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AGREEMENT AND PLAN OF MERGER
dated as of June 7, 2000
by and between
MUTUAL FIRST FINANCIAL, INC.
and
MARION CAPITAL HOLDINGS, INC.
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TABLE OF CONTENTS
ARTICLE I
CERTAIN DEFINITIONS....................................................1
1.01 Certain Definitions...........................................1
ARTICLE II
THE TRANSACTION........................................................6
2.01 [INTENTIONALLY LEFT BLANK]....................................6
2.02 The Company Merger............................................6
2.03 Bank Merger...................................................7
2.04 Effective Date and Effective Time.............................8
2.05 Reservation of Right to Revise Transaction....................8
ARTICLE III
CONSIDERATION; EXCHANGE PROCEDURES.....................................8
3.01 Merger Consideration..........................................8
3.02 Rights as Stockholders; Stock Transfers.......................9
3.03 Fractional Shares.............................................9
3.04 Exchange Procedures...........................................9
3.05 Anti-Dilution Provisions.....................................11
3.06 Options......................................................11
ARTICLE IV
ACTIONS PENDING TRANSACTION...........................................12
4.01 Forbearances of Marion.......................................12
4.02 Forbearances of Mutual First.................................15
ARTICLE V
REPRESENTATIONS AND WARRANTIES........................................17
5.01 Disclosure Schedules.........................................17
5.02 Standard.....................................................18
5.03 Representations and Warranties of Marion.....................18
5.04 Representations and Warranties of Mutual First...............28
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ARTICLE VI
COVENANTS.............................................................35
6.01 Reasonable Best Efforts......................................35
6.02 Stockholder Approvals........................................35
6.03 Registration Statement.......................................35
6.04 Press Releases...............................................36
6.05 Access; Information..........................................36
6.06 Marion Proposal..............................................37
6.07. Affiliate Agreement..........................................38
6.08 Takeover Laws................................................38
6.09 Certain Policies.............................................38
6.10 NASDAQ Listing...............................................38
6.11 Regulatory Applications......................................39
6.12 Indemnification..............................................39
6.13 Benefit Plans................................................40
6.14 Notification of Certain Matters..............................41
6.15 Directors....................................................42
6.16 THIS PARAGRAPH INTENTIONALLY LEFT BLANK......................42
6.17 Liabilities and Remedies and Breakup Fee.....................42
6.18 Marion Fee...................................................43
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE COMPANY MERGER......................43
7.01 Conditions to Each Party's Obligation to Effect the
Company Merger..............................................43
7.02 Conditions to Obligation of Marion...........................45
7.03 Conditions to Obligation of Mutual First.....................45
ARTICLE VIII
TERMINATION...........................................................46
8.01 Termination..................................................46
8.02 Effect of Termination and Abandonment........................47
ARTICLE IX
MISCELLANEOUS.........................................................47
9.01 Survival.....................................................47
9.02 Waiver; Amendment............................................47
9.03 Counterparts.................................................47
9.04 Governing Law................................................47
9.05 Expenses.....................................................48
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9.06 Notices......................................................48
9.07 Entire Understanding; No Third Party Beneficiaries...........49
9.08 Interpretation; Effect.......................................49
EXHIBIT A Form of Subsidiary Plan of Merger
EXHIBIT B Form of Marion Affiliate Agreement
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AGREEMENT AND PLAN OF MERGER, dated as of June 7, 2000 (this "Agreement"),
by and between Mutual First Financial, Inc. ("Mutual First") and Marion Capital
Holdings, Inc. ("Marion").
RECITALS
A. Marion. Marion is an Indiana corporation, having its principal place of
business in Marion, Indiana.
B. Mutual First. Mutual First is a Maryland corporation, having its
principal place of business in Muncie, Indiana.
C. Intentions of the Parties. It is the intention of the parties to this
Agreement that the combination of Marion and Mutual First be accounted for under
the "purchase" accounting method and that each of the business combinations
contemplated hereby be treated as a "reorganization" under Section 368 of the
Internal Revenue Code of 1986, as amended (the "Code").
D. Board Action. The respective Boards of Directors of Mutual First and
Marion have determined that it is in the best interests of their respective
companies and their stockholders to consummate a strategic business alliance
between Marion and Mutual First by the merger of Marion with and into Mutual
First and the other business combinations contemplated herein.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, representations, warranties and agreements contained herein the
parties agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
1.01 Certain Definitions. The following terms are used in this Agreement
with the meanings set forth below:
"Agreement" means this Agreement, as amended or modified from time to time
in accordance with Section 9.02.
"Bank Merger" has the meaning set forth in Section 2.03.
"CEBA" means the Competitive Equality Banking Act of 1987.
"Code" has the meaning set forth in the Recitals to this Agreement.
"Company Merger" has the meaning set forth in Section 2.02(a).
"Compensation and Benefit Plans" has the meaning set forth in Section
5.03(m).
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"Costs" has the meaning set forth in Section 6.12(a).
"Disclosure Schedule" has the meaning set forth in Section 5.01.
"DOL" means the Department of Labor.
"Effective Date" means the date on which the Effective Time occurs.
"Effective Time" means the effective time of the Company Merger and the
Bank Merger, as provided for in Section 2.04.
"Environmental Laws" means all applicable local, state and federal
environmental, health and safety laws and regulations, including, without
limitation, the Resource Conservation and Recovery Act, the Comprehensive
Environmental Response, Compensation, and Liability Act, the Clean Water Act,
the Clean Air Act, and the Occupational Safety and Health Act, each as amended,
regulations promulgated thereunder, and state counterparts.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" has the meaning set forth in Section 5.03(m).
"ERISA Affiliate Plan" has the meaning set forth in Section 5.03(m).
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations thereunder.
"Exchange Agent" has the meaning set forth in Section 3.04(a).
"Exchange Fund" has the meaning set forth in Section 3.04(a).
"Exchange Ratio" has the meaning set forth in Section 3.01(a).
"FDIC" means the Federal Deposit Insurance Corporation
"FFIEC" means the Federal Financial Institutions Examination Council.
"Governmental Authority" means any court, administrative agency or
commission or other federal, state or local governmental authority or
instrumentality.
"Indemnified Party" has the meaning set forth in Section 6.12(a).
"Indiana Law" means the relevant provisions of the Indiana Business
Corporation Law.
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"Indiana Secretary" means the Secretary of State of the State of Indiana.
"Insurance Amount" has the meaning set forth in Section 6.12(b).
"IRS" means the Internal Revenue Service.
"Lien" means any charge, mortgage, pledge, security interest, restriction,
claim, lien, or encumbrance.
"Marion" has the meaning set forth in the preamble to this Agreement.
"Marion Affiliate" has the meaning set forth in SEC Accounting Series
Releases 130 and 135.
"Marion Board" means the Board of Directors of Marion.
"Marion Bylaws" means the Bylaws of Marion.
"Marion Articles" means the Articles of Incorporation of Marion.
"Marion Common Stock" means the common stock, without par value of Marion.
"Marion Meeting" has the meaning set forth in Section 6.02.
"Marion Preferred Stock" means the preferred stock, without par value of
Marion.
"Marion Proposal" shall mean a tender offer or exchange offer, proposal for
a merger, involving Marion or any of its subsidiaries, or any proposal or offer
to acquire in any manner a substantial equity interest in, or a substantial
portion of, the assets or deposits of Marion or any of its subsidiaries, other
than the transactions contemplated by this agreement.
"Marion Stock" means, collectively, Marion Common Stock and Marion
Preferred Stock.
"Marion Stock Option" has the meaning set forth in Section 3.06(a).
"Marion Stock Plan" means the Marion Capital Holdings, Inc. Stock Option
Plan.
"Maryland Law" means the relevant provisions of the Maryland corporate
code.
"Maryland Secretary" means the State Department of Assessments and
Taxation.
"Material Adverse Effect" means, with respect to Mutual First or Marion,
any effect that (i) is material and adverse to the financial position, results
of operations or business of Mutual First
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and its Subsidiaries taken as a whole or Marion and its Subsidiaries taken as a
whole, respectively, or (ii) would materially impair the ability of Mutual First
or Marion to perform its obligations under this Agreement or otherwise
materially threaten or materially impede the consummation of the Company Merger
and the other transactions contemplated by this Agreement; provided, however,
that Material Adverse Effect shall not be deemed to include the impact of (a)
changes in thrift, banking and similar laws of general applicability or
interpretations thereof by courts or governmental authorities, or other changes
affecting depository institutions generally, including changes in general
economic conditions and changes in prevailing interest and deposit rates, (b)
changes in generally accepted accounting principles or regulatory accounting
requirements applicable to thrifts, banks and their holding companies generally,
(c) any modifications or changes to valuation policies and practices in
connection with the Company Merger or Bank Merger or restructuring charges taken
in connection with the Company Merger or Bank Merger, in each case in accordance
with generally accepted accounting principles, (d) changes resulting from
expenses (such as legal, accounting and investment bankers' fees) incurred in
connection with this Agreement and (e) actions or omissions of Mutual First or
Marion taken with the prior written consent of Marion or Mutual First, as
applicable, in contemplation of the transactions contemplated hereby.
"Merger Consideration" has the meaning set forth in Section 2.05.
"Mutual First" has the meaning set forth in the preamble to this Agreement.
"Mutual First Affiliate" has the meaning set forth in SEC Accounting Series
Releases 130 and 135.
"Mutual First Board" means the Board of Directors of Mutual First.
"Mutual First Common Stock" means the common stock, par value $0.01 per
share, of Mutual First.
"Mutual First Meeting" has the meaning set forth in Section 6.02.
"Mutual First Proposal" shall mean a tender offer or exchange offer,
proposal for a merger, involving Mutual First or any of its Subsidiaries, or any
proposal or offer to acquire in any manner a substantial equity interest in, or
a substantial portion of, the assets or deposits of Mutual First or any of its
subsidiaries, other than the transactions contemplated by this Agreement.
"NASDAQ" means The Nasdaq Stock Market, Inc.'s National Market System.
"New Certificates" has the meaning set forth in Section 3.04(a).
"Old Certificates" has the meaning set forth in Section 3.04(a).
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"OTS" means the Office of Thrift Supervision.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Pension Plan" has the meaning set forth in Section 5.03(m).
"Person" means any individual, bank, corporation, partnership, association,
joint-stock company, business trust or unincorporated organization.
"Previously Disclosed" by a party shall mean information set forth in its
Disclosure Schedule.
"Proxy Statement" has the meaning set forth in Section 6.03.
"Registration Statement" has the meaning set forth in Section 6.03.
"Regulatory Authorities" has the meaning set forth in Section 5.03(i).
"Representatives" means, with respect to any Person, such Person's
directors, officers, employees, legal or financial advisors or any
representatives of such legal or financial advisors.
"Rights" means, with respect to any Person, securities or obligations
convertible into or exercisable or exchangeable for, or giving any person any
right to subscribe for or acquire, or any options, calls or commitments relating
to, or any stock appreciation right or other instrument the value of which is
determined in whole or in part by reference to the market price or value of,
shares of capital stock of such Person.
"SEC" means the Securities and Exchange Commission.
"SEC Documents" has the meaning set forth in Section 5.03(g).
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations thereunder.
"Specified Representations" has the meaning set forth in Section 5.02.
"Subsidiary" has the meaning ascribed to it in Rule 1-02 of Regulation S-X
of the SEC.
"Surviving Corporation" has the meaning set forth in Section 2.02.
"Takeover Laws" has the meaning set forth in Section 5.03(o).
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"Tax" and "Taxes" means all federal, state, local or foreign taxes,
charges, fees, levies or other assessments, however denominated, including,
without limitation, all net income, gross income, gains, gross receipts, sales,
use, ad valorem, goods and services, capital, production, transfer, franchise,
windfall profits, license, withholding, payroll, employment, disability,
employer health, excise, estimated, severance, stamp, occupation, property,
environmental, unemployment or other taxes, custom duties, fees, assessments or
charges of any kind whatsoever, together with any interest and any penalties,
additions to tax or additional amounts, in each case imposed by any taxing or
Governmental Authority whether arising before, on or after the Effective Date.
"Tax Returns" means any return, amended return or other report (including
elections, declarations, disclosures, schedules, estimates and information
returns) required to be filed with any Governmental Authority with respect to
any Tax.
"Transaction" means the Company Merger and the Bank Merger.
"Treasury Stock" shall mean shares of Marion Stock held by Marion or any of
its Subsidiaries or by Mutual First or any of its Subsidiaries, in each case
other than in a fiduciary capacity or as a result of debts previously contracted
in good faith.
ARTICLE II
THE TRANSACTION
2.01 [INTENTIONALLY LEFT BLANK]
2.02 The Company Merger.
(a) Merger. At the Effective Time, Marion shall merge with and
into Mutual First (the "Company Merger"), the separate corporate
existence of Marion shall cease and Mutual First shall survive and
continue to exist as a Maryland corporation (Mutual First, as the
surviving corporation in the Company Merger, sometimes being referred
to herein as the "Surviving Corporation").
(b) Corporate Law Filings. Subject to the satisfaction or waiver
of the conditions set forth in Article VII, the Company Merger shall
become effective upon the occurrence of the filing in the office of
the Maryland Secretary of articles of merger in accordance with
Maryland Law and the filing in the office of the Indiana Secretary of
articles of merger in accordance with Indiana Law, or such later date
and time as may be set forth in such articles of merger.
(c) Effects of Company Merger. The Company Merger shall have the
effects prescribed in the Maryland Law including but not limited to,
Mutual First, as the
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Surviving Corporation, thereupon and thereafter possessing all of the
rights, privileges, immunities and franchises, of a public as well as
of a private nature, of each of the corporations so merged and Mutual
First, as the Surviving Corporation, becoming responsible and liable
for all the liabilities, obligations and penalties of each of the
corporations so merged. All rights of creditors and obligors and all
liens on the property of each of Marion and Mutual First shall be
preserved unimpaired.
(d) Articles of Incorporation and Bylaws of Surviving
Corporation. The Articles of Incorporation and Bylaws of Mutual First
immediately after the Company Merger shall be those of Mutual First as
in effect immediately prior to the Effective Time.
(e) Directors and Officers of the Surviving Corporation. The
directors and officers of Mutual First immediately after the Company
Merger shall be the directors and officers of Mutual First immediately
prior to the Effective Time, subject to the provisions of Section 6.15
hereof, until such time as their successors shall be duly elected and
qualified.
(f) Service of Process. At the Effective Time, Mutual First, as
the Surviving Corporation, consents to be sued and served with process
in the State of Maryland and irrevocably appoints the Maryland
Secretary of State as its agent to accept service of process in any
proceeding in the State of Maryland to enforce against it any
obligation of Marion.
(g) Principal Office. The location of the principal office of
Mutual First, as the Surviving Corporation, in the State of Indiana
shall be 110 E. Charles Street, Muncie, Indiana.
