<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) January 28, 1994
------------------------------
Trans Financial Bancorp, Inc.
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Kentucky 0-13030 61-1048868
- -------------------------------------------------------------------------------
(State or other (Commission (I.R.S. Employer
jurisdiction File Number) Identification No.)
of incorporation
500 East Main Street, Bowling Green, Kentucky 42101
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (502) 781-5000
----------------------------
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE> 2
INFORMATION TO BE INCLUDED IN THE REPORT
ITEM 5. OTHER EVENTS
On January 28, 1994, Trans Financial Bancorp, Inc. ("Trans Financial")
entered into a definitive Agreement and Plan of Reorganization and related Plan
of Merger (collectively, the "Merger Agreement") with FGC Holding Company,
Martin, Kentucky, a bank holding company organized under the laws of Kentucky
("FGC"), pursuant to which FGC will merge with and into Trans Financial and
each outstanding share of FGC will be exchanged for 419.83 shares of Trans
Financial common stock, for aggregate consideration of approximately 1,050,000
shares of Trans Financial common stock. FGC owns 100% of the outstanding
capital stock of First Guaranty National Bank, Martin, Kentucky. At September
30, 1993, FGC reported total consolidated assets of approximately $126 million.
Upon consummation of the acquisition, First Guaranty National Bank will
be a wholly-owned subsidiary of Trans Financial. Consummation of the
transactions contemplated by the Merger Agreement is conditioned on, among
other things, the approval of the Merger Agreement by the shareholders of FGC
and the receipt of all required regulatory approvals.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
A. Financial Statements
The following consolidated financial statements of FGC, notes related
thereto and report of independent auditors thereon are filed as a part of this
Report:
(1) Independent Auditors' Report;
(2) Consolidated Balance Sheet as of December 31, 1992;
(3) Consolidated Statement of Income for the year ended December
31, 1992;
(4) Consolidated Statement of Changes in Stockholders' Equity for the
year ended December 31, 1992;
(5) Consolidated Statement of Cash Flows for the year ended December
31, 1992;
(6) Notes to Consolidated Financial Statements;
(7) Consolidated Balance Sheet as of September 30, 1993 (unaudited);
2
<PAGE> 3
(8) Consolidated Statement of Income for the period ended
September 30, 1993 (unaudited).
B. Exhibits
The following exhibits are filed as a part of this report:
2(a) Agreement and Plan of Reorganization between Trans Financial
Bancorp, Inc. and FGC Holding Company dated as of January 28, 1994.
2(b) Plan of Merger between Trans Financial Bancorp, Inc. and FGC
Holding Company dated as of January 28, 1994.
3
<PAGE> 4
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Trans Financial Bancorp, Inc.
By: /s/ Vince Berta
--------------------------
Vince Berta
Title: Treasurer and Chief Financial
Officer
Date: February 18, 1994
4
<PAGE> 5
FGC HOLDING COMPANY AND SUBSIDIARY
MARTIN, KENTUCKY
AUDITED CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1992
<PAGE> 6
INDEPENDENT AUDITORS' REPORT
Board of Directors
FGC Holding Company
Martin, Kentucky
We have audited the accompanying consolidated balance sheet of
FGC Holding Company and its wholly-owned subsidiary, First Guaranty National
Bank, Martin, Kentucky as of December 31, 1992, and the related consolidated
statements of income, changes in stockholders' equity and cash flows for the
year then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the audit
to obtain reasonable, but not absolute, assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position of FGC
Holding Company and Subsidiary at December 31, 1992 and the results of its
operations and cash flows for the year then ended, in conformity with generally
accepted accounting principles.
February 11, 1994 /s/ Eskew & Gresham, PSC
<PAGE> 7
FGC HOLDING COMPANY AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1992
<TABLE>
<S> <C>
ASSETS
Cash and cash equivalents:
Cash and due from banks $ 4,389,380
Federal funds sold 2,750,000
------------
Total cash and cash equivalents $ 7,139,380
Investment securities (approximate market
value of $46,117,000) (Note 2) 44,771,677
Loans, net of allowance for loan losses
of $1,156,634 (Notes 3, 4 and 10) 65,240,407
Bank premises and equipment (Note 5) 2,021,711
Accrued interest receivable 1,145,615
Income taxes refundable (Note 8) 104,803
Deferred income taxes (Notes 4 and 8) 79,775
Other real estate owned 310,000
Excess cost over net assets acquired (net
of accumulated amortization of $373,372) 1,527,703
Other assets 102,576
------------
TOTAL ASSETS $122,443,647
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Demand - non-interest bearing $ 13,841,207
Demand - interest bearing 22,456,927
Savings 13,491,549
Time, $100,000 and over 21,877,263
Other time 37,031,270
------------
Total deposits $108,698,216
Dividends payable 20,366
Accrued interest payable and other liabilities 464,365
Debentures payable (Note 6) 3,790,000
Notes payable to stockholders (Note 7) 705,900
------------
Total liabilities $113,678,847
CONTINGENCIES (Note 13) -
STOCKHOLDERS' EQUITY (Notes 6 and 12):
Preferred stock, Class A non-voting,
$1,000 par value, 8% cumulative, 850
shares authorized; 836 shares issued
and outstanding $ 836,000
Preferred stock, Class B non-voting,
$1,000 par value, 8% non-cumulative, 200
shares authorized; 174 shares issued
and outstanding 174,000
Common stock, voting, no par value, 3,000
shares authorized; 2,501 shares issued
and outstanding 1,500,000
Retained earnings 6,254,800
------------
Total stockholders' equity $ 8,764,800
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $122,443,647
</TABLE>
See notes to consolidated financial statements.
Page 2
<PAGE> 8
FGC HOLDING COMPANY AND SUBSIDIARY
CONSOLIDATED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1992
<TABLE>
<S> <C>
INTEREST INCOME:
Interest and fees on loans and leases $ 6,455,585
Interest on investments -
U. S. Treasury and government agencies 2,104,220
Obligations of states and political
subdivisions 952,921
Other securities 135,177
Interest on federal funds sold 114,041
------------
$ 9,761,944
INTEREST EXPENSE:
Deposits $ 4,135,729
Debentures and notes payable 405,740
------------
$ 4,541,469
Net interest income $ 5,220,475
Provision for loan losses (Note 3) 300,000
------------
Net interest income after provision for
loan losses $ 4,920,475
OTHER INCOME:
Service charges on deposit accounts $ 227,476
Insurance commissions 195,040
Securities gains, net (Note 2) 48,040
Other 24,248
------------
$ 494,804
OTHER EXPENSES:
Salaries and employee benefits $ 1,279,419
Occupancy expenses 427,993
FDIC assessment 239,584
Stationery, printing and supplies 229,521
Loss on leveraged leases 155,081
Other operating expenses 706,594
------------
$ 3,038,192
Income before income taxes $ 2,377,087
Provision for income taxes (Note 8) 549,827
------------
NET INCOME $ 1,827,260
</TABLE>
See notes to consolidated financial statements.
Page 3
<PAGE> 9
FGC HOLDING COMPANY AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
YEAR ENDED DECEMBER 31, 1992
<TABLE>
<CAPTION>
Preferred Common Retained
Stock Stock Earnings Total
<S> <C> <C> <C> <C>
Balances, January 1, 1992 $1,010,000 $1,500,000 $4,508,561 $7,018,561
Net income - - 1,827,260 1,827,260
Dividends declared - - (81,021) (81,021)
---------- ---------- ---------- ----------
BALANCES, DECEMBER 31, 1992 $1,010,000 $1,500,000 $6,254,800 $8,764,800
</TABLE>
See notes to consolidated financial statements.
Page 4
<PAGE> 10
FGC HOLDING COMPANY AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1992
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,827,260
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 268,572
Provision for loan losses 300,000
Securities gains (48,040)
Loss on leveraged leases 155,081
Deferred income taxes (190,655)
Amortization of investment securities, net 34,369
Changes in:
Income taxes refundable (104,803)
Income taxes payable (330,279)
Accrued interest receivable 131,098
Accrued interest payable and other
liabilities (409,840)
Other assets (74,296)
------------
Net cash provided by operating activities $ 1,558,467
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale and maturity of investment
securities $ 17,704,917
Purchase of investment securities (16,553,981)
Net change in loans (7,321,478)
Purchases of premises and equipment (449,852)
Proceeds received on other real estate owned 93,200
------------
Net cash used in investing activities $ (6,527,194)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net change in deposits $ 1,238,200
Dividends paid (81,021)
------------
Net cash provided by financing activities $ 1,157,179
Net decrease in cash and cash equivalents $ (3,811,548)
Cash and cash equivalents at beginning of year 10,950,928
------------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 7,139,380
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for -
Interest expense $ 4,801,419
Income taxes $ 1,175,564
</TABLE>
See notes to consolidated financial statements.
Page 5
<PAGE> 11
FGC HOLDING COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1992
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Basis of Presentation - These financial statements include
the accounts of FGC Holding Company (the Company) and its wholly-owned
subsidiary, First Guaranty National Bank (the Bank). All material intercompany
accounts and transactions have been eliminated.
B. Investment Securities - Investment securities are carried at
cost, adjusted for amortization of premium and accretion of discount on a
constant yield basis. Gains or losses on dispositions are computed using the
specific identification method.
C. Loans - Loans are stated at the amount of unpaid principal,
reduced by unearned interest and an allowance for loan losses. Interest income
from certain installment loans is recognized on the sum-of-the-months-digits
method (Rule of 78's), which approximates income earned on the accrual basis.
Income from all other loans is recorded on the accrual basis, except for those
loans on a nonaccruing income status. Accrual of interest is discontinued on a
loan when management believes, after considering economic and business
conditions and collection efforts, that the borrowers' financial condition is
such that collection of interest is doubtful.
The provision for loan losses is an amount that is sufficient to
maintain the allowance for loan losses at an adequate level to absorb future
loan losses based on management's best estimate of possible loan losses,
predicated upon such considerations as the current condition and volume of the
Bank's loan portfolio, economic conditions within the Bank's service area and
any other factors influencing the collectibility of the loan portfolio.
D. Bank Premises and Equipment - Bank premises and equipment are
stated at cost less accumulated depreciation. Depreciation is provided over
the estimated useful lives of the respective assets using straight-line methods
for buildings and both straight-line and accelerated methods for furniture and
equipment.
E. Other Real Estate Owned - Real estate acquired through
foreclosure is carried at the lower of the recorded investment in the property
or its fair value. The value of the underlying loan is written down to the
fair value of the real estate to be acquired by a charge to the allowance for
loan losses. Operating expenses of such properties, net of related income, and
gains and losses on their disposition, are included in other expenses.
F. Income Taxes - The Company and the Bank file a consolidated
federal income tax return. Income taxes are allocated on a separate return
basis.
Deferred federal income taxes are provided on certain
transactions which are reported for financial statement purposes in different
years than for income tax purposes. The principal differences are in
provisions for loan losses, depreciation on premises and equipment, accretion
of discounts on securities, income from leveraged lease financing and changes
in accounting methods being amortized over periods of four to ten years for
income tax purposes.
Page 6
<PAGE> 12
FGC HOLDING COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1992
(CONTINUED)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
In February 1992, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standard No. 109, "Accounting for Income
Taxes". The Statement requires the use of the liability method for computing
deferred income taxes no later than 1993, with earlier adoption encouraged.
Under the liability method, deferred income taxes are based on the change from
the beginning of the year in the deferred tax liability or asset established
for the expected future tax consequences of differences in the financial
reporting and tax bases of assets and liabilities.
The Company has postponed adoption of the Statement until 1993.
Adoption of the Statement is not expected to have a significant effect on the
Company's financial position.
G. Leveraged Leases - The Bank has entered into leveraged leases
which are financing arrangements whereby the major portion of the cost of the
equipment leased is financed with nonrecourse debt from another investor. The
financial statements reflect the Bank's investment, net of unearned income and
nonrecourse debt. The investment is reduced by cash flows arising from the
transaction, after providing necessary amounts for deferred income taxes in the
period in which the benefits arise. Income is recorded under a method which
relates return to investment.
H. Purchase Method of Accounting - The net assets of First
Guaranty National Bank acquired in a purchase transaction are recorded at the
fair value at the date of acquisition. The excess cost over net assets
acquired (goodwill) is being amortized by the straight-line method over 25
years.
NOTE 2 - INVESTMENT SECURITIES
Amortized cost and approximate market value of investment
securities at December 31, 1992 are as follows:
<TABLE>
<CAPTION>
Amortized Unrealized Unrealized Approximate
Cost Gains Losses Market Value
<S> <C> <C> <C> <C>
U. S. Treasury securities $ 8,078,220 $ 159,780 $ - $ 8,238,000
Obligations of U. S.
government agencies 20,747,335 305,456 (50,791) 21,002,000
Obligations of states and
political subdivisions 14,602,222 818,611 (37,833) 15,383,000
Other securities 1,343,900 150,100 - 1,494,000
----------- ---------- -------- -----------
$44,771,677 $1,433,947 $(88,624) $46,117,000
</TABLE>
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<PAGE> 13
FGC HOLDING COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1992
(CONTINUED)
NOTE 2 - INVESTMENT SECURITIES (CONTINUED)
The amortized cost and approximate market values of investment
securities at December 31, 1992 by contractual maturity are shown below.
