<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
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): February 27, 1997
COBANCORP INC.
----------------------------------------------------
(Exact name of Registrant as specified in its Charter)
OHIO 0-13166 34-1465382
- ------------------------------- ----------------- ------------------
(State or other Jurisdiction of (Commission (IRS Employer
incorporation) File number) Identification No.)
1530 West River Road North, Elyria, Ohio 44035
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (216) 329-8000
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On February 27, 1997 CoBancorp Inc. ("CoBancorp") acquired Jefferson
Savings Bank, an Ohio-chartered savings association ("Jefferson") with assets of
approximately $62 million, by means of a merger of an interim subsidiary of
CoBancorp with and into Jefferson. Cash in the amount of $6,733,000 was paid to
Jefferson's shareholders, they also received additional consideration of
$649,498 attributable to certain favorable tax benefits (confirmed by an IRS
Private Letter Ruling dated May 31, 1996) in exchange for Jefferson's 3,535
issued and outstanding shares. The transaction was accounted for under the
purchase method. Jefferson remains a separate savings association subsidiary
of CoBancorp.
The terms of the sale, including the purchase price and form of
consideration were the result of arms'-length negotiations between the parties.
Prior to this transaction, there has been no material relationship between
Jefferson and CoBancorp, its affiliates, any officer or director of CoBancorp or
any of their affiliates.
In connection with the acquisition, CoBancorp acquired all of the
equipment and other physical property of Jefferson, consisting of equipment and
physical property used in Jefferson's banking business. CoBancorp intends to
continue to use the assets acquired in this transaction in the manner utilized
by Jefferson prior to the acquisition.
Jefferson conducts its operations in the following locations, all of
which will continue in operation for the immediate future following the
acquisition:
<TABLE>
<CAPTION>
Location Description
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<S> <C> <C>
1. One East Main Street Main Office
West Jefferson, Ohio 43162
2. 101 West High Street London Office
London, Ohio 43140
3. 299 Yankee Town Road Mt. Sterling Office
Mt. Sterling, Ohio 43143
</TABLE>
Headquartered in Elyria, Ohio, CoBancorp Inc. is a publicly traded bank
holding company (Nasdaq symbol "COBI") incorporated under the laws of the State
of Ohio and reporting under the Securities Exchange Act of 1934. As of December
31, 1996, CoBancorp Inc. reported assets of $598,917,714 and shareholders'
equity of $54,644,617. Through CoBancorp's principal banking subsidiary,
PREMIERBank & Trust, banking offices operate in Lorain County and portions of
Cuyahoga, Erie, Richland, Huron, Franklin, Delaware and Crawford Counties, Ohio.
The foregoing information does not purport to be complete and is
qualified in its entirety by reference to the exhibits to this Current Report on
Form 8-K.
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA, FINANCIAL INFORMATION, AND EXHIBITS
Exhibits:
10 Agreement and Plan of Reorganization and Merger dated
August 26, 1996 by and among CoBancorp Inc., Prime
Interim Savings Bank and Jefferson Savings Bank and
amendments thereto.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
COBANCORP INC.
Date: March 13, 1997 By: /s/ Timothy W. Esson
-------------------------------
Timothy W. Esson
Executive Vice President
and Treasurer
<PAGE> 1
ACKNOWLEDGEMENT AND AMENDMENT
The undersigned parties to the Agreement and Plan of Reorganization and
Merger dated August 26, 1996 (as amended by Amendment No. 1, the "Agreement")
have executed this Acknowledgment and Amendment in order to confirm certain
matters identified hereinafter.
WHEREAS, the Agreement provides for the acquisition by CoBancorp Inc.,
an Ohio corporation (the "Corporation"), of Jefferson Savings Bank, an
Ohio-chartered savings association ("Jefferson"), by means of the merger of
PRIMESavings Bank, an interim savings association organized under Ohio law as a
subsidiary of the Corporation in order to facilitate the acquisition of
Jefferson ("Prime"), with and into Jefferson, with Jefferson being the surviving
or resulting corporation in such merger (the "Merger");
WHEREAS, in connection with such acquisition certain applications have
been filed by the Corporation, Prime or Jefferson with the Ohio Division of
Financial Institutions (the "Division"), the Federal Deposit Insurance
Corporation (the "FDIC") and the Federal Reserve Bank of Cleveland (the "Reserve
Bank");
WHEREAS, the terms of such acquisition and Merger as set forth in the
foregoing applications are not consistent in every respect with the terms
originally contemplated by and set forth in the Agreement, but rather reflect
modifications to the terms of the acquisition and Merger agreed to by the
parties to such Agreement in accordance with the terms of the Agreement; and
WHEREAS, the parties to the Agreement intend that this Acknowledgement
and Amendment shall reflect the changes in the terms of the acquisition and
Merger from the terms set forth in the Agreement.
NOW, THEREFORE, the parties to the Agreement hereby acknowledge and
agree as follows:
1. The terms of the Agreement notwithstanding, the name of the surviving
or resulting corporation in the Merger will be "Jefferson Savings Bank."
2. The directors and officers of Jefferson will be the initial directors
and officers of the surviving or resulting corporation in the Merger, except
that Mr. James R. Bryden will serve as President of Jefferson following the
Merger.
3. In connection with the Merger, Prime's sole share of authorized capital
stock, par value $100 per share, shall be converted into 3,535 shares of
Jefferson capital stock, par value $100 per share.
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4. To the extent the foregoing terms are inconsistent with the terms of the
Agreement, the Agreement is hereby amended and the terms of this Acknowledgement
and Amendment supersede inconsistent terms of the Agreement.
IN WITNESS WHEREOF, each of the parties to the Agreement has duly
executed and delivered this Acknowledgement and Amendment, or has caused this
Acknowledgement and Amendment to be executed and delivered in its name and on
its behalf by its representative thereunto duly authorized, as of this 3lst day
of December, 1996.
ATTEST: JEFFERSON SAVINGS BANK
/s/ Lisa J. Viel By: /s/ James E. Campbell
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James E. Campbell
Its: President and Chief Executive Officer
ATTEST: COBANCORP INC.
/s/ By: /s/ John S. Kreighbaum
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John S. Kreighbaum
Its: Chairman, President and Chief
Executive Officer
ATTEST: PRIMESAVINGS BANK
/s/ Timothy W. Esson By: /s/ John S. Kreighbaum
- -------------------- ---------------------------------------
Timothy W. Esson John S. Kreighbaum
Secretary and Treasurer Its: President and Chief Executive
<PAGE> 3
AMENDMENT NO. 1 TO AGREEMENT AND PLAN
OF REORGANIZATION AND MERGER
This Amendment No. 1 (the "Amendment") to the Agreement and Plan of
Reorganization and Merger (the "Agreement") by and among CoBancorp Inc., an Ohio
corporation (the "CoBancorp") and PrimeSavings Bank, an Ohio-chartered savings
and loan association in formation ("Acquisition") and Jefferson Savings Bank, an
Ohio-chartered savings and loan association ("Jefferson").
WHEREAS, the parties have on this date entered into an Agreement and,
in connection therewith, wish to provide for certain contingencies which may
affect the value of Jefferson.
NOW THEREFORE, in consideration of the premises and mutual promises
hereinafter set forth and of other good and valuable consideration the receipt
and sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Definitions.
------------
All capitalized terms used herein shall have the meaning set
forth in the Agreement unless otherwise defined herein. As used in this
Amendment the following terms have the definitions indicated:
Subject Litigation - Shall mean the item or items of
litigation described in the supplemental exhibit delivered by Jefferson on this
date.
Expenses of the Subject Litigation - Shall mean all costs
incurred on or after August 21, 1996 in defending against the Subject Litigation
and all amounts paid pursuant to a non-appealable final order in the Subject
Litigation or in settlement of the Subject Litigation; in each case reduced by
the tax benefit which has accrued or will accrue to Jefferson or CoBancorp (on a
consolidated basis), as a result of the incurrence of such cost or making of
such payment.
2. Purchase Price Adjustment - Pre Closing.
----------------------------------------
If the Subject Litigation has been the subject of a final
non-appealable order or has been settled prior to Closing, the Consideration
provided in Section 3.2 of the Agreement shall be further adjusted by deducting
therefrom the Expenses of the Subject Litigation and the Consideration per share
shall be proportionately reduced; provided that in no event shall the
Consideration adjustment exceed in the aggregate the sum of $250,000.00 or
$70.72 per share.
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3. Purchase Price Adjustment - Post Closing.
-----------------------------------------
(a) If the Subject Litigation has not been the subject of a
final non-appealable order and has not been settled prior to Closing, the
parties shall enter into an Escrow Agreement funded in the amount of $250,000
substantially in the form of Exhibit A attached hereto which shall provide for
the payment of the Expenses of the Subject Litigation after the same is finally
settled or the subject of a final non-appealable order, and for the transmission
of any remaining funds to the Shareholders of Jefferson (prior to the Closing)
pro rata in proportion to their shareholdings.
(b) If such post closing adjustment is necessary, CoBancorp
will use its best efforts to minimize Expenses of the Subject Litigation. The
Shareholders of Jefferson (prior to the Closing) are intended and agreed to be
third party beneficiaries of this subsection (3b).
4. Confirmation of the Agreement.
-------------------------------
In all other respects the Agreement is confirmed as of this
date.
Agreed by the parties written above this 26th day of August, 1996.
JEFFERSON SAVINGS BANK COBANCORP INC.
By: /s/ James E. Campbell By: /s/ Lois E. Gunning
----------------------- ---------------------
Its: President and Chief Executive Officer Corporate Secretary
PRIMESAVINGS BANK
By: /s/ Lois E. Gunning
-----------------------
Corporate Secretary
<PAGE> 5
AGREEMENT AND PLAN OF REORGANIZATION AND MERGER
AMONG
COBANCORP INC.
PRIMESAVINGS BANK
AND
JEFFERSON SAVINGS BANK
AUGUST 26, 1996
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AGREEMENT AND PLAN OF REORGANIZATION AND MERGER
THIS AGREEMENT AND PLAN OF REORGANIZATION AND MERGER (this "Agreement")
is dated as of August 26, 1996, by and among CoBancorp Inc., an Ohio corporation
(the "Company"), PRIMESavings Bank, an Ohio-chartered savings and loan
association in formation ("Acquisition"), and Jefferson Savings Bank, an
Ohio-chartered savings and loan association ("Jefferson").
WHEREAS, the respective Boards of Directors of the Company and
Jefferson have approved and deem it advisable and in the best interests of their
respective stockholders to consummate the merger of Acquisition with and into
Jefferson (the "Merger") pursuant to the terms and subject to the conditions set
forth in this Agreement;
WHEREAS, it is expected that the Board of Directors of Acquisition
will, upon its formation, approve the merger of Acquisition with and into
Jefferson pursuant to the terms and subject to the conditions set forth in this
Agreement; and
WHEREAS, the parties desire to provide for certain undertakings,
conditions, representations, warranties and covenants in connection with the
transactions contemplated hereby.
NOW, THEREFORE, in consideration of the premises and mutual promises
hereinafter set forth, and of other good and valuable consideration the receipt
and sufficiency of which are hereby acknowledged, the parties hereto hereby
agree as follows:
ARTICLE 1
DEFINITIONS
1. DEFINITIONS. As used in this Agreement, the following terms have
the definitions indicated. To the extent any of these definitions conflicts
with any of the definitions set forth in the recitals to this Agreement, the
definitions in this Section 1 shall control.
ACQUISITION shall mean PRIMESavings Bank, an Ohio-chartered savings and loan
association in formation under Chapter 1151 of the ORC, and wholly owned
subsidiary of the Company.
ACQUISITION PROPOSAL shall have the meaning assigned to such term in Section 7.4
of this Agreement.
AFFILIATE of a party shall mean any person, partnership, corporation,
association or other legal entity directly, or indirectly through one or more
intermediaries, controlling, controlled by or under common control with that
party.
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AGREEMENT means this Agreement and Plan of Reorganization and Merger, including
all schedules, exhibits and annexes attached to or incorporated by specific
reference as a part of this Agreement, as well as any amendments to this
Agreement adopted after the date hereof.
APPLICABLE ENVIRONMENTAL LAWS shall have the meaning assigned to such term in
Section 5.15 of this Agreement.
ARTICLES OF INCORPORATION shall, with respect to the Company, mean its Second
Amended and Restated Articles of Incorporation. With respect to Jefferson, such
term shall mean its Articles of Incorporation, as the same may have been amended
or restated.
BALANCE SHEET DATE shall have the meaning assigned to such term in Section 4.8
of this Agreement.
BENEFIT ARRANGEMENTS shall have the meaning assigned to such term in Section
5.25(c) of this Agreement.
BHCA shall mean the Bank Holding Company Act of 1956, 12 U.S.C. 1841, et seq.
BMA shall mean the Bank Merger Act, 12 U.S.C. 1828(c).
BROKERED DEPOSITS shall mean all deposits of Jefferson on which Jefferson has
paid a commission or an interest rate significantly higher than that paid by
Jefferson to the general depositors of Jefferson.
BUSINESS DAY shall mean any Monday, Tuesday, Wednesday, Thursday or Friday that
is not a federal or state holiday generally recognized by financial institutions
in Ohio.
CERCLA shall have the meaning assigned to such term in Section 5.15(a) of this
Agreement.
CERCLIS shall have the meaning assigned to such term in Section 5.15(c) of this
Agreement.
CERTIFICATE OF MERGER shall have the meaning assigned in Section 2.1(a) of this
Agreement.
CLOSING shall have the meaning assigned to such term in Section 3.1 of this
Agreement.
CLOSING DATE shall mean the date on which the Closing occurs.
CODE shall mean the Internal Revenue Code of 1986, as amended.
COMPANY shall mean CoBancorp Inc., an Ohio corporation having its principal
place of business at 124 Middle Avenue, Elyria, Ohio 44035.
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<PAGE> 8
COMPANY FINANCIAL STATEMENTS shall mean (i) audited consolidated balance sheets
for the Company and its Subsidiaries as of the end of the Company's last two
fiscal years, (ii) audited consolidated statements of income, stockholders'
equity, and cash flows for each of the last three fiscal years, including the
notes to said audited consolidated financial statements, together with the
reports of the Company's independent certified public accountants pertaining to
said audited consolidated financial statements and (iii) the unaudited
consolidated balance sheets and consolidated statements of income and cash flows
(including related notes) of the Company and its Subsidiaries for each of the
quarters ended or ending after January 1, 1996, as filed by the Company with the
Securities and Exchange Commission.
CONSIDERATION shall have the meaning given in Section 3.2(a) of this Agreement.
CONTROL OR CONTROL shall mean the possession, direct or indirect, of the power
to direct or cause the direction of the management and policies of a person,
whether through the ownership of voting securities, by contract or otherwise.
DEPOSITS shall mean all deposits (including, but not limited to, certificates of
deposit, savings accounts, NOW accounts and checking accounts) of Jefferson.
DISSENTING STOCK shall have the meaning assigned to such term in Section 3.2(c)
of this Agreement.
EFFECTIVE DATE shall mean the date on which the Effective Time occurs.
EFFECTIVE TIME shall have the meaning assigned to such term in Section 2.1(a) of
this Agreement.
EMPLOYEE PENSION BENEFIT PLANS shall have the meaning assigned to such term in
Section 5.25(a) of this Agreement.
EMPLOYEE WELFARE BENEFIT PLANS shall have the meaning assigned to such term in
Section 5.25(b) of this Agreement.
ERISA shall mean the Employee Retirement Income Security Act of 1974, as
amended.
EXCHANGE AGENT shall mean Registrar & Transfer Company.
FDIA shall mean the Federal Deposit Insurance Act, 12 U.S.C. 1811, et seq.
FDIC means the Federal Deposit Insurance Corporation, or any successor thereto.
FIXED ASSETS shall mean the furniture, fixtures and equipment of the referenced
Party.
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FRB shall mean the Board of Governors of the Federal Reserve System.
GAAP shall meaning generally accepted accounting principles, consistently
applied.
GOVERNMENT APPROVALS shall have the meaning assigned to such term in Section 4.4
of this Agreement.
HAZARDOUS SUBSTANCES shall have the meaning assigned to such term in Section
5.15(a) of this Agreement; provided, that Hazardous Substances shall not include
commercially available consumer products reasonably appropriate for use in or
for routine maintenance or upkeep of an office of a financial institution as
long as such products are used in accordance with label instructions.
HOLA shall mean the Home Owners' Loan Act of 1933, 12 U.S.C. 1461, et seq.
JEFFERSON shall mean Jefferson Savings Bank, an Ohio-chartered savings and loan
association, which has its administrative office at 5060 Parkcenter Boulevard,
Dublin, Ohio 43017.
JEFFERSON COMMON STOCK shall have the meaning assigned to such term in Section
3.2(b) of this Agreement.
JEFFERSON EMPLOYEE PLANS shall mean any pension plan, profit sharing plan,
deferred compensation plan, stock option plan, cafeteria plan, and any other
such or related benefit plan or arrangement offered or funded by Jefferson to or
for the benefit of the officers, directors or employees of Jefferson, including
but not limited to any plan maintained by Jefferson under Section 401(k) of the
Code.
JEFFERSON FINANCIAL STATEMENTS shall mean (i) audited consolidated balance
sheets for Jefferson as of the end of Jefferson's last two fiscal years, (ii)
audited consolidated statements of income, stockholders' equity, and cash flows
for each of the last three fiscal years, including the notes to said audited
consolidated financial statements, together with the reports of Jefferson's
independent certified public accountants pertaining to said audited consolidated
financial statements and (iii) the unaudited consolidated balance sheets and
statements of income and cash flows (including related notes) of Jefferson for
each of the quarters ended or ending after July 1, 1995.
MERGER shall, as described in Section 2.1 of this Agreement, mean the merger of
Acquisition with and into Jefferson, which shall survive the Merger as the
Surviving Corporation. The Merger shall be effected by execution of a
Certificate of Merger by the Parties hereto and filing of such Certificate of
Merger with the Secretary of the State of Ohio in accordance with ORC 1701.81.
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<PAGE> 10
MORTGAGE LOAN shall have the meaning assigned to such term in Section 5.23 of
this Agreement.
NOTICE shall have the meaning assigned to such term in Section 10.1 of this
Agreement.
OGCL shall mean the Ohio General Corporation Law, as amended, Ohio Revised Code
Chapter 1701.
ORC shall mean the Ohio Revised Code.
OTS shall mean the Office of Thrift Supervision, or any successor thereto.
PARTIES shall mean Jefferson, the Company and Acquisition, collectively;
Jefferson on one hand, or the Company and Acquisition on the other, may
sometimes be referred to as a PARTY.
PENSION PLAN shall mean any employee pension benefit plan as such term is
defined in Section 3(2) of ERISA which is maintained by the referenced Party.
PER SHARE CONSIDERATION shall have the meaning given in Section 3.2(b) of this
Agreement.
PERSON shall mean any natural person, corporation, partnership, joint venture,
association, business trust or any other entity of any kind.
PROXY STATEMENt shall mean the proxy statement to be used by Jefferson to
solicit proxies for use at the Shareholders' Meeting in order to obtain the
approval and adoption of the Jefferson shareholders of this Agreement and the
Merger contemplated hereby, including any form of proxy, notice of meeting,
letter to shareholders or other accompanying materials.
RCRA shall have the meaning assigned to such term in Section 5.15(a) of this
Agreement.
REALTY shall mean the real property of Jefferson or its subsidiary owned or
leased by Jefferson or its subsidiary.
RECORD HOLDERS or RECORD HOLDER shall mean shareholders of record of Jefferson
Common Stock issued and outstanding immediately prior to the Effective Time.
RECORDS shall mean all available records, minutes of meetings of the Board of
Directors, committees and shareholders of Jefferson, original instruments and
other documentation, pertaining to Jefferson or its subsidiary, Jefferson's or
its subsidiary's assets (including plans and specifications relating to the
Realty), Jefferson's or its subsidiary's liabilities, the Jefferson Common
Stock, the Deposits and the loans, and all other business and financial records
which are necessary or customary for use in the conduct of Jefferson's or its
subsidiary's business by
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the Company and Acquisition on and after the Effective Time of the Merger as
it was conducted prior to the Closing Date.
REGULATORY AUTHORITIES shall mean, collectively, the FDIC, the FRB, the OTS and
the Ohio Division of Financial Institutions or the Superintendent thereof, or
any other state or federal governmental or quasi-governmental entity which has,
or may hereafter have, jurisdiction over any of the transactions described in
this Agreement.
RELEASE shall have the meaning assigned to such term in Section 5.15(b)(i) of
this Agreement.
SAIF shall mean the Savings Association Insurance Fund administered by the FDIC.
SHAREHOLDERS' MEETING shall mean the special meeting of the shareholders of
Jefferson to be held pursuant to Section 7.1 of this Agreement and ORC Chapter
1151, including any adjournment or adjournments thereof.