(h) Plan of Merger. At the reasonable request of any party,
Marion and Mutual First shall enter into a separate plan of merger
reflecting the terms of the Company Merger for purposes of any state
law filing requirement.
2.03 Bank Merger. At the Effective Time and immediately following the
Company Merger, First Federal Savings Bank of Marion ("First Federal"), a
federally chartered savings bank and wholly owned Subsidiary of Marion, shall be
merged with and into Mutual Federal Savings Bank ("Mutual First Bank"), a
federally chartered savings bank and wholly-owned Subsidiary of Mutual First.
Such merger is hereinafter sometimes referred to as the "Bank Merger". The Bank
Merger shall be implemented pursuant to Subsidiary Plan of Merger, in
substantially the form of Exhibit A. In order to obtain the necessary state and
federal regulatory approvals for the Bank Merger, the parties hereto shall cause
the following to be accomplished prior to the filing of applications for
regulatory approval: Marion shall cause the Board of Directors of First Federal
to approve Subsidiary Plan of Merger, Marion as the sole stockholder of First
Federal shall approve Subsidiary Plan of Merger, and Marion shall cause
Subsidiary Plan of Merger to be duly executed by First Federal and delivered to
Mutual First. Mutual First shall
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cause the Board of Directors of Mutual First Bank to approve The Subsidiary Plan
of Merger, Mutual First as the sole stockholder of Mutual First Bank shall
approve the Subsidiary Plan of Merger, and Mutual First shall cause the
Subsidiary Plan of Merger to be duly executed by Mutual First Bank and delivered
to Marion. Prior to the Effective Time, Marion shall cause First Federal and
Mutual First shall cause Mutual First Bank to execute such articles of
combination as are necessary to make effective the Bank Merger and cause such
documents to be timely and appropriately filed and endorsed, where required, by
the OTS so that the Bank Merger shall become effective at the Effective Time.
2.04 Effective Date and Effective Time. Subject to the satisfaction or
waiver of the conditions set forth in Article VII, the parties shall cause the
effective date of the Company Merger and the Bank Merger (the "Effective Date")
to occur on (i) the fifth business day after the last of the conditions set
forth in Article VII to be satisfied prior to the Effective Date shall have been
satisfied or waived in accordance with the terms of this Agreement or (ii) such
other date to which the parties may agree in writing. The time on the Effective
Date when the Company Merger and the Bank Merger shall become effective is
referred to as the "Effective Time".
2.05 Reservation of Right to Revise Transaction. Mutual First may at any
time prior to the Effective Time, with the prior consent of Marion (such consent
not to be unreasonably withheld or delayed), change the method of effecting the
Transaction or any part thereof if and to the extent it deems such change to be
necessary, appropriate or desirable; provided, however, that no such change
shall (i) alter or change the amount or kind of consideration to be issued to
holders of Marion Common Stock as provided for in this Agreement (the "Merger
Consideration"), (ii) adversely affect the tax treatment of Marion's
stockholders as a result of receiving the Merger Consideration, (iii) materially
impede or delay consummation of the Transaction, (iv) result in any
representation or warranty of any party set forth in this Agreement becoming
incorrect in any material respect, or (v) diminish the benefits, including
membership on the Mutual First Board, to be received by the directors, officers
or employees of Marion and its Subsidiaries as set forth in this Agreement or in
any other written agreements between the parties made in connection with this
Agreement.
ARTICLE III
CONSIDERATION; EXCHANGE PROCEDURES
3.01 Merger Consideration. Subject to the provisions of this Agreement, at
the Effective Time, automatically by virtue of the Company Merger and without
any action on the part of any Person:
(a) Outstanding Marion Common Stock. Each share, excluding Treasury
Stock, of Marion Common Stock issued and outstanding immediately prior to
the Effective Time shall become and be converted into, subject to Sections
3.03 and 3.05
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hereof, 1.862 shares of Mutual First Common Stock (the "Exchange Ratio").
The Exchange Ratio shall be subject to adjustment as set forth in Section
3.05.
(b) Outstanding Mutual First Common Stock. Each share of Mutual First
Common Stock issued and outstanding or held in treasury immediately prior
to the Effective Time shall remain issued and outstanding or held in
treasury and shall be unaffected by the Company Merger.
(c) Treasury Shares. Each share of Marion Common Stock held as
Treasury Stock immediately prior to the Effective Time shall be canceled
and retired at the Effective Time, and no consideration shall be issued in
exchange therefor.
3.02 Rights as Stockholders; Stock Transfers. At the Effective Time,
holders of Marion Stock shall cease to be, and shall have no rights as,
stockholders of Marion, other than to receive any dividend or other distribution
with respect to such Marion Stock permitted under this Agreement with a record
date occurring prior to the Effective Time and the consideration provided under
this Article III. After the Effective Time, there shall be no transfers on the
stock transfer books of Marion or the Surviving Corporation of shares of Marion
Stock.
3.03 Fractional Shares. Notwithstanding any other provision hereof, no
fractional shares of Mutual First Common Stock and no certificates or scrip
therefor, or other evidence of ownership thereof, will be issued in the Company
Merger; instead, Mutual First shall pay to each holder of Marion Common Stock
who would otherwise be entitled to a fractional share of Mutual First Common
Stock (after taking into account all Old Certificates delivered by such holder)
an amount in cash (without interest) determined by multiplying such fraction by
the closing sale price of Mutual First Common Stock, as reported by the NASDAQ
reporting system (as reported in The Wall Street Journal or, if not reported
therein, in another authoritative source), for the last trading day immediately
preceding the Effective Date.
3.04 Exchange Procedures.
(a) Deposit of New Certificates, Etc. At or prior to the Effective
Time, Mutual First shall deposit, or shall cause to be deposited, with an
independent exchange agent to be selected by Mutual First and reasonably
acceptable to Marion (the "Exchange Agent"), for the benefit of the holders
of certificates formerly representing shares of Marion Common Stock ("Old
Certificates"), for exchange in accordance with this Article III,
certificates representing the shares of Mutual First Common Stock ("New
Certificates") and an estimated amount of cash (such cash and New
Certificates, together with any dividends or distributions with a record
date occurring after the Effective Date with respect thereto (without any
interest on any such cash, dividends or distributions), being hereinafter
referred to as the "Exchange Fund") to be paid pursuant to this Article III
in exchange for outstanding shares of Marion Common Stock.
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(b) Transmittal and Deliveries. As promptly as practicable after the
Effective Date, Mutual First shall send or cause to be sent to each former
holder of record of shares of Marion Common Stock immediately prior to the
Effective Time transmittal materials (which shall specify that risk of loss
and title to Old Certificates shall pass only upon acceptance of such Old
Certificates by Mutual First or the Exchange Agent) for use in exchanging
such stockholder's Old Certificates for the consideration set forth in this
Article III. Mutual First shall cause the New Certificates into which
shares of a stockholder's Marion Common Stock are converted on the
Effective Date and/or any check in respect of any fractional share
interests or dividends or distributions which such person shall be entitled
to receive to be delivered to such stockholder upon delivery to the
Exchange Agent of Old Certificates representing such shares of Marion
Common Stock (or indemnity reasonably satisfactory to Mutual First and the
Exchange Agent, if any of such certificates are lost, stolen or destroyed)
owned by such stockholder. No interest will be paid on any such cash to be
paid in lieu of fractional share interests or in respect of dividends or
distributions which any such person shall be entitled to receive pursuant
to this Article III upon such delivery. Mutual First and the Exchange Agent
shall be entitled to rely upon the stock transfer books of Marion to
establish the identity of those persons entitled to receive consideration
specified in this Agreement, which books shall be conclusive with respect
thereto. In the event of a dispute with respect to ownership of stock
represented by any Old Certificate, Mutual First or the Exchange Agent
shall be entitled to deposit any consideration in respect thereof in escrow
with an independent third party and thereafter be relieved with respect to
any claims thereto.
(c) Escheat. Notwithstanding the foregoing, neither the Exchange
Agent, if any, nor any party hereto shall be liable to any former holder of
Marion Stock for any amount properly delivered to a public official
pursuant to applicable abandoned property, escheat or similar laws.
(d) Restrictions on the Payment of Dividends and Voting. No dividends
or other distributions with respect to Mutual First Common Stock with a
record date occurring after the Effective Time shall be paid to the holder
of any unsurrendered Old Certificate representing shares of Marion Common
Stock converted in the Company Merger into the right to receive shares of
such Mutual First Common Stock until the holder thereof shall be entitled
to receive New Certificates in exchange therefor in accordance with the
procedures set forth in this Section 3.04, and no such shares of Marion
Common Stock shall be eligible to vote until the holder of Old Certificates
is entitled to receive New Certificates in accordance with the procedures
set forth in this Section 3.04. After becoming so entitled in accordance
with this Section 3.04, the record holder thereof also shall be entitled to
receive any such dividends or other distributions, without any interest
thereon, which theretofore had become payable with respect to shares of
Mutual First Common Stock such holder had the right to receive upon
surrender of the Old Certificates.
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(e) Return of Exchange Fund to Mutual First. Any portion of the
Exchange Fund that remains unclaimed by the stockholders of Marion for
twelve months after the Effective Time shall be paid to Mutual First. Any
stockholders of Marion who have not theretofore complied with this Article
III shall thereafter look only to Mutual First for payment of the shares of
Mutual First Common Stock, cash in lieu of any fractional shares and unpaid
dividends and distributions on Mutual First Common Stock deliverable in
respect of each share of Marion Common Stock such stockholder holds as
determined pursuant to this Agreement, in each case, without any interest
thereon.
3.05 Anti-Dilution Provisions. In the event Mutual First changes (or
establishes a record date for changing) the number of shares of Mutual First
Common Stock issued and outstanding prior to the Effective Date as a result of a
stock split, stock dividend, recapitalization or similar transaction with
respect to the outstanding Mutual First Common Stock and the record date
therefor shall be prior to the Effective Date, the Exchange Ratio shall be
proportionately adjusted.
3.06 Options.
(a) Conversion. At the Effective Time, each option outstanding on the
date of this Agreement to purchase shares of Marion Common Stock under the
Marion Stock Plan (each, a "Marion Stock Option") and remaining outstanding
immediately prior to the Effective Time shall, at the Effective Time, be
assumed by Mutual First and each such Marion Stock Option shall continue to
be outstanding, but shall represent an option to purchase shares of Mutual
First Common Stock in an amount and at an exercise price determined as
provided below (and otherwise subject to the terms of the applicable Marion
Stock Plan and Marion Stock Option):
(i) the number of shares of Mutual First Common Stock to be
subject to the continuing option shall be equal to the product of the
number of shares of Marion Common Stock subject to the original option
and the Exchange Ratio, provided that any fractional share of Mutual
First Common Stock resulting from such multiplication shall be rounded
down to the nearest share; and
(ii) the exercise price per share of Mutual First Common Stock
under the continuing option shall be equal to the exercise price per
share of Marion Common Stock under the original option divided by the
Exchange Ratio, provided that such exercise price shall be rounded
down to the nearest cent.
It is intended that the foregoing assumption shall be undertaken
consistent with and in a manner that will not constitute a
"modification" under Section 424 of the Code as to any Marion Stock
Option which is an "incentive stock option".
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(b) Reservation of Mutual First Common Stock and Securities Filings.
At all times after the Effective Time, Mutual First shall reserve for
issuance such number of shares of Mutual First Common Stock as necessary so
as to permit the exercise of continuing options in the manner contemplated
by this Agreement and the instruments pursuant to which such options were
granted. Mutual First shall make all filings required under federal and
state securities laws promptly after the Effective Time, but to be
effective no earlier than one year from the effective date of Mutual First
Bank's mutual to stock conversion, so as to permit the exercise of such
continuing options and the sale of the shares received by the optionee upon
such exercise at and after the Effective Time and Mutual First shall
continue to make such filings thereafter as may be necessary to permit the
continued exercise of continuing options and sale of such shares.
ARTICLE IV
ACTIONS PENDING TRANSACTION
4.01 Forbearances of Marion. From the date hereof until the Effective Time,
except as expressly contemplated by this Agreement or any separate agreement
entered into by Marion and Mutual First on the date hereof, (any such agreement
being specifically incorporated by reference herein) without the prior written
consent of Mutual First (which consent shall not be unreasonably withheld or
delayed), Marion will not, and will cause each of its Subsidiaries not to:
(a) Ordinary Course. Conduct the business of Marion and its
Subsidiaries other than in the ordinary and usual course or fail to use
reasonable efforts to (i) preserve intact in any material respect their
business organizations and assets and (ii) maintain their rights,
franchises and existing relations with customers, suppliers, employees and
business associates, or take any action reasonably likely to materially
impair Marion's ability to perform any of its obligations under this
Agreement.
(b) Marion Stock. Other than pursuant to Rights Previously Disclosed
and outstanding on the date hereof, (i) issue, sell or otherwise permit to
become outstanding, or authorize the creation of, any additional shares of
Marion Stock or any Rights, (ii) enter into any agreement with respect to
the foregoing, or (iii) permit any additional shares of Marion Stock to
become subject to new grants of employee or director stock options, other
Rights or similar stock-based employee rights.
(c) Other Securities. Issue any other capital securities, capital
stock of any Subsidiary, debentures, or subordinated notes.
(d) Dividends, Etc. (i) Make, declare, pay or set aside for payment
any dividend (other than (A), quarterly cash dividends on Marion Common
Stock in an amount not to exceed $0.22 per share with record and payment
dates consistent with past
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practice (provided the declaration of the last quarterly dividend by Marion
prior to the Effective Time and the payment thereof shall be coordinated
with, and subject to the approval of Mutual First, so as to preclude any
duplication of dividend benefit) and (B) dividends from wholly owned
Subsidiaries to Marion or another wholly owned Subsidiary of Marion) on or
in respect of, or declare or make any distribution on any shares of Marion
Stock or (ii) directly or indirectly adjust, split, combine, redeem,
reclassify, purchase or otherwise acquire, any shares of its capital stock
or Rights.
(e) Compensation; Employment Agreements, Etc. Enter into or amend or
renew any employment, consulting, severance or similar agreements or
arrangements with any director, officer or employee of Marion or its
Subsidiaries, or grant any salary or wage increase or increase any employee
benefit (including incentive or bonus payments) except (i) for oral at will
employment agreements, (ii) for normal individual increases in compensation
to employees in the ordinary course of business consistent with past
practice, (iii) for other changes that are required by applicable law, or
(iv) to satisfy contractual obligations and planned programs existing as of
the date hereof that are Previously Disclosed.
(f) Benefit Plans. Enter into, establish, adopt or amend (except as
may be required by existing contractual obligation or applicable law) any
pension, profit sharing, employee stock ownership, retirement, stock
option, stock appreciation, phantom stock, stock purchase, savings,
deferred compensation, consulting, bonus, group insurance or other employee
benefit, incentive or welfare contract, plan or arrangement, or any trust
agreement (or similar arrangement) related thereto, in respect of any
director, officer or employee of Marion or its Subsidiaries, or take any
action to accelerate the vesting or exercisability of stock options,
restricted stock or other compensation or benefits payable thereunder.
