SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------
FORM 8-K
-----------------------
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 6, 1998
1ST BANCORP
(Exact name of registrant as specified in its charter)
INDIANA
(State or other jurisdiction of incorporation)
0-17915 35-1775411
(Commission File Number) (IRS Employer Identification No.)
101 North Third Street
Vincennes, Indiana 47591
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (812)885-4528
<PAGE>
Item 5. Other Events
On August 6, 1998, 1ST BANCORP ("1ST") and German American Bancorp
("German American") jointly announced the signing of a definitive agreement (the
"Agreement") pursuant to which 1ST will be merged with and into German American
(the "Merger"). The Agreement provides that upon the effective date of the
Merger (the "Effective Time"), the shareholders of 1ST would receive shares of
common stock of German American with an aggregate value of $57,120,000 (based on
market prices during a period of 15 trading days ending on the second trading
date before closing). If the German American share price is less than $28 per
share or more than $33 per share during the valuation period, however, then the
number of shares to be issued in the transaction will be based on a minimum or
maximum share price, as the case may be, of $28 or $33. Accordingly, to the
extent that German American's share price during the valuation period is less
than $28 or more than $33, then the market value of the transaction could vary
from the targeted value.
Based on the current number of 1ST shares outstanding and assuming the
exercise of stock options for 29,679 shares held by employees and directors of
1ST prior to the closing of the merger, each share of 1ST common stock would be
exchanged for German American common stock with a value equal to approximately
$50.94.
1ST has also signed a Stock Option Agreement with German American,
giving German American an option to purchase up to 19.9% of 1ST's outstanding
shares, exercisable at $50.94 per share upon the occurrence of certain events
that create the potential for another party to acquire control of 1ST.
Pursuant to General Instruction F to Form 8-K, the press release issued
August 6, 1998, concerning the Merger is incorporated herein by reference and is
attached hereto as Exhibit 20.
Item 7. Financial Statements and Exhibits
(c) Exhibits
Exhibit 2(1) Agreement and Plan of Reorganization
dated as of August 6, 1998, between German
American Bancorp and 1ST BANCORP.
Exhibit 2(2) Stock Option Agreement dated as of
August 6, 1998, between 1ST BANCORP and
German American.
Exhibit 20 Press Release dated August 6, 1998.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
By:/s/ Mary Lynn Stenftenagel
----------------------------
Mary Lynn Stenftenagel,
Secretary/Treasurer
Dated: August 6, 1998
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AGREEMENT AND PLAN OF REORGANIZATION
by and between
1ST BANCORP,
an Indiana corporation,
and
GERMAN AMERICAN BANCORP,
an Indiana corporation.
======================================================================
Dated: August 6, 1998
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is made
August 5, 1998, by and between 1ST BANCORP, an Indiana corporation ("1ST
BANCORP"), and GERMAN AMERICAN BANCORP, an Indiana corporation ("German
American").
Recitals
A. 1ST BANCORP is a corporation duly organized and existing under the
Indiana Business Corporation Law ("IBCL") that is duly registered with the
Office of Thrift Supervision ("OTS") as a savings and loan holding company under
the Home Owners' Loan Act ("HOLA"). 1ST BANCORP owns all of the outstanding
capital stock of First Federal Bank, A Federal Savings Bank (the "Bank"). The
principal place of business of 1ST BANCORP is Vincennes, Knox County, Indiana.
B. The Bank is a federal savings bank duly organized and existing under
the HOLA, chartered by the OTS, with its principal banking office located in
Vincennes, Knox County, Indiana
C. Financial Services of Southern Indiana Corporation ("FSSIC") is a
wholly-owned subsidiary of the Bank, and First Financial Insurance Agency, Inc.
("FFIAI"), and First Title Insurance Company ("FTC") are wholly-owned
subsidiaries of 1ST BANCORP, all with principal offices in Vincennes, Knox
County, Indiana (collectively FSSIC, FFIAI and FTC are referred to herein as the
"Subsidiaries"). The Subsidiaries are all Indiana corporations duly organized
and existing under the IBCL.
D German American is a corporation duly organized and existing under
the IBCL and is duly registered with the Board of Governors of the Federal
Reserve System ("FRB") as a bank holding company under Bank Holding Company Act
of 1956, as amended ("BHC Act"). The principal place of business of German
American is Jasper, Dubois County, Indiana.
E. The parties desire to effect a transaction whereby 1ST BANCORP will
be merged with and into German American in consideration of the issuance of
German American Common Stock.
Agreements
In consideration of the premises and the mutual terms and provisions
set forth in this Agreement, the parties agree as follows:
ARTICLE ONE
TERMS OF THE MERGER AND CLOSING
Section 1.01. The Merger. Pursuant to the terms and provisions of this
Agreement, the IBCL and the Plan of Merger attached hereto as Appendix A and
incorporated herein by reference (the "Plan of Merger"), 1ST BANCORP shall merge
with and into German American (the "Merger"). 1ST BANCORP shall be the "Merging
Company" in the Merger and its corporate identity and existence, separate and
apart from German American, shall cease on consummation of the Merger. German
American shall be the "Surviving Company" in the Merger, and its name shall not
be changed pursuant to the Merger.
Section 1.02. Effect of the Merger. The Merger shall have all the
effects provided by the IBCL.
Section 1.03. The Merger - Conversion of Shares.
(a) At the time of filing with the Indiana Secretary of State
of appropriate Articles of Merger with respect to the Merger or at such later
time as shall be specified by such Articles of Merger (the "Effective Time"):
i) ( Each of the shares of common stock, $1.00 par value, of
1ST BANCORP ("1ST BANCORP Common") that are issued and outstanding
immediately prior to the Effective Time shall thereupon and without
further action be converted into shares of common stock, no par value,
of German American ("German American Common") at the Exchange Ratio
which shall be calculated as set forth in this Section 1.03(a)(i). 1ST
BANCORP's shareholders of record at the Effective Time, for the shares
of 1ST BANCORP Common then held by them, respectively, shall be
allocated and entitled to receive (upon surrender of certificates
representing said shares for cancellation) shares of German American
Common, which total number of shares of German American Common shall
have a value (as hereinafter determined) of $57,120,000 subject,
however, to (A) the provisions of this Section 1.03(a) with respect to
the minimum and maximum number of shares to be exchanged, (B) the
provisions of Section 1.03(f) of this Agreement, and (C) the provisions
of this Section 1.03(b) with respect to fractional shares. The
consideration payable to 1ST BANCORP shareholders hereunder is
sometimes hereafter referred to as the "Merger Consideration."
For purposes of establishing the number of shares of German
American Common into which each share of 1ST BANCORP Common shall be
converted at the Effective Time (the "Exchange Ratio"), each share of
German American Common shall be valued (the "GA Common Value") at the
average of the highest closing bid and the lowest closing asked prices
of German American Common as reported by the NASDAQ National Market
System for the 15 trading days ending on the second trading day
preceding the Closing Date (as defined by Section 1.06 hereof) (the
"Valuation Period"). The GA Common Value shall then be divided into the
sum of $57,120,000 to establish (to the nearest whole share) the
aggregate number of shares of German American Common into which all of
the then issued and outstanding shares of 1ST BANCORP Common shall be
converted at the Effective Time. Notwithstanding the above, if the GA
Common Value exceeds $33 per share, then the aggregate number of shares
to be issued in the Merger will be determined by using $33 as the GA
Common Value. Similarly, if the GA Common Value is below $28 per share,
then the aggregate number of shares to be issued in the Merger will be
determined by using $28 as the GA Common Value. The number of shares of
German American Common as so calculated shall then be divided by the
number of shares of 1ST BANCORP Common that are issued and outstanding
as of the Effective Time, with the quotient therefrom (carried to the
fourth figure past the decimal point) being the Exchange Ratio. The
maximum and minimum figures for the GA Common Value shall be subject to
adjustment in accordance with the provisions of Section 1.03(f) of this
Agreement.
ii) The shares of German American issued and outstanding
immediately prior to the Effective Time shall continue to be issued and
outstanding shares of German American.
(b) No fractional shares of German American Common shall be
issued and, in lieu thereof, holders of shares of 1ST BANCORP Common who would
otherwise be entitled to a fractional share interest (after taking into account
all shares of 1ST BANCORP Common held by such holder) shall be paid an amount in
cash equal to the product of such fractional share and the average of the
highest bid and the lowest asked price of a share of German American Common as
quoted on the NASDAQ National Market System on the last day of the Valuation
Period.
(c) At the Effective Time, all of the outstanding shares of
1ST BANCORP Common, by virtue of the Merger and without any action on the part
of the holders thereof, shall no longer be outstanding and shall be canceled and
retired and shall cease to exist, and each holder of any certificate or
certificates which immediately prior to the Effective Time represented
outstanding shares of 1ST BANCORP Common (the "Certificates") shall thereafter
cease to have any rights with respect to such shares, except the right of such
holders to receive, without interest, the Merger Consideration upon the
surrender of such Certificate or Certificates in accordance with Section 1.05.
(d) At the Effective Time, each share of 1ST BANCORP Common,
if any, held in the treasury of 1ST BANCORP or by any direct or indirect
subsidiary of 1ST BANCORP, including the Bank and the Subsidiaries (other than
shares held in trust accounts for the benefit of others or in other fiduciary,
nominee or similar capacities) immediately prior to the Effective Time shall be
canceled.
(e) At the Effective Time, the shares of common stock of the
Bank outstanding immediately prior to the Effective Time shall be unchanged by
the Merger and shall be deemed owned by the Surviving Company.
(f) If (i) German American shall hereafter declare a stock
dividend or other distribution of property or securities (excluding any cash
dividends and excluding the five percent stock dividend that German American
intends to declare in late 1998) upon its shares of common stock or shall
subdivide, split up, reclassify or combine its shares of common stock, and (ii)
the record date for such transaction is prior to the date on which the Effective
Time occurs, appropriate adjustment or adjustments will be made in the maximum
and minimum figures for the GA Common Value as set forth in Section 1.03(a)(i)
above.
(g) If any holders of 1ST BANCORP Common dissent from the
Merger and demand dissenters' rights under the IBCL, any issued and outstanding
shares of 1ST BANCORP Common held by such dissenting holders shall not be
converted as described in this Section 1.03 but shall from and after the
Effective Time represent only the right to receive such consideration as may be
determined to be due to such dissenting holders pursuant to the IBCL; provided,
however, that each share of 1ST BANCORP Common outstanding immediately prior to
the Effective Time and held by a dissenting holder who shall, after the
Effective Time, withdraw his or her demand for dissenters' rights or lose his or
her right to exercise dissenters' rights shall have only such rights as provided
under the IBCL.
Section 1.04. The Closing. The closing of the Merger (the "Closing")
shall take place at the offices of Leagre Chandler & Millard (or at such other
place as the parties may agree) at 9:00 A.M. Eastern Standard Time on the
Closing Date described in Section 1.06 of this Agreement.
Section 1.05. Exchange Procedures; Surrender of Certificates.
<PAGE>
(a) The Fifth Third Bank, Cincinnati, Ohio, shall act as
Exchange Agent in the Merger (the "Exchange Agent").
(b) As soon as reasonably practicable but in no event more
than ten working days after the Effective Time, the Exchange Agent shall mail to
each record holder of any Certificate or Certificates whose shares were
converted into the right to receive the Merger Consideration, a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon proper delivery of the
Certificates to the Exchange Agent and shall be in such form and have such other
provisions as German American may reasonably specify) (each such letter the
"Merger Letter of Transmittal") and instructions for use in effecting the
surrender of the Certificates in exchange for the Merger Consideration. As soon
as reasonably practical but in no event more than ten days after surrender to
the Exchange Agent of a Certificate, together with a Merger Letter of
Transmittal duly executed and any other required documents, the Exchange Agent
shall transmit to the holder of such Certificate the Merger Consideration. No
interest on the Merger Consideration issuable upon the surrender of the
Certificates shall be paid or accrued for the benefit of holders of
Certificates.
With respect to any certificate for shares of 1ST BANCORP Common which
has been lost, stolen or destroyed, German American shall be authorized to issue
its common stock (or to pay cash as to fractional shares) to the registered
owner of such certificate upon German American's receipt of an agreement to
indemnify German American against loss from such lost, stolen or destroyed
certificate and an affidavit of lost, stolen or destroyed stock certificate,
both in form and substance reasonably satisfactory to German American, and upon
payment by the 1ST BANCORP shareholder of a reasonable fee for a security bond
from a recognized insurance company.
(c) No dividends that are otherwise payable on shares of
German American Common constituting the Merger Consideration shall be paid to
persons entitled to receive such shares of German American Common until such
persons surrender their Certificates. Upon such surrender, there shall be paid
to the person in whose name the shares of German American Common shall be issued
any dividends which shall have become payable with respect to such shares of
German American Common (without interest and less the amount of taxes thereon,
if any, which are required to be withheld), between the Effective Time and the
time of such surrender.
Section 1.06. The Closing Date. The Closing shall take place on the
last business day of the month during which each of the conditions in Sections
6.01(d) and 6.02(d) is satisfied or waived by the appropriate party, or on such
later or earlier date as 1ST BANCORP and German American may agree (the "Closing
Date"). The parties shall use their best efforts to cause the Effective Time of
the Merger to be as of the first business day of the calendar month that follows
the month in which the Closing occurs; provided, however, that in no event shall
the Effective Time be prior to January 4, 1999.
Section 1.07. Actions At Closing.
<PAGE>
(a) At the Closing, 1ST BANCORP shall deliver to German
American:
(i) certified copies of (A) the Articles of
Incorporation and Bylaws of 1ST BANCORP, as amended; (B) the Charter
and Bylaws of the Bank, as amended; and (C) the Articles of
Incorporation and Bylaws of each of the Subsidiaries;
(ii) a certificate or certificates signed by the
chief executive officer of 1ST BANCORP, to the best of his knowledge
and belief, after due inquiry, that (A) each of the representations and
warranties contained in Article Two hereof is true and correct in all
material respects at the time of the Closing with the same force and
effect as if such representations and warranties had been made at
Closing, and (B) 1ST BANCORP, the Bank, and the Subsidiaries have
performed and complied in all material respects, unless waived by
German American, with all of its respective obligations and agreements
required to be performed hereunder prior to the Closing Date;
(iii) certified copies of the resolutions of 1ST
BANCORP's Board of Directors and shareholders, approving and
authorizing the execution of this Agreement and the Plan of Merger and
authorizing the consummation of the Merger;
(iv) a certificate of the Indiana Secretary of State,
dated a recent date, stating that 1ST BANCORP is duly organized and
validly existing under the IBCL;
(v) a certificate of the OTS, dated a recent date,
stating that the Bank is duly organized and validly existing under the
laws of the United States of America;
(vi) certificates of the Indiana Secretary of State,
dated a recent date, stating that each of the Subsidiaries is duly
organized and exists under the IBCL; and
(vii) the legal opinion of Barnes & Thornburg,
counsel for 1ST BANCORP to the effect set forth as Exhibit
1.07(a)(vii).
(b) At the Closing, German American shall deliver to 1ST
BANCORP:
(i) a certificate signed by the Chief Executive
Officer of German American stating, to the best of his knowledge and
belief, after due inquiry, that (A) each of the representations and
warranties contained in Article Three is true and correct in all
material respects at the time of the Closing with the same force and
effect as if such representations and warranties had been made at
Closing and (B) German American has performed and complied in all
material respects, unless waived by 1ST BANCORP with all of its
obligations and agreements required to be performed hereunder prior to
the Closing Date;
(ii) certified copies of the resolutions of German
American's Board of Directors and (if required by the NASDAQ NMS
listing standards or the IBCL) German American's shareholders
authorizing the execution of this Agreement and the Plan of Merger and
the consummation of the Merger;
(iii) a certificate of the Indiana Secretary of
State, dated a recent date, stating that German American is duly
organized and validly existing under the IBCL; and
(iv) the legal opinion of Leagre Chandler & Millard,
counsel for German American, in the form attached hereto as Exhibit
1.07(b)(iv).
(c) At the Closing, the parties shall insert the Exchange
Ratio determined in accordance with Section 1.03 of this Agreement into the Plan
of Merger, and shall execute and/or deliver to one another such Plan of Merger
and such other documents and instruments and take such other actions as shall be
necessary or appropriate to consummate the Merger.
ARTICLE TWO
REPRESENTATIONS AND WARRANTIES OF 1ST BANCORP
1ST BANCORP hereby makes the following representations and warranties:
Section 2.01. Organization and Capital Stock.
<PAGE>
(a) 1ST BANCORP is a corporation duly organized and validly
existing under the IBCL and has the corporate power to own all of its property
and assets, to incur all of its liabilities and to carry on its business as now
being conducted.
(b) The Bank is a federal savings bank duly chartered and
validly existing under the laws of the United States of America and has the
corporate power to own all of its property and assets, to incur all of its
liabilities and to carry on its business as now being conducted.
(c) 1ST BANCORP has authorized capital stock of 7,000,000
shares, 5,000,000 of which are 1ST BANCORP Common, $1.00 par value, and
2,000,000 of which are preferred capital stock, $1.00 par value. At the date of
this Agreement, there were 1,096,189 shares of 1ST BANCORP Common duly and
validly issued and outstanding, fully paid and non-assessable and no shares of
preferred stock issued and outstanding. None of the outstanding shares of 1ST
BANCORP Common has been issued in violation of any preemptive rights of the
current or past shareholders of 1ST BANCORP or in violation of any applicable
federal or state securities laws or regulations.
(d) The Bank has authorized capital stock of 5,000,000 shares
of common stock, $1.00 par value, 1,000 of which shares are issued and
outstanding ("Bank Common") and 2,000,000 shares of preferred stock, none of
which are outstanding. All of such shares of Bank Common are duly and validly
issued and outstanding and are fully paid and nonassessable. None of the
outstanding shares of Bank Common has been issued in violation of any preemptive
rights of the current or past shareholders of the Bank or in violation of any
applicable federal or state securities laws or regulations.
(e) FSSIC has authorized capital stock of 1,000 shares of common stock,
no par value, one of which is issued and outstanding and is fully paid and
nonassessable. None of the outstanding shares of FSSIC Common has been issued in
violation of any preemptive rights of the current or past shareholders of FSSIC
or in violation of any applicable federal or state securities laws or
regulations.
(f) FFIAI has authorized capital stock of 1,000 shares of common stock,
no par value, 100 of which are issued and outstanding and are fully paid and
nonassessable. None of the outstanding shares of FFIAI Common has been issued in
violation of any preemptive rights of the current or past shareholders of FFIAI
or in violation of any applicable federal or state securities laws or
regulations.
(g) FTC has authorized capital stock of 1,000 shares of common stock,
no par value, 100 of which are issued and outstanding and are fully paid and
nonassessable. None of the outstanding shares of FTC Common has been issued in
violation of any preemptive rights of the current or past shareholders of FTC or
in violation of any applicable federal or state securities laws or regulations.