SUBSIDIARIES shall mean all of those corporations, banks, associations or other
entities of which the entity in question owns or controls 5% or more of the
outstanding voting equity securities either directly or through an unbroken
chain of entities as to each of which 5% or more of the outstanding equity
securities is owned directly or indirectly by its parent; provided, however,
that there shall not be included any such entity acquired through foreclosure or
in satisfaction of a debt previously contracted in good faith, any such entity
that owns or operates an automatic teller machine interchange network, any such
entity that is a joint venture of the parent or of a Subsidiary of the parent,
or any such entity the equity securities of which are owned or controlled in a
fiduciary capacity or through a small business investment corporation.
SUBSIDIARY COMMON STOCK shall have the meaning given in Section 5.11 of this
Agreement.
SURVIVING CORPORATION shall mean Jefferson as the corporation resulting from the
consummation of the merger as set forth in Section 2.1(b) of this Agreement.
TARGET DATE shall have the meaning given in Section 9.1(b) of this Agreement.
ARTICLE II
THE REORGANIZATION AND MERGER
2.1 THE MERGER. Upon the terms and subject to the conditions of this
Agreement, the Merger is to be accomplished in the manner described herein.
(a) Effective Time. Upon satisfaction of all conditions to Closing (as
hereinafter defined), the Merger shall become effective on the date and at the
time of filing of the Certificate of Merger (the "Certificate of Merger") with
the Secretary of State of the State of Ohio, in such
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<PAGE> 12
form as required by, and executed in accordance with the relevant
provisions of Ohio Law, or such later date and time as shall be specified in
such certificate (the "Effective Time").
(b) Effects of the Merger. Upon the terms and subject to the conditions
set forth in this Agreement, and in accordance with Ohio Law, at the Effective
Time Acquisition shall be merged with and into Jefferson. As a result of the
Merger, the separate corporate existence of Acquisition shall cease, Jefferson
shall continue as the surviving corporation of the Merger (the "Surviving
Corporation"), and the effect of the Merger shall be as provided in the
applicable provisions of Ohio Law. As the Surviving Corporation, Jefferson shall
thereupon and thereafter possess all of the assets, rights, privileges,
appointments, powers, licenses, permits and franchises of Jefferson and
Acquisition, whether of a public or private nature, and shall be subject to all
of the debts, liabilities, restrictions, disabilities and duties of Acquisition.
(c) Transfer of Assets. At the Effective Time, all rights, assets,
licenses, permits, franchises and interests of Jefferson in and to every type of
property, whether real, personal or mixed, whether tangible or intangible, and
choses in action shall be deemed to be vested in Jefferson as the Surviving
Corporation by virtue of the Merger becoming effective and without any deed or
other instrument or act of transfer whatsoever.
(d) Assumption of Liabilities. At the Effective Time, the Surviving
Corporation shall become and be liable for all debts, liabilities, obligations
and contracts of Acquisition whether the same shall be matured or unmatured,
accrued, absolute, contingent or otherwise, and whether reflected or reserved
against in the balance sheets, other financial statements, books of account or
records of Acquisition.
2.2 ARTICLES OF INCORPORATION, CONSTITUTION, BYLAWS, DIRECTORS, OFFICERS AND
NAME.
(a) Articles of Incorporation.At the Effective Time, the Articles of
Incorporation, Constitution and the Bylaws of Jefferson, as in effect
immediately prior to the Effective Time, shall continue to be the Articles of
Incorporation of the Surviving Corporation, unless and until amended as provided
by law or the Articles of Incorporation of Jefferson; provided, however, that
the name of Jefferson shall be changed to PRIMESavings Bank.
(b) Constitution. At the Effective Time, the Constitution of Jefferson,
as in effect immediately prior to the Effective Time, shall continue to be the
Constitution of the Surviving Corporation, unless and until amended as provided
by law, the Articles of Incorporation of Jefferson and such Constitution;
provided, however, that the name of Jefferson shall be changed to PRIMESavings
Bank.
(c) Bylaws. At the Effective Time, the Bylaws of Jefferson, as in
effect immediately prior to the Effective Time, shall be the Bylaws of the
Surviving Corporation, unless and until amended or repealed as provided by law,
the Articles of Incorporation or
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<PAGE> 13
Constitution of Jefferson and such Bylaws; provided, however, that the name
of Jefferson shall be changed to PRIMESavings Bank.
(d) Directors and Officers. The directors of Acquisition immediately
prior to the Effective Time shall be the initial directors of the Surviving
Corporation, each to hold office in accordance with the Articles of
Incorporation, Constitution and Bylaws of the Surviving Corporation, and,
subject to Section 6.5(b) of this Agreement, the officers of Acquisition
immediately prior to the Effective Time shall be the initial officers of the
Surviving Corporation, in each case until their respective successors are duly
elected or appointed and qualified.
(e) Name. The name of the Surviving Corporation following the Merger
shall be PRIMESavings Bank.
2.3 RIGHT TO REVISE THE STRUCTURE OF THE TRANSACTION. The Company and Jefferson
may revise the structure of the reorganization and merger contemplated by this
Agreement in order to achieve tax benefits or for any other reason that the
Company and Jefferson deem advisable; provided, however, that, without the
approval of the Board of Directors of Jefferson, no such revision shall have the
effect of making any revision to the structure of the reorganization and merger
contemplated hereby that would change the amount of Consideration (as
hereinafter defined) that Jefferson shareholders are entitled to receive
(determined as provided in Article III hereof).
ARTICLE III
DESCRIPTION OF THE TRANSACTION
3.1 CLOSING; SATISFACTION OF CONDITIONS TO CLOSING. After adoption of this
Agreement and approval of the transactions contemplated hereby by the
shareholders of Jefferson, and each other condition to the obligations of the
parties hereto (other than those conditions that are to be satisfied by delivery
of documents by any party to any other party) has been satisfied or waived by
the party or parties entitled to the benefits thereof, a closing (the "Closing")
will be held at 10:00 A.M. local time at the offices of Bricker & Eckler, 100
South Third Street, Columbus, Ohio on the Effective Date, or at such other time
or place as the parties hereto shall mutually agree.
At the Closing, the parties shall use their best efforts to deliver the
certificates, letters and opinions that constitute conditions to effecting the
Merger and each party shall provide the other with such proof or indication of
satisfaction of the conditions to the obligation of such other party to
consummate the Merger as such other party may reasonably require.
If all conditions to the obligations of each party shall have been
satisfied or waived by the party entitled to the benefits thereof, the parties
shall, at the Closing, duly execute a Certificate of Merger for filing with the
Secretary of State of the State of Ohio. Promptly thereafter,
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Jefferson and Acquisition shall take all steps necessary or desirable to
consummate the Merger in accordance with all applicable laws, rules and
regulations and this Agreement. The parties shall thereupon take such other and
further actions as the Company shall direct or as may be required by law or this
Agreement to consummate the transactions contemplated herein.
3.2 CONSIDERATION; EFFECT OF THE MERGER ON SHARES OF JEFFERSON COMMON STOCK.
(a) Consideration. Provided that as of the Closing Date the
shareholders' equity account of Jefferson is no less than $4,488,000, the
aggregate consideration (the "Consideration") payable by the Company to
shareholders of Jefferson shall be $6,733,000. If the shareholders' equity
account of Jefferson is less than $4,488,000 as of the Closing Date, the
Consideration payable by the Company to Jefferson shall be reduced by an amount
equal to the difference between $4,488,000 and the amount of Jefferson's
shareholders' equity as of the Closing Date; provided, however, that Jefferson's
shareholders' equity shall be calculated before deducting any special SAIF
assessment imposed by the FDIC or established by act of Congress after the date
hereof in order to recapitalize the SAIF insurance fund; and provided further,
that if the FDIC shall have imposed or announced its intention to impose a SAIF
special assessment or charge in deposit insurance premiums on or with respect to
deposits held by SAIF-insured institutions, including Jefferson, or if either
house of the U.S. Congress shall have adopted legislation providing for any such
special SAIF assessment or charge that would, in the Company's sole and
reasonable judgment, substantially impair the value of the Merger to the
Company, then the Consideration payable shall be equitably adjusted to account
for such SAIF special assessment or charge, except that a single, special SAIF
assessment not exceeding $.88 per $100 of deposits imposed in 1996 shall not be
deemed to impair the value of the Merger to the Company.
The aggregate consideration payable by the Company to Jefferson's
shareholders as determined above shall be increased by an amount equal to 34% of
the loss recognized by Jefferson in accordance with Internal Revenue Code
Section 267(f)(2)(B) as supported by the Private Letter Ruling issued to
Jefferson on May 31, 1996 on land sold by Shawnee Hills Land Company prior to
the Effective Time. As of the date of this Agreement, the additional
consideration is $636,525 based on a recognized loss of $1,872,133.
(b) Effect of the Merger. At the Effective Time, each share of common
stock, par value $100 per share, of Jefferson (the "Jefferson Common Stock")
validly issued and outstanding immediately prior to the Effective Time shall
(other than shares of Jefferson Common Stock cancelled pursuant to Section
3.2(a)(ii) hereof and other than shares of any holder of Dissenting Stock (as
hereinafter defined)), by virtue of the Merger becoming effective and without
any further action on the part of any person, be converted exclusively into, and
shall thereafter constitute only, his or her pro rata share of the Consideration
(the "Per Share Consideration"), based upon the number of whole shares of
Jefferson Common Stock held by such person; provided, however, that each share
of Jefferson Common Stock which, immediately
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prior to the Effective Time, is issued and outstanding and owned by the
Company or any direct or indirect subsidiary of the Company (other shares held
by the Company or any such subsidiary in a fiduciary or custodial capacity on
behalf of persons other than Jefferson), or which is held in the treasury of
Jefferson shall be cancelled and retired and no payment shall be made with
respect thereto. The Per Share Consideration shall be payable without interest
from the Effective Time until the time of payment.
Also at the Effective Time, each share of common stock, par value $100
per share, of Acquisition (the "Acquisition Common Stock") validly issued and
outstanding immediately prior to the Effective Time shall, by virtue of the
Merger becoming effective and without any further action on the part of the
Company, be converted exclusively into, and shall thereafter constitute, a like
number of shares of Jefferson Common Stock.
(c) Dissenting Stock. Shares of Jefferson Common Stock held by any
person who shall have taken the necessary steps under Section 1701.85 of the
OGCL to demand payment of the fair cash value of his or her shares of Jefferson
Common Stock and who is otherwise entitled to such payment under the OGCL shall
be referred to hereinafter as "Dissenting Stock." Notwithstanding anything
herein to the contrary, Dissenting Stock shall not be converted into the right
to receive Per Share Consideration at or after the Effective Time unless and
until the holder of such Dissenting Stock (i) withdraws his or her demand for
payment of the fair cash value of his or her shares with the consent of
Jefferson, if required under the OGCL, or (ii) becomes ineligible to demand such
payment (through failure to comply with the applicable provisions of the OGCL or
otherwise). If such holder of Dissenting Stock withdraws his or her demand or
becomes ineligible to make such demand, then as of the later of the Effective
Time or the occurrence of such event, such holder's Dissenting Stock shall be
converted automatically into and represent the right to receive the Per Share
Consideration as hereinafter provided, without interest thereon.
Jefferson shall give the Company prompt notice of any demands for
payment of the fair cash value of Jefferson Common Stock, withdrawals of any
such demands and any other instruments served pursuant to Section 1701.85 of the
OGCL and received by Jefferson. Jefferson shall not voluntarily make any payment
with respect to any such demands and shall not, except with the prior written
consent of the Company, settle or offer to settle any such demands. Each holder
of Dissenting Stock shall have only such rights and remedies as are granted to
such holder under Section 1701.85 of the OGCL. Dissenting Stock shall not, after
the Effective Time, be entitled to vote for any purpose or be entitled to the
payment of dividends or other distributions, except dividends or other
distributions payable to shareholders of record prior to the Effective Time.
(d) Stock Transfer Books. At the Effective Time, the stock transfer
books of Jefferson shall be closed and there shall be no further registration of
transfers of shares of Jefferson Common Stock thereafter on the records of
Jefferson. From and after the Effective
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Time, the holders of certificates evidencing ownership of shares of
Jefferson Common Stock outstanding immediately prior to the Effective Time shall
cease to have any rights with respect to such Shares except as otherwise
provided herein or by law. On or after the Effective Time, any Certificates
presented to the Exchange Agent or the Company for any reason shall be converted
into the right to receive cash in accordance with this Agreement.
(e) No Further Rights in the Shares. The Per Share Consideration issued
or paid upon conversion of the shares of Jefferson Common Stock in accordance
with the terms hereof (including any cash paid pursuant hereto) shall be deemed
to have been issued in full satisfaction of all rights pertaining to such
shares, and, at the Effective Time, the holders of certificates representing
shares of Jefferson Common Stock shall cease to have any rights as stockholders
of Jefferson except such rights, if any, as they may have under the OGCL. Until
certificates representing Jefferson Common Stock are surrendered for exchange,
each such certificate shall, after the Effective Time, represent for all
purposes solely the right to receive the Per Share Consideration for the number
of shares represented by such certificate.
(f) No Liability. None of the Company, Acquisition or Jefferson shall
be liable to any holder of Shares for any Per Share Consideration (or dividends
or distributions with respect thereto) delivered to a public official pursuant
to any abandoned property, escheat or similar law.
(g) Withholding Rights. The Company shall be entitled to deduct and
withhold from any Per Share Consideration payable pursuant to this Agreement to
any holder of shares of Jefferson Common Stock such amounts as may be necessary
under the Code or any provision of state, local or foreign tax law. To the
extent that amounts are so withheld by the Company, such withheld amounts shall
be treated for all purposes of this Agreement as having been paid to the holder
of the shares of Jefferson Common Stock in respect of which such deduction and
withholding was made by the Company.
3.3 EXCHANGE OF JEFFERSON COMMON STOCK
(a) As soon as practicable after the Effective Time, and in no event
later than five (5) business days thereafter, Registrar & Transfer Company or
another agent reasonably acceptable to the Company (the "Exchange Agent") shall
mail to each holder of record of one or more certificates representing Jefferson
Common Stock a letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the shares of Jefferson Common Stock
shall pass, only upon delivery of the certificates representing shares of
Jefferson Common Stock to the Exchange Agent) and instructions for use in
effecting the surrender of the shares of Jefferson Common Stock in exchange for
the Per Share Consideration. Upon proper surrender of a certificate representing
shares of Jefferson Common Stock for exchange and cancellation to the Exchange
Agent, together with a properly completed letter of transmittal, duly executed,
the holder of such Jefferson Common Stock shall be entitled to receive in
exchange therefor a check representing the cash amount which such holder has the
right to receive in respect thereof
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pursuant to Section 3.2 of this Agreement, and the certificate so
surrendered shall forthwith be cancelled. The Company shall not be obligated to
deliver the Per Share Consideration to any holder of Jefferson Common Stock
until such holder surrenders the certificates for same as provided herein. The
Company and the Exchange Agent shall be entitled to rely upon the stock transfer
books of Jefferson to establish the identity of those persons entitled to
receive the Consideration specified in this Agreement, which books shall be
conclusive with respect thereto. In the event of a dispute with respect to
ownership of stock represented by any certificate for Jefferson Common Stock,
the Company and the Exchange Agent shall be entitled to deposit any
consideration in respect thereof in escrow with an independent third party and
thereafter relieved with respect to any claims thereto.
(b) In the event any certificate representing one or more shares of
Jefferson Common Stock shall have been lost, stolen or destroyed, upon the
making of an affidavit of that fact (in form reasonably satisfactory to the
Company) by the person claiming such certificate to be lost, stolen or destroyed
and, if reasonably required by the Company, the posting by such person of a bond
in such amount as the Company may determine is reasonably necessary as indemnity
against any claim that may be made against it with respect to such Jefferson
Common Stock, such person will be entitled to receive in exchange for such lost,
stolen or destroyed certificate the Per Share Consideration for the shares
represented thereby.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
THE COMPANY AND ACQUISITION
Except as otherwise disclosed in one or more schedules (collectively,
the "Company Schedules") dated as of the date hereof and delivered concurrently
with this Agreement, both as the date hereof and as of the Effective Time of the
Merger, the Company (and, effective upon its formation, Acquisition) represents
and warrants to Jefferson as follows:
4.1 ORGANIZATION AND CORPORATE AUTHORITY. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Ohio and, upon completion of its organization evidenced by issuance of a
certificate by the Secretary of State of Ohio acknowledging filing of
Acquisition's Articles of Incorporation, Acquisition will be an Ohio-chartered
savings and loan association duly organized, validly existing and in good
standing under the laws of the State of Ohio. The Company and, upon completion
of its formation and receipt of any other necessary regulatory approvals,
Acquisition (i) have or will have, respectively, all requisite corporate power
and authority to own, operate and lease their material properties and carry on
their businesses as currently being conducted and (ii) are or will be,
respectively, in good standing and duly qualified to do business in each
jurisdiction where the character of their properties owned or held under lease
or the nature of their business is such that failure to be so qualified would
have a material adverse effect on the ability of the Company or
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Acquisition to consummate the transactions contemplated hereby. The Second
Amended and Restated Articles of Incorporation and Code of Regulations of the
Company and the Articles of Incorporation, Constitution and Bylaws of
Acquisition, are in full force and effect or, in the case of Acquisition, will
be in full force and effect following completion of Acquisition's formation.
4.2 AUTHORIZATION, EXECUTION AND DELIVERY; REORGANIZATION AGREEMENT NOT IN
BREACH.
(a) The Company and Acquisition have or will have, respectively, all
requisite corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. This Agreement, and all
other agreements contemplated to be executed in connection herewith by the
Company and Acquisition have been (or upon execution will have been) duly
executed and delivered by the Company and Acquisition, have been (or upon
execution will have been) effectively authorized by all necessary action,
corporate or otherwise, and, other than the approval of the Company's and
Acquisition's Boards of Directors, no other corporate proceedings on the part of
the Company or Acquisition is (or will be) necessary to authorize such execution
and delivery, and constitute (or upon execution will constitute) legal, valid
and enforceable obligations of the Company or Acquisition, subject, as to
enforceability, to applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting the enforcement of creditors' rights generally, and to
the application of equitable principles and judicial discretion; and
(b) The execution and delivery of this Agreement, the consummation of
the transactions contemplated hereby and the fulfillment of the terms hereof
will not: (A) result in material violation or breach of any of the terms or
provisions of, or constitute a material default under (or an event which, with
the passage of time or the giving of notice or both, would constitute such a
material default under), or conflict with, or permit the acceleration of any
material obligation under (i) any material mortgage, lease, covenant, agreement,
indenture or other instrument to which the Company or Acquisition is a party or
by which either such company or its property or any of its assets is bound, (ii)
the Articles of Incorporation and Code of Regulations of the Company or the
Articles of Incorporation, Constitution or Bylaws of Acquisition, (iii) any
material judgment, decree, order, regulatory letter of understanding or award of
any court, governmental body or arbitrator by which the Company or Acquisition
is bound, or (iv) any material permit, concession, grant, franchise, license,
law, statute, ordinance, rule or regulation applicable to the Company or
Acquisition or their properties; or (B) result in the creation of any material
lien, claim, security interest, encumbrance, charge, restriction or right of any
third party of any kind whatsoever upon the property or assets of the Company or
Acquisition, except that the Government Approvals shall be required in order for
the Company and Acquisition to consummate the Merger.
4.3 NO LEGAL BAR. Neither the Company nor Acquisition is or will be,
respectively, a party to, subject to or bound by any material agreement,
judgment order, regulatory letter of
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understanding, writ, prohibition, injunction or decree of any court or
other governmental authority or body of competent jurisdiction or any law which
would prevent the execution of this Agreement by the Company and Acquisition,
the delivery thereof to Jefferson or the consummation of the transactions
contemplated hereby and no action or proceeding is pending against the Company
or Acquisition in which the validity of this Agreement, any of the transactions
contemplated hereby or any action which has been taken by any of the Parties in
connection herewith or in connection with any of the transactions contemplated
hereby, is at issue.
4.4 GOVERNMENTAL APPROVALS. No consent, approval, order or authorization of,
or registration, declaration or filing with, any federal, state or local
governmental authority is required to be made or obtained by the Company in
connection with the execution and delivery of this Agreement or the consummation
of the transactions contemplated hereby by the Company except for the prior
approval of one or more of the FDIC, the FRB or the OTS under the BHCA, the BMA,
the FDIA or HOLA (the "Government Approvals"). Neither the Company nor
Acquisition is aware of any facts, circumstances or reasons such Governmental
Approvals should not be forthcoming or which would prevent or hinder such
approvals from being obtained.
4.5 CAPITALIZATION. The authorized capital stock of the Company consists of
5,000,000 shares of common stock without par value (the "Company Common Stock").