(g) Dispositions. Except as Previously Disclosed, sell, transfer,
mortgage, encumber or otherwise dispose of or discontinue any of its
assets, deposits, business or properties except in the ordinary course of
business for fair value and in a transaction that is not material to it and
its Subsidiaries taken as a whole.
(h) Acquisitions. Except as Previously Disclosed, acquire (other than
by way of foreclosures or acquisitions of control in a bona fide fiduciary
capacity or in satisfaction of debts previously contracted in good faith,
in each case in the ordinary and usual course of business consistent with
past practice) all or any portion of, the assets, business, deposits or
properties of any other entity.
(i) Governing Documents. Amend the Marion Articles, Marion Bylaws or
the certificate or articles of incorporation, charter or bylaws (or similar
governing documents) of any of Marion's Subsidiaries.
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(j) Accounting Methods. Implement or adopt any change in its
accounting principles, practices or methods, other than as may be required
by generally accepted accounting principles.
(k) Contracts. Except to satisfy Previously Disclosed written
commitments outstanding on the date hereof, enter into or terminate any
material contract (as defined in Section 5.03(k)) or amend or modify in any
material respect or renew any of its existing material contracts.
(l) Claims. Except in the ordinary course of business consistent with
past practice, settle any claim, action or proceeding, except for any
claim, action or proceeding which does not involve precedent for other
material claims, actions or proceedings and which involves solely money
damages in an amount, individually or in the aggregate for all such
settlements, that is not material to Marion and its Subsidiaries, taken as
a whole.
(m) Foreclose. Foreclose upon or otherwise take title to or possession
or control of any real property without first obtaining a phase one
environmental report thereon; provided, however, that Marion and its
Subsidiaries shall not be required to obtain such a report with respect to
one-to four-family, non-agricultural residential property of five acres or
less to be foreclosed upon unless it has reason to believe that such
property might be in violation of or require remediation under
Environmental Laws.
(n) Deposit Taking and Branch Activities. In the case of First Federal
(i) voluntarily make any material changes in or to its deposit mix; (ii)
increase or decrease the rate of interest paid on time deposits or on
certificates of deposit, except in a manner and pursuant to policies
consistent with past practice; (iii) except as Previously Disclosed open
any new branch or deposit taking facility; (iv) except as Previously
Disclosed close or relocate any existing branch or other facility; or (v)
incur any liability or obligation relating to retail banking and branch
merchandising, marketing and advertising activities and initiatives
materially in excess of the amounts budgeted in its 2000 business plan as
Previously Disclosed;
(o) Investments. Enter into any securities transaction for its own
account or purchase or otherwise acquire any investment security for its
own account except purchases and sales of securities consistent with past
practice in order to maintain investment portfolios at Marion and its
Subsidiaries that have risk and asset mix characteristics substantially
similar to those of the respective investment portfolios as of the date
hereof.
(p) Capital Expenditures. Purchase or lease any fixed asset where the
amount paid or committed thereof is in excess of $25,000, except for
Previously Disclosed amounts budgeted in the 2000 budget.
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(q) Lending. (i) Make any material changes in its policies concerning
loan underwriting or which persons may approve loans or fail to comply with
such policies; or (ii) make or commit to make any new loan, line or letter
of credit, or any new or additional discretionary advance under any
existing loan, line or letter of credit, or restructure any existing loan,
line or letter of credit so that any such loan, line or letter of credit
after such actions exceeds $500,000 without the prior written consent of
Mutual First acting through its Chief Executive Officer or a Senior Vice
President in a written notice to Marion, which approval or rejection shall
be given within five business days after delivery by Marion to such officer
of Mutual First of the complete loan package;
(r) Adverse Actions. (i) Take any action or fail to take any action
while knowing that such action or inaction would, or is reasonably likely
to, prevent or impede the Company Merger and the Bank Merger from
qualifying as reorganizations within the meaning of Section 368 of the
Code; or (ii) knowingly take any action or fail to take any action that is
intended or is reasonably likely to result in (A) any of its
representations and warranties set forth in this Agreement being or
becoming untrue in any material respect at any time at or prior to the
Effective Time, (B) any of the conditions to the Company Merger set forth
in Article VII not being satisfied or (C) a material violation of any
provision of this Agreement except, in each case, as may be required by
applicable law or regulation.
(s) Risk Management. Except as required by applicable law or
regulation, (i) implement or adopt any material change in its interest rate
and other risk management policies, procedures or practices; (ii) fail to
follow its existing policies or practices with respect to managing its
exposure to interest rate and other risk; or (iii) fail to use commercially
reasonable means to avoid any material increase in its aggregate exposure
to interest rate risk.
(t) Indebtedness. Incur any indebtedness for borrowed money other than
in the ordinary course of business and with a term of one year or less.
(u) Commitments. Agree or commit to do any of the foregoing.
4.02 Forbearances of Mutual First. From the date hereof until the Effective
Time, except as expressly contemplated by this Agreement, without the prior
written consent of Marion (which consent under subsection (e) shall not be
unreasonably withheld or delayed), Mutual First will not, and will cause each of
its Subsidiaries not to:
(a) Preservation. Fail to use reasonable efforts to (i) preserve
intact in any material respect their business organizations and assets and
(ii) maintain their rights, franchises and existing relations with
customers, suppliers, employees and business associates, or take any action
reasonably likely to materially impair the ability of Mutual First to
perform any of its obligations under this Agreement.
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(b) Adverse Actions. (i) Take any action or fail to take any action
while knowing that such action or inaction would, or is reasonably likely
to, prevent or impede the Company Merger and the Bank Merger from
qualifying as reorganizations within the meaning of Section 368 of the
Code; or (ii) knowingly take any action or fail to take any action that is
intended or is reasonably likely to result in (A) any of its
representations and warranties set forth in this Agreement being or
becoming untrue in any material respect at any time at or prior to the
Effective Time, (B) any of the conditions to the Company Merger set forth
in Article VII not being satisfied or (C) a material violation of any
provision of this Agreement except, in each case, as may be required by
applicable law or regulation.
(c) Accounting Methods. Implement or adopt any material change in its
accounting principles, practices or methods, other than as may be required
by generally accepted accounting principles.
(d) Acquisitions. Except as Previously Disclosed, acquire (other than
by way of foreclosures or acquisitions of control in a bona fide fiduciary
capacity or in satisfaction of debts previously contracted in good faith,
in each case in the ordinary and usual course of business consistent with
past practice) all or a significant portion of the assets, business,
deposits or properties of any other entity if the impact of any such
acquisition would be to prevent or materially delay the Effective Time of
the Transaction.
(e) Ordinary Course. Conduct the business of Mutual First and its
Subsidiaries other than in the ordinary and usual course or fail to use
reasonable efforts to (i) preserve intact in any material respect their
business organizations and assets and (ii) maintain their rights,
franchises and existing relations with customers, suppliers, employees and
business associates, or take any action reasonably likely to materially
impair Mutual First's ability to perform any of its obligations under this
Agreement.
(f) Dividends, Etc. (i) Make, declare, pay or set aside for payment
any dividend (other than (A), quarterly cash dividends on Mutual First
Common Stock in an amount not to exceed $0.07 per share with record and
payment dates consistent with past practice (provided the declaration of
the last quarterly dividend by Mutual First prior to the Effective Time and
the payment thereof shall be coordinated with, and subject to the approval
of Mutual First, so as to preclude any duplication of dividend benefit) and
(B) dividends from wholly owned Subsidiaries to Mutual First or another
wholly owned Subsidiary of Mutual First) on or in respect of, or declare or
make any distribution on any shares of Mutual First Stock or (ii) directly
or indirectly adjust, split, combine, redeem, reclassify, purchase or
otherwise acquire, any shares of its capital stock or Rights.
(g) Compensation; Employment Agreements, Etc. Enter into or amend or
renew any employment, consulting, severance or similar agreements or
arrangements with any director, officer or employee of Mutual First or its
Subsidiaries, or grant any salary or
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wage increase or increase any employee benefit (including incentive or
bonus payments) except (i) for oral at will employment agreements, (ii) for
normal individual increases in compensation to employees in the ordinary
course of business consistent with past practice, (iii) for other changes
that are required by applicable law, or (iv) to satisfy contractual
obligations and planned programs existing as of the date hereof that are
Previously Disclosed.
(h) Dispositions. Except as Previously Disclosed, sell, transfer,
mortgage, encumber or otherwise dispose of or discontinue any of its
assets, deposits, business or properties except in the ordinary course of
business for fair value and in a transaction that is not material to it and
its Subsidiaries taken as a whole.
(i) Risk Management. Except as required by applicable law or
regulation, (i) implement or adopt any material change in its interest rate
and other risk management policies, procedures or practices; (ii) fail to
follow its existing policies or practices with respect to managing its
exposure to interest rate and other risk; or (iii) fail to use commercially
reasonable means to avoid any material increase in its aggregate exposure
to interest rate risk.
(j) Indebtedness. Incur any indebtedness for borrowed money other than
in the ordinary course of business.
(k) Commitments. Agree or commit to do any of the foregoing.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.01 Disclosure Schedules. Prior to the date hereof, Mutual First has
delivered to Marion a schedule and Marion has delivered to Mutual First a
schedule (respectively, its "Disclosure Schedule") setting forth, among other
things, items the disclosure of which is necessary or appropriate either in
response to an express disclosure requirement contained in a provision hereof or
as an exception to one or more representations or warranties contained in
Section 5.03 or 5.04 or to one or more of its covenants contained in Article IV;
provided, that (a) no such item is required to be set forth in a Disclosure
Schedule as an exception to a Specified Representation if its absence would not
be reasonably likely to result in the Specified Representation being deemed
untrue or incorrect under the standard established by Section 5.02, and (b) the
mere inclusion of an item in a Disclosure Schedule as an exception to a
Specified Representation shall not be deemed an admission by a party that such
item represents a material exception or fact, event or circumstance or that such
item is reasonably likely to result in a Material Adverse Effect on the party
making the representation. Marion's representations, warranties and covenants
contained in this Agreement shall not be deemed to be untrue or
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breached as a result of effects arising solely from actions taken in compliance
with a written request of Mutual First.
5.02 Standard. No representation or warranty of Marion or Mutual First
contained in Section 5.03(a), (c)(iii), (d), (e), (f)(i), (f)(ii)(A),
(f)(ii)(C), (j)(ii), (h), (n), (o), (q), (r), (s), (t), (u) and (w) or 5.04(a),
(c), (d), (e), (f)(i), (h), (k), (m), (n), (o), (q) and (r) (collectively, the
"Specified Representations") shall be deemed untrue or incorrect, and no party
hereto shall be deemed to have breached a Specified Representation, as a
consequence of the existence of any fact, event or circumstance unless such
fact, circumstance or event, individually or taken together with all other
facts, events or circumstances inconsistent with any Specified Representation
has had or is reasonably likely to have a Material Adverse Effect. For purposes
of this Agreement, "knowledge" shall mean, with respect to a party hereto,
actual knowledge of any officer of that party with the title, if any, ranking
not less than senior vice president and that party's in-house counsel, if any.
5.03 Representations and Warranties of Marion. Subject to Sections 5.01 and
5.02 and except as Previously Disclosed in a paragraph of its Disclosure
Schedule corresponding to the relevant paragraph below, Marion hereby represents
and warrants to Mutual First:
(a) Organization, Standing and Authority. Marion is a corporation duly
organized and validly existing under the laws of the State of Indiana.
Marion is duly qualified to do business and is in good standing in the
states of the United States and any foreign jurisdictions where its
ownership or leasing of property or assets or the conduct of its business
requires it to be so qualified.
(b) Marion Stock. The authorized capital stock of Marion consists
solely of (i) 5,000,000 shares of Marion Common Stock, of which 1,362,971
shares were outstanding as of the day prior to the date hereof, and (ii)
2,000,000 shares of Marion Preferred Stock, of which no shares are
outstanding. The outstanding shares of Marion Stock have been duly
authorized and are validly issued and outstanding, fully paid and
nonassessable, and subject to no preemptive rights (and were not issued in
violation of any preemptive rights). As of the date hereof, except as
Previously Disclosed, there are no shares of Marion Stock authorized and
reserved for issuance, Marion does not have any Rights issued or
outstanding with respect to Marion Stock, and Marion does not have any
commitment to authorize, issue or sell any Marion Stock or Rights, other
than as set forth in this Agreement. The number of shares of Marion Common
Stock which are issuable upon exercise of each Marion Stock Option
outstanding as of the date hereof and the exercise price per share are
Previously Disclosed.
(c) Subsidiaries. (i)(A) Marion has Previously Disclosed a list of all
of its Subsidiaries together with the jurisdiction of organization of each
such Subsidiary, (B) except as previously disclosed, it owns, directly or
indirectly, all the issued and outstanding equity securities of each of its
Subsidiaries, (C) no equity securities of any of
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its Subsidiaries are or may become required to be issued (other than to it
or its wholly-owned Subsidiaries) by reason of any Right or otherwise, (D)
there are no contracts, commitments, understandings or arrangements by
which any of such Subsidiaries is or may be bound to sell or otherwise
transfer any equity securities of any such Subsidiaries (other than to it
or its wholly-owned Subsidiaries), (E) there are no contracts, commitments,
understandings, or arrangements relating to its rights to vote or to
dispose of such securities and (F) all the equity securities of each
Subsidiary held by Marion or its Subsidiaries are fully paid and
nonassessable and are owned by Marion or its Subsidiaries free and clear of
any Liens.
(ii) Neither Marion nor any Marion Subsidiary owns beneficially
any equity securities or similar interests of any Person, or any
interest in a partnership or joint venture of any kind, other than a
Marion Subsidiary.
(iii) Each of Marion's Subsidiaries has been duly organized and
is validly existing in good standing under the laws of the
jurisdiction of its organization, and is duly qualified to do business
and in good standing in the jurisdictions where its ownership or
leasing of property or the conduct of its business requires it to be
so qualified.
(d) Corporate Power. Each of Marion and its Subsidiaries has the
corporate power and authority to carry on its business as it is now being
conducted and to own all its properties and assets; and Marion has the
corporate power and authority to execute, deliver and perform its
obligations under this Agreement and to consummate the transactions
contemplated hereby.
(e) Corporate Authority. Subject in the case of this Agreement to
receipt of the requisite approval of this Agreement (including the
agreement of merger set forth herein) by the holders of a majority of the
outstanding shares of Marion Common Stock entitled to vote thereon (which
is the only Marion shareholder vote required thereon) and the corporate
approvals required in Section 2.03 of this Agreement, this Agreement and
the transactions contemplated hereby have been authorized by all necessary
corporate action of Marion and the Marion Board on or prior to the date
hereof. This Agreement is a valid and legally binding obligation of Marion,
enforceable in accordance with its terms (except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer and similar laws of general applicability relating to
or affecting creditors' rights or by general equity principles).
