<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report:
December 28, 1998
SKY FINANCIAL GROUP, INC.
(Exact name of registrant as specified in its charter)
Ohio 1-14473 34-1372535
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
221 South Church Street
Bowling Green, Ohio 43402
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (419) 327-6300
N/A
(Former name or former address, if changed since last report)
<PAGE> 2
Item 5. Other Events
On December 17, 1998, Sky Financial Group, Inc. (the "Registrant")
announced the execution of a definitive agreement to acquire Wood Bancorp, Inc.,
Bowling Green, Ohio, in a stock-for-stock exchange which will be accounted for
as a pooling-of-interests.
Attached hereto as Exhibit 2 is the Agreement and Plan of Merger dated December
16, 1998, the terms of which are incorporated by reference.
Attached hereto as Exhibit 10.1 is the Stock Option Agreement dated December 16,
1998, the terms of which are incorporated by reference.
Attached hereto as Exhibit 99.1 is the press release announcing the agreement,
the terms of which are incorporated by reference.
Item 7. Exhibits
2. Agreement and Plan of Merger, dated December 16, 1998.
10.1 Stock Option Agreement, dated December 16, 1998.
99.1 Text of Press Release, dated December 17, 1998, issued by Sky Financial
Group, Inc.
<PAGE> 3
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SKY FINANCIAL GROUP, INC.
By: /s/ W. Granger Souder
Name: W. Granger Souder
Title: Executive Vice President and
General Counsel
Date: December 28, 1998
<PAGE> 4
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
- ------------ -----------
EX-2 Agreement and Plan of Merger, dated December 16,
1998.
EX-10.1 Stock Option Agreement, dated December 16, 1998.
EX-99.1 Text of Press Release, dated December 17, 1998,
issued by Sky Financial Group, Inc.
<PAGE> 1
EXHIBIT 2
================================================================================
AGREEMENT AND PLAN OF MERGER
dated as of
December 16, 1998
by and between
SKY FINANCIAL GROUP, INC.
and
WOOD BANCORP, INC.
================================================================================
<PAGE> 2
TABLE OF CONTENTS
PAGE
----
RECITALS.......................................................................1
ARTICLE I Certain Definitions
1.01 Certain Definitions.................................................1
ARTICLE II The Merger
2.01 The Parent Merger...................................................7
2.02 The Subsidiary Merger...............................................7
2.03 Certificate of Merger...............................................7
2.04 Effective Date and Effective Time...................................7
ARTICLE III Consideration; Exchange Procedures
3.01 Merger Consideration................................................8
3.02 Rights as Stockholders; Stock Transfers.............................8
3.03 Fractional Shares...................................................9
3.04 Exchange Procedures.................................................9
3.05 Anti-Dilution Provisions...........................................10
3.06 Options............................................................10
ARTICLE IV Actions Pending Acquisition
4.01 Forebearances of WBI...............................................11
4.02 Forebearances of SFG...............................................13
ARTICLE V Representations and Warranties
5.01 Disclosure Schedules...............................................14
5.02 Standard...........................................................15
5.03 Representations and Warranties of WBI..............................15
5.04 Representations and Warranties of SFG..............................25
ARTICLE VI Covenants
6.01 Reasonable Best Efforts............................................31
6.02 Stockholder Approvals..............................................31
6.03 Registration Statement.............................................32
6.04 Press Releases.....................................................33
6.05 Access; Information................................................33
6.06 Acquisition Proposals..............................................34
6.07 Affiliate Agreements...............................................34
6.08 Takeover Laws......................................................34
6.09 Certain Policies...................................................34
i
<PAGE> 3
6.10 NASDAQ Listing....................................................35
6.11 Regulatory Applications............................................35
6.12 Indemnification....................................................35
6.13 Benefit Plans......................................................36
6.14 Notification of Certain Matters....................................38
6.15 Dividend Coordination..............................................38
6.16 Board Representation...............................................38
6.17 Separate Division..................................................38
ARTICLE VII Conditions to Consummation of the Merger
7.01 Conditions to Each Party's Obligation to Effect the Merger.........38
7.02 Conditions to Obligation of WBI....................................39
7.03 Conditions to Obligation of SFG....................................40
ARTICLE VIII Termination
8.01 Termination........................................................41
8.02 Effect of Termination and Abandonment..............................42
ARTICLE IX Miscellaneous
9.01 Survival...........................................................43
9.02 Waiver; Amendment..................................................43
9.03 Counterparts.......................................................43
9.04 Governing Law......................................................43
9.05 Expenses...........................................................43
9.06 Notices............................................................43
9.07 Entire Understanding; No Third Party Beneficiaries.................44
9.08 Interpretation; Effect.............................................45
9.09 Waiver of Jury Trial...............................................45
EXHIBIT A Form of Stock Option Agreement
EXHIBIT B Form of WBI Affiliate Agreement
ii
<PAGE> 4
AGREEMENT AND PLAN OF MERGER, dated as of December 16, 1998 (this
"Agreement"), by and between Sky Financial Group, Inc. ("SFG") and, Wood
Bancorp, Inc. ("WBI").
RECITALS
A. WBI. WBI is a Delaware corporation, having its principal place of
business in Bowling Green, Ohio.
B. SFG. SFG is an Ohio corporation, having its principal place of
business in Bowling Green, Ohio.
C. Stock Option Agreement. As an inducement to the willingness of SFG
to continue to pursue the transactions contemplated by this Agreement, WBI
intends to grant to SFG an option pursuant to a stock option agreement, in
substantially the form of Exhibit A.
D. Intentions of the Parties. It is the intention of the parties to
this Agreement that the business combinations contemplated hereby be accounted
for under the "pooling-of-interests" accounting method and that each be treated
as a "reorganization" under Section 368 of the Internal Revenue Code of 1986
(the "Code").
E. Board Action. The respective Boards of Directors of each of SFG and
WBI have determined that it is in the best interests of their respective
companies and their stockholders to consummate the strategic business
combinations provided for herein.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, representations, warranties and agreements contained herein the
parties agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
1.01 CERTAIN DEFINITIONS. The following terms are used in this
Agreement with the meanings set forth below:
"Acquisition Proposal" means any tender or exchange offer, proposal for
a merger, consolidation or other business combination involving WBI or any of
its Subsidiaries or any proposal or offer to acquire in any manner a substantial
equity interest in, or a substantial portion of the assets or deposits of, WBI
or any of its Subsidiaries, other than the transactions contemplated by this
Agreement.
"Agreement" means this Agreement, as amended or modified from time to
time in accordance with Section 9.02.
"Agreement to Merge" has the meaning set forth in Section 2.02.
<PAGE> 5
"Average NASDAQ Closing Price" has the meaning set forth in Section
8.01(e)l
"Code" means the Internal Revenue Code of 1986, as amended.
"Compensation and Benefit Plans" has the meaning set forth in Section
5.03(m).
"Consultants" has the meaning set forth in Section 5.03(m).
"Costs" has the meaning set forth in Section 6.12(a).
"DGCL" means the Delaware General Corporation Law.
"DSS" means the Delaware Secretary of State.
"Directors" has the meaning set forth in Section 5.03(m).
"Disclosure Schedule" has the meaning set forth in Section 5.01.
"Dissenting Shares" means any shares of WBI Common Stock held by a
holder who properly demands and perfects appraisal rights with respect to such
shares in accordance with Section 262 of the DGCL.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" has the meaning set forth in Section 5.03(m).
"Effective Date" means the date on which the Effective Time occurs.
"Effective Time" means the effective time of the Merger, as provided
for in Section 2.04.
"Employees" has the meaning set forth in Section 5.03(m).
"Environmental Laws" means all applicable local, state and federal
environmental, health and safety laws and regulations, including, without
limitation, the Resource Conservation and Recovery Act, the Comprehensive
Environmental Response, Compensation, and Liability Act, the Clean Water Act,
the Federal Clean Air Act, and the Occupational Safety and Health Act, each as
amended, regulations promulgated thereunder, and state counterparts.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder.
"Exchange Agent" has the meaning set forth in Section 3.04.
"Exchange Fund" has the meaning set forth in Section 3.04.
2
<PAGE> 6
"Exchange Ratio" has the meaning set forth in Section 3.01.
"FFB" means First Federal Bank, a federal savings association and
wholly-owned subsidiary of WBI.
"FFIEC" means Federal Financial Institutions Examination Committee.
"Governmental Authority" means any court, administrative agency or
commission or other federal, state or local governmental authority or
instrumentality.
"IRS" has the meaning set forth in Section 5.03(m).
"Indemnified Party" has the meaning set forth in Section 6.12(a).
"Insurance Amount" has the meaning set forth in Section 6.12(b).
"Lien" means any charge, mortgage, pledge, security interest,
restriction, claim, lien, or encumbrance.
"MAB" means Mid American National Bank & Trust Company, a national
banking association and wholly-owned subsidiary of SFG.
"MAB Board" means the Board of Directors of MAB.
"Material Adverse Effect" means, with respect to SFG or WBI, any effect
that (i) is material and adverse to the financial position, results of
operations or business of SFG and its Subsidiaries taken as a whole or WBI and
its Subsidiaries taken as a whole, respectively, or (ii) would materially impair
the ability of either SFG or WBI to perform its obligations under this Agreement
or otherwise materially threaten or materially impede the consummation of the
Merger and the other transactions contemplated by this Agreement; provided,
however, that Material Adverse Effect shall not be deemed to include the impact
of (a) changes in thrift, banking and similar laws of general applicability or
interpretations thereof by courts or governmental authorities or other changes
affecting depository institutions generally, including changes in general
economic conditions and changes in prevailing interest and deposit rates, (b)
any modifications or changes to valuation policies and practices in connection
with the Merger or restructuring charges taken in connection with the Merger, in
each case in accordance with generally accepted accounting principles, (c)
changes resulting from expenses (such as legal, accounting and investment
bankers' fees) incurred in connection with this Agreement or the transactions
contemplated herein, and (d) actions or omissions of a party which have been
waived in accordance with Section 9.02 hereof.
"Merger" has the meaning set forth in Section 2.02.
3
<PAGE> 7
"Merger Consideration" has the meaning set forth in Section 2.01.
"Multiemployer Plan" has the meaning set forth in Section 5.03(m).
"NASD" means The National Association of Securities Dealers.
"NASDAQ" means The NASDAQ Stock Market, Inc.'s National Market System.
"New Certificate" has the meaning set forth in Section 3.04."OGCL"
means the Ohio General Corporation Law.
"OSS" means the Office of the Secretary of State of the State of Ohio.
"Old Certificate" has the meaning set forth in Section 3.04.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Parent Merger" has the meaning set forth in Section 2.01.
"Pension Plan" has the meaning set forth in Section 5.03(m).
"Person" means any individual, bank, corporation, partnership,
association, joint-stock company, business trust or unincorporated organization.
"Plans" has the meaning set forth in Section 5.03(m).
"Previously Disclosed" by a party shall mean information set forth in
its Disclosure Schedule.
"Proxy/Prospectus" has the meaning set forth in Section 6.03.
"Proxy Statement" has the meaning set forth in Section 6.03.
"Registration Statement" has the meaning set forth in Section 6.03.
"Regulatory Authority" has the meaning set forth in Section 5.03(i).
4
<PAGE> 8
"Replacement Option" has the meaning set forth in Section 3.06.
"Representatives" means, with respect to any Person, such Person's
directors, officers, employees, legal or financial advisors or any
representatives of such legal or financial advisors.
"Resulting Bank" has the meaning set forth in Section 2.02.
"Rights" means, with respect to any Person, securities or obligations
convertible into or exercisable or exchangeable for, or giving any person any
right to subscribe for or acquire, or any options, calls or commitments relating
to, or any stock appreciation right or other instrument the value of which is
determined in whole or in part by reference to the market price or value of,
shares of capital stock of such person.
"SEC" means the Securities and Exchange Commission.
"SFG" has the meaning set forth in the preamble to this Agreement.
"SFG Board" means the Board of Directors of SFG.
"SFG Common Stock" means the common stock, without par value per share,
of SFG.
"SFG SEC Documents" has the meaning set forth in Section 5.04(g).
"SFG Stock" means the SFG Common Stock and SFG serial preferred stock.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations thereunder.
"Stock Option Agreement" has the meaning set forth in Recital C.
"Subsidiary" and "Significant Subsidiary" have the meanings ascribed to
them in Rule 1-02 of Regulation S-X of the SEC.
"Subsidiary Merger" has the meaning set forth in Section 2.02.
"Takeover Laws" has the meaning set forth in Section 5.03 (o).
"Tax" and "Taxes" means all federal, state, local or foreign taxes,
charges, fees, levies or other assessments, however denominated, including,
without limitation, all net income, gross income, gains, gross receipts, sales,
use, ad valorem, goods and services, capital, production, transfer, franchise,
windfall profits, license, withholding, payroll, employment, disability,
employer health, excise, estimated, severance, stamp, occupation, property,
environmental, unemployment or other taxes, custom duties, fees, assessments or
charges of any kind
5
<PAGE> 9
whatsoever, together with any interest and any penalties, additions to tax or
additional amounts imposed by any taxing authority whether arising before, on or
after the Effective Date.
"Tax Returns" means any return, amended return or other report
(including elections, declarations, disclosures, schedules, estimates and
information returns) required to be filed with respect to any Tax.
"Treasury Stock" shall mean shares of WBI Stock held by WBI or any of
its Subsidiaries or by SFG or any of its Subsidiaries, in each case other than
in a fiduciary capacity or as a result of debts previously contracted in good
faith.
"WBI" has the meaning set forth in the preamble to this Agreement.
"WBI Affiliate" has the meaning set forth in Section 6.07(a).
"WBI Board" means the Board of Directors of WBI.
"WBI By-Laws" means the By-Laws of WBI.
"WBI Certificate" means the Certificate of Incorporation of WBI.
"WBI Common Stock" means the common stock, par value $.01 per share, of
WBI.
"WBI Employees" has the meaning set forth in Section 6.13(b).
"WBI Meeting" has the meaning set forth in Section 6.02.
"WBI Preferred Stock" means the preferred stock, par value $.01 per
share, of WBI.
"WBI SEC Documents" has the meaning set forth in Section 5.03(g).
"WBI Stock" means WBI Common Stock and WBI Preferred Stock.
"WBI Stock Option" has the meaning set forth in Section 3.06.
"WBI Stock Plans" means the option plans and agreements of WBI and its
Subsidiaries pursuant to which rights to purchase WBI common stock are
outstanding immediately prior to the Effective Time.
6
<PAGE> 10
ARTICLE II
THE MERGER
2.01 THE PARENT MERGER. At the Effective Time, WBI shall merge with and
into SFG (the "Parent Merger"), the separate corporate existence of WBI shall
cease and SFG shall survive and continue to exist as an Ohio corporation. SFG
may at any time prior to the Effective Time change the method of effecting the
Merger (including, without limitation, the provisions of this Article II) if and
to the extent it deems such change to be necessary, appropriate or desirable;
provided, however, that no such change shall (i) alter or change the amount or
kind of consideration to be issued to holders of WBI Stock as provided for in
this Agreement (the "Merger Consideration"), (ii) adversely affect the tax
treatment of WBI's stockholders as a result of receiving the Merger
Consideration or the Merger qualifying for "pooling-of-interests" accounting
treatment or (iii) materially impede or delay consummation of the transactions
contemplated by this Agreement.
2.02 THE SUBSIDIARY MERGER. At the time specified by WBI or MAB in its
notice of consummation to the Comptroller of the Currency (which shall not be
earlier than the Effective Time), FFB shall merge with and into MAB (the
"Subsidiary Merger") pursuant to an agreement to merge (the "Agreement to
Merge") to be executed by FFB and MAB and filed with the Office of the
Comptroller of the Currency. Upon consummation of the Subsidiary Merger, the
separate corporate existence of FFB shall cease and MAB shall survive and
continue to exist as a national banking association (MAB, as the resulting bank
in the Subsidiary Merger, sometimes being referred to herein as the "Resulting
Bank"). SFG may, at any time prior to the Effective Date, convert the charter of
MAB to an Ohio state-chartered bank, in its sole discretion. In such event, the
Subsidiary Merger will be implemented in accordance with applicable Ohio banking
laws. (The Parent Merger and the Subsidiary Merger shall sometimes collectively
be referred to as the "Merger".)
2.03 CERTIFICATE OF PARENT MERGER. Subject to the satisfaction or
waiver of the conditions set forth in Article VII, the Parent Merger shall
become effective upon the occurrence of the filing in the office of the DSS and
the OSS of a certificate of merger in accordance with Section 252 of the DGCL
and Section 1701.81 of the OGCL or such later date and time as may be set forth
in such certificate. The Parent Merger shall have the effects prescribed in the
DGCL and the OGCL.
2.04 EFFECTIVE DATE AND EFFECTIVE TIME. Subject to the satisfaction or
waiver of the conditions set forth in Article VII, the parties shall cause the
effective date of the Parent Merger (the "Effective Date") to occur on (i) the
fifth business day to occur after the last of the conditions set forth in
Article VII shall have been satisfied or waived in accordance with the terms of
this Agreement (or, at the election of SFG, on the last business day of the
month in which such fifth business day occurs or, if such fifth business day
occurs within the last five business days of such month, on the last business
day of the succeeding month; provided, no such
7
<PAGE> 11
election shall cause the Effective Date to fall after the date specified in
Section 8.01 (c) hereof or after the date or dates on which any Regulatory
Authority approval or any extension thereof expires, or (ii) such other date to
which the parties may agree in writing. In no event will the Effective Date
occur earlier than May 1, 1999. The time on the Effective Date when the Parent
Merger shall become effective is referred to as the "Effective Time."
ARTICLE III
CONSIDERATION; EXCHANGE PROCEDURES
3.01 MERGER CONSIDERATION. Subject to the provisions of this Agreement,
at the Effective Time, automatically by virtue of the Parent Merger and without
any action on the part of any Person:
(a) Outstanding WBI Common Stock and WBI Rights. Each share, excluding
Treasury Stock and Dissenting Shares, of WBI Common Stock issued and
outstanding immediately prior to the Effective Time shall become and be
converted into .7315 of a share of SFG Common Stock (the "Exchange Ratio").
The Exchange Ratio shall be subject to adjustment as set forth in Section
3.05.
(b) Treasury Shares. Each share of WBI Common Stock held as Treasury
Stock immediately prior to the Effective Time shall be canceled and retired
at the Effective Time and no consideration shall be issued in exchange
therefor.
(c) Dissenting Shares. Dissenting Shares shall not be exchanged for SFG
Common Stock but rather shall be entitled to the rights set forth in
Section 262 of the DGCL. Notwithstanding any other provision of this
Agreement, any Dissenting Shares shall not, after the Effective Time, be
entitled to vote for any purpose or receive any dividends or other
distributions (except dividends or other distributions payable to
stockholders of record of WBI at a date which is prior to the Effective
Date) and shall be entitled only to such rights as are afforded in respect
of Dissenting Shares pursuant to the DGCL.
(d) Outstanding SFG Stock. Each share of SFG Common Stock issued and
outstanding immediately prior to the Effective Time shall remain issued and
outstanding and unaffected by the Parent Merger.
3.02 RIGHTS AS STOCKHOLDERS; STOCK TRANSFERS. At the Effective Time,
holders of WBI Common Stock shall cease to be, and shall have no rights as,
stockholders of WBI, other than to receive any dividend or other distribution
with respect to such WBI Common Stock with a record date occurring prior to the
Effective Time and the consideration provided under this Article III, and
appraisal rights in the case of Dissenting Shares. After the Effective Time,
there shall be no transfers on the stock transfer books of WBI of shares of WBI
Stock.