As of December 31, 1995, 3,447,160 shares of Company Common Stock were validly
issued and outstanding. As of the date hereof, the Company is the holder,
directly or indirectly, of all of the outstanding capital stock of the Company
Subsidiaries. The Company will be the holder of all of the issued and
outstanding shares of Acquisition common stock.
4.6 COMPANY FINANCIAL STATEMENTS. The Company has delivered and, to the
extent reference is made to financial statements not yet available, will deliver
to Jefferson true and complete copies of the Company Financial Statements. Such
financial statements and the notes thereto present fairly, or will present
fairly when issued, in all material respects, the consolidated financial
position of the Company at the respective dates thereof and the consolidated
results of operations and consolidated cash flows of the Company for the periods
indicated, and in each case in conformity with GAAP consistently applied and
maintained, except that quarterly financial statements may be prepared in
accordance with the requirements of the Securities and Exchange Commission for
inclusion of financial statements in Form 10-Q Quarterly Reports.
4.7 LICENSES, FRANCHISES, ETC. The Company and all Company Subsidiaries hold all
licenses, franchises, permits and authorizations that are necessary for the
lawful conduct of their respective businesses, except for any licenses, permits
and authorizations the absence of which would not have a material adverse effect
on the Company and its Subsidiaries taken as a whole, the Merger or any of the
other transactions contemplated hereby. All of such licenses, franchises,
permits and authorizations are in full force and effect. Neither the Company nor
any Company Subsidiary has received notice of any proceeding for the suspension
or revocation of
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any such license, franchise, permit, or authorization and no such
proceeding is pending or to the best knowledge of the Company and the Company
Subsidiaries has been threatened by any governmental authority.
4.8 ABSENCE OF CERTAIN CHANGES. Except as may be disclosed in a Schedule
4.8 or as provided for or contemplated in this Agreement, since December 31,
1995 (the "Balance Sheet Date") there has not been any material adverse change
in the business, property, assets (including loan portfolios), liabilities
(whether absolute, accrued, contingent or otherwise), operations, liquidity,
income, financial condition or net worth of the Company on a consolidated basis.
4.9 TAX MATTERS. Except as may be described in a Schedule 4.9 hereto:
(a) All federal, state, local and foreign tax returns required to be
filed by or on behalf of the Company and each Company Subsidiary have been
timely filed or requests for extensions have been timely filed, granted, and
have not expired for periods ended on or before the date of this Agreement, and
all returns filed are, and the information contained therein is, complete and
accurate. All tax obligations reflected in such returns have been paid. As of
the date of this Agreement, there is no audit examination, deficiency, or refund
litigation or matter in controversy with respect to any taxes that might
reasonably be expected to result in a determination materially adverse to the
Company and Company Subsidiaries taken as a whole, except as fully reserved for
in the Company Financial Statements. All taxes, interest, additions, and
penalties due with respect to completed and settled examinations or concluded
litigation have been paid;
(b) Neither the Company nor any Company Subsidiary has executed an
extension or waiver of any statute of limitations on the assessment or
collection of any tax due that is currently in effect;
(c) Adequate provision for any federal, state, local, or foreign taxes
due or to become due for the Company and all Company Subsidiaries for all
periods through and including December 31, 1995, has been made and is reflected
on the December 31, 1995 financial statements included in the Company Financial
Statements, and have been and will continue to be made with respect to periods
ending after December 31, 1995;
(d) Deferred taxes of the Company and each Company Subsidiary have
been and will be provided for in accordance with GAAP; and
(e) To the best knowledge of the Company, neither the Internal Revenue
Service nor any foreign, state, local or other taxing authority is now asserting
or threatening to assert against the Company or any Company Subsidiary any
material deficiency or claim for additional taxes, or interest thereon or
penalties in connection therewith. All material income, payroll, withholding,
property, excise, sales, use, franchise and transfer taxes, and all other taxes,
charges, fees, levies or other assessments, imposed upon the Company by the
United States or by any state, municipality, subdivision or instrumentality of
the United States or by any other
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taxing authority, including all interest, penalties or additions
attributable thereto, which are due and payable by the Company or any Company
Subsidiary, either have been paid in full or have been properly accrued and
reflected in the Company Financial Statements.
4.10 LITIGATION. Except as may be set forth in a Schedule 4.10 hereto, there
is no action, suit or proceeding pending against the Company or any Company
Subsidiary, or to the best knowledge of the Company threatened against or
affecting the Company, any Company Subsidiary or any of their assets, before any
court or arbitrator or any governmental body, agency or official that would, if
decided against the Company or a Company Subsidiary, have a material adverse
impact on the business, properties, assets, liabilities or condition (financial
or other) of the Company and that are not reflected in the Company Financial
Statements.
4.11 ABSENCE OF UNDISCLOSED LIABILITIES. Except as may be described in a
Schedule 4.11 hereto, neither the Company nor any Company Subsidiary has any
obligation or liability that is material to the financial condition or
operations of the Company or any Company Subsidiary, or that, when combined with
all similar obligations or liabilities, would be material to the financial
condition or operations of the Company or any Company Subsidiary (i) except as
disclosed in the Company Financial Statements delivered to Jefferson prior to
the date of this Agreement, (ii) except obligations or liabilities incurred in
the ordinary course of its business consistent with past practices or (iii)
except as contemplated under this Agreement. Except as may be disclosed in a
Schedule 4.11 hereto, since December 31, 1995, neither the Company nor any
Company Subsidiary has incurred or paid any obligation or liability that would
be material to the financial condition or operations of the Company and Company
Subsidiaries taken as a whole, except for obligations paid in connection with
transactions made in the ordinary course of business consistent with past
practice and the laws and regulations applicable to the Company or any Company
Subsidiary.
4.12 COMPLIANCE WITH LAWS.
(a) Each of the Company and the Company Subsidiaries is in compliance
with all laws, rules, regulations, reporting and licensing requirements, and
orders applicable to its business or employees conducting its business
(including, but not limited to, those relating to consumer disclosure and
currency transaction reporting) the breach or violation of which would
reasonably be expected to have a material adverse effect on the financial
condition or operations of the Company and the Company Subsidiaries taken as
whole, or which would reasonably be expected to subject the Company or any
Company Subsidiary or the directors or officers of any of them to civil money
penalties; and
(b) Neither the Company nor any Company Subsidiary has received
notification or communication from any agency or department of federal, state,
or local government or any of the Regulatory Authorities, or the staff thereof
(i) asserting that the Company or any Company Subsidiary is not in compliance
with any of the statutes, rules, regulations, or ordinances which such
governmental authority or Regulatory Authority enforces, the result of which
would reasonably be expected to have a material adverse effect on the Company
and the Company
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Subsidiaries taken as a whole, (ii) threatening to revoke any license,
franchise, permit, or governmental authorization which is material to the
financial condition or operations of the Company and the Company Subsidiaries
taken as a whole, or (iii) requiring the Company or any Company Subsidiary to
enter into a cease-and-desist order, consent, agreement, or memorandum of
understanding.
4.13 MATERIAL CONTRACT DEFAULTS. Neither the Company nor any Company
Subsidiary is in default in any respect under any material contract, agreement,
commitment, arrangement, lease, insurance policy, or other instrument to
which it is a party or by which its respective assets, business, or operations
may be bound or affected or under which it or its respective assets, business,
or operations receives benefits, and which default would reasonably be expected
to have either individually or in the aggregate a material adverse effect on the
Company and the Company Subsidiaries taken as a whole, and there has not
occurred any event that, with the lapse of time or the giving of notice of both,
would constitute such a default.
4.14 STATEMENTS TRUE AND CORRECT. None of the information prepared by or on
behalf of the Company or any Company Subsidiary regarding the Company or any
Company Subsidiary that is or will be included in any documents to be filed with
any Regulatory Authority in connection with the transactions contemplated hereby
will, at the respective times such documents are filed, be false or misleading
with respect to any material fact, or omit to state any material fact necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading. All documents that the Company or any Company
Subsidiary is responsible for filing with any Regulatory Authority in connection
with the transactions contemplated hereby will comply as to form in all material
respects with the provisions of applicable law.
4.15 DISCLOSURE. The information concerning and the representations made by
the Company and Acquisition, as set forth in this Agreement, or in any document,
statement, certificate or other writing furnished or to be furnished by the
Company or Acquisition to Jefferson pursuant hereto, do not and will not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated herein or therein which is necessary to make the
statements and facts contained herein or therein, in light of the circumstances
under which they were or are made, not false and misleading. Copies of all
documents heretofore or hereafter delivered or made available to Jefferson by
the Company or Acquisition pursuant hereto were or will be complete and accurate
copies of such documents.
4.16 CORPORATE APPROVAL.
(a) The affirmative vote of the Company, as the holder of all of the
outstanding shares of Acquisition Common Stock, is required to adopt this
Agreement and approve the Merger and the other transactions contemplated hereby.
No vote of the shareholders of the Company is required by law, the Articles of
Incorporation or Code of Regulations of the Company or otherwise to adopt this
Agreement and approve the Merger and the other transactions contemplated hereby;
and
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(b) At a duly constituted meeting of the Board of Directors of the
Company, directors constituting at least two-thirds of the directors then in
office approved the Merger.
4.17 CHARTER DOCUMENTS. Included in Schedule 4.17 hereto are true and
correct copies of the Articles of Incorporation and Code of Regulations of the
Company, as well as the Articles of Incorporation, Constitution and Bylaws of
Acquisition in the form submitted to the Superintendent of the Ohio Division of
Financial Institutions for filing and approval.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF JEFFERSON
Except as otherwise disclosed in one or more schedules (collectively,
the "Jefferson Schedules") dated as of the date hereof and delivered
concurrently with this Agreement, both as of the date hereof and as of the
Effective Time of the Merger, Jefferson represents and warrants to the Company
and Acquisition as follows:
5.1 ORGANIZATION AND QUALIFICATIONS OF JEFFERSON. Jefferson is a savings
and loan association duly organized, validly existing and in good standing under
the laws of the State of Ohio. Each of Jefferson and its subsidiary (i) has all
requisite corporate power and authority to own, operate and lease its properties
and to carry on its business as it is currently being conducted; (ii) is in good
standing and is duly qualified to do business in each jurisdiction where the
character of its properties owned or held under lease or the nature of its
business is such that a failure to be so qualified would have a material adverse
effect on Jefferson and its subsidiary, taken as a whole, or the ability of
Jefferson to consummate the transactions contemplated hereby; and (iii) engages
only in activities (and holds properties only of the types) permitted by the
HOLA and the rules and regulations promulgated by the OTS thereunder and the
FDIC for insured depository institutions, in the case of Jefferson, and for
subsidiaries thereof, in the case of Jefferson's subsidiary. Jefferson is a
member in good standing of the Federal Home Loan Bank of Cincinnati. Deposit
accounts maintained with Jefferson are insured by the Savings Association
Insurance Fund (the "SAIF") as administered by the FDIC to the fullest extent
permitted under applicable law. Jefferson's sole subsidiary is Jefferson
Financial Corporation, a corporation duly organized, validly existing and in
good standing under the laws of the State of Ohio. Each of Jefferson and its
subsidiary has in effect all federal, state, local and foreign governmental
authorizations, permits and licenses necessary for it to own or lease its
properties and assets and to carry on its business as it is currently being
conducted.
5.2 AUTHORIZATION, EXECUTION AND DELIVERY; REORGANIZATION AGREEMENT NOT IN
BREACH.
(a) Jefferson has all requisite corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by at least two thirds of the entire Board of Directors of Jefferson and,
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except for approval of Jefferson Shareholders, no other corporate
proceedings on the part of Jefferson or its subsidiary are necessary to
authorize the execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby. This Agreement and all other agreements
and instruments herein contemplated to be executed by Jefferson have been (or
upon execution will have been) duly executed and delivered by Jefferson and
constitute (or upon execution will constitute) legal, valid and enforceable
obligations of Jefferson, subject, as to enforceability, to applicable
bankruptcy, insolvency, receivership, conservatorship, reorganization,
moratorium or similar laws affecting the enforcement of creditors' rights
generally and to the application of equitable principles and judicial
discretion.
(b) The execution and delivery of this Agreement, the consummation of
the transactions contemplated hereby and the fulfillment of the terms hereof
will not: (A) result in a material violation or breach of any of the terms or
provisions of, or constitute a material default under (or an event which, with
the passage of time or the giving of notice, or both, would constitute such a
default under), or conflict with, or permit the acceleration of (i) any material
obligation under any material mortgage, lease, covenant, agreement, indenture or
other instrument to which either of Jefferson or its subsidiary is a party or by
which either is bound, (ii) the Articles of Incorporation, Constitution or
Bylaws of Jefferson or the Articles of Incorporation or Code of Regulations of
Jefferson's subsidiary, (iii) any material judgment, decree, order, regulatory
letter of understanding or award of any court, governmental body, authority or
arbitrator by which Jefferson or its subsidiary is bound, or (iv) any material
permit, concession, grant, franchise, license, law, statute, ordinance, rule or
regulation applicable to either of Jefferson or its subsidiary or either of
their properties; or (B) result in the creation of any material lien, claim,
security interest, encumbrance, charge, restriction or right of any third party
of any kind whatsoever upon the properties or assets of Jefferson or its
subsidiary.
5.3 NO LEGAL BAR. Neither Jefferson nor its subsidiary is a party to, or
subject to or bound by, any material agreement, judgment, order, letter of
understanding, writ, prohibition, injunction or decree of any court or other
governmental authority or body of competent jurisdiction, or any law which would
prevent the execution of this Agreement by Jefferson, the delivery thereof to
the Company and Acquisition or the consummation of the transactions contemplated
hereby, and no action or proceeding is pending against Jefferson or its
subsidiary in which the validity of this Agreement, any of the transactions
contemplated hereby or any action which has been taken by any of the Parties in
connection herewith, or, in connection with any of the transactions contemplated
hereby, is at issue.
5.4 GOVERNMENTAL AND OTHER APPROVALS. Except for the Governmental
Approvals described in Section 4.4, no consent, approval, order or authorization
of, or registration, declaration or filing with, any federal, state or local
governmental authority is required to be made or obtained by Jefferson or its
subsidiary in connection with the execution and delivery of this Agreement or
the consummation of the transactions contemplated hereby, nor is any consent or
approval required from any landlord, licensor or other non-governmental party
which has granted rights to Jefferson or its subsidiary in order to avoid
forfeiture or impairment of such rights. Neither Jefferson nor its subsidiary is
aware of any facts, circumstances or reasons why
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such Governmental Approvals should not be forthcoming or which would
prevent or hinder such approvals from being obtained.
5.5 LICENSES, FRANCHISES AND PERMITS. Each of Jefferson and its subsidiary
holds all licenses, franchises, permits and authorizations necessary for the
lawful conduct of its business, and Jefferson as the owner of the Realty, has,
to the best knowledge of Jefferson and its subsidiary, complied in all material
respects with all applicable statutes, laws, ordinances, rules and regulations
of all federal, state and local governmental bodies, agencies and subdivisions
having, asserting or claiming jurisdiction over Jefferson's Properties or over
any other part of Jefferson's assets, liabilities or operations, including
Jefferson's subsidiary. To the best knowledge of Jefferson and its subsidiary,
the benefits of all of such licenses, franchises, permits and authorizations are
in full force and effect and may continue to be enjoyed subsequent to the
Closing of the transactions contemplated herein without any consent or approval.
Neither Jefferson nor its subsidiary has received notice of any proceeding for
the suspension or revocation of any such license, franchise, permit, or
authorization and no such proceeding is pending or, to the best knowledge of
Jefferson and its subsidiary, has been threatened by any governmental authority.
5.6 CHARTER DOCUMENTS. Included in Schedule 5.6 hereto are true and
correct copies of the Article of Incorporation, Constitution and Bylaws of
Jefferson.
5.7 JEFFERSON FINANCIAL STATEMENTS. Jefferson has delivered and, to the
extent reference is made to financial statements not yet available, will deliver
to the Company true and complete copies of the Jefferson Financial Statements.
Such financial statements and the notes thereto present fairly, or will present
fairly when issued, in all material respects, the consolidated financial
position of Jefferson at the respective dates thereof and the consolidated
results of operations and consolidated cash flows of Jefferson for the periods
indicated, and in each case in conformity with GAAP.
5.8 ABSENCE OF CERTAIN CHANGES. Except as may be disclosed in a
Schedule 5.8 or as provided for or contemplated in this Agreement, since June
30, 1995 (the "Balance Sheet Date") there has not been:
(a) any material transaction by Jefferson or its subsidiary not in
the ordinary course of business and in conformity with past practice;
(b) any material adverse change in the business, property, assets
(including loan portfolios), liabilities (whether absolute, accrued, contingent
or otherwise), operations, liquidity, income, condition or net worth of
Jefferson or its subsidiary;
(c) any damage, destruction or loss, whether or not covered by
insurance, which has had or may have a material adverse effect on any of the
properties or business prospects of either of Jefferson or its subsidiary or
their future use and operation by Jefferson or its subsidiary;
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(d) any acquisition or disposition by Jefferson or its subsidiary of
any property or asset, whether real or personal, having a fair market value,
singularly or in the aggregate, in an amount greater than Fifty Thousand Dollars
($50,000), except for sale of loans in the ordinary course of business to the
Federal Home Loan Mortgage Corporation;
(e) any mortgage, pledge or subjection to lien, charge or encumbrance
of any kind on any of the respective properties or assets of Jefferson or its
subsidiary, except to secure extensions of credit in the ordinary course of
business and in conformity with past practice (pledges of and liens on assets to
secure Federal Home Loan Bank advances being deemed both in the ordinary course
of business and consistent with past practice);
(f) any amendment, modification or termination of any contract or
agreement, relating to Jefferson or its subsidiary and to which Jefferson or its
subsidiary is a party (not including loans of less than $50,000 made or held by
Jefferson) that would have a material adverse effect upon the financial
condition or operations of Jefferson and its subsidiary, taken as a whole;
(g) any increase in, or commitment to increase, the compensation
payable or to become payable to any officer, director, employee or agent of
Jefferson or its subsidiary, or any bonus payment or similar arrangement made to
or with any of such officers, directors, employees or agents, other than routine
increases made in the ordinary course of business not exceeding the greater of
10% per annum or $5,000 for any of them individually;
(h) any incurring of, assumption of, or taking by Jefferson or its
subsidiary of any property subject to, any liability, except for liabilities
incurred or assumed or property taken subsequent to the Balance Sheet Date in
the ordinary course of business and in conformity with past practice;
(i) any material alteration in the manner of keeping the books,
accounts or Records of Jefferson, or in the accounting policies or practices
therein reflected, except as required by GAAP and requirements of Regulatory
Authorities;
(j) any release or discharge of any obligation or liability of any
person or entity related to or arising out of any loan made by Jefferson of any
nature whatsoever, except in the ordinary course of business and in conformity
with past practice; or
(k) any loan (except credit card loans, passbook loans or home loans)
by Jefferson to any officer, director or known 5% shareholder of Jefferson or
any Affiliate of Jefferson; or to any member of the immediate family of such
officer, director or known 5% shareholder of Jefferson or any Affiliate of
Jefferson; or to any Person in which such officer, director or known 5%
shareholder directly or indirectly owns beneficially or of record 10% or more of
any class of equity securities in the case of a corporation, or of any equity
interest, in the case of a partnership or other non-corporate entity; or to any
trust or estate in which such officer, director or known 5% shareholder serves
as a trustee or in a similar capacity. As used in this Section
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5.8(k), "officer" shall refer to a person who holds the title of chairman,
president, executive vice president, senior vice president, controller,
secretary, cashier or treasurer or who performs the normal duties of such
officer whether or not he or she is compensated for such service or has an
official title.
5.9 DEPOSITS. Except as may be set forth in a Schedule 5.9(a), none of
the Jefferson Deposits is a Brokered Deposit. Except as may be set forth
therein, no portion of the Deposits represents a Deposit of any Affiliate of
Jefferson.
5.10 PROPERTIES. Except as may be described in a Schedule 5.10 hereto or
adequately reserved against in the Audited Financial Statements of Jefferson or
disposed of since the Balance Sheet Date, each of Jefferson and its subsidiary,
as the case may be, has good and, as to real property, marketable title free and
clear of all material liens, encumbrances, charges, defaults, or equities of
whatever character to all of the material properties and assets, reflected in
the Audited Financial Statements of Jefferson as being owned as of the dates
thereof. All buildings, and all fixtures, equipment, and other property and
assets that are material to the business of Jefferson and its subsidiary, taken
as a whole, and that are held under leases or subleases by Jefferson or its
subsidiary are held under valid instruments enforceable in accordance with their
respective terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, or other laws affecting the
enforcement of creditors' rights generally, or by equitable principles. To the
best knowledge of Jefferson, all such buildings, fixtures, equipment and other
property and assets and the use thereof are in compliance in all material
respects with applicable zoning statutes, regulations and ordinances and other
governmental laws and regulations relating thereto that are currently in effect,
enacted or adopted, as well as all private agreements relating thereto to which
Jefferson is a party or a party by succession. To the best knowledge of
Jefferson, there are no condemnation proceedings pending or threatened with
respect to such properties. The policies of fire, theft, liability, and other
insurance maintained with respect to the material properties, assets or
businesses of Jefferson or its subsidiary provide adequate coverage against
loss, and the fidelity bonds in effect as to which Jefferson or its subsidiary
is a named insured are believed to be sufficient.