Expected maturities will differ from contractual maturities because borrowers
may have the right to call or prepay obligations with or without call or
prepayment penalties.
<TABLE>
Amortized Approximate
Cost Market Value
<S> <C> <C>
Due in one year or less $ 10,355,974 $ 10,485,000
Due after 1 year through 5 years 18,209,665 18,731,000
Due after 5 years 8,459,329 8,919,000
------------ ------------
$ 37,024,968 $ 38,135,000
Mortgage-backed securities 7,617,809 7,853,000
Other securities 128,900 129,000
------------ ------------
$ 44,771,677 $ 46,117,000
</TABLE>
Investment securities with an approximate carrying value of
$13,796,000 at December 31, 1992 were pledged to secure public deposits, the
Treasury Tax and Loan account and other purposes as required or permitted by
law.
Proceeds from sales and calls of investment securities during
1992 were approximately $2,472,000, resulting in gross gains of $48,040 and
gross losses of $0.
NOTE 3 - LOANS
Major classifications of loans at December 31, 1992 are
summarized as follows:
<TABLE>
<S> <C>
Commercial and mortgage loans $ 58,199,101
Installment loans 9,095,121
Equipment lease financing 114,321
------------
$ 67,408,543
Unearned interest (1,011,502)
Allowance for loan losses (1,156,634)
------------
$ 65,240,407
</TABLE>
The amount of loans on nonaccrual status at December 31, 1992 was
approximately $292,000. Interest income on these loans that would have been
earned had they not been placed on nonaccrual status approximated $25,000 for
1992.
Certain directors and executive officers of the Bank, including
their immediate families and companies in which they are principal owners, are
loan customers of the Bank. Total loans to these persons at December 31, 1992
approximated $378,000. Such loans were made in the ordinary course of business
at the Bank's normal credit terms and interest rates.
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<PAGE> 14
FGC HOLDING COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1992
(CONTINUED)
NOTE 3 - LOANS (CONTINUED)
Activity in the allowance for loan losses for the year ended
December 31, 1992 is as follows:
<TABLE>
<S> <C>
Beginning of year $ 880,871
Provision for loan losses 300,000
Net charge-offs (24,237)
------------
End of year $ 1,156,634
</TABLE>
NOTE 4 - INVESTMENT IN LEVERAGED LEASES
The Bank's investment in leveraged leases amounted to $114,321 at
December 31, 1992. Deferred income tax credits applicable to such leases,
amounting to $38,869 at December 31, 1992 are included in deferred income taxes
on the accompanying balance sheet. Outstanding nonrecourse debt on these
leases amounted to $0 at December 31, 1992.
NOTE 5 - BANK PREMISES AND EQUIPMENT
Bank premises and equipment at December 31, 1992 are summarized
as follows:
<TABLE>
<S> <C>
Land and buildings $ 1,601,962
Furniture and equipment 1,668,799
------------
$ 3,270,761
Less accumulated depreciation (1,249,050)
------------
$ 2,021,711
Depreciation expense was $187,513 for 1992.
</TABLE>
NOTE 6 - DEBENTURES PAYABLE
Debentures payable at December 31, 1992 consists of four
identical debentures dated January 20, 1988 payable to the four individuals who
previously owned the Bank. Principal payments commenced on January 1, 1989 and
are due annually on January 1 of each year through 2000. The debentures bear
interest for the first five years at a rate of 9%, payable quarterly. After
the first five years, the interest rate is equal to the prime rate as quoted in
the Wall Street Journal. The debentures are collateralized by 100% of the
issued and outstanding common stock of First Guaranty National Bank.
The debentures require the maintenance of certain capital and
operational ratios for the Bank, all of which have been complied with at
December 31, 1992, however, the Company has failed to fully comply with certain
affirmative and negative covenants contained in the debentures. Management
believes that any adverse impact resulting from these failures will not have a
material effect on the Company's financial condition.
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FGC HOLDING COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1992
(CONTINUED)
NOTE 6 - DEBENTURES PAYABLE (CONTINUED)
The Company may, at its option, repay the debentures, with
certain restrictions, in whole or in part at any time. Principal payments due
on the debentures during the five years subsequent to December 31, 1992 are as
follows: 1993 - $0; 1994 - $0; 1995 - $500,000; 1996 - $700,000; 1997 -
$750,000.
NOTE 7 - NOTES PAYABLE TO STOCKHOLDERS
Notes payable at December 31, 1992 consists of two identical
unsecured notes dated January 20, 1988, payable to two of the stockholders of
the Company. Principal is due on demand. The notes bear interest for the
first five years at a rate of 9%, payable quarterly. After the first five
years, the interest rate is equal to the prime rate as quoted in the Wall
Street Journal.
NOTE 8 - INCOME TAXES
The provision for income taxes for the year ended December 31,
1992 is summarized as follows:
<TABLE>
<S> <C>
Currently payable $ 740,482
Deferred (190,655)
------------
$ 549,827
</TABLE>
Deferred income taxes according to timing differences which
caused them for the year ended December 31, 1992 were as follows:
<TABLE>
<S> <C>
Lease financing income $ 46,223
Provision for loan losses 93,759
Amortization of changes in tax
accounting methods 28,446
Depreciation (25,600)
Accretion of discounts on securities 40,951
Other 6,876
------------
$ 190,655
</TABLE>
The income tax provision is less than that obtained by using the
statutory Federal corporate income tax rate, principally due to interest income
of approximately $926,000 being exempt from Federal income taxes.
NOTE 9 - FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK
The Bank is party to financial instruments with off-balance-sheet
risk in the normal course of business to meet the financing needs of its
customers. These financial instruments include commitments to extend credit in
the form of unused lines of credit. The Bank uses the same credit policies in
making commitments and conditional obligations as it does for on-balance-sheet
instruments.
Page 10
<PAGE> 16
FGC HOLDING COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1992
(CONTINUED)
NOTE 9 - FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK (CONTINUED)
At December 31, 1992, the Bank had commitments to extend credit
of approximately $657,000 whose contract amounts represent credit risk.
Commitments to extend credit are agreements to lend to a customer
as long as there is no violation of any condition established in the contract.
Commitments generally have fixed expiration dates or other termination clauses
and may require payment of a fee. The Bank evaluates each customer's
credit-worthiness on a case-by-case basis. Since many of the commitments are
expected to expire without being drawn upon, the total commitment amounts do
not necessarily represent future cash requirements. Collateral held varies,
but primarily includes real estate.
NOTE 10 - CONCENTRATION OF CREDIT RISK
The Bank grants residential, commercial and consumer loans to
customers primarily located in Floyd and Knott Counties in Kentucky. Although
the Bank has a diverse loan portfolio, a substantial portion of its debtors'
ability to perform on their contracts is influenced by the coal industry which
has a significant impact on the local economy.
NOTE 11 - DIVIDEND LIMITATION
The Company's principal source of funds is dividends received
from the bank. Banking regulations limit the amount of dividends that may be
paid without prior approval of the Bank's regulatory agency. Under these
regulations, the amount of dividends that may be paid in any calendar year is
limited to the current year's net profits, as defined, combined with the
retained net profits of the preceding two years. During 1993, the Bank could,
without prior approval, declare dividends of approximately $3,234,000 plus any
1993 net profits retained to the date of the dividend declaration.
NOTE 12 - PREFERRED STOCK
The Company has authorized, issued and outstanding two classes of
preferred stock, Class A and Class B. Both classes of preferred stock and all
dividends to which it is entitled shall have a preference as to all other
shareholders on all of the assets of the corporation. Each share of preferred
stock is subject to redemption and may, at the option of the Company, on any
dividend payment date, at any time after January 20, 1993, be called and
retired at the cash price per share equal to its par value.
At December 31, 1992, there were no dividends on the preferred
stock in arrears.
Page 11
<PAGE> 17
FGC HOLDING COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1992
(CONTINUED)
NOTE 13 - CONTINGENT LIABILITIES
The Bank and certain officers and directors are named defendants
in legal actions arising from the purchase of the Bank by the Company. This
litigation has been settled by the parties agreeing to a dismissal of all
claims, subject to court approval, therefore, the ultimate liability, if any,
resulting from these actions is not expected to have a material effect on the
Company's consolidated financial condition or results of operations.
NOTE 14 - SUBSEQUENT EVENT
On January 28, 1994, the Company entered into a merger agreement
with Trans Financial Bancorp, Inc. of Bowling Green, Kentucky, whereby Trans
Financial will exchange 1,050,000 shares of its common stock for 100% of the
common stock of FGC Holding Company. The merger is contingent upon regulatory
approval.
Page 12
<PAGE> 18
FGC Holding Company, Inc.
Consolidated Balance Sheet
September 30, 1993
(Unaudited)
(In thousands)
Assets
Cash and due from banks $ 4,097
Federal funds sold and resale agreements 4,250
Investment securities 48,289
Loans, net of unearned income 65,836
Less allowance for loan losses (1,371)
Net loans 64,465
Premises and equipment 1,855
Goodwill 1,471
Other assets 1,857
-------
Total Assets $126,284
=======
Liabilities and Stockholders' Equity
Deposits $110,880
Other liabilities 5,208
-------
Total liabilities 116,088
Preferred stock 1,010
Common stock 1,500
Retained earnings 7,686
-------
Total stockholders' equity 10,196
-------
Total liabilities and stockholders' equity $126,284
=======
<PAGE> 19
FGC Holding Company, Inc. & Subsidiary
Consolidated Statement of Income
Nine months ended September 30, 1993
(Unaudited)
(In thousands, except per share data)
<TABLE>
<S> <C>
Interest income:
Loans $ 4,827
Securities 1,992
Other 81
--------------
Total interest income 6,900
Interest expense:
Deposits 2,494
Short-term borrowings 0
Notes payable 209
--------------
Total interest expense 2,703
--------------
Net interest income 4,197
Provision for loan losses 390
--------------
Net interest income after
provision for loan losses 3,807
Non-interest income 332
Non-interest expenses 2,169
--------------
Income before income taxes 1,970
Income tax expense 478
--------------
Income before cumulative effect
of accounting change $ 1,492
==============
Income applicable to common stock $ 1,431
==============
Weighted average shares outstanding:
Primary 2,501
Fully diluted 2,501
Earnings per common share:
Primary $ 572.33
Fully diluted $ 572.33
</TABLE>
<PAGE> 20
EXHIBIT INDEX
Exhibit Sequentially
Numbered Page
2(a) Agreement and Plan of Reorganization between
Trans Financial Bancorp, Inc. and FGC Holding
Company dated as of January 28, 1994.
2(b) Plan of Merger between Trans Financial Bancorp,
Inc. and FGC Holding Company dated as of
January 28, 1994.
6
<PAGE> 1
Exhibit 2 (a)
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION ("Agreement") is
made and entered into as of this 28th day of January, 1994 between TRANS
FINANCIAL BANCORP, INC., a Kentucky corporation ("Corporation"), and FGC
HOLDING COMPANY, a Kentucky corporation ("FGC"), and the undersigned
individuals and trust, being all of the holders of common stock of FGC
(individually, a "Shareholder" and collectively, the "Shareholders").
W I T N E S S E T H :
The Boards of Directors of Corporation and FGC have approved,
and deem it advisable and in their respective shareholders' best interests to
consummate, the business combination transaction (the "Merger") provided for
herein and in the Plan of Merger between Corporation and FGC executed of even
date herewith and incorporated by reference herein as if fully set out herein
(the "Plan of Merger");
Corporation, FGC and the Shareholders are willing to make
certain representations, warranties and agreements in connection with the
Merger and also to prescribe various conditions to the Merger.
For federal income tax purposes, it is intended that the
Merger qualify as a reorganization under the provisions of Section 368 of the
Internal Revenue Code of 1986, as amended.
NOW, THEREFORE, in consideration of the premises and of the
respective representations, warranties, agreements and undertakings herein
contained, the parties hereby agree as follows:
ARTICLE 1
DEFINITIONS
"Act" shall mean the Kentucky Business Corporation Act.
"BHCA" shall mean the Bank Holding Company Act of 1956, as
amended.
"Closing" shall mean the closing of the transactions
contemplated herein and in the Plan of Merger, and "Closing Date" shall mean
the date and time specified pursuant to Section 2.2 hereof as the date of the
Closing.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
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"Commission" shall mean the Securities and Exchange Commission.
"Corporation Common Stock" shall mean the common stock, no par
value, of Corporation.
"Corporation Financial Statements" shall mean (i) the audited
consolidated balance sheets (including related notes) of Corporation as of
December 31, 1992, 1991 and 1990 and the related audited consolidated
statements of income, changes in shareholders' equity and cash flows (including
related notes) for the years ended December 31, 1992, 1991 and 1990, and the
unaudited consolidated balance sheet as of September 30, 1993 and the related
unaudited consolidated statements of income, changes in shareholders' equity
and cash flows of Corporation for the nine months ended September 30, 1993, and
(ii) the consolidated balance sheets and related consolidated statements of
income, changes in shareholders' equity and cash flows (including related
notes) of Corporation with respect to periods ending subsequent to September
30, 1993.