8
<PAGE> 12
3.03 FRACTIONAL SHARES. Notwithstanding any other provision hereof, no
fractional shares of SFG Common Stock and no certificates or scrip therefor, or
other evidence of ownership thereof, will be issued in the Parent Merger;
instead, SFG shall pay to each holder of WBI Common Stock who would otherwise be
entitled to a fractional share of SFG Common Stock (after taking into account
all Old Certificates delivered by such holder) an amount in cash (without
interest) determined by multiplying such fractional share of SFG Common Stock to
which the holder would be entitled by the last sale price of SFG Common Stock,
as reported by the NASDAQ (as reported in The Wall Street Journal or, if not
reported therein, in another authoritative source), for the NASDAQ trading day
immediately preceding the Effective Date.
3.04 EXCHANGE PROCEDURES. (a) At or prior to the Effective Time, SFG
shall deposit, or shall cause to be deposited, with Bank of New York (in such
capacity, the "Exchange Agent"), for the benefit of the holders of certificates
formerly representing shares of WBI Common Stock ("Old Certificates"), for
exchange in accordance with this Article III, certificates representing the
shares of SFG Common Stock ("New Certificates") and an estimated amount of cash
(such cash and New Certificates, together with any dividends or distributions
with a record date occurring on or after the Effective Date with respect thereto
(without any interest on any such cash, dividends or distributions), being
hereinafter referred to as the "Exchange Fund") to be paid pursuant to this
Article III in exchange for outstanding shares of WBI Common Stock.
(b) As promptly as practicable after the Effective Date, SFG shall send
or cause to be sent to each former holder of record of shares of WBI Common
Stock immediately prior to the Effective Time transmittal materials for use
in exchanging such stockholder's Old Certificates for the consideration set
forth in this Article III. SFG shall cause the New Certificates into which
shares of a stockholder's WBI Common Stock are converted on the Effective
Date and/or any check in respect of any fractional share interests or
dividends or distributions which such person shall be entitled to receive
to be delivered to such stockholder upon delivery to the Exchange Agent of
Old Certificates representing such shares of WBI Common Stock (or indemnity
reasonably satisfactory to SFG and the Exchange Agent, if any of such
certificates are lost, stolen or destroyed) owned by such stockholder. No
interest will be paid on any such cash to be paid in lieu of fractional
share interests or in respect of dividends or distributions which any such
person shall be entitled to receive pursuant to this Article III upon such
delivery.
(c) Notwithstanding the foregoing, neither the Exchange Agent, if any,
nor any party hereto shall be liable to any former holder of WBI Stock for
any amount properly delivered to a public official pursuant to applicable
abandoned property, escheat or similar laws.
(d) No dividends or other distributions with respect to SFG Common
Stock with a record date occurring on or after the Effective Date shall be
paid to the holder of any unsurrendered Old Certificate representing shares
of WBI Common Stock converted in the Parent Merger into the right to
receive shares of such SFG Common Stock until the holder
9
<PAGE> 13
thereof shall be entitled to receive New Certificates in exchange therefor
in accordance with the procedures set forth in this Section 3.04. After
becoming so entitled in accordance with this Section 3.04, the record
holder thereof also shall be entitled to receive any such dividends or
other distributions, without any interest thereon, which theretofor had
become payable with respect to shares of SFG Common Stock such holder had
the right to receive upon surrender of the Old Certificates.
(e) Any portion of the Exchange Fund that remains unclaimed by the
stockholders of WBI for six months after the Effective Time shall be paid
to SFG. Any stockholders of WBI who have not theretofor complied with this
Article III shall thereafter look only to SFG for payment of the shares of
SFG Common Stock, cash in lieu of any fractional shares and unpaid
dividends and distributions on SFG Common Stock deliverable in respect of
each share of WBI Common Stock such stockholder holds as determined
pursuant to this Agreement, in each case, without any interest thereon.
3.05 ANTI-DILUTION PROVISIONS. In the event SFG changes (or establishes
a record date for changing) the number of shares of SFG Common Stock issued and
outstanding between the date hereof and the Effective Date as a result of a
stock split, stock dividend, recapitalization, reclassification, split up,
combination, exchange of shares, readjustment or similar transaction with
respect to the outstanding SFG Common Stock and the record date therefor shall
be prior to the Effective Date, the Exchange Ratio shall be proportionately
adjusted.
3.06 OPTIONS. (a) At the Effective Time, each outstanding option to
purchase shares of WBI Common Stock under the WBI Stock Plans (each, a "WBI
Stock Option"), whether vested or unvested, shall be converted into an option to
acquire, on the same terms and conditions as were applicable under such WBI
Stock Option, the number of shares of SFG Common Stock equal to (a) the number
of shares of WBI Common Stock subject to the WBI Stock Option, multiplied by (b)
the Exchange Ratio (such product rounded to the nearest whole number) (a
"Replacement Option"), at an exercise price per share (rounded to the nearest
whole cent) equal to (y) the aggregate exercise price for the shares of WBI
Common Stock which were purchasable pursuant to such WBI Stock Option divided by
(z) the number of full shares of SFG Common Stock subject to such Replacement
Option in accordance with the foregoing. Notwithstanding the foregoing, each WBI
Stock Option which is intended to be an "incentive stock option" (as defined in
Section 422 of the Code) shall be adjusted in accordance with the requirements
of Section 424 of the Code. At or prior to the Effective Time, WBI shall use its
best efforts, including using its best efforts to obtain any necessary consents
from optionees, with respect to the WBI Stock Plans to permit the replacement of
the outstanding WBI Stock Options by SFG pursuant to this Section and to permit
SFG to assume the WBI Stock Plans. WBI shall further take all action necessary
to amend the WBI Stock Plans to eliminate automatic grants or awards thereunder
following the Effective Time. At the Effective Time, SFG shall assume the WBI
Stock Plans; provided, that such assumption shall be only in respect of the
Replacement Options and that SFG shall have no obligation with respect to any
awards under the WBI Stock Plans other than the Replacement Options and shall
have no obligation to make any additional grants or
10
<PAGE> 14
awards under such assumed WBI Stock Plans.
(b) At all times after the Effective Time, SFG shall reserve for
issuance such number of shares of SFG Common Stock as necessary so as to
permit the exercise of the Replacement Options in the manner contemplated
by this Agreement and the instruments pursuant to which the corresponding
WBI Stock Options were granted. SFG shall make all filings required under
federal and state securities laws no later than the Effective Time so as to
permit the exercise of such options and the sale of the shares received by
the optionee upon such exercise at and after the Effective Time and SFG
shall continue to make such filings thereafter as may be necessary to
permit the continued exercise of options and subsequent sale of such
shares.
ARTICLE IV
ACTIONS PENDING ACQUISITION
4.01 FOREBEARANCES OF WBI. From the date hereof until the Effective
Time, except as expressly contemplated by this Agreement or a separate agreement
entered into by the parties on the date hereof, without the prior written
consent of SFG, WBI will not, and will cause each of its Subsidiaries not to:
(a) Ordinary Course. Conduct the business of WBI and its Subsidiaries
other than in the ordinary and usual course or fail to use reasonable
efforts to preserve intact their business organizations and assets and
maintain their rights, franchises and existing relations with customers,
suppliers, employees and business associates, or voluntarily take any
action which, at the time taken, is reasonably likely to have an adverse
affect upon WBI's ability to perform any of its material obligations under
this Agreement.
(b) Capital Stock. Other than pursuant to Rights Previously Disclosed
and outstanding on the date hereof, (i) issue, sell or otherwise permit to
become outstanding, or authorize the creation of, any additional shares of
WBI Stock or any Rights, (ii) enter into any agreement with respect to the
foregoing, or (iii) permit any additional shares of WBI Stock to become
subject to new grants of employee or director stock options, other Rights
or similar stock-based employee rights.
11
<PAGE> 15
(c) Dividends, Etc. (a) Make, declare, pay or set aside for payment any
dividend, other than (A) quarterly cash dividends on WBI Stock in an amount
not to exceed the per share amount declared and paid in its most recent
quarterly cash dividend, with record and payment dates consistent with past
practice, and (B) dividends from wholly owned Subsidiaries to WBI, or (b)
directly or indirectly adjust, split, combine, redeem, reclassify, purchase
or otherwise acquire, any shares of its capital stock.
(d) Compensation; Employment Agreements; Etc. Enter into or amend or
renew any employment, consulting, severance or similar agreements or
arrangements with any director, officer or employee of WBI or its
Subsidiaries, or grant any salary or wage increase or increase any employee
benefit, (including incentive or bonus payments) except (i) for normal
individual increases in compensation to employees in the ordinary course of
business consistent with past practice, (ii) for other changes that are
required by applicable law, (iii) to satisfy Previously Disclosed
contractual obligations existing as of the date hereof, or (iv) for grants
of awards to newly hired employees consistent with past practice.
(e) Benefit Plans. Enter into, establish, adopt or amend (except (i) as
may be required by applicable law, (ii) to satisfy Previously Disclosed
contractual obligations existing as of the date hereof or (iii) the regular
annual renewal of insurance contracts) any pension, retirement, stock
option, stock purchase, savings, profit sharing, deferred compensation,
consulting, bonus, group insurance or other employee benefit, incentive or
welfare contract, plan or arrangement, or any trust agreement (or similar
arrangement) related thereto, in respect of any director, officer or
employee of WBI or its Subsidiaries, or take any action to accelerate the
vesting or exercisability of stock options, restricted stock or other
compensation or benefits payable thereunder.
(f) Dispositions. Sell, transfer, mortgage, encumber or otherwise
dispose of or discontinue any of its assets, deposits, business or
properties except in the ordinary course of business.
(g) Acquisitions. Acquire (other than by way of foreclosures or
acquisitions of control in a bona fide fiduciary capacity or in
satisfaction of debts previously contracted in good faith, in each case in
the ordinary and usual course of business consistent with past practice)
all or any portion of, the assets, business, deposits or properties of any
other entity.
(h) Governing Documents. Amend the WBI Certificate, WBI By-Laws or the
articles of incorporation or by-laws (or similar governing documents) of
any of WBI's Subsidiaries.
(i) Accounting Methods. Implement or adopt any change in its accounting
principles, practices or methods, other than as may be required by
generally accepted accounting principles.
12
<PAGE> 16
(j) Contracts. Except in the ordinary course of business consistent
with past practice, enter into or terminate any material contract (as
defined in Section 5.03(k)) or amend or modify in any material respect any
of its existing material contracts.
(k) Claims. Except in the ordinary course of business consistent with
past practice, settle any claim, action or proceeding, except for any
claim, action or proceeding which does not involve precedent for other
material claims, actions or proceedings and which involve solely money
damages in an amount, individually or in the aggregate for all such
settlements, that is not material to WBI and its Subsidiaries, taken as a
whole.
(l) Adverse Actions. (a) Take any action while knowing that such action
would, or is reasonably likely to, prevent or impede the Merger from
qualifying (i) for "pooling-of-interests" accounting treatment or (ii) as a
reorganization within the meaning of Section 368 of the Code; or (b)
knowingly take any action that is intended or is reasonably likely to
result in (i) any of its representations and warranties set forth in this
Agreement being or becoming untrue in any material respect at any time at
or prior to the Effective Time, (ii) any of the conditions to the Merger
set forth in Article VII not being satisfied or (iii) a material violation
of any provision of this Agreement except, in each case, as may be required
by applicable law or regulation.
(m) Risk Management. Except pursuant to applicable law or regulation,
(i) implement or adopt any material change in its interest rate and other
risk management policies, procedures or practices; (ii) fail to follow its
existing policies or practices with respect to managing its exposure to
interest rate and other risk; or (iii) fail to use commercially reasonable
means to avoid any material increase in its aggregate exposure to interest
rate risk.
(n) Indebtedness. Incur any indebtedness for borrowed money other than
in the ordinary course of business.
(o) Commitments. Agree or commit to do any of the foregoing.
4.02 FOREBEARANCES OF SFG. From the date hereof until the Effective
Time, except as expressly contemplated by this Agreement, without the prior
written consent of WBI, SFG will not, and will cause each of its Subsidiaries
not to:
(a) Preservation. Fail to use reasonable efforts to preserve intact in
any material respect their business organizations and assets and maintain
their rights, franchises and existing relations with customers, suppliers,
employees and business associates.
13
<PAGE> 17
(b) Extraordinary Dividends. Make, declare, pay or set aside for
payment any extraordinary dividend.
(c) Adverse Actions. (a) Take any action while knowing that such action
would, or is reasonably likely to, prevent or impede the Merger from
qualifying (i) for "pooling-of-interests" accounting treatment or (ii) as a
reorganization within the meaning of Section 368 of the Code; or (b)
knowingly take any action that is intended or is reasonably likely to
result in (i) any of its representations and warranties set forth in this
Agreement being or becoming untrue in any material respect at any time at
or prior to the Effective Time, (ii) any of the conditions to the Merger
set forth in Article VII not being satisfied or (iii) a material violation
of any provision of this Agreement except, in each case, as may be required
by applicable law or regulation; provided, however, that nothing contained
herein shall limit the ability of SFG to exercise its rights under the
Stock Option Agreement.
(d) Risk Management. Except pursuant to applicable law or regulation,
(I) fail to follow its existing policies or practices with respect to
managing its exposure to interest rate and other risk, or (ii) fail to use
commercially reasonable means to avoid any material increase in its
aggregate exposure to interest rate risk.
(e) Commitments. Agree or commit to do any of the foregoing.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.01 DISCLOSURE SCHEDULES. On or prior to the date hereof, SFG has
delivered to WBI a schedule and WBI has delivered to SFG a schedule
(respectively, its "Disclosure Schedule") setting forth, among other things,
items the disclosure of which is necessary or appropriate either in response to
an express disclosure requirement contained in a provision hereof or as an
exception to one or more representations or warranties contained in Section 5.03
or 5.04 or to one or more of its covenants contained in Article IV; provided,
that (a) no such item is required to be set forth in a Disclosure Schedule as an
exception to a representation or warranty if its absence would not be reasonably
likely to result in the related representation or warranty being deemed untrue
or incorrect under the standard established by Section 5.02, and (b) the mere
inclusion of an item in a Disclosure Schedule as an exception to a
representation or warranty shall not be deemed an admission by a party that such
item represents a material exception or fact, event or circumstance or that such
item is reasonably likely to result in a Material Adverse Effect on the party
making the representation. WBI's representations, warranties and covenants
contained in this Agreement shall not be deemed to be untrue or breached as a
result of effects arising solely from actions taken in compliance with a written
request of SFG.
14
<PAGE> 18
5.02 STANDARD. No representation or warranty of WBI or SFG contained in
Section 5.03 or 5.04 shall be deemed untrue or incorrect, and no party hereto
shall be deemed to have breached a representation or warranty, as a consequence
of the existence of any fact, event or circumstance unless such fact,
circumstance or event, individually or taken together with all other facts,
events or circumstances inconsistent with any representation or warranty
contained in Section 5.03 or 5.04 has had, or is reasonably likely to have, a
Material Adverse Effect. For purposes of this Agreement, "knowledge" shall mean,
with respect to a party hereto, actual knowledge of any officer of that party
with the title of not less than senior vice president and that party's in-house
counsel, if any.
5.03 REPRESENTATIONS AND WARRANTIES OF WBI. Subject to Sections 5.01
and 5.02 and except as Previously Disclosed in a paragraph of its Disclosure
Schedule corresponding to the relevant paragraph below, WBI hereby represents
and warrants to SFG:
(a) Organization, Standing and Authority. WBI is a corporation duly
organized, validly existing and in good standing under the laws of the
state of Delaware. WBI is duly qualified to do business and is in good
standing in the state of Ohio and any foreign jurisdictions where its
ownership or leasing of property or assets or the conduct of its business
requires it to be so qualified. FFB is a federal savings association duly
organized, validly existing and in good standing under the laws of the
United States of America. FFB is duly qualified to do business and is in
good standing in the State of Ohio and any foreign jurisdictions where its
ownership or leasing of property or assets or the conduct of its business
requires it to be so qualified.
(b) WBI Stock. As of the date hereof, the authorized capital stock of
WBI consists solely of 5,000,000 shares of WBI Common Stock, of which
2,818,722 shares are outstanding as of the date hereof, and 500,000 shares
of WBI Preferred Stock, of which none were outstanding as of the date
hereof. As of the date hereof, 288,343 shares of Treasury Stock were held
by WBI or otherwise owned by WBI or its Subsidiaries . The outstanding
shares of WBI Common Stock have been duly authorized and are validly issued
and outstanding, fully paid and nonassessable, and subject to no preemptive
rights (and were not issued in violation of any preemptive rights). As of
the date hereof, except as Previously Disclosed in its Disclosure Schedule,
there are no shares of WBI Common Stock authorized and reserved for
issuance, WBI does not have any Rights issued or outstanding with respect
to WBI Common Stock, and WBI does not have any commitment to authorize,
issue or sell any WBI Common Stock or Rights, except pursuant to this
Agreement and the Stock Option Agreement. The number of shares of WBI
Common Stock which are issuable and reserved for issuance upon exercise of
WBI Stock Options as of the date hereof are Previously Disclosed in WBI's
Disclosure Schedule.
(c) Subsidiaries. (i)(A) WBI has Previously Disclosed a list of all of
its Subsidiaries together with the jurisdiction of organization of each
such Subsidiary, (B) except as
15
<PAGE> 19
Previously Disclosed, it owns, directly or indirectly, all the issued and
outstanding equity securities of each of its Subsidiaries, (C) no equity
securities of any of its Subsidiaries are or may become required to be
issued (other than to it or its wholly-owned Subsidiaries) by reason of any
Right or otherwise, (D) there are no contracts, commitments, understandings
or arrangements by which any of such Subsidiaries is or may be bound to
sell or otherwise transfer any equity securities of any such Subsidiaries
(other than to it or its wholly-owned Subsidiaries), (E) there are no
contracts, commitments, understandings, or arrangements relating to its
rights to vote or to dispose of such securities and (F) all the equity
securities of each Subsidiary held by WBI or its Subsidiaries are fully
paid and nonassessable (except pursuant to 12 U.S.C. Section 55) and are
owned by WBI or its Subsidiaries free and clear of any Liens.
(ii) WBI does not own beneficially, directly or indirectly, any
equity securities or similar interests of any Person, or any interest
in a partnership or joint venture of any kind, other than its
Subsidiaries.
(iii) Each of WBI's Subsidiaries has been duly organized and is
validly existing in good standing under the laws of the jurisdiction of
its organization, and is duly qualified to do business and in good
standing in the jurisdictions where its ownership or leasing of
property or the conduct of its business requires it to be so qualified.
(d) Corporate Power. Each of WBI and its Subsidiaries has the corporate
power and authority to carry on its business as it is now being conducted
and to own all its properties and assets; WBI has the corporate power and
authority to execute, deliver and perform its obligations under this
Agreement and the Stock Option Agreement; and FFB has the corporate power
and authority to consummate the Subsidiary Merger in accordance with the
terms of this Agreement.