5.11 JEFFERSON SUBSIDIARY. Jefferson's sole subsidiary is Jefferson Financial
Corporation. The authorized capital stock of Jefferson Financial Corporation
consists of 500 shares of Common Stock having a par value of $1,000 per share
(the "Subsidiary Common Stock") and no other class of equity security. As of the
date of this Agreement, 6 shares of Subsidiary Common Stock are issued and
outstanding, and no shares of Subsidiary Common Stock are held by Jefferson
Financial Corporation as treasury stock. All of the outstanding Subsidiary
Common Stock is validly issued, fully paid and non-assessable and owned
beneficially and of record by Jefferson. There are no outstanding securities or
other obligations or instruments that are or may be convertible into or
exercisable or exchangeable for Subsidiary Common Stock or into any other equity
or debt security of Jefferson Financial Corporation, and there are no
outstanding options, warrants, rights, rights to subscribe to, calls or other
commitments of any nature which would entitle the holder, upon exercise thereof,
to be issued Subsidiary Common Stock or any other equity or debt security of
Jefferson Financial Corporation. There are no outstanding
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agreements, restrictions, contracts, commitments or demands of any
character to which Jefferson Financial Corporation or Jefferson is a party,
which relate to the transfer or restrict the transfer of any shares of Jefferson
Financial Corporation's capital stock.
5.12 CONDITION OF FIXED ASSETS AND EQUIPMENT. Except as may be disclosed in a
Schedule 5.12, each item of Jefferson's and its subsidiary's fixed assets and
equipment having a net book value in excess of Twenty-Five Thousand Dollars
($25,000) included in the Fixed Assets is in good operating condition and
repair, normal wear and tear excepted.
5.13 TAX MATTERS. Except as may be described in a Schedule 5.13 hereto:
(a) All federal, state, local and foreign tax returns required to be
filed by or on behalf of Jefferson or its subsidiary have been timely filed or
requests for extensions have been timely filed, granted and have not expired for
periods ended on or before the date of this Agreement, and all returns filed
are, and the information contained therein is, complete and accurate. All tax
obligations reflected in such returns have been paid. As of the date of this
Agreement, there is no audit examination, deficiency, or refund litigation or
matter in controversy with respect to any taxes that might reasonably be
expected to result in a determination materially adverse to Jefferson and its
subsidiary, taken as a whole, except as fully reserved for in the Audited
Financial Statements of Jefferson. All taxes, interest, additions, and penalties
due with respect to completed and settled examinations or concluded litigation
have been paid;
(b) Neither Jefferson nor its subsidiary has executed an extension or
waiver of any statute of limitations on the assessment or collection of any tax
due that is currently in effect;
(c) Adequate provision for any federal, state, local, or foreign taxes
due and to become due for Jefferson or its subsidiary for all periods through
and including June 30, 1995, has been made and is reflected on the June 30, 1995
financial statements included in the Audited Financial Statements of Jefferson,
and has been and will continue to be made with respect to periods ending after
June 30, 1995.
(d) Deferred taxes of Jefferson and its subsidiary have been and will
be provided for in accordance with GAAP; and
(e) To the best knowledge of Jefferson and its subsidiary, neither the
Internal Revenue Service nor any foreign, state, local or other taxing authority
is now asserting or threatening to assert against Jefferson or its subsidiary
any deficiency or claim for additional taxes, or interest thereon or penalties
in connection therewith. All material income, payroll, withholding, property,
excise, sales, use, franchise and transfer taxes, and all other taxes, charges,
fees, levies or other assessments, imposed upon Jefferson or its subsidiary by
the United States or by any state, municipality, subdivision or instrumentality
of the United States or by any other taxing authority, including all interest,
penalties or additions attributable thereto, which are due and payable either
have been paid in full or have been properly accrued and reflected in the
Audited Financial Statements of Jefferson.
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5.14 LITIGATION. Except as may be set forth in a Schedule 5.14 hereto, there
is no action, suit or proceeding pending against Jefferson or its subsidiary, or
to the best knowledge of Jefferson and its subsidiary threatened against or
affecting Jefferson or its subsidiary, or any of the assets of either of them
before any court or arbitrator or any governmental body, agency or official that
would, if decided against Jefferson or its subsidiary, have a material adverse
impact on the business, properties, assets, liabilities or condition (financial
or other) of Jefferson and its subsidiary, taken as a whole, and that is not
reflected in the Audited Financial Statements of Jefferson.
5.15 HAZARDOUS MATERIALS.
(a) To the best knowledge of Jefferson and its subsidiary, (i) each of
Jefferson and its subsidiary has obtained all permits, licenses and other
authorizations which are required to be obtained with respect to the Property
(as defined herein) under all Applicable Environmental Laws (as defined herein);
(ii) all Property controlled, directly or indirectly, by Jefferson is in
compliance in all material respects with the terms and conditions of all of such
permits, licenses and authorizations, and is also in compliance in all material
respects with all other limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and timetables contained in
any Applicable Environmental Laws or in any regulation, code, plan, order,
decree, judgment, injunction, notice of demand letter issued, entered,
promulgated or approved thereunder, except as may be described in detail in a
Schedule 5.15(a) hereto. For purposes hereof, the following terms shall have the
following meanings:
APPLICABLE ENVIRONMENTAL LAWS shall mean all federal, state, local and
municipal environmental laws, rules, or regulations to the extent applicable to
the Property, including, but not limited to, (a) the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. Section 9601, et seq.
("CERCLA"); (b) the Resource Conservation and Recovery Act, 42 U.S.C. 6901 et
seq. ("RCRA"); (c) the Federal Water Pollution Control Act, 33 U.S.C. Section
1251 et seq.; (d) the Clean Air Act, 42 U.S.C. Section 7401 et seq.; (e) the
Hazardous Materials Transportation Act, 49 U.S.C. 1471 et seq.; (f) the Toxic
Substances Control Act, 15 U.S.C. Section 2691 et seq.; (g) the Emergency
Planning and Community Right-to-Know Act, 42 U.S.C. Section 11001 et seq.; (h)
the National Environmental Policy Act, 42 U.S.C. Section 4321 et seq.; (i) the
Rivers and Harbours Act of 1899, 33 U.S.C. Section 401 et seq.; (j) the
Occupational Safety and Health Act, 29 U.S.C. Section 651 et seq.; (k) the Safe
Drinking Water Act, 42 U.S.C. 300(f) et seq.; (l) the Oil Pollution Act of 1990,
33 U.S.C. Section 2701 et seq.; (m) the Hazardous Waste Management Act of 1977;
(n) Chapters 445, 459, 590 and 618 of the NRS; (o) the Hazardous Waste
Management Act of 1983; (p) the Hazardous Waste Reduction Act of 1990; (q) the
Petroleum Underground Storage Tank Act; (r) any amendments to the foregoing Acts
as adopted from time to time on or before the Closing; (s) the rules and
regulations of the State Fire Marshal, Bureau of Underground Storage Tank
Regulation and (t) any rule or regulation, order, injunction, judgment,
declaration or decree implementing or interpreting any of the foregoing acts, as
amended.
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HAZARDOUS SUBSTANCES shall mean any substance, material, waste, or
pollutant that is now (or prior to the Closing) listed, defined, characterized
or regulated as hazardous, toxic or dangerous under or pursuant to any statute,
law, ordinance, rule or regulation of any federal, state, regional, county or
local governmental authority having jurisdiction over the Property of Jefferson
or its use or operation, including, without limitation, (a) any substance,
material, element, compound, mixture, solution, waste, chemical or pollutant
listed, defined, characterized or regulated as hazardous, toxic or dangerous
under any Applicable Environmental laws, (b) petroleum, petroleum derivatives or
by-products, and other hydrocarbons, (c) polychlorinated biphenyls (PCBs),
asbestos and urea formaldehyde, and (d) radioactive substances, materials or
waste.
PROPERTY shall be deemed to include all real or personal property
owned, controlled, leased or held by Jefferson or its subsidiary, in whole or in
part, solely or in a joint venture or other business arrangement, and whether
assigned, purchased, or obtained through foreclosure (or similar action) or in
satisfaction of debts previously contracted.
(b) In addition, except as may be set forth in any such Schedule
5.15(a) hereto, to the best knowledge of Jefferson and its subsidiary:
(i) No notice, notification, demand, request for information,
citation, summons or order has been issued, no complaint has been filed, no
penalty has been assessed and no investigation or review is pending by any
governmental or other entity with respect to any alleged failure by Jefferson or
its subsidiary to have any permit, license or authorization required in
connection with the conduct of the business of Jefferson or its subsidiary or
with respect to any generation, treatment, storage, recycling, transportation,
release, or disposal, or any release as defined in 42 U.S.C. Section 9601(22)
("Release(d)"), of any Hazardous Substances generated by Jefferson or its
subsidiary at the Property;
(ii) None of the Property has received or held any Hazardous
Substances in such amount and in such manner as to constitute a violation of the
Applicable Environmental laws, and no Hazardous Substances have been Released or
disposed of on, in or under any of the Property during or prior to Jefferson's
or its subsidiary's occupancy thereof, or during or prior to the occupancy
thereof by any assignee or sublessee of Jefferson or its subsidiary, except in
compliance with all Applicable Environmental Laws;
(iii) There are no Hazardous Substances being stored at any
Property or located in, on or upon, any Property (including the subsurface
thereof) or installed or affixed to structures or equipment on the Property; and
there are no underground storage tanks for Hazardous Substances, active or
abandoned, at any Property; and
(iv) No Hazardous Substances have been Released in a
reportable quantity, where such a quantity has been established by statute,
ordinance, rule, regulation or order, at, on or under any Property.
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(c) To the best knowledge of Jefferson and its subsidiary, neither
Jefferson nor its subsidiary has transported or arranged for the transportation
of any Hazardous Substances to any location which is listed on the National
Priorities List under CERCLA, listed for possible inclusion on the National
Priorities List by the Environmental Protection Agency in the CERCLA Information
System ("CERCLIS") or on any similar state list or which is the subject of
federal, state or local enforcement actions or other investigations which may
lead to claims against the owner of the Property for cleanup costs, remedial
work, damages to natural resources or for personal injury claims, including, but
not limited to, claims under CERCLA.
(d) Except as may be set forth in a Schedule 5.15(d), to the best
knowledge of Jefferson and its subsidiary no Hazardous Substances have been
generated, recycled, treated, stored, disposed of or Released by, Jefferson or
its subsidiary, whether or not in violation of Applicable Environmental laws.
(e) No oral or written notification of a Release of Hazardous
Substances has been filed by or on behalf of Jefferson or its subsidiary
relating to the Property and no Property is listed or, to the best knowledge of
Jefferson and its subsidiary, proposed for listing on the National Priority List
promulgated pursuant to CERCLA, on CERCLIS or on any similar state list of sites
requiring investigation or cleanup.
(f) To the best knowledge of Jefferson and its subsidiary, there are no
liens arising under or pursuant to any Applicable Environmental Laws on any
Property, and no government actions have been taken or, to the best knowledge of
Jefferson and its subsidiary, threatened, or are in process which could subject
any of such properties to such liens and none of the Property would be required
to place any notice or restriction relating to the presence of Hazardous
Substances at any Property in any deed to such Property.
(g) To the best knowledge of Jefferson and its subsidiary, except as
may be described in a Schedule 5.15(g) hereto, there have been no environmental
investigations, studies, audits, tests, reviews or other analyses conducted by
or which are in the possession of Jefferson or its subsidiary in relation to any
Property, which have not been made available to the Company.
(h) Neither Jefferson nor its subsidiary is aware of any facts which
could reasonably be understood to indicate that Jefferson or its subsidiary has
engaged in any management practice with respect to any of its past or existing
borrowers which could reasonably be expected to subject Jefferson, its
subsidiary or the Property to any material liability, either directly or
indirectly, under CERCLA.
5.16 INSURANCE. Each of Jefferson and its subsidiary has paid all amounts
due and payable under any insurance policies and guaranties applicable to
Jefferson or its subsidiary and Jefferson's or its subsidiary's assets and
operations; all such insurance policies and guaranties are in full force and
effect; and Jefferson and its subsidiary and all of the Realty of Jefferson or
its subsidiary and other material properties are insured against fire, casualty,
theft, loss, and such
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other events against which it is customary to insure, all such insurance
policies being in amounts that are adequate and are consistent with past
practices and experience.
5.17 LABOR AND EMPLOYMENT MATTERS. Except as may be set forth in a Schedule
5.17 hereto, there is no (i) collective bargaining agreement or other labor
agreement to which Jefferson or its subsidiary is a party or by which either of
them is bound; (ii) employment, profit sharing, deferred compensation, bonus,
stock option, purchase, retainer, consulting, retirement, welfare or incentive
plan or contract to which Jefferson or its subsidiary is a party or by which
either of them is bound; or (iii) plan or agreement under which "fringe
benefits" (including, but not limited to, vacation plans or programs, sick leave
plans or programs and related benefits) are afforded any of the employees of
Jefferson or its subsidiary. To the best knowledge of Jefferson and its
subsidiary, no party to any such agreement, plan or contract is in default with
respect to any material term or condition thereof, nor has any event occurred
which, through the passage of time or the giving of notice, or both, would
constitute a default thereunder or would cause the acceleration of any
obligation of any party thereto. Neither Jefferson nor its subsidiary has
received notice from any governmental agency of any alleged violation of
applicable laws that remains unresolved respecting employment and employment
practices, terms and conditions of employment and wages and hours. To the best
knowledge of Jefferson and its subsidiary, each of Jefferson and its subsidiary
has complied in all material respects with all applicable laws, rules and
regulations relating to the employment of labor, including those related to its
employment practices, employee disabilities, wages, hours, collective bargaining
and the payment and withholding of taxes and other sums as required by the
appropriate governmental authorities, and each of Jefferson and its subsidiary
has withheld and paid to the appropriate governmental authorities or are holding
for payment not yet due to such authorities, all amounts required to be withheld
from the employees of Jefferson or its subsidiary and is not liable for any
arrears of wages, taxes, penalties or other sums for failure to comply with any
of the foregoing. Except as may be set forth in any such Schedule 5.17, there is
no: unfair labor practice complaint against Jefferson or its subsidiary pending
before the National Labor Relations Board or any state or local agency; pending
labor strike or other labor trouble affecting Jefferson or its subsidiary; labor
grievance pending against Jefferson or its subsidiary; pending representation
question respecting the employees of Jefferson or its subsidiary; pending
arbitration proceedings arising out of or under any collective bargaining
agreement to which Jefferson or its subsidiary is a party, or to the best
knowledge of Jefferson and its subsidiary, any basis for which a claim may be
made under any collective bargaining agreement to which Jefferson or its
subsidiary is a party.
5.18 RECORDS AND DOCUMENTS. The Records of each of Jefferson and its
subsidiary are and will be sufficient to continue after the Closing the conduct
of Jefferson's and its subsidiary's respective businesses under similar
standards as Jefferson and its subsidiary have heretofore conducted such
businesses.
5.19 CAPITALIZATION OF JEFFERSON. The authorized capital stock of Jefferson
consists of 100,000 shares of Common Stock having a par value of $100 per share
(the "Jefferson Common Stock") and no other class of equity security. As of the
date of this Agreement, 3,535 shares of
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Jefferson Common Stock are issued and outstanding, and no shares of
Jefferson Common Stock are held by Jefferson as treasury stock. All of the
outstanding Jefferson Common Stock is validly issued, fully paid and
non-assessable and has not been issued in violation of any preemptive rights of
any Jefferson Shareholder. There are no outstanding securities or other
obligations or instruments that are or may be convertible into or exercisable or
exchangeable for Jefferson Common Stock or into any other equity or debt
security of Jefferson, and there are no outstanding options, warrants, rights,
rights to subscribe to, calls or other commitments of any nature which would
entitle the holder, upon exercise thereof, to be issued Jefferson Common Stock
or any other equity or debt security of Jefferson. Accordingly, immediately
prior to the Effective Time, there will be not more than 3,535 shares of
Jefferson Common Stock issued and outstanding. There are no outstanding
agreements, restrictions, contracts, commitments or demands of any character to
which Jefferson is a party, which relate to the transfer or restrict the
transfer of any shares of Jefferson's capital stock.
5.20 SOLE AGREEMENT. With the exception of this Agreement, neither Jefferson
nor its subsidiary has been or is a party to: any letter of intent or agreement
to merge, to consolidate, to sell or purchase assets (other than in the normal
course of its business) or to any other agreement which contemplates the
involvement of Jefferson (or any of its assets) or its subsidiary in any
business combination of any kind; or any agreement obligating Jefferson to issue
or sell or authorize the sale or transfer of Jefferson Common Stock. There are
no (nor will there be at the Effective Time any) shares of capital stock or
other equity securities of Jefferson outstanding, except for shares of Jefferson
Common Stock presently issued and outstanding, and there are no (nor will there
be at the Effective Time any) outstanding options, warrants, rights to subscribe
to, calls or commitments of any character whatsoever relating to, or securities
or rights convertible into or exchangeable for, shares of capital stock of
Jefferson, or contracts, commitments, understandings, or arrangements by which
Jefferson or its subsidiary is or may be bound to issue additional shares of
capital stock or options, warrants, or rights to purchase or acquire any
additional shares of capital stock.
5.21 ABSENCE OF UNDISCLOSED LIABILITIES. Except as may be described in a
Schedule 5.21 hereto, neither Jefferson nor its subsidiary has any obligation or
liability that is material to the financial condition or operations of Jefferson
and its subsidiary, taken as a whole, or that, when combined with all similar
obligations or liabilities, would be material to the financial condition or
operations of Jefferson and its subsidiary, taken as a whole, (i) except as
disclosed in the Audited Financial Statements of Jefferson delivered to the
Company prior to the date of this Agreement, (ii) except obligations or
liabilities incurred in the ordinary course of business consistent with past
practices or (iii) except as contemplated under this Agreement. Since June 30,
1995, neither Jefferson nor its subsidiary has incurred or paid any obligation
or liability that would be material to the financial condition or operations of
Jefferson and its subsidiary, taken as a whole, except for obligations paid in
connection with transactions made in the ordinary course of business consistent
with past practices and the laws and regulations applicable to Jefferson or its
subsidiary.
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5.22 ALLOWANCE FOR POSSIBLE LOAN OR REO LOSSES. Subject to adjustment to be
made at Closing as hereinafter provided, the allowance for possible loan
losses shown on the Audited Financial Statements of Jefferson is adequate in all
material respects to provide for anticipated losses inherent in loans
outstanding or for commitments to extend credit or similar off-balance-sheet
items (including accrued interest receivable) as of the dates thereof. Except as
may be disclosed in a Schedule 5.22 hereto, as of the date thereof, Jefferson
has no loan which has been criticized, designated or classified by management of
Jefferson, by regulatory examiners representing any Regulatory Authority or by
Jefferson's independent auditors as "Special Mention," "Substandard,"
"Doubtful," "Loss" or as a "Potential Problem Loan."
The allowance for possible losses in real estate owned, if any, shown
on the Audited Financial Statements of Jefferson is or will be adequate in all
material respects to provide for anticipated losses inherent in real estate
owned or held by Jefferson or its subsidiary and the net book value of real
estate owned on the Balance Sheet of the Audited Financial Statements of
Jefferson is the fair value of the real estate owned in accordance with
Statement of Position 92-3.
5.23 LOAN PORTFOLIO. To the best knowledge of Jefferson and its
subsidiary, with respect to each mortgage loan owned by Jefferson in whole or in
part (each, a "Mortgage Loan"):
(a) Enforceability. The mortgage note and the related mortgage
are each legal, valid, and binding obligations of the maker or obligor thereof,
enforceable against such maker or obligor in accordance with their terms;
(b) No Modification. Neither Jefferson (or its subsidiary) nor
any prior holder of a Mortgage Loan has modified the related documents in any
material respect or satisfied, canceled or subordinated such mortgage
or mortgage note except as otherwise disclosed by documents in the applicable
mortgage file;
(c) Owner. Jefferson is the sole holder of legal and beneficial
title to each Mortgage Loan (or Jefferson's applicable participation interest),
as applicable and there has not been any assignment or pledge of any Mortgage
Loan (other than as security for Federal Home Loan Bank advances);
(d) Collateral Documents. The mortgage note, mortgage and any
other collateral documents, copies of which are included in the Mortgage Loan
files, are true and correct copies of the documents they purport to be and have
not been superseded, amended, modified, canceled or otherwise changed except as
otherwise disclosed by documents in the applicable mortgage file;
(e) Litigation. There is no litigation or proceeding pending or
threatened, relating to the mortgage property which would have a material
adverse effect upon the related Mortgage Loan; and
(f) Participation. With respect to each Mortgage Loan held in the
form of a participation, the participation documentation is legal, valid,
binding and enforceable and the
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interest in such Mortgage Loan created by such participation would not be a
part of the insolvency estate of the Mortgage Loan originator or other third
party upon the insolvency thereof.