(h) Except as otherwise disclosed with particularity in a confidential
writing delivered by 1ST BANCORP to German American prior to execution of this
Agreement, which confidential writing thereafter shall be executed by all the
parties concurrently with the execution of this Agreement (the "Disclosure
Schedule"), there are no shares of capital stock or other equity securities of
1ST BANCORP, the Bank, or the Subsidiaries authorized, issued or outstanding and
no outstanding options, warrants, rights to subscribe for, calls, puts, or
commitments of any character whatsoever relating to, or securities or rights
convertible into or exchangeable for, shares of the capital stock of 1ST
BANCORP, the Bank, or the Subsidiaries, or contracts, commitments,
understandings or arrangements by which 1ST BANCORP, the Bank, or the
Subsidiaries are or may be obligated to issue additional shares of its capital
stock or options, warrants or rights to purchase or acquire any additional
shares of its capital stock.
Section 2.02. Authorization; No Defaults. The Board of Directors of 1ST
BANCORP, by all appropriate action, has approved this Agreement, the Plan of
Merger and the Merger and has authorized the execution of this Agreement and the
Plan of Merger on its behalf by its duly authorized officers and the performance
by 1ST BANCORP of its obligations hereunder. Nothing in the Articles of
Incorporation or Bylaws of 1ST BANCORP, as amended, or the Charter or Bylaws of
the Bank, as amended, or the Articles of Incorporation or Bylaws of any of the
Subsidiaries, as amended, or in any material agreement or instrument, or any
decree, proceeding, law or regulation (except as specifically referred to in or
contemplated by this Agreement) by or to which 1ST BANCORP, the Bank, or any of
the Subsidiaries is bound or subject, would prohibit 1ST BANCORP from
consummating, or would be violated or breached by 1ST BANCORP's consummation of,
this Agreement and the Merger and other transactions contemplated herein on the
terms and conditions herein contained. This Agreement has been duly and validly
executed and delivered by 1ST BANCORP and constitutes a legal, valid and binding
obligation of 1ST BANCORP, enforceable against 1ST BANCORP in accordance with
its terms, subject to the provisions of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium, or similar laws affecting the
enforceability of creditors' rights generally from time to time in effect and
equitable principles relating to the granting of specific performance and other
equitable remedies as a matter of judicial discretion. Neither 1ST BANCORP, the
Bank, nor any of the Subsidiaries is, nor will be by reason of the consummation
of the transactions contemplated herein, in material default under or in
material violation of any provision of, nor will the consummation of the
transactions contemplated herein afford any party a right to accelerate any
indebtedness under, 1ST BANCORP's, the Bank's, or any of the Subsidiaries'
articles of incorporation or bylaws, any material promissory note, indenture or
other evidence of indebtedness or security therefor, or any material lease,
contract, or other commitment or agreement to which either 1ST BANCORP or the
Bank is a party or by which it or its property is bound.
Section 2.03. Subsidiaries. Except (i) as otherwise disclosed in the
Disclosure Schedule, (ii) for the ownership by 1ST BANCORP of all the capital
stock of the Bank and FFIAI and FTC and (iii) for the ownership by the Bank of
all of the capital stock of FSSIC, neither 1ST BANCORP nor the Bank nor any of
the Subsidiaries has (or has had at any time in the last ten years) any direct
or indirect ownership interest in any corporation, partnership, limited
liability company, joint venture or other business.
Section 2.04. Financial Information.
<PAGE>
(a) 1ST BANCORP has furnished to German American its audited
financial statements of 1ST BANCORP for the years ended June 30, 1997, 1996 and
1995 and all subsequent financial statements of 1ST BANCORP included as part of
1ST BANCORP's Quarterly Reports on Form 10-Q filed with the Securities and
Exchange Commission. Such financial statements were prepared in accordance with
generally accepted accounting principles applied on a consistent basis (except
as may be reflected in the notes thereto), and fairly present the consolidated
financial position and the consolidated results of operations, changes in
shareholders' equity and cash flows of 1ST BANCORP in all material respects as
of the date and for the period indicated.
(b) The Bank has furnished to German American its Thrift
Financial Reports as filed with the OTS for the quarters ended March 31, 1998,
and June 30, 1998 (the "TFR Reports"). The TFR Reports were prepared in
accordance with the applicable regulatory instructions on a consistent basis
with previous such reports, and fairly present the financial position and
results of operations of the Bank in all material respects as of the dates and
for the periods indicated, subject, however, to normal recurring year-end
adjustments, none of which will be material.
(c) Each of the Subsidiaries has furnished to German American its
financial statements for the year-to-date periods ended March 31, 1998 and June
30, 1998. Such reports were prepared in accordance with any applicable
regulatory instructions on a consistent basis with previous such reports, and
fairly present the financial position and results of operations of the
Subsidiaries in all material respects as of the dates and for the periods
indicated, subject, however, to normal recurring year-end adjustments, none of
which will be material.
(d) Except as set forth in the Disclosure Schedule, neither 1ST
BANCORP, the Bank, nor any one of the Subsidiaries, has any material liability,
fixed or contingent, except to the extent set forth in the financial statements
and the TFR Reports described in subsections (a), (b) and (c) of this Section
2.04 (collectively, the "1ST BANCORP Financial Statements") or incurred in the
ordinary course of business since the date of the most recent balance sheet of
1ST BANCORP, the Bank, or the Subsidiaries included in the 1ST BANCORP Financial
Statements.
(e) Except as otherwise provided in the Disclosure Schedule, 1ST
BANCORP does not engage in the lending business (except by and through the Bank)
or any other business or activity other than that which is incident to its
ownership of all the capital stock of the Bank or of FFIAI and FTC and does not
own any investment securities (except the capital stock of the Bank and FFIAI
and FTC).
Section 2.05. Absence of Changes. Since June 30, 1997, and except to
the extent reflected in the TFR Reports, there has not been any material adverse
change in the financial condition, the results of operations or the business of
1ST BANCORP or the Bank, taken as a whole. The making by the Bank after June 30,
1998, of provisions for the purpose of increasing its allowance for possible
loan losses not exceeding in the aggregate the amount specified by Section 4.05
of this Agreement shall not be deemed a material adverse change for purposes of
this Section 2.05.
Section 2.06. Absence of Agreements with Banking Authorities. Neither
1ST BANCORP nor the Bank is subject to any order (other than orders applicable
to saving and loan holding companies or savings banks generally) and neither is
a party to any agreement or memorandum of understanding with any federal or
state agency charged with the supervision or regulation of saving and loan
holding companies or savings banks, including without limitation, the OTS or the
Federal Deposit Insurance Corporation (the "FDIC").
Section 2.07. Tax Matters. 1ST BANCORP and the Bank have filed all
federal, state and local tax returns due in respect of any of their respective
business, income and properties in a timely fashion and has paid or made
provision for all amounts shown due on such returns. All such returns fairly
reflect the information required to be presented therein in all material
respects. All provisions for accrued but unpaid taxes contained in the 1ST
BANCORP Financial Statements were made in accordance with generally accepted
accounting principles.
Section 2.08. Absence of Litigation. There is no material litigation,
claim or other proceeding pending or, to the knowledge of 1ST BANCORP,
threatened, before any judicial, administrative or regulatory agency or
tribunal, to which 1ST BANCORP, the Bank, or any one of the Subsidiaries is a
party or to which any of their properties are subject. Set forth in Section 2.08
of the Disclosure Schedule is a listing of all litigation to which 1ST BANCORP
is a named party.
Section 2.09. Employment Matters.
<PAGE>
(a) Except as set forth in the Disclosure Schedule, neither
1ST BANCORP, the Bank, nor any one of the Subsidiaries is a party to or bound by
any material contract arrangement or understanding (written or otherwise) for
the employment, retention or engagement of any past or present officer,
employee, agent, consultant or other person or entity which, by its terms, is
not terminable by 1ST BANCORP, the Bank, or one of the Subsidiaries
respectively, on thirty (30) days' written notice or less without the payment of
any amount by reason of such termination.
(b) 1ST BANCORP, the Bank and each of the Subsidiaries are and have
been in material compliance with all applicable laws respecting employment and
employment practices, terms and conditions of employment and wages and hours,
including, without limitation, any such laws respecting employment
discrimination and occupational safety and health requirements, and (i) neither
1ST BANCORP, the Bank, nor any one of the Subsidiaries is engaged in any unfair
labor practice; (ii) there is no unfair labor practice complaint against 1ST
BANCORP, the Bank, or any of the Subsidiaries pending or, to the knowledge of
1ST BANCORP, threatened before the National Labor Relations Board; (iii) there
is no labor dispute, strike, slowdown or stoppage actually pending or, to the
knowledge of 1ST BANCORP, threatened against or directly affecting 1ST BANCORP,
the Bank, or any of the Subsidiaries; and (iv) neither 1ST BANCORP, the Bank,
nor any one of the Subsidiaries has experienced any material work stoppage or
other material labor difficulty during the past five years.
(c) Except as set forth in the Disclosure Schedule, neither the
execution nor the delivery of this Agreement, nor the consummation of any of the
transactions contemplated hereby, will (i) result in any payment (including
without limitation severance, unemployment compensation or golden parachute
payment) becoming due to any director or employee of 1ST BANCORP, the Bank, or
any of the Subsidiaries from any of such entities, (ii) increase any benefit
otherwise payable under any of their employee plans or (iii) result in the
acceleration of the time of payment of any such benefit. No amounts paid or
payable by 1ST BANCORP, the Bank, or any of the Subsidiaries to or with respect
to any employee or former employee of 1ST BANCORP, the Bank, or any of the
Subsidiaries will fail to be deductible for federal income tax purposes by
reason of Section 280G of the Internal Revenue Code of 1986, as amended ("Code")
or otherwise.
Section 2.10. Reports. Since June 30, 1995, 1ST BANCORP, the Bank, and
each of the Subsidiaries have filed all reports, notices and other statements,
together with any amendments required to be made with respect thereto, if any,
that they were required to file with (i) the Securities and Exchange Commission
("SEC"), (ii) the OTS, (iii) the FDIC and (iv) any other governmental authority
with jurisdiction over 1ST BANCORP, the Bank, or any of the Subsidiaries. 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 the relevant statutes, rules and regulations enforced or
promulgated by the regulatory authority with which they were filed.
Section 2.11. Investment Portfolio. All United States Treasury
securities, obligations of other United States Government agencies and
corporations, obligations of States and political subdivisions of the United
States and other investment securities held by the Bank, as reflected in the TFR
Reports, are carried on the books of the Bank in accordance with generally
accepted accounting principles, consistently applied. The Bank from and after
the date hereof will not engage in activities that would require that it
establish a trading account under applicable regulatory guidelines and
interpretations.
Section 2.12. Loan Portfolio. To the knowledge of 1ST BANCORP, all
loans and discounts shown in the TFR Reports, or which were entered into after
June 30, 1998, but before the Closing Date, were and will be made in all
material respects for good, valuable and adequate consideration in the ordinary
course of the business of the Bank, in accordance in all material respects with
the Bank's lending policies and practices unless otherwise approved by the
Bank's Board of Directors, and are not subject to any material defenses, set
offs or counterclaims, including without limitation any such as are afforded by
usury or truth in lending laws, except as may be provided by bankruptcy,
insolvency or similar laws or by general principles of equity. To the knowledge
of 1ST BANCORP, the notes or other evidences of indebtedness evidencing such
loans and all forms of pledges, mortgages and other collateral documents and
security agreements are and will be, in all material respects, enforceable,
valid, true and genuine and what they purport to be. To the knowledge of 1ST
BANCORP, the Bank has complied and will through the Closing Date continue to
comply with all laws and regulations relating to such loans, or to the extent
there has not been such compliance, such failure to comply will not materially
interfere with the collection of any such loan. Except as set forth in the
Disclosure Schedule, the Bank has not sold, purchased or entered into any loan
participation arrangement except where such participation is on a pro rata basis
according to the respective contributions of the participants to such loan
amount. Except as set forth in the Disclosure Schedule, 1ST BANCORP has no
knowledge that any condition of property in which the Bank has an interest as
collateral to secure a loan or that is held as an asset of any trust violates
the Environmental Laws (defined in Section 2.15) in any material respect or
obligates 1ST BANCORP, or the Bank, or the owner or operator of such property to
remedy, stabilize, neutralize or otherwise alter the environmental condition of
such property.
Section 2.13. ERISA.
(a) Except as disclosed in the Disclosure Schedule, no person
participates in any "employee welfare benefit plan" or "employee pension benefit
plan" (as those terms are respectively defined in Sections 3(1) and 3(2) of the
Employee Retirement Income Security Act of 1974 ("ERISA")), nor may any person
reasonably expect to participate in any such plan, in either case, on account of
his or her past or present employment with 1ST BANCORP or the Bank. 1ST BANCORP
and the Bank do not maintain any retirement or deferred compensation plan,
savings, incentive, stock option or stock purchase plan, unemployment
compensation plan, vacation pay, severance pay, bonus or benefit arrangement,
insurance or hospitalization program or any other fringe benefit arrangements
(referred to collectively hereinafter as "fringe benefit arrangements") for any
past or present employee, consultant or agent of 1ST BANCORP or the Bank,
whether pursuant to contract, arrangement, custom or informal understanding,
which does not constitute an "employee benefit plan" (as defined in Section 3(3)
of ERISA), except as listed in the Disclosure Schedule.
(b) During the past sixty months, 1ST BANCORP has not
maintained any employee welfare benefit plans or employee pension benefit plans
except for plans listed on the Disclosure Schedule. There have been no
amendments to any of the employee pension benefit plans, employee welfare
benefit plans or fringe benefit arrangements listed on the Disclosure Schedule
since June 30, 1997, except as set forth in the Disclosure Schedule.
(c) To the knowledge of 1ST BANCORP, all employee pension
benefit plans, employee welfare benefit plans and fringe benefit arrangements
listed on the Disclosure Schedule comply in form and in operation in all
material respects with all applicable requirements of law and regulation. To the
knowledge of 1ST BANCORP, all employee pension benefit plans maintained by 1ST
BANCORP and the Bank comply in form and in operation with all applicable
requirements of Section 401(a) and, to the extent applicable, Section 401(k) of
the Code. To the knowledge of 1ST BANCORP, except as disclosed in the Disclosure
Schedule, neither 1ST BANCORP nor the Bank has (i) incurred any liability for
tax under Section 4971 of the Code on account of any accumulated funding
deficiency and no plan or arrangement listed in the Disclosure Schedule has
incurred any accumulated funding deficiency within the meaning of Section 412 or
418(B) of the Code; (ii) applied for or obtained a waiver by the IRS of any
minimum funding requirement under Section 412 of the Code; (iii) become subject
to any disallowance of deductions under Sections 419 or 419(A) of the Code; (iv)
incurred any liability for excise tax under Sections 4972, 4975, or 4976 of the
Code or any liability under Section 406 of ERISA; (v) incurred any liability to
the Pension Benefit Guaranty Corporation; (vi) had a reportable event (within
the meaning of Section 4043 of ERISA) for which notice is not waived by
applicable regulations; or (vii) breached any of the duties or failed to perform
any of the obligations imposed upon the fiduciaries or plan administrators under
Title I or ERISA.
(d) A true and correct copy of each of the plans and
arrangements listed on the Disclosure Schedule as in effect on the date hereof
and each trust agreement relating to each such plan and arrangement, has been
supplied to German American. A true and correct copy of the annual report (as
described in Section 103 of ERISA) most recently filed for each plan listed in
the Disclosure Schedule has been supplied to German American, and there have
been no material changes in the financial condition in the respective plans from
that stated in the annual reports supplied. In the case of any plan or
arrangement which is not in written form, the Disclosure Schedule includes an
accurate description of such plan or arrangement. 1ST BANCORP and the Bank have
provided to German American a description of any liability or contingent
liability which may be incurred by 1ST BANCORP or the Bank if any plan or
arrangement listed on the Disclosure Schedule (including without limitation the
payment by the Bank of premiums for health care coverage for active employees or
retirees) were terminated or if 1ST BANCORP or the Bank was to cease its
participation therein. To the best of the knowledge of the present non-employee
members of the Board of Directors of 1ST BANCORP and of the Bank (without any
independent review of the books and records of 1ST BANCORP and the Bank or the
making of any other independent inquiry), and to the best of the knowledge of
the President of the Bank (after review of the books and records of the Bank but
without the obligation to make any further independent inquiry), neither 1ST
BANCORP nor the Bank nor any of their affiliates or persons acting on their
behalf have made any written or oral promises or statements to employees or
retirees who are now living which might reasonably have been construed by them
as promising "lifetime" or other vested rights to benefits under any plan or
arrangement (other than any employee pension plan disclosed in the Disclosure
Schedule) that cannot be unilaterally terminated or modified by the Bank or 1ST
BANCORP at their discretion at any time without further obligation.
(e) Except as disclosed in the Disclosure Schedule, in the
case of each plan or arrangement listed in the Disclosure Schedule which is a
defined benefit plan (within the meaning of Section 3(35) of ERISA), the net
fair market value of the assets held to fund such plan or arrangement equals or
exceeds the present value of all accrued benefits thereunder, both vested and
nonvested, on a plan continuation basis and as determined in accordance with an
actuarial costs method acceptable under Section 3(31) of ERISA.
(f) On a timely basis, 1ST BANCORP and the Bank have made all
contributions or payments to or under each plan or arrangement listed in the
Disclosure Schedule as required pursuant to each such plan or arrangemen or in
the alternative have made sufficient provision for reserves to meet
contributions and payments under such plans or arrangements which have not been
made because they are not yet due.
(g) Except as otherwise provided in the Disclosure Schedule,
none of the plans or arrangements listed in the Disclosure Schedule owns (or has
owned within the past 60 months) any 1ST BANCORP Common or other securities of
1ST BANCORP, the Bank or a related entity.
Section 2.14. Title to Properties; Insurance. 1ST BANCORP, the Bank,
and the Subsidiaries have marketable title, insurable at standard rates, free
and clear of all liens, charges and encumbrances (except taxes which are a lien
but not yet payable and liens, charges or encumbrances reflected in the 1ST
BANCORP Financial Statements and easements, rights-of-way, and other
restrictions which are not material and, in the case of other real estate owned,
as such real estate is internally classified on the books of the Bank, rights of
redemption under applicable law) to all real properties reflected on the 1ST
BANCORP Financial Statements as being owned by 1ST BANCORP, the Bank, or the
Subsidiaries, respectively. All material leasehold interests used by 1ST
BANCORP, the Bank, and the Subsidiaries in their respective operations are held
pursuant to lease agreements which are valid and enforceable in accordance with
their terms, subject to the provisions of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium, or similar laws affecting the
enforceability of creditors' rights generally from time to time in effect and
equitable principles relating to the granting of specific performance and other
equitable remedies as a matter of judicial discretion. Except as set forth in
the Disclosure Schedule, all such properties comply in all material respects
with all applicable private agreements, zoning requirements and other
governmental laws and regulations relating thereto and there are no condemnation
proceedings pending or, to the knowledge of 1ST BANCORP, threatened with respect
to such properties. 1ST BANCORP, the Bank, and the Subsidiaries have valid title
or other ownership or use rights under licenses to all material intangible
personal or intellectual property used by 1ST BANCORP, the Bank, and the
Subsidiaries in their respective business free and clear of any claim, defense
or right of any other person or entity which is material to such property,
subject only to rights of the licensor pursuant to applicable license
agreements, which rights do not materially adversely interfere with the use or
enjoyment of such property. All insurable properties owned or held by 1ST
BANCORP, the Bank, or the Subsidiaries are insured in such amounts, and against
fire and other risks insured against by extended coverage and public liability
insurance, as is customary with companies of the same size and in the same
business.