(e) Corporate Authority. Subject in the case of this Agreement to
receipt of the requisite adoption of this Agreement by the holders of a
majority of the outstanding shares of WBI Common Stock entitled to vote
thereon (which is the only stockholder vote required thereon), this
Agreement, the Stock Option Agreement and the transactions contemplated
hereby and thereby have been authorized by all necessary corporate action
of WBI and the WBI Board prior to the date hereof. The Agreement to Merge,
when executed by FFB, shall have been approved by the Board of Directors of
FFB and by the WBI Board, as the sole stockholder of FFB. This Agreement is
a valid and legally binding obligation of WBI, enforceable in accordance
with its terms (except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and
similar laws of general applicability relating to or affecting creditors'
rights or by general equity principles). The WBI Board has received the
written opinion of Stifel, Nicholaus & Company, Incorporated to the effect
that as of the date hereof the consideration to be received by the holders
of WBI Common Stock in the Parent Merger is fair to the holders of WBI
Common Stock from a financial point of view.
16
<PAGE> 20
(f) Regulatory Filings; No Defaults. (i) No consents or approvals of,
or filings or registrations with, any Governmental Authority or with any
third party are required to be made or obtained by WBI or any of its
Subsidiaries in connection with the execution, delivery or performance by
WBI of this Agreement or the Stock Option Agreement or to consummate the
Merger except for (A) filings of applications, notices and the Agreement to
Merge, as applicable, with federal and state thrift and banking
authorities, (B) filings with the SEC and state securities authorities, and
(C) the filing of the certificate of merger with the DSS pursuant to the
DGCL and the OSS pursuant to the OGCL. As of the date hereof, WBI is not
aware of any reason why the approvals set forth in Section 7.01(b) will not
be received without the imposition of a condition, restriction or
requirement of the type described in Section 7.01(b).
(ii) Subject to receipt of the regulatory and stockholder
approvals referred to above and expiration of related regulatory
waiting periods, and required filings under federal and state
securities laws, the execution, delivery and performance of this
Agreement and the Stock Option Agreement and the consummation of the
transactions contemplated hereby and thereby do not and will not (A)
constitute a breach or violation of, or a default under, or give rise
to any Lien, any acceleration of remedies or any right of termination
under, any law, rule or regulation or any judgment, decree, order,
governmental permit or license, or agreement, indenture or instrument
of WBI or of any of its Subsidiaries or to which WBI or any of its
Subsidiaries or properties is subject or bound, (B) constitute a breach
or violation of, or a default under, the WBI Certificate or the WBI
By-Laws, or (C) require any consent or approval under any such law,
rule, regulation, judgment, decree, order, governmental permit or
license, agreement, indenture or instrument.
(g) Financial Reports and SEC Documents. (i) WBI's Annual Reports on
Form 10-KSB for the fiscal years ended June 30, 1996, 1997 and 1998 and all
other reports, registration statements, definitive proxy statements or
information statements filed or to be filed by it or any of its
Subsidiaries subsequent to June 30, 1996 under the Securities Act, or under
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act, in the form filed or
to be filed (collectively, "WBI SEC Documents") with the SEC, as of the
date filed, (A) complied or will comply in all material respects with the
applicable requirements under the Securities Act or the Exchange Act, as
the case may be, and (B) did not and will not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; and each of the
balance sheets or statements of condition contained in or incorporated by
reference into any such WBI SEC Document (including the related notes and
schedules thereto) fairly presents, or will fairly present, the financial
position of WBI and its Subsidiaries as of its date, and each of the
statements of income and changes in stockholders' equity and cash flows or
equivalent statements in such WBI SEC Documents (including any related
notes and schedules thereto) fairly presents, or will fairly present, the
results of operations, changes in stockholders' equity and cash flows, as
the case may be, of
17
<PAGE> 21
WBI and its Subsidiaries for the periods to which they relate, in each case
in accordance with generally accepted accounting principles consistently
applied during the periods involved, except in each case as may be noted
therein, subject to normal year-end audit adjustments and the absence of
footnotes in the case of unaudited statements.
(ii) Since June 30, 1998, WBI and its Subsidiaries have not
incurred any material liability not disclosed in any WBI SEC Document
other than in the ordinary course of business consistent with past
practice.
(iii) Since June 30, 1998, (A) WBI and its Subsidiaries have
conducted their respective businesses in the ordinary and usual course
consistent with past practice (excluding matters related to this
Agreement and the transactions contemplated hereby) and (B) no event
has occurred or circumstance arisen that, individually or taken
together with all other facts, circumstances and events (described in
any paragraph of Section 5.03 or otherwise), is reasonably likely to
have a Material Adverse Effect with respect to WBI.
(h) Litigation. No litigation, claim or other proceeding before any
court or governmental agency is pending against WBI or any of its
Subsidiaries and, to WBI's knowledge, no such litigation, claim or other
proceeding has been threatened.
(i) Regulatory Matters.
(i) Neither WBI nor any of its Subsidiaries or properties is a
party to or is subject to any order, decree, agreement, memorandum of
understanding or similar arrangement with, or a commitment letter or
similar submission to, or extraordinary supervisory letter from, any
federal or state governmental agency or authority charged with the
supervision or regulation of financial institutions (or their holding
companies) or issuers of securities or engaged in the insurance of
deposits (including, without limitation, the Office of the Comptroller
of the Currency, the Office of Thrift Supervision, the Federal Reserve
System and the FDIC) or the supervision or regulation of it or any of
its Subsidiaries (collectively, the "Regulatory Authorities").
(ii) Neither it nor any of its Subsidiaries has been advised by
any Regulatory Authority that such Regulatory Authority is
contemplating issuing or requesting (or is considering the
appropriateness of issuing or requesting) any such order, decree,
agreement, memorandum of understanding, commitment letter, supervisory
letter or similar submission.
(j) Compliance with Laws. Each of WBI and its Subsidiaries:
(i) is in compliance with all applicable federal, state, local and
foreign statutes, laws, regulations, ordinances, rules, judgments,
orders or decrees applicable thereto or to the employees conducting
such businesses, including, without limitation, the Equal Credit
18
<PAGE> 22
Opportunity Act, the Fair Housing Act, the Community Reinvestment Act,
the Home Mortgage Disclosure Act and all other applicable fair lending
laws and other laws relating to discriminatory business practices;
(ii) has all permits, licenses, authorizations, orders and
approvals of, and has made all filings, applications and registrations
with, all Governmental Authorities that are required in order to permit
them to own or lease their properties and to conduct their businesses
as presently conducted; all such permits, licenses, certificates of
authority, orders and approvals are in full force and effect and, to
WBI's knowledge, no suspension or cancellation of any of them is
threatened; and
(iii) has received, since June 30, 1998, no notification or
communication from any Governmental Authority (A) asserting that WBI or
any of its Subsidiaries is not in compliance with any of the statutes,
regulations, or ordinances which such Governmental Authority enforces
or (B) threatening to revoke any license, franchise, permit, or
governmental authorization (nor, to WBI's knowledge, do any grounds for
any of the foregoing exist).
(k) Material Contracts; Defaults. Except for this Agreement, the Stock
Option Agreement, those agreements and other documents filed as exhibits to
the WBI SEC Documents, neither it nor any of its Subsidiaries is a party
to, bound by or subject to any agreement, contract, arrangement, commitment
or understanding (whether written or oral) (i) that is a "material
contract" within the meaning of Item 601(b)(10) of the SEC's Regulation S-K
or (ii) that restricts or limits in any way the conduct of business by it
or any of its Subsidiaries (including without limitation a non-compete or
similar provision). Neither it nor any of its Subsidiaries is in default
under any contract, agreement, commitment, arrangement, lease, insurance
policy or other instrument to which it is a party, by which its respective
assets, business, or operations may be bound or affected in any way, or
under which it or its respective assets, business, or operations receive
benefits, and there has not occurred any event that, with the lapse of time
or the giving of notice or both, would constitute such a default.
(l) No Brokers. No action has been taken by WBI that would give rise to
any valid claim against any party hereto for a brokerage commission,
finder's fee or other like payment with respect to the transactions
contemplated by this Agreement, excluding a Previously Disclosed fee to be
paid to Stifel, Nicolaus & Company, Incorporated.
(m) Employee Benefit Plans. (i) Section 5.03(m)(i) of WBI's Disclosure
Schedule contains a complete and accurate list of all existing bonus,
incentive, deferred compensation, pension, retirement, profit-sharing,
thrift, savings, employee stock ownership, stock bonus, stock purchase,
restricted stock, stock option, severance, welfare and fringe benefit
plans, employment or severance agreements and all similar practices,
policies and arrangements in which any employee or former employee (the
"Employees"), consultant or former consultant
19
<PAGE> 23
(the "Consultants") or director or former director (the "Directors") of WBI
or any of its Subsidiaries participates or to which any such Employees,
Consultants or Directors are a party (the "Compensation and Benefit
Plans"). Neither WBI nor any of its Subsidiaries has any commitment to
create any additional Compensation and Benefit Plan or to modify or change
any existing Compensation and Benefit Plan.
(ii) Each Compensation and Benefit Plan has been operated and
administered in all material respects in accordance with its terms and
with applicable law, including, but not limited to, ERISA, the Code,
the Securities Act, the Exchange Act, the Age Discrimination in
Employment Act, or any regulations or rules promulgated thereunder, and
all filings, disclosures and notices required by ERISA, the Code, the
Securities Act, the Exchange Act, the Age Discrimination in Employment
Act and any other applicable law have been timely made. Each
Compensation and Benefit Plan which is an "employee pension benefit
plan" within the meaning of Section 3(2) of ERISA (a "Pension Plan")
and which is intended to be qualified under Section 401(a) of the Code
has received a favorable determination letter (including a
determination that the related trust under such Compensation and
Benefit Plan is exempt from tax under Section 501(a) of the Code) from
the Internal Revenue Service ("IRS"), and WBI is not aware of any
circumstances likely to result in revocation of any such favorable
determination letter. There is no material pending or, to the knowledge
of WBI, threatened legal action, suit or claim relating to the
Compensation and Benefit Plans. Neither WBI nor any of its Subsidiaries
has engaged in a transaction, or omitted to take any action, with
respect to any Compensation and Benefit Plan that would reasonably be
expected to subject WBI or any of its Subsidiaries to a tax or penalty
imposed by either Section 4975 of the Code or Section 502 of ERISA,
assuming for purposes of Section 4975 of the Code that the taxable
period of any such transaction expired as of the date hereof.
(iii) No liability (other than for payment of premiums to the PBGC
which have been made or will be made on a timely basis) under Title IV
of ERISA has been or is expected to be incurred by WBI or any of its
Subsidiaries with respect to any ongoing, frozen or terminated
"single-employer plan", within the meaning of Section 4001(a)(15) of
ERISA, currently or formerly maintained by any of them, or any
single-employer plan of any entity (an "ERISA Affiliate") which is
considered one employer with WBI under Section 4001(a)(14) of ERISA or
Section 414(b) or (c) of the Code (an "ERISA Affiliate Plan"). None of
WBI, any of its Subsidiaries or any ERISA Affiliate has contributed, or
has been obligated to contribute, to a multiemployer plan under
Subtitle E of Title IV of ERISA at any time since September 26, 1980.
No notice of a "reportable event", within the meaning of Section 4043
of ERISA for which the 30-day reporting requirement has not been
waived, has been required to be filed for any Compensation and Benefit
Plan or by any ERISA Affiliate Plan within the 12-month period ending
on the date hereof, and no such notice will be required to be filed as
a result of the transactions contemplated by this Agreement. The PBGC
has not instituted proceedings to terminate any Pension Plan or ERISA
Affiliate Plan and, to WBI's knowledge, no condition exists that
presents a
20
<PAGE> 24
material risk that such proceedings will be instituted. To the
knowledge of WBI, there is no pending investigation or enforcement
action by the PBGC, the Department of Labor (the "DOL") or IRS or any
other governmental agency with respect to any Compensation and Benefit
Plan. Under each Pension Plan and ERISA Affiliate Plan, as of the date
of the most recent actuarial valuation performed prior to the date of
this Agreement, the actuarially determined present value of all
"benefit liabilities", within the meaning of Section 4001(a)(16) of
ERISA (as determined on the basis of the actuarial assumptions
contained in such actuarial valuation of such Pension Plan or ERISA
Affiliate Plan), did not exceed the then current value of the assets of
such Pension Plan or ERISA Affiliate Plan and since such date there has
been neither an adverse change in the financial condition of such
Pension Plan or ERISA Affiliate Plan nor any amendment or other change
to such Pension Plan or ERISA Affiliate Plan that would increase the
amount of benefits thereunder which reasonably could be expected to
change such result.
(iv) All contributions required to be made under the terms of any
Compensation and Benefit Plan or ERISA Affiliate Plan or any employee
benefit arrangements under any collective bargaining agreement to which
WBI or any of its Subsidiaries is a party have been timely made or have
been reflected on WBI's financial statements. Neither any Pension Plan
nor any ERISA Affiliate Plan has an "accumulated funding deficiency"
(whether or not waived) within the meaning of Section 412 of the Code
or Section 302 of ERISA and all required payments to the PBGC with
respect to each Pension Plan or ERISA Affiliate Plan have been made on
or before their due dates. None of WBI, any of its Subsidiaries or any
ERISA Affiliate (x) has provided, or would reasonably be expected to be
required to provide, security to any Pension Plan or to any ERISA
Affiliate Plan pursuant to Section 401(a)(29) of the Code, and (y) has
taken any action, or omitted to take any action, that has resulted, or
would reasonably be expected to result, in the imposition of a lien
under Section 412(n) of the Code or pursuant to ERISA.
(v) Neither WBI nor any of its Subsidiaries has any obligations to
provide retiree health and life insurance or other retiree death
benefits under any Compensation and Benefit Plan, other than benefits
mandated by Section 4980B of the Code, and each such Compensation and
Benefit Plan may be amended or terminated without incurring liability
thereunder. There has been no communication to Employees by WBI or any
of its Subsidiaries that would reasonably be expected to promise or
guarantee such Employees retiree health or life insurance or other
retiree death benefits on a permanent basis.
(vi) WBI and its Subsidiaries do not maintain any Compensation and
Benefit Plans covering foreign Employees.
(vii) With respect to each Compensation and Benefit Plan, if
applicable, WBI has provided or made available to SFG, true and
complete copies of existing: (A) Compensation and Benefit Plan
documents and amendments thereto; (B) trust instruments and insurance
contracts; (C) two most recent Forms 5500 filed with the IRS;
21
<PAGE> 25
(D) most recent actuarial report and financial statement; (E) the most
recent summary plan description; (F) forms filed with the PBGC (other
than for premium payments); (G) most recent determination letter issued
by the IRS; (H) any Form 5310 or Form 5330 filed with the IRS; and (I)
most recent nondiscrimination tests performed under ERISA and the Code
(including 401(k) and 401(m) tests).
(viii) Except as disclosed on Section 5.03(m)(viii) of WBI's
Disclosure Schedule, the consummation of the transactions contemplated
by this Agreement would not, directly or indirectly (including, without
limitation, as a result of any termination of employment prior to or
following the Effective Time) reasonably be expected to (A) entitle any
Employee, Consultant or Director to any payment (including severance
pay or similar compensation) or any increase in compensation, (B)
result in the vesting or acceleration of any benefits under any
Compensation and Benefit Plan or (C) result in any material increase in
benefits payable under any Compensation and Benefit Plan.
(ix) Except as disclosed on Section 5.03(m)(ix) of WBI's
Disclosure Schedule, neither WBI nor any of its Subsidiaries maintains
any compensation plans, programs or arrangements the payments under
which would not reasonably be expected to be deductible as a result of
the limitations under Section 162(m) of the Code and the regulations
issued thereunder.
(x) Except as disclosed on Section 5.03(m)(x) of WBI's Disclosure
Schedule, as a result, directly or indirectly, of the transactions
contemplated by this Agreement (including, without limitation, as a
result of any termination of employment prior to or following the
Effective Time), none of SFG or WBI, or any of their respective
Subsidiaries, will be obligated to make a payment that would be
characterized as an "excess parachute payment" to an individual who is
a "disqualified individual" (as such terms are defined in Section 280G
of the Code)of WBI on a consolidated basis, without regard to whether
such payment is reasonable compensation for personal services performed
or to be performed in the future.
(n) Labor Matters. Neither WBI nor any of its Subsidiaries is a party
to or is bound by any collective bargaining agreement, contract or other
agreement or understanding with a labor union or labor organization, nor is
WBI or any of its Subsidiaries the subject of a proceeding asserting that
it or any such Subsidiary has committed an unfair labor practice (within
the meaning of the National Labor Relations Act) or seeking to compel WBI
or any such Subsidiary to bargain with any labor organization as to wages
or conditions of employment, nor is there any strike or other labor dispute
involving it or any of its Subsidiaries pending or, to WBI's knowledge,
threatened, nor is WBI aware of any activity involving its or any of its
Subsidiaries' employees seeking to certify a collective bargaining unit or
engaging in other organizational activity.
(o) Takeover Laws. WBI has taken all action required to be taken by it
in order to
22
<PAGE> 26
exempt this Agreement, the Stock Option Agreement and the transactions
contemplated hereby and thereby from, and this Agreement, the Stock Option
Agreement and the transactions contemplated hereby and thereby are exempt
from, the requirements of any "moratorium", "control share", "fair price",
"affiliate transaction", "business combination" or other antitakeover laws
and regulations of any state (collectively, "Takeover Laws") applicable to
it, including, without limitation, the State of Delaware.
(p) Environmental Matters. To WBI's knowledge, neither the conduct nor
operation of WBI or its Subsidiaries nor any condition of any property
presently or previously owned, leased or operated by any of them
(including, without limitation, in a fiduciary or agency capacity), or on
which any of them holds a Lien, violates or violated Environmental Laws and
to WBI's knowledge, no condition has existed or event has occurred with
respect to any of them or any such property that, with notice or the
passage of time, or both, is reasonably likely to result in liability under
Environmental Laws. To WBI's knowledge, neither WBI nor any of its
Subsidiaries has received any notice from any person or entity that WBI or
its Subsidiaries or the operation or condition of any property ever owned,
leased, operated, or held as collateral or in a fiduciary capacity by any
of them are or were in violation of or otherwise are alleged to have
liability under any Environmental Law, including, but not limited to,
responsibility (or potential responsibility) for the cleanup or other
remediation of any pollutants, contaminants, or hazardous or toxic wastes,
substances or materials at, on, beneath, or originating from any such
property.
(q) Tax Matters. (i) All Tax Returns that are required to be filed by
or with respect to WBI and its Subsidiaries have been duly filed, (ii) all
Taxes shown to be due on the Tax Returns referred to in clause (i) have
been paid in full, (iii) the Tax Returns referred to in clause (i) have
been examined by the Internal Revenue Service or the appropriate state,
local or foreign taxing authority or the period for assessment of the Taxes
in respect of which such Tax Returns were required to be filed has expired,
(iv) all deficiencies asserted or assessments made as a result of such
examinations have been paid in full, (v) no issues that have been raised by
the relevant taxing authority in connection with the examination of any of
the Tax Returns referred to in clause (i) are currently pending, and (vi)
no waivers of statutes of limitation have been given by or requested with
respect to any Taxes of WBI or its Subsidiaries. WBI has made available to
SFG true and correct copies of the United States federal income Tax Returns
filed by WBI and its Subsidiaries for each of the three most recent fiscal
years ended on or before June 30, 1997. Neither WBI nor any of its
Subsidiaries has any liability with respect to income, franchise or similar
Taxes that accrued on or before the end of the most recent period covered
by the WBI SEC Documents filed prior to the date hereof in excess of the
amounts accrued with respect thereto that are reflected in the financial
statements included in WBI' SEC Documents filed on or prior to the date
hereof. As of the date hereof, neither WBI nor any of its Subsidiaries has
any reason to believe that any conditions exist that might prevent or
impede the Parent Merger from qualifying as a reorganization within the
meaning of Section 368(a) of the Code.
