreement between the parties with
respect to the transactions contemplated hereunder and supersedes all prior
arrangements or understandings with respect
-14-
<PAGE>
thereof, written or oral. The terms and conditions of this Agreement shall inure
to the benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns. Nothing in this Agreement, express or implied,
is intended to confer upon any party, other than the parties hereto, and their
respective successors and permitted assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as expressly provided
herein.
21. Capitalized terms used in this Agreement and not defined herein shall
have the meanings assigned thereto in the Merger Agreement.
-15-
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all as of the
date first above written.
FIDELITY FINANCIAL OF OHIO, INC.
Attest:
/s/ Paul D. Staubach By: /s/ John R. Reusing
- ---------------------------------- --------------------------
Name: Paul D. Staubach Name: John R. Reusing
Title: Senior Vice President, Title: President and Chief
Chief Financial Officer Executive Officer
and Secretary
GLENWAY FINANCIAL CORPORATION
Attest:
/s/ Daniel W. Geeding By: /s/ Robert R. Sudbrook
- ---------------------------------- --------------------------
Name: Daniel W. Geeding Name: Robert R. Sudbrook
Title: Secretary Title: President and Chief
Executive Officer
-16-
EXHIBIT C
STOCKHOLDER AGREEMENT
STOCKHOLDER AGREEMENT, dated as of September 28, 1998, by and among
Fidelity Financial of Ohio, Inc. ("FFOH"), an Ohio corporation, and certain
stockholders of Glenway Financial Corporation ("GFCO"), a Delaware corporation,
named on Schedule I hereto (collectively, the "Stockholders").
WITNESSETH:
WHEREAS, FFOH and GFCO have entered into an Agreement of Merger of even
date herewith (the "Agreement"), providing for, among other things, the merger
of GFCO with and into a wholly-owned subsidiary of FFOH (the "Merger"); and
WHEREAS, in order to induce FFOH to enter into the Agreement, each of
the Stockholders agrees to, among other things, vote in favor of the Agreement
in his or her capacity as a stockholder of GFCO.
NOW, THEREFORE, in consideration of the premises, the mutual covenants
and agreements set forth herein and other good and valuable consideration, the
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. Ownership of GFCO Common Stock. Each Stockholder represents and
warrants that the Stockholder has or shares the right to vote and dispose of the
number of shares of common stock of GFCO, $0.01 par value per share ("GFCO
Common Stock"), set forth opposite such Stockholder's name on Schedule I hereto
(which does not include shares held solely in a fiduciary capacity).
2. Agreements of the Stockholders. Each Stockholder covenants and
agrees that:
(a) such Stockholder shall, at any meeting of GFCO's
stockholders called for the purpose, vote, or cause to be voted, all
shares of GFCO Common Stock in which such stockholder has the right to
vote (whether owned as of the date hereof or hereafter acquired) in
favor of the Agreement;
(b) except as otherwise expressly permitted hereby, such
Stockholder shall not, prior to the meeting of GFCO's stockholders
referred to in Section 2(a) hereof or the earlier termination of the
Agreement in accordance with its terms, sell, pledge, transfer or
otherwise dispose of the Stockholder's shares of GFCO Common Stock;
<PAGE>
(c) such Stockholder shall not in his capacity as a
stockholder of GFCO directly or indirectly encourage or solicit or hold
discussions or negotiations with, or provide any information to, any
person, entity or group (other than FFOH or an affiliate thereof)
concerning any merger, sale of substantial assets or liabilities not in
the ordinary course of business, sale of shares of capital stock or
similar transactions involving GFCO or any subsidiary of GFCO (provided
that nothing herein shall be deemed to affect the ability of any
Stockholder to fulfill his duties as a director and/or officer of
GFCO); and
(d) such Stockholder shall use his reasonable best efforts to
take or cause to be taken all action, and to do or cause to be done all
things, necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the agreements
contemplated by this Stockholder Agreement.
Each Stockholder further agrees that GFCO's transfer agent shall be
given an appropriate stop transfer order and shall not be required to register
any attempted transfer of shares of GFCO Common Stock unless the transfer has
been effected in compliance with the terms of this Stockholder Agreement.