Section 2.15. Environmental Matters.
<PAGE>
(a) As used in this Agreement, "Environmental Laws" means all
local, state and federal environmental, health and safety laws and regulations
in all jurisdictions in which 1ST BANCORP, the Bank, or any one of the
Subsidiaries has done business or owned property, including, without limitation,
the Federal Resource Conservation and Recovery Act, the Federal Comprehensive
Environmental Response, Compensation and Liability Act, the Federal Clean Water
Act, the Federal Clean Air Act, and the Federal Occupational Safety and Health
Act.
(b) Except as disclosed in the Disclosure Schedule, to the knowledge of
1ST BANCORP, the Bank, or the Subsidiaries, neither (i) the conduct by 1ST
BANCORP, the Bank, and the Subsidiaries of operations at any property, nor (ii)
any condition of any property owned by 1ST BANCORP, the Bank, or the
Subsidiaries within the past ten (10) years and used in its business operations,
nor (iii) the condition of any property owned by them within the past ten (10)
years but not used in their business operations, nor (iv) the condition of any
property held by them as a trust asset within the past ten (10) years, violates
or violated Environmental Laws in any material respect, and no condition or
event has occurred with respect to any such property that, with notice or the
passage of time, or both, would constitute a material violation of Environmental
Laws or obligate (or potentially obligate) 1ST BANCORP, the Bank, or the
Subsidiaries to remedy, stabilize, neutralize or otherwise alter the
environmental condition of any such property. Neither 1ST BANCORP, the Bank, nor
any one of the Subsidiaries has received any notice from any person or entity
that 1ST BANCORP, the Bank, or the Subsidiaries or the operation of any
facilities or any property owned by any of them, or held as a trust asset, are
or were in violation of any Environmental Laws or that any one of them is
responsible (or potentially responsible) for the cleanup of any pollutants,
contaminants, or hazardous or toxic wastes, substances or materials at, on or
beneath any such property.
Section 2.16. Compliance with Law. 1ST BANCORP, the Bank, and each of
the Subsidiaries have all material licenses, franchises, permits and other
governmental authorizations that are legally required to enable it to conduct
their respective businesses as presently conducted and, to their knowledge, are
in compliance in all material respects with all applicable laws and regulations,
the violation of which would be material.
Section 2.17. Brokerage. Except as set forth in the Disclosure
Schedule, there are no claims, agreements, arrangements, or understandings
(written or otherwise) for brokerage commissions, finders' fees or similar
compensation in connection with the Merger payable by 1ST BANCORP, the Bank, or
any of the Subsidiaries.
Section 2.18. Material Contracts. Except as set forth in the Disclosure
Schedule, neither 1ST BANCORP, the Bank, nor any one of the Subsidiaries is a
party to or bound by any oral or written (i) material agreement, contract or
indenture under which it has borrowed or will borrow money (not including
federal funds and money deposited, including without limitation, checking and
savings accounts, certificates of deposit, money market accounts and other
deposit accounts and borrowings from the Federal Home Loan Bank ("FHLB") and the
FRB); (ii) material guaranty of any obligation for the borrowing of money or
otherwise, excluding endorsements made for collection and guarantees made in the
ordinary course of business and letters of credit issued in the ordinary course
of business; (iii) contract, arrangement or understanding with any present or
former officer, director or shareholder (except for deposit or loan agreements
entered into in the ordinary course of business); (iv) material license, whether
as licensor or licensee; (v) contract or commitment for the purchase of
materials, supplies or other real or personal property in an individual amount
in excess of $10,000 or for the performance of services over a period of more
than thirty days and involving an individual amount in excess of $25,000; (vi)
joint venture or partnership agreement or arrangement; (vii) contract
arrangement or understanding with any present or former consultant, advisor,
investment banker, broker, attorney or accountant; or (viii) contract, agreement
or other commitment not made in the ordinary course of business.
Section 2.19. Compliance with Americans with Disabilities Act. (a) To
the best of 1ST BANCORP's knowledge, 1ST BANCORP, the Bank, and the
Subsidiaries, and their respective properties (including those held by any of
them in a fiduciary capacity) are in material compliance with all applicable
provisions of the Americans with Disabilities Act (the "ADA"), and (b) no action
under the ADA against 1ST BANCORP, the Bank, the Subsidiaries, or any of its
properties has been initiated nor, to the best of 1ST BANCORP's knowledge, has
been threatened or contemplated.
Section 2.20. Statements True and Correct. None of the information
supplied or to be supplied by 1ST BANCORP, the Bank, or the Subsidiaries for
inclusion in any documents to be filed with the SEC, the OTS, the FDIC, or any
other regulatory authority in connection with the Merger will, to the best of
the knowledge of 1ST BANCORP 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 in order to make the statements therein not misleading.
Section 2.21. 1ST BANCORP's Knowledge. With respect to representations
and warranties herein that are made or qualified as being made "to the knowledge
of 1ST BANCORP" or words of similar import, it is understood and agreed that
matters within the knowledge of the directors and the executive officers of 1ST
BANCORP, of the Bank and of each of the Subsidiaries shall be considered to be
within the knowledge of 1ST BANCORP.
ARTICLE THREE
REPRESENTATIONS AND WARRANTIES OF GERMAN AMERICAN
German American hereby makes the following representations and
warranties:
Section 3.01. Organization and Capital Stock.
<PAGE>
(a) German American is a corporation duly incorporated and
validly existing under the IBCL and has the corporate power to own all of its
property and assets, to incur all of its liabilities and to carry on its
business as now being conducted.
(b) German American has authorized capital stock of (i) 20,000,000
shares of German American Common, of which, as of the date of this Agreement,
6,346,039 shares are issued and outstanding (not including an additional
approximately 317,302 shares that will be issued and delivered in December 1998,
pursuant to German American's annual five percent stock dividend), and (ii)
500,000 shares of preferred stock, no par value per share, of which no shares
are issued and outstanding. All of the issued and outstanding shares of German
American Common are duly and validly issued and outstanding, fully paid and
non-assessable.
(c) The shares of German American Common that are to be issued to the
shareholders of 1ST BANCORP pursuant to the Merger have been duly authorized
and, when issued in accordance with the terms of this Agreement, will be validly
issued and outstanding, fully paid and non-assessable.
Section 3.02. Authorization. The Board of Directors of German American
has, by all appropriate action, approved this Agreement, the Plan of Merger and
the Merger and authorized the execution hereof on its behalf by its duly
authorized officers and its performance of its obligations hereunder. Nothing in
the Articles of Incorporation or Bylaws of German American, as amended, or any
other agreement, instrument, decree, proceeding, law or regulation (except for
the need for approval of the issuance of additional shares pursuant to the
Merger by the shareholders of German American under the National Market System
listing standards of NASDAQ or the IBCL, and except as specifically referred to
in or contemplated by this Agreement) by or to which it or any of its
subsidiaries is bound or subject would prohibit German American from entering
into and consummating this Agreement and the Merger on the terms and conditions
herein contained. This Agreement has been duly and validly executed and
delivered by German American and constitutes a legal, valid and binding
obligation of German American enforceable against German American in accordance
with its terms and no other corporate acts or proceedings are required by law to
be taken by German American to authorize the execution, delivery and performance
of this Agreement. Except for any requisite approvals of the FRB and OTS, and
the SEC's order declaring effective German American's registration statement
under the Securities Act of 1933, as amended ("Securities Act") with respect to
the Merger, and applicable state securities law filings and approvals, no notice
to, filing with, authorization by, or consent or approval of, any federal or
state regulatory authority is necessary for the execution and delivery of this
Agreement or the consummation of the Merger by German American. German American
is not, nor will by reason of the consummation of the transactions contemplated
herein be, in material default under or material violation of any provision of,
nor will the consummation of the transactions contemplated herein afford any
party a right to accelerate any indebtedness under, German American's articles
of incorporation or bylaws, any material promissory note, indenture or other
evidence of indebtedness of security thereof, or any material lease, contract or
other commitment or agreement to which German American is a party or other
commitment or agreement to which it is a party or by which it or its property is
bound.
Section 3.03. Subsidiaries. Each of German American's subsidiaries is
duly organized and validly existing under the laws of the jurisdiction of its
incorporation and has the corporate power to own its respective properties and
assets, to incur its respective liabilities and to carry on its respective
business as now being conducted.
Section 3.04. Financial Information. The consolidated balance sheet of
German American and its subsidiaries as of December 31, 1997 and related
consolidated statements of income, changes in shareholders' equity and cash
flows for the year then ended together with the notes thereto, included in
German American's most recent Annual Report on Form 10-K, as filed with the SEC
(the "10-K"), and the unaudited consolidated balance sheets of German American
and its subsidiaries as of March 31, 1998 and the related unaudited consolidated
statements of income, changes in shareholders' equity and cash flows for the
periods then ended included in German American's Quarterly Reports on Form 10-Q
for the quarter ended March 31, 1998 as filed with the SEC (the "10-Q Reports")
(collectively the financial statements and notes thereto included in the 10-Q
Reports and the 10-K are sometimes referred to as the "German American Financial
Statements"), have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis (except as disclosed
therein) and fairly present the consolidated financial position and the
consolidated results of operations, changes in shareholders' equity and cash
flows of German American and its consolidated subsidiaries as of the dates and
for the periods indicated (subject, in the case of interim financial statements,
to normal recurring year-end adjustments, none of which will be material).
Section 3.05. Absence of Changes. Since December 31, 1997 (and except
to the extent reflected in the 10-Q Reports), there has not been any material
adverse change in the consolidated financial condition or the consolidated
results of operations or the business of German American and its subsidiaries,
taken as a whole.
Section 3.06. Reports. Since January 1, 1995 (or, in the case of
subsidiaries of German American, the date of acquisition thereof by German
American, if later), German American and each of its subsidiaries have filed all
reports, notices and other statements, together with any amendments required to
be made with respect thereto, that it was required to file with (i) the SEC,
(ii) the FRB, (iii) the FDIC, (iv) the Office of the Comptroller of the Currency
("OCC"), (v) the Indiana Department of Financial Institutions ("IDFI"), (vi) any
applicable state securities or banking authorities, and (vii) any other
governmental authority with jurisdiction over German American or any of its
subsidiaries. As of their respective dates, each of such reports and documents,
as amended, including the financial statements, exhibits and schedules thereto,
complied in all material respects with the relevant statutes, rules and
regulations enforced or promulgated by the regulatory authority with which they
were filed. None of the information included in such reports or documents was,
at their respective dates of filing, false or misleading with respect to any
material fact, or omitted to state any material fact necessary in order to make
the statements therein not misleading, on a consolidated basis, taking into
account the circumstances under which such reports or documents were filed and
considering the total mix of information that was at the time publicly available
concerning German American and its subsidiaries.
Section 3.07. Absence of Litigation. There is no material litigation,
claim or other proceeding pending or, to the knowledge of German American,
threatened, before any judicial, administrative or regulatory agency or tribunal
against German American or any of its subsidiaries, or to which the property of
German American or any of its subsidiaries is subject, which is required to be
disclosed in SEC reports under Item 103 of Regulation S-K, and which has not
been so disclosed.
Section 3.08. Absence of Agreements with Banking Authorities. Neither
German American nor any of its subsidiaries is subject to any order (other than
orders applicable to bank holding companies or banks generally) or is a party to
any agreement or memorandum of understanding with any federal or state agency
charged with the supervision or regulation of banks or bank holding companies,
including without limitation the FDIC, the OCC, the IDFI, and the FRB.
Section 3.09. Compliance with Law. German American and its subsidiaries
have all material licenses, franchises, permits and other governmental
authorizations that are legally required to enable them to conduct their
respective businesses as presently conducted and are, and all times while this
Agreement is in effect shall be, in compliance in all material respects with all
applicable laws and regulations, including, without limitation, all rules,
regulations and requirements of the SEC, the violation of which would be
material.
Section 3.10. Environmental Matters.
<PAGE>
(a) As used in this Agreement, "Environmental Laws" means all
local, state and federal environmental, health and safety laws and regulations
in all jurisdictions in which German American or any of its subsidiaries has
done business or owned property, including, without limitation, the Federal
Resource Conservation and Recovery Act, the Federal Comprehensive Environmental
Response, Compensation and Liability Act, the Federal Clean Water Act, the
Federal Clean Air Act, and the Federal Occupational Safety and Health Act.
(b) Except as previously disclosed to 1ST BANCORP regarding the banking
offices at 9th and Main Streets, Petersburg, Indiana and 231 West Broadway,
Princeton, Indiana, to the knowledge of German American or any of its
subsidiaries, neither (i) the conduct by German American or any of its
subsidiaries of operations at any property, nor (ii) any condition of any
property owned by German American or any of its subsidiaries within the past ten
(10) years and used in its business operations, nor (iii) the condition of any
property owned by them within the past ten (10) years but not used in their
business operations, nor (iv) the condition of any property held by them as a
trust asset within the past ten (10) years, violates or violated Environmental
Laws in any material respect, and no condition or event has occurred with
respect to any such property that, with notice or the passage of time, or both,
would constitute a material violation of Environmental Laws or obligate (or
potentially obligate) German American or any of its subsidiaries to remedy,
stabilize, neutralize or otherwise alter the environmental condition of any such
property. Neither German American or any of its subsidiaries has received any
notice from any person or entity that German American or any of its subsidiaries
or the operation of any facilities or any property owned by any of them, or held
as a trust asset, are or were in violation of any Environmental Laws or that any
one of them is responsible (or potentially responsible) for the cleanup of any
pollutants, contaminants, or hazardous or toxic wastes, substances or materials
at, on or beneath any such property.
Section 3.11. Statements True and Correct. None of the information
supplied or to be supplied by German American or any of its subsidiaries for
inclusion in any documents to be filed with the SEC, the OTS, the FDIC, or any
other regulatory authority in connection with the Merger will, to the best of
the knowledge of German American 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 in order to make the statements therein not
misleading.
Section 3.12. German American's Knowledge. With respect to
representations and warranties herein that are made or qualified as being made
"to the knowledge of German American" or words of similar import, it is
understood and agreed that matters within the knowledge of the directors and the
executive officers of German American shall be considered to be within the
knowledge of German American.
ARTICLE FOUR
COVENANTS OF 1ST BANCORP
The parties hereto agree that the covenants contained in this Article
Four shall be effective from the date hereof through the earlier of the
Effective Time or the termination of this Agreement.
Section 4.01. Conduct of Business.
<PAGE>
(a) 1ST BANCORP, the Bank, and the Subsidiaries shall continue
to carry on their respective businesses, and shall discharge or incur
obligations and liabilities, only in the ordinary course of business as
heretofore conducted and, by way of amplification and not limitation with
respect to such obligation, neither 1ST BANCORP, the Bank nor any one of the
Subsidiaries will, without the prior written consent of German American:
(i) declare or pay any dividend or make any other distribution
to shareholders, whether in cash, stock or other property, except as
provided in Section 4.09 of this Agreement; or
(ii) issue (or agree to issue) any common or other capital
stock (other than common stock for an aggregate of 25,200 shares issued
to directors or employees of 1ST BANCORP upon the exercise of stock
options issued and outstanding prior to the execution of the Letter of
Intent dated June 15, 1998 between German American and 1ST BANCORP), or
any options, warrants or any other rights to subscribe for or purchase
common or any other capital stock or any securities convertible into or
exchangeable for any capital stock; or
(iii) directly or indirectly redeem, purchase or otherwise
acquire (or agree to redeem, purchase or acquire) (except for shares
acquired in satisfaction of a debt previously contracted) any of their
own common or any other capital stock; or
(iv) effect a split, reverse split, reclassification, or other
similar change in, or of, any common or other capital stock or
otherwise reorganize or recapitalize; or
(v) change the Articles of Incorporation or Bylaws of 1ST
BANCORP or the Charter or Bylaws of the Bank; or
(vi) pay or agree to pay, conditionally or otherwise, any
bonus other than bonuses that were accrued as of June 30, 1998, for the
fiscal year ended June 30, 1998, in the aggregate amount of $278,000
and bonuses for the six month period ended December 31, 1998, equal to
$124,500 (which amount approximates 50 percent of the average of the
total amount of bonuses paid in each of the prior two fiscal years); or
(vii) pay or agree to pay, conditionally or otherwise,
additional compensation (other than ordinary and normal salary
increases consistent with past practices) or severance benefit or
otherwise make any changes out of the ordinary course of business with
respect to the fees or compensation payable or to become payable to
consultants, advisors, investment bankers, brokers, attorneys,
accountants, directors, officers or employees or, except as required by
law or this Agreement, adopt or make any change in any Employee Plan or
other arrangement or payment made to, for or with any of such
consultants, advisors, investment bankers, brokers, attorneys,
accountants, directors, officers or employees; provided, however, that
1ST BANCORP and the Bank may pay the fees, expenses and other
compensation of consultants, advisors, investment bankers, brokers,
attorneys and accountants disclosed on the Disclosure Schedule when,
if, and as earned by them; or
(viii) borrow or agree to borrow any material amount of funds
except in the ordinary course of business, or directly or indirectly
guarantee or agree to guarantee any material obligations of others
except in the ordinary course of business or pursuant to outstanding
letters of credit; or
(ix) make or commit to make (or renew or commit to renew) any
new loan, or issue or commit to issue (or renew or commit to renew) any
new letter of credit or line of credit, or make (or commit to make) any
additional discretionary advance (not including any advance for the
purposes and in the amount already committed) under any existing letter
of credit or line of credit, or purchase or agree to purchase any
interest in a loan participation, in aggregate principal amounts (A) in
excess of $300,000 to any one borrower (or group of affiliated
borrowers) or (B) that would cause the Bank's credit extensions or
commitments to any one borrower (or group of affiliated borrowers) to
exceed $500,000 (German American's consent to credit extensions in the
ordinary course of business will not be unreasonably withheld); or
(x) other than U.S. Treasury obligations or asset-backed
securities issued or guaranteed by United States governmental agencies
or financial institution certificates of deposit insured by the FDIC,
in either case having an average remaining life of five years or less
(except that maturities may extend to seven years on variable-rate
securities), purchase or otherwise acquire any investment security for
their own accounts, or sell any investment security owned by either of
them which is designated as held-to-maturity, or engage in any activity
that would require the establishment of a trading account for
investment securities; or
(xi) increase or decrease the rate of interest paid on time
deposits, or on certificates of deposit, except in a manner and
pursuant to policies consistent with past practices; or
(xii) enter into or amend any agreement, contract or
commitment out of the ordinary course of business; or
(xiii) except in the ordinary course of business, place on any
of their assets or properties any mortgage, pledge, lien, charge, or
other encumbrance; or
(xiv) except in the ordinary course of business, cancel,
release, compromise or accelerate any material indebtedness owing to
1ST BANCORP, the Bank, or the Subsidiaries, or any claims which either
of them may possess, or voluntarily waive any material rights with
respect thereto; or
(xv) sell or otherwise dispose of any real property or any
material amount of any personal property other than properties acquired
in foreclosure or otherwise in the ordinary course of collection of
indebtedness to 1ST BANCORP, the Bank, or the Subsidiaries; or
(xvi) foreclose upon or otherwise take title to or possession
or control of any real property without first obtaining a phase one
environmental report thereon, prepared by a reliable and qualified
person or firm reasonably acceptable to German American, which
indicates that the property is free of pollutants, contaminants or
hazardous or toxic waste materials; provided, however, that neither 1ST
BANCORP, the Bank, nor any one of the Subsidiaries shall be required to
obtain such a report with respect to single family, non-agricultural
residential property of five acres or less to be foreclosed upon unless
it has reason to believe that such property might contain such
materials or otherwise might be contaminated; or
(xvii) commit any act or fail to do any act which will cause a
material breach of any material agreement, contract or commitment to
which it is a party; or
(xviii) violate any law, statute, rule, governmental
regulation or order, which violation could reasonably be expected to
have a material adverse effect on its business, financial condition, or
earnings; or
(xix) purchase any real or personal property or make any other
capital expenditure where the amount paid or committed therefor is in
excess of $10,000 other than (a) purchases of property made in the
ordinary course of business or (b) purchases made or costs incurred in
connection with loan collection activities or foreclosure sales in
connection with any of 1ST BANCORP's, the Bank's, or any one of the
Subsidiaries' loans, without the consent of German American, which
consent shall not be unreasonably withheld; or
(xx) issue certificate(s) for shares of 1ST BANCORP Common to
any 1ST BANCORP shareholder in replacement of certificate(s) claimed to
have been lost or destroyed without first obtaining from such
shareholder(s), at the expense of such shareholder(s), reasonable
payments for a surety bond from a recognized insurance company in an
amount that would indemnify 1ST BANCORP (and its successors) against
lost certificate(s) and obtaining a usual and customary affidavit of
loss and indemnity agreement from such shareholder(s); provided,
however, that 1ST BANCORP may waive the surety bond requirement in
connection with the issuance of replacement certificates to any
shareholder if the number of shares of 1ST BANCORP Common so reissued
(together with the number of shares previously reissued since January
1, 1997, to such shareholder and all other shareholders who are
affiliated or associated with such shareholder) has an aggregate market
value of $2,500 or less; or
(xxi) hold a special, regular or annual meeting (or take
action by consent in lieu thereof) of the Board of Directors or the
sole shareholder of the Bank or of any one of the Subsidiaries for the
purpose of appointing or electing any new member to the Board of
Directors of the Bank or any one of the Subsidiaries (whether to fill a
vacancy or otherwise) unless such new member is approved in advance in
writing by German American.