23
<PAGE> 27
(ii) No Tax is required to be withheld pursuant to Section 1445 of
the Code as a result of the transfer contemplated by this Agreement.
(iii) WBI and its Subsidiaries will not be liable for any taxes as
a result of any Covered Transaction.
(r) Risk Management Instruments. All material interest rate swaps,
caps, floors, option agreements, futures and forward contracts and other
similar risk management arrangements, whether entered into for WBI' own
account, or for the account of one or more of WBI' Subsidiaries or their
customers (all of which are listed on WBI' Disclosure Schedule), were
entered into (i) in accordance with prudent business practices and all
applicable laws, rules, regulations and regulatory policies and (ii) with
counterparties believed to be financially responsible at the time; and each
of them constitutes the valid and legally binding obligation of WBI or one
of its Subsidiaries, enforceable in accordance with its terms (except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar laws of general
applicability relating to or affecting creditors' rights or by general
equity principles), and is in full force and effect. Neither WBI nor its
Subsidiaries, nor to WBI' knowledge any other party thereto, is in breach
of any of its obligations under any such agreement or arrangement.
(s) Books and Records. The books and records of WBI and its
Subsidiaries have been fully, properly and accurately maintained in all
material respects, and there are no material inaccuracies or discrepancies
of any kind contained or reflected therein and they fairly reflect the
substance of events and transactions included therein.
(t) Insurance. WBI's Disclosure Schedule sets forth all of the
insurance policies, binders, or bonds maintained by WBI or its
Subsidiaries. WBI and its Subsidiaries are insured with reputable insurers
against such risks and in such amounts as the management of WBI reasonably
has determined to be prudent in accordance with industry practices. All
such insurance policies are in full force and effect; WBI and its
Subsidiaries are not in material default thereunder; and all claims
thereunder have been filed in due and timely fashion.
(u) Accounting Treatment. As of the date hereof, after due inquiry, WBI
is aware of no reason why the Merger will fail to qualify for
"pooling-of-interests" accounting treatment.
(v) Disclosure. The representations and warranties contained in this
Section 5.03 do not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements and
information contained in this Section 5.03 not misleading.
(w) Year 2000. Neither WBI nor any of its Subsidiaries has received, or
has reason to believe that it will receive, a rating of less than
"satisfactory" on any Office of Thrift Supervision Year 2000 Report of
Examination. WBI has disclosed to SFG a complete and accurate copy of its
plan, including an estimate of the anticipated associated costs, for
24
<PAGE> 28
addressing the issues set forth in the statements of the FFIEC dated May 5,
1997, entitled "Year 2000 Project Management Awareness," and December 17,
1997, entitled "Safety and Soundness Guidelines Concerning the Year 2000
Business Risk," as such issues affect it and its Subsidiaries and such plan
is in material compliance with the schedule set for in the FFIEC
statements.
5.04 REPRESENTATIONS AND WARRANTIES OF SFG. Subject to Sections 5.01
and 5.02 and except as Previously Disclosed in a paragraph of its Disclosure
Schedule corresponding to the relevant paragraph below, SFG hereby represents
and warrants to WBI as follows:
(a) Organization, Standing and Authority. SFG is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Ohio. SFG is duly qualified to do business and is in good standing
in the State of Ohio and any foreign jurisdictions where its ownership or
leasing of property or assets or the conduct of its business requires it to
be so qualified. MAB is a national banking association duly organized,
validly existing and in good standing under the laws of the United States
of America. MAB is duly qualified to do business and is in good standing in
the State of Ohio and any foreign jurisdictions where its ownership or
leasing of property or assets or the conduct of its business requires it to
be so qualified.
(b) SFG Stock. (i) As of the date hereof, the authorized capital stock
of SFG consists of 160,000,000 shares, of which 150,000,000 shares are SFG
Common Stock, of which 45,045,733 shares are outstanding as of the date
hereof, and 10,000,000 shares are SFG serial preferred stock, of which no
shares are outstanding as of the date hereof. As of the date hereof, except
as set forth in its Disclosure Schedule, SFG does not have any Rights
issued or outstanding with respect to SFG Common Stock and SFG does not
have any commitment to authorize, issue or sell any SFG Common Stock or
Rights, except pursuant to this Agreement. The outstanding shares of SFG
Common Stock have been duly authorized and are validly issued and
outstanding, fully paid and nonassessable, and subject to no preemptive
rights (and were not issued in violation of any preemptive rights).
(ii) The shares of SFG Common Stock to be issued in exchange for
shares of WBI Common Stock in the Parent Merger, when issued in
accordance with the terms of this Agreement, will be duly authorized,
validly issued, fully paid and nonassessable and subject to no
preemptive rights.
(c) Subsidiaries. Each of SFG's Subsidiaries has been duly organized
and is validly existing in good standing under the laws of the jurisdiction
of its organization, and is duly qualified to do business and is in good
standing in the jurisdictions where its ownership or leasing of property or
the conduct of its business requires it to be so qualified and it owns,
directly or indirectly, all the issued and outstanding equity securities of
each of its Significant Subsidiaries.
25
<PAGE> 29
(d) Corporate Power. Each of SFG and its Subsidiaries has the corporate
power and authority to carry on its business as it is now being conducted
and to own all its properties and assets; and SFG has the corporate power
and authority to execute, deliver and perform its obligations under this
Agreement and the Stock Option Agreement and to consummate the transactions
contemplated hereby and thereby.
(e) Corporate Authority. This Agreement, the Stock Option Agreement and
the transactions contemplated hereby and thereby have been authorized by
all necessary corporate action of SFG and the SFG Board prior to the date
hereof and no stockholder approval is required on the part of SFG. The
Agreement to Merge, when executed by MAB, shall have been approved by the
Board of Directors of MAB and by the SFG Board, as the sole stockholder of
MAB. This Agreement is a valid and legally binding agreement of SFG,
enforceable in accordance with its terms (except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer and similar laws of general applicability relating to
or "affecting creditors" rights or by general equity principles).
(f) Regulatory Approvals; No Defaults. (i) No consents or approvals of,
or filings or registrations with, any Governmental Authority or with any
third party are required to be made or obtained by SFG or any of its
Subsidiaries in connection with the execution, delivery or performance by
SFG of this Agreement or to consummate the Merger except for (A) the filing
of applications, notices, or the Agreement to Merge, as applicable, with
the federal and state thrift and banking authorities; (B) the filing and
declaration of effectiveness of the Registration Statement; (C) the filing
of the certificate of merger with the DSS pursuant to the DGCL and with the
OSS pursuant to the OGCL; (D) such filings as are required to be made or
approvals as are required to be obtained under the securities or "Blue Sky"
laws of various states in connection with the issuance of SFG Common Stock
in the Parent Merger; and (E) receipt of the approvals set forth in Section
7.01(b). As of the date hereof, SFG is not aware of any reason why the
approvals set forth in Section 7.01(b) will not be received without the
imposition of a condition, restriction or requirement of the type described
in Section 7.01(b).
(ii) Subject to the satisfaction of the requirements referred to
in the preceding paragraph and expiration of the related waiting
periods, and required filings under federal and state securities laws,
the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby do not and will
not (A) constitute a breach or violation of, or a default under, or
give rise to any Lien, any acceleration of remedies or any right of
termination under, any law, rule or regulation or any judgment, decree,
order, governmental permit or license, or agreement, indenture or
instrument of SFG or of any of its Subsidiaries or to which SFG or any
of its Subsidiaries or properties is subject or bound, (B) constitute a
breach or violation of, or a default under, the articles of
incorporation or Code of Regulations (or similar governing documents)
of SFG or any of its Subsidiaries, or (C) require any consent or
approval under any such law, rule, regulation, judgment, decree, order,
governmental permit or license, agreement, indenture or instrument.
26
<PAGE> 30
(g) Financial Reports and SEC Documents; Material Adverse Effect. (i)
SFG's supplemental consolidated financial statements as of December 31,
19976 and 1996 and for each of the three years in the period ended December
31, 1998, as filed with the SEC on SFG's Current Report on Form 8-K dated
October 15, 1998 (which include the financial statements of Mid Am, Inc.,
Citizens Bancshares, Inc., Century Financial Corporation and Unibank), and
all other reports, registration statements, definitive proxy statements or
other statements filed or to be filed by it or any of its Subsidiaries with
the SEC subsequent to December 31, 1997 under the Securities Act, or under
Section 13, 14 or 15(d) of the Exchange Act, in the form filed or to be
filed (collectively, "SFG SEC Documents") as of the date filed, (A)
complied or will comply in all material respects with the applicable
requirements under the Securities Act or the Exchange Act, as the case may
be, and (B) did not and will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading; and each of the balance sheets
or statements of condition contained in or incorporated by reference into
any such SFG SEC Document (including the related notes and schedules
thereto) fairly presents, or will fairly present, the financial position of
SFG and its Subsidiaries as of its date, and each of the statements of
income or results of operations and changes in stockholders' equity and
cash flows or equivalent statements in such SFG SEC Documents (including
any related notes and schedules thereto) fairly presents, or will fairly
present, the results of operations, changes in stockholders' equity and
cash flows, as the case may be, of SFG and its Subsidiaries for the periods
to which they relate, in each case in accordance with generally accepted
accounting principles consistently applied during the periods involved,
except in each case as may be noted therein, subject to normal year-end
audit adjustments in the case of unaudited statements.
(ii) The Ohio Bank financial statements as of December 31, 1997
and 1996 and for each of the three years in the period ended December
31, 1997, (A) complied or will comply in all material respects with
generally accepted accounting principles, and (B) did not and will not
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading.
(iii) Since December 31, 1997, no event has occurred or
circumstance arisen that, individually or taken together with all other
facts, circumstances and events (described in any paragraph of Section
5.04 or otherwise), is reasonably likely to have a Material Adverse
Effect with respect to SFG.
(h) Litigation; Regulatory Action. (i) No litigation, claim or other
proceeding before any Governmental Authority is pending against SFG or any
of its Subsidiaries and, to the best of SFG's knowledge, no such
litigation, claim or other proceeding has been threatened.
27
<PAGE> 31
(ii) Neither SFG nor any of its Subsidiaries or properties is a
party to or is subject to any order, decree, agreement, memorandum of
understanding or similar arrangement with, or a commitment letter or
similar submission to, or extraordinary supervisory letter from a
Regulatory Authority, nor has SFG or any of its Subsidiaries been
advised by a Regulatory Authority that such agency is contemplating
issuing or requesting (or is considering the appropriateness of issuing
or requesting) any such order, decree, agreement, memorandum of
understanding, commitment letter, supervisory letter or similar
submission.
(i) Compliance with Laws. Each of SFG and its Subsidiaries:
(i) is in compliance with all applicable federal, state, local and
foreign statutes, laws, regulations, ordinances, rules, judgments,
orders or decrees applicable thereto or to the employees conducting
such businesses, including, without limitation, the Equal Credit
Opportunity Act, the Fair Housing Act, the Community Reinvestment Act,
the Home Mortgage Disclosure Act and all other applicable fair lending
laws and other laws relating to discriminatory business practices; and
(ii) has all permits, licenses, authorizations, orders and
approvals of, and has made all filings, applications and registrations
with, all Governmental Authorities that are required in order to permit
them to conduct their businesses substantially as presently conducted;
all such permits, licenses, certificates of authority, orders and
approvals are in full force and effect and, to the best of its
knowledge, no suspension or cancellation of any of them is threatened;
and
(iii) has received, since December 31, 1996, no notification or
communication from any Governmental Authority (A) asserting that SFG or
any of its Subsidiaries is not in compliance with any of the statutes,
regulations, or ordinances which such Governmental Authority enforces
or (B) threatening to revoke any license, franchise, permit, or
governmental authorization (nor, to SFG's knowledge, do any grounds for
any of the foregoing exist).
(j) No Brokers. No action has been taken by SFG that would give rise to
any valid claim against any party hereto for a brokerage commission,
finder's fee or other like payment with respect to the transactions
contemplated by this Agreement.
(k) Takeover Laws. SFG has taken all action required to be taken by it
in order to exempt this Agreement, the Stock Option Agreement and the
transactions contemplated hereby and thereby from, and this Agreement, the
Stock Option Agreement and the transactions contemplated hereby and thereby
are exempt from, the requirements of any Takeover Laws applicable to SFG.
(l) Environmental Matters. To SFG's knowledge, neither the conduct nor
operation of SFG or its Subsidiaries nor any condition of any property
presently or previously owned,
28
<PAGE> 32
leased or operated by any of them (including, without limitation, in a
fiduciary or agency capacity), or on which any of them holds a Lien,
violated Environmental Laws and to SFG's knowledge no condition has existed
or event has occurred with respect to any of them or any such property
that, with notice or the passage of time, or both, is reasonably likely to
result in liability under Environmental Laws. To SFG's knowledge, neither
SFG nor any of its Subsidiaries has received any notice from any person or
entity that SFG or its Subsidiaries or the operation or condition of any
property ever owned, leased, operated, or held as collateral or in a
fiduciary capacity by any of them are or were in violation of or otherwise
are alleged to have liability under any Environmental Law, including, but
not limited to, responsibility (or potential responsibility) for the
cleanup or other remediation of any pollutants, contaminants, or hazardous
or toxic wastes, substances or materials at, on, beneath, or originating
from any such property.
(m) Tax Matters. (i) All Tax Returns that are required to be filed by
or with respect to SFG and its Subsidiaries have been duly filed, (ii) all
Taxes shown to be due on the Tax Returns referred to in clause (i) have
been paid in full, (iii) the Tax Returns referred to in clause (i) have
been examined by the Internal Revenue Service or the appropriate state,
local or foreign taxing authority or the period for assessment of the Taxes
in respect of which such Tax Returns were required to be filed has expired,
(iv) all deficiencies asserted or assessments made as a result of such
examinations have been paid in full, (v) no issues that have been raised by
the relevant taxing authority in connection with the examination of any of
the Tax Returns referred to in clause (i) are currently pending, and (vi)
no waivers of statutes of limitation have been given by or requested with
respect to any Taxes of SFG or its Subsidiaries. Neither SFG nor any of its
Subsidiaries has any liability with respect to income, franchise or similar
Taxes that accrued on or before the end of the most recent period covered
by the SFG SEC Documents filed prior to the date hereof in excess of the
amounts accrued with respect thereto that are reflected in the financial
statements included in SFG's SEC Documents filed on or prior to the date
hereof. As of the date hereof, SFG has no reason to believe that any
conditions exist that might prevent or impede the Parent Merger from
qualifying as a reorganization with the meaning of Section 368(a) of the
Code.
(n) Books and Records. The books and records of SFG and its
Subsidiaries have been fully, properly and accurately maintained in all
material respects, and there are no material inaccuracies or discrepancies
of any kind contained or reflected therein, and they fairly present the
substance of events and transactions included therein.
(o) Insurance. SFG's Disclosure Schedule sets forth all of the
insurance policies, binders, or bonds maintained by SFG or its
Subsidiaries. SFG and its Subsidiaries are insured with reputable insurers
against such risks and in such amounts as the management of SFG reasonably
has determined to be prudent in accordance with industry practices. All
such insurance policies are in full force and effect; SFG and its
Subsidiaries are not in material default thereunder; and all claims
thereunder have been filed in due and timely fashion.
29
<PAGE> 33
(p) Accounting Treatment. As of the date hereof, after due inquiry, SFG
is aware of no reason why the Merger will fail to qualify for "pooling-of-
interests" accounting treatment.
(q) Contracts. Neither SFG nor any of its Subsidiaries is in default
under any contract, agreement, commitment, arrangement, lease, insurance
policy or other instrument to which it is a party, by which its respective
assets, business, or operations may be bound or affected in any way, or
under which it or its respective assets, business, or operations receive
benefits, and there has not occurred any event that, with the lapse of time
or the giving of notice or both, would constitute such a default.
(r) Disclosure. The representations and warranties contained in this
Section 5.04 do not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements and
information contained in this Section 5.04 not misleading.
(s) Risk Management Instruments. All material interest rate swaps,
caps, floors, option agreements, futures and forward contracts and other
similar risk management arrangements, whether entered into for SFG's own
account, or for the account of one or more of its Subsidiaries or their
customers, were entered into (i) in accordance with prudent business
practices and all applicable laws, rules, regulations and regulatory
policies and with counterparties believed to be financially responsible at
the time; and each of them constitutes the valid and legally binding
obligation of SFG or one of its Subsidiaries, enforceable in accordance
with its terms (except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and
similar laws of general applicability relating to or affecting creditors'
rights or by general equity principles), and is in full force and effect.
Neither SFG nor its Subsidiaries, nor to SFG's knowledge any other party
thereto, is in breach of any of its obligations under any such agreement or
arrangement in any material respect.
(t) Year 2000. Neither SFG nor any of its Subsidiaries has received, or
has reason to believe that it will receive, a rating of less than
"satisfactory" on any Year 2000 Report of Examination of any Regulatory
Authority. SFG has disclosed to WBI a complete and accurate copy of its
plan, including an estimate of the anticipated associated costs, for
addressing the issues set forth in the statements of the FFIEC dated May 5,
1997, entitled "Year 2000 Project Management Awareness," and December 17,
1997, entitled "Safety and Soundness Guidelines Concerning the Year 2000
Business Risk," as such issues affect it and its Subsidiaries, and such
plan is in material compliance with the schedule set forth in the FFIEC
statements.
ARTICLE VI
COVENANTS
30
<PAGE> 34
6.01 REASONABLE BEST EFFORTS. Subject to the terms and conditions of
this Agreement, each of WBI and SFG agrees to use their reasonable best efforts
in good faith to take, or cause to be taken, all actions, and to do, or cause to
be done, all things necessary, proper or desirable, or advisable under
applicable laws, so as to permit consummation of the Merger as promptly as
practicable and otherwise to enable consummation of the transactions
contemplated hereby and shall cooperate fully with the other party hereto to
that end.
6.02 STOCKHOLDER APPROVAL. WBI agrees to take, in accordance with
applicable law, the WBI Certificate and WBI By-Laws, all action necessary to
convene an appropriate meeting of its stockholders to consider and vote upon the
adoption of this Agreement and any other matters required to be approved or
adopted by WBI's stockholders for consummation of the Parent Merger (including
any adjournment or postponement, the "WBI Meeting"), as promptly as practicable
after the Registration Statement is declared effective. The WBI Board shall
recommend that its stockholders adopt this Agreement at the WBI Meeting unless
otherwise necessary under the applicable fiduciary duties of the WBI Board, as
determined by the WBI Board in good faith after consultation with and based upon
advice of independent legal counsel.