(f) Regulatory Filings; No Defaults. (i) No consents or approvals of,
or filings or registrations with, any Governmental Authority or with any
third party are required to be made or obtained by Marion or any of its
Subsidiaries in connection with the execution, delivery or performance by
Marion of this Agreement or to consummate the Company Merger or the Bank
Merger except for (A) filings of applications or notices
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with the OTS, (B) filings with the SEC and state securities authorities,
(C) filings for approval of listing on the Nasdaq System of the shares to
be issued, and (D) the filing of (and endorsement of, if required) articles
of merger or articles of combination with the Maryland Secretary, the
Indiana Secretary and the OTS. As of the date hereof, Marion is not aware
of any reason why the approvals set forth in Section 7.01(b) will not be
received in a timely manner without the imposition of a condition,
restriction or requirement of the type described in Section 7.01(b).
(ii) Subject to receipt of the regulatory approvals referred to
in the preceding paragraph, and expiration of related waiting periods,
and required filings under federal and state securities laws, the
execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby and thereby do
not and will not (A) constitute a breach or violation of, or a default
under, or give rise to any Lien, any acceleration of remedies or any
right of termination under, any law, rule or regulation or any
judgment, decree, order, governmental permit or license, or material
agreement, indenture or instrument of Marion or of any of its
Subsidiaries or to which Marion or any of its Subsidiaries or
properties is subject or bound, (B) constitute a breach or violation
of, or a default under, the Marion Articles or the Marion Bylaws, or
(C) require any consent or approval under any such law, rule,
regulation, judgment, decree, order, governmental permit or license,
material agreement, indenture or instrument.
(g) Financial Reports and SEC Documents. (i) Marion's Annual Reports
on Form 10-K for the fiscal years ended June 30, 1997, 1998 and 1999, and
all other reports, registration statements, definitive proxy statements or
information statements filed or to be filed by it or any of its
Subsidiaries subsequent to June 30, 1999 under the Securities Act, or under
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act, in the form filed or
to be filed (collectively, Marion's "SEC Documents") with the SEC, as of
the date filed, (A) complied or will comply in all material respects with
the applicable requirements under the Securities Act or the Exchange Act,
as the case may be, and (B) did not and will not contain any untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading; and each of
the balance sheets or statements of condition contained in or incorporated
by reference into any such SEC Document (including the related notes and
schedules thereto) fairly presents, or will fairly present in all material
respects, the financial position of Marion and its Subsidiaries as of its
date, and each of the statements of income and changes in stockholders'
equity and cash flows or equivalent statements in such SEC Documents
(including any related notes and schedules thereto) fairly presents, or
will fairly present, in all material respects, the results of operations,
changes in stockholders' equity and cash flows, as the case may be, of
Marion and its Subsidiaries for the periods to which they relate, in each
case in accordance with generally accepted accounting principles
consistently applied during the periods involved, except in each case as
may be noted therein, subject to normal year-end audit adjustments and the
absence of footnotes in the case of unaudited statements.
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(ii) Except for liabilities incurred in connection with negotiation of
and compliance with this Agreement and otherwise in connection with the
transactions contemplated hereby, since June 30, 1999, Marion and its
Subsidiaries have not incurred any liability other than in the ordinary
course of business consistent with past practice.
(iii) Since June 30, 1999, (A) Marion and its Subsidiaries have
conducted their respective businesses in the ordinary and usual course
consistent with past practice (excluding matters related to this Agreement
and the transactions contemplated hereby) and (B) no event has occurred or
circumstance arisen that, individually or taken together with all other
facts, circumstances and events (described in any paragraph of Section 5.03
or otherwise), is reasonably likely to have a Material Adverse Effect with
respect to Marion.
(h) Litigation. No material litigation, claim or other proceeding
before any Governmental Authority is pending against Marion or any of its
Subsidiaries and, to Marion's knowledge, no such litigation, claim or other
proceeding has been threatened.
(i) Regulatory Matters. (i) Neither Marion nor any of its
Subsidiaries or properties is a party to or is subject to any order,
decree, agreement, memorandum of understanding or similar arrangement
with, or a commitment letter or similar submission to, or
extraordinary supervisory letter from, any federal or state
governmental agency or authority charged with the supervision or
regulation of financial institutions (or their holding companies) or
issuers of securities or engaged in the insurance of deposits
(including, without limitation, the Board of Governors of the Federal
Reserve System, the OTS, and the FDIC) or the supervision or
regulation of it or any of its Subsidiaries (collectively, the
"Regulatory Authorities").
(ii) Neither Marion nor any of its Subsidiaries has been advised
by any Regulatory Authority that such Regulatory Authority is
contemplating issuing or requesting (or is considering the
appropriateness of issuing or requesting) any such order, decree,
agreement, memorandum of understanding, commitment letter, supervisory
letter or similar submission.
(j) Compliance with Laws. Each of Marion and its Subsidiaries:
(i) is in substantial compliance with all applicable
federal, state, local and foreign statutes, laws, regulations,
ordinances, rules, judgments, orders or decrees applicable
thereto or to the employees conducting such businesses,
including, without limitation, the Equal Credit Opportunity Act,
the Fair Housing Act, the Community Reinvestment Act of 1977, the
Home Mortgage Disclosure Act and all other applicable fair
lending laws and other laws relating to discriminatory business
practices;
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(ii) has all permits, licenses, authorizations, orders and
approvals of, and has made all filings, applications and
registrations with, all Governmental Authorities that are
required in order to permit them to own or lease their properties
and to conduct their businesses as presently conducted; all such
permits, licenses, certificates of authority, orders and
approvals are in full force and effect and, to Marion's
knowledge, no suspension or cancellation of any of them is
threatened or will result from the consummation of the
transactions contemplated by this Agreement; and
(iii) has received, since June 30, 1998, no notification or
communication from any Governmental Authority (A) asserting that
Marion or any of its Subsidiaries is not in compliance in any
material respect with any of the statutes, regulations, or
ordinances which such Governmental Authority enforces or (B)
threatening to revoke any material license, franchise, permit, or
governmental authorization (nor, to Marion's knowledge, do any
grounds for any of the foregoing exist).
(k) Material Contracts; Defaults. Except for this Agreement and those
agreements and other documents filed as exhibits to its SEC Documents,
neither it nor any of its Subsidiaries is a party to, bound by or subject
to any agreement, contract, arrangement, commitment or understanding
(whether written or oral) (i) that is a "material contract" within the
meaning of Item 601(b)(10) of the SEC's Regulation S-K or (ii) that
restricts or limits in any material way the conduct of business by it or
any of its Subsidiaries (it being understood that any non-compete or
similar provision which restricts the ability of Marion or its Subsidiaries
to compete with others shall be deemed material). Neither it nor any of its
Subsidiaries is in default in any material respect under any material
contract, agreement, commitment, arrangement, lease, insurance policy or
other instrument to which it is a party, by which its respective assets,
business, or operations may be bound or affected, or under which it or its
respective assets, business, or operations receive benefits, and there has
not occurred any event that, with the lapse of time or the giving of notice
or both, would constitute such a default.
(l) Brokers. No action has been taken by Marion that would give rise
to any valid claim against any party hereto for a brokerage commission,
finder's fee or other like payment with respect to the transactions
contemplated by this Agreement, excluding Previously Disclosed fees to be
paid to Keefe, Bruyette and Woods ("KBW") and David A. Noyes & Company.
(m) Employee Benefit Plans. (i) Section 5.03(m)(i) of Marion's
Disclosure Schedule contains a complete and accurate list of all existing
bonus, incentive, deferred compensation, pension, retirement,
profit-sharing, thrift, savings, employee stock ownership, stock bonus,
stock purchase, restricted stock, stock option, stock appreciation, phantom
stock, severance, welfare and fringe benefit plans, employment or severance
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agreements and all similar practices, policies and arrangements maintained
by Marion or any of its Subsidiaries in which any employee or former
employee, consultant or former consultant or director or former director of
Marion or any of its Subsidiaries participates or to which any such
employees, consultants or directors are a party other than plans and
programs involving immaterial obligations (the "Compensation and Benefit
Plans"). Except as expressly contemplated by a separate agreement entered
into by Marion and Mutual First on the date hereof, neither Marion nor any
of its Subsidiaries has any commitment to create any additional
Compensation and Benefit Plan or to modify or change any existing
Compensation and Benefit Plan.
(ii) Each Compensation and Benefit Plan has been operated and
administered in all material respects in accordance with its terms and with
applicable law, including, but not limited to, ERISA, the Code, the
Securities Act, the Exchange Act, the Age Discrimination in Employment Act,
or any regulations or rules promulgated thereunder, and all material
filings, disclosures and notices required by ERISA, the Code, the
Securities Act, the Exchange Act, the Age Discrimination in Employment Act
and any other applicable law have been timely made. Each Compensation and
Benefit Plan which is an "employee pension benefit plan" within the meaning
of Section 3(2) of ERISA (a "Pension Plan") and which is intended to be
qualified under Section 401(a) of the Code has received a favorable
determination letter (including a determination that the related trust
under such Compensation and Benefit Plan is exempt from tax under Section
501(a) of the Code) from the IRS, and Marion is not aware of any
circumstances likely to result in revocation of any such favorable
determination letter. There is no material pending or, to the knowledge of
Marion, threatened legal action, suit or claim relating to the Compensation
and Benefit Plans. Neither Marion nor any of its Subsidiaries has engaged
in a transaction, or omitted to take any action, with respect to any
Compensation and Benefit Plan that would reasonably be expected to subject
Marion or any of its Subsidiaries to a material tax or penalty imposed by
either Section 4975 of the Code or Section 502 of ERISA, assuming for
purposes of Section 4975 of the Code that the taxable period of any such
transaction expired as of the date hereof.
(iii) No material liability (other than for payment of premiums to the
PBGC which have been made or will be made on a timely basis) under Title IV
of ERISA has been or is expected to be incurred by Marion or any of its
Subsidiaries with respect to any ongoing, frozen or terminated
"single-employer plan", within the meaning of Section 4001(a)(15) of ERISA,
currently or formerly maintained by any of them, or any single-employer
plan of any entity (an "ERISA Affiliate") which is considered one employer
with Marion under Section 4001(a)(14) of ERISA or Section 414(b) or (c) of
the Code (an "ERISA Affiliate Plan"). None of Marion, any of its
Subsidiaries or any ERISA Affiliate has contributed, or has been obligated
to contribute, to a multiemployer plan under Subtitle E of Title IV of
ERISA at any time since September 26, 1980. No notice of a "reportable
event", within the meaning of Section 4043 of ERISA for which the 30-day
reporting requirement has not been waived, has been required to be filed
for
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any Compensation and Benefit Plan or by any ERISA Affiliate Plan within the
12-month period ending on the date hereof. The PBGC has not instituted
proceedings to terminate any Pension Plan or ERISA Affiliate Plan and, to
Marion's knowledge, no condition exists that presents a material risk that
such proceedings will be instituted by the PBGC. To the knowledge of
Marion, there is no pending investigation or enforcement action by the
PBGC, DOL or IRS or any other Governmental Authority with respect to any
Compensation and Benefit Plan. Under each Pension Plan and ERISA Affiliate
Plan, as of the date of the most recent actuarial valuation performed prior
to the date of this Agreement, the actuarially determined present value of
all "benefit liabilities", within the meaning of Section 4001(a)(16) of
ERISA (as determined on the basis of the actuarial assumptions contained in
such actuarial valuation of such Pension Plan or ERISA Affiliate Plan), did
not exceed the then current value of the assets of such Pension Plan or
ERISA Affiliate Plan and since such date there has been neither a material
adverse change in the financial condition of such Pension Plan or ERISA
Affiliate Plan nor any amendment or other change to such Pension Plan or
ERISA Affiliate Plan that would increase the amount of benefits thereunder
which reasonably could be expected to change such result.
(iv) All material contributions required to be made under the terms of
any Compensation and Benefit Plan or ERISA Affiliate Plan or any employee
benefit arrangements under any collective bargaining agreement to which
Marion or any of its Subsidiaries is a party have been timely made or have
been reflected on Marion's financial statements. Neither any Pension Plan
nor any ERISA Affiliate Plan has an "accumulated funding deficiency"
(whether or not waived) within the meaning of Section 412 of the Code or
Section 302 of ERISA and all required payments to the PBGC with respect to
each Pension Plan or ERISA Affiliate Plan have been made on or before their
due dates. None of Marion, any of its Subsidiaries or any ERISA Affiliate
(x) has provided, or would reasonably be expected to be required to
provide, security to any Pension Plan or to any ERISA Affiliate Plan
pursuant to Section 401(a)(29) of the Code, and (y) has taken any action,
or omitted to take any action, that has resulted, or would reasonably be
expected to result, in the imposition of a lien under Section 412(n) of the
Code or pursuant to ERISA.
(v) Except as Previously Disclosed, neither Marion nor any of its
Subsidiaries has any obligations to provide retiree health and life
insurance or other retiree death benefits under any Compensation and
Benefit Plan, other than benefits mandated by Section 4980B of the Code.
Except as Previously Disclosed, there has been no communication to
employees by Marion or any of its Subsidiaries that would reasonably be
expected to promise or guarantee such employees retiree health or life
insurance or other retiree death benefits on a permanent basis.
(vi) Marion and its Subsidiaries do not maintain any Compensation and
Benefit Plans covering foreign employees.
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(vii) With respect to each Compensation and Benefit Plan, if
applicable, Marion has provided or made available to Mutual First, true and
complete copies of existing: (A) Compensation and Benefit Plan documents
and amendments thereto; (B) trust instruments and insurance contracts; (C)
two most recent Forms 5500 filed with the IRS; (D) two most recent
actuarial report and financial statement; (E) the most recent summary plan
description; (F) forms filed with the PBGC (other than for premium
payments); (G) most recent determination letter issued by the IRS; (H) any
Form 5310 or Form 5330 filed with the IRS; and (I) two most recent
nondiscrimination tests performed under ERISA and the Code (including
401(k) and 401(m) tests).
(viii) Except as Previously Disclosed or expressly contemplated by a
separate agreement entered into by Marion and Mutual First on the date
hereof, the consummation of the transactions contemplated by this Agreement
would not, directly or indirectly (including, without limitation, as a
result of any termination of employment prior to or following the Effective
Time) reasonably be expected to (A) entitle any employee, consultant or
director to any payment (including severance pay or similar compensation)
or any increase in compensation, (B) result in the vesting or acceleration
of any benefits under any Compensation and Benefit Plan or (C) result in
any material increase in benefits payable under any Compensation and
Benefit Plan.
(ix) Neither Marion 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.