5.24 COMPLIANCE WITH LAWS.
(a) To the best of their knowledge, each of Jefferson and its
subsidiary is in compliance with all laws, rules, regulations, reporting and
licensing requirements, and orders applicable to its business or employees
conducting its business (including, but not limited to, those relating to
consumer disclosure and currency transaction reporting) the breach or violation
of which would reasonably be expected to have a material adverse effect on the
financial condition or operations of Jefferson and its subsidiary, taken as a
whole, or which would reasonably be expected to subject Jefferson or its
subsidiary or any of the directors or officers of either of them to civil money
penalties.
(b) Neither Jefferson nor its subsidiary has received notification or
communication from any agency or department of federal, state, or local
government or any of the Regulatory Authorities, or the staff thereof (i)
asserting that Jefferson or its subsidiary is not in compliance with any of the
statutes, rules, regulations, or ordinances which such governmental authority or
Regulatory Authority enforces, and which, as a result of such noncompliance,
would reasonably be expected to have a material adverse effect on Jefferson and
its subsidiary, taken as a whole, (ii) threatening to revoke any license,
franchise, permit, or governmental authorization which is material to the
financial condition or operations of Jefferson and its subsidiary, taken as a
whole, or (iii) requiring Jefferson or its subsidiary to enter into a
cease-and-desist order, consent, agreement, or memorandum of understanding.
Neither Jefferson nor its subsidiary is subject to any cease-and-desist order,
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 letter from, or
has adopted any board resolutions at the request of, federal or state
governmental authorities charged with the supervision or regulation of savings
and loan associations or engaged in the insurance of savings and loan deposits,
nor has it been advised by any such governmental authority that the governmental
authority is contemplating issuing or requesting (or is considering the
appropriateness of issuing or requesting) any such order, directive, written
agreement, memorandum of understanding, extraordinary supervisory letter,
commitment letter, board resolutions or similar undertaking.
5.25 EMPLOYEE BENEFIT PLANS. The representations set forth in this Section
5.25 shall be deemed to have been made by each of Jefferson and its subsidiary.
Accordingly, references to Jefferson in this Section 5.25 shall be deemed to
include its subsidiary, as appropriate.
(a) Jefferson has previously provided to the Company true and complete
copies of each "employee pension benefit plan," as defined in Section 3(2) of
ERISA which, to the best of its knowledge, is currently maintained by Jefferson
and is subject to any provision of ERISA and covers any employee, whether active
or retired, of Jefferson or any other entity which is a member of a controlled
group or is under common control with Jefferson in the manner defined
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and further described in Section 414(b), (c), or (m) of the Code. Such
plans are hereinafter referred to collectively as the "Employee Pension Benefit
Plans", and each such Employee Pension Benefit Plan, if any, is listed in
Schedule 5.25(a) hereto. Jefferson has also provided to the Company true and
complete copies of all trust agreements, collective bargaining agreement, and
insurance contracts related to such Employee Pension Benefit Plans.
To the best knowledge of Jefferson, each Employee Pension Benefit Plan
which is intended to be qualified under Section 401(a) of the Code is so
qualified and each trust forming a part thereof is exempt from tax pursuant to
Section 501(a) of the Code. Copies of the latest determination letters
concerning the qualified status of each Employee Pension Benefit Plan which is
intended to be qualified under Section 401(a) of the Code have been provided to
the Company. Where applicable, requests for determination letters relating to
amendments required to cause such Employee Pension Benefit Plans to be in
compliance with the Tax Equity and Fiscal Responsibility Act of 1982, the
Deficit Reduction Act of 1984, the Retirement Equity Act of 1984 and the Tax
Reform Act of 1986 were timely filed and have been received by Jefferson. To the
best knowledge of Jefferson, any requests for determination letters relating to
any amendments to such plans which are currently pending have been provided to
the Company. All such requests were timely and properly filed and appropriate
notice of any such filing was timely and properly provided to affected plan
participants and beneficiaries.
To the best knowledge of Jefferson, each of the Employee Pension
Benefit Plans has been operated in substantial conformity with the written
provisions of the applicable plan documents which have been delivered to the
Company and in material compliance with the requirements prescribed by all
statutes, orders, rules, and regulations including, but not limited to, ERISA
and the Code, which are applicable to such Employee Pension Benefit Plans. To
the extent that the operation of an Employee Pension Benefit Plan has materially
deviated from the written provisions of the plan, such operational deviations
have been disclosed in Schedule 5.25(a) hereto. All such deviations have been
made in conformity with applicable laws, including ERISA and the Code.
With respect to Employee Pension Benefit Plans that are subject to the
annual report requirement of ERISA Section 103 or to the annual return
requirement of Code Section 6047, to the best knowledge of Jefferson all
required annual reports and annual returns, or such other documents as may have
been required as alternative means of compliance with the annual report
requirement, have been timely filed. Copies of all such annual returns/reports,
including all attachments and schedules, for the three (3) plan years
immediately preceding the current date have been delivered to the Company. With
respect to Employee Pension Benefit Plans that complied with the annual return
requirement by satisfaction of an alternate compliance method, to the best
knowledge of Jefferson any documents required to be filed with the Department of
Labor in satisfaction of such requirements have been provided to the Company.
With respect to all Employee Pension Benefit Plan that are subject to
the summary plan description requirement of ERISA Section 102, to the best
knowledge of Jefferson all such summary plan descriptions as were required to be
filed with the Department of Labor and
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distributed to participants and beneficiaries have been timely filed and
distributed. Copies of all such summary plan descriptions have been delivered to
the Company. No Employee Pension Benefit Plan constitutes a "multiemployer plan"
as defined in Section 4001(a)(3) of ERISA.
No current Employee Pension Benefit Plan is subject to Part III of
Subtitle B of ERISA or Section 412 of the Code, or both. The limitations of Code
Section 415 have not been exceeded with respect to any Employee Pension Benefit
Plan or combination of such plans to which such limitations apply.
To the best knowledge of Jefferson, no Employee Pension Benefit Plan or
any trust created thereunder, nor any "disqualified person" with respect to the
plan (as defined in Section 4975 of the Code), has engaged in a "prohibited
transaction", as such term is defined in Section 4975 of the Code, which could
reasonably be expected to subject such Employee Pension Benefit Plan, any such
trust or any such disqualified person (other than a person for whom Jefferson is
not directly or indirectly responsible) to liability under Title I of ERISA or
to the imposition of any tax under Section 4975 of the Code.
To the best knowledge of Jefferson, no condition exists with regard to
any Employee Pension Benefit Plan which constitutes grounds for the termination
of such plan pursuant to Section 4042 of ERISA.
There is presently in effect no Employee Pension Benefit Plan that is
subject to Title IV of ERISA. Jefferson has not incurred any liability under
Title IV of ERISA arising in connection with the termination of, or complete or
partial withdrawal from, any plan covered or previously covered by Title IV of
ERISA other than liabilities which have been satisfied. The termination of any
Internal Revenue Code Section 401(a) qualified Employee Pension Benefit Plan
previously terminated by Jefferson did not adversely affect the qualification of
such Employee Pension Benefit Plan. To the best knowledge of Jefferson, the
distribution of the assets or any such Employee Pension Benefit Plan was made or
is currently being made in conformity with the requirements of that Employee
Pension Benefit Plan and of applicable legal requirements and has not resulted
in, will not result in, and is reasonably not anticipated to result in the
assessment of any tax, penalty, or excise tax against such pension plan, its
related trusts, the fiduciary and administrators of the Employee Pension Benefit
Plan, Jefferson or any disqualified person (as defined in Code Section 4975)
with respect to the Employee Pension Benefit Plan.
Except as may be disclosed in a Scheduled 5.25(a) hereto, all Employee
Pension Benefit Plans were in effect for substantially all of calendar year
1995. There has been no material amendment of any such plans (other than
amendments required to comply with applicable law) or material increase in the
cost of maintaining such plans or providing benefits thereunder on or after the
last day of the plan year which ended in calendar year 1995 for each such
Employee Pension Benefit Plan.
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Jefferson has provided to the Company copies of the annual actuarial
valuation or allocation report, as applicable, for each Employee Pension Benefit
Plan for the three (3) plan years for such plan immediately preceding the
current date. With regard to Employee Pension Benefit Plans that are not
intended to be qualified under Section 401(a) of the Code, copies of financial
statements or reports containing information regarding the expense of
maintaining any such Employee Pension Benefit Plan for the three (3) plan years
preceding the current date have been delivered to the Company.
To the extent applicable, Jefferson has provided to the Company copies
of any filings regarding the Employee Pension Benefit Plans that have been made
with the Securities and Exchange Commission for the three (3) plan years
preceding the current date.
(b) Jefferson has furnished to the Company true and complete copies of
each "Employee Welfare Benefit Plan" as defined in Section 3(a) of ERISA, which,
to the best of its knowledge, is subject to any provision of ERISA and covers
any employee, whether active or retired, of Jefferson or members of a controlled
group or entities under common control with Jefferson in the manner defined and
further described in Section 414(b), (c), or (m) of the Code. Such plans are
hereinafter referred to collectively as the "Employee Welfare Benefit Plans,"
and each such Employee Welfare Benefit Plan, if any, is listed in Schedule
5.25(b) hereto.
Jefferson has also provided to the Company true and complete copies of
documents establishing all funding instruments for each Employee Welfare Benefit
Plans, including but not limited to, trust agreements, cafeteria plans (pursuant
to Code Section 125), and voluntary employee beneficiary associations (pursuant
to Code Section 501(c)(9)). To the best knowledge of Jefferson, each of the
Employee Welfare Benefit Plans has been operated in substantial conformity with
the written provisions of the plan documents that have been delivered to the
Company and in material compliance with the requirements prescribed by all
statutes, orders, rules, and regulations including, but not limited to, ERISA
and the Code, which are applicable to such Employee Welfare Benefit Plans. Any
material deviation in the operation of such plans from the requirements of the
plan documents or of applicable laws has been listed in Schedule 5.25(b) hereto.
Jefferson has provided any notification required by law to any participant
covered under any Employee Welfare Benefit Plan who has failed to comply with
the requirements of any Code section, resulting in the imposition of a tax on
benefits provided to such participants under such plan.
With respect to all Employee Welfare Benefit Plans that are subject to
the annual report requirement of ERISA Section 103 or to the annual return
requirement of Code Section 5039D, all annual reports and annual returns as were
required to be filed pursuant to such sections have been timely filed. Copies of
all such annual returns/reports, including all attachments and schedules, for
the three (3) plan years immediately preceding the current date for all plans
subject to such requirements have been delivered to the Company. With respect to
all Employee Welfare Benefit Plans that are subject to the summary plan
description requirement of ERISA Section 102, all such summary plan descriptions
as were required to be filed with the
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Department of Labor and distributed to participants and beneficiaries have
been timely filed and distributed. Copies of all such summary plan descriptions
have been delivered to the Company.
Except as may be disclosed in a Schedule 5.25(b) hereto, all employee
Welfare Benefit Plans that are in effect were in effect for substantially all of
the calendar year 1995. Except as disclosed in such Schedule 5.25(b), there has
been with respect to such Employee Welfare Benefit Plans no material amendment
thereof or material increase in the cost thereof or benefits payable thereunder
on or after January 1, 1996.
To the best knowledge of Jefferson, no Employee Welfare Benefit Plan or
any trust created thereunder, nor any "party in interest" with respect to the
plan (as defined in Section 3(14) of ERISA), has engaged in a "prohibited
transaction," as such term is defined in Section 406 of ERISA, which could
subject such Employee Welfare Benefit Plan, any such trust, or any party in
interest (other than a person for whom Jefferson is not directly or indirectly
responsible) to the imposition of a penalty for such prohibited transaction
under Section 502(i) of ERISA. The Department of Labor has not assessed any such
penalty or served notice to Jefferson that such a penalty may be imposed upon
any Employee Welfare Benefit Plan.
Jefferson has not failed to make any contribution to, or pay any amount
due and owing by Jefferson under the terms of, an Employee Welfare Benefit Plan.
Except as may be disclosed in Schedule 5.25(b) hereto, no claims have been
incurred with respect to any Employee Welfare Benefit Plan which may, to the
best knowledge, information and belief of Jefferson, constitute a liability for
Jefferson after the application of any insurance, trust or other funds that are
applicable to the payment of such claims.
Except as may be disclosed in Schedule 5.25(b) hereto, to the best
knowledge, information and belief at Jefferson, no condition exists that could
subject any Employee Welfare Benefit Plan or any person (other than a person for
whom Jefferson is not directly or indirectly responsible) to liabilities,
damages, losses, taxes, or sanctions that arise under Section 4980B of the Code
or Sections 601 through 608 of ERISA for failure to comply with the continuation
health care coverage requirements of ERISA Sections 601 through 608 and Code
Section 4980B with respect to any current or former employee of Jefferson or the
beneficiaries of such employee.
(c) Jefferson has furnished to the Company true and complete copies
and/or descriptions of each plan or arrangement maintained or otherwise
contributed to by Jefferson that is not an Employee Pension Benefit Plan and is
not an Employee Welfare Benefit Plan and which (exclusive of base salary and
base wages) provides for any form of current or deferred compensation, bonus,
stock option, profit sharing, retirement, group health or insurance, welfare
benefits, fringe benefits, or similar plan or arrangement for the benefit of any
employee or class of employees, whether active or retired, or independent
contractors of Jefferson. Such plans and arrangements shall collectively be
referred to herein as "Benefit Arrangements" and all such Benefit Arrangements
of Jefferson, if any, are listed on Schedule 5.25(c) hereto. Except as disclosed
on Schedule 5.25(c), there are no other benefit arrangements of Jefferson and
all
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Benefit Arrangements that are in effect were in effect for substantially all
of calendar year 1995. Except as disclosed on Schedule 5.25(c), there has been
with respect to Benefit Arrangements no material amendment thereof or material
increase in the cost thereof or benefits payable thereunder on or after January
1, 1996. There has been no material increase in the base salary and wage levels
of Jefferson and, except in the ordinary course of business, no change in the
terms or conditions of employment (including severance benefits) compared, in
each case, to those prevailing for substantially all of calendar year 1995.
Except as may be disclosed in Schedule 5.25(c), there has been no material
increase in the compensation of, or benefits payable to, any senior executive
employee of Jefferson on or after January 1, 1996, nor has any employment,
severance, or similar contract been entered into with any such employee, nor has
any amendment to any such contract been made on or after January 1, 1996.
With respect to all Benefit Arrangements that are subject to the annual
return requirement of Code Section 6039D, all annual returns as were required to
be filed have been timely filed. Copies of all such annual returns for the three
(3) plan years immediately preceding the current date have been delivered to the
Company.
(d) Listed on Schedule 5.25(d) hereto are all Employee Pension Benefit
Plans, Employee Welfare Benefit Plans, and Benefit Arrangements which provide
compensation or benefits that become effective upon a change in control of
Jefferson, including, but not limited to, additional compensation or benefits,
or acceleration in the amount of timing of payment of compensation or benefits
which had become effective prior to the date of such acceleration. Except as may
be disclosed in such Schedule 5.25(d), there is no Employee Pension Benefit
Plan, Employee Welfare Benefit Plan, or Benefit Arrangement covering any
employee of Jefferson that individually or collectively could give rise to the
payment of any amount which would constitute an "excess parachute payment," as
such term is defined in Section 280G of the Code and Regulations proposed
pursuant to that section.
(e) Except as may be described in a Schedule 5.25(e) hereto, each
Employee Pension Benefit Plan, Employee Welfare Benefit Plan, or Benefit
Arrangement and each personal services contract, fringe benefit, consulting
contract or similar arrangement with or for the benefit of any officer,
director, employee, or other person may be terminated by Jefferson (or by the
Surviving Corporation) within a period of no more than thirty (30) days
following the Effective Time without payment of any amount as a penalty, bonus,
premium, severance pay, or other compensation for such termination. No
limitation on the right to terminate any such plan has been communicated by
Jefferson to employees, former employees, or retirees who are or may be
participants in or beneficiaries of such plans or arrangements.
(f) Except as may be disclosed in a Schedule 5.25(f) hereto, Jefferson
has not received notice from any governmental agency of any alleged violation of
applicable laws or of any prospective audit or other investigation for the
purpose of reviewing compliance with applicable laws with respect to any
Employee Pension Benefit Plan, Employee Welfare Benefit Plan or Benefit
Arrangement.
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Except as disclosed in such Schedule 5.25(f), no suits, actions, or
claims have been filed in any court of law or with any governmental agency
regarding the operation of any Employee Pension Benefit Plan, Employee Welfare
Benefit Plan, or Benefit Arrangement and no such additional suits, actions, or
claims are, to the best information, knowledge and belief of Jefferson,
anticipated to be filed.
5.26 MATERIAL CONTRACTS. Except as may be described in a Schedule 5.26
hereto, neither Jefferson (or its subsidiary) nor any of its (or its
subsidiary's) assets, businesses, or operations, is as of the date of this
Agreement a party to, or bound or affected by, or receives benefits under, any
contract or agreement or amendment thereto that require annual payments of over
$25,000 per year.
5.27 MATERIAL CONTRACT DEFAULTS. Neither Jefferson nor its subsidiary is in
default in any respect under any material contract, agreement, commitment,
arrangement, lease, insurance policy, or other instrument to which either of
them is a party or by which the assets, business, or operations of either of
them may be bound or affected or under which Jefferson or its subsidiary or the
assets, business, or operations of either of them receives benefits, and which
default would reasonably be expected to have either individually or in the
aggregate a material adverse effect on Jefferson and its subsidiary, taken as a
whole. There has not occurred any event that, with the lapse of time or the
giving of notice or both, would constitute such a default.
5.28 REPORTS. Since July 1, 1990, each of Jefferson and its subsidiary has
filed all material reports and answers to regulatory examination reports,
together with any amendments required to be made with respect thereto, that it
was required to file with any or all of (i) the OTS; (ii) the FDIC and (iii) any
other applicable federal or state securities or banking authorities (except, in
the case of federal or state securities authorities, filings that are not
material). As of their respective dates, each of such reports and documents,
including the financial statements, exhibits, and schedules thereto, complied in
all material respects with all of the requirements of their respective forms and
all of the statutes, rules and regulations enforced or promulgated by the
Regulatory Authority with which they were filed. All such reports in Jefferson's
possession were true and complete in all material respects and did not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. Jefferson
is not in receipt of any correspondence from any Regulatory Authority inquiring
into Jefferson's compliance with all of the requirements of their respective
forms and all of the statutes, rules and regulations enforced or promulgated by
such Regulatory Authority, or asserting that Jefferson has failed to comply
therewith. Each of Jefferson and its subsidiary has previously provided to the
Company true and correct copies of all such reports filed after July 1, 1990 and
of which Jefferson and its subsidiary are aware. Insofar as the representations
and warranties in this Section 5.28 concern reports and correspondence prior to
February, 1993, such representations and warranties are made to the best
knowledge of Jefferson.
5.29 1934 ACT AND NASDAQ FILINGS.
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(a) The outstanding shares of Jefferson Common Stock are not and are
not required to be registered with the Office of Thrift Supervision pursuant to
the Securities Exchange Act of 1934.
(b) The outstanding shares of Jefferson Common Stock are not traded or
authorized for trading on any system operated, owned or maintained by the
National Association of Securities Dealers, Inc.
5.30 STATEMENTS TRUE AND CORRECT. None of the information prepared by or on
behalf of Jefferson or its subsidiary regarding Jefferson or its subsidiary
included or to be included in the Proxy Statement to be mailed to Jefferson's
Shareholders in connection with the Shareholders' Meeting, and any other
documents to be filed with any Regulatory Authority in connection with the
transactions contemplated hereby, will, at the respective times such documents
are filed and, with respect to the Proxy Statement, at the time it is mailed to
shareholders of Jefferson, be false or misleading with respect to any material
fact, omit to state any material fact necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading or omit
to state any material fact required to be stated therein, or, in the case of the
Proxy Statement or any amendment thereof or supplement thereto, at the time of
the Shareholders' Meeting, be false or misleading with respect to any material
fact, omit to state any material fact necessary to correct any statement in any
earlier communication with respect to the solicitation of any proxy for the
Jefferson Shareholders' Meeting or omit to state any material fact required to
be stated therein. All documents Jefferson is responsible for preparing for
filing or filing with any Regulatory Authority in connection with the
transactions contemplated hereby will comply as to form in all material respects
with the provisions of applicable law.