6.03 REGISTRATION STATEMENT. (a) SFG agrees to prepare pursuant to all
applicable laws, rules and regulations a registration statement on Form S-4 (the
"Registration Statement") to be filed by SFG with the SEC in connection with the
issuance of SFG Common Stock in the Parent Merger (including the proxy statement
and prospectus and other proxy solicitation materials of WBI constituting a part
thereof (the "Proxy Statement") and all related documents). WBI agrees to
cooperate, and to cause its Subsidiaries to cooperate, with SFG, its counsel and
its accountants, in preparation of the Registration Statement and the Proxy
Statement; and provided that WBI and its Subsidiaries have cooperated as
required above, SFG agrees to file the Proxy Statement and the Registration
Statement (together, the "Proxy/Prospectus") with the SEC as promptly as
reasonably practicable. Each of WBI and SFG agrees to use all reasonable efforts
to cause the Proxy/Prospectus to be declared effective under the Securities Act
as promptly as reasonably practicable after filing thereof. SFG also agrees to
use all reasonable efforts to obtain, prior to the effective date of the
Registration Statement, all necessary state securities law or "Blue Sky" permits
and approvals required to carry out the transactions contemplated by this
Agreement. WBI agrees to furnish to SFG all information concerning WBI, its
Subsidiaries, officers, directors and stockholders as may be reasonably
requested in connection with the foregoing.
(b) Each of WBI and SFG agrees, as to itself and its Subsidiaries, that
none of the information supplied or to be supplied by it for inclusion or
incorporation by reference in (i) the Registration Statement will, at the
time the Registration Statement and each amendment or supplement thereto,
if any, becomes effective under the Securities Act, contain any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein not
misleading, and (ii) the Proxy Statement and any amendment or supplement
thereto will, at the date of mailing to the WBI
31
<PAGE> 35
stockholders and at the time of the WBI Meeting, as the case may be,
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading or any statement which, in the light of
the circumstances under which such statement is made, will be false or
misleading with respect to any material fact, or which will omit to state
any material fact necessary in order to make the statements therein not
false or misleading or necessary to correct any statement in any earlier
statement in the Proxy Statement or any amendment or supplement thereto.
Each of WBI and SFG further agrees that if it shall become aware prior to
the Effective Date of any information furnished by it that would cause any
of the statements in the Proxy Statement to be false or misleading with
respect to any material fact, or to omit to state any material fact
necessary to make the statements therein not false or misleading, to
promptly inform the other party thereof and to take the necessary steps to
correct the Proxy Statement.
(c) SFG agrees to advise WBI, promptly after SFG receives notice
thereof, of the time when the Registration Statement has become effective
or any supplement or amendment has been filed, of the issuance of any stop
order or the suspension of the qualification of SFG Stock for offering or
sale in any jurisdiction, of the initiation or threat of any proceeding for
any such purpose, or of any request by the SEC for the amendment or
supplement of the Registration Statement or for additional information.
6.04 PRESS RELEASES. Each of WBI and SFG agrees that it will not,
without the prior approval of the other party, issue any press release or
written statement for general circulation relating to the transactions
contemplated hereby, except as otherwise required by applicable law or
regulation or NASDAQ rules.
6.05 ACCESS; INFORMATION. (a) Each of WBI and SFG agrees that upon
reasonable notice and subject to applicable laws relating to the exchange of
information, it shall afford the other party and the other party's officers,
employees, counsel, accountants and other authorized representatives, such
access during normal business hours throughout the period prior to the Effective
Time to the books, records (including, without limitation, tax returns and work
papers of independent auditors), properties, personnel and to such other
information as any party may reasonably request and, during such period, it
shall furnish promptly to such other party (i) a copy of each material report,
schedule and other document filed by it pursuant to federal or state securities
or banking laws, and (ii) all other information concerning the business,
properties and personnel of it as the other may reasonably request.
(b) Each agrees that it will not, and will cause its representatives
not to, use any information obtained pursuant to this Section 6.05 (as well
as any other information obtained prior to the date hereof in connection
with the entering into of this Agreement) for any purpose unrelated to the
consummation of the transactions contemplated by this Agreement. Subject to
the requirements of law, each party will keep confidential, and will cause
its representatives to keep confidential, all information and documents
obtained pursuant to this Section 6.05 (as well as any other information
obtained prior to the date hereof in connection
32
<PAGE> 36
with the entering into of this Agreement) unless such information (i) was
already known to such party, (ii) becomes available to such party from
other sources not known by such party to be bound by a confidentiality
obligation, (iii) is disclosed with the prior written approval of the party
to which such information pertains or (iv) is or becomes readily
ascertainable from published information or trade sources. In the event
that this Agreement is terminated or the transactions contemplated by this
Agreement shall otherwise fail to be consummated, each party shall promptly
cause all copies of documents or extracts thereof containing information
and data as to another party hereto to be returned to the party which
furnished the same. No investigation by either party of the business and
affairs of the other shall affect or be deemed to modify or waive any
representation, warranty, covenant or agreement in this Agreement, or the
conditions to either party's obligation to consummate the transactions
contemplated by this Agreement.
(c) During the period from the date of this Agreement to the Effective
Time, WBI shall promptly furnish SFG with copies of all monthly and other
interim financial statements produced in the ordinary course of business as
the same shall become available.
6.06 ACQUISITION PROPOSALS. WBI agrees that it shall not, and shall
cause its Subsidiaries and its and its Subsidiaries' officers, directors,
agents, advisors and affiliates not to, solicit or encourage inquiries or
proposals with respect to, or engage in any negotiations concerning, or provide
any confidential information to, or have any discussions with, any person
relating to, any Acquisition Proposal. It shall immediately cease and cause to
be terminated any activities, discussions or negotiations conducted prior to the
date of this Agreement with any parties other than SFG with respect to any of
the foregoing and shall use its reasonable best efforts to enforce any
confidentiality or similar agreement relating to an Acquisition Proposal. WBI
shall promptly (within 24 hours) advise SFG following the receipt by WBI of any
Acquisition Proposal and the substance thereof (including the identity of the
person making such Acquisition Proposal), and advise SFG of any material
developments with respect to such Acquisition Proposal immediately upon the
occurrence thereof. Notwithstanding the foregoing, but only after the receipt of
an Acquisition Proposal and during the period prior to the WBI Meeting, WBI may
provide information at the request of or enter into negotiations with the party
presenting the Acquisition Proposal with respect thereto, if the WBI Board
determines in good faith, after consultation with and based upon the advice of
independent legal counsel, that the failure to do so would result in a breach of
the fiduciary duties of the WBI Board to the WBI stockholders under applicable
law.
6.07 AFFILIATE AGREEMENTS. Not later than the 15th day prior to the
mailing of the Proxy Statement, WBI shall deliver to SFG a schedule of each
person that, to the best of its knowledge, is or is reasonably likely to be, as
of the date of the WBI Meeting, deemed to be an "affiliate" of WBI (each, a "WBI
Affiliate") as that term is used in Rule 145 under the Securities Act or SEC
Accounting Series Releases 130 and 135. WBI shall use its reasonable best
efforts to cause each person who may be deemed to be a WBI Affiliate, as the
case may be, to execute and deliver to SFG on or before the date of mailing of
the Proxy Statement an agreement in the form attached hereto as Exhibit B.
33
<PAGE> 37
6.08 TAKEOVER LAWS. No party hereto shall take any action that would
cause the transactions contemplated by this Agreement or the Stock Option
Agreement to be subject to requirements imposed by any Takeover Law and each of
them shall take all necessary steps within its control to exempt (or ensure the
continued exemption of) the transactions contemplated by this Agreement from, or
if necessary challenge the validity or applicability of, any applicable Takeover
Law, as now or hereafter in effect.
6.09 CERTAIN POLICIES. Prior to the Effective Date, WBI shall,
consistent with generally accepted accounting principles and on a basis mutually
satisfactory to it and SFG, modify and change its loan, litigation and real
estate valuation policies and practices (including loan classifications and
levels of reserves) so as to be applied on a basis that is consistent with that
of SFG; provided, however, that WBI shall not be obligated to take any such
action pursuant to this Section 6.09 unless and until SFG acknowledges that all
conditions to its obligation to consummate the Merger have been satisfied and
certifies to WBI that SFG's representations and warranties, subject to Section
5.02, are true and correct as of such date and that SFG is otherwise material in
compliance with this Agreement. WBI's representations, warranties and covenants
contained in this Agreement shall not be deemed to be untrue or breached in any
respect for any purpose as a consequence of any modifications or changes
undertaken solely on account of this Section 6.09.
6.10 NASDAQ LISTING. SFG shall file a listing application, or a NASDAQ
Notification Form for Change in the Number of Shares Outstanding, as required by
NASDAQ, with respect to the shares of SFG Common Stock to be issued to the
holders of WBI Common Stock in the Merger.
6.11 REGULATORY APPLICATIONS. (a) SFG and WBI and their respective
Subsidiaries shall cooperate and use their respective reasonable best efforts to
prepare all documentation, to timely effect all filings and to obtain all
permits, consents, approvals and authorizations of all third parties and
Governmental Authorities necessary to consummate the transactions contemplated
by this Agreement. Each of SFG and WBI shall have the right to review in
advance, and to the extent practicable each will consult with the other, in each
case subject to applicable laws relating to the exchange of information, with
respect to, and shall be provided in advance so as to reasonably exercise its
right to review in advance, all material written information submitted to any
third party or any Governmental Authority in connection with the transactions
contemplated by this Agreement. In exercising the foregoing right, each of the
parties hereto agrees to act reasonably and as promptly as practicable. Each
party hereto agrees that it will consult with the other party hereto with
respect to the obtaining of all material permits, consents, approvals and
authorizations of all third parties and Governmental Authorities necessary or
advisable to consummate the transactions contemplated by this Agreement and each
party will keep the other party apprised of the status of material matters
relating to completion of the transactions contemplated hereby.
34
<PAGE> 38
(b) Each party agrees, upon request, to furnish the other party with
all information concerning itself, its Subsidiaries, directors, officers
and stockholders and such other matters as may be reasonably necessary or
advisable in connection with any filing, notice or application made by or
on behalf of such other party or any of its Subsidiaries to any third party
or Governmental Authority.
6.12 INDEMNIFICATION. (a) Following the Effective Date and for a period
of six years thereafter, SFG shall indemnify, defend and hold harmless the
present directors, officers and employees of WBI and its Subsidiaries (each, an
"Indemnified Party") against all costs or expenses (including reasonable
attorneys' fees), judgments, fines, losses, claims, damages or liabilities
(collectively, "Costs") incurred in connection with any claim, action, suit,
proceeding or investigation, whether civil, criminal, administrative or
investigative, arising out of actions or omissions occurring at or prior to the
Effective Time (including, without limitation, the transactions contemplated by
this Agreement) to the fullest extent that WBI is permitted to indemnify (and
advance expenses to) its directors, officers, and employees under the laws of
the State of Delaware, the WBI Certificate and the WBI By-Laws as in effect on
the date hereof; provided that any determination required to be made with
respect to whether an officer's, director's or employee's conduct complies with
the standards set forth under Delaware law, the WBI Certificate and the WBI
By-Laws shall be made by independent counsel (which shall not be counsel that
provides material services to SFG) selected by SFG and reasonably acceptable to
such officer, director or employee.
(b) For a period of three years from the Effective Time, SFG shall use
its reasonable best efforts to provide that portion of director's and
officer's liability insurance that serves to reimburse the present and
former officers and directors of WBI or any of its Subsidiaries (determined
as of the Effective Time) (as opposed to WBI) with respect to claims
against such directors and officers arising from facts or events which
occurred before the Effective Time, which insurance shall contain at least
the same coverage and amounts, and contain terms and conditions no less
advantageous, as that coverage currently provided by WBI; provided,
however, that in no event shall SFG be required to extend more than 200
percent of the current amount expended by WBI (the "Insurance Amount") to
maintain or procure such directors and officers insurance coverage;
provided , further that if SFG is unable to maintain or obtain the
insurance called for by this Section 6.12(b), SFG shall use its reasonable
best efforts to obtain as much comparable insurance or is available for the
Insurance Amount; provided, further, that officers and directors of WBI or
any Subsidiary may be required to make application and provide customary
representations and warranties to SFG's insurance carrier for the purpose
of obtaining such insurance.
(c) Any Indemnified Party wishing to claim indemnification under
Section 6.12(a), upon learning of any claim, action, suit, proceeding or
investigation described above, shall promptly notify SFG thereof; provided
that the failure so to notify shall not affect the obligations of SFG under
Section 6.12(a) unless and to the extent that SFG is actually prejudiced as
a result of such failure.
35
<PAGE> 39
(d) If SFG or any of its successors or assigns shall consolidate with
or merge into any other entity and shall not be the continuing or surviving
entity of such consolidation or merger or shall transfer all or
substantially all of its assets to any entity, then and in each case,
proper provision shall be made so that the successors and assigns of SFG
shall assume the obligations set forth in this Section 6.12.
6.13 BENEFIT PLANS. (a) Except as expressly contemplated by a separate
agreement entered into by WBI and SFG on the date hereof, at the Effective
Time, SFG or an applicable SFG Subsidiary, as the case may be, shall be
substituted for WBI and each WBI Subsidiary as the sponsoring employer
under those benefit and welfare plans with respect to which WBI or any of
its Subsidiaries is a sponsoring employer immediately prior to the
Effective Time, and shall assume and be vested with all of the powers,
rights, duties, obligations and liabilities previously vested in WBI and/or
its Subsidiaries with respect to each such plan. Except as expressly
contemplated by a separate agreement entered into by WBI and SFG on the
date hereof, each such plan shall be continued in effect by SFG or an
applicable SFG Subsidiary after the Effective Time without a termination or
discontinuance thereof as a result of the Merger, subject to the power
reserved to SFG or any applicable SFG Subsidiary under each such plan to
subsequently amend or terminate the plan, which amendments or terminations
shall comply with the terms of the plans and applicable law. WBI, each WBI
Subsidiary, and SFG will use all reasonable efforts (i) to effect said
substitutions and assumptions, and such other actions contemplated under
this Agreement, and (ii) to amend such plans as to the extent necessary to
provide for said substitutions and assumptions, and such other actions
contemplated under this Agreement.
(b) At or as promptly as practicable after the Effective Time, SFG
shall provide, or cause an appropriate SFG Subsidiary to provide, to each
employee of WBI, and its wholly-owned subsidiaries as of the Effective Time
("WBI Employees") the opportunity to participate in, subject to eligibility
and vesting provisions, each employee benefit and welfare plan maintained
by SFG or an appropriate SFG Subsidiary, whichever is applicable, for
similarly-situated employees; provided that with respect to such plans
maintained by SFG or an SFG Subsidiary, whichever is applicable, WBI
Employees shall be given full credit for their service with WBI and its
Subsidiaries in determining participation in, eligibility for and vesting
in benefits thereunder and past years of service will be fully taken into
account for vacation and severance benefits to the extent applicable;
provided further that WBI Employees shall not be subject to any
pre-existing condition exclusions under the group health plan of SFG or any
applicable SFG Subsidiary; and provided further that to the extent that the
initial period of coverage for WBI Employees under any plan of SFG or an
SFG Subsidiary, whichever is applicable, that is an "employee benefit plan"
as defined in Section 3(1) of ERISA is not a full 12-month period of
coverage, WBI Employees shall be given credit under the applicable welfare
plan for any deductibles and co-insurance payments made by such WBI
Employees under the corresponding welfare plan of WBI or an applicable WBI
subsidiary during the balance of such 12-month period of coverage. Nothing
in the preceding sentence shall
36
<PAGE> 40
obligate SFG or any SFG Subsidiary to provide or cause to be provided any
benefits duplicative to those provided under any benefit or welfare plan of
WBI or any applicable WBI Subsidiary while continued pursuant to
subparagraph (a) above. Except as otherwise provided in this Agreement, or
in any applicable plan, the power of SFG or any SFG Subsidiary to amend or
terminate any benefit or welfare plans of WBI and its Subsidiaries shall
not be altered or affected. Moreover, this subsection 6.13(b) shall not
confer upon any WBI Employee any rights or remedies hereunder and shall not
constitute a contract of employment or create any rights, to be retained or
otherwise, in employment at SFG or any SFG Subsidiary.
37
<PAGE> 41
(c) Any separate agreement entered into by WBI and SFG on the date
hereof relating to employee or director benefits is incorporated herein by
reference and shall be deemed a part of this Agreement.
6.14 NOTIFICATION OF CERTAIN MATTERS. Each of WBI and SFG shall give
prompt notice to the other of any fact, event or circumstance known to it that
(i) is reasonably likely, individually or taken together with all other facts,
events and circumstances known to it, to result in any Material Adverse Effect
with respect to it or (ii) would cause or constitute a material breach of any of
its representations, warranties, covenants or agreements contained herein.
6.15 DIVIDEND COORDINATION. It is agreed by the parties hereto that
they will cooperate to assure that as a result of the Merger, during any
applicable period, there shall not be a duplicating payment of both an SFG and a
WBI dividend. The parties further agree that if the Effective Date is at the end
of a fiscal quarter, then they will cooperate to assure that the WBI
shareholders receive the dividend, if any, declared by WBI rather than the
dividend for that period, if any, by SFG. In no event will the selection of the
Effective Date cause the stockholders of WBI to lose a quarterly or a portion of
a quarterly dividend.
6.16 BOARD REPRESENTATION. SFG shall cause its Executive Committee to
nominate for election to the SFG Board one (1) member of the WBI Board, which
nominee shall be recommended by WBI and reasonably satisfactory to SFG. At the
Effective Time, the nominee so selected shall be elected to fill a vacancy for a
term ending at the annual meeting of stockholders of SFG in 2001 and shall
thereafter serve as a member of the SFG Board until his successor is elected and
shall have qualified. SFG shall cause its Executive Committee to nominate for
election to the MAB Board one (1) member of the FFB Board, which nominee shall
be recommended by WBI and reasonably satisfactory to SFG.
6.17 SEPARATE DIVISION OF MAB. In connection with the merger of FFB
into MAB, MAB shall name a new Community Bank Division, which will include all
of FFB's offices (with the exception of the Rossford, Ohio branch) in addition
to the MAB branches in Bowling Green, Elmore, North Baltimore, Grand Rapids,
Genoa, Stony Ridge, Weston and Bradner, Ohio.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
7.01 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligation of each of SFG and WBI to consummate the Merger is subject
to the fulfillment or written waiver by SFG and WBI prior to the Effective Time
of each of the following conditions:
38
<PAGE> 42
(a) WBI Stockholder Approval. This Agreement shall have been duly
adopted by the requisite vote of the stockholders of WBI.
(b) Regulatory Approvals. All regulatory approvals required to
consummate the transactions contemplated hereby shall have been obtained
and shall remain in full force and effect and all statutory waiting periods
in respect thereof shall have expired and no such approvals shall contain
(i) any conditions, restrictions or requirements which the SFG Board
reasonably determines would either before or after the Effective Time have
a Material Adverse Effect on SFG after giving effect to the consummation of
the Merger, or (ii) any conditions, restrictions or requirements that are
not customary and usual for approvals of such type and which the SFG Board
reasonably determines would either before or after the Effective Date be
unduly burdensome.
(c) No Injunction. No Governmental Authority of competent jurisdiction
shall have enacted, issued, promulgated, enforced or entered any statute,
rule, regulation, judgment, decree, injunction or other order (whether
temporary, preliminary or permanent) which is in effect and prohibits
consummation of the transactions contemplated by this Agreement.
(d) Registration Statement. The Registration Statement shall have
become effective under the Securities Act and no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been initiated or threatened by the
SEC.
(e) Blue Sky Approvals. All permits and other authorizations under
state securities laws necessary to consummate the transactions contemplated
hereby and to issue the shares of SFG Common Stock to be issued in the
Parent Merger shall have been received and be in full force and effect.