(b) 1ST BANCORP, the Bank, and the Subsidiaries shall take all
necessary action to ensure that all bonus arrangements of 1ST BANCORP, the Bank,
or the Subsidiaries, including all arrangements pursuant to the Management
Incentive Award Plan for the fiscal year ended June 30, 1998, and the six months
ended December 31, 1998, have been paid and terminated prior to the Closing
Date.
(c) Neither 1ST BANCORP, the Bank, nor any one of the Subsidiaries
shall, without the prior written consent of German American, engage in any
transaction or take any other action that would render untrue in any material
respect any of the representations and warranties of 1ST BANCORP contained in
Article Two hereof if such representations and warranties were given as of the
date of such transaction or action.
(d) 1ST BANCORP shall promptly notify German American in writing of the
occurrence of any matter or event known to 1ST BANCORP that is, or is likely to
become, materially adverse to the business, operations, properties, assets or
condition (financial or otherwise) of 1ST BANCORP, the Bank, or the Subsidiaries
taken as a whole.
(e) Neither 1ST BANCORP, the Bank, nor any of the Subsidiaries shall
(a) directly or indirectly solicit or encourage (nor shall they permit any of
their respective officers, directors, employees or agents directly or indirectly
to solicit or encourage), including by way of furnishing information other than
the terms of this Agreement, any inquiries or proposals from third parties for a
merger, consolidation, share exchange or similar transaction involving 1ST
BANCORP, the Bank, or the Subsidiaries or for the acquisition of the stock or
substantially all of the assets or business of 1ST BANCORP, the Bank, or the
Subsidiaries, or (b) subject to the fiduciary duties of the Directors of 1ST
BANCORP as advised by counsel in a written opinion, discuss with or enter into
conversations with any person concerning any such merger, consolidation, share
exchange, acquisition or other transaction. 1ST BANCORP shall promptly notify
German American orally (to be confirmed in writing as soon as practicable
thereafter) of all of the relevant details concerning any inquiries or proposals
that it may receive relating to any such matters, including actions it intends
to take with respect to such matters.
Section 4.02. Breaches. 1ST BANCORP shall, in the event it has
knowledge of the occurrence of any event or condition which would cause or
constitute a breach (or would have caused or constituted a breach had such event
occurred or been known prior to the date of this Agreement) of any of its
representations or agreements contained or referred to in this Agreement, give
prompt notice thereof to German American and use its best efforts to prevent or
promptly remedy the same.
Section 4.03. Submission to Shareholders. 1ST BANCORP shall cause to be
duly called and held, on a date mutually selected by German American and 1ST
BANCORP, an annual or special meeting of its shareholders (the "1ST BANCORP
Shareholders' Meeting") for submission of this Agreement and the Merger for
approval of 1ST BANCORP shareholders as required by the IBCL. In connection with
the 1ST BANCORP Shareholders' Meeting, (i) 1ST BANCORP shall cooperate with and
assist German American in preparing and filing a registration statement
containing a Prospectus/Proxy Statement (the "Prospectus/Proxy Statement") with
the SEC in accordance with SEC requirements and 1ST BANCORP shall mail it to its
shareholders, (ii) 1ST BANCORP shall furnish German American all information
concerning itself that German American may reasonably request in connection with
such Prospectus/Proxy Statement, and (iii) the Board of Directors of 1ST BANCORP
shall (unless a written opinion of independent counsel for 1ST BANCORP relating
to the fiduciary duties of the Board of Directors advises against such a
recommendation, in which event the individual members of the Board of Directors
shall nevertheless remain personally obligated to support the Agreement and the
Merger pursuant to their personal undertakings on the signature page of this
Agreement) unanimously recommend to 1ST BANCORP's shareholders the approval of
this Agreement and the Merger contemplated hereby.
Section 4.04. Consummation of Agreement. 1ST BANCORP shall use its best
efforts to perform and fulfill all conditions and obligations on its part to be
performed or fulfilled under this Agreement and to effect the Merger in
accordance with the terms and provisions hereof. 1ST BANCORP shall furnish to
German American in a timely manner all information, data and documents in the
possession of 1ST BANCORP, the Bank, or the Subsidiaries requested by German
American as may be required to obtain any necessary regulatory or other
approvals of the Merger or to file with the SEC a registration statement on Form
S-4 (the "Registration Statement") relating to the shares of German American
Common to be issued to the shareholders of 1ST BANCORP pursuant to the Merger
and this Agreement, and shall otherwise cooperate fully with German American to
carry out the purpose and intent of this Agreement.
Section 4.05. Financial Information. 1ST BANCORP shall allow German
American to make a special review of the assets of the Bank with a view to
determining the consistency of the procedures and standards employed by the Bank
in determining its allowance for possible loan losses with the procedures and
standards employed by German American's present bank subsidiaries. If, as a
result of such review or otherwise, the Bank after June 30, 1998, has made or
hereafter makes additions to its allowance for possible loan losses for the
purpose of increasing the amount of the allowance above its amount as of June
30, 1998, German American shall not assert that such additions (to the extent
that the amount thereof does not exceed an aggregate of $300,000) violate any
representation, warranty or covenant of 1ST BANCORP in this Agreement or
otherwise entitle German American to terminate its obligations to consummate the
transactions contemplated hereby.
Section 4.06. Environmental Reports. Except as German American shall
otherwise consent with respect to any residential real estate (which consent
will not be unreasonably withheld by German American), 1ST BANCORP shall, at 1ST
BANCORP's and German American's shared expense, cooperate with an environmental
consulting firm designated by German American in connection with the conduct by
such firm of a phase one environmental investigation on all real property owned
or leased by 1ST BANCORP, the Bank, or the Subsidiaries as of the date of this
Agreement, and any real property acquired or leased by 1ST BANCORP, the Bank, or
the Subsidiaries after the date of this Agreement, except as otherwise provided
in Section 4.01(a)(xvi). If further investigation procedures are required as to
any property by the report of the phase one investigation in German American's
reasonable opinion, 1ST BANCORP shall as soon as practicable, at 1ST BANCORP's
and German American's shared expense, commission the taking of such further
procedures and provide a report of the results of such further procedures
("Phase Two Report") to German American. German American shall have fifteen (15)
business days from German American's receipt of any Phase Two Report to notify
1ST BANCORP of any objection to the contents of the Phase Two Report. Should the
cost of taking all remedial and corrective actions and measures (i) required by
applicable law, or (ii) recommended or suggested in the Phase Two Report and
prudent in light of the recommendations or suggestions in the Phase Two Report
findings, in the aggregate, exceed the sum of $250,000, as reasonably estimated
by the environmental expert retained for such purpose by German American and
reasonably acceptable to 1st BANCORP, or if the cost of such actions and
measures cannot be so reasonably estimated by such expert with any reasonable
degree of certainty, then German American shall have the right pursuant to
Section 7.03 hereof, for a period of 10 business days following receipt of such
estimate or indication that the costs of such actions and measures cannot be so
reasonably estimated to terminate this Agreement without further obligation to
1ST BANCORP, which shall be German American's sole remedy in such event.
Section 4.07. Restriction on Resales. 1ST BANCORP shall obtain and
deliver to German American, at least thirty (30) days prior to the Closing Date,
signed representations, in form reasonably acceptable to German American, of
each shareholder who may reasonably be deemed an "affiliate" of 1ST BANCORP as
of the date of the 1ST BANCORP Shareholders' Meeting within the meaning of such
term as used in Rule 145 under the Securities Act regarding their prospective
compliance with the provisions of such Rule 145. 1ST BANCORP shall also obtain
and deliver to German American at least 30 days prior to the Closing Date, the
signed agreements of each shareholder who may reasonably be deemed an
"affiliate" (as such term is described in the preceding sentence) of 1ST BANCORP
as of the date of the Shareholders' Meeting agreeing not to sell any shares of
German American Common or otherwise reduce his or her risk relative to such
shares, until such time as financial results covering at least thirty (30) days
of post-Merger combined operations have been filed by German American with the
SEC in a quarterly report on Form 10-Q or in an annual report on Form 10-K.
Section 4.08. Access to Information. 1ST BANCORP shall permit German
American reasonable access, in a manner which will avoid undue disruption or
interference with 1ST BANCORP's normal operations, to its, the Bank's, and the
Subsidiaries' properties and shall disclose and make available to German
American all books, documents, papers and records relating to its, the Bank's,
and the Subsidiaries' assets, stock ownership, properties, operations,
obligations and liabilities, including, but not limited to, all books of account
(including general ledgers), tax records, minute books of directors' and
shareholders' meetings, organizational documents, material contracts and
agreements, loan files, filings with any regulatory authority, accountants'
workpapers, litigation files, plans affecting employees, and any other business
activities or prospects in which German American may have an interest in light
of the transactions contemplated by this Agreement. During the period from the
date of this Agreement to the Effective Time, 1ST BANCORP will cause one or more
of its, the Bank's, or the Subsidiaries' designated representatives to confer on
a regular basis with the President of German American, or any other person
designated in a written notice given to 1ST BANCORP by German American pursuant
to this Agreement, to report the general status of the ongoing operations of 1ST
BANCORP, the Bank, and the Subsidiaries. 1ST BANCORP will promptly notify German
American of any material change in the normal course of the operation of its
business or properties and of any regulatory complaints, investigations or
hearings (or communications indicating that the same may be contemplated), or
the institution or the threat of litigation involving 1ST BANCORP, the Bank, or
any of the Subsidiaries, and will keep German American fully informed of such
events. German American hereby understands and agrees that all books, documents,
papers and records relating to 1ST BANCORP's, the Bank's, and the Subsidiaries'
assets, stock ownership, properties, operations, obligations and liabilities
which it obtains, receives, reviews or has access to pursuant to this Section
4.08 shall be subject to the Confidentiality Agreement between 1ST BANCORP and
German American ("Confidentiality Agreement").
Section 4.09. Dividends. Notwithstanding Section 4.01(a) of this
Agreement, 1ST BANCORP may (in the absence of any material adverse change in its
consolidated financial condition, results of operations, or business, other than
the adverse change that might result from additional provisions made to increase
the Bank's allowance for loan losses as contemplated by, and not exceeding the
maximum amount specified by, Section 4.05, and other than the adverse changes
that are expected to result from the expenses associated with the Merger and
accruals under the Director Deferred Compensation Plan of 1ST BANCORP resulting
from the Merger), continue to declare and pay quarterly cash dividends (during
September and December 1998 and during the third month of each subsequent
calendar quarter with respect to that calendar quarter) to 1ST BANCORP
shareholders in a quarterly amount not to exceed $.0667 per share of 1ST BANCORP
Common, or an aggregate of not more than $.2668 per share for the fiscal year
beginning July 1, 1998; provided, however, that no dividend may be paid to 1ST
BANCORP's shareholders during the quarter in which the Merger is consummated if,
during such quarter, 1ST BANCORP's shareholders will become entitled to receive
dividends on their shares of German American common stock received pursuant to
this Agreement.
Section 4.10. Termination and Modification of Benefit Plans. On or
before the Closing Date, 1ST BANCORP shall terminate the 1ST BANCORP Stock
Option Plan, the 1ST BANCORP 1997 Employee Stock Purchase Plan, and the 1ST
BANCORP Automatic Dividend Reinvestment and Stock Purchase Plan. On or before
the date employees of 1ST BANCORP and its Subsidiaries may begin participating
in German American Bancorp's Retirement Profit Sharing Plan, 1ST BANCORP shall
terminate and freeze its defined benefit pension plan and, in connection
therewith, shall take and shall have taken all necessary action to apply to the
IRS for a determination letter in connection with such termination and provide
all notices to participants and to the Pension Benefit Guaranty Corporation as
required by and in accordance with ERISA. Upon such termination, all accrued
benefits of participants in the pension plan shall be payable at the times and
in the amounts provided for under that plan. The Bank shall continue to make
contributions to the pension plan through the date of such termination only to
the extent required to maintain the plan's tax-qualified status and to avoid any
federal income taxes or penalties attributable to the plan's funding status.
Subject to Section 5.12 hereof, on or before November 1, 1998, 1ST BANCORP shall
take and have taken all necessary steps to discontinue all medical insurance
benefits provided to any party who would not be eligible for such benefits under
the German American Bancorp Employee Benefits Plan.
ARTICLE FIVE
COVENANTS OF GERMAN AMERICAN
Section 5.01. Regulatory Approvals and Registration Statement.
<PAGE>
(a) German American shall file (and cooperate with 1ST
BANCORP, the Bank, and the Subsidiaries, in filing) all regulatory applications
required in order to consummate the Merger, including all necessary applications
for the prior approval of the FRB under the BHC Act and the OTS under the HOLA,
as soon as practicable after the date hereof. German American shall keep 1ST
BANCORP reasonably informed as to the status of such applications and promptly
send or deliver copies of such applications, and of any supplementally filed
materials, to counsel for 1ST BANCORP.
(b) German American shall file with the SEC the Registration
Statement relating to the shares of German American Common to be issued to the
shareholders of 1ST BANCORP pursuant to this Agreement as soon as practicable
after the date hereof, and shall use its best efforts to cause the Registration
Statement to become effective as soon as practicable. At the time the
Registration Statement becomes effective, the form of the Registration Statement
shall comply in all material respects with the provisions of the Securities Act
and the published rules and regulations thereunder, and shall 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 not false or
misleading. At the time of the mailing thereof to the shareholders and at the
time of any Shareholders' Meeting, the Prospectus/Proxy Statement included as
part of the Registration Statement, as amended or supplemented by any amendment
or supplement, shall not contain any untrue statement of a material fact or omit
to state any material fact regarding German American or the Merger necessary to
make the statements therein not false or misleading. German American shall
timely file all documents required to obtain all necessary Blue Sky permits and
approvals, if any, required to carry out the Merger, shall pay all expenses
incident thereto and shall use its best efforts to obtain such permits and
approvals on a timely basis. German American shall promptly and properly prepare
and file any other filings required under the Securities Exchange Act of 1934
(the "Exchange Act") relating to the Merger or the Stock Option Agreement
referred to in Section 8.04 hereof, or otherwise required of it under the
Exchange Act prior to the Effective Time, and shall deliver copies thereof to
1ST BANCORP's counsel promptly upon the filing thereof with the SEC.
Section 5.02. Breaches. German American shall, in the event it has
knowledge of the occurrence of any event or condition which would cause or
constitute a breach (or would have caused or constituted a breach had such event
occurred or been known prior to the date of this Agreement) of any of its
representations or agreements contained or referred to in this Agreement, give
prompt notice thereof to 1ST BANCORP and use its best efforts to prevent or
promptly remedy the same.
Section 5.03. Consummation of Agreement. German American shall use its
best efforts to perform and fulfill all conditions and obligations to be
performed or fulfilled under this Agreement and to effect the Merger in
accordance with the terms and conditions of this Agreement, and use its best
efforts to cause the Effective Time to occur on January 4, 1999 or as soon
thereafter as practicable.
Section 5.04. Directors' and Officers' Indemnification.
<PAGE>
(a) Following the Effective Time, German American will provide
the directors and officers of 1ST BANCORP, the Bank, and the Subsidiaries from
time to time with the same directors' and officers' liability insurance coverage
that German American provides to directors and officers of its other banking
subsidiaries.
(b) For six (6) years after the Effective Time, German
American shall (and shall cause the Bank to) indemnify, defend and hold harmless
the present and former officers and directors of 1ST BANCORP, the Bank, and the
Subsidiaries (each, an "Indemnified Party") against all losses, expenses,
claims, damages and liabilities arising out of actions or omissions (arising
from their present or former status as officers or directors) occurring on or
prior to the Effective Time to the full extent then permitted under the
applicable provisions of the IBCL and the HOLA and under the articles of
incorporation and bylaws of 1ST BANCORP and the charter and bylaws of the Bank
and under the articles of incorporation and bylaws of the Subsidiaries.