(x) To the knowledge of Marion, 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 Mutual First, Marion or the
Surviving Corporation, or any of their respective Subsidiaries will be
obligated to make a payment that would be characterized as an "excess
parachute payment" to an individual who is a "disqualified individual" (as
such terms are defined in Section 280G of the Code), without regard to
whether such payment is reasonable compensation for personal services
performed or to be performed in the future (provided this representation
does not take into account any payments to be made pursuant to any
employment agreement to be entered into by Mutual First and the Chief
Executive Officer of Marion).
(xi) There are no LSAR's, Tandem SARs, Stand-Alone SARs or shares of
Phantom Stock (as such terms may be defined in the Marion Stock Plan)
outstanding under the Marion Stock Plan and except as Previously Disclosed
neither Marion nor any Marion Subsidiary has any commitment or obligation
to make any awards thereof.
(xii) There are no phantom stock shares or awards outstanding.
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(n) Labor Matters. Neither Marion nor any of its Subsidiaries is a
party to or is bound by any collective bargaining agreement, contract or
other agreement or understanding with a labor union or labor organization,
nor is Marion or any of its Subsidiaries the subject of a proceeding
asserting that it or any such Subsidiary has committed an unfair labor
practice (within the meaning of the National Labor Relations Act) or
seeking to compel Marion or any such Subsidiary to bargain with any labor
organization as to wages or conditions of employment, nor is there any
strike or other labor dispute involving it or any of its Subsidiaries
pending or, to Marion's knowledge, threatened, nor is Marion aware of any
activity involving its or any of its Subsidiaries' employees seeking to
certify a collective bargaining unit or engaging in other organizational
activity.
(o) Takeover Laws; Dissenters Rights. Subject to the continuing
accuracy of Mutual First's representation in Section 5.04(p), this
Agreement and the transactions contemplated hereby are not subject to the
requirements of any "moratorium," "control share", "fair price", "affiliate
transactions", "business combination" or other antitakeover laws and
regulations of any state, including the provisions of Section 23-1-42 and
21-1- 43 of Indiana law ("Takeover Laws") applicable to Marion or any
Marion Subsidiary. Subject to the continuing accuracy of Mutual First's
representation in Section 5.04(p), the provisions of Article 12 of the
Marion Articles do not apply to the entering into of this Agreement and the
transactions contemplated hereby, including the Company Merger. Holders of
Marion Common Stock will not have dissenters' rights in connection with the
Company Merger.
(p) Environmental Matters. To Marion's knowledge, neither the conduct
nor operation of Marion or its Subsidiaries nor any condition of any
property currently or previously owned or operated by any of them
(including, without limitation, in a fiduciary or agency capacity), or on
which any of them holds a Lien, results or resulted in a material violation
of any Environmental Laws and to Marion's knowledge, no condition has
existed or event has occurred with respect to any of them or any such
property that, with notice or the passage of time, or both, is reasonably
likely to result in any material liability to Marion or any Marion
Subsidiary under Environmental Laws. To Marion's knowledge, neither Marion
nor any of its Subsidiaries has received any notice from any person or
entity that Marion or its Subsidiaries or the operation or condition of any
property ever owned, operated, or held as collateral or in a fiduciary
capacity by any of them are or were in material violation of or otherwise
are alleged to have material liability under any Environmental Law,
including, but not limited to, responsibility (or potential responsibility)
for the cleanup or other remediation of any pollutants, contaminants, or
hazardous or toxic wastes, substances or materials at, on, beneath, or
originating from any such property.
(q) Tax Matters. (i) (a) All Tax Returns that are required to be filed
by or with respect to Marion and its Subsidiaries have been duly filed, or
requests for
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extensions have been timely filed or an extension is automatic) and any
such extension has been granted and has not been rescinded, (b) all Taxes
shown to be due on Tax Returns referred to in clause (a), if filed, and all
Taxes required to be shown on the Tax Returns for which extensions have
been granted have been paid in full or adequate provision has been made for
such Taxes on Marion's most recent balance sheet provided to Mutual First,
(c) the Tax Returns referred to in clause (a) that have been filed (with
the exception of the tax returns filed in the last three calendar years)
have been examined by the IRS or the appropriate state, local or foreign
taxing authority or the period for assessment of the Taxes in respect of
which such Tax Returns were required to be filed has expired, (d) all
deficiencies asserted or assessments made as a result of such examinations
have been paid in full or non-material amounts are being contested in good
faith, (e) no material issues that have been raised by the relevant taxing
authority in connection with the examination of any of the Tax Returns
referred to in clause (a) are currently pending, and (f) no waivers of
statutes of limitation have been given by or requested with respect to any
Taxes of Marion or its Subsidiaries. Marion has made available to Mutual
First true and correct copies of the United States federal income Tax
Returns filed by Marion and its Subsidiaries for each of the three most
recent fiscal years ended on or before June 30, 1999. Neither Marion nor
any of its Subsidiaries has any material liability with respect to income,
franchise or similar Taxes that accrued on or before the end of the most
recent period covered by Marion's SEC Documents filed prior to the date
hereof in excess of the amounts accrued with respect thereto that are
reflected in the financial statements included in Marion's SEC Documents
filed on or prior to the date hereof. As of the date hereof, neither Marion
nor any of its Subsidiaries has any reason to believe that any conditions
exist that might prevent or impede the Company Merger and the Bank Merger
from qualifying as reorganizations within the meaning of Section 368(a) of
the Code.
(ii) No Tax is required to be withheld pursuant to Section 1445 of the
Code as a result of the transfer contemplated by this Agreement.
(iii) Marion and its Subsidiaries will not be liable for any taxes as
a result of the Company Merger.
(r) Risk Management Instruments. All material interest rate swaps,
caps, floors, option agreements, futures and forward contracts and other
similar risk management arrangements, whether entered into for Marion's own
account, or for the account of one or more of Marion's Subsidiaries or
their customers (all of which are Previously Disclosed), were entered into
(i) in accordance with prudent business practices and in all material
respects in compliance with all applicable laws, rules, regulations and
regulatory policies and (ii) with counterparties believed to be financially
responsible at the time; and each of them constitutes the valid and legally
binding obligation of Marion or one of its Subsidiaries, enforceable in
accordance with its terms (except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer and similar laws of general applicability relating to or
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affecting creditors' rights or by general equity principles), and is in
full force and effect. Neither Marion nor its Subsidiaries, nor to Marion's
knowledge any other party thereto, is in breach of any of its obligations
under any such agreement or arrangement in any material respect.
(s) Books and Records. The books and records of Marion and its
Subsidiaries have been fully, properly and accurately maintained in all
material respects, and there are no material inaccuracies or discrepancies
of any kind contained or reflected therein and they fairly reflect the
substance of events and transactions included therein.
(t) Insurance. Marion's Disclosure Schedule sets forth all of the
material insurance policies, binders, or bonds maintained by Marion or its
Subsidiaries. Marion and its Subsidiaries are insured with reputable
insurers against such risks and in such amounts as the management of Marion
reasonably has determined to be prudent in accordance with industry
practices and in accordance in all material respects with all contractual
obligations. All such insurance policies are in full force and effect;
Marion and its Subsidiaries are not in material default thereunder; and all
material claims thereunder have been filed in due and timely fashion.
(u) Governmental Reviews. No investigation or review by any
Governmental Authority with respect to Marion or any Marion Subsidiary is
pending or, to the knowledge of Marion, threatened, nor has any
Governmental Authority indicated to Marion or any Marion Subsidiary an
intention to conduct the same, other than normal or routine regulatory
examinations.
(v) Fairness Opinion. On the date of this Agreement, David A. Noyes &
Company has provided to the Marion Board a written fairness opinion to the
effect that the Exchange Ratio is fair to the stockholders of Marion from a
financial point of view.
(w) Compliance with Servicing Obligations. Marion and the Marion
Subsidiaries are in compliance in all material respects with all contract,
agency and investor requirements and guidelines, and all applicable laws,
rules and regulations of Governmental Authorities, relating to the
servicing and administration of loans by them, or any of them, including
but not limited to, properly and timely making interest rate adjustments to
adjustable rate loans.
(x) Disclosure. The representations and warranties contained in this
Section 5.03 do not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements and
information contained in this Section 5.03 not misleading.
5.04 Representations and Warranties of Mutual First. Subject to Sections
5.01 and 5.02 and except as Previously Disclosed in a paragraph of its
Disclosure Schedule corresponding
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to the relevant paragraph below, Mutual First hereby represents and warrants to
Marion as follows:
(a) Organization, Standing and Authority. Mutual First is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Maryland. Mutual First is duly qualified to do
business and is in good standing in the states of the United States and
foreign jurisdictions where its ownership or leasing of property or assets
or the conduct of its business requires it to be so qualified.
(b) Mutual First Stock. (i) As of the date hereof, the authorized
capital stock of Mutual First consists solely of (i) 20,000,000 shares of
Mutual First Common Stock, of which no more than 5,819,611 shares were
outstanding, and no shares were held in treasury, as of the day prior to
the date hereof and (ii) 5,000,000 shares of preferred stock, $0.01 par
value per share, of which none were issued and outstanding on the date
hereof. As of the date hereof, Mutual First does not have any Rights issued
or outstanding with respect to Mutual First Common Stock and Mutual First
does not have any commitment to authorize, issue or sell any Mutual First
Common Stock or Rights, other than pursuant to this Agreement. The
outstanding shares of Mutual First Common Stock have been duly authorized
and are validly issued and outstanding, fully paid and nonassessable, and
subject to no preemptive rights (and were not issued in violation of any
preemptive rights).
(ii) The shares of Mutual First Common Stock to be issued in exchange
for shares of Marion Common Stock in the Company Merger, when issued in
accordance with the terms of this Agreement, will be duly authorized,
validly issued, fully paid and nonassessable and subject to no preemptive
rights.
(c) Subsidiaries. Each of Mutual First's Subsidiaries has been duly
organized and is validly existing in good standing under the laws of the
jurisdiction of its organization, and is duly qualified to do business and
is in good standing in the jurisdictions where its ownership or leasing of
property or the conduct of its business requires it to be so qualified and
Mutual First owns, directly or indirectly, all the issued and outstanding
equity securities of each of its Subsidiaries.
(d) Corporate Power. Each of Mutual First and its Subsidiaries has the
corporate power and authority to carry on its business as it is now being
conducted and to own all its properties and assets; and Mutual First has
the corporate power and authority to execute, deliver and perform its
obligations under this Agreement and to consummate the transactions
contemplated hereby.
(e) Corporate Authority. Subject to the approval of the Merger and the
issuance of Mutual First Common Stock to be issued in the Company Merger by
the holders of Mutual First Common Stock in accordance with Maryland Law
and the NASDAQ rules (which are the only Mutual First stockholder votes
required thereon), the
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Board has declared this transaction advisable and this Agreement and the
transactions contemplated hereby have been authorized by all necessary
corporate action of Mutual First and the Board on or prior to the date
hereof. This Agreement is a valid and legally binding agreement of Mutual
First enforceable in accordance with its terms (except as enforceability
may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer and similar laws of general applicability
relating to or affecting creditors' rights or by general equity
principles).
(f) Regulatory Approvals; No Defaults. (i) No consents or approvals
of, or filings or registrations with, any Governmental Authority or with
any third party are required to be made or obtained by Mutual First or any
of its Subsidiaries in connection with the execution, delivery or
performance by Mutual First of this Agreement or to consummate the Company
Merger or the Bank Merger except for (A) the filings referred to in Section
5.03(f)(i); (B) such filings as are required to be made or approvals as are
required to be obtained under the securities or "Blue Sky" laws of various
states in connection with the issuance of Mutual First Common Stock in the
Company Merger; and (C) receipt of the approvals set forth in Section
7.01(b). As of the date hereof, Mutual First is not aware of any reason why
the approvals set forth in Section 7.01(b) will not be received in a timely
manner without the imposition of a condition, restriction or requirement of
the type described in Section 7.01(b).
(ii) Subject to the satisfaction of the requirements referred to in
the preceding paragraph and expiration of the related waiting periods, and
required filings under federal and state securities laws, the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby do not and will not (A) constitute a
breach or violation of, or a default under, or give rise to any Lien, any
acceleration of remedies or any right of termination under, any law, rule
or regulation or any judgment, decree, order, governmental permit or
license, or material agreement, indenture or instrument of Mutual First or
of any of its Subsidiaries or to which Mutual First or any of its
Subsidiaries or properties is subject or bound, (B) constitute a breach or
violation of, or a default under, the articles of incorporation or bylaws
(or similar governing documents) of Mutual First or any of its
Subsidiaries, or (C) require any consent or approval under any such law,
rule, regulation, judgment, decree, order, governmental permit or license,
material agreement, indenture or instrument.
(g) Financial Reports and SEC Documents; Material Adverse Effect. (i)
Mutual First's SEC Documents, as of the date filed, (A) complied or will
comply in all material respects with the applicable requirements under the
Securities Act or the Exchange Act, as the case may be, and (B) did not and
will not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading; and each of the balance sheets or statements of
condition contained in or incorporated by reference into any such SEC
Document (including the related notes and schedules thereto) fairly
presents, or will fairly present in all material
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respects, the financial position of Mutual First and its Subsidiaries as of
its date, and each of the statements of income or results of operations and
changes in stockholders' equity and cash flows or equivalent statements in
such SEC Documents (including any related notes and schedules thereto)
fairly presents, or will fairly present, in all material respects, the
results of operations, changes in stockholders' equity and cash flows, as
the case may be, of Mutual First and its Subsidiaries for the periods to
which they relate, in each case in accordance with generally accepted
accounting principles consistently applied during the periods involved,
except in each case as may be noted therein, subject to normal year-end
audit adjustments in the case of unaudited statements.
(ii) Since December 31, 1999, no event has occurred or circumstance
arisen that, individually or taken together with all other facts,
circumstances and events (described in any paragraph of Section 5.04 or
otherwise), is reasonably likely to have a Material Adverse Effect with
respect to Mutual First.
(h) Litigation; Regulatory Action. (i) No material litigation, claim
or other proceeding before any Governmental Authority is pending against
Mutual First or any of its Subsidiaries and, to Mutual First's knowledge,
no such litigation, claim or other proceeding has been threatened.
(ii) Neither Mutual First nor any of its Subsidiaries or properties is
a party to or is subject to any order, decree, agreement, memorandum of
understanding or similar arrangement with, or a commitment letter or
similar submission to, or extraordinary supervisory letter from a
Regulatory Authority, nor has Mutual First or any of its Subsidiaries been
advised by a Regulatory Authority that such agency is contemplating issuing
or requesting (or is considering the appropriateness of issuing or
requesting) any such order, decree, agreement, memorandum of understanding,
commitment letter, supervisory letter or similar submission.