"Corporation Subsidiary" shall mean each company or other
organization of which at least a majority of the securities or other interests
is directly or indirectly owned or controlled by Corporation.
"Effective Time" is defined at Section 2.1.
"Federal Reserve" shall mean the Board of Governors of the
Federal Reserve System.
"FGC Class A Preferred Stock" and "FGC Class B Preferred
Stock" are defined at Section 4.2B.
"FGC Common Stock" is defined at Section 4.2.B.
"FGC Preferred Stock" shall mean the FGC Class A Preferred
Stock and the FGC Class B Preferred Stock.
"FGC Financial Statements" shall mean (i) the unaudited
consolidated balance sheets of FGC as of December 31, 1992, 1991 and 1990 and
the related unaudited consolidated statements of income, for the years ended
December 31, 1992, 1991 and 1990 as filed by FGC on Form F.R. Y-6 with the
Federal Reserve, and the unaudited balance sheet as of September 30, 1993 and
the unaudited consolidated statements of income of FGC for the nine months
ended September 30, 1993, and (ii) the consolidated balance sheets and related
consolidated statements of income, changes in shareholders' equity and cash
flows (including related notes) of FGC with respect to periods ending
subsequent to September 30, 1993.
"FGC Subsidiary" is defined at Section 4.2C.
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"KDFI" shall mean the Kentucky Department of Financial
Institutions.
"Previously Disclosed" shall mean disclosed prior to the
execution hereof in the letter dated of even date herewith from the party
making such disclosure and delivered to the other party contemporaneously with
the execution hereof.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Securities Laws" shall mean /i/ the Securities Act; the
Securities Exchange Act of 1934, as amended (the "Exchange Act"); the
Investment Company Act of 1940, as amended; the Trust Indenture Act of 1939, as
amended; and the rules and regulations of the Commission promulgated
thereunder, and /ii/ all applicable state securities laws.
ARTICLE 2
The Merger
2.1 Effective Time of Merger. Upon the terms and conditions set
forth in this Agreement and the Plan of Merger, Articles of Merger (the
"Articles of Merger") shall be duly prepared and executed by Corporation and
FGC, and thereafter delivered to the Secretary of State of the Commonwealth of
Kentucky for filing, as provided in the Act, on the Closing Date. The Merger
shall become effective upon the filing with the Kentucky Secretary of State or
at such time and date thereafter as is provided in the Articles of Merger (the
"Effective Time").
2.2 Closing. The closing of the Merger (the "Closing") will take
place at 10:00 a.m. on a date to be specified by Corporation (the "Closing
Date"), which shall be no later than the fifth business day following the last
to occur of /i/ the effective date of the last order, approval, or exemption of
any federal or state regulatory agency approving or exempting the Merger if
such action is required, and /ii/ the expiration of all required waiting
periods after the filing of all notices to all federal or state regulatory
agencies required for consummation of the Merger, at the offices of Wyatt,
Tarrant & Combs, 2800 Citizens Plaza, Louisville, Kentucky, or at such other
date and time, and at such other place, as may be mutually agreed upon by
Corporation and FGC.
ARTICLE 3
COVENANTS
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3.1 Shareholders' Meeting. This Agreement and the Plan of Merger
shall be submitted for approval to the shareholders of FGC at a meeting to be
called and held in accordance with the applicable provisions of law and the
Articles of Incorporation and Bylaws of FGC (the "Meeting"). FGC shall cause
the Meeting to be held as promptly as practicable and shall disseminate to its
shareholders all materials required of it under law to be disseminated in
connection with the consideration by the shareholders of this Agreement and the
Plan. The Board of Directors of FGC shall recommend that its shareholders
adopt and approve this Agreement and the Plan of Merger at the Meeting and
shall take all action necessary or helpful to secure a vote of shareholders in
favor of the Merger. Immediately after the Meeting, FGC shall notify
Corporation of the results of the Meeting. Each Shareholder hereby agrees to
vote in favor of the Merger at the Meeting and waives any right to dissent from
or seek appraisal rights with respect to the Merger which such Shareholder may
have under applicable law. Each Shareholder acknowledges receipt of the
documents and reports listed on Exhibit 3.1 hereto.
3.2 Cooperation. FGC and Corporation shall proceed expeditiously
and cooperate fully in making application for all necessary regulatory
approvals, in the procurement of any other consents and approvals, and in the
taking of any other action and the satisfaction of all other requirements
prescribed by law or otherwise, necessary for consummation of the Merger on the
terms provided herein and in the Plan of Merger. Corporation shall and FGC
shall, and shall cause each FGC Subsidiary to, use all reasonable efforts (i)
to take, or cause to be taken, all actions necessary to comply promptly with
all legal requirements which may be imposed on such party with respect to the
Merger and to consummate the transactions contemplated by this Agreement and
the Plan of Merger, and /ii/ to obtain (and to cooperate with the other party
to obtain) any consent, authorization, order or approval of, or any exemption
by, any governmental entity or any other public or private third party which is
required to be obtained or made by such party in connection with the Merger and
the transactions contemplated by this Agreement and the Plan of Merger. Each of
FGC and Corporation shall cooperate fully with, and provide true, complete and
accurate information to, the other in connection with their requests and
applications for consents and governmental clearance, approvals, licenses or
permits, if any, which are necessary for the Merger and Corporation's ownership
and operation of FGC's business following the Merger.
3.3 Conduct of Business Prior to Closing. Except with the prior
written consent of Corporation or as expressly contemplated or permitted by
this Agreement, during the period from the date of this Agreement and
continuing until the Effective Time, neither FGC nor any FGC Subsidiary shall:
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A. conduct its business other than in the usual, regular
and ordinary course or fail to use its best efforts to preserve its business
organization intact or to keep available to Corporation the services of its
present officers and employees or to preserve the good will of its customers
and others having business relations with it;
B. fail to comply in all material respects with all
applicable laws and regulations which relate to the conduct of its business;
C. amend its articles of incorporation or bylaws;
D. issue any shares of authorized capital stock or
securities convertible into such shares, or purchase, redeem, retire or
otherwise acquire any of its outstanding shares, or sell or give any option or
right to purchase, hypothecate, pledge or otherwise encumber or dispose of any
such shares or any shares held in treasury, if any, make or effect any other
change in the structure or composition of its capital stock or agree to do any
of the foregoing;
E. enter into, adopt, amend or terminate any employee
benefit plan, except as required by law, or enter into any employment agreement
with any person or, except in a manner consistent with past practices, grant
any increase in the compensation (including bonus and benefit plans and all
other non-cash compensation) of any of its employees;
F. borrow or agree to borrow any amount of funds or
incur any obligation or liability except in the ordinary course of business
consistent with prior practice, or guarantee or agree to guarantee any material
obligations of others except for letters of credit and guaranties of signatures
in the ordinary course of business;
G. except in the ordinary course of business, cancel any
indebtedness owing to it or any claims that it might have possessed, waive any
material rights of substantial value or sell, lease, encumber, otherwise
dispose of, or agree to sell, lease, encumber or otherwise dispose of any of
its assets;
H. amend, modify or terminate any material agreement or
contract other than in the ordinary course of business or commit any act or
omit to do any act that would cause a breach of any lease, contract or
commitment to which it is a party or by which its property or business is bound
or affected, or which would have a material adverse effect on its financial
condition, operations or assets; or
I. enter into or agree to enter into any agreement or
contract that would have been required to be Previously Disclosed
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pursuant to this Agreement, other than such contracts and agreements entered
into in the ordinary course of business.
3.4 Access to Information. Upon reasonable notice, Corporation
and FGC shall each (and shall cause each of their respective subsidiaries to)
afford to the officers, employees, accountants, counsel and other
representatives of the other, access, during normal business hours during the
period prior to the Effective Time, to all its properties, books, contracts,
commitments and records and, during such period, each of Corporation and FGC
shall (and shall cause each of their respective subsidiaries to) make available
to the other (i) a copy of each report, schedule, registration statement and
other document filed or received by it during such period pursuant to the
requirements of the Securities Laws or federal or state banking laws (other
than reports or documents that such party is not permitted to disclose under
applicable law) and (ii) all other information concerning its business,
properties and personnel as such other party may reasonably request. The
parties will hold any such information that is nonpublic in confidence to the
extent required by, and in accordance with, the provisions of the
Confidentiality Agreements dated December, 1993 and December __, 1993
respectively between Corporation and FGC (the "Confidentiality Agreements"). No
investigation by either Corporation or FGC shall affect the representations and
warranties to the other except to the extent such representations and
warranties are by their terms qualified by disclosures made to the other party.
The undertakings in this Section 3.4 shall survive any termination of this
Agreement.
3.5 Press Releases. All parties to this Agreement agree that any
press release or other public announcement by either party pertaining to the
Merger shall be coordinated with the other parties hereto; provided, however,
that nothing contained herein shall prohibit either party from making any
disclosure required by law which its counsel deems necessary, provided the
other party is given written notice thereof.
3.6 Updating of Information by FGC. FGC will furnish Corporation
with all reports and statements filed by it or any FGC Subsidiary with any
regulatory authority and the FGC Financial Statements, such reports and
statements to be furnished promptly after their filing or the preparation
thereof. Each such report and statement shall have been prepared in accordance
with and shall comply in all material respects with applicable law and the
regulations governing its preparation.
3.7 Accounting Treatment. FGC shall not intentionally take or
cause to be taken any action, whether before or after the Effective Time, that
would disqualify the Merger as a "pooling of interests" for accounting purposes
and neither FGC nor Corporation shall intentionally take or cause to be taken
any action, whether before or after the Effective Time, that would disqualify
the
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Merger as a "reorganization" within the meaning of Section 368(a) of the Code.
Each Shareholder agrees that he or it shall not dispose of any shares of
Corporation Common Stock received in the Merger until such time as financial
results covering at least 30 days of combined operations of Corporation and FGC
shall be published.
3.8 Acknowledgements of Shareholders. Each Shareholder
acknowledges and agrees that the certificates representing shares of
Corporation Common Stock to be received by such Shareholder in the Merger will
contain a legend to the effect that such shares may not be transferred or
disposed of without registration under the Securities Act and applicable state
securities laws or receipt by Corporation and its transfer agent of an opinion
of counsel acceptable to Corporation as to the existence of an available
exemption therefrom. In addition, each Shareholder consents to the giving of
appropriate stop transfer instructions to Corporation's transfer agent.
3.9 Noncompetition Agreements. Each Shareholder agrees that, at
the Closing, such Shareholder shall execute a noncompetition agreement in the
form attached hereto as Exhibit 5.2.L.
3.10 Acquisition Proposals.
A. Prior to the Effective Time, FGC agrees (a) that
neither FGC nor any FGC Subsidiary shall, and each of them shall direct and use
its best efforts to cause its respective officers, directors, employees, agents
and representatives (including, without limitation, any investment banker,
attorney or accountant retained by it) not to, initiate, solicit or encourage,
directly or indirectly, any inquiries or the making or implementation of any
proposal or offer (including, without limitation, any proposal or offer to its
shareholders) with respect to a merger, acquisition, consolidation or similar
transaction involving, or any purchase of all or any significant portion of the
assets or any equity securities of, FGC or any FGC Subsidiary (any such
proposal or offer being hereinafter referred to as an "Acquisition Proposal")
or engage in any negotiations concerning, or provide any confidential
information or data to, or have any discussions with, any person relating to an
Acquisition Proposal, or otherwise facilitate any effort or attempt to make or
implement an Acquisition Proposal; (b) that it will immediately cease and cause
to be terminated any existing activities, discussions or negotiations with any
parties conducted heretofore with respect to any of the foregoing and will take
the necessary steps to inform the individuals or entities referred to above of
the obligations undertaken in this Section 3.10; and (c) that it will notify
the Corporation immediately if any such inquiries or proposals are received by,
any such information is requested from, or any such negotiations or discussions
are sought to be initiated or continued with, it.
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B. Prior to the Effective Time, each Shareholder agrees
(a) that such Shareholder shall not initiate, solicit or encourage, directly or
indirectly, any inquiries or the making or implementation of any proposal or
offer with respect to an Acquisition Proposal or engage in any negotiations
concerning, or provide any confidential information or data to, or have any
discussions with, any person relating to an Acquisition Proposal, or otherwise
facilitate any effort or attempt to make or implement an Acquisition Proposal;
(b) that such Shareholder will immediately cease and cause to be terminated any
existing activities, discussions or negotiations with any parties conducted
heretofore with respect to any of the foregoing and will take the necessary
steps to inform the individuals or entities referred to above of the
obligations undertaken in this Section 3.10; and (c) that such Shareholder will
notify the Corporation immediately if any such inquiries or proposals are
received by, any such information is requested from, or any such negotiations
or discussions are sought to be initiated or continued with, such Shareholder.
3.11 FGC Dividends.
FGC may continue the declaration and payment of
regular quarterly dividends not in excess of $20 per share of FGC Preferred
Stock, with usual record and payments dates for such dividends in accordance
with past dividend practice.
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3.12 Indemnification.