5.31 MATERIAL INTERESTS OF CERTAIN PERSONS. Except as may be set forth in a
Schedule 5.31 hereto, to the best knowledge of Jefferson and its subsidiary, no
officer or director of Jefferson or its subsidiary, or any "associate" (as such
term is defined in Rule 14a-1 under the 1934 Act) of any such officer or
director, has any material interest in any contract or property (real or
personal), tangible or intangible, used in or pertaining to the business of
Jefferson or its subsidiary.
5.32 INVESTMENT SECURITIES. Section 1 of Schedule 5.32 sets forth the book
and market value as of June 30, 1995 and as of the Effective Time of the
investment securities, mortgage-backed securities and securities held for sale
of Jefferson as of such date. Section 2 of such Schedule 5.32 sets forth an
investment securities report which includes (to the extent known or reasonably
obtainable)security descriptions, CUSIP or Agency Pool numbers, current pool
face values, book values, coupon rates, market values and book yields in each
case as of June 30, 1995 and as of the Effective Time.
5.33 INTELLECTUAL PROPERTIES. Except where there would be no material
adverse effect on the business, financial condition or results of operations of
Jefferson and its subsidiary taken as a whole, each of Jefferson and its
subsidiary owns or possesses valid and binding license and other rights to use
without payment all material patents, copyrights, trade secrets, trade names,
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servicemarks and trademarks used in its businesses and neither Jefferson nor its
subsidiary has received any notice of conflict with respect thereto that asserts
the right of others. Each of Jefferson and its subsidiary has in all material
respects performed all the obligations required to be performed by it and is not
in default in any material respect under any material contract, agreement,
arrangement or commitment relating to any of the foregoing, except for any
nonperformance or default that would not, individually or in the aggregate, have
a material adverse effect on the business, financial condition or results of
operations of Jefferson and its subsidiary, taken as a whole.
5.34 CERTAIN REGULATORY MATTERS.
(a) Jefferson is a qualified thrift lender under Section 10(m) of
the HOLA and is a member of the Federal Home Loan Bank of Cincinnati; and
(b) Jefferson has not paid or declared any dividends that (i)
caused or would cause the regulatory capital of Jefferson to be less than the
amount then required by applicable law or (ii) exceeded any other limitation on
the payment of dividends imposed by law, agreement or regulatory policy. Other
than as provided by applicable law, there are no restrictions on the payment of
dividends by Jefferson or its subsidiary.
5.35 CORPORATE APPROVAL.
(a) The affirmative vote of the holders of two thirds (_) of the
outstanding shares of Jefferson Common Stock is required to adopt this Agreement
and approve the Merger and the other transactions contemplated hereby. No other
vote of the shareholders of Jefferson is required by law, the Articles of
Incorporation, Constitution or Bylaws of Jefferson or otherwise to adopt this
Agreement and approve the merger and the other transactions contemplated hereby;
and
(b) At a duly constituted meeting of the Board of Directors of
Jefferson, directors constituting at least two-thirds of the directors then in
office and a majority of the Disinterested Directors (meaning directors of
Jefferson who are not officers, employees or holders of more than 5% of the
Common Stock of Jefferson) granted their prior approval to the Merger.
5.36 BROKER'S AND FINDERS FEES. Except for payments to Keller & Company,
Inc., which has been engaged by Jefferson as consultant to provide a fairness
opinion (pursuant to an agreement, a copy of which has been separately provided
to the Company), Jefferson has not incurred any liability to any broker, finder,
or similar agent, nor has it agreed to pay any broker's fee, finder's fee or
commission, with respect hereto or to the transactions contemplated hereby.
ARTICLE VI
COVENANTS OF THE COMPANY
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The Company and, as appropriate, Acquisition hereby make and agree to
the covenants set forth in this Article VI in favor of Jefferson.
6.1 GOVERNMENTAL AND OTHER APPROVALS. Within a reasonable time after
execution of this Agreement, the Company shall file any and all applications
with the appropriate government Regulatory Authorities in order to obtain the
Governmental Approvals and take such other actions as may be reasonably required
to consummate the transactions contemplated in this Agreement with reasonable
promptness. The Company shall pay all fees and expenses arising in connection
with such applications for regulatory approval. The Company agrees to use its
best efforts to provide the appropriate Regulatory Authorities with the
information required by such authorities in connection with the Company's
applications for regulatory approval and to use its best efforts to obtain such
regulatory approvals and any other approvals and consents as may be required for
the Closing, as promptly as practicable; provided, however, that nothing in this
Section 6.1. shall be construed to obligate the Company to take any action to
meet any condition required to obtain prior regulatory approval if the Company
shall, in its sole discretion, deem such condition to be unreasonable or to
constitute a significant impediment upon its ability to carry on its business or
any acquisition programs. The Company shall provide Jefferson the opportunity to
review and comment on all required applications within a reasonable period prior
to the filing thereof and provide Jefferson with copies of all written
communications with Regulatory Authorities regarding the transactions provided
for herein and related applications and proceedings. Subject to the terms and
conditions of this Agreement, the Company and Acquisition agree to use all
reasonable efforts to take, or to cause to be taken, all actions, and to do, or
to cause to be done, all things necessary, proper, or advisable under applicable
laws and regulations to consummate and make effective, with reasonable
promptness after the date of this Agreement, the transactions contemplated by
this Agreement, including, without limitation, using reasonable efforts to lift
or rescind any injunction or restraining or other order adversely affecting the
ability of the parties to consummate the transaction contemplated by this
Agreement. Subject to the provisions of this Section 6.1, the Company shall use,
and shall cause each Company Subsidiary to use, its best efforts to obtain
consents of all third parties and Regulatory Authorities necessary or desirable
for the consummation of each of the transactions contemplated by this Agreement.
6.2 COOPERATION IN PREPARATION OF THE PROXY STATEMENT. The Company will
furnish such information concerning the Company (and Acquisition shall furnish
such information concerning Acquisition) as is necessary in order to cause the
Proxy Statement, insofar as it relates to either such corporation, to comply
with Section 4.14. The Company agrees promptly to advise Jefferson if at
any time prior to the Jefferson Shareholders' Meeting any information provided
by it for inclusion in the Proxy Statement becomes incorrect or incomplete in
any material respect and to provide Jefferson with the information needed to
correct such inaccuracy or omission. The Company and Acquisition shall furnish
Jefferson with such supplemental information as may be necessary in order to
cause such Proxy Statement, insofar as it relates to the Company or Acquisition,
respectively, to comply with Section 4.14.
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6.3 EMPLOYEE BENEFITS. Following the consummation of the transactions
contemplated herein, the Company shall not be obligated to make further
contributions to any of the Employee Plans or Benefit Arrangements of Jefferson
and all employees of Jefferson immediately prior to the Effective Time who shall
continue as employees of Acquisition as the Surviving Corporation or as
employees of any other Company Subsidiary will be afforded the opportunity to
participate in any applicable employee benefit plans maintained by the Company
or the Company Subsidiaries, included but not limited to any "employee benefit
plan," as that term is defined in ERISA, on an equal basis with employees of the
Company or any Company Subsidiary with comparable positions, compensation and
tenure, subject to the provisions of this Section 6.3. Service with Jefferson
prior to the Effective Time by such former Jefferson employees will not be
deemed service with the Company or any Company Subsidiary and will not be
counted for purposes of determining eligibility for participation and for
crediting of service for vesting purposes in such employee benefit plans of the
Company or any Company Subsidiary. In no event shall any former Jefferson
employee be entitled to or be given credit for past service with Jefferson for
purposes of the accrual, calculation, or determination of benefit amounts under
any plan maintained by the Company or any Company Subsidiary. In its sole
discretion, the Company may elect to postpone until the first day of January
next following the Effective Time the participation of the employees of
Jefferson in the employee benefit plans maintained by the Company or a Company
Subsidiary.
The Company shall take all steps necessary to cause any 401(k) plan
maintained by Jefferson to be terminated, and distributions made thereunder in
accordance with the provisions of Code Section 401(k)(10)(A)(i), as soon as
practicable after the Effective Time, but in no event sooner than the date that
the former Jefferson employees who remain employed by the Surviving Corporation
or any Subsidiary of the Surviving Corporation are entitled to participate in
the Company's employee stock ownership plan. Nothing contained in this Section
6.3 shall be deemed to be a promise (express or implied) or represent any
understanding with respect to continued or future employment of any employee of
Jefferson.
Neither the Company nor Acquisition will provide or be required to
provide health insurance or health benefits for any officer or employee of
Jefferson, or a family member of any officer or employee of Jefferson, in the
event any such person is determined by the Company's or its affiliates' health
insurer to be not insurable due to a pre-existing condition.
6.4 NOTIFICATION. The Company shall notify Jefferson promptly after
becoming aware of the occurrence of, or the impending or threatened occurrence
of, any event that would constitute a breach on its part of any obligation
under this Agreement or the occurrence of any event that would cause any
representation or warranty made by it herein to be false or misleading, or if it
becomes a party or is threatened with becoming a party to any legal or equitable
proceeding or governmental investigation or upon the occurrence of any event
that would result in a change in the circumstances described in the
representations and warranties contained herein. At all times up to, including
and as of the Closing, the Company and Acquisition shall inform Jefferson in
writing of any and all facts necessary to amend or supplement the
representations and warranties made herein and any Company Schedules attached
hereto as necessary so that the information
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contained herein and therein will accurately reflect the current status of the
Company and Acquisition; provided, however, that any such updates to the Company
Schedules shall be required prior to the Closing only with respect to matters
that represent material changes to the Company Schedules and the information
contained therein.
6.5 CERTAIN EMPLOYEE MATTERS.
(a) For a period of six months following the Effective Date, the
Company shall not, and shall cause the Surviving Corporation not to, terminate
the employment of any person who is an employee of Jefferson as of the date
hereof who is not employed by Jefferson pursuant to a written employment
agreement; provided, however, that the Company and the Surviving Corporation
shall retain the right to terminate any such employee for cause, whether
termination occurs during such six-month period or thereafter. For purposes of
this Section 6.5(a), "cause" shall mean dishonesty, fraud, embezzlement,
misappropriation or breach of duty to the Company or an Affiliate of the
Company, incompetence, an act or omission such employee knew or should have
known would materially impair the reputation, goodwill or business position of
the Company or any of its Affiliates, a continuing pattern of neglect or
misconduct by such employee in the performance of his or her duties or
conviction of a felony offense; and provided further, that employment of any
such person by the Company or any of its Affiliates other than the Surviving
Corporation during such six-month period shall not be deemed to constitute a
breach of the covenant set forth in this Section 6.5(a). It is expressly
understood and agreed by the Company and Jefferson that the only officers or
employees of Jefferson whose employment by Jefferson is pursuant to a written
employment agreement are Messrs. Campbell, Dozer and Hiss (President and Chief
Executive Officer, Vice President and Chief Lending Officer and Vice President
and Treasurer of Jefferson, respectively).
(b) For a period of six months following the Effective Date or for the
remaining term of their current employment contract, whichever is greater, the
Company shall not, and shall cause the Surviving Corporation not to, terminate
the employment of Messrs. Dozer and Hiss; provided, however, that the Company
and the Surviving Corporation shall retain the right to terminate either such
individual for cause, whether termination occurs during the six-month period
following the Effective Date or thereafter. For purposes of this Section 6.5(a),
"cause" shall mean dishonesty, fraud, embezzlement, misappropriation or breach
of duty to the Company or an Affiliate of the Company, incompetence, an act or
omission such employee knew or should have known would materially impair the
reputation, goodwill or business position of the Company or any of its
Affiliates, a continuing pattern of neglect or misconduct by such employee in
the performance of his or her duties, conviction of a felony offense or any
other event or circumstance that would permit Jefferson to terminate their
employment for cause pursuant to their respective employment agreements; and
provided further, that employment of either such individual by the Company or
any of its Affiliates other than the Surviving Corporation during such period,
without requiring relocation of such individual, shall not be deemed to
constitute a breach of the covenant set forth in this Section 6.5(a).
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(c) On the business day before the Closing, the Company shall (i)
provide to Mr. Campbell assurance identical to that set forth in Section 6.5(b)
for Messrs. Dozer and Hiss or (ii) at the Company's option, which option shall
be exercised by written notice from the Company to Mr. Campbell delivered not
later than thirty days prior to Closing, the Company may request that Jefferson
terminate before the Closing Mr. Campbell's existing employment agreement and
pay or cause to be paid to him the termination or severance payments to which
Mr. Campbell would thereafter be entitled pursuant to his employment agreement
with Jefferson, as in effect on the date hereof and in the form previously
delivered to the Company. If the latter option is elected by the Company, such
payment, whether made or accrued, shall not have the effect of reducing
Jefferson's shareholders' equity as of the Closing Date under Section 3.2(a) or
Section 8.2(k) of this Agreement.
6.6 DIRECTORS AND OFFICERS INSURANCE AND INDEMNIFICATION.
(a) Insurance. The Company shall cause the Jefferson Directors and
Officers to be added as additional covered parties under the director and
officer insurance coverage maintained by the Company, with a policy limit of $8
million. For purposes of this Section 6.6(a), the phrase "Jefferson Directors
and Officers" shall mean James Campbell, Ronald Root, Roger Holstein, Stanton
Jones, William Blazer, Robert Hiss, Donald Dozer and any of their predecessors
who are covered under the existing policy of Jefferson. In addition to the
indemnification obligation set forth in Section 6.6(b) hereafter, the Company
shall protect, indemnify and hold harmless the Jefferson Directors and Officers
from and against any and all causes of action, suits, judgments, liabilities,
obligations, losses, damages, actual or threatened claims, and expenses of any
nature whatsoever (including reasonable attorneys' fees and expenses and costs
incurred in settlement) which may be imposed on, incurred by or asserted against
the Jefferson Directors and Officers at any time by reason of, in any way
relating to, arising directly or indirectly out of, or reasonably alleged to
arise out of the Company's failure to purchase or maintain or cause to be
purchased or maintained directors and officers liability insurance pursuant to
the terms of this Section 6.6(a), but only to the extent that the foregoing
causes of action, suits, judgments, liabilities, obligations, losses, damages,
actual or threatened claims, and expenses of any nature whatsoever (including
reasonable attorneys' fees and expenses and costs incurred in settlement) are of
the type that would have been covered had the Company's director and officer
insurance policy been purchased or maintained as required.
(b) Indemnification. The Company and Acquisition hereby acknowledge and
agree that Ohio law provides for the indemnification of directors and officers
of Ohio corporations under certain circumstances and with certain exceptions,
which indemnification includes but is not necessarily limited to indemnification
of directors and officers of all constituent corporations that are party to a
merger. Furthermore, the Company and Acquisition hereby acknowledge and agree
that they are bound by Ohio law, including without limitation Ohio Revised Code
Section 1701.13(E), and that Ohio law as in effect on the date hereof requires
the advancement of expenses under certain circumstances. It is acknowledged and
agreed by all parties hereto that the intent and effect of this Section 6.6(b)
is merely to acknowledge, and not to expand upon, Ohio law concerning
indemnification of directors and officers, and none of such parties shall be
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entitled to assert, nor shall they assert, that this Section 6.6(b) creates any
indemnification obligation on the part of the Company beyond any indemnification
obligations imposed on the Company or its Affiliates under Section 1701.13(E) or
elsewhere under Ohio law, as in effect on the date of this Agreement.
(c) Indemnification Procedural Matters. The parties hereto acknowledge
and agree that the Company shall be entitled to impose any reasonable terms and
conditions in connection with any obligation on its part to indemnify Jefferson
directors and officers pursuant to this Section 6.6. Such reasonable terms and
conditions shall include, but shall not be limited to, the Company's right to
control the defense or settlement of any causes of action, suits, judgments,
liabilities, obligations, losses, damages, actual or threatened claims, the
Company's right to require prior approval by the Company for incurrence of
expenses of any nature whatsoever (including reasonable attorneys' fees and
expenses and costs incurred in settlement), the right of the Company to select
counsel to represent its interests and the interests of persons claiming
indemnification, the right of the Company to appeal any adverse judgment or
judgments, the Company's right to seek recovery of expenses advanced if the
person to whom expenses were advanced is determined not to be entitled thereto
and the right to assert any defense to a claim of indemnification that the
Company may be entitled to assert under Ohio or other applicable law, including
a defense based upon failure by the person seeking indemnification to abide by
the foregoing terms and conditions, all of which rights are hereby acknowledged
and agreed to.
ARTICLE VII
COVENANTS OF JEFFERSON
Jefferson hereby makes and agrees to the covenants set forth in this
Article VII in favor of the Company and Acquisition.
7.1 JEFFERSON SHAREHOLDER APPROVAL; PROXY STATEMENT
(a) Shareholder Approval. Jefferson shall call the Jefferson
Shareholders' Meeting to be held as soon as reasonably practical after the date
of this Agreement for the purpose of adopting and approving this Agreement and
the Merger contemplated hereby, and such other related matters as it deems
appropriate. The Board of Directors of Jefferson shall recommend, subject to
compliance with their legal and fiduciary duties as advised by counsel, to the
Jefferson Shareholders the approval and adoption of this Agreement and the
Merger contemplated hereby. Jefferson shall use its best efforts, subject to
compliance with its legal and fiduciary duties as advised by counsel, to obtain
the approvals of Jefferson Shareholders.
(b) Proxy Statement. As soon as reasonably practicable after the date
hereof, Jefferson shall prepare or cause to be prepared a Proxy Statement for
use in connection with the Shareholders' Meeting. Jefferson shall provide to the
Company and its counsel reasonable opportunity to review and comment upon the
Proxy Statement prior to the time it is first sent or given to shareholders of
Jefferson or filed in preliminary form with any Regulatory Authority. Except as
to any information concerning the Company or Acquisition that is included in the
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Proxy Statement and that is provided in writing to Jefferson by the Company or
its counsel specifically for inclusion in the Proxy Statement, for which
information the Company and Acquisition shall be solely responsible, Jefferson
shall ensure that the Proxy Statement, at the time it is first sent or given to
shareholders of Jefferson and at all times to and including the Shareholders'
Meeting, is not false or misleading with respect to any material fact, that it
does not omit to state any material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, and that it does not omit to state any material fact required to be
stated therein, and, in the case of any amendment thereof or supplement thereto
(at the time it is first sent or given and at all times to and including the
Shareholders' Meeting), that such supplement or amendment is not false or
misleading with respect to any material fact, and that it does not omit to state
any material fact necessary to correct any statement in any earlier
communication with respect to the solicitation of any proxy for the Jefferson
Shareholders' Meeting and that it does not omit to state any material fact
required to be stated therein. All documents Jefferson is responsible for
preparing for filing or filing with any Regulatory Authority in connection with
the transactions contemplated hereby will comply as to form in all material
respects with the provisions of applicable law.
7.2 CONDUCT OF BUSINESS - AFFIRMATIVE COVENANTS. Unless the prior written
consent of the Company shall have been obtained:
(a) Each of Jefferson and its subsidiary shall:
(i) Operate its business only in the usual, regular, and ordinary
course;
(ii) Preserve intact its business organizations and assets and to
maintain its rights and franchises;
(iii) Take no action, unless otherwise required by law, rules or
regulation, that would reasonably be considered to (A) adversely affect its
ability or that of the Company to obtain any necessary approvals of Regulatory
Authorities required to consummate the transactions contemplated by this
Agreement, or (B) adversely affect the ability of such Party to perform its
covenants and agreements under this Agreement;
(iv) Except as they may terminate in accordance with their terms, keep
in full force and effect, and not default in any of their obligations under, all
material contracts; provided, however, that as of or prior to the Closing Date
the Data Servicing Agreement between Jefferson and FISERV Cleveland, Inc.
("FISERV") dated January 13, 1993 (the "Contract") will, at the request of the
Company, be terminated by Jefferson, it being understood and agreed by the
parties hereto that any payment, whether denominated a termination payment,
liquidated damage payment or otherwise, payable by Jefferson to FISERV as a
result of such early termination of the Contract shall not have the effect of
reducing Jefferson's shareholders' equity as of the Closing Date for purposes of
Section 3.2(a) or Section 8.2(k) of this Agreement;
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(v) Keep in full force and effect insurance coverage with responsible
insurance carriers which is reasonably adequate in coverage and amount for
companies the size of Jefferson and its subsidiary, respectively, and for the
nature of the business and the properties owned by them, to the extent that such
insurance is reasonably available;
(vi) Use its best efforts to retain the present customer base of each
of Jefferson and its subsidiary and to facilitate the retention of such
customers by Acquisition after the Effective Time; and
(vii) Maintain, renew, keep in full force and effect, and preserve its
business organization and material rights and franchises, permits and licenses,
and to use its best efforts to maintain positive relations with its present
employees so that such employees will continue to perform effectively and will
be available to the Company and Company Subsidiaries at and after the Effective
Time, and to use its best efforts to maintain its existing, or substantially
equivalent, credit arrangements with banks and other financial institutions and
to assure the continuance of customer relationships.