(c) If during the six (6) year period after the Effective Time
German American or the Bank or any of its or their successors or assigns (i)
shall consolidate with or merge into any other corporation or entity and shall
not be the continuing or surviving corporation or entity of such consolidation
or merger or (ii) shall transfer all or substantially all of its properties and
assets to any individual, corporation or other entity, then and in each such
case, proper provision shall be made so that the successors and assigns of
German American and/or the Bank shall assume the obligations set forth in this
Section 5.04.
Section 5.05. Board of Directors of German American. German American
shall cause the Chairman of the Board of 1ST BANCORP to be appointed to the
Board of Directors of German American as of the Effective Time and shall take
action to waive the retirement provision in the German American Bylaws to allow
him to serve as a Director until the third annual meeting of German American
following the Closing Date.
Section 5.06. Board of Directors of the Bank. At the Effective Time,
the Board of Directors of the Bank shall be reconstituted at the sole discretion
of German American; provided, however, that German American agrees that no fewer
than four current members of the Board of Directors of the Bank shall be
appointed to serve as members of the Board of Directors of the Bank after the
Effective Time.
Section 5.07. Preservation of Business. German American shall: (a)
conduct its business substantially in the manner as is presently being conducted
and in the ordinary course of business and not amend its articles of
incorporation in any manner that requires the approval of shareholders of German
American under the IBCL; (b) file, and cause its subsidiaries to file, all
required reports with applicable regulatory authorities; (c) comply with all
laws, statutes, ordinances, rules or regulations applicable to it and to the
conduct of its business, the noncompliance with which results or could result in
a material adverse effect on the financial condition, results of operations,
business, assets or capitalization of German American on a consolidated basis;
and (d) comply in all material respects with each contract, agreement,
commitment, obligation, understanding, arrangement, lease or license to which it
is a party by which it is or may be subject or bound, the breach of which could
result in a material adverse effect on the financial condition, results of
operations, business, assets or capitalization of German American on a
consolidated basis.
Section 5.08. Securities and Exchange Commission Filings. German
American will provide 1ST BANCORP with copies of all filings made by German
American with the SEC under the Exchange Act; and the Securities Act and the
respective rules and regulations of the SEC thereunder as soon as practicable
after such filings are made at any time prior to the Effective Time.
Section 5.09. Rule 144(c) Information. Following the Effective Time,
German American shall make available adequate current public information about
itself as that terminology is used in and as required by Rule 144(c) of the SEC
under the Securities Act.
Section 5.10. Authorization of Common Stock. At the Effective Time and
on such subsequent dates when the former shareholders of 1ST BANCORP surrender
their 1ST BANCORP share certificates for cancellation, the shares of German
American Common to be exchanged with former shareholders of 1ST BANCORP shall
have been duly authorized and validly issued by German American and shall be
fully paid and non-assessable and subject to no pre-emptive rights and listed
for trading on the NASDAQ NMS.
Section 5.11. Benefit Plan Eligibility and Past Service Credit.
Employees of the Bank shall receive full vesting and eligibility credit under
German American's defined contribution retirement and other employee benefit
plans for their years and, if applicable, months of service to the Bank;
provided, however, that German American reserves the right to retain health
insurance benefits for eligible employees of the Bank under the current existing
plan or plans pertaining to such employees, which benefits and costs to the
employees shall be substantially equal to those under German American's health
insurance plan.
Section 5.12. Director and Retiree Benefit Payments. From and after the
date hereof and for a period of three years after the Effective Time, German
American will make payments to certain Directors and former employees of 1ST
BANCORP as outlined in a memorandum from George Astrike to Jim McCormick dated
July 27, 1998, a copy of which is attached to this Agreement as Appendix B. Any
post-retirement health insurance benefits other than the cash payments to be
made in lieu of such benefits as described in Appendix B for any employees or
directors of 1ST BANCORP and its Subsidiaries, shall be discontinued as of
November 1, 1998, as provided in Section 4.10 hereof.
Section 5.13. Executive Supplemental Retirement Income Agreements.
Following the Effective Time, German American agrees to cause the Bank to honor
all obligations under the Executive Supplemental Retirement Income Agreements
effective January 1, 1993, between the Bank and C. James McCormick, Frank D.
Baracani, Lynn Stenftenagel, Robert W. Ballard, Bradley M. Rust, Carroll C.
Hamner, and Gerald R. Belanger, and to guarantee the Bank's obligations
thereunder.
Section 5.14. Director Deferred Compensation Plan. German American
agrees to honor all obligations to the individuals listed in the Disclosure
Schedule as parties to the related agreements under the Director Deferred
Compensation Plan as amended pursuant to Section 6.01(j) hereof. No additional
director fee deferrals will be permitted on and after the date hereof.
ARTICLE SIX
CONDITIONS PRECEDENT TO THE MERGER
Section 6.01. Conditions of German American's Obligations. The
obligations of German American to effect the Merger shall be subject to the
satisfaction (or waiver by German American) prior to or on the Closing Date of
the following conditions:
<PAGE>
(a) The representations and warranties made by 1ST BANCORP in
this Agreement shall be true in all material respects on and as of the Closing
Date with the same effect as though such representations and warranties had been
made or given on and as of the Closing Date.
(b) 1ST BANCORP shall have performed and complied in all
material respects with all of its obligations and agreements required to be
performed on or prior to the Closing Date under this Agreement.
(c) No temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent jurisdiction or other
legal restraint or prohibition preventing the consummation of the Merger shall
be in effect, nor shall any proceeding by any bank regulatory authority or
governmental agency seeking any of the foregoing be pending. There shall not be
any action taken, or any statute, rule, regulation or order enacted, entered,
enforced or deemed applicable to the Merger which makes the consummation of the
Merger illegal.
(d) All necessary regulatory approvals, consents,
authorizations and other approvals required by law or stock market requirements
for consummation of the Merger, including approval of the Merger by the
shareholders of German American in order to comply with the NASDAQ NMS listing
standards or the IBCL, shall have been obtained and all waiting periods required
by law shall have expired.
(e) German American shall have received the environmental
reports required by Sections 4.06 and 4.01(a)(xvi) hereof and shall not have
elected, pursuant to Section 4.06 hereof, to terminate and cancel this
Agreement.
(f) German American shall have received all documents required
to be received from 1ST BANCORP or the Bank on or prior to the Closing Date, all
in form and substance reasonably satisfactory to German American.
(g) German American shall have received a letter, dated as of
the Effective Time, from Crowe, Chizek and Company, LLP, its independent public
accountants, to the effect that the Merger will qualify for pooling of interests
accounting treatment under Accounting Principles Board Opinion No. 16 if closed
and consummated in accordance with this Agreement.
(h) The Registration Statement shall be effective under the
Securities Act and no stop orders suspending the effectiveness of the
Registration Statement shall be in effect or proceedings for such purpose
pending before or threatened by the SEC.
(i) German American shall have received from its counsel,
Leagre Chandler & Millard, an opinion to the effect that if the Merger is
consummated in accordance with the terms set forth in this Agreement, (i) the
Merger will constitute a reorganization within the meaning of Section 368(a) of
the Code; (ii) no gain or loss will be recognized by the holders of shares of
1ST BANCORP Common upon receipt of the Merger Consideration (except for cash
received in lieu of fractional shares); (iii) the basis of shares of German
American Common received by the shareholders of 1ST BANCORP will be the same as
the basis of shares of 1ST BANCORP Common exchanged therefor; and (iv) the
holding period of the shares of German American Common received by the
shareholders of 1ST BANCORP will include the holding period of the shares of 1ST
BANCORP Common exchanged therefor, provided such shares were held as capital
assets as of the Effective Time.
(j) The Bank and each of its directors who have not reached and will
not reach, on or before the Effective Time, the "Normal Retirement Date"
specified by his or her individual Director Deferred Compensation Agreement with
the Bank, shall have agreed to amend such Agreement from and after the Effective
Time as follows:
(i) the monthly interest factor set forth in Section 1.7 of
such Agreement shall be 0.857%;
(ii) the monthly interest crediting rate set forth in Section
1.11 of such Agreement shall be 0.521%; and
(iii) the phantom stock feature set forth in Section 1.14 and
referred to throughout such Agreement shall be eliminated as of
December 31, 1998.
(k) All officers, directors and employees of 1ST BANCORP, the Bank, and
the Subsidiaries shall have exercised all stock options such that no options,
warrants, or other rights to purchase 1ST BANCORP Common are outstanding at the
Closing Date.
Section 6.02. Conditions of 1ST BANCORP's Obligations. 1ST BANCORP's
obligations to effect the Merger shall be subject to the satisfaction (or waiver
by 1ST BANCORP) prior to or on the Closing Date of the following conditions:
<PAGE>
(a) The representations and warranties made by German American
in this Agreement shall be true in all material respects on and as of the
Closing Date with the same effect as though such representations and warranties
had been made or given on the Closing Date.
(b) German American shall have performed and complied in all
material respects with all of its obligations and agreements required to be
performed prior to the Closing Date under this Agreement.
(c) No temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent jurisdiction or other
legal restraint or prohibition preventing the consummation of the Merger shall
be in effect, nor shall any proceeding by any bank regulatory authority or other
governmental agency seeking any of the foregoing be pending. There shall not be
any action taken, or any statute, rule, regulation or order enacted, enforced or
deemed applicable to the Merger which makes the consummation of the Merger
illegal.
(d) All necessary regulatory approvals, consents,
authorizations and other approvals required by law for consummation of the
Merger, including the requisite approval of the Merger by the shareholders of
1ST BANCORP, shall have been obtained and all waiting periods required by law
shall have expired.
(e) 1ST BANCORP shall have received all documents required to
be received from German American on or prior to the Closing Date, all in form
and substance reasonably satisfactory to 1ST BANCORP.
(f) The Registration Statement shall be effective under the
Securities Act and no stop orders suspending the effectiveness of the
Registration Statement shall be in effect or proceedings for such purpose
pending before or threatened by the SEC, and German American shall have received
all state securities or "Blue Sky" approvals, authorizations, exemptions or
permits required to issue the shares of German American Common as the Merger
Consideration to the shareholders of 1ST BANCORP.
(g) 1ST BANCORP shall have received from counsel for German
American, Leagre Chandler & Millard, an opinion reasonably satisfactory to 1ST
BANCORP to the effect that if the Merger is consummated in accordance with the
terms set forth in this Agreement, (i) the Merger will constitute a
reorganization within the meaning of Section 368(a) of the Code; (ii) no gain or
loss will be recognized by the holders of shares of 1ST BANCORP Common upon
receipt of the Merger Consideration (except for cash received in lieu of
fractional shares); (iii) the basis of German American Common received by the
shareholders of 1ST BANCORP will be the same as the basis of 1ST BANCORP Common
exchanged therefor; and (iv) the holding period of the shares of German American
Common received by the shareholders of 1ST BANCORP will include the holding
period of the shares of 1ST BANCORP Common exchanged therefor, provided such
shares were held as capital assets as of the Effective Time.
(h) The German American Common to be exchanged for the 1ST BANCORP
Common pursuant to the Merger shall have an aggregate value (as measured by the
per share average value of the German American Common during the Valuation
Period that is utilized to determine the Exchange Ratio pursuant to Section
1.03(a)) of at least $57,120,000.
(i) 1ST BANCORP shall have received from Olive Corporate Finance, LLC
or another reputable financial advisor a written fairness opinion stating that
the terms of the Merger are fair to the shareholders of 1ST BANCORP from a
financial point of view. Such written fairness opinion shall (i) be in form and
substance reasonably satisfactory to 1ST BANCORP, (ii) be dated as of the
mailing date of the Prospectus/Proxy Statement, and (iii) be included as an
exhibit to such Prospectus/Proxy Statement.
ARTICLE SEVEN
TERMINATION OR ABANDONMENT
Section 7.01. Mutual Agreement. This Agreement may be terminated by the
mutual written agreement of the parties approved by their respective Boards of
Directors at any time prior to the Effective Time, regardless of whether
shareholder approval of this Agreement and the Merger by the shareholders of 1ST
BANCORP or German American shall have been previously obtained.
Section 7.02. Breach of Representations, Warranties or Covenants. In
the event that there is a material breach in any of the representations and
warranties or covenants of the parties, which breach is not cured within thirty
(30) days after notice to cure such breach is given by the non-breaching party,
then the Board of Directors of the non-breaching party, regardless of whether
approval by the shareholders of this Agreement and the Merger shall have been
previously obtained, and in addition to any other remedies to which the
non-breaching party may be entitled, may terminate and cancel this Agreement
effective immediately by providing written notice thereof to the other party
hereto.
Section 7.03. Adverse Environmental Reports. German American as
specifically provided by Section 4.06 may terminate this Agreement by giving
written notice thereof to1ST BANCORP.
Section 7.04. Failure of Conditions. In the event any of the conditions
to the obligations of either party are not satisfied or waived on or prior to
the Closing Date, and if any applicable cure period provided in Section 7.02
hereof has lapsed, then the Board of Directors of such party may, regardless of
whether approval by its shareholders of this Agreement and the Merger shall have
been previously obtained, terminate and cancel this Agreement on the Closing
Date by delivery of written notice thereof to the other party on such date.
Section 7.05. Shareholder Approval Denial. If this Agreement and
consummation of the Merger is not approved by the shareholders of 1ST BANCORP,
or if the issuance of the additional German American Common is required to be
approved by the shareholders of German American pursuant to the NASDAQ NMS
listing standards or the IBCL and is not so approved at the meeting of German
American's shareholders called to consider such issuance, then either party may
terminate this Agreement by giving written notice thereof to the other party,
subject to Section 7.02.
Section 7.06. Regulatory Enforcement Matters. In the event that 1ST
BANCORP or the Bank, on the one hand, or German American, on the other hand,
shall become a party or subject to any memorandum of understanding, cease and
desist order, or civil money penalties imposed by any federal or state agency
charged with the supervision or regulation of savings associations, savings and
loan holding companies, or bank holding companies, after the date of this
Agreement, then the party that is not subject to such regulatory enforcement may
terminate this Agreement by giving written notice thereof to the other party.
Section 7.07. Lapse of Time. If the Closing Date does not occur on or
prior to June 30, 1999, despite each party's best efforts to consummate the
Merger on or before that date, then this Agreement may be terminated by the
Board of Directors of either 1ST BANCORP or German American by giving written
notice thereof to the other party.
ARTICLE EIGHT
GENERAL PROVISIONS
Section 8.01. Liabilities. In the event that this Agreement is
terminated or the Merger is abandoned pursuant to the provisions of Article
Seven hereof, no party hereto shall have any liability to any other party for
costs, expenses, damages, termination fees, or otherwise. Directors, officers
and employees of each party hereto shall have no personal liability under this
Agreement with respect to the representations and warranties of their respective
parties except for fraud or for their personal intentional and knowing
participation in the making of false or misleading statements in such
representation and warranties.
Section 8.02. Notices. Any notice or other communication hereunder
shall be in writing and shall be deemed to have been given or made (a) on the
date of delivery, in the case of hand delivery, or (b) three (3) business days
after deposit in the United States Registered or Certified Mail, with mailing
receipt postmarked by the Postal Service to show date of mailing, postage
prepaid, or (c) upon actual receipt if transmitted during business hours by
facsimile (but only if receipt of a legible copy of such transmission is
confirmed by the recipient); addressed (in any case) as follows:
<PAGE>
If to German American:
German American Bancorp
711 Main Street
Box 810
Jasper, Indiana 47546
Attn: George W. Astrike, Chairman of the Board
with a copy to:
Leagre Chandler & Millard
1400 First Indiana Plaza
135 North Pennsylvania
Indianapolis, Indiana 46204
Attn: Mark B. Barnes
John R. Zerkle
and
If to 1ST BANCORP or the Bank:
1ST BANCORP
101 North Third Street
Vincennes, Indiana 47951-1220
Attn: C. James McCormick, Chairman of the Board
with a copy to:
Barnes & Thornburg
1313 Merchants Bank Building
11 South Meridian Street
Indianapolis, Indiana 46204
Attn: Claudia V. Swhier
or to such other address as any party may from time to time designate by notice
to the other.
Section 8.03. Non-survival of Representations and Agreements. No
representation, warranty or covenant contained in this Agreement shall survive
(and no claims for the breach or nonperformance thereof may be brought after)
the Effective Time except the covenants of German American in Sections 5.04,
5.05, 5.06, 5.09, 5.10, 5.12, 5.13, and 5.14 which shall survive the Effective
Time. No representation, warranty or covenant contained in this Agreement shall
survive (and, except for any intentional breach or nonperformance, no claims for
the breach or nonperformance, thereof may be brought after) the termination of
this Agreement pursuant to Article Seven hereof. The reliability and binding
effect of any representation or warranty made by any party in this Agreement
shall not be diminished or limited in any way by any review, or by the
opportunity to conduct any review, by or on behalf of the intended beneficiary
of the subject matter of the representation or warranty, whether before or after
the date of this Agreement, unless and to the extent that the reviewing party
and the other party expressly agree otherwise in writing.
Section 8.04. Stock Option Agreement. Concurrently with the execution
of this Agreement, German American and 1ST BANCORP are executing and delivering
a Stock Option Agreement that provides for the grant to German American of an
option to purchase up to 19.9% of the outstanding common stock of 1ST BANCORP
upon the occurrence of certain events that create the potential for another
party to acquire control of 1ST BANCORP. German American hereby agrees to make
all necessary filings with the SEC and the OTS or other governmental agencies in
connection with the receipt of such option from 1ST BANCORP.
Section 8.05. Entire Agreement. This Agreement constitutes the entire
agreement between the parties and supersedes and cancels any and all prior
discussions, negotiations, undertakings and agreements between the parties
relating to the subject matter hereof, including, without limitation, the Letter
of Intent dated June 15, 1998 of German American accepted by 1ST BANCORP.
Section 8.06. Headings and Captions. The captions of Articles and
Sections hereof are for convenience only and shall not control or affect the
meaning or construction of any of the provisions of this Agreement.
Section 8.07. Waiver, Amendment or Modification. The conditions of this
Agreement which may only be waived by written notice specifically waiving such
condition addressed to the party claiming the benefit of the waiver. The failure
of any party at any time or times to require performance of any provision hereof
shall in no manner affect the right of such party at a later time to enforce the
same. This Agreement may not be amended or modified except by a written document
duly executed by the parties hereto.
Section 8.08. Rules of Construction. Unless the context otherwise
requires (a) a term used herein has the meaning assigned to it, and (b) an
accounting term not otherwise defined has the meaning assigned to it in
accordance with generally accepted accounting principles.
Section 8.09. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original and all of which
shall be deemed one and the same instrument.
Section 8.10. Successors. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors.
Except for Sections 5.04, 5.10, 5.12, 5.13 and 5.14 of this Agreement (which are
intended to be for the benefit of present and former officers and directors and
their spouses, to the extent contemplated thereby, and their beneficiaries, and
may be enforced by such persons), there shall be no third party beneficiaries
hereof.