A. From and after the Effective Time, the Corporation
shall indemnify, defend and hold harmless each person who is now or who
becomes prior to the Effective Time, an executive officer or director of FGC or
any FGC Subsidiary (the "Indemnified Parties") against (i) all losses, claims,
damages, costs, expenses, liabilities or judgments or amounts that are paid in
settlement with the approval of the Corporation (which approval shall not be
unreasonably withheld) of or in connection with any claim, action, suit,
proceeding or investigation based in whole or in part on or arising in whole or
in part out of the fact that such person is or was a director or officer of FGC
or any FGC Subsidiary, whether pertaining to any matter existing or occurring
at or prior to the Effective Time and whether asserted or claimed prior to, or
at or after, the Effective Time ("Indemnified Liabilities"), and (ii) all
Indemnified Liabilities based in whole or in part on, or arising in whole or in
part out of, or pertaining to this Agreement or the transactions contemplated
hereby, in each case to the full extent FGC would have been permitted under law
and its Articles of Incorporation and Bylaws to indemnify such person (and the
Corporation shall pay expenses in advance of the final disposition of any such
action or proceeding to each Indemnified Party to the full extent permitted by
law upon receipt of any undertaking required by law). Without limiting the
foregoing, in the event any such claim, action, suit, proceeding or
investigation is brought against any Indemnified Party (whether arising before
or after the Effective Time), (i) any counsel retained by the Indemnified
Parties for any period after the Effective Time shall be reasonably
satisfactory to the Corporation; (ii) after the Effective Time, the Corporation
shall pay all reasonable fees and expenses of such counsel for the Indemnified
Parties promptly as statements therefor are received to the extent permitted by
law and upon receipt of any undertaking required by law; and (iii) after the
Effective Time, the Corporation will use all reasonable efforts to assist in
the vigorous defense of any such matter, provided that the Corporation shall
not be liable for any settlement of any claim effected without its written
consent, which consent, however, shall not be unreasonably withheld. Any
Indemnified Party wishing to claim indemnification under this Section 3.12,
upon learning of any such claim, action, suit, proceeding or investigation,
shall notify the Corporation in writing (but the failure so to notify the
Corporation shall not relieve it from any liability that it may have under this
Section 3.12 except to the extent such failure materially prejudices the
Corporation), and shall deliver to the Corporation the undertaking, if any,
required by law. The Indemnified Parties as a group may retain only one law
firm to represent them with respect to each such matter unless there is, under
applicable standards of professional conduct, a conflict on any significant
issue between the positions of any two or more Indemnified Parties.
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B. The provisions of this Section 3.12 are intended to
be for the benefit of, and shall be enforceable by, each Indemnified Party, his
heirs and his representatives.
3.13 Employee Benefits. At, or as soon as administratively
feasible after, the Effective Time, employees and officers of FGC and each FGC
Subsidiary shall be provided with such employee benefits as Corporation from
time to time generally provides to employees and officers of a Corporation
Subsidiary, including, but not limited to, participation in Corporation's
Employee Stock Ownership Plan, Savings Investment Plan, life, medical and
hospitalization and disability insurance, and sick pay, vacation, personal
leave and severance benefits, on a non-discriminatory and substantially similar
basis. For purposes of providing such benefits to employees and officers of
FGC or any FGC Subsidiary after the Effective Time, the Corporation shall
credit such employees and officers for years of service at FGC or any FGC
Subsidiary prior to the Effective Time for purposes of eligibility and vesting.
3.14 Additional Agreements. In case at any time after the Effective
Time any further action is necessary or desirable to carry out the purposes of
this Agreement and the Plan of Merger, each party to this Agreement shall take
all such necessary action.
3.16 Certain Covenants of Corporation. Within one hundred twenty
(120) days after the Effective Time, Corporation, at its expense, shall file
with the Securities and Exchange Commission under the Securities Act a
registration statement pursuant to which the Shareholders may publicly offer
and sell the shares of Corporation Common Stock they receive in the Merger and
shall take all actions necessary to register or qualify such shares pursuant to
all applicable state "blue sky" or securities laws. Corporation shall use its
reasonable best efforts to maintain such registration statement (and such
registrations and qualifications) in effect for three years after the Effective
Time. FGC and the Shareholders shall cooperate fully with, and provide full,
complete and accurate information to, Corporation in connection with such
registration statement and any filings related thereto. In no event, however,
shall any party hereto be liable for, and each party shall indemnify and hold
the other harmless from, any untrue statement of a material fact or omission to
state a material fact in any registration statement filed pursuant to the
provisions of this Section 3.16 made in reliance upon, and in conformity with,
written information concerning the other party furnished by such other party
specifically for use in such registration statement.
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES
4.1 Representation and Warranties of Shareholders as to title and
Authority. Each Shareholder, severally and not jointly, represents and
warrants to Corporation, only on such Shareholder's behalf and only with
respect to the shares of FGC Common Stock owned by such Shareholder, as
follows:
A. Power and Authority of Shareholders. Shareholder has
the right, power and capacity to execute, deliver and perform this Agreement
and to consummate the transactions contemplated hereby. This Agreement has
been duly and validly executed and delivered by such Shareholder and
constitutes Shareholder's legal, valid and binding obligation, enforceable
against Shareholder in accordance with its terms. The execution, delivery and
performance by such Shareholder of this Agreement and the consummation of the
transactions contemplated hereby will not, with or without the giving of notice
or the lapse of time, or both, (i) violate any provision of law, statute, rule
or regulation to which such Shareholder is subject, (ii) violate any order,
judgment or decree applicable to such Shareholder, or (iii) violate, conflict
with, or result in a breach or default under, or cause the termination of, any
term or condition of any agreement, document or other instrument to which such
Shareholder is a party or by which such Shareholder or such Shareholder's
properties may be bound.
B. Ownership of Shares. Shareholder owns good record and
beneficial title to the number of shares of FGC Common Stock and FGC Preferred
Stock set forth beside Shareholder's name on Exhibit 4.1 to this Agreement,
free and clear of any liens, restrictions, claims, equities, charges, options,
rights of first refusal, or encumbrances, with no defects of title whatsoever.
Shareholder owns, of record or beneficially, no other shares of capital stock
of FGC or any other equity security of FGC or right or option of any kind to
have any such equity security issued. Upon consummation of the Merger,
Corporation shall have obtained good title to all shares of FGC Common Stock
owned by Shareholder, free and clear of any liens, restrictions, claims,
equities, options, charges, rights of first refusal, or encumbrances or other
restrictions, and with no defects of title whatsoever. Shareholder has the
exclusive right, power and authority to vote the shares of FGC Common Stock
owned by Shareholder. Shareholder covenants that it is not a party to or
bound by any agreement affecting or relating to Shareholder's right to
transfer or vote the shares of FGC Common Stock owned by Shareholder.
C. Investment and Other Representations. Shareholder is
acquiring the shares of Corporation Common Stock in the Merger for his or its
own account for investment and not with a view to or for sale, distribution or
other disposition, unless such shares are
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registered under the Securities Act, or, in the opinion of knowledgeable
counsel, transferred under an applicable exemption from registration.
Shareholder has had an adequate opportunity to ask questions of and receive
answers from the officers and other employees of Corporation and has such
knowledge and experience in financial and business matters that he or it is
capable of evaluating the merits and risks of an investment in Corporation
Common Stock. Shareholder is an "accredited investor" as such term is defined
in Rule 501 promulgated by the Securities and Exchange Commission under the
Securities Act.
4.2 FGC's Representations and Warranties. Except as Previously
Disclosed, FGC hereby represents and warrants to Corporation as follows:
A. Corporate Standing; Authorization.
(i) FGC is a bank holding company registered
under the BHCA. FGC and each FGC Subsidiary is a Kentucky corporation
or banking corporation, duly organized, validly existing, and in good
standing under the laws of the Commonwealth of Kentucky. FGC and each
FGC Subsidiary has paid all fees due and owing to the Office of the
Kentucky Secretary of State, has delivered to that office its most
recent annual report as required by the Act, and has never filed
articles of dissolution with the Kentucky Secretary of State or the
KDFI. FGC has delivered to Corporation true and correct copies of the
Articles of Incorporation and Bylaws of FGC and all amendments thereto
through the date hereof. FGC and each FGC Subsidiary has all
requisite power and authority to own, lease and operate its properties
and to carry on its business as now being conducted and is duly
qualified and in good standing to do business in each jurisdiction in
which the nature of its business or the ownership or leasing of its
properties makes such qualification necessary.
(ii) The execution and delivery of this Agreement
and the Plan of Merger do not, and the consummation of the
transactions contemplated hereby and thereby will not, conflict with,
or result in any violation of, or default (with or without notice or
lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or the loss of a
material benefit under, or the creation of a lien, pledge, security
interest, charge or other encumbrance on assets (any such conflict,
violation, default, right of termination, cancellation or
acceleration, loss or creation, shall be deemed hereunder a
"Violation") pursuant to, any provision of the articles of
incorporation or bylaws of FGC or any FGC Subsidiary, or, subject to
obtaining or making the consents, approvals, orders, authorizations,
registrations, declaration and filings referred to in paragraph (iii)
below, or result in any Violation of any loan or
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credit agreement, note, mortgage, indenture, lease, Benefit Plan (as
defined in Section 4.2J) or other agreement, obligation, instrument,
permit, concession, franchise, license, judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to FGC or any
FGC Subsidiary or their respective properties or assets.
(iii) Except (a) for consents, approvals, orders,
and authorizations from the Federal Reserve and the KDFI, and (b) for
the filing of Articles of Merger with the Kentucky Secretary of State,
noconsent, approval, order or authorization of, or registration,
declaration or filing with, any court, administrative agency or
commission or other governmental authority or instrumentality,
domestic or foreign, is required by or with respect to FGC or any FGC
Subsidiary in connection with the execution and delivery of this
Agreement and the Plan of Merger, or the consummation by FGC of the
transactions contemplated hereby and thereby.
(iv) FGC has all requisite corporate power and
authority to enter into and to consummate the transactions
contemplated by this Agreement and the Plan of Merger. The execution
and delivery of this Agreement and the Plan of Merger and the
consummation of the transactions contemplated hereby and thereby have
been duly authorized by all necessary corporate action on the part of
FGC, subject to the approval of this Agreement and the Plan of Merger
by the shareholders of FGC. This Agreement and the Plan of Merger
have been duly executed and delivered by FGC, and constitute the
legal, valid and binding obligations of FGC enforceable against it in
accordance with their terms.
B. Capital Structure of FGC. The authorized capital
stock of FGC consists of 3,000 shares of common stock without par value ("FGC
Common Stock"), 850 shares of Class A Preferred Stock, $1,000 par value per
share ("FGC Class A Preferred Stock"), and 200 shares of Class B Preferred
Stock, $1,000 par value per share ("FGC Class B Preferred Stock"). At the date
hereof, (i) 2,501 shares of FGC Common Stock are validly issued and outstanding
and fully paid and nonassessable, (ii) 836 shares of FGC Class A Preferred
Stock are issued and outstanding and fully paid and nonassessable, and (iii)
174 shares of Class B Preferred Stock are issued and outstanding and fully paid
and nonassessable. No shares of FGC Common Stock or FGC Preferred Stock are
held in treasury. There is outstanding no subscription, option, warrant, call
or commitment of any character relating to shares of FGC's capital stock or any
instruments that can be converted into shares of FGC's capital stock. None of
the shares of FGC Common Stock have been issued in violation of any preemptive
right. There are no outstanding contractual obligations of FGC or any FGC
Subsidiary to repurchase, redeem or otherwise acquire any shares of capital
stock of FGC. No bonds, debentures, notes or other indebtedness having the
right to
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vote (or convertible into or exercisable for securities having the right to
vote) on any matters on which stockholders of FGC may vote are issued or
outstanding.
C. Subsidiaries. FGC has Previously Disclosed each
company or other organization, whether incorporated or unincorporated, of which
FGC is a general partner or at least a majority of the securities or other
interests is directly or indirectly owned or controlled by FGC (each such
company or other organization Previously Disclosed by FGC is referred to in
this Agreement as a "FGC Subsidiary"). FGC has delivered to Corporation true
and correct copies of the Articles of Incorporation and Bylaws of each FGC
Subsidiary, as amended through the date hereof, and has Previously Disclosed
the authorized, issued and outstanding capital stock of each FGC Subsidiary.
No shares of capital stock of any FGC Subsidiary are held in treasury. All of
the outstanding shares of capital stock of each FGC Subsidiary are validly
issued and outstanding and are fully paid and nonassessable and such shares are
wholly owned by FGC directly, free and clear of all liens, claims and
encumbrances. There is outstanding no subscription, option, warrant, call or
commitment of any character relating to or any instruments that can be
converted into shares of the capital stock of any FGC Subsidiary. No bonds,
debentures, notes or other indebtedness having the right to vote (or
convertible into or exercisable for securities having the right to vote) of any
FGC Subsidiary are issued or outstanding.