(i) Compliance with Laws. Each of Mutual First and its Subsidiaries:
(i) is in substantial compliance with all applicable federal,
state, local and foreign statutes, laws, regulations, ordinances,
rules, judgments, orders or decrees applicable thereto or to the
employees conducting such businesses, including, without limitation,
the Equal Credit Opportunity Act, the Fair Housing Act, the Community
Reinvestment Act of 1977, the Home Mortgage Disclosure Act and all
other applicable fair lending laws and other laws relating to
discriminatory business practices; and
(ii) has all permits, licenses, authorizations, orders and
approvals of, and has made all filings, applications and registrations
with, all Governmental Authorities that are required in order to
permit them to conduct their businesses substantially as presently
conducted; all such permits, licenses, certificates of authority,
orders and approvals are in full force and effect and, to the best of
its
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knowledge, no suspension or cancellation of any of them is threatened
or will result from the consummation of the transactions contemplated
by this Agreement; and
(iii) has received, since June 30, 1998, no notification or
communication from any Governmental Authority (A) asserting that
Mutual First or any of its Subsidiaries is not in compliance in any
material respect with any of the statutes, regulations, or ordinances
which such Governmental Authority enforces or (B) threatening to
revoke any material license, franchise, permit, or governmental
authorization (nor, to Mutual First's knowledge, do any grounds for
any of the foregoing exist).
(j) Brokers. No action has been taken by Mutual First that would give
rise to any valid claim against any party hereto for a brokerage
commission, finder's fee or other like payment with respect to the
transactions contemplated by this Agreement, except for a fee to be paid to
RP Financial, lc.
(k) Takeover Laws. Mutual First has taken all action required to be
taken by it in order to exempt this Agreement and the transactions
contemplated hereby from, and this Agreement and the transactions
contemplated hereby are exempt from, the requirements of any Takeover Laws
applicable to Mutual First or their Subsidiaries. Holders of Mutual First
common stock will not have dissenters' rights in connection with the
Company Merger.
(l) Environmental Matters. To Mutual First's knowledge, neither the
conduct nor operation of Mutual First or its Subsidiaries nor any condition
of any property currently or previously owned or operated by any of them
(including, without limitation, in a fiduciary or agency capacity), or on
which any of them holds a Lien, results or resulted in a material violation
of any Environmental Laws and to Mutual First's knowledge no condition has
existed or event has occurred with respect to any of them or any such
property that, with notice or the passage of time, or both, is reasonably
likely to result in any material liability to Mutual First or any Mutual
First Subsidiary under Environmental Laws. To Mutual First's knowledge,
neither Mutual First nor any of its Subsidiaries has received any notice
from any person or entity that Mutual First or its Subsidiaries or the
operation or condition of any property ever owned, operated, or held as
collateral or in a fiduciary capacity by any of them are or were in
material violation of or otherwise are alleged to have material liability
under any Environmental Law, including, but not limited to, responsibility
(or potential responsibility) for the cleanup or other remediation of any
pollutants, contaminants, or hazardous or toxic wastes, substances or
materials at, on, beneath, or originating from any such property.
(m) Tax Matters. (i) All Tax Returns that are required to be filed by
or with respect to Mutual First and its Subsidiaries have been duly filed,
or requests for extensions have been timely filed (or an extension is
automatic) and any such extension
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has been granted and has not been rescinded, (ii) all Taxes shown to be due
on Tax Returns referred to in clause (i) , if filed, and all Taxes required
to be shown on the Tax Returns for which extensions have been granted have
been paid in full or adequate provision has been made for such Taxes on
Mutual First's most recent balance sheet provided to Marion, (iii) the Tax
Returns referred to in clause (i) that have been filed have been examined
by the IRS or the appropriate state, local or foreign taxing authority or
the period for assessment of the Taxes in respect of which such Tax Returns
were required to be filed has expired, (iv) all deficiencies asserted or
assessments made as a result of such examinations have been paid in full,
or non-material amounts are being contested in good faith, (v) no material
issues that have been raised by the relevant taxing authority in connection
with the examination of any of the Tax Returns referred to in clause (i)
are currently pending, and (vi) no waivers of statutes of limitation have
been given by or requested with respect to any Taxes of Mutual First or its
Subsidiaries. Neither Mutual First nor any of its Subsidiaries has any
material liability with respect to income, franchise or similar Taxes that
accrued on or before the end of the most recent period covered by Mutual
First's SEC Documents filed prior to the date hereof in excess of the
amounts accrued with respect thereto that are reflected in the financial
statements included in Mutual First's SEC Documents filed on or prior to
the date hereof. As of the date hereof, neither Mutual First nor any of its
Subsidiaries has any reason to believe that any conditions exist that might
prevent or impede the Company Merger and the Bank Merger from qualifying as
reorganizations within the meaning of Section 368(a) of the Code.
(n) Books and Records. The books and records of Mutual First and its
Subsidiaries have been fully, properly and accurately maintained in all
material respects, and there are no material inaccuracies or discrepancies
of any kind contained or reflected therein, and they fairly present the
substance of events and transactions included therein.
(o) Insurance. Mutual First's Disclosure Schedule sets forth all of
the material insurance policies, binders, or bonds maintained by Mutual
First or its Subsidiaries. Mutual First and its Subsidiaries are insured
with reputable insurers against such risks and in such amounts as the
management of Mutual First reasonably has determined to be prudent in
accordance with industry practices and in all material respects in
accordance with all contractual obligations. All such insurance policies
are in full force and effect; Mutual First and its Subsidiaries are not in
material default thereunder; and all material claims thereunder have been
filed in due and timely fashion.
(p) Mutual First Ownership of Marion Stock. Neither Mutual First nor
any of its Subsidiaries either beneficially owns any shares of Marion
Common Stock or, other than as contemplated by this Agreement, has any
option, warrant or right of any kind to acquire the beneficial ownership of
any shares of Marion Common Stock.
(q) Governmental Reviews. No investigation or review by any
Governmental Authority with respect to Mutual First or any of its
Subsidiary is pending or, to the
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knowledge of Mutual First, threatened, nor has any Governmental Authority
indicated to Mutual First or any of its Subsidiary an intention to conduct
the same, other than normal or routine regulatory examinations.
(r) Risk Management Instruments. All material interest rate swaps,
caps, floors, option agreements, futures and forward contracts and other
similar risk management arrangements, whether entered into for Mutual
First's own account, or for the account of one or more of Mutual First's
Subsidiaries or their customers, were entered into (i) in accordance with
prudent business practices and in all material respects in compliance with
all applicable laws, rules, regulations and regulatory policies and (ii)
with counterparties believed to be financially responsible at the time; and
each of them constitutes the valid and legally binding obligation of Mutual
First or one of its Subsidiaries, enforceable in accordance with its terms
(except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer and similar
laws of general applicability relating to or affecting creditors' rights or
by general equity principles), and is in full force and effect. Neither
Mutual First nor its Subsidiaries, nor to Mutual First's knowledge any
other party thereto, is in breach of any of its obligations under any such
agreement or arrangement in any material respect.
(s) Fairness Opinion. On the date of this Agreement, RP Financial, lc
has provided to the Mutual First Board a written fairness opinion to the
effect that the Exchange Ratio is fair to the stockholders of Mutual First
from a financial point of view.
(t) Disclosure. The representations and warranties contained in this
Section 5.04 do not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements and
information contained in this Section 5.04 not misleading
(u) Employee Benefit Plans. (iii) Section 5.03(m)(i) of Mutual First's
Disclosure Schedule contains a complete and accurate list of all existing
bonus, incentive, deferred compensation, pension, retirement,
profit-sharing, thrift, savings, employee stock ownership, stock bonus,
stock purchase, restricted stock, stock option, stock appreciation, phantom
stock, severance, welfare and fringe benefit plans, employment or severance
agreements and all similar practices, policies and arrangements maintained
by Mutual First or any of its Subsidiaries in which any employee or former
employee, consultant or former consultant or director or former director of
Mutual First or any of its Subsidiaries participates or to which any such
employees, consultants or directors are a party other than plans and
programs involving immaterial obligations (the "Compensation and Benefit
Plans"). Except as expressly contemplated by a separate agreement entered
into by Mutual First and Marion on the date hereof, neither Mutual First
nor any of its Subsidiaries has any commitment to create any additional
Compensation and Benefit Plan or to modify or change any existing
Compensation and Benefit Plan.
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ARTICLE VI
COVENANTS
6.01 Reasonable Best Efforts. Subject to the terms and conditions of this
Agreement, each of Marion and Mutual First agrees to use its reasonable best
efforts in good faith to take, or cause to be taken, all actions, and to do, or
cause to be done, all things necessary, proper or desirable, or advisable under
applicable laws, so as to permit consummation of the Transaction as promptly as
practicable and otherwise to enable consummation of the Transaction and shall
cooperate fully with the other party hereto to that end.
6.02 Stockholder Approvals. Mutual First and Marion agree to take, in
accordance with applicable law or NASDAQ rules and their articles of
incorporation and bylaws, all action necessary to convene an appropriate meeting
of their stockholders to consider and vote upon, in the case of Marion, the
approval of the plan of merger and adoption of this Agreement and in the case of
Mutual First to approve the Company Merger and approve the issuance of Mutual
First Common Stock to be issued in the Company Merger, and in each case any
other matter required to be approved by such stockholders for consummation of
the Company Merger (including any adjournment or postponement, the "Mutual First
Meeting" or "Marion Meeting", whichever is applicable), in each case as promptly
as practicable after the Registration Statement is declared effective. The
Mutual First Board and the Marion Board shall each recommend such approval, the
Mutual First Board shall declare the transaction advisable and Mutual First and
Marion shall take all reasonable, lawful action to solicit such approval by its
stockholders, unless either board of directors, after having received a Marion
Proposal or a Mutual First Proposal, as applicable, and after having consulted
with and considered the advice of outside counsel and its investment banking
firm, has determined in good faith that to do so would result in a failure by
the directors to discharge properly their fiduciary duties in accordance with
the applicable law.
6.03 Registration Statement. (a) Mutual First agrees to prepare a
registration statement on Form S-4 (the "Registration Statement") to be filed by
Mutual First with the SEC in connection with the issuance of Mutual First Common
Stock in the Company Merger (including the joint proxy statement and prospectus
and other proxy solicitation materials of Mutual First and Marion constituting a
part thereof (the "Proxy Statement") and all related documents). Marion agrees
to cooperate, and to cause its Subsidiaries to cooperate, with Mutual First, its
counsel and its accountants, in preparation of the Registration Statement and
the Proxy Statement; and provided that Marion and its Subsidiaries have
cooperated as required above, Mutual First agrees to file the Registration
Statement (or the form of the Proxy Statement) with the SEC as promptly as
reasonably practicable and shall use reasonable efforts to cause such filing to
occur within 60 days after execution of this Agreement. Each of Marion and
Mutual First agrees to use all reasonable efforts to cause the Registration
Statement to be declared effective under the Securities Act as promptly as
reasonably practicable after filing thereof. Mutual First also agrees to use all
reasonable efforts to obtain, prior to the effective date of the Registration
Statement, all necessary state securities law or "Blue Sky" permits and
approvals
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required to carry out the transactions contemplated by this Agreement. Marion
agrees to furnish to Mutual First all information concerning Marion, its
Subsidiaries, officers, directors and stockholders as may be reasonably
requested in connection with the foregoing.
(b) Each of Marion and Mutual First agrees, as to itself and its
Subsidiaries, that none of the information supplied or to be supplied by it for
inclusion or incorporation by reference in (i) the Registration Statement will,
at the time the Registration Statement and each amendment or supplement thereto,
if any, becomes effective under the Securities Act, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, and (ii) the
Proxy Statement and any amendment or supplement thereto will, at the date of
mailing to stockholders and at the time of the Mutual First Meeting or the
Marion Meeting, as the case may be, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading or any statement which,
in the light of the circumstances under which such statement is made, will be
false or misleading with respect to any material fact, or omit to state any
material fact necessary in order to make the statements therein not false or
misleading or necessary to correct any statement in any earlier statement in the
Proxy Statement or any amendment or supplement thereto. Each of Marion and
Mutual First further agrees that if it shall become aware prior to the Effective
Date of any information furnished by it that would cause any of the statements
in the Proxy Statement to be false or misleading with respect to any material
fact, or to omit to state any material fact necessary to make the statements
therein not false or misleading, to promptly inform the other party thereof and
to take the necessary steps to correct the Proxy Statement.
(c) Mutual First agrees to advise Marion, promptly after Mutual First
receives notice thereof, of the time when the Registration Statement has become
effective or any supplement or amendment has been filed, of the issuance of any
stop order or the suspension of the qualification of Mutual First Common Stock
for offering or sale in any jurisdiction, of the initiation or threat of any
proceeding for any such purpose, or of any request by the SEC for the amendment
or supplement of the Registration Statement or for additional information.
(d) Each of Mutual First and Marion, in consultation with the other, shall
employ professional proxy solicitors to assist it in contacting stockholders in
connection with soliciting votes on the matters to be considered and voted upon
at the Mutual First Meeting and Marion Meeting.
6.04 Press Releases. Each of Marion and Mutual First agrees that it will
not, without the prior approval of the other party, issue any press release or
written statement for general circulation relating to the transactions
contemplated hereby, except as otherwise required by applicable law or
regulation or NASDAQ rules, and then only after making reasonable efforts to
first consult with the other party.
6.05 Access; Information. (a) Each of Marion and Mutual First agrees that
upon reasonable notice and subject to applicable laws relating to the exchange
of information, it shall
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afford the other party and the other party's Representatives, such access during
normal business hours throughout the period prior to the Effective Time to the
books, records (including, without limitation, Tax Returns and work papers of
independent auditors), properties, personnel and to such other information as
any party may reasonably request and, during such period, it shall furnish
promptly to such other party (i) a copy of each material report, schedule and
other document filed by it pursuant to the requirements of federal or state
securities or banking laws, and (ii) all other information concerning the
business, properties and personnel of it as the other may reasonably request.
(b) Each of Marion and Mutual First agrees that it will not, and will cause
its Representatives not to, use any information obtained pursuant to this
Section 6.05 (as well as any other information obtained prior to the date hereof
in connection with the entering into of this Agreement) for any purpose
unrelated to the consummation of the transactions contemplated by this
Agreement. Subject to the requirements of law, each party will keep
confidential, and will cause its Representatives to keep confidential, all
information and documents obtained pursuant to this Section 6.05 (as well as any
other information obtained prior to the date hereof in connection with the
entering into of this Agreement) unless such information (i) was already known
to such party, (ii) becomes available to such party from other sources not known
by such party to be bound by a confidentiality obligation, (iii) is disclosed
with the prior written approval of the party to which such information pertains
or (iv) is or becomes readily ascertainable from published information or trade
sources. In the event that this Agreement is terminated or the transactions
contemplated by this Agreement shall otherwise fail to be consummated, each
party shall promptly cause all copies of documents, extracts thereof or notes,
analyses, compilations, studies or other documents containing information and
data as to another party hereto to be returned to the party which furnished the
same. No investigation by either party of the business and affairs of the other
shall affect or be deemed to modify or waive any representation, warranty,
covenant or agreement in this Agreement, or the conditions to either party's
obligation to consummate the transactions contemplated by this Agreement.