(f) Accounting Treatment. SFG shall have received from Crowe, Chizek
and Company, LLP, SFG's independent auditors, a letter, dated the date of
or shortly prior to each of the mailing date of the Proxy Statement and the
Effective Date, stating its opinion that the Merger shall qualify for
pooling-of-interests accounting treatment.
7.02 CONDITIONS TO OBLIGATION OF WBI. The obligation of WBI to
consummate the Merger is also subject to the fulfillment or written waiver by
WBI prior to the Effective Time of each of the following conditions:
(a) Representations and Warranties. The representations and warranties
of SFG set forth in this Agreement shall be true and correct, subject to
Section 5.02, as of the date of this Agreement and as of the Effective Date
as though made on and as of the Effective Date (except that representations
and warranties that by their terms speak as of the date of this Agreement
or some other date shall be true and correct as of such date), and WBI
shall have received a certificate, dated the Effective Date, signed on
behalf of SFG by the Chief
39
<PAGE> 43
Executive Officer and the Chief Financial Officer of SFG to such effect.
(b) Performance of Obligations of SFG. SFG shall have performed in all
material respects all obligations required to be performed by them under
this Agreement at or prior to the Effective Time, and WBI shall have
received a certificate, dated the Effective Date, signed on behalf of SFG
by the Chief Executive Officer and the Chief Financial Officer of SFG to
such effect.
(c) Tax Opinion. WBI shall have received an opinion of counsel to SFG
or SFG's independent auditors, dated the Effective Date, to the effect
that, on the basis of facts, representations and assumptions set forth in
such opinion, (i) the Parent Merger constitutes a "reorganization" within
the meaning of Section 368 of the Code and (ii) no gain or loss will be
recognized by stockholders of WBI who receive shares of SFG Common Stock in
exchange for shares of WBI Common Stock, and cash in lieu of fractional
share interests, other than the gain or loss to be recognized as to cash
received in lieu of fractional share interests. In rendering its opinion,
counsel to SFG or SFG's independent auditors, as the case may be, may
require and rely upon representations contained in letters from WBI and
SFG.
(d) Opinion of SFG's Counsel. WBI shall have received an opinion of
counsel to SFG, dated the Effective Date, to the effect that, on the basis
of the facts, representations and assumptions set forth in the opinion, (i)
SFG is a corporation duly organized and in good standing under the laws of
the State of Ohio, (ii) this Agreement has been duly executed by SFG and
constitutes the binding obligation of SFG, enforceable against SFG in
accordance with its terms, (iii) the SFG Common Stock to be issued as
Merger Consideration, when issued, shall be duly authorized, fully paid and
non-assessable, and (iv) that upon the filing of the certificate of merger
with the DSS, the Parent Merger shall become effective.
(e) Fairness Opinion. WBI shall have received a fairness opinion from
Stifel, Nicolaus & Company, Incorporated, financial advisor to WBI, dated
as of a date reasonably proximate to the date of the Proxy Statement,
stating that the Merger Consideration is fair to the stockholders of WBI
from a financial point of view.
7.03 CONDITIONS TO OBLIGATION OF SFG. The obligation of SFG to
consummate the Merger is also subject to the fulfillment or written waiver by
SFG prior to the Effective Time of each of the following conditions:
(a) Representations and Warranties. The representations and warranties
of WBI set forth in this Agreement shall be true and correct, subject to
Section 5.02, as of the date of this Agreement and as of the Effective Date
as though made on and as of the Effective Date (except that representations
and warranties that by their terms speak as of the date of this Agreement
or some other date shall be true and correct as of such date) and SFG shall
have received a certificate, dated the Effective Date, signed on behalf of
WBI by the Chief Executive Officer and the Chief Financial Officer of WBI
to such effect.
40
<PAGE> 44
(b) Performance of Obligations of WBI. WBI shall have performed in all
material respects all obligations required to be performed by it under this
Agreement at or prior to the Effective Time, and SFG shall have received a
certificate, dated the Effective Date, signed on behalf of WBI by the Chief
Executive Officer and the Chief Financial Officer of WBI to such effect.
(c) Opinion of WBI's Counsel. SFG shall have received an opinion of
Silver, Freedman & Taff, dated the Effective Date, to the effect that, on
the basis of the facts, representations and assumptions set forth in the
opinion, (i) WBI is a corporation duly organized and in good standing under
the laws of the State of Delaware, (ii) this Agreement has been duly
executed by WBI and constitutes a binding obligation on WBI, enforceable in
accordance with its terms against WBI, and (iii) that upon the filing of
the certificate of merger with the DSS, the Parent Merger shall become
effective.
(d) Dissenters. Holders of not more than 7% of the WBI Common Stock
shall have preserved their elections to perfect appraisal rights under
Section 262 of the DGCL.
(e) Affiliate Agreements. SFG shall have received the agreements
referred to in Section 6.07 from each affiliate of WBI.
ARTICLE VIII
TERMINATION
8.01 TERMINATION. This Agreement may be terminated, and the Acquisition
may be abandoned:
(a) Mutual Consent. At any time prior to the Effective Time, by the
mutual consent of SFG and WBI, if the Board of Directors of each so
determines by vote of a majority of the members of its entire Board.
(b) Breach. At any time prior to the Effective Time, by SFG or WBI, if
its Board of Directors so determines by vote of a majority of the members
of its entire Board, in the event of either: (i) a breach by the other
party of any representation or warranty contained herein (subject to the
standard set forth in Section 5.02), which breach cannot be or has not been
cured within 30 days after the giving of written notice to the breaching
party of such breach; or (ii) a breach by the other party of any of the
covenants or agreements contained herein, which breach cannot be or has not
been cured within 30 days after the giving of written notice to the
breaching party of such breach, provided that such breach (whether under
(i) or (ii)) would be reasonably likely, individually or in the aggregate
with other breaches, to result in a Material Adverse Effect.
41
<PAGE> 45
(c) Delay. At any time prior to the Effective Time, by SFG or WBI, if
its Board of Directors so determines by vote of a majority of the members
of its entire Board, in the event that the Parent Merger is not consummated
by September 30, 1999, except to the extent that the failure of the Parent
Merger then to be consummated arises out of or results from the knowing
action or inaction of the party seeking to terminate pursuant to this
Section 8.01(c).
(d) No Approval. By WBI or SFG, if its Board of Directors so determines
by a vote of a majority of the members of its entire Board, in the event
(i) the approval of any Governmental Authority required for consummation of
the Merger and the other transactions contemplated by this Agreement shall
have been denied by final nonappealable action of such Governmental
Authority or (ii) the WBI stockholders fail to adopt this Agreement at the
WBI Meeting.
(e) By WBI, if the Average NASDAQ Closing Price (as defined below) of
SFG Common Stock is less than $24.25, subject to adjustment for events
occurring under Section 3.05, provided however, that prior to WBI
exercising any right of termination pursuant to this Section 8.01(e), SFG
may, at its option, for a period of three (3) business days, offer to
distribute to WBI stockholders, in connection with Section 3.01, an
additional number of shares of SFG Common Stock to offset the amount by
which the Average NASDAQ Closing Price is below $24.25 subject to
adjustment for events occurring under Section 3.05. In the event that SFG
offers the stockholders of WBI additional shares of SFG Common Stock in
accordance herewith, the right of WBI to terminate this Agreement under
this Section 8.01 (e) shall be null and void, and the Merger Consideration
shall be adjusted in accordance herewith. For purposes of this Section 8.01
(e), the Average NASDAQ Closing Price shall mean the arithmetic mean of the
NASDAQ closing prices of SFG Common Stock for the ten (10) trading days
immediately preceding the eighth (8th) trading day prior to the Effective
Date.
8.02 EFFECT OF TERMINATION AND ABANDONMENT, ENFORCEMENT OF AGREEMENT.
In the event of termination of this Agreement and the abandonment of the Merger
pursuant to this Article VIII, no party to this Agreement shall have any
liability or further obligation to any other party hereunder except (i) as set
forth in Section 9.01 and (ii) that termination will not relieve a breaching
party from liability for any willful breach of this Agreement giving rise to
such termination. Notwithstanding anything contained herein to the contrary, the
parties hereto agree that irreparable damage will occur in the event that a
party breaches any of its obligations, duties, covenants and agreements
contained herein. It is accordingly agreed that the parties shall be entitled to
an injunction or injunctions to prevent breaches or threatened breaches of this
Agreement and to enforce specifically the terms and provisions of this Agreement
in any court of the United States or any state having jurisdiction, this being
in addition to any other remedy to which they are entitled by law or in equity.
ARTICLE IX
42
<PAGE> 46
MISCELLANEOUS
9.01 SURVIVAL. No representations, warranties, agreements and covenants
contained in this Agreement shall survive the Effective Time (other than
Sections 6.12, 6.13, 6.16, and 6.17 and this Article IX which shall survive the
Effective Time) or the termination of this Agreement if this Agreement is
terminated prior to the Effective Time (other than Sections 6.03(b), 6.04,
6.05(b), 8.02, and this Article IX which shall survive such termination).
9.02 WAIVER; AMENDMENT. Prior to the Effective Time, any provision of
this Agreement may be (i) waived by the party benefited by the provision, or
(ii) amended or modified at any time, by an agreement in writing between the
parties hereto executed in the same manner as this Agreement, except that after
the WBI Meeting, this Agreement may not be amended if it would violate the DGCL
or the federal securities laws.
9.03 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to constitute an original.
9.04 GOVERNING LAW. This Agreement shall be governed by, and
interpreted in accordance with, the laws of the State of Ohio applicable to
contracts made and to be performed entirely within such State (except to the
extent that mandatory provisions of Federal law are applicable).
9.05 EXPENSES. Each party hereto will bear all expenses incurred by it
in connection with this Agreement and the transactions contemplated hereby,
except that printing and mailing expenses shall be shared equally between WBI
and SFG. All fees to be paid to Regulatory Authorities and the SEC in connection
with the transactions contemplated by this Agreement shall be borne by SFG.
9.06 NOTICES. All notices, requests and other communications hereunder
to a party shall be in writing and shall be deemed given if personally
delivered, telecopied (with confirmation) or mailed by registered or certified
mail (return receipt requested) to such party at its address set forth below or
such other address as such party may specify by notice to the parties hereto.
43
<PAGE> 47
If to WBI, to:
Wood Bancorp, Inc.
124 E. Court St.
Bowling Green, OH 43402
Attn: Robert E. Spitler, Chairman and Richard L. Gordley, CEO
With a copy to:
Silver, Freedman and Taff
1100 New York Avenue, NW
Floor Seven
Washington, DC 20005
Attn: Jeffrey M. Werthan, Esq.
If to SFG, to:
Sky Financial Group, Inc.
10 E. Main Street
Salineville, OH 43945
Attn: Marty E. Adams, President and COO
With a copy to:
Sky Financial Group, Inc.
221 S. Church Street
Bowling Green, OH 43402
Attn: W. Granger Souder, General Counsel
9.07 ENTIRE UNDERSTANDING; NO THIRD PARTY BENEFICIARIES. This
Agreement, any separate agreement entered into by the parties on even date
herewith, and any Stock Option Agreement entered into represent the entire
understanding of the parties hereto with reference to the transactions
contemplated hereby and thereby and this Agreement supersedes any and all other
oral or written agreements heretofore made (other than any such separate
agreement or Stock Option Agreement). Except for Section 6.12, nothing in this
Agreement, expressed or implied, is intended to confer upon any person, other
than the parties hereto or their respective successors, any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
44
<PAGE> 48
9.08 INTERPRETATION; EFFECT. When a reference is made in this Agreement
to Sections, Exhibits or Schedules, such reference shall be to a Section of, or
Exhibit or Schedule to, this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and are not part of this Agreement. Whenever the words "include",
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation."
9.09 WAIVER OF JURY TRIAL. Each of the parties hereto hereby
irrevocably waives any and all right to trial by jury in any legal proceeding
arising out of or related to this Agreement or the transactions contemplated
hereby.
* * *
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in counterparts by their duly authorized officers, all as of the day
and year first above written.
Wood Bancorp, Inc.
By: /s/ Richard L. Gordley
----------------------------------
Richard L. Gordley
Chief Executive Officer
Sky Financial Group, Inc.
By: /s/ Marty E. Adams
----------------------------------
Marty E. Adams
President and COO
45
<PAGE> 1
EXHIBIT 10.1
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of December 16, 1998, between Sky
Financial Group, Inc., an Ohio corporation ("Grantee"), and Wood Bancorp, Inc.,
a Delaware corporation ("Issuer").
W I T N E S S E T H:
WHEREAS, Grantee and Issuer are simultaneously entering into an Agreement
and Plan of Merger (the "Merger Agreement");
WHEREAS, as an inducement to the willingness of Grantee to enter into the
Merger Agreement, Issuer has agreed to grant Grantee the Option (as hereinafter
defined); and
WHEREAS, the Board of Directors of Issuer has approved the grant of the
Option and the Merger Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements set forth herein and in the Merger Agreement, the parties hereto
agree as follows:
1. (a) Issuer hereby grants to Grantee an unconditional, irrevocable
option (the "Option") to purchase, subject to the terms hereof, up to an
aggregate of 560,926 fully paid and nonassessable shares of the common stock,
par value $.01 per share, of Issuer ("Common Stock") at a price per share equal
to $16.00; PROVIDED, HOWEVER, that in the event Issuer issues or agrees to issue
any shares of Common Stock (other than shares of Common Stock issued pursuant to
stock options granted pursuant to any employee and director benefit plans prior
to the date hereof) at a price less than such price per share (as adjusted
pursuant to subsection (b) of Section 5), such price shall be equal to such
lesser price (such price, as adjusted if applicable, the "Option Price");
PROVIDED, FURTHER, that in no event shall the number of shares for which this
Option is exercisable exceed 19.9% of the issued and outstanding shares of
Common Stock. The number of shares of Common Stock that may be received upon the
exercise of the Option and the Option Price are subject to adjustment as herein
set forth.
(b) In the event that any additional shares of Common Stock are issued or
otherwise become outstanding after the date of this Agreement (other than
pursuant to this Agreement and other than pursuant to an event described in
Section 5(a) hereof), the number of shares of Common Stock subject to the Option
shall be increased so that, after such issuance, such number together with any
shares of Common Stock previously issued pursuant hereto, equals 19.9% of the
number of shares of Common Stock then issued and outstanding without giving
effect to any shares subject or issued pursuant to the Option. Nothing contained
in this Section l(b) or elsewhere in this Agreement shall be deemed to authorize
Issuer to issue shares in breach any provision of the Merger Agreement.
2. (a) The Holder (as hereinafter defined) may exercise the Option, in
whole or part, if, but only if, both an Initial Triggering Event (as hereinafter
defined) and a Subsequent Triggering Event (as hereinafter defined) shall have
occurred prior to the occurrence of an Exercise
<PAGE> 2
Termination Event (as hereinafter defined), PROVIDED that the Holder shall have
sent the written notice of such exercise (as provided in subsection (e) of this
Section 2) within six (6) months following such Subsequent Triggering Event (or
such later period as provided in Section 10). Each of the following shall be an
Exercise Termination Event: (i) the Effective Time of the Merger; (ii)
termination of the Merger Agreement in accordance with the provisions thereof if
such termination occurs prior to the occurrence of an Initial Triggering Event
except a termination by Grantee pursuant to Section 8.01(b) of the Merger
Agreement (but only if the breach giving rise to the termination was willful)
(a "Listed Termination"); or (iii) the passage of eighteen (18) months (or such
longer period as provided in Section 10) after termination of the Merger
Agreement if such termination follows the occurrence of an Initial Triggering
Event or is a Listed Termination. The term "Holder" shall mean the holder or
holders of the Option. Notwithstanding anything to the contrary contained
herein, (i) the Option may not be exercised at any time when Grantee shall be in
material breach of any of its representations, warranties, covenants or
agreements contained in the Merger Agreement such that Issuer shall be entitled
to terminate the Merger Agreement pursuant to Section 8.01(b) thereof and (ii)
this Agreement shall automatically terminate upon the proper termination of the
Merger Agreement by Issuer pursuant to Section 8.01(b) thereof as a result of
the material breach by Grantee of its representations, warranties, covenants or
agreements contained in the Merger Agreement.
(b) The term "Initial Triggering Event" shall mean any of the following
events or transactions occurring on or after the date hereof:
(i) Issuer or its financial institution subsidiary (the "Issuer
Subsidiary"), without having received Grantee's prior written consent,
shall have entered into an agreement to engage in an Acquisition
Transaction (as hereinafter defined) with any person (the term "person"
for purposes of this Agreement having the meaning assigned thereto in
Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act of 1934, as
amended (the "1934 Act"), and the rules and regulations thereunder) other
than Grantee or any of its Subsidiaries (each a "Grantee Subsidiary") or
the Board of Directors of Issuer (the "Issuer Board") shall have
recommended that the shareholders of Issuer approve or accept any
Acquisition Transaction other than as contemplated by the Merger
Agreement. For purposes of this Agreement, (a) "Acquisition Transaction"
shall mean (x) a merger or consolidation, or any similar transaction,
involving Issuer or the Issuer Subsidiary (other than mergers,
consolidations or similar transactions involving solely Issuer and/or one
or more wholly-owned Subsidiaries of the Issuer, PROVIDED, any such
transaction is not entered into in violation of the terms of the Merger
Agreement), (y) a purchase, lease or other acquisition of all or any
substantial part of the assets or deposits of Issuer or the Issuer
Subsidiary, or (z) a purchase or other acquisition (including by way of
merger, consolidation, share exchange or otherwise) of securities
representing 10% or more of the voting power of Issuer or the Issuer
Subsidiary and (b) "Subsidiary" shall have the meaning set forth in Rule
12b-2 under the 1934 Act;
(ii) Any person other than the Grantee or any Grantee Subsidiary shall
have acquired beneficial ownership or the right to acquire beneficial
ownership of 10% or more of the
2
<PAGE> 3
outstanding shares of Common Stock (the term "beneficial ownership" for
purposes of this Agreement having the meaning assigned thereto in Section
13(d) of the 1934 Act, and the rules and regulations thereunder);
(iii) The shareholders of Issuer shall have voted and failed to adopt
the Merger Agreement at a meeting which has been held for that purpose or
any adjournment or postponement thereof, or such meeting shall not have
been held in violation of the Merger Agreement or shall have been
cancelled prior to termination of the Merger Agreement if, prior to such
meeting (or if such meeting shall not have been held or shall have been
cancelled, prior to such termination), it shall have been publicly
announced that any person (other than Grantee or any of its Subsidiaries)
shall have made, or disclosed an intention to make, a proposal to engage
in an Acquisition Transaction;
(iv) The Issuer Board shall have withdrawn or modified (or publicly
announced its intention to withdraw or modify) in any manner adverse in
any respect to Grantee its recommendation that the shareholders of Issuer
approve the transactions contemplated by the Merger Agreement, or Issuer
or the Issuer Subsidiary shall have authorized, recommended, proposed (or
publicly announced its intention to authorize, recommend or propose) an
agreement to engage in an Acquisition Transaction with any person other
than Grantee or a Grantee Subsidiary;
(v) Any person other than Grantee or any Grantee Subsidiary shall have
made a proposal to Issuer or its shareholders to engage in an Acquisition
Transaction and such proposal shall have been publicly announced;
(vi) Any person other than Grantee or any Grantee Subsidiary shall
have filed with the SEC a registration statement or tender offer materials
with respect to a potential exchange or tender offer that would constitute
an Acquisition Transaction (or filed a preliminary proxy statement with
the Securities and Exchange Commission (the "SEC") with respect to a
potential vote by its shareholders to approve the issuance of shares to be
offered in such an exchange offer);
(vii) Issuer shall have willfully breached any covenant or obligation
contained in the Merger Agreement in anticipation of engaging in an
Acquisition Transaction, and following such breach Grantee would be
entitled to terminate the Merger Agreement (whether immediately or after
the giving of notice or passage of time or both); or
(viii) Any person other than Grantee or any Grantee Subsidiary shall
have filed an application or notice with the Board of Governors of the
Federal Reserve System (the "Federal Reserve Board") or other federal or
state bank regulatory or antitrust authority, which application or notice
has been accepted for processing, for approval to engage in an Acquisition
Transaction.