D. FGC Financial Statements. The FGC Financial
Statements were prepared in accordance with generally accepted accounting
principles or regulatory accounting principles, applied on a consistent basis,
and fairly present the financial condition of FGC and the FGC Subsidiaries at
the respective dates indicated therein, the results of operation of FGC and the
FGC Subsidiaries for the periods covered thereby and the other financial
information purported to be shown thereon. The FGC Financial Statements as of
dates ending subsequent to September 30, 1993 will be prepared in accordance
with generally accepted accounting principles, applied on a consistent basis,
and will fairly present the financial condition of FGC and the FGC Subsidiaries
at the respective dates indicated therein, the results of operation of FGC and
the FGC Subsidiaries for the periods covered thereby and the other financial
information purported to be shown thereon.
E. Absence of Undisclosed Liabilities. Except as
disclosed in the FGC Financial Statements, neither FGC nor any FGC Subsidiary
has any obligations or liabilities (contingent or otherwise) that might
reasonably be expected to have, individually or in the aggregate, a material
adverse effect on the business, assets, results of operations or financial
condition of FGC and the FGC Subsidiaries taken as a whole, except obligations
or liabilities incurred after the date of this Agreement in the ordinary course
of business consistent with prior practice. The business of
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FGC and each FGC Subsidiary has been conducted only in the ordinary course of
business since December 31, 1992.
F. Loans and Allowance for Credit Losses. All loans
reflected on the books and records of each FGC Subsidiary have been (i) made
for good, valuable and adequate consideration in the ordinary course of
business and (ii) evidenced by notes or other evidences of indebtedness that
are true and genuine. The allowance for credit losses ("Allowance") shown on
the consolidated balance sheet of FGC as of September 30, 1993 included in the
FGC Financial Statements was, and the Allowance shown on the consolidated
balance sheets of FGC as of dates subsequent to the execution of this Agreement
included in the FGC Financial Statements will be, in each case as of the dates
thereof, adequate to provide for losses relating to or inherent in the loan and
lease portfolios of, and other extensions of credit (including letters of
credit and commitments to make loans or extend credit) made by, FGC and each
FGC Subsidiary.
G. Legal Proceedings. There are no claims of any kind
or any actions, suits, proceedings, arbitrations or investigations pending or,
to the best knowledge of FGC, threatened against FGC or any FGC Subsidiary or
against any asset, interest or right of any such company that might,
individually or in the aggregate, have a material adverse effect on the
financial condition, results of operation or business of FGC or any FGC
Subsidiary, nor is there any judgment, decree, injunction, rule or order of any
governmental entity or arbitrator outstanding against FGC or any FGC Subsidiary
having or which, insofar as reasonably can be foreseen, in the future could
have any such effect.
H. Agreements with Regulators. Neither FGC, any FGC
Subsidiary, nor any officer or director of FGC or any FGC Subsidiary, is a
party to any written agreement or memorandum of understanding with, or a party
to any commitment letter or similar undertaking to, or is subject to any order
or directive by, or is a recipient of any extraordinary supervisory letters
from, any banking regulator, nor has FGC or any FGC Subsidiary been advised by
any banking regulator that it is contemplating issuing or requesting (or is
considering the appropriateness of issuing or requesting) any such order,
decree, agreement, memorandum of understanding, extraordinary supervisory
letter, commitment letter or similar submission. No investigation by any
governmental entity with respect to FGC or any FGC Subsidiary is pending or, to
the best knowledge of FGC, threatened and neither FGC nor any FGC Subsidiary
has knowledge of any basis for the commencement of any regulatory or
enforcement action against FGC or any FGC Subsidiary by any governmental or
regulatory authority.
I. Compliance with Laws. FGC and each FGC Subsidiary
holds all permits, licenses, variances, exemptions, orders and approvals of all
governmental entities which are material to the
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operation of the businesses of FGC and each FGC Subsidiary and is in compliance
in all material respects with the terms thereof. FGC and each FGC Subsidiary
has complied with in all material respects and is not in any default under (and
has not been charged with or received notice with respect to (except for
routine bank examinations by Federal and state agencies), nor are threatened
with or under investigation with respect to, any charge concerning any
violation of any provision of) any federal, state or local law, regulation,
ordinance, rule or order (whether executive, judicial, legislative or
administrative) or any order, writ, injunction or decree of any court, agency
or instrumentality, except for possible violations or defaults that,
individually or in the aggregate, would not have a material adverse effect on
FGC and its Subsidiaries taken as a whole. There are no uncured violations or
violations with respect to which refunds or restitution may be required cited
in any report concerning FGC or any FGC Subsidiary as a result of examination
by any regulatory authority and neither FGC nor any FGC Subsidiary has
knowledge of any basis on which refunds or restitution may be required by any
regulatory authority.
J. Employee Benefit Plans.
(i) Since the date of the most recent FGC Financial
Statements, there has not been any adoption or amendment in any
material respect by FGC or any FGC Subsidiary of any collective
bargaining agreement, or any bonus, pension, profit sharing, deferred
compensation, incentive compensation, stock ownership, stock purchase,
stock option, phantom stock, retirement, vacation, severance,
disability, death benefit, hospitalization, medical or other plan,
arrangement or understanding (whether or not legally binding)
providing benefits to any current or former employee or director of
FGC or any FGC Subsidiary (collectively, "Benefit Plans"). There
exist no employment, consulting, severance, termination or
indemnification agreements, arrangements or understandings between FGC
or any FGC Subsidiary and any officer, director or key employee of FGC
or any FGC Subsidiary.
(ii) FGC has Previously Disclosed a list and brief
description of all "employee pension benefit plans" (as defined in
Section 3(2) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")) (sometimes referred to herein as "Pension
Plans"), all "employee welfare benefit plans" (as defined in Section
3(1) of ERISA) and all other Benefit Plans maintained, or contributed
to, by FGC or any FGC Subsidiary for the benefit of any officers or
employees of FGC or any FGC Subsidiary. FGC has delivered to
Corporation true, complete and correct copies of (1) each Benefit Plan
(or, in the case of any unwritten Benefit Plans, descriptions
thereof), (2) the most recent annual report on Form 5500 filed with
the Internal Revenue Service with respect to each Benefit Plan, (if
any such report was required), (3)
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the most recent summary plan description for each Benefit Plan for
which such summary plan description is required, and (4) each trust
agreement and group annuity contract relating to any Benefit Plan. No
Benefit Plan provides medical or hospitalization benefits to retirees
or other former employees, other than medical benefits required to be
provided to qualified beneficiaries under the provisions of Section
4980B(f) of the Code and paid for entirely by the individual electing
such coverage under Section 4980B(f) of the Code.
(iii) Each Benefit Plan has been administered in all
material respects in accordance with its terms. FGC, each FGC
Subsidiary and all the Benefit Plans are in compliance with the
applicable provisions of ERISA and the Code. All reports, returns and
similar documents with respect to the Benefit Plans required to be
filed with any governmental agency or distributed to any Benefit Plan
participant have been duly and timely filed or distributed. There are
no investigations by any governmental agency, termination proceedings
or other claims (except claims for benefits payable in the normal
operation of the Benefit Plans), suits or proceedings against or
involving any Benefit Plan or asserting any rights or claims to
benefits under any Benefit Plan that could give rise to any liability,
and, to the best knowledge of FGC, there are not any facts that could
give rise to any liability in the event of any such investigation,
claim, suit or proceeding.
(iv) All Pension Plans have been the subject of
determination letters from the Internal Revenue Service to the effect
that such Pension Plans are qualified and exempt from Federal income
taxes under Sections 401(a) and 501(a), respectively, of the Code. No
such determination letter has been revoked nor, to the best knowledge
of FGC, has revocation been threatened, nor has any such Pension Plan
been amended since the date of its most recent determination letter or
application therefor in any respect that would adversely affect its
qualification or materially increase its costs.
(v) No Pension Plan that FGC, any FGC Subsidiary
or any other company under common control with FGC (within the meaning
of Section 4001(a)(14) of ERISA) maintains, or to which FGC, any FGC
Subsidiary or any other company under common control with FGC (within
the meaning of Section 4001(a)(14) of ERISA) is obligated to
contribute, other than any Pension Plan that is a "multiemployer plan"
(as such term is defined in Section 4001(a)(3) of ERISA)
(collectively, the "Multiemployer Pension Plans"), had, as of the
respective last annual valuation date for each such Pension Plan, an
"unfunded benefit liability" (as such term is defined in Section
4001(a)(18) of ERISA). FGC is not aware of any facts or circumstances
that would change the funded status of any such
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Pension Plan. None of the Pension Plans has an "accumulated funding
deficiency" (as such term is defined in Section 302 of ERISA or
Section 412 of the Code), whether or not waived. All contributions
to, and payments from, the Benefit Plans required to be made in
accordance with the Benefit Plans and, when applicable, Section 302 of
ERISA or Section 412 of the Code, have been timely made, and there has
been no application for or waiver of the minimum funding standards
imposed by Section 412 of the Code with respect to any Pension Plan.
All such contributions to, and payments from, the Benefit Plans
(except those payments to be made from a trust qualified under Section
401(a) of the Code), for any period ending before the Effective Time
that are not yet, but will be, required to be made, will be properly
accrued and reflected in the proper books and records of FGC at the
Effective Time. None of FGC, any FGC Subsidiary or any officer of FGC
or any FGC Subsidiary or any of the employee benefit plans of FGC and
any FGC Subsidiary which are subject to ERISA, including the Pension
Plans, or any trusts created thereunder, any administrator or, to the
best knowledge of FGC, any trustee thereof, has engaged in a
"prohibited transaction" (as such term is defined in Section 406 of
ERISA or Section 4975 of the Code) or any other breach of fiduciary
responsibility under Part 4, Subtitle B, Title I of ERISA that could
subject FGC, any FGC Subsidiary or any officer of FGC or any FGC
Subsidiary to the tax or penalty on prohibited transactions imposed by
such Section 4975 or to any liability under Section 502(i) or (1) of
ERISA. Neither any of such plans nor any of such trusts have been
terminated, nor has there been any "reportable event" (as that term is
defined in Section 4043 of ERISA) with respect thereto during the last
five years. Neither FGC, any FGC Subsidiary, any administrator, nor,
to the best knowledge of FGC, any trustee or other fiduciary, of any
Benefit Plan nor any agent of any of the foregoing has engaged in any
transaction or acted or failed to act in a manner that could subject
FGC or any FGC Subsidiary to any material liability for breach of
fiduciary duty under ERISA or any other applicable law. Neither FGC
nor any FGC Subsidiary (or any other employer that since September 2,
1974 has ever been treated as a "single employer" under Section
414(b)(c) or (m) of the Code with FGC or any FGC Subsidiary) has ever
been required to contribute to any Multiemployer Pension Plans.
(vi) With respect to any Pension Plan subject to
Title IV of ERISA (including for purposes of clause (1) below, any
Pension Plan maintained or contributed to by FGC or any other company
under common control with FGC within the meaning of Section 414 of the
Code and, for purposes of clause (2) below, any Pension Plan
maintained or contributed to by FGC or any other company under common
control with FGC within the meaning of Section 4001(a)(14) of ERISA):
FGC has not incurred any material liability on or prior to the date
hereof
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(1) to such Pension Plan or (2) to the Pension Benefit Guaranty
Corporation other than for the payment of premiums, all of which have
been paid when due. FGC has furnished to Corporation the most recent
actuarial report or valuation with respect to each Pension Plan that
is a "defined benefit pension plan" (as defined in Section 3(35) of
ERISA). The information supplied to the actuary by FGC for use in
preparing those reports or valuations was complete and accurate and
FGC has no reason to believe that the conclusions expressed in those
reports or valuations are incorrect.
(vii) With respect to any Benefit Plan that is an
employee welfare benefit plan: (1) no such Benefit Plan is unfunded or
funded through a welfare benefits fund, as such term is defined in
Section 419(e) of the Code, (2) each such Benefit Plan that is a group
health plan, as such term is defined in Section 5000(b)(1) of the
Code, complies with the applicable requirements of Section 4980B(f) of
the Code and (3) each such Benefit Plan (including any such Plan
covering retirees or other former employees) may be prospectively
amended or terminated without material liability to FGC or any FGC
Subsidiary on or at any time after the Effective Time.
(viii) Each employee bonus or profit sharing plan
providing benefits to any current or former officer, director or
employee of FGC or any FGC Subsidiary is terminable by FGC or such FGC
Subsidiary without notice at any time.
K. Labor Matters.
(i) FGC and each FGC Subsidiary is in compliance in
all material respects with all applicable laws respecting employment
and employment practices, terms and conditions of employment and wages
and hours and occupational safety and health;
(ii) There is no unfair labor practice charge or
complaint or any other matter against or involving FGC or any FGC
Subsidiary pending or, to the knowledge of FGC, threatened before the
National Labor Relations Board or any court of law;
(iii) Neither FGC nor any FGC Subsidiary is a party
to or bound by any collective bargaining agreement or any similar
labor union arrangement;
(iv) There are no charges, investigations,
administrative proceedings or formal complaints of discrimination
(including discrimination based upon sex, age, marital status, race,
color, religion, national origin, sexual preference, disability,
handicap or veteran status) pending or, to the knowledge of FGC
threatened, before the Equal Employment
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Opportunity Commission or any federal, state or local agency or court
against FGC or any FGC Subsidiary;
(v) There have been no governmental audits of the
equal employment opportunity practices of FGC or any FGC Subsidiary
and, to the knowledge of FGC, no basis for any such claim exists; and
(vi) FGC and each FGC Subsidiary is in compliance in
all material respects with the requirements of the Americans With
Disabilities Act.