(c) During the period from the date of this Agreement to the Effective
Time, each party shall promptly furnish the other with copies of all monthly and
other interim financial statements produced in the ordinary course of business
as the same shall become available.
6.06 Marion Proposal. Marion agrees that it shall not, and shall cause its
Subsidiaries and its and its Subsidiaries' officers, directors, agents, advisors
and affiliates not to, solicit or encourage inquiries or proposals with respect
to, or engage in any negotiations concerning, or provide any confidential
information to, or have any discussions with, any person relating to, any Marion
Proposal. It shall immediately cease and cause to be terminated any activities,
discussions or negotiations conducted prior to the date of this Agreement with
any parties other than Mutual First with respect to any of the foregoing and
shall use its reasonable best efforts to enforce any confidentiality or similar
agreement relating to a Marion Proposal in existence on the date hereof. Marion
shall promptly (within 24 hours) advise Mutual First following the receipt by
Marion of any Marion Proposal and the substance thereof (including the identity
of the person making such Marion Proposal), and advise Mutual First of any
material developments with
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respect to such Marion Proposal immediately upon the occurrence thereof.
Notwithstanding the foregoing but only after receipt of a Marion Proposal and
during the period prior to the Marion Meeting, Marion may provide information at
the request of or enter into negotiations with a third party with respect
thereto, if the Marion Board, after having consulted with and considered the
advice of outside counsel and its investment banking firm, has determined that
the failure to do so would result in a failure by the directors to properly
discharge their fiduciary duties under applicable law.
6.07 Affiliate Agreement. (a) Not later than the 15th day prior to the
mailing of the Proxy Statement, Marion shall deliver to Mutual First a schedule
of each person that, to the best of its knowledge, is or is reasonably likely to
be, as of the date of the Marion Meeting, deemed to be an "affiliate" of Marion
(each, a "Marion Affiliate") as that term is used in Rule 145 under the
Securities Act or SEC Accounting Series Releases 130 and 135.
(b) Marion and Mutual First shall use its reasonable best efforts to cause
each person who may be deemed to be a Marion Affiliate to execute and deliver to
Marion and Mutual First on or before the date of mailing of the Proxy Statement
an agreement in the form attached hereto as Exhibit B.
6.08 Takeover Laws. No party hereto shall take any action that would cause
the transactions contemplated by this Agreement to be subject to requirements
imposed by any Takeover Law and each of them shall take all necessary steps
within its control to exempt (or ensure the continued exemption of) the
transactions contemplated by this Agreement from, or if necessary challenge the
validity or applicability of, any applicable Takeover Law, as now or hereafter
in effect.
6.09 Certain Policies. Prior to the Effective Date, Marion shall, and shall
cause its Subsidiaries, but only to the extent consistent with generally
accepted accounting principles and on a basis mutually satisfactory to it and
Mutual First, modify and change its loan, litigation and real estate valuation
policies and practices (including loan classifications and levels of reserves)
so as to be applied on a basis that is consistent with that of Mutual First;
provided, however, that Marion shall not be obligated to take any such action
pursuant to this Section 6.09 unless and until Mutual First acknowledges that
all conditions to its obligation to consummate the Transaction have been
satisfied and certifies to Marion that Mutual First's representations and
warranties, subject to Section 5.02, are true and correct as of such date and
that Mutual First is otherwise in material compliance with this Agreement.
Marion's representations, warranties and covenants contained in this Agreement
shall not be deemed to be untrue or breached in any respect for any purpose as a
consequence of any modifications or changes undertaken solely on account of this
Section 6.09.
6.10 NASDAQ Listing. Mutual First agrees to use its best efforts to list,
prior to the Effective Time, on the NASDAQ, subject to official notice of
issuance, the shares of Mutual First Common Stock to be issued to the holders of
Marion Common Stock in the Company Merger.
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6.11 Regulatory Applications. (a) Mutual First and Marion and their
respective Subsidiaries shall cooperate and use their respective reasonable best
efforts to prepare all documentation, to effect all filings and to obtain all
permits, consents, approvals and authorizations of all third parties and
Governmental Authorities necessary to consummate the transactions contemplated
by this Agreement. Each of Mutual First and Marion shall have the right to
review in advance, and to the extent practicable each will consult with the
other, in each case subject to applicable laws relating to the exchange of
information, with respect to, all material written information submitted to any
third party or any Governmental Authority in connection with the transactions
contemplated by this Agreement. In exercising the foregoing right, each of the
parties hereto agrees to act reasonably and as promptly as practicable. Each
party hereto agrees that it will consult with the other party hereto with
respect to the obtaining of all material permits, consents, approvals and
authorizations of all third parties and Governmental Authorities necessary or
advisable to consummate the transactions contemplated by this Agreement and each
party will keep the other party apprised of the status of material matters
relating to completion of the transactions contemplated hereby.
(b) Each party agrees, upon request, to furnish the other party with all
information concerning itself, its Subsidiaries, directors, officers and
stockholders and such other matters as may be reasonably necessary or advisable
in connection with any filing, notice or application made by or on behalf of
such other party or any of its Subsidiaries to any third party or Governmental
Authority.
6.12 Indemnification. (a) Following the Effective Date and for a period of
six years thereafter, Mutual First shall indemnify, defend and hold harmless the
present and former directors, officers and employees of Marion and its
Subsidiaries (each, an "Indemnified Party") against all costs or expenses
(including reasonable attorneys' fees), judgments, fines, losses, claims,
damages or liabilities (collectively, "Costs") incurred in connection with any
claim, action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, arising out of actions or omissions occurring
at or prior to the Effective Time (including, without limitation, the
transactions contemplated by this Agreement) to the fullest extent that Marion
is permitted to indemnify (and advance expenses to) its directors and officers
under the laws of the State of Indiana, the Marion Articles and the Marion
Bylaws as in effect on the date hereof; provided that any determination required
to be made with respect to whether an officer's, director's or employee's
conduct complies with the standards set forth under Indiana law, the Marion
Certificate and the Marion Bylaws shall be made by independent counsel (which
shall not be counsel that provides material services to Mutual First) selected
by Mutual First and reasonably acceptable to such officer or director.
(b) For a period of three years from the Effective Time, Mutual First shall
use its best efforts to provide that portion of director's and officer's
liability insurance that serves to reimburse the present and former officers and
directors of Marion or any of its Subsidiaries (determined as of the Effective
Time) (as opposed to Marion) with respect to claims against such directors and
officers arising from facts or events which occurred before the Effective Time,
which insurance shall contain at least the same coverage and amounts, and
contain terms and
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conditions no less advantageous, as that coverage currently provided by Marion;
provided, however, that in no event shall Mutual First be required to expend in
the aggregate during the coverage period more than 150 percent of the current
annual amount expended by Marion (the "Insurance Amount") to maintain or procure
such directors and officers insurance coverage; provided, further, that if
Mutual First is unable to maintain or obtain the insurance called for by this
Section 6.12(b), Mutual First shall use its reasonable best efforts to obtain as
much comparable insurance as is available for the Insurance Amount; provided,
further, that officers and directors of Marion or any Subsidiary may be required
to make application and provide customary representations and warranties to
Mutual First's insurance carrier for the purpose of obtaining such insurance.
(c) Any Indemnified Party wishing to claim indemnification under Section
6.12(a), upon learning of any claim, action, suit, proceeding or investigation
described above, shall promptly notify Mutual First thereof; provided that the
failure so to notify shall not affect the obligations of Mutual First under
Section 6.12(a) unless and to the extent that Mutual First is actually
prejudiced as a result of such failure.
(d) If Mutual First or any of its successors or assigns shall consolidate
with or merge into any other entity and shall not be the continuing or surviving
entity of such consolidation or merger or shall transfer all or substantially
all of its assets to any entity, then and in each case, proper provision shall
be made so that the successors and assigns of Mutual First shall assume the
obligations set forth in this Section 6.12.
6.13 Benefit Plans.
(a) At the Effective Time, Mutual First or a Mutual First Subsidiary
shall be substituted for Marion or a Marion Subsidiary as the sponsoring
employer under those benefit and welfare plans with respect to which Marion
or any of its Subsidiaries is a sponsoring employer immediately prior to
the Effective Time, and shall assume and be vested with all of the powers,
rights, duties, obligations and liabilities previously vested in Marion or
its Subsidiary with respect to each such plan. Except as expressly
contemplated by a separate agreement entered into by Marion and Mutual
First on the date hereof, each such plan shall be continued in effect by
Mutual First or any applicable Mutual First Subsidiary after the Effective
Time without a termination or discontinuance thereof as a result of the
Company Merger or the Bank Merger, subject to the power reserved to Mutual
First or any applicable Mutual First Subsidiary under each such plan to
subsequently amend or terminate the plan, which amendments or terminations
shall comply with applicable law. Marion, each Marion Subsidiary, and
Mutual First will use all reasonable efforts (i) to effect said
substitutions and assumptions, and such other actions contemplated under
this Agreement, and (ii) to amend such plans as to the extent necessary to
provide for said substitutions and assumptions, and such other actions
contemplated under this Agreement.
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(b) At or as promptly as practicable after the Effective Time as
Mutual First shall reasonably determine, Mutual First shall provide, or
cause a Mutual First Subsidiary to provide, to each full time employee of
Marion, and its wholly-owned Subsidiaries as of the Effective Time ("Marion
Employees") the opportunity to participate in each employee benefit and
welfare plan maintained by Mutual First or a Mutual First Subsidiary,
whichever is applicable, for similarly-situated employees provided that
with respect to such plans maintained by Mutual First or a Mutual First
Subsidiary, whichever is applicable, Marion Employees shall be given credit
for service recognized under the corresponding plan of Marion and its
Subsidiaries in determining participation in, eligibility for and vesting
in benefits thereunder, and only with respect to severance and vacation
plans, accrual of benefits; provided further that Marion Employees shall
not be subject to any waiting periods or pre-existing condition exclusions
under the group health plan of Mutual First or any applicable Mutual First
Subsidiary to the extent that such periods are longer or restrictions
impose a greater limitation than the periods or limitations imposed under
the applicable Marion group health plan; and provided further that to the
extent that the initial period of coverage for Marion Employees under any
plan of Mutual First or a Mutual First Subsidiary, whichever is applicable,
that is an "employee welfare benefit plan" as defined in Section 3(1) of
ERISA is not a full 12- month period of coverage, Marion Employees shall be
given credit under the applicable welfare plan for any deductibles and
co-insurance payments made by such Marion Employees under the corresponding
Marion welfare plan during the balance of such 12- month period of
coverage. Nothing in the preceding sentence shall obligate Mutual First or
any Mutual First Subsidiary to provide or cause to be provided any benefits
duplicative to those provided under any Marion benefit or welfare plan
continued pursuant to subparagraph (a) above, including, but not limited
to, extending participation in any plan which is an "employee pension
benefit plan" under ERISA relative to any period of time with respect to
which allocations are made to Marion Employees under any employee pension
benefit plan maintained or sponsored by Marion or a Marion Subsidiary.
Except as otherwise provided in this Agreement, the power of Mutual First
or any Mutual First Subsidiary to amend or terminate any benefit or welfare
plans of Marion and its Subsidiaries shall not be altered or affected.
Moreover, this subsection 6.13(b) shall not confer upon any Marion Employee
any rights or remedies hereunder and shall not constitute a contract of
employment or create any rights, to be retained or otherwise, in employment
at Mutual First or any Mutual First Subsidiary.
(c) Any separate agreement entered into by Marion and Mutual First on
the date hereof relating to employee or other benefits is incorporated
herein by reference and shall be deemed a part of this Agreement.
6.14 Notification of Certain Matters. Each of Marion and Mutual First shall
give prompt notice to the other of any fact, event or circumstance known to it
that (i) is reasonably likely, individually or taken together with all other
facts, events and circumstances known to it, to result in any Material Adverse
Effect with respect to it, (ii) would cause or constitute a breach of any of its
representations, warranties, covenants or agreements contained herein as of the
date of
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this Agreement or (iii) would require any material amendment to any information
Previously Disclosed arising from events or circumstances after the date of this
Agreement or otherwise would cause a material breach of any of its
representations, warranties, covenants or agreements contained herein.
6.15 Directors. At the Effective Time, Mutual First agrees to cause four
directors of Marion, Steve Banks, John Dalton, Jerry McVicker and Jon Marler, to
be elected to the Mutual First Board and Mutual First Bank's Board of Directors
for such terms as shall be agreed upon between the parties, subject to
compliance with applicable law.
6.16 Termination of Agreement. In the event that this Agreement is
terminated by a party (the "Aggrieved Party") solely by reason of the material
breach by the other party ("Breaching Party") of any of its representations,
warranties, covenants or agreements contained herein then the Aggrieved Party
shall be entitled to such remedies and relief against the Breaching Party as are
available at law or in equity. Moreover, the Aggrieved Party without terminating
this Agreement shall be entitled to specifically enforce the terms hereof
against the Breaching Party in order to cause the Merger to be consummated. Each
party acknowledges that there is not an adequate remedy at law to compensate the
other parties relating to the non- consummation of the Merger. To this end, each
party, to the extent permitted by law, irrevocably waives any defense it might
have based on the adequacy of a remedy at law which might be asserted as a bar
to specific performance, injunctive relief or other equitable relief.
6.17 Liabilities and Remedies and Breakup Fee-Mutual First. (a) In the
event that (i) the Marion Meeting does not take place, the Board of Directors of
Marion fails to recommend approval of this Agreement and the Company Merger to
the stockholders of Marion, or such Board of Directors shall adversely alter or
modify its favorable recommendation of this Agreement and the Company Merger to
the stockholders of Marion, and (ii) this Agreement and the Company Merger is
not approved by the stockholders of Marion by the required vote, and Mutual
First is not, as of the date of such event, in material breach of this
Agreement, then, upon termination of this Agreement, Marion and First Federal
shall be obligated to pay Mutual First in immediately available funds a cash
amount of $975,000 as an agreed upon break up fee and as the sole and exclusive
remedy of Mutual First and Mutual First Bank. In order to obtain the benefit of
the break-up fees provided in this Section 6.17, Mutual First shall be required
to execute a waiver of its rights under Section 6.16 above, and shall not take
any further action to enforce any right that it might have under Section 6.16
hereof.