3. Successors and Assigns. Subject to Section 5.13 of the Agreement and
the terms of the agreement with affiliates of GFCO referred to therein, a
Stockholder may sell, pledge, transfer or otherwise dispose of his shares of
GFCO Common Stock, provided that, with respect to any sale, transfer or
disposition which would occur on or before the meeting of GFCO's stockholders
referred to in Section 2(a) hereof, such Stockholder obtains the prior written
consent of FFOH and that any acquiror of such GFCO Common Stock expressly agrees
in writing to be bound by the terms of this Stockholder Agreement.
4. Termination. The parties agree and intend that this Stockholder
Agreement be a valid and binding agreement enforceable against the parties
hereto and that damages and other remedies at law for the breach of this
Stockholder Agreement are inadequate. This Stockholder Agreement may be
terminated at any time prior to the consummation of the Merger by mutual written
consent of the parties hereto and shall be automatically terminated in the event
that the Agreement is terminated in accordance with its terms.
5. Notices. Notices may be provided to FFOH and the Stockholders in the
manner specified in Section 8.4 of the Agreement, with all notices to the
Stockholders being provided to them at GFCO in the manner specified in such
section.
6. Governing Law. This Stockholder Agreement shall be governed by the
laws of the State of Ohio without giving effect to the principles of conflicts
of laws thereof.
7. Counterparts. This Stockholder Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same and each of
which shall be deemed an original.
2
<PAGE>
8. Headings and Gender. The Section headings contained herein are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Stockholder Agreement. Use of the masculine gender herein
shall be considered to represent the masculine, feminine or neuter gender
whenever appropriate.
3
<PAGE>
IN WITNESS WHEREOF, FFOH, by a duly authorized officer, and each of the
Stockholders have caused this Stockholder Agreement to be executed as of the day
and year first above written.
FIDELITY FINANCIAL OF OHIO, INC.
By: /s/ John R. Reusing
------------------------------
Name: John R. Reusing
Title: President and Chief
Executive Officer
STOCKHOLDERS OF
GLENWAY FINANCIAL CORPORATION :
/s/ Daniel W. Geeding
------------------------------------
Daniel W. Geeding
/s/ Ronald L. Goodfellow
------------------------------------
Ronald L. Goodfellow
/s/ Kenneth C. Lichtendahl
------------------------------------
Kenneth C. Lichtendahl
/s/ Albert W. Moeller
------------------------------------
Albert W. Moeller
/s/ Edgar A. Rust
------------------------------------
Edgar A. Rust
4
<PAGE>
/s/ Robert R. Sudbrook
------------------------------------
Robert R. Sudbrook
/s/ John P. Torbeck
------------------------------------
John P. Torbeck
/s/ Milton L. Van Schoik
------------------------------------
Milton L. Van Schoik
5
<PAGE>
SCHEDULE I
Number of Shares of
GFCO Common Stock
Name of Stockholder Beneficially Owned
- ----------------------------------------------- -------------------
Daniel W. Geeding 31,453
Ronald L. Goodfellow 27,238
Kenneth C. Lichtendahl 40,896
Albert W. Moeller 23,948
Edgar A. Rust 75,671
Robert R. Sudbrook 46,950
John P. Torbeck 35,294
Milton L. Van Schoik 24,898
6
EXHIBIT E
STOCKHOLDER AGREEMENT
STOCKHOLDER AGREEMENT, dated as of September 28, 1998, by and among
Glenway Financial Corporation ("GFCO"), a Delaware corporation, and certain
stockholders of Fidelity Financial of Ohio, Inc. ("FFOH"), an Ohio corporation,
named on Schedule I hereto (collectively the "Stockholders").
WITNESSETH:
WHEREAS, FFOH and GFCO have entered into an Agreement of Merger of even
date herewith (the "Agreement"), providing for, among other things, the merger
of GFCO with and into a wholly-owned subsidiary of FFOH (the "Merger"); and
WHEREAS, in order to induce GFCO to enter into the Agreement, each of
the Stockholders agrees to, among other things, vote in favor of the Agreement
in his or her capacity as a stockholder of FFOH.