(b) Jefferson agrees to use its best efforts to assist the Company in
obtaining the Governmental Approvals necessary to complete the transactions
contemplated hereby and does not know of any reason that such governmental
Approvals can not be obtained. Each of Jefferson and its subsidiary shall
provide to the Company or to the appropriate governmental authorities all
information reasonably required to be submitted in connection with obtaining
such approvals.
(c) Jefferson, at its cost and expense, shall use its best efforts to
secure all necessary consents and all consents and releases, if any, required by
Jefferson or third parties and shall comply with all applicable laws,
regulations and rulings in connection with this Agreement and the consummation
of the transactions contemplated hereby.
(d) At all times to and including, and as of, the Closing, Jefferson
shall inform the Company in writing of any and all facts necessary to amend or
supplement the representations and warranties made herein and in the Jefferson
Schedules attached hereto as necessary so that the information contained herein
and therein will accurately reflect the current status of Jefferson and its
subsidiary; provided, however, that any such updates to the Jefferson Schedules
shall be required prior to the Closing only with respect to matters which
represent material changes to the Jefferson Schedules and the information
contained therein.
(e) On and after the Closing Date, each of Jefferson and its subsidiary
shall give such further assistance to the Company and shall execute, acknowledge
and deliver all such documents and instruments as the Company may reasonably
request and take such further action as may be necessary or appropriate
effectively to consummate the transactions contemplated by this Agreement.
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(f) Between the date of this Agreement and the Closing Date, each of
Jefferson and its subsidiary shall, at times mutually agreed upon by Jefferson
and the Company, afford the Company, its officers, employees, agents or other
representatives (including accountants and attorneys) reasonable access during
normal business hours to the properties, operations, books, records, contracts,
documents, loan files and other information of, or relating to Jefferson or its
subsidiary. The business and accounting records of Jefferson and its subsidiary
to which access shall be provided shall include but shall not be limited to loan
and deposit account files; reports and correspondence sent to, filed with or
received from any federal or state regulatory or supervisory agency; all leases
with respect to Jefferson's or its subsidiary's premises; all internal audit
reports and management's responses thereto; a list of current directors; a list
of current shareholders of Jefferson; and such other information concerning the
business, financial condition, affairs, properties and prospects of Jefferson
and its subsidiary as the Company, its employees, officers, agents or other
representatives may reasonably request. Each of Jefferson and its subsidiary
shall provide reasonable assistance to the Company in its investigation of
matters relating to Jefferson or its subsidiary.
(g) Subject to the terms and conditions of this Agreement, Jefferson
agrees to use all reasonable efforts and to take, or to cause to be taken, all
actions, and to do, or to cause to be done, all things necessary, proper, or
advisable under applicable laws and regulations to consummate and make
effective, with reasonable promptness after the date of this Agreement, the
transactions contemplated by this Agreement, including, without limitation,
using reasonable efforts to lift or rescind any injunction or restraining or
other order adversely affecting the ability of the Parties to consummate the
transaction contemplated by this Agreement. Jefferson shall use its best efforts
to obtain consents of all third parties and Regulatory Authorities necessary or
desirable for the consummation of each of the transactions contemplated by this
Agreement.
(h) Jefferson shall notify the Company promptly after becoming aware of
the occurrence of, or the impending or threatened occurrence of, any event that
would constitute a breach on its part of any obligation under this Agreement or
the occurrence of any event that would cause any representation or warranty made
by it or its subsidiary herein to be false or misleading, of it or its
subsidiary becomes a party or is threatened with becoming a party to any legal
or equitable proceeding or governmental investigation or upon the occurrence of
any event that would result in a change in the circumstances described in the
representations and warranties contained herein.
(i)(A) Jefferson shall, at its sole cost and expense, engage an
environmental engineering firm for the purpose of remediation of any adverse
environmental condition existing with respect to the properties of Jefferson,
including but not limited to those located at 5th Avenue and Maple Street in
Marysville, Ohio and at 2182 West Dublin-Granville Road in Worthington, Ohio;
provided, however, that Jefferson shall not be required to remediate the
Marysville property if Jefferson demonstrates to the Company's satisfaction that
Jefferson has disposed of such property in a transaction or transactions with
one or more third parties. The remediation required hereunder shall be completed
prior to the Closing Date.
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(B) The Company shall be afforded the opportunity to cause a Phase I
(and if indicated a Phase II) Environmental Audit of all real property owned or
leased by Jefferson or its subsidiary (whether used in their operations or
otherwise). Any Phase I Environmental Audit shall be completed by the Company
not later than sixty (60) days following the date of this Agreement. If, as a
result of such Environmental Audit, a fact, circumstance or condition is
discovered that would constitute a violation of Jefferson's or its subsidiary's
representations set forth herein, if known to Jefferson or its subsidiary,
whether or not disclosed in a schedule hereto, Jefferson shall take or cause to
be taken such actions as are necessary to remedy the same to the reasonable
satisfaction of the Company.
(C) The Company shall be afforded the right, at the Company's
expense, to conduct a physical inspection of all improvements, buildings and
mechanical equipment owned or leased by Jefferson or its subsidiary. Any such
inspection shall be conducted at a time mutually acceptable to Jefferson and the
Company and shall not unreasonably interfere with the conduct of Jefferson's
business. The inspection shall be conducted not later than thirty (30) days
following the date of this Agreement.
7.3 CONDUCT OF BUSINESS - NEGATIVE COVENANTS. From the date of this
Agreement until the earlier of the Effective Time or the termination of
this Agreement, each of Jefferson and, as applicable, its subsidiary covenants
and agrees that it will not do or agree or commit to do any of the following
without requesting in writing the Company's approval and receiving the prior
written consent of the chief executive officer of the Company, which consent
will not be unreasonably withheld and shall be deemed given unless the Company
disapproves the same within five (5) business days after the chief executive
officer of the Company shall have actually received Jefferson's request for such
approval.
(a) Except as expressly contemplated by this Agreement, amend
its Articles of Incorporation, Constitution or Bylaws;
(b) Impose on any share of capital stock held by it any lien,
charge, or encumbrance, or permit any such lien, charge, or encumbrance to
exist;
(c) (i) Repurchase, redeem, or otherwise acquire or exchange,
directly or indirectly, any shares of its capital stock or other equity
securities or instruments convertible into any shares of its capital stock, or
any rights or options to acquire any shares of its capital stock or other equity
securities except as expressly permitted by this Agreement; (ii) split or
otherwise subdivide its capital stock; (iii) recapitalize in any way; (iv)
declare a stock dividend on the Jefferson Common Stock; or (v) pay or declare a
cash dividend or make or declare any other type of distribution on the Jefferson
Common Stock except, as to frequency and amount, in accordance with Jefferson's
historical practices.
(d) Except as expressly permitted by this Agreement, acquire
direct or indirect control over any corporation, association, firm, organization
or other entity, other than in connection with (i) mergers, acquisitions, or
other transactions approved in writing by the
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Company, (ii) foreclosures in the ordinary course of business and not
knowingly exposing it to liability by reason of Hazardous Substances, or (iii)
acquisitions of control in its fiduciary capacity.
(e) Except as expressly permitted by this Agreement, to (i) issue,
sell, agree to sell, or otherwise dispose of or otherwise permit to become
outstanding any additional shares of Jefferson Common Stock, any other capital
stock of Jefferson, any stock appreciation rights, options, warrants, conversion
rights, calls or other rights to acquire any such stock, or any security
convertible into any such stock, unless any such shares of such stock are
directly sold or otherwise directly transferred to Jefferson, (ii) sell, agree
to sell, or otherwise dispose of any substantial part of the assets or earning
power of Jefferson or its subsidiary, (iii) sell, agree to sell, or otherwise
dispose of any asset of Jefferson or its subsidiary other than in the ordinary
course of business for reasonable and adequate consideration or (iv) buy, agree
to buy or otherwise acquire a substantial part of the assets or earning power of
any Person or entity;
(f) Incur any additional debt obligation or other obligation for
borrowed money other than (i) in replacement of existing short-term debt with
other short-term debt of an equal or lesser amount or (ii) financing of banking
related activities except in the ordinary course of the business consistent with
past practices (and such ordinary course of business shall include, but shall
not be limited to, creation of deposit liabilities, entry into repurchase
agreements or reverse repurchase agreements, purchase or sales of federal funds,
Federal Home Loan Bank advances, and sales of certificates of deposit; provided,
however, that short-term (of twelve months or less) Federal Home Loan Bank
advances not subject to a prepayment penalty and in an aggregate amount of not
more than $8 million that are obtained by Jefferson shall be deemed to be within
the ordinary course of business;
(g) Grant any increase in compensation or benefits to any of its
employees or officers, except in accordance with past practices or as required
by law; pay any bonus except in accordance with past practices or any plan or
arrangement disclosed in Schedule 5.25(e); enter into any severance agreements
with any of its officers or employees; grant any material increase in fees or
other increases in compensation or other benefits to any director; or effect any
change in retirement benefits for any class of its employees or officers, unless
such change is required by applicable law;
(h) Amend any existing employment contract between it and any
person having a salary thereunder in excess of $30,000 per year (unless such
amendment is required by law) to increase the compensation or benefits
payable thereunder; or enter into any new employment contract with any person
having an annual salary thereunder in excess of $30,000 that Jefferson, its
subsidiary or the successor of Jefferson or its subsidiary does not have the
unconditional right to terminate without liability (other than liability for
services already rendered), at any time on or after the Effective Time;
(i) Adopt any new employee benefit plan or terminate or make any
material change in or to any existing employee benefit plan other than any
change that is required by law or that,
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in the opinion of counsel, is necessary or advisable to maintain the
tax-qualified status of any such plan;
(j) Enter into any new service contracts, purchase or sale
agreements or lease agreements that are material to Jefferson and its
subsidiary, taken as a whole;
(k) Make any capital expenditure exceeding $50,000;
(l) Enter into any transactions other than in the ordinary course
of business or to accomplish the requirements of this Agreement;
(m) Grant or commit to grant any new extension of credit to any
officer or director or known holder of 5% or more of the outstanding Jefferson
Common Stock, or to any corporation, partnership, trust or other entity
controlled by any such person, if such extension of credit, together with all
other credits then outstanding to the same borrower, would exceed 5% of the
capital of Jefferson or amend the terms of any such credit outstanding on the
date hereof;
(n) Knowingly take any action that will affect its ability to
continue to deduct losses on loans under the reserve method as provided for
under Section 593 of the Code;
(o) Knowingly take any action that is intended or may reasonably
be expected to result in any of its representations and warranties set forth in
this Agreement being or becoming untrue in any material respect, or in any of
the conditions to the Merger set forth in Article 8 not being satisfied, or in
violation of any provision of this Agreement, except, in every case, as may be
required by applicable law;
(p) Change its methods of accounting in effect at June 30, 1995,
except as provided in this Agreement or as required by changes in GAAP as
concurred in, in writing, by Jefferson's independent auditors (a copy of which
shall be provided to the Company) or regulatory accounting principles. It is
acknowledged and agreed by the parties hereto that (i) Jefferson shall, at the
request of the Company, effective at Closing, cause its allowance for loan and
lease losses to be increased by an amount to be provided in writing by the
Company within two days prior to Closing and (ii) that such increase shall not
have the effect of reducing Jefferson's shareholders' equity as of the Closing
Date for purposes of Section 3.2(a) and Section 8.2(k) of this Agreement;
(q) Except as required by applicable law, knowingly take or cause
to be taken any action that could reasonably be expected to jeopardize or delay
the receipt of any of the required regulatory approvals or which would
reasonably be expected to result in any such required regulatory approval
containing a condition that is determined by the Company to be unduly
burdensome;
(r) Fail to use its best efforts to keep in full force and
effect its insurance and bonds in such amounts as are reasonable to cover such
risks customary in relation to the character and
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location of is properties and the nature of its business and in any event
at least equal in scope and amount of coverage of insurance and bonds now
carried;
(s) Fail to notify the Company promptly of its receipt of any
letter, notice or other communication, whether written or oral, from any
governmental entity advising Jefferson or its subsidiary that the governmental
entity is contemplating issuing, requiring, or requesting any agreement,
memorandum of understanding, or similar undertaking, order or directive;
(t) Fail to use its best efforts to remain in compliance with any
capital or other operating requirement of any regulatory agency to which it is
subject;
(u) Fail promptly to notify the Company of (i) the commencement or
threat of any audit, action, or proceeding involving any material amount of
taxes against Jefferson or its subsidiary or (ii) the receipt by Jefferson or
its subsidiary of any deficiency or audit notices or reports in respect of any
material deficiencies asserted by any federal, state, local or other tax
authorities;
(v) Agree to the extension of any statute of limitations for making
any assessments with respect to taxes, except for extensions granted in good
faith in connection with attempts to resolve existing disputes with taxing
authorities;
(w) Fail to maintain and keep its properties in good repair and
condition, except for depreciation due to ordinary wear and tear;
(x) Fail to perform in all material respects all obligations
required to be performed under all material contracts, leases, and documents
relating to or affecting its assets, properties, and businesses; or
(y) Engage in any off-balance sheet hedge transactions except in the
ordinary course of its residential mortgage lending business consistent with
past practices.
7.4 CONDUCT OF BUSINESS -- CERTAIN ACTIONS. Except to the extent necessary
to consummate the transactions specifically contemplated by this Agreement,
neither Jefferson nor its subsidiary shall (and each shall use its best efforts
to ensure that its directors, officers, employees, and advisors do not) directly
or indirectly, institute, solicit, or knowingly encourage (including by way of
furnishing any information not legally required to be furnished) any inquiry or
proposal from or discussion with any corporation, partnership, person or other
entity or group (other than to the Company or any Company Subsidiary) concerning
any "Acquisition Proposal" (as defined below), except for actions reasonably
considered by the Board of Directors of Jefferson, based upon the advice of
outside legal counsel, to be required in order to fulfill its fiduciary
obligations.
Jefferson shall notify the Company immediately if any Acquisition
Proposal has been or should hereafter be received. Such notice shall contain, at
a minimum, the identity of the
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persons making the Acquisition Proposal, and, subject to disclosure being
consistent with the fiduciary obligations of Jefferson's Board of Directors, a
copy of any written inquiry, the terms of any proposal or inquiry, any
information requested or discussions sought to be initiated, and the status of
any reports, negotiations or expressions of interest. For purposes of this
Section 7.4, "Acquisition Proposal" means any tender offer, agreement,
understanding or other proposal of any nature pursuant to which any corporation,
partnership, person or other entity or group, other than the Company or any
Company Subsidiary, would directly or indirectly (i) acquire or participate in a
merger, share exchange, consolidation or any other business combination
involving Jefferson; (ii) acquire the right to vote 10% or more of the Jefferson
Common Stock; (iii) acquire a significant portion of the assets or earning power
of Jefferson or its subsidiary; or (iv) acquire in excess of 10% of the
outstanding Jefferson Common Stock.
7.5 CERTAIN EMPLOYMENT AGREEMENTS. On or promptly following the date of this
Agreement, Jefferson shall provide or cause to be provided to the Company a
written statement from each of Messrs. Campbell, Dozer and Hiss (President and
Chief Executive Officer, Vice President and Chief Lending Officer and Vice
President and Treasurer of Jefferson, respectively) to the effect that the
consummation of the Merger and the transactions and other matters contemplated
hereby do not and will not constitute an involuntary termination of their
employment under their respective employment agreements with Jefferson, or
constitute an event or action entitling any of them to termination or severance
payment or payments under such employment agreements; provided, however, it is
understood and agreed by the parties hereto that nothing in this Section 7.5 or
in any written statement to be provided by Mr. Campbell pursuant to this Section
7.5 shall adversely affect Mr. Campbell's right to termination or severance
payment or payments pursuant to his employment agreement with Jefferson in the
event that the Company elects pursuant to Section 6.5(c) hereof to request that
Jefferson terminate his employment prior to the Effective Date.
ARTICLE VIII
CONDITIONS TO CLOSING
8.1 CONDITIONS TO THE OBLIGATIONS OF JEFFERSON. Unless waived in writing by
Jefferson, the obligation of Jefferson to consummate the transaction
contemplated by this Agreement is subject to the satisfaction at or prior to the
Closing Date of the following conditions:
(a) Performance. Each of the material acts and undertakings of the
Company to be performed at or prior to the Closing Date pursuant to this
Agreement shall have been duly performed;
(b) No Material Adverse Change. No material adverse change in the
business, property, assets (including loan portfolios), liabilities (whether
absolute, contingent or otherwise), operations, liquidity, income, or financial
condition of the Company and Acquisition taken as a whole shall have occurred
since the date of this Agreement;
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(c) Representations and Warranties. The representations and
warranties contained in Article IV of this Reorganization Agreement shall be
true and correct in all material respects on and as of the Closing Date with the
same effect as though made on and as of the Effective Time;
(d) Documents. In addition to the other deliveries of the Company
described elsewhere in this Agreement, Jefferson shall have received the
following documents and instruments:
(i) a certificate signed by the Secretary or an assistant
secretary of the Company and Acquisition dated as of the Closing Date
certifying that:
(A) the Company's and Acquisition's respective Boards of
Directors have duly adopted resolutions (copies of which shall be attached to
such certificate) approving the substantive terms of this Agreement (including
the Merger contemplated hereby), authorizing the consummation of the
transactions contemplated by this Agreement and certifying that such resolutions
have not been amended or modified and remain in full force and effect;
(B) the person executing this Agreement on behalf of the
Company and Acquisition are officers of the Company and Acquisition,
respectively, holding the offices so specified with full power and authority to
execute this Agreement and any and all other documents in connection with the
Merger, and that the signature of such person set forth on such certificate is
his or her genuine signature; and
(C) the organization documents of the Company and Acquisition
attached to such certificate remain in full force and effect; and
(ii) a certificate signed respectively by duly authorized officers
of the Company and Acquisition stating that the conditions set forth in Sections
8.1(a), 8.1(b) and 8.1(c) of this Agreement have been satisfied.
(e) Fairness Opinion. Jefferson shall have received a "fairness
opinion" letter from its independent financial adviser dated the date hereof and
to the effect that, in the opinion of such adviser the Consideration to be
received by the Jefferson Record Holders is fair to the Record Holders from a
financial point of view, and Jefferson shall have received an updated "fairness
opinion" letter from such advisor dated as of the date of mailing of the Proxy
Statement confirming the opinions provided in the initial "fairness opinion"
letter.
8.2 CONDITIONS TO THE OBLIGATIONS OF THE COMPANY. Unless waived in writing
by the Company and Acquisition, the obligations of the Company and Acquisition
to consummate the transactions contemplated by this Agreement are subject to the
satisfaction at or prior to the Closing Date of the following conditions:
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(a) Performance. Each of the material acts and undertakings of
Jefferson to be performed at or before the Closing Date pursuant to this
Agreement shall have been duly performed;
(b) Representations and Warranties. The representations and
warranties contained in Article V of this Reorganization Agreement shall be true
and correct in all material respects on and as of the Closing Date with the same
effect as though made on and as of the Closing Date;
(c) Documents. In addition to the documents delivered elsewhere
in this Agreement, the Company shall have received the following documents and
instruments:
(i) a certificate signed by the Secretary of Jefferson dated as
of the Closing Date certifying that:
(A) Jefferson's Board of Directors has duly adopted
resolutions (copies of which shall be attached to such certificate) approving
the substantive terms of this Agreement (including the Merger contemplated
hereby), authorizing the consummation of the transactions contemplated by this
Agreement and certifying that such resolutions have not been amended or modified
and remain in full force and effect;
(B) the person executing this Agreement on behalf of Jefferson
is an officer of Jefferson, holding the office or offices specified therein,
with full power and authority to execute this Agreement and any and all other
documents in connection with the Merger, and that the signature of such person
set forth on such certificate is his genuine signature; and
(C) the charter documents of Jefferson attached to such
certificate remain in full force and effect; and
(ii) a certificate signed respectively by the President and Chief
Executive Officer of Jefferson stating that the conditions set forth in Sections
8.2(a), 8.2(b), 8.2(e) and 8.2(f) of this Agreement have been satisfied.
(d) Inspections Permitted; Certain Financial Matters. Between the
date of this Agreement and the Closing Date, each of Jefferson and its
subsidiary shall have afforded the Company, its employees, officers, agents
and other representatives reasonable access during normal business hours to the
properties, operations, books, records, contracts, documents, loan files and
other information of or relating to Jefferson or its subsidiary. Each of
Jefferson and its subsidiary shall have caused all personnel to provide
reasonable assistance to the Company in its investigation of matters relating to
Jefferson and its subsidiary. The Company's independent certified public
auditors shall have (i) reviewed the most recent unaudited Jefferson Financial
Statements and performed such other auditing procedures as the Company may
request and (ii) reported to the Company that such independent certified public
auditors are not aware of any material modifications that should be made to such
unaudited Jefferson Financial Statements in order for such statements to conform
to GAAP.