Section 8.11. Governing Law; Assignment. This Agreement shall be
governed by the laws of the State of Indiana. This Agreement may not be assigned
by any of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written, with the unanimous
approval of their respective Boards of Directors.
GERMAN AMERICAN BANCORP
By /s/ George W. Astrike
-------------------------------
George W. Astrike
Chairman of the Board and
Chief Executive Officer
<PAGE>
1ST BANCORP
By /s/ C. James McCormick
------------------------------
C. James McCormick
Chairman of the Board and
Chief Executive Officer
APPROVED BY THE MEMBERS OF THE BOARD OF DIRECTORS OF 1ST BANCORP:
The undersigned Directors of 1ST BANCORP hereby (a) agree in their capacities as
Directors of 1ST BANCORP to recommend to 1ST BANCORP's shareholders the approval
of this Agreement and the Merger in accordance with 4.03 hereof, and (b) agree
to vote their shares of 1ST BANCORP Common that are registered in their personal
names (and agree to use their best efforts to cause all additional shares of 1ST
BANCORP Common over which they have voting influence or control to be voted) in
favor of the Merger at the 1ST BANCORP Shareholders' Meeting. Notwithstanding
the foregoing, the execution of the Agreement by the undersigned Directors of
1ST BANCORP or anything herein to the contrary, German American hereby
understands and agrees, as evidenced by its execution of this Agreement above,
that none of the undersigned Directors of 1ST BANCORP will have any obligation
or liability under this Agreement or otherwise to German American or any other
person or entity, except as provided in the foregoing sentence and in Section
8.01 hereof.
/s/ R. William Ballard /s/ Ruth Mix Carnahan
- ----------------------------------- ----------------------------------
R. William Ballard Ruth Mix Carnahan
/s/ Frank Baracani /s/ C. James McCormick
- ----------------------------------- ----------------------------------
Frank Baracani C. James McCormick
/s/ Donald G. Bell /s/ Rahmi Soyugenc
- ----------------------------------- ----------------------------------
Donald G. Bell Rahmi Soyugenc
/s/ James W. Bobe /s/ Lynn Stenftenagel
- ----------------------------------- ----------------------------------
James W. Bobe Lynn Stenftenagel
/s/John J. Summers
----------------------------------
John J. Summers
<PAGE>
PLAN OF MERGER
by and between
1ST BANCORP
(an Indiana corporation)
and
GERMAN AMERICAN BANCORP
(an Indiana corporation)
APPENDIX A
<PAGE>
PLAN OF MERGER
THIS PLAN OF MERGER, made and entered into as of _________, 1998,
between 1ST BANCORP, an Indiana corporation ("1ST BANCORP"), and German American
Bancorp, an Indiana corporation ("German American").
W I T N E S S E T H:
WHEREAS, 1ST BANCORP and German American deem it advisable for 1ST
BANCORP to merge with and into German American pursuant to this Plan of Merger
in accordance with the IBCL (as defined in Section 1.01); and
WHEREAS, the Boards of Directors of the parties hereto have approved an
Agreement and Plan of Reorganization that was executed and delivered as of
August 5, 1998 between them (the "Agreement and Plan of Reorganization");
NOW, THEREFORE, the parties hereby agree as follows:
ARTICLE ONE
THE MERGER
Section 1.01. The Merger. Pursuant to the terms and provisions of this
Plan of Merger and the Indiana Business Corporation Law ("IBCL"), 1ST BANCORP
shall merge with and into German American (the "Merger"). The Merger shall be
effective at 12:01 a.m. on _______ , 1999, subject to the filing of this Plan of
Merger in the Office of the Indiana Secretary of State prior to such time (the
"Effective Time").
Section 1.02. Merging Corporation. 1ST BANCORP shall be the merging
corporation under the Merger and its corporate identity and existence, separate
and apart from German American, shall cease on consummation of the Merger.
Section 1.03. Surviving Corporation. German American shall be the
surviving corporation in the Merger and the Articles of Incorporation and Bylaws
of German American in effect prior to the Merger shall be the Articles of
Incorporation and Bylaws of the Surviving Corporation.
ARTICLE TWO
TERMS OF THE MERGER
AND CONVERSION OF SHARES
Section 2.01. Effect of the Merger. The Merger shall have all of the
effects provided by the IBCL.
<PAGE>
Section 2.02. Conversion of Shares. At the Effective Time:
(a) Each of the not more than ________ shares of common stock, no par
value, of 1ST BANCORP ("1ST BANCORP Common") that are issued and
outstanding immediately prior to the Effective Time shall thereupon and
without further action be converted into the right to receive ______
[Here insert the Exchange Ratio to be determined in accordance with the
Agreement and Plan of Reorganization.]shares of common stock, no par
value, of German American ("German American Common") (the "Merger
Consideration").
(b) The shares of German American Common issued and outstanding
immediately prior to the Effective Time shall continue to be issued and
outstanding shares of German American.
(c) If any holders of 1ST BANCORP Common dissent from the Merger and
demand dissenters' rights under the IBCL, any issued and outstanding
shares of 1ST BANCORP Common held by such dissenting holders shall not
be converted as described in Section 2.02(a) but shall from and after
the Effective Time represent only the right to receive such
consideration as may be determined to be due to such dissenting holders
pursuant to the IBCL; provided, however, that each share of 1ST BANCORP
Common outstanding immediately prior to the Effective Time and held by
a dissenting holder who shall, after the Effective Time, withdraw his
demand for dissenters' rights or lose his right to exercise dissenters'
rights shall have only such rights as provided under the IBCL.
<PAGE>
Section 2.03. Fractional Shares. No fractional shares of German
American Common shall be issued and, in lieu thereof, holders of shares of 1ST
BANCORP Common who would otherwise be entitled to a fractional share interest
(after taking into account all shares of 1ST BANCORP Common held by such holder)
shall be paid an amount in cash equal to the product of multiplying such
fractional share by $______. [Here insert the average of the highest bid and
lowest ask price of a share of German American Common as quoted on the NASDAQ
National Market System on the last day of the Valuation Period.]
Section 2.04. Exchange Procedures; Surrender of Certificates.
<PAGE>
(a) The Fifth Third Bank shall act as Exchange Agent in the
Merger (the "Exchange Agent").
(b) As soon as reasonably practicable but in no event more
than ten working days after the Effective Time, the Exchange Agent
shall mail to each record holder of any Certificate or Certificates
whose shares were converted into the right to receive the Merger
Consideration, a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon proper delivery of the Certificates
to the Exchange Agent and shall be in such form and have such other
provisions as German American may reasonably specify) (each such letter
the "Merger Letter of Transmittal") and instructions for use in
effecting the surrender of the Certificates in exchange for the Merger
Consideration. As soon as reasonably practical but in no event more
than ten days after surrender to the Exchange Agent of a Certificate,
together with a Merger Letter of Transmittal duly executed and any
other required documents, the Exchange Agent shall transmit to the
holder of such Certificate the Merger Consideration. No interest on the
Merger Consideration issuable upon the surrender of the Certificates
shall be paid or accrued for the benefit of holders of Certificates. If
the Merger Consideration is to be issued to a person other than a
person in whose name a surrendered Certificate is registered, it shall
be a condition of issuance that the surrendered Certificate shall be
properly endorsed or otherwise in proper form for transfer and that the
person requesting such issuance shall pay to the Exchange Agent any
required transfer or other taxes or establish to the satisfaction of
the Exchange Agent that such tax has been paid or is not applicable.
German American reserves the right in all cases to require that a
surety bond on terms and in an amount satisfactory to German American
be provided to German American at the reasonable expense of the 1ST
BANCORP shareholder in the event that such shareholder claims loss of a
Certificate and requests that German American waive the requirement for
surrender of such Certificate.
ARTICLE THREE
AMENDMENT; TERMINATION; ASSIGNMENT
Section 3.01. Amendment. At any time prior to the Effective Time, the
parties to this Plan of Merger by mutual written agreement authorized by their
respective Boards of Directors (and whether before or after the shareholders of
German American and 1ST BANCORP have approved and adopted this Plan of Merger)
may amend this Plan of Merger; provided, however, that if the shareholders of
1ST BANCORP have approved and adopted this Plan of Merger, any such amendment
shall not have a material adverse effect on the shareholders of 1ST BANCORP.
Section 3.02. Termination. This Plan of Merger may be terminated by the
parties hereto prior to the Effective Time under the circumstances provided in,
and strictly in accordance with, the provisions of the Agreement and Plan of
Reorganization.
Section 3.03. Successors and Assigns. This Plan of Merger and all of
the provisions hereof shall be binding upon and inure to the benefit of the
parties hereto and their respective successors but none of the provisions hereof
shall inure to the benefit of any other person, firm, or corporation whomsoever.
Neither this Plan of Merger nor any of the rights, interests, or obligations
hereunder shall be assigned by either of the parties hereto.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Plan of
Merger as of the day and year first above written.
1ST BANCORP
By
--------------------------------
C. James McCormick
Chairman of the Board and
Chief Executive Officer
GERMAN AMERICAN BANCORP
By
--------------------------------
George W. Astrike,
Chairman of the Board and
Chief Executive Officer
<PAGE>
APPENDIX B
GERMAN AMERICAN BANCORP
MEMO TO: Jim McCormick
FROM: George Astrike
DATE: July 27, 1998
SUBJECT: Director and Retiree Health Benefits Coverage
It is our understanding that 1ST BANCORP and its subsidiaries have no
contractual obligation to provide ongoing health benefits to any current or
former director and surviving spouses (excluding the obligation as outlined in
the agreement dated December 5, 1998 by and between Arthur L. Hart and First
Federal Bank). It is our further understanding that 1ST BANCORP and its
subsidiaries have no contractual obligation to provide post-retirement health
benefits to any current or former employees. Promptly after the signing of a
definitive agreement, appropriate disclosures will be provided to all such
directors and employees confirming these assumptions. Such disclosures will
clearly communicate to all parties that the right of 1ST BANCORP and its
subsidiaries to terminate or make modifications to any current health benefits
exists and that 1ST BANCORP and its subsidiaries have the right to terminate or
make further modifications to any such benefits without further obligation or
notice.
In consideration of the change from your Company's current practice of
paying the cost of health benefits for certain directors, former directors, and
retired employees, we agree, for a 36-month period from the effective time of
the merger, to the following financial consideration:
GROUP ONE: DIRECTORS ELIGIBLE FOR MEDICARE COVERAGE
Directors: Bell, Carnahan, McCormick and Summers
Payment: Will pay up to $200 per month ($2,400 annually) as
reimbursement of the Director's cost of obtaining Medicare and
Medicare supplemental insurance coverage.
(In the event any of the above named directors are rejected
for Medicare supplemental insurance coverage, GABC will pay
$250 per month for a three-year period from the date of our
merger transaction in lieu of the $200 monthly payment for
Medicare and Medicare supplement coverage).
GROUP TWO: DIRECTORS NOT ELIGIBLE FOR MEDICARE COVERAGE
Directors: Bobe and Soyugenc
<PAGE>
--
Payment: If Director is or becomes ineligible for any other
group medical plan, will pay up to $250 per month ($3,000
annually) as reimbursement of the Director's cost of obtaining
other insurance coverage.
GROUP THREE: ACTIVE EMPLOYEE DIRECTORS
Directors: Baracani and Stenftenagel
Payment: Not applicable. Coverage and Employee premiums will
be consistent to those provided and charged to other full-time
active employees.
GROUP FOUR: RETIRED EMPLOYEES ELIGIBLE FOR EARLY RETIREE
BENEFITS
Individuals: Ballard and Hamner
Payment: During the time the director/retired employee is
eligible for coverage as an early retiree under GABC's
standard health benefit plan, a payment of up to $250 per
month ($3,000 annually) as reimbursement of a portion of the
premium paid by the director/retired employee toward coverage
under GABC's health benefit plan. Upon the director/retired
employee's eligibility for Medicare coverage, the monthly
payment will be equal to that paid to Group One.
GROUP FIVE: FORMER DIRECTORS, SPOUSES OF FORMER DIRECTORS
AND CERTAIN RETIRED EMPLOYEES
Individuals: Long, McClure, Riley, Rutledge and Floyd
Payment: Will pay up to $200 per month ($2,400 annually) as
reimbursement of the individual's cost of obtaining Medicare
and Medicare supplemental insurance coverage.
GROUP SIX: RETIRED EMPLOYEE PAYING THEIR OWN PREMIUM
Individuals: Jones and Cunningham
Payment: Not Applicable. Cunningham will not be eligible to
participate in GABC's health benefit plan. Jones may be
eligible to participate in GABC's plan as an early retiree and
would be responsible for the full premium amount charged for
such coverage.
STOCK OPTION
AGREEMENT
THIS STOCK OPTION AGREEMENT (this "Agreement") is made and
entered into as of August 6, 1998, by and between 1ST BANCORP, an Indiana
corporation ("Issuer"), and GERMAN AMERICAN BANCORP, an Indiana corporation
("Grantee").
WHEREAS, Grantee and Issuer have entered into that certain
Agreement and Plan of Reorganization, dated as of August 5, 1998 (the "Merger
Agreement"), providing for, among other things, the merger of Issuer with and
into Grantee with Grantee as the surviving entity; and
WHEREAS, as a condition and inducement to Grantee's execution
of the Merger Agreement, Grantee has required that Issuer agree, and Issuer has
agreed, to grant Grantee the Option (as defined below);
NOW, THEREFORE, in consideration of the respective
representations, warranties, covenants and agreements set forth herein and in
the Merger Agreement, and intending to be legally bound hereby, Issuer and
Grantee agree as follows:
1 . DEFINED TERMS. Capitalized terms which are used but not defined
herein shall have the meanings ascribed to such terms in the Merger Agreement.
2. GRANT OF OPTION. Subject to the terms and conditions set forth
herein, Issuer hereby grants to Grantee an irrevocable option (the "Option") to
purchase up to 218,142 shares (as adjusted as set forth herein, the "Option
Shares," which shall include the Option Shares before and after any transfer of
such Option Shares) of common stock, $1.00 par value per share ("Issuer Common
Stock"), of Issuer at a purchase price per Option Share (subject to adjustment
as set forth herein, the "Purchase Price") equal to $50.94 provided, however,
that in no event shall the number of shares of Issuer Common Stock for which
this Option is exercisable exceed the lesser of (i) 19.9% of the lssuer's issued
and outstanding shares of Issuer Common Stock without giving effect to any
shares subject to or issued pursuant to the Option and (ii) that minimum number
of shares of Issuer Common Stock which when aggregated with any other shares of
Issuer Common Stock beneficially owned by Grantee or any Affiliate thereof would
cause the provisions of any Takeover Laws of the IBCL to be applicable to the
Merger or the Option.
3. EXERCISE OF OPTION.
<PAGE>
(a) Provided that (i) Grantee or Holder (as hereinafter defined), as
applicable, shall not be in material breach of its agreements or covenants
contained in this Agreement or the Merger Agreement, and (ii) no preliminary or
permanent injunction or other order against the delivery of shares covered by
the Option issued by any court of competent jurisdiction in the United States
shall be in effect, Holder may exercise the Option, in whole or in part, at any
time and from time to time following the occurrence of a Purchase Event and
prior to the termination of the Option. The Option shall terminate and be of no
further force and effect upon the earliest to occur of (A) the Effective Time,
(B) termination of the Merger Agreement in accordance with the terms thereof
prior to the occurrence of a Purchase Event or a Preliminary Purchase Event
(other than a termination of the Merger Agreement by Grantee pursuant to (i)
Section 7.02 thereof (but only if such termination was a result of a willful
breach by Issuer) or (ii) Section 7.05 thereof (but only if such termination was
as a result of the failure of the shareholders of Issuer to approve the Merger)
(each a "Default Termination")), (C) 18 months after a Default Termination, and
(D) 18 months after any termination of the Merger Agreement following the
occurrence of a Purchase Event or a Preliminary Purchase Event. Any purchase of
shares upon exercise of the Option shall be subject to compliance with
applicable law, including, without limitation, any required regulatory approvals
under the Bank Holding Company Act of 1956, as amended (the "BHC Act"), and the
Savings and Loan Holding Company Act. The term "Holder" shall mean the holder or
holders of the Option from time to time, and which initially is the Grantee. The
rights set forth in Section 8 shall terminate when the right to exercise the
Option terminates (other than as a result of a complete exercise of the Option)
as set forth herein.
(b) As used herein, a "Purchase Event" means any of the
following events subsequent to the date of this Agreement:
(i) without Grantee's prior written consent, Issuer
shall have authorized, recommended, publicly proposed or publicly
announced an intention to authorize, recommend or propose, or entered
into an agreement with any person (other than Grantee or any Subsidiary
of Grantee) to effect an Acquisition Transaction (as defined below). As
used herein, the term Acquisition Transaction shall mean (A) a merger,
consolidation or similar transaction involving Issuer, or any of its
Subsidiaries (other than transactions solely between Issuer's
Subsidiaries and transactions involving Issuer or any Subsidiary in
which the voting securities of Issuer outstanding immediately prior
thereto continue to represent (by either remaining outstanding or being
converted into securities of the surviving entity or the parent
thereof) at least 75% of the combined voting power of the voting
securities of the Issuer or the surviving entity or the parent thereof
outstanding immediately after the consummation of the transaction), (B)
the disposition, by sale, lease, exchange or otherwise, of Assets of
Issuer or any of its Subsidiaries representing in either case 20% or
more of the consolidated assets of Issuer and its Subsidiaries, or (C)
the issuance, sale or other disposition of (including by way of merger,
consolidation, share exchange or any similar transaction) securities
representing 20% or more of the voting power of Issuer or any of its
Subsidiaries (any of the foregoing, an "Acquisition Transaction"); or
(ii) any person (other than Grantee or any Subsidiary
of Grantee) shall have acquired beneficial ownership (as such term is
defined in Rule 13d-3 promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act")), of or the right to acquire
beneficial ownership of, or any "group" (as such term is defined under
the Exchange Act), other than a group of which Grantee or any of its
Subsidiaries is a member, shall have been formed which beneficially
owns or has the right to acquire beneficial ownership of, 20% or more
of the then-outstanding shares of Issuer Common Stock,
(c) As used herein, a "Preliminary Purchase Event" means any
of the following events:
(i) any person (other than Grantee or any Subsidiary
of Grantee) shall have commenced (as such term is defined in Rule 14d-2
under the Exchange Act), or shall have filed a registration statement
under the Securities Act of 1933, as amended (the "Securities Act")
with respect to, a tender offer or exchange offer to purchase any
shares of Issuer Common Stock such that, upon consummation of such
offer, such person would own or control 20% or more of the
then-outstanding shares of Issuer Common Stock (such an offer being
referred to herein as a "Tender Offer" or an "Exchange Offer,"
respectively); or
(ii) the holders of Issuer Common Stock shall not
have approved the Merger Agreement at the meeting of such stockholders
held for the purpose of voting on the Merger Agreement, such meeting
shall not have been held or shall have been canceled prior to
termination of the Merger Agreement, or Issuer's Board of Directors
shall have withdrawn or modified in a manner adverse to Grantee the
recommendation of Issuer's Board of Directors with respect to the
Merger Agreement, in each case after it shall have been publicly
announced that any person (other than Grantee or any Subsidiary of
Grantee) shall have (A) made a proposal to engage in an Acquisition
Transaction, (B) commenced a Tender Offer or filed a registration
statement under the Securities Act with respect to an Exchange Offer,
or (C) filed an application (or given a notice), whether in draft or
final form, under any federal or state statute or regulation (including
a notice filed under the HSR Act and an application, or notice filed
under the BHC Act, the Bank Merger Act, or the Change in Bank Control
Act of 1978) seeking the Consent to an Acquisition Transaction from any
federal or state governmental or regulatory authority or agency.