NOW, THEREFORE, in consideration of the premises, the mutual covenants
and agreements set forth herein and other good and valuable consideration, the
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. Ownership of FFOH Common Stock. Each Stockholder represents and
warrants that the Stockholder has or shares the right to vote and dispose of the
number of shares of common stock of FFOH, $.10 par value per share ("FFOH Common
Stock"), set forth opposite such Stockholder's name on Schedule I hereto (which
does not include shares held solely in a fiduciary capacity).
2. Agreements of the Stockholders. Each Stockholder covenants and
agrees that:
(a) such Stockholder shall, at any meeting of FFOH's stockholders
called for the purpose, vote, or cause to be voted, all shares of FFOH
Common Stock in which such stockholder has the right to vote (whether
owned as of the date hereof or hereafter acquired) in favor of the
Agreement and the other transactions contemplated thereby (including
approval of the amendment to FFOH's Articles of Incorporation in
accordance with Section 5.16(a) of the Agreement);
(b) except as otherwise expressly permitted hereby, such Stockholder
shall not, prior to the meeting of FFOH's stockholders referred to in
Section 2(a) hereof or the earlier
<PAGE>
termination of the Agreement in accordance with its terms, sell, pledge,
transfer or otherwise dispose of the Stockholder's shares of FFOH Common
Stock;
(c) such Stockholder shall not in his capacity as a stockholder of
FFOH directly or indirectly encourage or solicit or hold discussions or
negotiations with, or provide any information to, any person, entity or
group (other than GFCO or an affiliate thereof) concerning any merger,
sale of substantial assets or liabilities not in the ordinary course of
business, sale of shares of capital stock or similar transactions
involving FFOH or any subsidiary of FFOH (provided that nothing herein
shall be deemed to affect the ability of any Stockholder to fulfill his
duties as a director and/or officer of FFOH); and
(d) such Stockholder shall use his reasonable best efforts to take
or cause to be taken all action, and to do or cause to be done all things,
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the agreements contemplated by this
Stockholder Agreement.
Each Stockholder further agrees that FFOH's transfer agent shall be
given an appropriate stop transfer order and shall not be required to register
any attempted transfer of shares of FFOH Common Stock, unless the transfer has
been effected in compliance with the terms of this agreement.
3. Successors and Assigns. Subject to Section 5.13 of the Agreement and
the terms of the agreement with affiliates of FFOH referred to therein, a
Stockholder may sell, pledge, transfer or otherwise dispose of his shares of
FFOH Common Stock, provided that, with respect to any sale, transfer or
disposition which would occur on or before the meeting of FFOH's stockholders
referred to in Section 2(a) hereof, such Stockholder obtains the prior written
consent of GFCO and that any acquiror of such FFOH Common Stock expressly agrees
in writing to be bound by the terms of this Stockholder Agreement.
4. Termination. The parties agree and intend that this Stockholder
Agreement be a valid and binding agreement enforceable against the parties
hereto and that damages and other remedies at law for the breach of this
Stockholder Agreement are inadequate. This Stockholder Agreement may be
terminated at any time prior to the consummation of the Merger by mutual written
consent of the parties hereto and shall be automatically terminated in the event
that the Agreement is terminated in accordance with its terms.
5. Notices. Notices may be provided to GFCO and the Stockholders in the
manner specified in Section 8.4 of the Agreement, with all notices to the
Stockholders being provided to them at FFOH in the manner specified in such
section.
6. Governing Law. This Stockholder Agreement shall be governed by the
laws of the State of Ohio without giving effect to the principles of conflicts
of laws thereof.
2
<PAGE>
7. Counterparts. This Stockholder Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same and each of
which shall be deemed an original.
8. Headings and Gender. The Section headings contained herein are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Stockholder Agreement. Use of the masculine gender herein
shall be considered to represent the masculine, feminine or neuter gender
whenever appropriate.
3
<PAGE>
IN WITNESS WHEREOF, GFCO, by a duly authorized officer, and each of
1the Stockholders have caused this Stockholder Agreement to be executed as of
the day and year first above written.