3
<PAGE> 4
(c) The term "Subsequent Triggering Event" shall mean any of the following
events or transactions occurring after the date hereof:
(i) The acquisition by any person (other than Grantee or any Grantee
Subsidiary) of beneficial ownership of 25% or more of the then outstanding
Common Stock; or
(ii) The occurrence of the Initial Triggering Event described in
clause (i) of subsection (b) of this Section 2, except that the percentage
referred to in clause (z) of the second sentence thereof shall be 25%.
(d) Issuer shall notify Grantee promptly in writing of the occurrence of
any Initial Triggering Event or Subsequent Triggering Event (together, a
"Triggering Event"), it being understood that the giving of such notice by
Issuer shall not be a condition to the right of the Holder to exercise the
Option.
(e) In the event the Holder is entitled to and wishes to exercise the
Option (or any portion thereof), it shall send to Issuer a written notice (the
date of which being herein referred to as the "Notice Date") specifying (i) the
total number of shares it will purchase pursuant to such exercise and (ii) a
place and date not earlier than three business days nor later than 60 business
days from the Notice Date for the closing of such purchase (the "Closing Date");
PROVIDED, that if prior notification to or approval of the Federal Reserve Board
or any other regulatory or antitrust agency is required in connection with such
purchase, the Holder shall promptly file the required notice or application for
approval, shall promptly notify Issuer of such filing, and shall expeditiously
process the same and the period of time that otherwise would run pursuant to
this sentence shall run instead from the date on which any required notification
periods have expired or been terminated or such approvals have been obtained and
any requisite waiting period or periods shall have passed. Any exercise of the
Option shall be deemed to occur on the Notice Date relating thereto.
(f) At the closing referred to in subsection (e) of this Section 2, the
Holder shall (i) pay to Issuer the aggregate purchase price for the shares of
Common Stock purchased pursuant to the exercise of the Option in immediately
available funds by wire transfer to a bank account designated by Issuer and (ii)
present and surrender this Agreement to Issuer at its principal executive
offices, PROVIDED that the failure or refusal of the Issuer to designate such a
bank account or accept surrender of this Agreement shall not preclude the Holder
from exercising the Option .
(g) At such closing, simultaneously with the delivery of immediately
available funds as provided in subsection (f) of this Section 2, Issuer shall
deliver to the Holder a certificate or certificates representing the number of
shares of Common Stock purchased by the Holder and, if the Option should be
exercised in part only, a new Option evidencing the rights of the Holder thereof
to purchase the balance of the shares purchasable hereunder.
4
<PAGE> 5
(h) Certificates for Common Stock delivered at a closing hereunder may be
endorsed with a restrictive legend that shall read substantially as follows:
"The transfer of the shares represented by this certificate is
subject to certain provisions of an agreement, dated as of December 16,
1998, between the registered holder hereof and Issuer and to resale
restrictions arising under the Securities Act of 1933, as amended. A copy
of such agreement is on file at the principal office of Issuer and will be
provided to the holder hereof without charge upon receipt by Issuer of a
written request therefor."
It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act of 1933, as amended (the "1933 Act") in the above legend
shall be removed by delivery of substitute certificate(s) without such reference
if the Holder shall have delivered to Issuer a copy of a letter from the staff
of the SEC, or an opinion of counsel, in form and substance reasonably
satisfactory to Issuer, to the effect that such legend is not required for
purposes of the 1933 Act; (ii) the reference to the provisions of this Agreement
in the above legend shall be removed by delivery of substitute certificate(s)
without such reference if the shares have been sold or transferred in compliance
with the provisions of this Agreement and under circumstances that do not
require the retention of such reference in the opinion of Counsel to the Holder;
and (iii) the legend shall be removed in its entirety if the conditions in the
preceding clauses (i) and (ii) are both satisfied. In addition, such
certificates shall bear any other legend as may be required by law.
(i) Upon the giving by the Holder to Issuer of the written notice of
exercise of the Option provided for under subsection (e) of this Section 2 and
the tender of the applicable purchase price in immediately available funds, the
Holder shall be deemed to be the holder of record of the shares of Common Stock
issuable upon such exercise, notwithstanding that the stock transfer books of
Issuer shall then be closed or that certificates representing such shares of
Common Stock shall not then be actually delivered to the Holder. Issuer shall
pay all expenses, and any and all United States federal, state and local taxes
and other charges that may be payable in connection with the preparation, issue
and delivery of stock certificates under this Section 2 in the name of the
Holder or its assignee, transferee or designee.
3. Issuer agrees: (i) that it shall at all times maintain, free from
preemptive rights, sufficient authorized but unissued or treasury shares of
Common Stock so that the Option may be exercised without additional
authorization of Common Stock after giving effect to all other options,
warrants, convertible securities and other rights to purchase Common Stock; (ii)
that it will not, by charter amendment or through reorganization, consolidation,
merger, dissolution or sale of assets, or by any other voluntary act, avoid or
seek to avoid the observance or performance of any of the covenants,
stipulations or conditions to be observed or performed hereunder by Issuer;
(iii) promptly to take all action as may from time to time be required
(including (x) complying with all applicable premerger notification, reporting
and waiting period requirements specified in 15 U.S.C. Section 18a and
regulations promulgated thereunder and (y) in the event, under the Bank Holding
Company Act of 1956, as amended (the "BHCA"), or the Change in Bank Control Act
of 1978, as amended, or any state or other federal banking law, prior approval
of or notice to the
5
<PAGE> 6
Federal Reserve Board or to any state or other federal regulatory authority is
necessary before the Option may be exercised, cooperating fully with the Holder
in preparing such applications or notices and providing such information to the
Federal Reserve Board or such state or other federal regulatory authority as
they may require) in order to permit the Holder to exercise the Option and
Issuer duly and effectively to issue shares of Common Stock pursuant hereto; and
(iv) promptly to take all action provided herein to protect the rights of the
Holder against dilution.
4. This Agreement (and the Option granted hereby) are exchangeable,
without expense, at the option of the Holder, upon presentation and surrender of
this Agreement at the principal office of Issuer, for other Agreements providing
for Options of different denominations entitling the holder thereof to purchase,
on the same terms and subject to the same conditions as are set forth herein, in
the aggregate the same number of shares of Common Stock purchasable hereunder.
The terms "Agreement" and "Option" as used herein include any 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.
5. In addition to the adjustment in the number of shares of Common Stock
that are purchasable upon exercise of the Option pursuant to Section 1 of this
Agreement, the number of shares of Common Stock purchasable upon the exercise of
the Option and the Option Price shall be subject to adjustment from time to time
as provided in this Section 5.
(a) In the event of any change in, or distributions in respect of, the
Common Stock by reason of stock dividends, split-ups, mergers,
recapitalizations, combinations, subdivisions, conversions, exchanges of shares
or the like, the type and number of shares of Common Stock purchasable upon
exercise hereof shall be appropriately adjusted and proper provision shall be
made so that, in the event that any additional shares of Common Stock are to be
issued or otherwise become outstanding as a result of any such change (other
than pursuant to an exercise of the Option), the number of shares of Common
Stock that remain subject to the Option shall be increased so that, after such
issuance and together with shares of Common Stock previously issued pursuant to
the exercise of the Option (as adjusted on account of any of the foregoing
changes in the Common Stock), it equals 19.9% of the number of shares of Common
Stock then issued and outstanding.
(b) Whenever the number of shares of Common Stock purchasable upon
exercise hereof is adjusted as provided in this Section 5, the Option Price
shall be adjusted by multiplying the Option Price by a fraction, the numerator
of which shall be equal to the number of shares of
6
<PAGE> 7
Common Stock purchasable prior to the adjustment and the denominator of which
shall be equal to the number of shares of Common Stock purchasable after the
adjustment.
6. Upon the occurrence of a Subsequent Triggering Event that occurs prior
to an Exercise Termination Event, Issuer shall, at the request of Grantee
delivered within twelve (12) months (or such later period as provided in Section
10) of such Subsequent Triggering Event (whether on its own behalf or on behalf
of any subsequent holder of this Option (or part thereof) or any of the shares
of Common Stock issued pursuant hereto), promptly prepare, file and keep current
a registration statement under the 1933 Act covering any shares issued and
issuable pursuant to this Option and shall use its reasonable best efforts to
cause such registration statement to become effective and remain current in
order to permit the sale or other disposition of any shares of Common Stock
issued upon total or partial exercise of this Option ("Option Shares") in
accordance with any plan of disposition requested by Grantee. Issuer will use
its reasonable best efforts to cause such registration statement promptly to
become effective and then to remain effective for such period not in excess of
180 days from the day such registration statement first becomes effective or
such shorter time as may be reasonably necessary to effect such sales or other
dispositions. Grantee shall have the right to demand two such registrations. The
Issuer shall bear the costs of such registrations (including, but not limited
to, Issuer's attorneys' fees, printing costs and filing fees, except for
underwriting discounts or commissions, brokers' fees and the fees and
disbursements of Grantee's counsel related thereto). The foregoing
notwithstanding, if, at the time of any request by Grantee for registration of
Option Shares as provided above, Issuer is in registration with respect to an
underwritten public offering by Issuer of shares of Common Stock, and if in the
good faith judgment of the managing underwriter or managing underwriters, or, if
none, the sole underwriter or underwriters, of such offering the offer and sale
of the Option Shares would interfere with the successful marketing of the shares
of Common Stock offered by Issuer, the number of Option Shares otherwise to be
covered in the registration statement contemplated hereby may be reduced;
PROVIDED, HOWEVER, that after any such required reduction the number of Option
Shares to be included in such offering for the account of the Holder shall
constitute at least 25% of the total number of shares to be sold by the Holder
and Issuer in the aggregate; and PROVIDED FURTHER, HOWEVER, that if such
reduction occurs, then Issuer shall file a registration statement for the
balance as promptly as practicable thereafter as to which no reduction pursuant
to this Section 6 shall be permitted or occur and the Holder shall thereafter be
entitled to one additional registration and the twelve (12) month period
referred to in the first sentence of this section shall be increased to
twenty-four (24) months. Each such Holder shall provide all information
reasonably requested by Issuer for inclusion in any registration statement to be
filed hereunder. If requested by any such Holder in connection with such
registration, Issuer shall become a party to any underwriting agreement relating
to the sale of such shares, but only to the extent of obligating itself in
respect of representations, warranties, indemnities and other agreements
customarily included in such underwriting agreements for Issuer. Upon receiving
any request under this Section 6 from any Holder, Issuer agrees to send a copy
thereof to any other person known to Issuer to be entitled to registration
rights under this Section 6, in each case by promptly mailing the same, postage
prepaid, to the address of record of the persons entitled to receive such
copies. Notwithstanding anything to the contrary contained herein, in no event
shall
7
<PAGE> 8
the number of registrations that Issuer is obligated to effect be increased by
reason of the fact that there shall be more than one Holder as a result of any
assignment or division of this Agreement.
7. (a) At any time after the occurrence of a Repurchase Event (as defined
below) (i) at the request of the Holder, delivered prior to an Exercise
Termination Event (or such later period as provided in Section 10), Issuer (or
any successor thereto) shall repurchase the Option from the Holder at a price
(the "Option Repurchase Price") equal to the amount by which (A) the
market/offer price (as defined below) exceeds (B) the Option Price, multiplied
by the number of shares for which this Option may then be exercised and (ii) at
the request of the owner of Option Shares from time to time (the "Owner"),
delivered prior to an Exercise Termination Event (or such later period as
provided in Section 10), Issuer (or any successor thereto) shall repurchase such
number of the Option Shares from the Owner as the Owner shall designate at a
price (the "Option Share Repurchase Price") equal to the market/offer price
multiplied by the number of Option Shares so designated. The term "market/offer
price" shall mean the highest of (i) the price per share of Common Stock at
which a tender or exchange offer therefor has been made, (ii) the price per
share of Common Stock to be paid by any third party pursuant to an agreement
with Issuer, (iii) the highest closing price for shares of Common Stock within
the six-month period immediately preceding the date the Holder gives notice of
the required repurchase of this Option or the Owner gives notice of the required
repurchase of Option Shares, as the case may be, or (iv) in the event of a sale
of all or any substantial part of Issuer's assets or deposits, the sum of the
net price paid in such sale for such assets or deposits and the current market
value of the remaining net assets of Issuer as determined by a nationally
recognized investment banking firm selected by the Holder or the Owner, as the
case may be, and reasonably acceptable to Issuer, divided by the number of
shares of Common Stock of Issuer outstanding at the time of such sale. In
determining the market/offer price, the value of consideration other than cash
shall be determined by a nationally recognized investment banking firm selected
by the Holder or Owner, as the case may be, and reasonably acceptable to Issuer.
(b) The Holder and the Owner, as the case may be, may exercise its right
to require Issuer to repurchase the Option and any Option Shares pursuant to
this Section 7 by surrendering for such purpose to Issuer, at its principal
office, a copy of this Agreement or certificates for Option Shares, as
applicable, accompanied by a written notice or notices stating that the Holder
or the Owner, as the case may be, elects to require Issuer to repurchase this
Option and/or the Option Shares in accordance with the provisions of this
Section 7. As promptly as practicable, and in any event within five business
days after the surrender of the Option and/or certificates representing Option
Shares and the receipt of such notice or notices relating thereto, Issuer shall
deliver or cause to be delivered to the Holder the Option Repurchase Price
and/or to the Owner the Option Share Repurchase Price therefor or the portion
thereof that Issuer is not then prohibited under applicable law and regulation
from so delivering.
(c) To the extent that Issuer is prohibited under applicable law or
regulation, or as a consequence of administrative policy, from repurchasing the
Option and/or the Option Shares in full, Issuer shall immediately so notify the
Holder and/or the Owner and thereafter deliver or
8
<PAGE> 9
cause to be delivered, from time to time, to the Holder and/or the Owner, as
appropriate, the portion of the Option Repurchase Price and the Option Share
Repurchase Price, respectively, that it is no longer prohibited from delivering,
within five business days after the date on which Issuer is no longer so
prohibited; PROVIDED, HOWEVER, that if Issuer at any time after delivery of a
notice of repurchase pursuant to paragraph (b) of this Section 7 is prohibited
under applicable law or regulation, or as a consequence of administrative
policy, from delivering to the Holder and/or the Owner, as appropriate, the
Option Repurchase Price and the Option Share Repurchase Price, respectively, in
full (and Issuer hereby undertakes to use its reasonable best efforts to obtain
all required regulatory and legal approvals and to file any required notices as
promptly as practicable in order to accomplish such repurchase), the Holder or
Owner may revoke its notice of repurchase of the Option and/or the Option Shares
whether in whole or to the extent of the prohibition, whereupon, in the latter
case, Issuer shall promptly (i) deliver to the Holder and/or the Owner, as
appropriate, that portion of the Option Repurchase Price and/or the Option Share
Repurchase Price that Issuer is not prohibited from delivering; and (ii)
deliver, as appropriate, either (A) to the Holder, a new Agreement evidencing
the right of the Holder to purchase that number of shares of Common Stock
obtained by multiplying the number of shares of Common Stock for which the
surrendered Agreement was exercisable at the time of delivery of the notice of
repurchase by a fraction, the numerator of which is the Option Repurchase Price
less the portion thereof theretofore delivered to the Holder and the denominator
of which is the Option Repurchase Price, and/or (B) to the Owner, a certificate
for the Option Shares it is then so prohibited from repurchasing. If an Exercise
Termination Event shall have occurred prior to the date of the notice by Issuer
described in the first sentence of this subsection (c), or shall be scheduled to
occur at any time before the expiration of a period ending on the thirtieth day
after such date, the Holder shall nonetheless have the right to exercise the
Option until the expiration of such 30-day period.
(d) For purposes of this Section 7, a "Repurchase Event" shall be deemed
to have occurred upon the occurrence of any of the following events or
transactions after the date hereof:
(i) the acquisition by any person (other than Grantee or any Grantee
Subsidiary) of beneficial ownership of 50% or more of the then outstanding
Common Stock; or
(ii) the consummation of any Acquisition Transaction described in
Section 2(b)(i) hereof, except that the percentage referred to in clause
(z) shall be 50%.
8. (a) In the event that prior to an Exercise Termination Event, Issuer
shall enter into an agreement (i) to consolidate with or merge into any person,
other than Grantee or a Grantee Subsidiary, or engage in a plan of exchange with
any person, other than Grantee or a Grantee Subsidiary and Issuer shall not be
the continuing or surviving corporation of such consolidation or merger or the
acquirer in such plan of exchange, (ii) to permit any person, other than Grantee
or a Grantee Subsidiary, to merge into Issuer or be acquired by Issuer in a plan
of exchange and Issuer shall be the continuing or surviving or acquiring
corporation, but, in connection with such merger or plan of exchange, the then
outstanding shares of Common Stock shall be changed into or
9
<PAGE> 10
exchanged for stock or other securities of any other person or cash or any other
property or the then outstanding shares of Common Stock shall after such merger
or plan of exchange represent less than 50% of the outstanding shares and share
equivalents of the merged or acquiring company, or (iii) to sell or otherwise
transfer all or a substantial part of its or the Issuer Subsidiary's assets or
deposits to any person, other than Grantee or a Grantee Subsidiary, then, and in
each such case, the agreement governing such transaction shall make proper
provision so that the Option shall, upon the consummation of any such
transaction and upon the terms and conditions set forth herein, be converted
into, or exchanged for, an option (the "Substitute Option"), at the election of
the Holder, of either (x) the Acquiring Corporation (as hereinafter defined) or
(y) any person that controls the Acquiring Corporation.
(b) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (i) the continuing or
surviving person of a consolidation or merger with Issuer (if other than
Issuer), (ii) the acquiring person in a plan of exchange in which Issuer
is acquired, (iii) the Issuer in a merger or plan of exchange in which
Issuer is the continuing or surviving or acquiring person, and (iv) the
transferee of all or a substantial part of Issuer's assets or deposits (or
the assets or deposits of the Issuer Subsidiary).
(ii) "Substitute Common Stock" shall mean the common stock issued by
the issuer of the Substitute Option upon exercise of the Substitute
Option.
(iii) "Assigned Value" shall mean the market/offer price, as defined
in Section 7.
(iv) "Average Price" shall mean the average closing price of a share
of the Substitute Common Stock for one year immediately preceding the
consolidation, merger or sale in question, but in no event higher than the
closing price of the shares of Substitute Common Stock on the day
preceding such consolidation, merger or sale; PROVIDED that if Issuer is
the issuer of the Substitute Option, the Average Price shall be computed
with respect to a share of common stock issued by the person merging into
Issuer or by any company which controls or is controlled by such person,
as the Holder may elect.