As used in this Agreement, "person" shall have the meaning specified in
Sections 3(a)(9) and 13(d)(3) of the Exchange Act.
(d) In the event Holder wishes to exercise the Option, it
shall send to Issuer a written notice (the date of which being herein referred
to as the "Notice Date") specifying (i) the total number of Option Shares it
intends to purchase pursuant to such exercise and (ii) a place and date not
earlier than three business days nor later than 30 business days from the Notice
Date for the closing (the "Closing") of such purchase (the "Closing Date"). If
prior Consent of any governmental or regulatory agency or authority is required
in connection with such purchase, Issuer shall cooperate with Holder in the
filing of the required notice or application for such Consent and the obtaining
of such Consent and the Closing shall occur immediately following receipt of
such Consents (and expiration of any mandatory waiting periods).
4. PAYMENT AND DELIVERY OF CERTIFICATES.
(a) On each Closing Date, Holder shall (i) pay to Issuer, in
immediately available funds by wire transfer to a bank account designated by
Issuer, an amount equal to the Purchase Price multiplied by the number of Option
Shares to be purchased on such Closing Date, and (ii) present and surrender this
Agreement to the Issuer at the address of the Issuer specified in Section 13(f)
hereof.
(b) At each Closing, simultaneously with the delivery of
immediately available funds and surrender of this Agreement as provided in
Section 4(a), (i) Issuer shall deliver to Holder (A) a certificate or
certificates representing the Option Shares to be purchased at such Closing,
which Option Shares shall be free and clear of all liens, claims, charges and
encumbrances of any kind whatsoever and subject to no pre-emptive rights, and
(B) if the Option is exercised in part only, an executed new agreement with the
same terms as this Agreement evidencing the right to purchase the balance of the
shares of Issuer Common Stock purchasable hereunder, and (ii) Holder shall
deliver to Issuer a letter agreeing that Holder shall not offer to sell or
otherwise dispose of such Option Shares in violation of applicable federal and
state law or of the provisions of this Agreement.
(c) In addition to any other legend that is required by
applicable law, certificates for the Option Shares delivered at each Closing
shall be endorsed with a restrictive legend which shall read substantially as
follows:
THE TRANSFER OF THE STOCK REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO
RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
PURSUANT TO THE TERMS OF A STOCK OPTION AGREEMENT DATED AS OF AUGUST 5,
1998. A COPY OF SUCH AGREEMENT WILL BE PROVIDED TO THE HOLDER HEREOF
WITHOUT CHARGE UPON RECEIPT BY THE ISSUER OF A WRITTEN REQUEST
THEREFOR.
It is understood and agreed that: (i) the references in the above legend to
resale restrictions of the Securities Act shall be removed by delivery of
substitute certificate(s) without such reference if Holder shall have delivered
to Issuer a copy of a letter from the staff of the SEC, or an opinion of counsel
in form and substance reasonably satisfactory to Issuer and its counsel, to the
effect that such legend is not required for purposes of the Securities Act: (ii)
the references in the above legend to the provisions of this Agreement shall be
removed by delivery of substitute certificate(s) without such reference if the
shares have been sold or transferred in compliance with the provisions of this
Agreement and under circumstances that do not require the retention of such
reference; and (iii) the legend shall be removed in its entirety if the
conditions in the preceding clauses (i) and (ii) are both satisfied.
5. REPRESENTATIONS AND WARRANTIES OF ISSUER. Issuer hereby represents
and warrants to Grantee as follows:
(a) Issuer has all requisite corporate power and authority to
enter into this Agreement and, subject to any approvals referred to herein, to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of Issuer.
This Agreement has been duly executed and delivered by Issuer.
<PAGE>
(b) Issuer has taken all necessary corporate action to
authorize and reserve and to permit it to issue, and, at all times from the date
hereof until the obligation to deliver Issuer Common Stock upon the exercise of
the Option terminates, will have reserved for issuance, upon exercise of the
Option, the number of shares of Issuer Common Stock necessary for Holder to
exercise the Option, and Issuer will take all necessary corporate action, to
authorize and reserve for issuance all additional shares of Issuer Common Stock
or other securities which may be issued pursuant to Section 7 upon exercise of
the Option. The shares of Issuer Common Stock to be issued upon due exercise of
the Option, including all additional Shares of Issuer Common Stock or other
securities which may be issuable pursuant to Section 7, upon issuance pursuant
hereto, shall be duly and validly issued, fully paid, and nonassessable, and
shall be delivered free and clear of all liens, claims, charges, and
encumbrances of any kind or nature whatsoever, including any preemptive rights
of any stockholder of Issuer.
(c) Issuer has taken all action so that the entering into of
this Agreement and the consummation of the transactions contemplated by this
Agreement do not and will not result in the grant of any rights to any Person
under the Articles of Incorporation, Bylaws, or other governing instruments of
Issuer or any of its subsidiaries or restrict or impair the ability of Grantee
to vote, or otherwise to exercise the rights of a stockholder with respect to,
shares of Issuer or any of its subsidiaries that may be directly or indirectly
acquired or controlled by it.
6. REPRESENTATIONS AND WARRANTIES OF GRANTEE. Grantee hereby represents
and warrants to Issuer that:
(a) Grantee has all requisite corporate power and authority to
enter into this Agreement and, subject to any approvals or consents referred to
herein, to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the part
of Grantee. This Agreement has been duly executed and delivered by Grantee.
(b) This Option is not being, and any Option Shares or other
securities acquired by Grantee upon exercise of the Option will not be, acquired
with a view to the public distribution thereof and will not be transferred or
otherwise disposed of except in a transaction registered or exempt from
registration under any applicable securities laws.
(c) Grantee has taken all necessary action to exempt the
transactions contemplated by this Agreement from any applicable Takeover Laws.
7. ADJUSTMENT UPON CHANGES IN CAPITALIZATION, ETC.
(a) In the event of any change in Issuer Common Stock by
reason of a stock dividend, stock split, split-up, recapitalization,
combination, exchange of shares or similar transaction, the type and number of
shares or securities subject to the Option, and the Purchase Price therefor,
shall be adjusted appropriately, and proper provision shall be made in the
agreements governing such transaction, if any, so that Holder shall receive,
upon exercise of the Option, the number and class of shares or other securities
or property that Holder would have received in respect of Issuer Common Stock if
the Option had been exercised immediately prior to such event, or the record
date therefor, as applicable. If any additional shares of Issuer Common Stock
are issued after the date of this Agreement (other than pursuant to an event
described in the first sentence of this Section 7(a) or pursuant to this
Option), the number of shares of Issuer Common Stock subject to the Option shall
be adjusted so that, after such issuance, it, together with any shares of Issuer
Common Stock previously issued pursuant hereto, shall not exceed the lesser of
(i) 19.9% of the number of shares of Issuer Common Stock then issued and
outstanding, without giving effect to any shares subject to or issued pursuant
to the Option and (ii) that minimum number of shares of Issuer Common Stock,
which when aggregated with any other shares of Issuer Common Stock beneficially
owned by Grantee or any Affiliate thereof would cause the provisions of any
Takeover Laws of the IBCL to be applicable to the Merger or the Option.
(b) In the event that Issuer shall enter in an agreement (i)
to consolidate with or merge into any person, other than Grantee or one of its
Subsidiaries, and shall not be the continuing or surviving corporation of such
consolidation or merger; (ii) to permit any person, other than Grantee or one of
its Subsidiaries, to merge into Issuer and Issuer shall be the continuing or
surviving corporation, but, in connection with such merger, the then outstanding
shares of Issuer Common Stock shall be changed into or exchanged for stock or
other securities of Issuer or any other person or cash or any other property and
the outstanding shares of Issuer Common Stock immediately prior to such merger
shall after such merger represent less than 50% of the outstanding shares and
share equivalents of the merged company; or (iii) to sell or otherwise transfer
all or substantially all of its assets to any person, other than Grantee or one
of its Subsidiaries, then, and in each such case, the agreement governing such
transaction shall make proper provisions so that the Option shall, upon the
consummation of any such transaction and upon the terms and conditions set forth
herein, be converted into, or exchanged for, an option (the "Substitute
Option"), at the election of Grantee, of either (x) the Acquiring Corporation
(as defined below) or (y) any person that controls the Acquiring Corporation (in
each case, such person being referred to as the "Substitute Option Issuer").
(c) The Substitute Option shall have the same terms as the
Option, provided that, if the terms of the Substitute Option cannot, for legal
reasons, be the same as the Option, such terms shall be as similar as possible
and in no event less advantageous to Grantee. The Substitute Option Issuer shall
also enter into an agreement with the then holder or holders of the Substitute
Option in substantially the same form as this Agreement, which shall be
applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such number
of shares of the Substitute Common Stock (as hereinafter defined) as is equal to
the Assigned Value (as hereinafter defined) multiplied by the number of shares
of the Issuer Common Stock for which the Option was theretofore exercisable,
divided by the Average Price (as hereinafter defined). The exercise price of the
Substitute Option per share of the Substitute Common Stock (the "Substitute
Purchase Price") shall then be equal to the Purchase Price, multiplied by a
fraction in which the numerator is the number of shares of the Issuer Common
Stock for which the Option was theretofore exercisable and the denominator is
the number of shares for which the Substitute Option is exercisable.
(e) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (x) the continuing or
surviving corporation of a consolidation or merger with Issuer (if
other than Issuer), (y) Issuer in a merger in which Issuer is the
continuing or surviving person, and (z) the transferee of all or any
substantial part of the Issuer's assets (or the assets of its
Subsidiaries).
(ii) "Substitute Common Stock" shall mean the common
stock issued by the Substitute Option Issuer upon exercise of the
Substitute Option.
(iii) "Assigned Value" shall mean the highest of (x)
the price per share of the Issuer Common Stock at which a Tender Offer
or Exchange Offer therefor has been made by any person (other than
Grantee), (y) the price per share of the Issuer Common Stock to be paid
by any person (other than the Grantee) pursuant to an agreement with
Issuer, and (z) the highest last sale price per share of Issuer Common
Stock quoted on the Nasdaq National Market (or if Issuer Common Stock
is not quoted on such exchange, the highest bid price per share on any
day as quoted on the principal trading market or securities exchange on
which such shares are traded as reported by a recognized source chosen
by Grantee) within the six-month period immediately preceding the
agreement; provided, that in the event of a sale of less than all of
Issuer's assets, the Assigned Value shall be the sum of the price paid
in such sale for such assets and the current market value of the
remaining assets of Issuer as determined by a nationally recognized
investment banking firm selected by Grantee (or by a majority in
interest of the Grantees if there shall be more than one Grantee (a
"Grantee Majority")) and reasonably acceptable to Issuer, divided by
the number of shares of the Issuer Common Stock outstanding at the time
of such sale. In the event that an exchange offer is made for the
Issuer Common Stock or an agreement is entered into for a merger or
consolidation involving consideration other than cash, the value of the
securities or other property issuable or deliverable in exchange for
the Issuer Common Stock shall be determined by a nationally recognized
investment banking firm selected by Grantee and reasonably acceptable
to Issuer (or if applicable, Acquiring Corporation). (If there shall be
more than one Grantee, any such selection shall be made by a Grantee
Majority.)
(iv) "Average Price" shall mean the average closing
price of a share of the Substitute Common Stock for the one year
immediately preceding the consolidation, merger or sale in question,
but in no event higher than the last sale price of the shares of the
Substitute Common Stock on the day preceding such consolidation, merger
or sale; provided that if Issuer is the issuer of the Substitute
Option, the Average Price shall be computed with respect to a share of
common stock issued by Issuer, the person merging into Issuer or by any
company which controls or is controlled by such merger person, as
Grantee may elect.
(f) In no event pursuant to any of the foregoing paragraphs
shall the Substitute Option be exercisable for more than 19.9% of the aggregate
of the shares of the Substitute Common Stock outstanding prior to exercise of
the Substitute Option. In the event that the Substitute Option would be
exercisable for more than 19.9% of the aggregate of the shares of Substitute
Common Stock but for this clause (f), the Substitute Option Issuer shall make a
cash payment to Grantee equal to the excess of (i) the value of the Substitute
Option without giving effect to the limitation in this clause (f) over (ii) the
value of the Substitute Option after giving effect to the limitation in this
clause (f). This difference in value shall be determined by a nationally
recognized investment banking firm selected by Grantee (or a Grantee Majority)
and reasonably acceptable to the Acquiring Corporation.
(g) Issuer shall not enter into any transaction described in
subsection (b) of this Section 7 unless the Acquiring Corporation and any person
that controls the Acquiring Corporation assume in writing all the obligations of
Issuer hereunder and take all other actions that may be necessary so that the
provisions of this Section 7 are given full force and effect (including, without
limitation, any action that may be necessary so that the shares of Substitute
Common Stock are in no way distinguishable from or have lesser economic value
than other shares of common stock issued by the Substitute Option Issuer).
(h) The provisions of Sections 8, 9, 10, and 11 shall apply,
with appropriate adjustments, to any securities for which the Option becomes
exercisable pursuant to this Section 7 and, as applicable, references in such
sections to "Issuer," "Option," "Purchase Price" and "Issuer Common Stock" shall
be deemed to be references to "Substitute Option Issuer," "Substitute Option,"
"Substitute Purchase Price" and "Substitute Common Stock," respectively.
8. REPURCHASE AT THE OPTION OF HOLDER.
(a) Subject to the last sentence of Section 3(a), at the
request of Holder at any time commencing upon the first occurrence of a
Repurchase Event (as defined in Section 8(d)) and ending 18 months immediately
thereafter, Issuer shall repurchase from Holder the Option and all shares of
Issuer Common Stock purchased by Holder pursuant hereto with respect to which
Holder then has beneficial ownership. The date on which Holder exercises its
rights under this Section 8 is referred to as the "Request Date." Such
repurchase shall be at an aggregate price (the "Section 8 Repurchase
Consideration") equal to the sum of:
(i) the aggregate Purchase Price paid by Holder for
any shares of Issuer Common Stock acquired by Holder pursuant to the
Option with respect to which Holder then has beneficial ownership;
(ii) the excess, if any, of (x) the Applicable Price
(as defined below) for each share of Issuer Common Stock over (y) the
Purchase Price (subject to adjustment pursuant to Section 7),
multiplied by the number of shares of Issuer Common Stock with respect
to which the Option has not been exercised; and
(iii) the excess, if any, of the Applicable Price
over the Purchase Price (subject to adjustment pursuant to Section 7)
paid (or, in the case of Option Shares with respect to which the Option
has been exercised but the Closing Date has not occurred, payable) by
Holder for each share of Issuer Common Stock with respect to which the
Option has been exercised and with respect to which Holder then has
beneficial ownership, multiplied by the number of such shares.
(b) If Holder exercises its rights under this Section 8,
Issuer shall, within ten business days after the Request Date, pay the Section 8
Repurchase Consideration to Holder in immediately available funds, and
contemporaneously with such payment Holder shall surrender to Issuer the Option
and the certificates evidencing the shares of' Issuer Common Stock purchased
thereunder with respect to which Holder then has beneficial ownership, and
Holder shall warrant that it has sole record and beneficial ownership of such
shares and that the same are then free and clear of all liens, claims, charges
and encumbrances of any kind whatsoever. Notwithstanding the foregoing, to the
extent that prior notification to or Consent of any governmental or regulatory
agency or authority is required in connection with the payment of all or any
portion of the Section 8 Repurchase Consideration, Holder shall have the ongoing
option to revoke its request for repurchase pursuant to Section 8, in whole or
in part, or to require that Issuer deliver from time to time that portion of the
Section 8 Repurchase Consideration that it is not then so prohibited from paying
and promptly file the required notice or application for Consent and
expeditiously process the same (and each party shall cooperate with the other in
the filing of any such notice or application and the obtaining of any such
Consent). If any governmental or regulatory agency or authority disapproves of
any part of Issuer's proposed repurchase pursuant to this Section 8, Issuer
shall promptly give notice of such fact to Holder. If any governmental or
regulatory agency or authority prohibits the repurchase in part but not in
whole, then Holder shall have the right (i) to revoke the repurchase request or
(ii) to the extent permitted by such agency or authority, determine whether the
repurchase should apply to the Option and/or Option Shares and to what extent to
each, and Holder shall thereupon have the right to exercise the Option as to the
number of Option Shares for which the Option was exercisable at the Request Date
less the sum of the number of shares covered by the Option in respect of which
payment has been made pursuant to Section 8(a)(ii) and the number of shares
covered by the portion of the Option (if any) that has been repurchased. Holder
shall notify Issuer of its determination under the preceding sentence within
five business days of receipt of notice of disapproval of the repurchase.
Notwithstanding anything herein to the contrary, all of Holder's rights
under this Section 8 shall terminate on the date of termination of this Option
pursuant to Section 3(a).
(c) For purposes of this Agreement, the "Applicable Price"
means the highest of (i) the highest price per share of Issuer Common Stock paid
for any such share by the person or groups described in Section 8(d)(i), (ii)
the price per share of Issuer Common Stock received by holders of Issuer Common
Stock in connection with any merger or other business combination transaction
described in Section 7(b)(i), 7(b)(ii) or 7(b)(iii), or (iii) the highest last
sale price per share of Issuer Common Stock quoted on the Nasdaq National Market
(or if Issuer Common Stock is not quoted on such exchange, the highest bid price
per share as quoted on the principal trading market or securities exchange on
which such shares are traded as reported by a recognized source chosen by
Holder) during the 60 business days preceding the Request Date; provided,
however, that in the event of a sale of less than all of Issuer's Assets, the
Applicable Price shall be the sum of the price paid in such sale for such assets
and the current market value of the remaining assets of Issuer as determined by
an independent nationally recognized investment banking firm selected by Holder
and reasonably acceptable to Issuer (which determination shall be conclusive for
all purposes of this Agreement), divided by the number of shares of the Issuer
Common Stock outstanding at the time of such sale. If the consideration to be
offered, paid or received pursuant to either of the foregoing clauses (i) or
(ii) shall be other than in cash, the value of such consideration shall be
determined in good faith by an independent nationally recognized investment
banking firm selected by Holder and reasonably acceptable to Issuer, which
determination shall be conclusive for all purposes of this Agreement.