GLENWAY FINANCIAL CORPORATION
By: /s/ Robert R. Sudbrook
------------------------------------
Name: Robert R. Sudbrook
Title: President and Chief Executive
Officer
STOCKHOLDERS OF FIDELITY
FINANCIAL OF OHIO:
/s/ Joseph D. Hughes
----------------------------------------
Joseph D. Hughes
/s/ Michael W. Jordan
-----------------------------------------
Michael W. Jordan
/s/ David A. Luecke
-----------------------------------------
David A. Luecke
/s/ Constantine N. Papadakis
-----------------------------------------
Constantine N. Papadakis
/s/ John R. Reusing
-----------------------------------------
John R. Reusing
4
<PAGE>
/s/ Thomas N. Spaeth
-----------------------------------------
Thomas N. Spaeth
/s/ Paul D. Staubach
-----------------------------------------
Paul D. Staubach
/s/ Robert W. Zumbiel
-----------------------------------------
Robert W. Zumbiel
5
<PAGE>
SCHEDULE I
Number of Shares of
FFOH Common Stock
Name of Stockholder Beneficially Owned
- ------------------------------------------------ -------------------------
Joseph D. Hughes 46,549
Michael W. Jordan 14,725
David A. Luecke 12,987
Constantine N. Papadakis 10,800
John R. Reusing 85,351
Thomas N. Spaeth 13,853
Paul D. Staubach 55,700
Robert W. Zumbiel 27,675
6
Exhibit 10.5
September 28, 1998
Fidelity Financial of Ohio
4555 Montgomery Road
Cincinnati, Ohio 45212
Ladies and Gentlemen:
Fidelity Financial of Ohio, Inc. ("FFOH") and Glenway Financial
Corporation (the "Company") desire to enter into an Agreement of Merger, dated
as of September 28, 1998 (the "Agreement"), pursuant to which, subject to the
terms and conditions set forth therein, (a) the Company will merge with and into
a wholly-owned subsidiary of FFOH (the "Merger") and (b) each share of Company
common stock outstanding immediately prior to the Merger will be converted into
the right to receive 1.50 shares of FFOH common stock, plus cash in lieu of any
fractional share interest.
In consideration of the foregoing, the undersigned hereby irrevocably:
(a) Agrees not to sell, or in any other way reduce the risk of
the undersigned relative to, any shares of common stock of the Company or of
common stock of FFOH, during the period commencing thirty days prior to the
effective date of the Merger and ending on the date on which financial results
covering at least thirty days of post-Merger combined operations of FFOH and the
Company have been published within the meaning of Topic 2-E of the Staff
Accounting Bulletin Series of the Securities and Exchange Commission ("SEC"),
provided, however, that excluded from the foregoing undertaking shall be such
sales, pledges, transfers or other dispositions of shares of Company common
stock or shares of FFOH common stock which, in FFOH's sole judgment (after
consulting with its independent public accountants), are individually and in the
aggregate de minimis within the meaning of Topic 2-E of the Staff Accounting
Bulletin Series of the SEC;
(b) Agrees that neither the Company nor FFOH shall be bound by
any attempted sale or other transfer of any shares of Company common stock or
FFOH common stock, respectively, and the Company's and FFOH's transfer agents
shall be given appropriate stop transfer orders and shall not be required to
register any such attempted sale or other transfer, unless the sale has been
effected in compliance with the terms of this Letter Agreement;
(c) Acknowledges and agrees that the provisions of subparagraphs
(a) and (b) hereof apply to shares of FFOH common stock and Company common stock
owned by (i) his or her spouse, (ii) any of his or her relatives or relatives of
his or her spouse occupying his or her home, (iii) any trust or estate in which
he or she, his or her spouse, or any such relative owns at least a 10%
beneficial interest or of which any of them serves as trustee, executor or in
any similar capacity and
<PAGE>
Fidelity Financial of Ohio, Inc.