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(e) No Material Adverse Change. No material adverse change in the
business, property, assets (including loan portfolios), liabilities (whether
absolute, contingent or otherwise), operations, liquidity, income, or financial
condition of Jefferson and its subsidiary taken as a whole shall have occurred
since the date of this Agreement, including but not limited to any unusual or
extraordinary loan losses; provided, however, that before the Closing Date
Jefferson shall have, if requested by the Company, (i) terminated the Contract
with FISERV pursuant to Section 7.2(a)(iv) of this Agreement and (ii) caused its
allowance for loan and lease losses to be increased in accordance with Section
7.3(p) of this Agreement.
(f) Opinion of Jefferson's Counsel. The Company shall have
been furnished with an opinion of counsel to Jefferson, dated as of the Closing
Date and addressed to the Company, substantially to the effect that:
(i) Jefferson is an Ohio-chartered savings and loan association,
duly incorporated, validly existing, and in good standing under the laws of the
State of Ohio;
(ii) Jefferson has full corporate power and authority to enter into
this Agreement; this Agreement has been duly and validly authorized by all
necessary corporate action of Jefferson and has been duly and validly executed
and delivered by and on behalf of Jefferson; and no approval, authorization,
order, consent, registration, filing, qualification, license or permit of or
with any regulatory, administrative or other governmental body (including any
court) is required under any federal or Ohio statute or regulation for the
execution and delivery of this Agreement by Jefferson or the consummation of the
transactions contemplated by this Agreement, except such as have been obtained
and are in full force and effect; and
(iii) (a) that Jefferson's capital stock consists solely of the
Jefferson Common Stock; the Jefferson Common Stock has been duly authorized;
3,535 such shares are issued and outstanding and are validly issued; (b) to the
best of such counsel's knowledge, except as set forth in Schedule 5.14 to the
Agreement or reflected in the Audited Financial Statements of Jefferson, there
is no action, suit or proceeding pending or threatened against Jefferson or its
subsidiary or any of the assets of either of them, before any court or
arbitrator or any governmental body, agency or official that would, if decided
against Jefferson or its subsidiary, have a material adverse impact on the
business, properties, assets, liabilities or condition (financial or other) of
Jefferson and its subsidiary, taken as a whole; and (c) to the best of such
counsel's knowledge, with the exception of this Agreement, neither Jefferson nor
its subsidiary is a party to: any letter of intent or agreement to merge, to
consolidate, to sell or purchase substantially all assets or any other agreement
which contemplates the involvement of Jefferson (or any of its assets) or its
subsidiary in any business combination of any kind; or any agreement obligating
Jefferson to issue or sell or authorize the sale or transfer of Jefferson Common
Stock.
Such opinion may (i) expressly rely as to matters of fact upon
certificates furnished by appropriate officers of Jefferson or appropriate
government officials; (ii) in the case of matters of law governed by the laws of
the states in which they are not licensed, reasonably rely upon the
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opinions of legal counsel duly licensed in such states and may be limited,
in any event, to federal law and the OGCL; and (iii) incorporate, be guided by,
and be interpreted in accordance with, the Legal Opinion Accord of the ABA
Section of Business Law (1991).
(g) Other Business Combinations, Etc. Jefferson shall not have
entered into any agreement, letter of intent, understanding or other arrangement
pursuant to which Jefferson would merge with, consolidate with, effect a
business combination with, sell any substantial part of Jefferson's or its
subsidiary's assets to, or, acquire a significant part of the shares or assets
of, any other Person or entity (financial or otherwise), adopt any "poison pill"
or other type of anti-takeover arrangement, any shareholder rights provision,
any "golden parachute" or similar program which would have the effect of
materially decreasing the value of Jefferson or the benefits of acquiring the
Jefferson Common Stock;
(h) Governmental Approvals. Except for the filing of the
Certificate of Merger with the Secretary of the State of Ohio, all Governmental
Approvals for the transactions contemplated by this Agreement shall have
been obtained without the imposition of any conditions not typically imposed in
similar transactions (including any requirement that the Company commit to
divest branches or assets) which the Company determines in its sole judgment to
be materially burdensome upon the conduct of the business of the Company or any
of its Subsidiaries or which would so adversely impact the economic and business
benefits of the Merger to the Company as to render it inadvisable (in the sole
judgment of the Company) to proceed with the Merger; such approvals shall be in
effect and no proceedings shall have been instituted or threatened with respect
thereto; all applicable waiting periods with respect to such approvals shall
have expired; and all conditions and requirements prescribed by law or otherwise
imposed in connection with the Regulatory Approvals shall have been satisfied;
(i) Shareholder Approval. Jefferson shall have furnished the
Company with a certified copy of resolutions duly adopted by the holders of a
vote of the outstanding shares of Jefferson Common Stock entitled to vote
thereon approving and adopting this Agreement, the Merger contemplated hereby
and the other transactions contemplated hereby; such resolutions shall be in
full force and effect and shall have not been modified, rescinded or annulled;
(j) Availability of Workpapers. Jefferson shall authorize its
independent accounting firm to make available the non-proprietary workpapers
that were prepared by such firm in connection with the audits of Jefferson for
the years ended June 30, 1995, 1994 and 1993;
(k) Jefferson Shareholders' Equity Account. Jefferson shall have
delivered to the Company a statement of its shareholders' equity as of the
Closing Date, which statement shall be in form and substance satisfactory to the
Company, in order that the Company may verify the amount of Jefferson's
shareholders' equity as of the Closing Date and make the calculations provided
in Section 3.2(a) of this Agreement;
(l) SAIF Assessments. The FDIC shall not have increase or announced
its intention to increase regular SAIF assessments beyond $.31 per $100 of
deposits for deposit insurance
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premiums on or with respect to deposits held by SAIF-insured institutions,
including Jefferson; provided, however, that if the such assessments are
increased beyond $.31 per $100 of deposits, the Company and Jefferson shall in
good faith negotiate an adjustment in the consideration to be paid hereunder;
(m) Certain Environmental Matters. Jefferson shall have provided to
the Company reports and other documents reasonably requested by the Company in
order that the Company may confirm that environmental remediation has occurred
in accordance with Section 7.2(i) of this Agreement. Insofar as the property
located in Marysville, Ohio is concerned, satisfactory remediation (which shall
be required only if the Marysville property shall not have been disposed of)
shall be deemed to have occurred at such time as the Company shall have received
and accepted (i) a copy of any and all reports prepared by one or more reputable
environmental consulting or engineering firms reasonably acceptable to the
Company verifying that environmental contamination on the Marysville, Ohio
property has been remedied to a level below the acceptable "action level" under
rules promulgated by the State Fire Marshal, Bureau of Underground Storage Tank
Regulation or (ii) a copy of a No Further Action Letter or its equivalent from
the State Fire Marshal, Bureau of Underground Storage Tank Regulation as to
remediation of environmental contamination of the Marysville, Ohio property,
regardless of whether such letter is addressed to the Company; and
(n) Release. The Company shall have received from each shareholder
of Jefferson a release from liability, in form and substance satisfactory to the
Company, concerning acts and transactions occurring prior to the Effective Time;
provided, however, that acts and transactions of the Company, Acquisition and
any of their Subsidiaries, including any acts and transactions contemplated by
the Agreement, shall be specifically excepted therefrom. The release from
liability may be incorporated into the letter of transmittal contemplated by
Section 3.3(a) of this Agreement or it may be contained in a separate document,
in the Company's discretion.
8.3 CONDITIONS TO OBLIGATIONS OF ALL PARTIES. The obligations of each
party to effect the transactions contemplated hereby shall be subject to the
fulfillment, at or prior to the Closing, of the following conditions:
(a) No Court Orders, Pending or Threatened Claims or Regulatory
Changes. No claim, action, suit, investigation or other proceeding shall be
pending or threatened before any court or governmental agency which represents a
substantial risk of the restraint or prohibition of the transaction contemplated
by this Agreement or the obtaining of material damages or other relief in
connection therewith. No party hereto shall be subject to any order, decree or
injunction of a court or agency of competent jurisdiction which enjoins or
prohibits the consummation of the Merger. No statute, rule, regulation, order,
injunction or decree shall have been enacted, entered, promulgated or enforced
by any governmental authority which prohibits, restricts or makes illegal the
consummation of the Merger;
(b) Governmental Approvals and Acquiescence Obtained. The Parties
hereto shall have received all applicable Governmental Approvals for the
consummation of the transaction
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contemplated herein and all waiting periods incidental to such approvals or
notices given shall have expired. The pre-merger notification provisions of
Section 7A of the Clayton Act, if and to the extent applicable, shall have been
complied with by the parties hereto, and no other statutory or regulatory
requirements with respect to the Clayton Act shall be applicable; and
(c) Approval of Shareholders. Approval of this Agreement and the
transactions contemplated hereby by the stockholders of Jefferson, as required
by applicable law or applicable provisions of the Articles of Incorporation,
Constitution or Bylaws of Jefferson.
ARTICLE IX
TERMINATION
9.1 TERMINATION. This Agreement may be terminated at any time prior to the
Closing, as follows:
(a) By mutual consent in writing of the Parties;
(b) By the Company or Jefferson in the event the Closing shall not
have occurred by March 31, 1997 (the "Target Date"), unless the failure of the
Closing to occur shall be due to the failure of the Party seeking to terminate
this Agreement to perform its obligations hereunder in a timely manner;
(c) By either the Company or Jefferson upon written notice to the
other Party, upon denial of any Governmental Approval necessary for the
consummation of the Merger (or should such approval be conditioned upon a
substantial deviation from the transactions contemplated); provided, however,
that either the Company or Jefferson may, upon written notice to the other,
extend the term of this Agreement for only one sixty (60) day period to
prosecute diligently and overturn such denial, provided that such denial has
been appealed within ten (10) business days of the receipt thereof;
(d) By the Company or Jefferson in the event that there shall have
been a material breach of any obligation or covenant of the other Party
hereunder and such breach shall not have been remedied within sixty (60) days
after receipt by the breaching Party of written notice from the other Party
specifying the nature of such breach and requesting that it be remedied;
(e) By the Company should Jefferson enter into a letter of intent
or agreement with a view to being acquired by or effecting a business
combination with any Person; or any agreement to merge with, to consolidate
with, to combine with or to sell a material portion of its assets to, or to be
acquired in any other manner by, any other Person or to acquire a material
amount of assets or a material equity position in any other Person, whether
financial or otherwise; or
(f) By the Company should Jefferson enter into any formal
agreement, letter of understanding, memorandum or other similar arrangement with
any bank regulatory authority
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establishing a formal capital plan requiring Jefferson to raise additional
capital or to sell a substantial portion of its assets.
If a Party should elect to terminate this Agreement pursuant to
subsections (b), (c), (d), (e), or (f) of this Section 9.1, it shall give notice
to the other Party, in writing, of its election in the manner prescribed in
Section 10.1 ("Notices") of this Agreement.
9.2 EFFECT OF TERMINATION. In the event that this Agreement should be
terminated pursuant to Section 9.1 hereof, all further obligations of the
Parties under this Agreement shall terminate without further liability of any
Party to another, provided, however, that a termination under Section 9.1 hereof
shall not relieve any Party of any liability for wilful breach of this Agreement
or for any misstatement or misrepresentation made hereunder prior to such
termination, or be deemed to constitute a waiver of any available remedy for any
such breach, misstatement or misrepresentation.
ARTICLE X
GENERAL PROVISIONS
10.1 NOTICES. Any notice, request, demand and other communication which
either Part hereto may desire or may be required hereunder to give shall be
in writing and shall be deemed to be duly given if delivered personally or
mailed by certified or registered mail (postage prepaid, return receipt
requested), air courier or facsimile transmission, addressed or transmitted to
such other Party as follows:
If to the Company:
CoBancorp Inc.
124 Middle Avenue
Elyria, Ohio 44035
Fax: (216) 329-8390
Attn: Mr. John S. Kreighbaum, Chairman of the Board,
President and Chief Executive Officer
With a copy to:
Grady & Associates
1468 West Ninth Street, Suite 620
Cleveland, Ohio 44113-1220
Fax: (216) 241-6611
Attn: Francis X. Grady, Esq.
If to Jefferson:
Jefferson Savings Bank
5060 Parkcenter Boulevard
Dublin, Ohio 43017
Fax: (614) 889-6482
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Attn: Mr. James E. Campbell, President and Chief
Executive Officer
With a copy to:
Bricker & Eckler
100 South Third Street
Columbus, Ohio 43215-4291
Fax: (614) 227-2390
Attn: Mark J. Palmer, Esq.
or such other address as any Party hereto may hereafter designate to the other
Parties in writing. Except as may be otherwise specified in this Agreement,
notice shall be deemed to have been given on the date reflected in the proof or
evidence of delivery, or if none, on the date actually received.
10.2 ASSIGNABILITY AND PARTIES IN INTEREST. This Agreement shall not be
assignable by any of the Parties hereto; provided, however, that the Company may
assign, set over and transfer all, or any part of its rights and obligations
under this Agreement to any one or more of its present or future Affiliates, but
only if the Company or a publicly traded entity that controls an affiliated
group of entities of which the Company is then a member remains or becomes
obligated to perform the obligations of the Company under the Agreement. This
Agreement shall inure to the benefit of, and be binding only upon the Parties
hereto and their respective successors and permitted assigns and no other
Persons. Except as may be expressly provided otherwise in this Agreement, there
shall be no third party beneficiaries under this Agreement.
10.3 GOVERNING LAW. This Agreement shall be governed by, and construed and
enforced in accordance with, the internal laws, and not the laws pertaining to
choice or conflict of laws, of the State of Ohio, unless and to the extent that
federal law controls. Any dispute arising between the Parties in connection with
the transactions which are the subject of this Agreement shall be heard in a
court of competent jurisdiction located in Ohio.
10.4 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute but one and the same instrument.
10.5 PUBLICITY. The Parties hereto will consult with each other with regard
to the terms and substance of any press released, announcements or other public
statements with respect to the transactions contemplated hereby. To the extent
practicable, each Party shall provide the proposed text of any such press
release, announcement or public statement to the other Party prior to its
publication and shall permit such other Party a reasonable period to provide
comments thereon.
10.6 ENTIRE AGREEMENT. This Agreement, including schedules and exhibits
hereto, certificates required to be delivered hereunder and any amendments or
addenda hereafter
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executed and delivered in accordance with Section 10.8 hereof constitute
the entire agreement of the Parties pertaining to the transactions contemplated
hereby and supersede all prior written and oral (and all contemporaneous oral)
agreements and understandings of the Parties concerning the subject matter
hereof. The schedules, annexes, exhibits and certificates attached hereto or
furnished pursuant to this Agreement are hereby incorporated as integral parts
of this Agreement. Except to the extent otherwise, provided herein, by specific
language and not by mere implication, this Agreement is not intended to confer
upon any other person not a Party to this Agreement any rights or remedies
hereunder.
10.7 SEVERABILITY. If any portion or provision of this Agreement should be
determined by a court of competent jurisdiction to be invalid, illegal or
unenforceable in any jurisdiction, such portion or provision shall be
ineffective as to that jurisdiction to the extent of such invalidity,
illegality, or unenforceability, without affecting in any way the validity or
enforceability or the remaining portions or provisions hereof is such
jurisdiction or rendering that or any other portions or provisions of this
Agreement invalid, illegal or unenforceable in any other jurisdiction.
10.8 MODIFICATION, AMENDMENTS AND WAIVER. At any time prior to the Closing
or termination of this Agreement, the Parties may, solely by written agreement
executed by their duly authorized officers:
(a) extend the time for the performance of any of the obligations
or other acts of the other Party hereto;
(b) waive any inaccuracies in the representations and warranties
made by the other Party contained in this Agreement or in the schedules or
exhibits hereto or any other document delivered pursuant to this Agreement;
(c) waive compliance with any of the covenants or agreements of
the other Party contained in this Agreement to the extent permitted by
applicable law; and
(d) amend or add to any provision of this Agreement; provided,
however, that no provision of this Agreement may be amended or added to except
by an agreement in writing signed by the Parties hereto or their respective
successors in interest and expressly stating that it is an amendment to this
Agreement.
10.9 INTERPRETATION. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
10.10 PAYMENT OF EXPENSES. (a) Except as set forth herein, each of the
Company, Acquisition and Jefferson shall pay its own fees and expenses
(including, without limitation, legal fees and expenses) incurred by it in
connection with the transactions contemplated hereunder.
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(b) Upon any wilful breach of this Agreement, the Party committing the
breach will be responsible for the costs and expenses incurred by the
nonbreaching party (including reasonable attorney's fees and fees of
accountants, consultants, investment bankers and others engaged in connection
with the Merger contemplated hereby, and including costs and expenses incurred
by the nonbreaching Party in enforcing the Agreement).
(c) In addition to and not in limitation of a Party's right to seek
reimbursement or compensation under the preceding paragraphs of this Section
10.10, if the Merger contemplated by this Agreement is not consummated by reason
of (i) Jefferson's acceptance of a competing offer for merger of Jefferson or
acceptance of another Acquisition Proposal, Jefferson shall pay to and reimburse
the Company for the Company's reasonable costs and expenses (including
reasonable attorney's fees) incurred in connection with this Agreement or (ii)
the Company's acceptance of a competing offer for merger of the Company or
acceptance of a
proposal for acquisition of the Company or substantially all of its assets, the
Company shall pay to and reimburse Jefferson for Jefferson's reasonable costs
and expenses (including reasonable attorney's fees) incurred in connection with
this Agreement.
10.11 NO SURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the
representations, warranties, covenants and conditions of the Parties contained
in this Agreement or in any instrument of transfer or other document delivered
in connection with the transactions contemplated by this Agreement shall survive
the Closing or other termination of this Agreement; provided, that, to the
extent necessary, such representations, warranties and covenants shall survive
so as not to deprive the Company or Jefferson (or any director, officer or
controlling person thereof) of any defense at law or in equity which otherwise
would be available against the claims of any person, including, without
limitation, any shareholder or former shareholder of either the Company or
Jefferson.
10.12 NO WAIVER. No failure, delay or omission of or by any Party in
exercising any right, power or remedy upon any breach or default of any
other Party shall impair any such rights, powers or remedies of the Party not in
breach or default, nor shall it be construed to be a waiver of any such right,
power or remedy, or an acquiescence in any similar breach or default; nor shall
any waiver of any single breach or default be deemed a waiver of any other
breach or default theretofore or thereafter occurring. Any waiver, permit,
consent or approval of any kind or character on the part of any Party of any
provisions of this Agreement must be in writing and must be executed by the
Parties to this Agreement and shall be effective only to the extent specifically
set forth in such writing.
10.13 REMEDIES CUMULATIVE. All remedies provided in this Agreement, by law
or equity, shall be cumulative and not alternative.
10.14 CONFIDENTIALITY. Any non-public or confidential information disclosed
by either Jefferson or the Company (including any Company Subsidiary) to the
other Parties pursuant to this Agreement or as a result of the discussions and
negotiations leading to this Agreement, or otherwise disclosed, or to which any
other part has acquired or may acquire access, and
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indicated (in writing or orally) by the disclosing Party to be nonpublic or
confidential shall be kept strictly confidential and shall not be used in any
manner by the recipient except in connection with the transactions contemplated
by this Agreement. To that end, the Parties hereto will each, to the maximum
extent practicable, restrict knowledge of and access to nonpublic or
confidential information of the other Party to its officers, directors,
employees and professional advisors who are directly involved in the
transactions contemplated hereby and reasonably need to know such information.
Further to that end, all nonpublic or confidential documents (including all
copies thereof) obtained hereunder by any Party shall be returned as soon as
practicable after any termination of this Agreement.
IN WITNESS WHEREOF, each of the Parties hereto has duly executed and
delivered this Agreement or has caused this Agreement to be executed and
delivered in its name and on its behalf by its representative thereunto duly
authorized, all as of the date first written above.
ATTEST: JEFFERSON SAVINGS BANK
/s/ Lynn K. Spalding By: /s/ James E. Campbell
- -------------------- -------------------------
James E. Campbell
Its: President and Chief Executive
Officer
ATTEST: COBANCORP INC.
/s/ Mary E. Hoffman By: /s/ John S, Kreighbaum
- ------------------- --------------------------
John S. Kreighbaum
Its: Chairman, President and
Chief Executive Officer
ATTEST: PRIMESAVINGS BANK
/s/ Mary E. Hoffman By: /s/ John S. Kreighbaum
- ------------------- --------------------------
John S. Kreighbaum
Its: President and Chief Executive
Officer
62