(d) As used herein, a "Repurchase Event" shall occur if (i)
any person (other than Grantee or any subsidiary of Grantee) shall have acquired
beneficial ownership (as such term is defined in Rule 13d-3 promulgated under
the Exchange Act), or the right to acquire beneficial ownership, or any "group"
(as such term is defined under the Exchange Act) shall have been formed which
beneficially owns or has the right to acquire beneficial ownership of 50% or
more of the then-outstanding shares of Issuer Common Stock, or (ii) any of the
transactions described in Section 7(b)(i), 7(b)(ii), or 7(iii) shall be
consummated.
9. REGISTRATION RIGHTS.
(a) Issuer shall, subject to the conditions of subparagraph
(c) below, if requested by any Holder, including Grantee and any permitted
transferee ("Selling Holder"), as expeditiously as possible prepare and file a
registration statement under the Securities Laws if necessary in order to permit
the sale or other disposition of any or all shares of Issuer Common Stock or
other securities that have been acquired by or are issuable to Selling Holder
upon exercise of the Option in accordance with the intended method of sale or
other disposition stated by Holder in such request (it being understood and
agreed that any such sale or other disposition shall be effected on a widely
distributed basis so that, upon consummation thereof, no purchaser or transferee
shall beneficially own more than 5% of the shares of Issuer Common Stock then
outstanding), including, without limitation, a "shelf" registration statement
under Rule 415 under the Securities Act or any successor provision, and Issuer
shall use its best efforts to qualify such shares or other securities for sale
under any applicable state securities laws. Each such Holder shall provide all
information reasonably requested by Issuer for inclusion in any registration
statement to be filed hereunder.
(b) If Issuer at any time after the exercise of the Option,
but prior to the termination of the Option, proposes to register any shares of
Issuer Common Stock under the Securities Laws in connection with an underwritten
public offering of such Issuer Common Stock, Issuer will promptly give written
notice to Holder of its intention to do so and, upon the written request of
Holder given within 30 days after receipt of any such notice (which request
shall specify the number of shares of Issuer Common Stock intended to be
included in such underwritten public offering by Selling Holder), Issuer will
use all reasonable efforts to cause all such shares, the holders of which shall
have requested participation in such registration, to be so registered and
included in such underwritten public offering; provided, that Issuer may elect
to not cause any such shares to be so registered (i) if the underwriters in good
faith determine that the inclusion of such shares would interfere with the
successful marketing of the shares of Issuer Common Stock for the account of
Issuer, or (ii) in the case of a registration solely to implement a dividend
reinvestment or similar plan, an employee benefit plan or a registration filed
on Form S-4 or any successor form, or a registration filed on a form which does
not permit registrations of resales; provided, further, that such election
pursuant to clause (i) may only be made once. If some but not all the shares of
Issuer Common Stock, with respect to which Issuer shall have received requests
for registration pursuant to this subparagraph (b), shall be excluded from such
registration, Issuer shall make appropriate allocation of shares to be
registered among Selling Holders and any other person (other than Issuer or any
person exercising demand registration rights in connection with such
registration) who or which is permitted to register their shares of Issuer
Common Stock in connection with such registration pro rata in the proportion
that the number of shares requested to be registered by each Selling Holder
bears to the total number of shares requested to be registered by all persons
then desiring to have Issuer Common Stock registered for sale (other than Issuer
or any person exercising demand registration rights in connection with such
registration).
(c) Issuer shall use all reasonable efforts to cause the
registration statement referred to in subparagraph (a) above to become effective
and to obtain all consents or waivers of other parties which are required
therefor and to keep such registration statement effective, provided, that
Issuer may delay any registration of Option Shares required pursuant to
subparagraph (a) above for a period not exceeding 90 days, provided Issuer shall
in good faith determine that any such registration would adversely affect an
offerings, or contemplated offering of other securities by Issuer.
Notwithstanding anything to the contrary contained herein, Issuer shall not be
required to register Option Shares under the Securities Laws pursuant to
subparagraph (a) above:
(i) prior to the occurrence of a Purchase Event and
following the termination of the Option;
(ii) more than twice;
(iii) within 90 days after the effective date of a
registration referred to in subparagraph (b) above pursuant to which
the Selling Holders concerned were afforded the opportunity to register
such shares under the Securities Laws and such shares were registered
as requested; and
(iv) unless a request therefor is made to Issuer by
Selling Holders holding at least 15% or more of the aggregate number of
Option Shares then outstanding or the right to acquire at least 15% of
the Option Shares.
In addition to the foregoing, Issuer shall not be required to
maintain the effectiveness of any registration statement after the expiration of
120 days from the effective date of such registration statement. Issuer shall
use all reasonable efforts to make any filings, and take all steps, under all
applicable state securities laws to the extent necessary to permit the sale or
other disposition of the Option Shares so registered in accordance with the
intended method of distribution for such shares, provided, that Issuer shall not
be required to consent to general jurisdiction or qualify to do business in any
state where it is not otherwise required to so consent to such jurisdiction or
to so qualify to do business.
(d) Except where applicable state law prohibits such payments,
Issuer will pay all expenses (including without limitation registration fees,
qualification fees, blue sky fees and expenses (including the fees and expenses
of Issuer's counsel), accounting expenses, printing expenses, expenses of
underwriters, excluding discounts and commissions but including liability
insurance if Issuer so desires or the underwriters so require, and the
reasonable fees and expenses of any necessary special experts) in connection
with each registration pursuant to subparagraph (a) or (b) above (including the
related offerings and sales by Selling Holders) and all other qualifications,
notifications or exemptions pursuant to subparagraph (a) or (b) above.
Underwriting discounts and commissions relating to Option Shares and any other
expenses incurred by such Selling Holders in connection with any such
registration (including expenses of Selling Holders' counsel) shall be borne by
such Selling Holders.
(e) In connection with any registration under subparagraph (a)
or (b) above Issuer hereby agrees to indemnify the Selling Holders, and each
underwriter thereof, including each person, if any, who controls such holder or
underwriter within the meaning of Section 15 of the Securities Act, against all
expenses, losses, claims, damages and liabilities caused by any untrue statement
of a material fact contained in any registration statement or prospectus
(including any amendments or supplements thereto) or any preliminary prospectus,
or caused by any omission to state therein 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, except insofar as such
expenses, losses, claims, damages or liabilities of such indemnified party are
caused by any untrue statement or alleged untrue statement or any omission or
alleged omission made in reliance upon and in conformity with, information
furnished in writing to Issuer by such indemnified party expressly for use
therein, and Issuer and each officer, director and controlling person of Issuer
shall be indemnified by such Selling Holder, or by such underwriter, as the case
may be, for all such expenses, losses, claims, damages and liabilities caused by
any untrue, or alleged untrue, statement or omission made in reliance upon, and
in conformity with, information furnished in writing to Issuer by such holder or
such underwriter, as the case may be, expressly for such use.
Promptly upon receipt by a party indemnified under this
subparagraph (e) of notice of the commencement of any action against such
indemnified party in respect of which indemnity or reimbursement may be sought
against any indemnifying party under this subparagraph (e), such indemnified
party shall notify the indemnifying party in writing of the commencement of such
action, but the failure so to notify the indemnifying party shall not relieve it
of any liability which it may otherwise have to any indemnified party under this
subparagraph (e), except to the extent such failure to notify materially
prejudices the indemnifying party. In case notice of commencement of any such
action shall be given to the indemnifying party as above provided, the
indemnifying party shall be entitled to participate in and, to the extent it may
wish, jointly with any other indemnifying party similarly notified, to assume
the defense of such action at its own expense, with counsel chosen by it and
reasonably satisfactory to such indemnified party. The indemnified party shall
have the right to employ separate counsel in any such action and participate in
the defense thereof, but the fees and expenses of such counsel (other than
reasonable costs of investigation) shall be paid by the indemnified party unless
(i) the indemnifying party either agrees to pay the same, (ii) the indemnifying
party falls to assume the defense of such action with counsel satisfactory to
the indemnified party, or (iii) the indemnified party has been advised by
counsel that one or more legal defenses may be available to the indemnifying
party that may be contrary to the interest of the indemnified party, in which
case the indemnifying party shall be entitled to assume the defense of such
action notwithstanding its obligation to bear fees and expenses of such counsel;
provided, however, that the indemnifying party shall not be liable for the
expenses of more than one firm of counsel for all indemnified parties in any
jurisdiction. No indemnifying party shall be liable for any settlement entered
into without its consent, which consent may not be unreasonably withheld
If the indemnification provided for in this subparagraph (e) is
unavailable to a party otherwise entitled to be indemnified in respect of any
expenses, losses, claims, damages or liabilities referred to herein, then the
indemnifying party, in lieu of indemnifying such party otherwise entitled to be
indemnified, shall contribute to the amount paid or payable by such party to be
indemnified as a result of such expenses, losses, claims, damages or liabilities
in such proportion as is appropriate to reflect the relative benefits received
by issuer, all Selling Holders and the underwriters from the offering of the
securities and also the relative fault of Issuer, all Selling Holders and the
underwriters in connection with the statements or omissions which resulted in
such expenses, losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The amount paid or payable by a party as a
result of the expenses, losses, claims, damages and liabilities referred to
above shall be deemed to include any legal or other fees or expenses reasonably
incurred by such party in connection with investigating or defending any action
or claim; provided, that in no case shall any Selling Holder be responsible, in
the aggregate, for any amount in excess of the net offering proceeds
attributable to its Option Shares included in the offering. No person guilty of
fraudulent misrepresentation (within the meaning of Section 1 (f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. Any obligation by any holder to
indemnify shall be several and not joint with other holders.
In connection with any registration pursuant to subparagraph
(a) or (b) above, Issuer and each Selling Holder (other than Grantee) shall
enter into an agreement containing the indemnification provisions of this
subparagraph (e).
(f) Issuer shall use its best efforts to comply with all
reporting requirements and will do all such other things as may be necessary to
permit the expeditious sale at any time of any Option Shares by Holder in
accordance with and to the extent permitted by any rule or regulation
promulgated by the SEC from time to time, including, without limitation, Rules
144 and 144A.
(g) Issuer will pay all stamp taxes in connection with the
issuance and the sale of the Option Shares and in connection with the exercise
of the Option, and will save Holder harmless, without limitation as to time,
against any and all liabilities, with respect to all such taxes.
10. QUOTATION; LISTING. If Issuer Common Stock or any other securities
to be acquired upon exercise of the Option are then authorized for quotation or
trading or listing on any securities exchange or any automated quotations system
maintained by a self-regulatory organization, Issuer, upon the request of
Holder, will promptly file an application, if required, to authorize for
quotation or trading or listing the shares of Issuer Common Stock or other
securities to be acquired upon exercise of the Option on the securities exchange
or any automated quotations system maintained by a self-regulatory organization
and will use its best efforts to obtain approval, if required, of such quotation
or listing as soon as practicable.
11. DIVISION OF OPTION. This Agreement (and the Option granted hereby)
are exchangeable, without expense, at the option of Holder, upon presentation
and surrender of this Agreement at the principal office of Issuer for other
Agreements providing for Options of different denominations entitling the holder
thereof to purchase in the aggregate the same number of shares of Issuer Common
Stock purchasable hereunder. The terms "Agreement" and "Option" as used herein
include any other Agreements and related Options for which this Agreement (and
the Option granted hereby) may be exchanged. Upon receipt by Issuer of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation of
this Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like
tenor and date. Any such new Agreement executed and delivered shall constitute
an additional contractual obligation on the part of Issuer, whether or not the
Agreement so lost, stolen, destroyed or mutilated shall at any time be
enforceable by anyone.
12. MISCELLANEOUS.
(a) EXPENSES. Except as otherwise provided in Section 9, each
of the parties hereto shall bear and pay all costs and expenses incurred by it
or on its behalf in connection with the transactions contemplated hereunder,
including fees and expenses of its own financial consultants, investment
bankers, accountants and counsel.
(b) WAIVER AND AMENDMENT. Any provision oft his Agreement may
be waived at any time by the party that is entitled to the benefits of such
provision. This Agreement may not be modified, amended, altered or supplemented
except upon the execution and delivery of a written agreement executed by the
parties hereto.
<PAGE>
(c) ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARY;
SEVERABILITY. This Agreement, together with the Merger Agreement and the other
documents and instruments referred to herein and therein, between Grantee and
Issuer (a) constitutes the entire agreement and supersedes all prior agreements
and understandings, both written and oral, between the parties with respect to
the subject matter hereof and (b) is not intended to confer upon any person
other than the parties hereto (other than any transferees of the Option Shares
or any permitted transferee of this Agreement pursuant to Section 12(h) and
other than as provided in the Merger Agreement) any rights or remedies
hereunder. If any term, provision, covenant or restriction of this Agreement is
held by a court of competent jurisdiction or a federal or state governmental or
regulatory agency or authority to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions of this Agreement
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated. If for any reason such court or regulatory agency determines
that the Option does not permit Holder to acquire, or does not require Issuer to
repurchase, the full number of shares of Issuer Common Stock as provided in
Sections 3 and 8 (as adjusted pursuant to Section 7), it is the express
intention of Issuer to allow Holder to acquire or to require Issuer to
repurchase such lesser number of shares as may be permissible without any
amendment or modification hereof.
(d) GOVERNING LAW. This Agreement shall be governed and
construed in accordance with the laws of the State of Indiana without regard to
any applicable conflicts of law rules.
(e) DESCRIPTIVE HEADINGS. The descriptive headings contained
herein are for convenience of reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
(f) NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
telecopied (with confirmation) or mailed by registered or certified mail (return
receipt requested) to the parties at the addresses set forth in the Merger
Agreement (or at such other address for a party as shall be specified by like
notice).
(g) COUNTERPARTS. This Agreement and any amendments hereto may
be executed in two counterparts, each of which shall be considered one and the
same agreement and shall become effective when both counterparts have been
signed, it being understood that both parties need not sign the same
counterpart.
(h) ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder or under the Option shall be assigned by any
of the parties hereto (whether by operation of law or otherwise) without the
prior written consent of the other party, except that Grantee may assign this
Agreement to a wholly owned Subsidiary of Grantee and Grantee may assign its
rights hereunder in whole or in part after the occurrence of a Purchase Event.
Subject to the preceding sentence, this Agreement shall be binding upon, inure
to the benefit of and be enforceable by the parties and their respective
successors and assigns.
(i) FURTHER ASSURANCES. In the event of any exercise of the
Option by Holder, Issuer and Holder shall execute and deliver all other
documents and instruments and take all other action that may be reasonably
necessary in order to consummate the transactions provided for by such exercise.
(j) SPECIFIC PERFORMANCE. The parties hereto agree that this
Agreement may be enforced by either party through specific performance,
injunctive relief and other equitable relief. Both parties further agree to
waive any requirement for the securing or posting of any bond in connection with
the obtaining of any such equitable relief and that this provision is without
prejudice to any other rights that the parties hereto may have for any failure
to perform this Agreement.
(k) CONFIDENTIALITY AGREEMENTS. The parties hereto agree that
this Agreement supersedes any provision of the Confidentiality Agreements that
could be interpreted to preclude the exercise of any rights or the fulfillment
of any obligations under this Agreement, and that none of the provisions
included in the Confidentiality Agreements will act to preclude Holder from
exercising the Option or exercising any other rights under this Agreement or act
to preclude Issuer from fulfilling any of its obligations under this Agreement.
IN WITNESS WHEREOF, Issuer and Grantee have caused this Stock Option
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the day and year first written above.
GERMAN AMERICAN BANCORP
BY:/s/ George W. Astrike
------------------------------
George W. Astrike
Chairman of the Board and
Chief Executive Officer
1ST BANCORP
BY:/s/ C. James McCormick
------------------------------
C. James McCormick
Chairman of the Board and
Chief Executive Officer
NEWS RELEASE
For additional information, contact:
German American Bancorp 1ST BANCORP
George W. Astrike, Chairman & CEO C. James McCormick, Chairman & CEO
Mark A. Schroeder, President Frank Baracani, President
(812) 482-1314 (812) 885-2255
GERMAN AMERICAN BANCORP AND 1ST
BANCORP ANNOUNCE SIGNING OF MERGER
AGREEMENT
JASPER, INDIANA -- AUGUST 6, 1998 -- German American Bancorp (NASDAQ:
GABC), headquartered in Jasper, Indiana, and 1ST BANCORP (NASDAQ: FBCV),
headquartered in Vincennes, Indiana, jointly announced today that they have
signed a definitive agreement providing for the merger of 1ST BANCORP, a $260
million banking company, with and into German American Bancorp. The agreement
supersedes the previously-announced letter of intent between the parties.
Under the terms of the agreement, the shareholders of 1ST BANCORP would
receive shares of common stock of German American with a targeted aggregate
market value of $57,120,000 (based on market prices of German American common
stock during a period of 15 trading days ending on the second trading date
preceding closing) in a tax-free exchange, or approximately $50.94 per 1ST
BANCORP share (assuming exercise of all outstanding options). If the German
American share price is less than $28 per share or more than $33 per share
during the valuation period, however, then the number of shares to be issued in
the transaction will be based on a minimum or maximum share price, as the case
may be, of $28 or $33. Accordingly, to the extent that German American's share
price during the valuation period is less than $28 or more than $33, then the
market value of the transaction could vary from the targeted value. German
American's common stock closed on the Nasdaq National Market System on August 5,
1998, at $28.75 per share.
The proposed merger is subject to the approval of 1ST BANCORP's and
German American's shareholders as well as the approval of the appropriate bank
regulatory agencies; receipt of a fairness opinion and other conditions. The
parties contemplate that the merger will become effective during the first
quarter of 1999. 1ST BANCORP has also signed a Stock Option Agreement with
German American, giving German American an option to purchase up to 19.9% of 1ST
BANCORP's outstanding shares, exercisable at $50.94 per share upon the
occurrence of certain events that create the potential for another party to
acquire control of 1ST BANCORP.
Following the completion of the transaction, C. James McCormick,
Chairman of the Board and Chief Executive Officer of 1ST BANCORP, will join the
Board of Directors of
-1-
<PAGE>
German American Bancorp.
1ST BANCORP's subsidiaries include First Federal Bank, A Federal
Savings Bank; First Financial Insurance Agency, Inc.; and First Title Insurance
Company, Inc. First Federal Bank operates a loan origination office in
Evansville, Indiana. First Financial Insurance Agency has offices in Vincennes
and Princeton, Indiana. Following the merger, First Federal Bank and 1ST
BANCORP's insurance subsidiaries will remain intact as wholly owned direct or
indirect subsidiaries of German American and will continue to serve their
existing markets from their present facilities.
Upon completion of the merger, German American Bancorp, a Jasper based
multi-bank holding company, will have total assets of approximately $850 million
and will operate five bank subsidiaries with a total of 26 banking offices
within eight contiguous counties in Southwest Indiana. Its stock is traded on
NASDAQ's National Market System under the symbol GABC.