September 28, 1998
Page 2
(iv) any corporation or other organization in which the undersigned, any
affiliate of the undersigned, his or her spouse, or any such relative owns at
least 10% of any class of equity securities or of the equity interest;
(d) Represents that the undersigned has no plan or intention to
sell, exchange, or otherwise dispose of any shares of common stock of FFOH prior
to expiration of the time period referred to in paragraph (a) hereof; and
(e) Represents that the undersigned has the capacity to enter
into this Letter Agreement and that it is a valid and binding obligation
enforceable against the undersigned in accordance with its terms, subject to
bankruptcy, insolvency and other laws affecting creditors' rights and general
equitable principles.
-------------------------
This Letter Agreement may be executed in two or more counterparts, each
of which shall be deemed to constitute an original, but all of which together
shall constitute one and the same Letter Agreement.
-------------------------
This Letter Agreement shall terminate concurrently with any termination
of the Agreement in accordance with its terms.
-------------------------
The undersigned intends to be legally bound hereby.
Sincerely,
Exhibit 10.6
September 28, 1998
Glenway Financial Corporation
5535 Glenway Avenue
Cincinnati, Ohio 45238
Ladies and Gentlemen:
Fidelity Financial of Ohio, Inc. ("FFOH") and Glenway Financial
Corporation (the "Company") desire to enter into an Agreement of Merger, dated
as of September 28, 1998 (the "Agreement"), pursuant to which, subject to the
terms and conditions set forth therein, (a) the Company will merge with and into
a wholly-owned subsidiary of FFOH (the "Merger") and (b) each share of Company
common stock outstanding immediately prior to the Merger will be converted into
the right to receive 1.50 shares of FFOH common stock, plus cash in lieu of any
fractional share interest.
In consideration of the foregoing, the undersigned hereby irrevocably:
(a) Agrees not to sell, or in any other way reduce the risk of
the undersigned relative to, any shares of common stock of the Company or of
common stock of FFOH, during the period commencing thirty days prior to the
effective date of the Merger and ending on the date on which financial results
covering at least thirty days of post-Merger combined operations of FFOH and the
Company have been published within the meaning of Topic 2-E of the Staff
Accounting Bulletin Series of the Securities and Exchange Commission ("SEC"),
provided, however, that excluded from the foregoing undertaking shall be such
sales, pledges, transfers or other dispositions of shares of Company common
stock or shares of FFOH common stock which, in FFOH's sole judgment (after
consulting with its independent public accountants), are individually and in the
aggregate de minimis within the meaning of Topic 2-E of the Staff Accounting
Bulletin Series of the SEC;
(b) Agrees that neither the Company nor FFOH shall be bound by
any attempted sale or other transfer of any shares of Company common stock or
FFOH common stock, respectively, and the Company's and FFOH's transfer agents
shall be given appropriate stop transfer orders and shall not be required to
register any such attempted sale or other transfer, unless the sale has been
effected in compliance with the terms of this Letter Agreement;
(c) Acknowledges and agrees that the provisions of subparagraphs
(a) and (b) hereof apply to shares of FFOH common stock and Company common stock
owned by (i) his or her spouse, (ii) any of his or her relatives or relatives of
his or her spouse occupying his or her home, (iii) any trust or estate in which
he or she, his or her spouse, or any such relative owns at least a 10%
beneficial interest or of which any of them serves as trustee, executor or in
any similar capacity and
<PAGE>
Glenway Financial Corporation
September 28, 1998
Page 2
(iv) any corporation or other organization in which the undersigned, any
affiliate of the undersigned, his or her spouse, or any such relative owns at
least 10% of any class of equity securities or of the equity interest;
(d) Represents that the undersigned has no plan or intention to
sell, exchange, or otherwise dispose of any shares of common stock of FFOH prior
to expiration of the time period referred to in paragraph (a) hereof; and
(e) Represents that the undersigned has the capacity to enter
into this Letter Agreement and that it is a valid and binding obligation
enforceable against the undersigned in accordance with its terms, subject to
bankruptcy, insolvency and other laws affecting creditors' rights and general
equitable principles.
-------------------------
This Letter Agreement may be executed in two or more counterparts, each
of which shall be deemed to constitute an original, but all of which together
shall constitute one and the same Letter Agreement.
-------------------------
This Letter Agreement shall terminate concurrently with any termination
of the Agreement in accordance with its terms.
-------------------------
The undersigned intends to be legally bound hereby.
Sincerely,