L. Brokers. Neither FGC, any FGC Subsidiary, nor any of
their respective officers, directors or employees, has employed any broker,
finder or financial advisor or incurred any liability for fees or commissions
payable to any broker, finder or financial advisor in connection with the
negotiations relating to or the transactions contemplated by this Agreement.
M. Assets. FGC and each FGC Subsidiary has good and
marketable title to all of the properties and assets, real and personal,
tangible and intangible, reflected on the FGC Financial Statements or acquired
after the dates thereof, free and clear of all liens, charges, security
interests, encumbrances and claims, except for (i) liens for current taxes not
yet due and payable, (ii) pledges to secure deposits and other liens incurred
in the ordinary course of its business, and (iii) such imperfections or
irregularities of title, easements, claims, liens, charges, security interests
and encumbrances, if any, as do not materially affect the use of the properties
or assets subject thereto or affected thereby or otherwise materially impair
business operations at such properties. All leases by which either of FGC or
any FGC Subsidiary leases real or personal property as lessee (other than
leases that are the equivalent of extensions of credit) are valid without
default in any material respect thereunder by the lessee or, to the best
knowledge of FGC, the lessor, and are in full force and effect in accordance
with their respective terms.
N. Material Contracts. Except as disclosed in any FGC
SEC Document, neither FGC nor any FGC Subsidiary is a party to any:
(i) agreement, arrangement or commitment not made
in the ordinary course of business consistent with past practices;
(ii) employment agreement or any bonus, incentive,
deferred compensation, severance pay, profit sharing, retirement,
stock purchase, stock option agreement or arrangement or employee
benefit plan for or in respect of any employee or former employee;
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(iii) collective bargaining agreement or other
agreement with any labor union or labor organization;
(iv) material agreement, indenture or other
instrument relating to the borrowing of money, or the guaranty of any
obligation for the borrowing of money or any agreement that involves a
potential material liability (other than in the ordinary course of its
business);
(v) any agreement, contract or commitment
containing any covenant materially limiting the freedom of FGC or any
FGC Subsidiary to engage in any line of business in any geographic
area or to compete with any person; or
(vi) agreement for loans or the provision,
purchase or sale of goods, services or property, or other contract or
commitment with any director or officer.
O. Good Standing of Contracts. No event or condition has
occurred or exists, or, to the best knowledge of FGC, is alleged by any of the
other parties thereto to have occurred or existed, which constitutes, or with
lapse of time or giving of notice or both might constitute, a default or breach
under any of the leases, contracts or agreements to which FGC or any FGC
Subsidiary is a party, which default is reasonably likely to result in a
material adverse change in the financial condition, results of operation or
business of FGC or any FGC Subsidiary.
P. Insurance. FGC has Previously Disclosed a list and
of all policies of fire, theft, liability and other insurance and bonds
maintained with respect to the assets or businesses of FGC and each FGC
Subsidiary, the effective dates thereof and the premiums payable with respect
thereto. All such policies and bonds are valid and enforceable and in full
force and effect and neither FGC nor any FGC Subsidiary has received any notice
of premium increases or cancellations with respect to any of such policies and
bonds. To the best knowledge of FGC, neither FGC nor any FGC Subsidiary is
liable for any material retroactive premium adjustments with respect to any of
its insurance policies or bonds.
Q. Tax Matters. Each member of the consolidated group
of which FGC is a member or has ever been a member (the "Group") has timely
filed or caused to be filed all federal, state, foreign and local income,
franchise, gross receipts, payroll, sales, use, withholding, occupancy, excise,
real and personal property, employment and other tax returns, tax information
returns and reports required to be filed, and has paid, or made adequate
provisions for the payment of, all taxes, duties or assessments of any nature
whatsoever, interest payments, penalties and additions (whether or not
reflected in its returns as filed) due and payable (and/or properly accruable
for all periods ending on or before the date of this Agreement) to any city,
county, state, foreign
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country, the United States or any other taxing authority. The most recent FGC
Financial Statements reflect an adequate reserve for all taxes payable by FGC
and each FGC Subsidiary accrued through the date of such Financial Statements.
No material deficiencies for any taxes have been proposed, asserted or assessed
against FGC or any FGC Subsidiary that are not adequately reserved for. Except
with respect to claims for refund, the federal income tax returns of FGC and
each FGC Subsidiary consolidated in such returns have been examined by and
settled with the United States Internal Revenue Service (the "IRS"), or the
statue of limitations with respect to such years has expired (and no waiver
extending the statute of limitations has been requested or granted) for all
years through 1989. The consolidated federal income tax returns of the Group
have not been audited during the last five (5) fiscal years of FGC. No audit,
examination or investigation is presently being conducted or, to the best
knowledge of FGC, threatened by any taxing authority; no unpaid tax
deficiencies or additional liabilities of any sort have been proposed by any
governmental representative; and no agreements for the extension of time for
the assessment of any amounts of tax have been entered into by or on behalf of
any member of the Group.
R. Fiduciary Activities. Each FGC Subsidiary's
fiduciary and custodial activities have been and are being conducted in all
material respects in accordance with all applicable law.
S. Environmental Matters. To the best knowledge of FGC:
(i) FGC and each FGC Subsidiary is in substantial
compliance with all applicable federal, state and local laws, rules,
regulations, ordinances and requirements relating to the environment
("Environmental Laws");
(ii) No "Hazardous Wastes" (as hereinafter defined) have
ever been generated, transported, treated, stored, released or
disposed of on any real property owned or leased by FGC or FGC
Subsidiary;
(iii) Neither FGC nor any FGC Subsidiary has transported or
disposed or caused or permitted any person to transport or dispose of
any Hazardous Wastes other than in accordance with all Environmental
Laws;
(iv) Neither FGC nor any FGC Subsidiary has ever violated
any of the Environmental Laws;
(v) No asbestos, PCBs or other Hazardous Wastes or any
petroleum product or constituents thereof is present on, in or under
any of the property owned by FGC or any FGC Subsidiary, whether owned
or leased or held as OREO (as such term is
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customarily used) or in which FGC or any FGC Subsidiary has any legal
or equitable interest;
(vi) There are no loans or other credits included in the
loan portfolio of any FGC Subsididary with respect to which FGC or any
FGC Subsidiary is or could incur or become responsible liability under
the Environmental Laws, except where such liability would not have a
material adverse effect on FGC and its subsidiaries taken as a whole;
and
(vii) No Hazardous Wastes have ever been utilized on any of
the property now held or previously held by FGC or any FGC Subsidiary
as collateral or otherwise securing any loan made by FGC or any FGC
Subsidiary.
Hazardous Wastes" for purposes of this Agreement shall include,
without limitation: (i) hazardous substances or hazardous wastes, as those
terms are defined by the Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C. Section 9601 et seq., the Resource Conservation and
Recovery Act, 42 U.S.C. Section 6901 et seq., and any other applicable federal,
state or local law, rule, regulation, ordinance or requirement, all as amended
or hereafter amended; (ii) petroleum, including without limitation crude oil
or any fraction thereof which is liquid at standard conditions of temperature
and pressure (60 degrees Fahrenheit and 14.7 pounds per square inch absolute);
(iii) any radioactive material , including without limitation any source,
special nuclear, or by-product material as defined in 42 U.S.C. Section 2011 et
seq.; and (iv) asbestos or any asbestiform minerals in any form or condition.
T. Insider Loans. All loans, loan commitments and any
other extensions of credit and commitments to extend credit that are currently
outstanding by FGC or any FGC Subsidiary to directors, officers, or principal
shareholders of FGC or any FGC Subsidiary or any of their related interests,
were made on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with
other persons, and substantially comply with all applicable provisions of
federal and state law. Such loans, extensions and commitments do not involve
more than a normal risk of collectability.
U. Adjustable Rate Mortgages. Each FGC Subsidiary has
properly calculated, in accordance with the contractual terms thereof and all
applicable law, all adjustments required in its portfolio of adjustable rate
mortgage notes, except for possible violations or errors that individually or
in the aggregate would not have a material adverse effect on FGC and its
subsidiaries taken as a whole.
V. Regulatory Matters. Neither FGC nor any FGC
Subsidiary has, through the date hereof, taken or agreed to take
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any action or has knowledge of any fact or circumstance that would materially
impede or delay receipt of any approval referred to in Section 5.2E hereof.
W. Absence of Certain Changes or Events. Except as
Previously Disclosed, since December 31, 1992, FGC and the FGC Subsidiaries
have not incurred any material liability, except in the ordinary course of
their business consistent with their past practices, nor has there been any
change, or any event involving a prospective change, in the business, assets,
financial condition or results of operations of FGC or any of its FGC
Subsidiaries that has had, or is reasonably likely to have, a material adverse
effect on FGC and FGC's Subsidiaries taken as a whole.
X. Full Disclosure. No representation or warranty of
FGC contained in this Agreement and no statement contained in this Agreement or
in any certificate or other instrument furnished to Corporation hereunder
contains or will contain any untrue statement of a material fact or omits or
will omit to state any material fact necessary to make the statements contained
herein or therein not misleading.
4.3 Corporation's Representations and Warranties. Except as
Previously Disclosed, Corporation hereby represents and warrants to FGC that:
A. Corporate Standing; Authorization.
(i) Corporation is a bank holding company
registered under the BHCA and a savings and loan holding company
registered under the Home Owners' Loan Act. Corporation and each
Corporation Subsidiary is a Kentucky corporation or national bank or
savings association duly organized, validly existing, and in good
standing under applicable laws. Corporation and each Corporation
Subsidiary has all requisite power and authority to own, lease and
operate its properties and to carry on its business as now being
conducted and is duly qualified and in good standing to do business in
each jurisdiction in which the nature of its business or the ownership
or leasing of its properties makes such qualification necessary.
(ii) The execution and delivery of this Agreement
and the Plan of Merger do not, and the consummation of the
transactions contemplated hereby and thereby will not, conflict with,
or result in any Violation pursuant to, any provision of the articles
of incorporation or association or bylaws of Corporation or any
Corporation Subsidiary or, subject to obtaining or making the
consents, approvals, orders, authorizations, registrations,
declarations and filings referred to in paragraph (iii) below, result
in any
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Violation of any loan or credit agreement, note, mortgage, indenture,
lease, benefit plan or other agreement, obligation, instrument,
permit, concession, franchise, license, judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to Corporation
or any Corporation Subsidiary or their respective properties or
assets.
(iii) Except (a) for consents, approvals, orders,
and authorizations from the Federal Reserve and the KDFI, (b) for the
filing of Articles of Merger with the Kentucky Secretary of State, and
(c) in connection with compliance with the provisions of the
Securities Laws and applicable state corporate and securities laws, no
consent, approval, order or authorization of, or registration,
declaration or filing with, any court, administrative agency or
commission or other governmental authority or instrumentality,
domestic or foreign, is required by or with respect to Corporation or
any Corporation Subsidiary in connection with the execution and
delivery of this Agreement and the Plan of Merger, or the consummation
by Corporation of the transactions contemplated hereby and thereby.
(iv) Corporation has all requisite corporate power
and authority to enter into and to consummate the transactions
contemplated by this Agreement and the Plan of Merger. The execution
and delivery of this Agreement and the Plan of Merger and the
consummation of the transactions contemplated hereby and thereby have
been duly authorized by all necessary corporate action on the part of
Corporation. All shares of Corporation Common Stock to be issued
pursuant to or as specifically contemplated by this Agreement and the
Plan of Exchange will be validly issued, fully paid and nonassessable
and not subject to preemptive rights. This Agreement and the Plan of
Merger have been duly executed and delivered by Corporation and
constitute the legal, valid and binding obligations of Corporation
enforceable against it in accordance with their terms.
B. SEC Documents. Corporation has made available to FGC
a true and complete copy of each report, schedule, registration statement and
definitive proxy statement filed by Corporation with the Commission since
January 1, 1991 (as such documents have since the time of their filing been
amended, the "Corporation SEC Documents"), which are all the documents that
Corporation was required to file with the Commission since such date. As of
their respective dates, the Corporation SEC documents complied in all material
respects with the Securities Act or the Exchange Act, as the case may be, and
the rules and regulations of the Commission thereunder applicable to such
Corporation SEC Documents, and none of the Corporation SEC Documents contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein, in
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light of the circumstances under which they were made, not misleading. The
financial statements of Corporation included in the Corporation SEC Documents
comply as to form in all material respects with applicable accounting
requirements and with the published rules and regulations of the Commission
with respect thereto, have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto or, in the case of the
unaudited statements, as permitted by Form 10-Q of the Commission) and fairly
present the consolidated financial position of Corporation and its consolidated
subsidiaries as at the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended. All material agreements,
contracts and other documents required to be filed as exhibits to any of the
Corporation SEC Documents have been so filed. All reports, schedules and
statements hereafter filed by Corporation with the Commission which Corporation
shall deliver to Corporation pursuant to Section 3.6 hereof will comply in all
material respects with the requirements of the Securities Act or the Exchange
Act, as the case may be, and the rules and regulations of the Commission
thereunder, and none of such reports, schedules or statements will 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. The financial
statements of Corporation included in such reports, schedules and statements
will comply as to form in all material respects with applicable accounting
requirements and with the published rules and regulations of the Commission
with respect thereto, will be prepared in accordance with generally accepted
accounting principles applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto or, in the case of the
unaudited statements, as permitted by Form 10-Q of the Commission) and will
fairly present the consolidated financial position of Corporation and its
consolidated subsidiaries as at the dates thereof and the consolidated results
of their operations and cash flows for the periods then ended.