(c) The Substitute Option shall have the same terms as the Option,
PROVIDED that if the terms of the Substitute Option cannot, for legal reasons,
be the same as the Option, such terms shall be as similar as possible and in no
event less advantageous to the Holder. The issuer of the Substitute Option shall
also enter into an agreement with the then Holder or Holders of the Substitute
Option in substantially the same form as this Agreement (after giving effect for
such purpose to the provisions of Section 9), which agreement shall be
applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such number of shares
of Substitute Common Stock as is equal to the Assigned Value multiplied by the
number of shares of Common
10
<PAGE> 11
Stock for which the Option was exercisable immediately prior to the event
described in the first sentence of Section 8(a), divided by the Average Price.
The exercise price of the Substitute Option per share of Substitute Common Stock
shall then be equal to the Option Price multiplied by a fraction, the numerator
of which shall be the number of shares of Common Stock for which the Option was
exercisable immediately prior to the event described in the first sentence of
Section 8(a) and the denominator of which shall be the number of shares of
Substitute Common Stock for which the Substitute Option is exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs, shall the
Substitute Option be exercisable for more than 19.9% of the shares of Substitute
Common Stock outstanding prior to exercise of the Substitute Option. In the
event that the Substitute Option would be exercisable for more than 19.9% of the
shares of Substitute Common Stock outstanding prior to exercise but for this
clause (e), the issuer of the Substitute Option (the "Substitute Option Issuer")
shall make a cash payment to Holder equal to the excess of (i) the value of the
Substitute Option without giving effect to the limitation in this clause (e)
over (ii) the value of the Substitute Option after giving effect to the
limitation in this clause (e). This difference in value shall be determined by a
nationally recognized investment banking firm selected by the Holder.
(f) Issuer shall not enter into any transaction described in subsection
(a) of this Section 8 unless the Acquiring Corporation and any person that
controls the Acquiring Corporation assume in writing all the obligations of
Issuer hereunder.
9. (a) At the request of the holder of the Substitute Option (the
"Substitute Option Holder"), the issuer of the Substitute Option (the
"Substitute Option Issuer") shall repurchase the Substitute Option from the
Substitute Option Holder at a price (the "Substitute Option Repurchase Price")
equal to the amount by which (i) the Highest Closing Price (as hereinafter
defined) exceeds (ii) the exercise price of the Substitute Option, multiplied by
the number of shares of Substitute Common Stock for which the Substitute Option
may then be exercised, and at the request of the owner (the "Substitute Share
Owner") of shares of Substitute Common Stock (the "Substitute Shares"), the
Substitute Option Issuer shall repurchase the Substitute Shares at a price (the
"Substitute Share Repurchase Price") equal to the Highest Closing Price
multiplied by the number of Substitute Shares so designated. The term "Highest
Closing Price" shall mean the highest closing price for shares of Substitute
Common Stock within the six-month period immediately preceding the date the
Substitute Option Holder gives notice of the required repurchase of the
Substitute Option or the Substitute Share Owner gives notice of the required
repurchase of the Substitute Shares, as applicable.
(b) The Substitute Option Holder and the Substitute Share Owner, as the
case may be, may exercise its respective rights to require the Substitute Option
Issuer to repurchase the Substitute Option and the Substitute Shares pursuant to
this Section 9 by surrendering for such purpose to the Substitute Option Issuer,
at its principal office, the agreement for such Substitute Option (or, in the
absence of such an agreement, a copy of this Agreement) and/or certificates for
Substitute Shares accompanied by a written notice or notices stating that the
Substitute Option Holder or the
11
<PAGE> 12
Substitute Share Owner, as the case may be, elects to require the Substitute
Option Issuer to repurchase the Substitute Option and/or the Substitute Shares
in accordance with the provisions of this Section 9. As promptly as practicable
and in any event within five business days after the surrender of the Substitute
Option and/or certificates representing Substitute Shares and the receipt of
such notice or notices relating thereto, the Substitute Option Issuer shall
deliver or cause to be delivered to the Substitute Option Holder the Substitute
Option Repurchase Price and/or to the Substitute Share Owner the Substitute
Share Repurchase Price therefor or the portion thereof which the Substitute
Option Issuer is not then prohibited under applicable law and regulation from so
delivering.
(c) To the extent that the Substitute Option Issuer is prohibited under
applicable law or regulation, or as a consequence of administrative policy, from
repurchasing the Substitute Option and/or the Substitute Shares in part or in
full, the Substitute Option Issuer shall immediately so notify the Substitute
Option Holder and/or the Substitute Share Owner and thereafter deliver or cause
to be delivered, from time to time, to the Substitute Option Holder and/or the
Substitute Share Owner, as appropriate, the portion of the Substitute Option
Repurchase Price and/or the Substitute Share Repurchase Price, respectively,
which it is no longer prohibited from delivering, within five (5) business days
after the date on which the Substitute Option Issuer is no longer so prohibited;
PROVIDED, HOWEVER, that if the Substitute Option Issuer is at any time after
delivery of a notice of repurchase pursuant to subsection (b) of this Section 9
prohibited under applicable law or regulation, or as a consequence of
administrative policy, from delivering to the Substitute Option Holder and/or
the Substitute Share Owner, as appropriate, the Substitute Option Repurchase
Price and the Substitute Share Repurchase Price, respectively, in full (and the
Substitute Option Issuer shall use its reasonable best efforts to receive all
required regulatory and legal approvals as promptly as practicable in order to
accomplish such repurchase), the Substitute Option Holder and/or Substitute
Share Owner may revoke its notice of repurchase of the Substitute Option or the
Substitute Shares either in whole or to the extent of prohibition, whereupon, in
the latter case, the Substitute Option Issuer shall promptly (i) deliver to the
Substitute Option Holder or Substitute Share Owner, as appropriate, that portion
of the Substitute Option Repurchase Price or the Substitute Share Repurchase
Price that the Substitute Option Issuer is not prohibited from delivering; and
(ii) deliver, as appropriate, either (A) to the Substitute Option Holder, a new
Substitute Option evidencing the right of the Substitute Option Holder to
purchase that number of shares of the Substitute Common Stock obtained by
multiplying the number of shares of the Substitute Common Stock for which the
surrendered Substitute Option was exercisable at the time of delivery of the
notice of repurchase by a fraction, the numerator of which is the Substitute
Option Repurchase Price less the portion thereof theretofore delivered to the
Substitute Option Holder and the denominator of which is the Substitute Option
Repurchase Price, and/or (B) to the Substitute Share Owner, a certificate for
the Substitute Option Shares it is then so prohibited from repurchasing. If an
Exercise Termination Event shall have occurred prior to the date of the notice
by the Substitute Option Issuer described in the first sentence of this
subsection (c), or shall be scheduled to occur at any time before the expiration
of a period ending on the thirtieth day after such date, the Substitute
12
<PAGE> 13
Option Holder shall nevertheless have the right to exercise the Substitute
Option until the expiration of such 30-day period.
10. The 30-day, 6-month, 12-month, 18-month or 24-month periods for
exercise of certain rights under Sections 2, 6, 7, 9, 12 and 14 shall be
extended: (i) to the extent necessary to obtain all regulatory approvals for the
exercise of such rights (for so long as the Holder, Owner, Substitute Option
Holder or Substitute Share Owner, as the case may be, is using commercially
reasonable efforts to obtain such regulatory approvals), and for the expiration
of all statutory waiting periods; and (ii) to the extent necessary to avoid
liability under Section 16(b) of the 1934 Act by reason of such exercise.
11. Issuer hereby represents and warrants to Grantee as follows:
(a) Issuer has full corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
Issuer Board prior to the date hereof and no other corporate proceedings on the
part of Issuer are necessary to authorize this Agreement or to consummate the
transactions so contemplated. This Agreement has been duly and validly executed
and delivered by Issuer.
(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 through
the termination of this Agreement in accordance with its terms will have
reserved for issuance upon the exercise of the Option, that number of shares of
Common Stock equal to the maximum number of shares of Common Stock at any time
and from time to time issuable hereunder, and all such shares, upon issuance
pursuant thereto, will be duly authorized, validly issued, fully paid,
nonassessable, and will be delivered free and clear of all claims, liens,
encumbrance and security interests and not subject to any preemptive rights.
12. Neither of the parties hereto may assign any of its rights or
obligations under this Agreement or the Option created hereunder to any other
person, without the express written consent of the other party, except that in
the event an Initial Triggering Event shall have occurred prior to an Exercise
Termination Event, Grantee, subject to the express provisions hereof, may assign
in whole or in part its rights and obligations hereunder; PROVIDED, HOWEVER,
that until the date 15 days following the date on which the Federal Reserve
Board has approved an application by Grantee to acquire the shares of Common
Stock subject to the Option, Grantee may not assign its rights under the Option
except in (i) a widely dispersed public distribution, (ii) a private placement
in which no one party acquires the right to purchase in excess of 2% of the
voting shares of Issuer, (iii) an assignment to a single party (E.G., a broker
or investment banker) for the purpose of conducting a widely dispersed public
distribution on Grantee's behalf or (iv) any other manner approved by the
Federal Reserve Board.
13
<PAGE> 14
13. Each of Grantee and Issuer will use its reasonable best efforts to
make all filings with, and to obtain consents of, all third parties and
governmental authorities necessary to the consummation of the transactions
contemplated by this Agreement, including, without limitation, applying to the
Federal Reserve Board under the BHCA for approval to acquire the shares issuable
hereunder, but Grantee shall not be obligated to apply to state banking
authorities for approval to acquire the shares of Common Stock issuable
hereunder until such time, if ever, as it deems appropriate to do so.
14. (a) Grantee may, at any time following a Repurchase Event and prior to
the occurrence of an Exercise Termination Event (or such later period as
provided in Section 10), relinquish the Option (together with any Option Shares
issued to and then owned by Grantee) to Issuer in exchange for a cash fee equal
to the Surrender Price; PROVIDED, HOWEVER, that Grantee may not exercise its
rights pursuant to this Section 14 if Issuer has repurchased the Option (or any
portion thereof) or any Option Shares pursuant to Section 7. The "Surrender
Price" shall be equal to $2.8 million (i) plus, if applicable, Grantee's
purchase price with respect to any Option Shares and (ii) minus, if applicable,
the excess of (B) the net cash amounts, if any, received by Grantee pursuant to
the arms' length sale of Option Shares (or any other securities into which such
Option Shares were converted or exchanged) to any unaffiliated party, over (B)
Grantee's purchase price of such Option Shares.
(b) Grantee may exercise its right to relinquish the Option and any Option
Shares pursuant to this Section 14 by surrendering to Issuer, at its principal
office, a copy of this Agreement together with certificates for Option Shares,
if any, accompanied by a written notice stating (i) that Grantee elects to
relinquish the Option and Option Shares, if any, in accordance with the
provisions of this Section 14 and (ii) the Surrender Price. The Surrender Price
shall be payable in immediately available funds on or before the second business
day following receipt of such notice by Issuer.
(c) To the extent that Issuer is prohibited under applicable law or
regulation, or as a consequence of administrative policy, from paying the
Surrender Price to Grantee in full, Issuer shall immediately so notify Grantee
and thereafter deliver or cause to be delivered, from time to time, to Grantee,
the portion of the Surrender Price that it is no longer prohibited from paying,
within five business days after the date on which Issuer is no longer so
prohibited; PROVIDED, HOWEVER, that if Issuer at any time after delivery of a
notice of surrender pursuant to paragraph (b) of this Section 14 is prohibited
under applicable law or regulation, or as a consequence of administrative
policy, from paying to Grantee the Surrender Price in full, (i) Issuer shall (A)
use its reasonable best efforts to obtain all required regulatory and legal
approvals and to file any required notices as promptly as practicable in order
to make such payments, (B) within five days of the submission or receipt of any
documents relating to any such regulatory and legal approvals, provide Grantee
with copies of the same, and (c) keep Grantee advised of both the status of any
such request for regulatory and legal approvals, as well as any discussions with
any relevant regulatory or other third party reasonably related to the same and
(ii) Grantee may revoke such notice of surrender by delivery of a notice of
revocation to Issuer and, upon delivery of such
14
<PAGE> 15
notice of revocation, the Exercise Termination Date shall be extended to a date
six months from the date on which the Exercise Termination Date would have
occurred if not for the provisions of this Section 14(c) (during which period
Grantee may exercise any of its rights hereunder, including any and all rights
pursuant to this Section 14).
15. The parties hereto acknowledge that damages would be an inadequate
remedy for a breach of this Agreement by either party hereto and that the
obligations of the parties hereto shall be enforceable by either party hereto
through injunctive or other equitable relief. In connection therewith both
parties waive the posting of any bond or similar requirement.
16. If any term, provision, covenant or restriction contained in this
Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions and covenants and restrictions contained in this Agreement
shall remain in full force and effect, and shall in no way be affected, impaired
or invalidated. If for any reason such court or regulatory agency determines
that the Holder is not permitted to acquire, or Issuer is not permitted to
repurchase pursuant to Section 7, the full number of shares of Common Stock
provided in Section l(a) hereof (as adjusted pursuant to Section l(b) or Section
5 hereof), it is the express intention of Issuer to allow the Holder to acquire
or to require Issuer to repurchase such lesser number of shares as may be
permissible, without any amendment or modification hereof.
17. All notices, requests, claims, demands and other communications
hereunder shall be deemed to have been duly given when delivered in person, by
fax, telecopy, or by registered or certified mail (postage prepaid, return
receipt requested) at the respective addresses of the parties set forth in the
Merger Agreement.
18. This Agreement shall be governed by and construed in accordance with
the laws of the State of Ohio, without regard to the conflict of law principles
thereof (except to the extent that mandatory provisions of Federal law or of the
VSCA are applicable).
19. This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which shall constitute one
and the same agreement.
20. Except as otherwise expressly provided herein, each of the parties
hereto shall bear and pay all costs and expenses incurred by it or on its behalf
in connection with the transactions contemplated hereunder, including fees and
expenses of its own financial consultants, investment bankers, accountants and
counsel.
21. Except as otherwise expressly provided herein or in the Merger
Agreement, this Agreement contains the entire agreement between the parties with
respect to the transactions contemplated hereunder and supersedes all prior
arrangements or understandings with respect thereof, written or oral. The terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors and permitted assignees.
15
<PAGE> 16
Nothing in this Agreement, expressed or implied, is intended to confer upon any
party, other than the parties hereto, and their respective successors except as
assignees, any rights, remedies, obligations or liabilities under or by reason
of this Agreement, except as expressly provided herein.
22. Capitalized terms used in this Agreement and not defined herein shall
have the meanings assigned thereto in the Merger Agreement.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all as of the
date first above written.
WOOD BANCORP, INC.
By /s/ Richard L. Gordley
Richard L. Gordley
President and Chief Executive Officer
SKY FINANCIAL GROUP, INC.
By /s/ Marty E. Adams
Marty E. Adams
President and Chief Operating Officer
16
<PAGE> 1
EXHIBIT 99.1
FOR IMMEDIATE RELEASE: [NATIONAL VERSION]
CONTACT: Marty E. Adams
President & Chief Operating Officer
Sky Financial Group, Inc.
(419) 327-6300
Richard L. Gordley
President & Chief Executive Officer
First Federal Bank
(419) 352-3502
SKY FINANCIAL GROUP, INC. ANNOUNCES PLANS TO AFFILIATE
FIRST FEDERAL BANK, BOWLING GREEN, OHIO
DECEMBER 17, 1998 (BOWLING GREEN; OHIO; NASDAQ: SKYF) Sky Financial
Group, Inc. today announced the execution of a definitive agreement with Wood
Bancorp, Inc. (NASDAQ: FFWD) and its affiliate First Federal Bank, Bowling
Green, Ohio. First Federal Bank is a federal savings bank with seven offices in
Bowling Green, Rossford, Woodville, Pemberville, Grand Rapids and North
Baltimore, Ohio, with $130 million in total deposits. It is anticipated that the
transaction will be completed by June 30, 1999, pending regulatory approvals and
the approval of Wood Bancorp's shareholders. Immediately following the
affiliation, First Federal will merge with the Mid American National Bank &
Trust Company, a Sky Financial affiliate.
Under the terms of the agreement, Wood Bancorp shareholders will
receive .7315 shares of Sky Financial Group common stock for each share of Wood
Bancorp common stock. The transaction is valued at $59 million. The exchange of
shares will qualify as a tax-free exchange, and the transaction will be
accounted for as a pooling-of-interests. Wood Bancorp has issued an option in
favor of Sky Financial to purchase up to 19.9% of the outstanding shares of Wood
Bancorp, at an exercise price of $16.00 per share, which is exercisable upon the
occurrence of certain events.
<PAGE> 2
"This in-market merger represents an important addition to Mid Am
Bank's already strong presence in the Northwest Ohio market area," stated Marty
E. Adams, President and Chief Operating Officer of Sky Financial Group. "With a
pro forma Wood county market share of 38% coupled with operating efficiencies
this transaction should contribute to our previously announced earnings
objectives, and will further enhance our leadership position in this important
market."
Richard L. Gordley, First Federal's President and CEO, said the
affiliation with Sky Financial Group will benefit First Federal's customers
employees, shareholders, and the communities in which the bank operates. "Sky
Financial and First Federal are both well known for their strong customer
service approach and commitment to their communities, and we are proud to form a
partnership that will continue this proud tradition. Mr. Gordley further
explained that " this merger will allow us to provide a broader range of
financial services to our customers, while still allowing our customers to work
with the people they know and trust. We will now be able to offer investment,
insurance, leasing and trust services, as well as a host of other products and
services to our customers."
David R. Francisco, Chairman and CEO of Sky Financial Group, said that
"this transaction meets our conservative acquisition criteria, and does not
rely upon significant revenue growth to achieve our goals. We look forward to
First Federal participating with us in our future growth."
"We are especially pleased to be able to serve the customers of First
Federal Bank, who have become accustomed to high quality, personalized service
during First Federal Bank's 75 year history," stated Patrick A.
Kennedy, President and CEO of Mid American National Bank & Trust Company.
Robert E. Spitler, Chairman of the Board of First Federal, is expected
to serve as a director of Sky Financial Group, and Mr. Gordley will serve as a
director of Mid Am Bank following the completion of the merger.
Sky Financial Group, Inc. is a diversified financial services holding
company headquartered in Bowling Green, Ohio. The Company's banking affiliates
include Mid American National Bank and Trust Company, Toledo, Ohio; The Citizens
Banking Company, Salineville, Ohio; The Ohio Bank, Findlay, Ohio; First National
Bank Northwest Ohio, Bryan; Century National Bank, Rochester, Pennsylvania; and
Adrian State Bank, Adrian, Michigan. The Company's financial services affiliates
<PAGE> 3
include Mid Am Recovery Services, Inc., Clearwater, Florida; MFI Investments
Corp., Bryan, Ohio; Mid Am Credit Corp., Columbus, Ohio; Mid Am Private Trust,
N.A., Cincinnati, Ohio; Mid Am Financial Services, Inc., Carmel, Indiana;
Simplicity Mortgage Consultants, Marion, Indiana; Mid Am Title Insurance Agency,
Inc., Adrian, Michigan; Sky Technology Resources, Inc., Bowling Green, Ohio;
ValueNet, Inc., Lisbon, Ohio; Freedom Financial Life Insurance Company, Phoenix,
Arizona; and Freedom Express, Inc., Salineville, Ohio.
*****
The information contained in this press release contains
forward-looking statements regarding expected future financial performance which
are not historical facts and which involve risks and uncertainties. Actual
results and performance could differ materially from those contemplated by these
forward-looking statements.
-end-