(b) In the event that a Marion Proposal occurs between the date hereof and
the time of the Marion Meeting and the stockholders of Marion fail to approve
this Agreement and the Company Merger under circumstances where the Board of
Directors of Marion continuously maintained its favorable recommendation of this
Agreement and the Company Merger, and Mutual First was not, as of the date of
such action, in material breach of this Agreement, then if a definitive
agreement relating to a Marion Proposal is executed by Marion or any Marion
Subsidiary, or a Marion Proposal is consummated, in either case within 15 months
after the termination of this Agreement, then upon the happening of such event
Marion and First Federal
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shall be jointly and severally obligated to pay Mutual First a cash amount of
$975,000 as an agreed upon break up fee and as the sole and exclusive remedy of
Mutual First. There shall be no duplication of remedy under this Section 6.17(b)
and 6.17(a). In order to obtain the benefit of the break-up fee provided in this
Section 6.17(b), Mutual First shall be required to execute a waiver of its
rights under Section 6.16 above, and shall not take any further action to
enforce any right that it might have under Section 6.16 hereof.
6.18 Liabilities and Remedies and Breakup Fee-Marion. (a) In the event that
(i) the Mutual First Meeting does not take place, the Board of Directors of
Mutual First fails to recommend approval of this Agreement and the Company
Merger to the stockholders of Mutual First, or such Board of Directors shall
adversely alter or modify its favorable recommendation of this Agreement and the
Company Merger to the stockholders of Mutual First, and (ii) this Agreement and
the Company Merger is not approved by the stockholders of Mutual First by the
required vote, and Marion is not, as of the date of such event, in material
breach of this Agreement, then, upon termination of this Agreement, Mutual First
and Mutual First Bank shall be obligated to pay Marion in immediately available
funds a cash amount of $975,000 as an agreed upon break up fee and as the sole
and exclusive remedy of Marion and First Federal. In order to obtain the benefit
of the break-up fees provided in this Section 6.18, Marion shall be required to
execute a waiver of its rights under Section 6.16 above, and shall not take any
further action to enforce any right that it might have under Section 6.16
hereof.
(b) In the event that a Mutual First Proposal occurs between the date
hereof and the time of the Mutual First Meeting and the stockholders of Mutual
First fail to approve this Agreement and the Company Merger under circumstances
where the Board of Directors of Mutual First continuously maintained its
favorable recommendation of this Agreement and the Company Merger, and Marion
was not, as of the date of such action, in material breach of this Agreement,
then if a definitive agreement relating to a Mutual First Proposal is executed
by Mutual First or any Mutual First Subsidiary, or a Mutual First Proposal is
consummated, in either case within 15 months after the termination of this
Agreement, and the transactions contemplated by this Agreement are not
consummated, then upon the happening of such events Mutual First and Mutual
First Bank shall be jointly and severally obligated to pay Marion a cash amount
of $975,000 as an agreed upon break up fee and as the sole and exclusive remedy
of Marion. There shall be no duplication of remedy under this Section 6.18(b)
and 6.18(a). In order to obtain the benefit of the break-up fee provided in this
Section 6.18(b), Marion shall be required to execute a waiver of its rights
under Section 6.16 above, and shall not take any further action to enforce any
right that it might have under Section 6.16 hereof.
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ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE COMPANY MERGER
7.01 Conditions to Each Party's Obligation to Effect the Company Merger.
The respective obligation of each of Mutual First, Marion and their respective
Subsidiaries to consummate the Company Merger is subject to the fulfillment or
written waiver by Mutual First and Marion prior to the Effective Time of each of
the following conditions:
(a) Stockholder Approvals. This Agreement shall have been duly
approved by the requisite vote of the stockholders of Marion under the
Indiana Law and the Company Merger and the issuance of Mutual First
Common Stock as contemplated by this Agreement shall have been
approved by the requisite vote of the Mutual First stockholders under
NASDAQ rules and applicable provisions of Maryland Laws.
(b) Regulatory Approvals. All regulatory approvals required to
consummate the Company Merger shall have been obtained and shall
remain in full force and effect and all statutory waiting periods in
respect thereof shall have expired and no such approvals shall contain
(i) any conditions, restrictions or requirements which the Mutual
First Board reasonably determines would either before or after the
Effective Time have a Material Adverse Effect on Mutual First and its
Subsidiaries taken as a whole or (ii) any conditions, restrictions or
requirements that are not customary and usual for approvals of such
type and which the Mutual First Board reasonably determines would
either before or after the Effective Time be unduly burdensome.
(c) No Injunction. No Governmental Authority of competent
jurisdiction shall have enacted, issued, promulgated, enforced or
entered any statute, rule, regulation, judgment, decree, injunction or
other order (whether temporary, preliminary or permanent) which is in
effect and prohibits consummation of the Company Merger.
(d) Registration Statement. The Registration Statement shall have
become effective under the Securities Act and no stop order suspending
the effectiveness of the Registration Statement shall have been issued
and no proceedings for that purpose shall have been initiated or
threatened by the SEC.
(e) Blue Sky Approvals. All permits and other authorizations
under state securities laws necessary to consummate the transactions
contemplated hereby and to issue the shares of Mutual First Common
Stock to be issued in the Company Merger shall have been received and
be in full force and effect.
(f) Listing. The shares of Mutual First Common Stock to be issued
in the Company Merger shall have been approved for listing on the
NASDAQ, subject to official notice of issuance.
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(g) Permits, Authorizations. Each of Mutual First and Marion
shall have obtained all material permits, authorizations, consents,
waivers and approvals required for the lawful consummation of the
Company Merger.
7.02 Conditions to Obligation of Marion. The obligation of Marion and its
Subsidiaries to consummate the Company Merger is also subject to the fulfillment
(or written waiver by Marion) prior to the Effective Time of each of the
following conditions:
(a) Representations and Warranties. The representations and
warranties of Mutual First set forth in this Agreement shall be true
and correct in all material respects, subject in the case of Specified
Representations to the standard set forth in Section 5.02, as of the
date of this Agreement and as of the Effective Date as though made on
and as of the Effective Date (except that (i) representations and
warranties that by their terms speak as of the date of this Agreement
or some other date shall be true and correct as of such date and (ii)
with respect to any information provided by Mutual First pursuant to
Section 6.14(iii) relating to Section 5.04(l) on account of events
arising after the date of this Agreement the representations and
warranties in Section 5.04(l) shall be deemed true and correct as of
the Effective Date unless such information individually or taken
together with other facts, events and circumstances has resulted in or
is reasonably likely to result in a Material Adverse Effect on Mutual
First), and Marion shall have received a certificate, dated the
Effective Date, signed on behalf of Mutual First by the Chief
Executive Officer and the Chief Financial Officer of Mutual First to
such effect.
(b) Performance of Obligations of Mutual First. Mutual First and
its Subsidiaries shall have performed in all material respects all
obligations required to be performed by them under this Agreement at
or prior to the Effective Time, and Marion shall have received a
certificate, dated the Effective Date, signed on behalf of Mutual
First by the Chief Executive Officer and the Chief Financial Officer
of Mutual First to such effect.
7.03 Conditions to Obligation of Mutual First. The obligation of Mutual
First and its Subsidiaries to consummate the Company Merger is also subject to
the fulfillment (or written waiver by Mutual First) prior to the Effective Time
of each of the following conditions:
(a) Representations and Warranties. The representations and
warranties of Marion set forth in this Agreement shall be true and
correct in all material respects, subject in the case of Specified
Representations to the standard set forth in Section 5.02, as of the
date of this Agreement and as of the Effective Date as though made on
and as of the Effective Date (except that (i) representations and
warranties that by their terms speak as of the date of this Agreement
or some other date shall be true and correct as of such date and (ii)
with respect to any information provided by Marion pursuant to Section
6.14(iii) relating to Section 5.03(p) on account of events arising
after the date of this Agreement the representations and warranties in
Section 5.03(p) shall be deemed true and correct as of the Effective
Date unless such information individually or taken together
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with other facts, events and circumstances has resulted in or is
reasonably likely to result in a Material Adverse Effect on Marion)
and Mutual First shall have received a certificate, dated the
Effective Date, signed on behalf of Marion by the Chief Executive
Officer and the Chief Financial Officer of Marion to such effect.
(b) Performance of Obligations of Marion. Marion and its
Subsidiaries shall have performed in all material respects all
obligations required to be performed by them under this Agreement at
or prior to the Effective Time, and Mutual First shall have received a
certificate, dated the Effective Date, signed on behalf of Marion by
the Chief Executive Officer and the Chief Financial Officer of Marion
to such effect.
ARTICLE VIII
TERMINATION
8.01 Termination. This Agreement may be terminated, and the Transactions
may be abandoned:
(a) Mutual Consent. At any time prior to the Effective Time, by
the mutual consent of Mutual First and Marion, if the Board of
Directors of each so determines by vote of a majority of the members
of its entire Board.
(b) Breach. At any time prior to the Effective Time, by Mutual
First or Marion, if its Board of Directors so determines by vote of a
majority of the members of its entire Board, in the event of either:
(i) a breach by the other party of any representation or warranty
contained herein (subject in the case of Specified Representations to
the standard set forth in Section 5.02), which breach cannot be or has
not been cured within 30 days after the giving of written notice to
the breaching party of such breach; or (ii) a breach by the other
party in any material respect of any of the covenants or agreements
contained herein, which breach cannot be or has not been cured within
30 days after the giving of written notice to the breaching party of
such breach.
(c) Delay. At any time prior to the Effective Time, by Mutual
First or Marion, if its Board of Directors so determines by vote of a
majority of the members of its entire Board, in the event that the
Company Merger is not consummated by February 28, 2001, except to the
extent that the failure of the Company Merger then to be consummated
arises out of or results from the knowing action or inaction of the
party seeking to terminate pursuant to this Section 8.01(c).
(d) No Approval. By Marion or Mutual First, if its Board of
Directors so determines by a vote of a majority of the members of its
entire Board, in the event (i) the approval of any Governmental
Authority required for consummation of the Company Merger and the Bank
Merger shall have been denied by final nonappealable action of
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such Governmental Authority or (ii) any stockholder approval required
by Section 7.01(a) herein is not obtained at the Marion Meeting or the
Mutual First Meeting.
(e) Failure to Recommend, Etc. At any time prior to the Marion
Meeting, by Mutual First if the Marion Board shall have failed to
unanimously recommend approval and adoption of this Agreement to the
Marion stockholders, withdrawn such recommendation or modified or
changed such recommendation in a manner adverse in any respect to the
interests of Mutual First; or at any time prior to the Mutual First
Meeting, by Marion, if the Mutual First Board shall have failed to
unanimously recommend to the Mutual First stockholders approval of the
issuance of Mutual First Common Stock to be issued pursuant to the
Company Merger, withdrawn such recommendation or modified or changed
such recommendation in a manner adverse in any respect to the
interests of Marion.
8.02 Effect of Termination and Abandonment. In the event of termination of
this Agreement and the abandonment of the Transaction pursuant to this Article
VIII, no party to this Agreement shall have any liability or further obligation
to any other party hereunder except (i) as set forth in Section 9.01 and (ii)
that termination will not relieve a breaching party from liability for any
willful breach of this Agreement giving rise to such termination. Provided,
however, if a party pursues its rights under Section 6.17 or 6.18, whichever is
applicable, then such party shall not be entitled to any other relief.
Conversely, if a party pursues a remedy pursuant to this Section 8.02, then it
shall waive its rights under Section 6.17 or 6.18, whichever is applicable.
ARTICLE IX
MISCELLANEOUS
9.01 Survival. No representations, warranties, agreements and covenants
contained in this Agreement shall survive the Effective Time (other than the
agreements and covenants contained in Section 6.12 and 6.15 and this Article IX
which shall survive the Effective Time) or the termination of this Agreement if
this Agreement is terminated prior to the Effective Time (other than Sections
6.03(b), 6.04, 6.05(b), 6.17, 6.18, 8.02 and this Article IX which shall survive
such termination).
9.02 Waiver; Amendment. Prior to the Effective Time, any provision of this
Agreement may be (i) waived by the party benefitted by the provision, or (ii)
amended or modified at any time, by an agreement in writing between the parties
hereto executed in the same manner as this Agreement, except that after the
Marion Meeting, the consideration to be received by the Marion stockholders for
each share of Marion Common Stock shall not thereby be decreased if such
decrease shall violate Indiana Law.
9.03 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to constitute an original.
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9.04 Governing Law. This Agreement shall be governed by, and interpreted in
accordance with, the laws of the State of Indiana applicable to contracts made
and to be performed entirely within such State (except to the extent that
mandatory provisions of Federal law are applicable).
9.05 Expenses. Except as otherwise provided herein, each party hereto will
bear all expenses incurred by it in connection with this Agreement and the
transactions contemplated hereby.
9.06 Notices. All notices, requests and other communications hereunder to a
party shall be in writing and shall be deemed given if personally delivered,
telecopied (with confirmation) or mailed by registered or certified mail (return
receipt requested) to such party at its address set forth below or such other
address as such party may specify by notice to the parties hereto.
If to Marion, to:
Marion Capital Holdings, Inc.
100 West Third Street
Marion, Indiana 46952
Attention: Steven L. Banks, Chief Executive Officer
With a copy to:
Barnes & Thornburg
11 South Meridian Street
Indianapolis, Indiana 46204
Attn: Claudia V. Swhier, Esq.
If to Mutual First, to:
Mutual First Financial, Inc.
110 E. Charles Street
Muncie, Indiana 47305
Attention: R. Donn Roberts, Chief Executive Officer
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With a copy to:
Silver, Freedman & Taff, LLP
Suite 700 East
1100 New York Avenue, N.W.
Washington, DC 20005-3934
Attn: James S. Fleischer, Esq.
9.07 Entire Understanding; No Third Party Beneficiaries. This Agreement and
any Supplemental Letter entered into by the parties on the date hereof represent
the entire understanding of the parties hereto with reference to the
transactions contemplated hereby and thereby and this Agreement supersedes any
and all other oral or written agreements heretofore made. Except for Section
6.12 and 6.15 and the separate agreement entered into by Marion and Mutual First
on the date hereof, nothing in this Agreement expressed or implied, is intended
to confer upon any person, other than the parties hereto or their respective
successors, any rights, remedies, obligations or liabilities under or by reason
of this Agreement.
9.08 Interpretation; Effect. When a reference is made in this Agreement to
Sections, Exhibits or Schedules, such reference shall be to a Section of, or
Exhibit or Schedule to, this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and are not part of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation." No provision of this Agreement shall
be construed to require Marion, Mutual First or any of their respective
Subsidiaries, affiliates or directors to take any action which would violate
applicable law (whether statutory or common law), rule or regulation.
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* * *
The parties hereto have caused this Agreement to be executed in
counterparts by their duly authorized officers, all as of the day and year first
above written.
Marion Capital Holdings, Inc.
By: /s/ Steven L. Banks
---------------------------------
Name: Steven L. Banks
Title: Chief Executive Officer
Mutual First Financial, Inc.
By: /s/ R. Donn Roberts
---------------------------------
Name: R. Donn Roberts
Title: Chief Executive Officer
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