C. Absence of Undisclosed Liabilities. Except as
disclosed in any Corporation SEC Documents filed since January 1, 1991, neither
Corporation nor any Corporation Subsidiary has any obligations or liabilities
(contingent or otherwise) that might reasonably be expected to have,
individually or in the aggregate, a material adverse effect on the business,
assets, results of operations or financial condition of Corporation and its
Corporation Subsidiaries taken as a whole, except obligations or liabilities
incurred after the date of this Agreement in the ordinary course of business
consistent with prior practice.
D. Absence of Certain Changes or Events. Except as
disclosed in the Corporation SEC Documents, since December 31, 1992,
Corporation and the Corporation Subsidiaries have not
26
<PAGE> 27
incurred any material liability, except in the ordinary course of their
business consistent with their past practices, nor has there been any change,
or any event involving a prospective change, in the business, assets, financial
condition or results of operations of Corporation or any of its Corporation
Subsidiaries that has had, or is reasonably likely to have, a material adverse
effect on Corporation and the Corporation Subsidiaries taken as a whole.
E. Brokers. Neither Corporation nor any Corporation
Subsidiary, nor any of their respective officers, directors or employees, has
employed any broker, finder or financial advisor or incurred any liability for
fees or commissions in connection with the negotiations relating to or the
transactions contemplated by this Agreement.
4.4 Non-Survival of Representations and Warranties. All
representations and warranties contained in this Agreement by any party hereto
or set forth in any certificate or other instrument delivered by or on behalf
of the parties pursuant to this Agreement shall expire at the Effective Time.
ARTICLE 5
CONDITIONS PRECEDENT
5.1 Conditions to Obligations of FGC. The obligation of FGC to
consummate the transactions contemplated by this Agreement and the Plan of
Merger, including the Merger, is subject to the satisfaction of the following
conditions precedent on or before the Closing Date, any of which may be waived
by FGC:
A. Approval of this Agreement and the Plan of Merger by
the shareholders of FGC at the Meeting.
B. There shall not be threatened, instituted or pending
any action or proceeding before any domestic or foreign court or governmental
agency or other regulatory or administrative agency or commission, or by any
other person (i) challenging the Merger or the other transactions contemplated
by this Agreement or the terms thereof, or (ii) seeking to prohibit the Merger
or the other transactions contemplated by this Agreement, which, in the opinion
of FGC's counsel, has a reasonable probability of success.
C. The representations and warranties of Corporation set
forth in Section 4.3 of this Agreement shall be true and correct in all
material respects as of the date of this Agreement and as of the Closing Date
as if made on the Closing Date, and Corporation shall have furnished to FGC a
certificate of an executive officer of Corporation to that effect.
27
<PAGE> 28
D. Corporation in all material respects shall have
performed and observed its obligations and covenants as set forth in this
Agreement prior to or on the Closing Date and shall have delivered to FGC a
certificate of an executive officer of Corporation to that effect and evidence,
in form and substance satisfactory to counsel for FGC, that the transactions
contemplated by this Agreement and the Plan of Merger were duly authorized by
all necessary corporate action of Corporation.
E. There shall not have been any material adverse change
in the business, financial condition, prospects or operations of Corporation
since December 31, 1992.
F. Receipt of all permits, consents, approvals and
authorizations from federal and state governmental authorities and regulatory
agencies necessary to effect the Merger (including the expiration of all
applicable waiting periods) and the other transactions contemplated herein, and
the satisfaction of all other requirements prescribed by law which are
necessary to the carrying out of the Merger.
G. FGC shall have received an opinion of counsel of
Corporation dated as of the Closing Date, in substantially the form attached
hereto as Exhibit 5.1G.
H. FGC shall have received the opinion of Corporation's
counsel, Wyatt, Tarrant & Combs, in form and substance satisfactory to FGC and
its counsel, Hirn, Reed & Harper, dated the Closing Date, to the effect that
the Merger will be treated for Federal income tax purposes as a reorganization
within the meaning of Section 368 of the Code and that, except with respect to
the payment of cash for fractional shares or in connection with the exercise of
appraisal rights, the conversion of FGC Common Stock into Corporation Common
Stock will not give rise to the recognition of gain or loss for federal income
tax purposes to the shareholders of FGC.
5.2 Conditions to Obligations of Corporation. The obligation of
Corporation to consummate the transactions contemplated by this Agreement and
the Plan of Merger, including the Merger, is subject to the satisfaction of the
following conditions precedent on or before the Closing Date, any of which may
be waived by Corporation:
A. Approval of this Agreement and the Plan of Merger by
the shareholders of FGC at the Meeting.
B. There shall not be threatened, instituted or pending
any action or proceeding before any domestic or foreign court or governmental
agency or other regulatory or administrative agency or commission, or by any
other person (i) challenging the Merger or the other transactions contemplated
by this Agreement or the terms thereof, or (ii) seeking to prohibit the Merger
or the other
28
<PAGE> 29
transactions contemplated by this which, in the opinion of Corporation's
counsel, has a reasonable probability of success.
C. The representations and warranties of FGC set forth
in Section 4.2 of this Agreement shall be true and correct in all material
respects as of the date of this Agreement and as of the Closing Date as if made
on the Closing Date, and FGC shall have furnished to Corporation a certificate
executed by the Chief Executive Officer of FGC to that effect.
D. FGC in all material respects shall have performed and
observed its obligations and covenants as set forth in this Agreement prior to
or on the Closing Date and shall have delivered to Corporation a certificate of
the Chief Executive Officer of FGC to that effect and evidence, in form and
substance satisfactory to counsel for Corporation, that the transactions
contemplated by this Agreement and the Plan of Merger were duly authorized by
all necessary corporate action of FGC.
E. Receipt of all permits, consents, approvals and
authorizations from federal and state governmental authorities and regulatory
agencies necessary to effect the Merger (including the expiration of all
applicable waiting periods) and the other transactions contemplated herein, on
terms and conditions satisfactory to Corporation (other than standard terms and
conditions), and the satisfaction of all other requirements prescribed by law
which are necessary to the carrying out of the Merger.
F. There shall not have been any material adverse change
in the business, financial condition, prospects or operations of FGC or any FGC
Subsidiary since December 31, 1992.
G. Corporation shall have received an opinion of counsel
for FGC dated as of the Closing Date, in substantially the form attached hereto
as Exhibit 5.2G.
H. Corporation shall have received a written release
from each of the executive officers and directors of FGC and each FGC
Subsidiary which releases Corporation, FGC and each FGC Subsidiary from any and
all claims, known or unknown, contingent or direct, which he or she may have
against Corporation, FGC or any FGC Subsidiary as of the Closing Date, other
than (i) claims arising under this Agreement and the transactions contemplated
hereby, or (ii) claims arising out of moneys on deposit or property held in
trust or as a custodian by a FGC Subsidiary or compensation accrued but not yet
payable or in payment for services rendered to FGC or any FGC Subsidiary as
reflected on the books and records of FGC or any FGC Subsidiary.
I. Corporation shall have received a letter from KPMG
Peat Marwick to the effect that the Merger qualifies for "pooling
29
<PAGE> 30
of interests" accounting treatment if consummated in accordance with this
Agreement and the Plan of Merger.
J. Corporation shall have received all state securities
or "blue sky" permits and other authorizations necessary to consummate the
Merger.
K. The representations and warranties made by FGC in
Section 4.1K (Environmental Matters) shall be true and correct in all material
respects without giving effect to the knowledge qualification contained
therein.
L. Each of the Shareholders shall have executed and
delivered to Corporation a noncompetition agreement in the form attached hereto
as Exhibit 6.2.I.
M. The representations and warranties of the
Shareholders set forth in Section 4.1 of this Agreement shall be true and
correct in all material respects as of the date of this Agreement and as of the
Closing Date, and each Shareholder shall have executed and delivered to
Corporation a certificate to that effect.
N. FGC shall have received with respect to its audited
financial statements as of and for the year ended December 31, 1993 an
unqualified opinion from the independent certified public accountants or
accounting firm preparing such statements.
ARTICLE 6
TERMINATION
6.1 Dissenting Shares. Prior to the Effective Time, this
Agreement and the Plan of Merger may be declared void and of no effect by
Corporation if the number of Dissenting Shares is greater than 9% of the issued
and outstanding shares of FGC.
6.2 Termination. This Agreement and the Plan of Merger may be
terminated: (i) by the mutual agreement of Corporation and FGC; (ii) by
Corporation, upon prior written notice, if FGC or the Shareholders materially
breach any representation or warranty set out in Sections 4.1 or 4.2 of this
Agreement or materially breaches any covenant in this Agreement, or upon the
failure and nonwaiver of any condition precedent set out in Section 5.2 unless,
in the case of a material breach of a covenant or failure of a condition,
within thirty (30) days after written notice from Corporation, FGC or the
Shareholders shall have cured such breach or failure; (iii) by FGC, upon prior
written notice, if Corporation materially breaches any representation or
warranty set out in Section 4.3 of this Agreement or materially breaches any
covenant in this Agreement or upon the failure and nonwaiver of any condition
precedent set out in Section 5.1 unless, in the case of a material
30
<PAGE> 31
breach of a covenant or failure of a condition, within thirty (30) days after
written notice from FGC, Corporation shall have cured such breach or failure;
or (iv) by FGC or Corporation if the Effective Time shall not have occurred on
or before November 30, 1994.
6.3 Declaration. Any declaration of termination under this
Article 6 by Corporation or FGC shall be pursuant to resolution of its Board of
Directors or by executive officers thereof duly authorized by its Board of
Directors to make such a declaration; shall be made by written notice given to
the other parties setting forth the grounds for the termination, including, if
applicable, the alleged material misrepresentation, breach or failure, and,
unless, in the case of a material breach of a covenant or a failure of a
condition, such material breach or failure is timely cured, shall have the
effect of terminating this Agreement and the Plan of Merger effective upon the
delivery of such written notice or the expiration of any applicable cure
period, whichever is later, whereupon the same shall have no further effect and
the Merger provided for herein and therein shall not be effected.
Notwithstanding the foregoing, no termination of this Agreement shall affect
the covenants set forth in Section 3.4 relating to confidentiality or the
provisions set forth in Section 8.5 relating to expenses, which shall survive
any such termination. Except as otherwise expressly provided herein, no
termination of this Agreement on the grounds of a material misrepresentation or
uncured material breach of any covenant contained herein shall relieve the
breaching party from any liability for such uncured material misrepresentation
or uncured material breach of any covenant or agreement contained herein giving
rise to such termination.
ARTICLE 7
INDEMNIFICATION
FGC shall indemnify, defend and hold Corporation harmless, and
Corporation shall indemnify, defend and hold FGC harmless, against and in
respect of any material nonfulfillment of any covenant or agreement or the
material breach of any representation or warranty on the part of the
indemnifying party under this Agreement and any claim, action, suit,
proceeding, demand, judgment, assessment, cost and expense, including
reasonable counsel fees, incident to the foregoing. Except with respect to a
party's intentional breach of any covenant, agreement, representation or
warranty under this Agreement, the liability of either party hereto under this
Article 7 shall be limited to the actual costs and expenses incurred by the
party to be indemnified in connection with its investigation of the other party
and the transactions contemplated by this Agreement. A party seeking
indemnification hereunder shall use its best efforts to minimize any
liabilities, damages, deficiencies, claims, judgments,
31
<PAGE> 32
assessments, cost and expenses in respect of which indemnity is sought
hereunder.
ARTICLE 8
GENERAL PROVISIONS
8.1 Law and Section Headings. This Agreement shall be construed
and interpreted in accordance with the laws of the Commonwealth of Kentucky.
Section headings are used in this Agreement for convenience only and are to be
ignored in the construction of the terms of this Agreement.
8.2 Modifications. The parties hereto may amend, modify or
supplement this Agreement, before or after approval thereof by the shareholders
of FGC, in such manner as may be agreed by them in writing.
8.3 Severability. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
the remaining provisions.
8.4 Notices. All notices hereunder shall be in writing and shall
be deemed to have been given or made when delivered or mailed, first class,
registered or certified mail, postage prepaid, addressed as follows, until
notice of another address or additional addresses have been received by the
other parties:
If to Corporation to:
Trans Financial Bancorp, Inc.
500 East Main Street
Bowling Green, Kentucky 42101
Attention: Douglas M. Lester, President and Chief
Executive Officer
With a copy to:
Stewart E. Conner, Esq.
Wyatt, Tarrant & Combs
2800 Citizens Plaza
Louisville, Kentucky 40202
If to FGC or the Shareholders to:
FGC Holding Company
P. O. Box 457
Martin, Kentucky 41649
Attention: Julius Martin, Chairman of the Board
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<PAGE> 33
With a copy to:
David W. Harper, Esq.
Hirn Reed & Harper
2000 Meidinger Tower
Louisville, Kentucky 40202
8.5 Expenses; Risk of Loss. Whether or not the Merger is
consummated, each of the parties hereto will pay its own fees and expenses
incurred in connection with the Merger and the other transactions contemplated
by this Agreement and the Plan of Merger; provided, however, that if the
transactions contemplated hereby are consummated, then the out-of-pocket fees
and expenses incurred or paid by or on behalf of FGC in connection with the
Merger or the consummation of any of the transactions contemplated by this
Agreement and the Plan of Merger, including all fees and expenses of investment
banking firms, financial advisors, attorneys, accountants, experts and
consultants, shall not exceed the amount Previously Disclosed. Until the
Effective Time, the risk of loss to the assets of FGC shall remain with FGC.
8.6 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but such counterparts shall
together constitute one and the same instrument.
8.7 Time of Essence; Best Efforts. Time is of the essence to the
performance of the obligations set forth in this Agreement. FGC and
Corporation each agree to use their respective best efforts to obtain the
satisfaction of the conditions to their respective obligations specified
herein, and to advise the other parties hereto in writing, as to any unusual
delays or impediments in obtaining the same.
8.8 Closing. At the Closing, each party shall execute and deliver
all documents required by this Agreement, and such further documents as the
other party shall reasonably request in order to satisfy the fulfillment of
each party's agreements and undertakings hereunder.
8.9 Records and Further Assurances. After the Closing, each party
shall make available to the other on reasonable request such books and records
of that party as may be appropriate for use in connection with their respective
tax returns, including any review thereof, and for any other reasonable
purpose.
8.10 Parties in Interest; Third Party Rights. All covenants and
agreements contained in this Agreement by or on behalf of any of the parties
hereto shall bind and inure to the benefit of their respective successors and
permitted assigns. No party to this Agreement may however, assign its rights
hereunder or delegate its
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<PAGE> 34
obligations hereunder to any other person or entity without the express prior
written consent of the other parties hereto. It is the intention of the
parties that nothing in this Agreement or the Plan of Merger shall be deemed to
create any right with respect to any person or entity not a party to this
Agreement or the Plan of Merger.
8.11 Entire Agreement; Waiver. This Agreement, including all
information Previously Disclosed, the Exhibits hereto, the Plan of Merger, and
the Confidentiality Agreements, constitute and contain the entire agreement of
FGC, the Shareholders and Corporation with respect to the Merger and supersede
any prior agreement by the parties, whether written or oral. The waiver of a
breach of any term or condition of this Agreement must be in writing signed by
the party sought to be charged with such waiver and such waiver shall not be
deemed to constitute the waiver of any other breach of the same or of any other
term or condition of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized officers as of the date first above
written.
TRANS FINANCIAL BANCORP, INC.
By /s/ Douglas M. Lester
------------------------------
Douglas M. Lester, President
and Chief Executive Officer
FGC HOLDING COMPANY
By /s/ Julius Martin
------------------------------
Title Chairman
---------------------------
"SHAREHOLDERS"
/s/ Julius Martin
---------------------------------
JULIUS MARTIN
/s/ Ben J. Spradlin
---------------------------------
BEN J. SPRADLIN
/s/ Charles Johnson
---------------------------------
CHARLES JOHNSON
34
<PAGE> 35
/s/ Arnold Turner, Jr.
------------------------------
ARNOLD TURNER, JR.
/s/ Gregory D. Stumbo
------------------------------
GREGORY D. STUMBO
HAROLD STUMBO TRUST
By /s/ Gregory D. Stumbo
---------------------------
Gregory D. Stumbo, Trustee
35
<PAGE> 1
Exhibit 2 (b)
PLAN OF MERGER
THIS PLAN OF MERGER ("Plan") is made and entered into as of
this 28th day of January, 1994, by and between TRANS FINANCIAL BANCORP, INC., a
Kentucky corporation ("Corporation"), and FGC HOLDING COMPANY, a Kentucky
corporation ("FGC").
W I T N E S S E T H :
FGC is a corporation organized and existing under the laws of
the Commonwealth of Kentucky, the authorized capital stock of which consists of
3,000 shares of common stock without par value ("FGC Common Stock"), 850 shares
of Class A Preferred Stock, $1,000 par value per share ("FGC Class A Preferred
Stock"), and 200 shares of Class B Preferred Stock, $1,000 par value per share
("FGC Class B Preferred Stock"). At the date hereof, (i) 2,501 shares of FGC
Common Stock are validly issued and outstanding and fully paid and
nonassessable, (ii) 836 shares of FGC Class A Preferred Stock are issued and
outstanding and fully paid and nonassessable, and (iii) 174 shares of Class B
Preferred Stock are issued and outstanding and fully paid and nonassessable.
The respective Boards of Directors of Corporation and FGC have
determined that it is desirable to effect a Plan and Agreement of
Reorganization (the "Agreement"), for the general welfare and advantage of
Corporation and FGC and their respective shareholders, under which plan FGC
would be merged into Corporation, in accordance with the terms of the Agreement
and this Plan.
The respective Boards of Directors of FGC and Corporation have
approved and adopted the Agreement and this Plan and have authorized the
execution hereof.
NOW, THEREFORE, in consideration of the premises and of the
mutual agreements and undertakings herein contained, the parties hereby agree
as follows:
ARTICLE 1
THE MERGER
1.1 The Merger. Upon the terms and conditions set forth in this Plan
and the Agreement, at the Effective Time (as hereinafter defined) FGC shall be
merged with and into Corporation, the "Surviving Corporation," under the
provisions of, and with the effect provided in, the Kentucky Business
Corporation Act. The terms of the Merger shall be as set forth in the
Agreement and in this Plan.
1.2 Articles of Merger. Upon the terms and conditions set forth in
this Plan and the Agreement, Articles of Merger will be
<PAGE> 2
duly prepared and executed by Corporation and FGC and thereafter delivered for
filing to the Secretary of State of the Commonwealth of Kentucky as provided in
the Agreement. The Merger shall become effective upon the filing of the
Articles of Merger with the Secretary of State of the Commonwealth of Kentucky
or at such time thereafter as is provided in the Articles of Merger (the
"Effective Time").
1.3 Effect of Filing.
A. At the Effective Time, (i) the separate existence of
FGC shall cease and FGC shall be merged with and into Corporation, (ii) the
Articles of Incorporation of Corporation as in effect immediately prior to the
Effective Time shall be the Articles of Incorporation of the Surviving
Corporation, and (iii) the Bylaws of Corporation as in effect immediately prior
to the Effective Time shall be the Bylaws of the Surviving Corporation.
B. At the Effective Time, the officers and Board of
Directors of the Surviving Corporation shall consist of those persons serving
as the officers and directors of Corporation immediately prior to the Effective
Time.
C. At and after the Effective Time, the Merger will have
the effects set forth in Section 271B.11-060 of the Kentucky Business
Corporation Act and as otherwise provided by law.
ARTICLE 2
CONVERSION OF SHARES
2.1 Conversion of FGC Common Stock.
A. Conversion of FGC Common Stock. Each share of FGC
Common Stock issued and outstanding immediately prior to the Effective Time
shall, automatically, by virtue of the Merger and at the Effective Time, be
exchanged for and converted, without any further notice to or on the part of
the holder thereof, into 419.83 shares of Corporation Common Stock, subject to
Sections 2.1C and 2.1D hereof (the "Exchange Ratio"). All shares of FGC Common
Stock shall automatically be canceled and shall cease to exist and each
certificate previously representing any such shares shall thereafter represent
the Corporation Common Stock into which such FGC Common Stock has been
converted. Certificates previously representing shares of FGC Common Stock
shall be exchanged for Corporation Common Stock issued in consideration
therefor upon the surrender of such certificates in accordance with Section
2.3.
B. Treasury Stock. All shares of FGC Common Stock that
are owned by FGC as treasury stock immediately prior to the
2
<PAGE> 3
Effective Time shall be canceled and no cash, stock or other property shall be
delivered in exchange therefor.
C. Reclassifications. If, prior to the Effective Time,
Corporation declares a stock dividend on or subdivides, splits, reclassifies or
combines Corporation Common Stock, or makes a distribution on Corporation
Common Stock of any security convertible into its common stock, then
appropriate adjustment shall be made in the Exchange Ratio to take into account
the stock dividend, subdivision, split, reclassification, combination or
distribution of securities.
D. No Fractional Shares. No certificate or scrip of any
kind will be issued by Corporation to any shareholder of FGC in respect of any
fractional interest in Corporation Common Stock arising out of the conversion
of FGC Common Stock into Corporation Common Stock in the Merger. No holder of
FGC Common Stock will have any rights in respect of a fractional interest in
Corporation Common Stock arising out of the Merger except the right to receive
in lieu thereof a cash payment in a dollar amount equal to such fractional
interest multiplied by the average of the bid and asked price per share, as
quoted by the National Association of Securities Dealers Automated Quotation
System ("NASDAQ"), for Corporation Common Stock on the trading day which occurs
immediately prior to the Closing Date. For purposes of this Agreement,
"trading day" shall mean any day on which securities are traded on the New York
Stock Exchange.
2.2 Conversion of FGC Preferred Stock. Each share of FGC Class A
Preferred Stock and FGC Class B Preferred Stock issued and outstanding
immediately prior to the Effective Time (if any such shares shall be issued and
outstanding immediately prior to the Effective Time) shall, automatically, by
virtue of the Merger and at the Effective Time, be exchanged for and converted,
without any further notice to or on the part of the holder thereof, into one
share of Class A Preferred Stock of Corporation ("Corporation Preferred Stock")
having substantially identical terms, rights, designations and preferences
(including without limitation substantially identical terms, rights,
designations and preferences with respect to dividends, redemption and
liquidation) as the FGC Class A Preferred Stock and Class B Preferred Stock,
respectively. All shares of FGC Preferred Stock shall automatically be
canceled and shall cease to exist and each certificate previously representing
any such shares shall thereafter represent the Corporation Preferred Stock into
which such FGC Preferred Stock has been converted. Certificates previously
representing shares of FGC Preferred Stock shall be exchanged for Corporation
Preferred Stock issued in consideration therefor upon the surrender of such
certificates in accordance with Section 2.3.
3
<PAGE> 4
2.3 Exchange of Certificates.
A. At Closing, each Shareholder shall deliver to
Corporation the Shareholder's certificate or certificates previously
representing shares of FGC Common Stock, together with a properly executed
letter of transmittal in form and substance satisfactory to Corporation, with
all instruments or documents required to accompany the letter of transmittal.
At the Effective Time, or as soon as practical thereafter, Corporation shall
issue to each Shareholder a certificate representing the number of shares of
Corporation Common Stock to which each Shareholder is entitled as provided in
Section 2.1 and, if appropriate, pay each Shareholder a cash amount in lieu of
any fractional share interest, as provided in Section 2.1D. At and after the
Effective Time, holders of certificates previously representing shares of FGC
Common Stock shall cease to have any rights as shareholders of FGC except for
the right to receive upon such surrender the consideration specified in Section
2.1.
B. As soon as practical after the Effective Time,
Corporation shall mail or deliver to each holder of FGC Preferred Stock a form
letter of transmittal. At and after the Effective Time, each person who
immediately prior to the Effective Time held of record shares of FGC Preferred
Stock shall be entitled to receive, upon the surrender of the certificate which
represented such shares to Corporation, together with a properly executed
letter of transmittal in form and substance satisfactory to Corporation and all
instruments or documents required to accompany the letter of transmittal, the
consideration specified in Section 2.2. At and after the Effective Time,
holders of certificates previously representing shares of FGC Preferred Stock
shall cease to have any rights as shareholders of FGC except for the right to
receive upon such surrender the consideration specified in Section 2.2.
ARTICLE 3
TERMINATION
Anything contained in this Plan notwithstanding and
notwithstanding adoption hereof by the shareholders of FGC, this Plan may be
terminated and the Merger abandoned as provided in the Agreement.
4
<PAGE> 5
ARTICLE 4
CONDITIONS PRECEDENT
The obligations of Corporation and FGC to effect the Merger as
herein provided shall be subject to satisfaction, unless duly waived, of the
conditions set forth in the Agreement.
ARTICLE 5
GENERAL PROVISIONS
5.1 Law and Section Headings. This Plan shall be construed and
interpreted in accordance with the laws of the Commonwealth of Kentucky.
Section headings are used in this Plan for convenience only and are to be
ignored in the construction of the terms of this Plan.
5.2 Modifications. The parties hereto may amend, modify or
supplement this Plan, before or after approval thereof by the shareholders of
FGC, in such manner as may be agreed by them in writing.
5.3 Definitions. Capitalized terms not otherwise defined herein
shall have the meaning ascribed to them in the Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized officers as of the date first
above written.
TRANS FINANCIAL BANCORP, INC.
By /s/ Douglas M. Lester
-------------------------------
Douglas M. Lester, President
FGC HOLDING COMPANY
By /s/ Julius Martin
-------------------------------
Title Chairman
-----------------------------
5
