<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 21, 2000
REGISTRATION NO. 333-___________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
------------------
BANCFIRST OHIO CORP.
(Exact name of registrant as specified in its charter)
OH 6712 31-1294136
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction of Classification Code Number) Identification Number)
incorporation or
organization)
422 MAIN STREET, P.O. BOX 4658
ZANESVILLE, OHIO 43702
(740) 452-8444
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
------------------
JAMES H. NICHOLSON
BANCFIRST OHIO CORP.
422 MAIN STREET, P.O. BOX 4658
ZANESVILLE, OHIO 43702
(740) 452-8444
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
COPIES TO:
AMY M. SHEPHERD, ESQ. JOHN C. VORYS, ESQ.
BAKER & HOSTETLER LLP VORYS SATER SEYMOUR AND PEASE LLP
65 EAST STATE STREET, SUITE 2100 52 EAST GAY STREET
COLUMBUS, OHIO 43215 COLUMBUS, OH 43216
(614) 462-4712 (614) 464-6211
(614) 462-2616 (facsimile) (614) 719-5014 (facsimile)
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective and all other
conditions to the merger described in the enclosed Proxy
Statement/Prospectus have been satisfied or waived.
If the securities being registered on this form are being offered in connection
with the formation of a holding company and there is compliance with General
Instruction G, check the following box. [ ]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
===================================================================================================================================
TITLE OF EACH CLASS OF AMOUNT TO PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED (1) OFFERING PRICE PER UNIT AGGREGATE OFFERING PRICE (2) REGISTRATION FEE (2)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, no par value 932,398 shares N/A $18,542,957 $4,896
===================================================================================================================================
</TABLE>
(1) Based upon the maximum number of shares of common stock that the
Registrant may be required to issue in the transaction, calculated as the
product of (i) 2,099,995, the aggregate number of shares of common stock
of Milton Federal Financial Corporation outstanding and (ii) the
conversion rate of .444 share of the Registrant's common stock for each
share of Milton Federal Financial Corporation common stock.
(2) Estimated solely for the purpose of calculating the registration fee
required by Section 6(b) of the Securities Act of 1933 and computed
pursuant to Rule 457(f)(1) thereunder on the basis of the market value of
Milton Federal Financial Corporation common stock to be exchanged in the
transaction, computed, in accordance with Rule 457(c), as the product of
(i) $15.63 (the average of the high and low prices per share of Milton
Federal Financial Corporation common stock on March 20, 2000 as reported
by the Nasdaq National Market) and (ii) 2,099,995, the aggregate number
of shares of common stock of Milton Federal Financial Corporation
outstanding, less $14,279,966, the cash to be paid by BancFirst Ohio to
the shareholders of Milton Federal Financial Corporation.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
<PAGE> 2
MILTON FEDERAL FINANCIAL CORPORATION
25 LOWRY DRIVE
WEST MILTON, OHIO 45383
(937) 698-4168
_____________, 2000
Dear Milton Federal Financial Corporation Shareholder:
You are cordially invited to attend the Special Meeting of shareholders
of Milton Federal Financial Corporation to be held at 2:00 p.m. local time on
Friday, June 9, 2000, at the American Legion building, 2334 South Miami Street,
West Milton, Ohio 45383.
At the Special Meeting, you will be asked to consider and vote on the
proposed merger of Milton Federal Financial Corporation with and into BancFirst
Ohio Corp. If the merger is approved by the holders of a majority of the
outstanding Milton Federal Financial Corporation common shares and if certain
other conditions are satisfied, you will receive $6.80 in cash and .444 of a
common share of BancFirst Ohio for each common share of Milton Federal Financial
Corporation you own.
Your Board of Directors has received the opinion from McDonald
Investments Inc., its financial advisor, to the effect that the financial
consideration is fair to Milton Federal Financial Corporation shareholders from
a financial point of view, as of the date of this document. Your Board of
Directors unanimously approved the merger and believes that it is in the best
interest of Milton Federal Financial Corporation shareholders. The Board of
Directors unanimously recommends that you approve the merger at the Special
Meeting so that the transaction may be completed.
In the materials accompanying this letter, you will find a Notice of
Special Meeting of Shareholders, a proxy statement/prospectus and a proxy card.
We have also included a copy of BancFirst Ohio's 1999 Annual Report to
shareholders. These documents more fully describe the proposed transaction and
provide detailed information regarding BancFirst Ohio. We encourage you to read
these materials carefully.
Whether or not you plan to attend the Special Meeting, please take the
time to vote by completing, signing and returning to us the enclosed proxy card.
A postage paid envelope is enclosed for your convenience. If you sign, date and
return your proxy card without indicating how you want to vote, your proxy will
be counted as a vote in favor of the transaction. Even if you plan to attend the
Special Meeting, please complete, sign and return your proxy card. By following
certain procedures discussed in the accompanying document, you can later revoke
your proxy if you wish.
PLEASE DO NOT SEND YOUR SHARE CERTIFICATES AT THIS TIME. IF THE MERGER
IS APPROVED, YOU WILL RECEIVE WRITTEN INSTRUCTIONS ON HOW TO EXCHANGE YOUR SHARE
CERTIFICATES.
Sincerely,
Milton Federal Financial Corporation
By:
---------------------------------
Glenn E. Aidt, President and
Chief Executive Officer
2
<PAGE> 3
MILTON FEDERAL FINANCIAL CORPORATION
25 LOWRY DRIVE
WEST MILTON, OHIO 45383
(937) 698-4168
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS TO BE HELD JUNE 9, 2000
Notice is hereby given that a Special Meeting of Shareholders of Milton
Federal Financial Corporation will be held on Friday, June 9, 2000, at the
American Legion building, 2334 South Miami Street, West Milton, Ohio 45383. The
Special Meeting will start at 2:00 p.m., local time.
The Special Meeting will be held for the following purposes:
(1) To consider and vote upon a proposal to adopt the Agreement and
Plan of Reorganization dated January 13, 2000, by and among Milton
Federal Financial Corporation, Milton Federal Savings Bank, BancFirst
Ohio and The First National Bank of Zanesville, and the transactions
contemplated by the merger agreement. A copy of the merger agreement is
attached as Annex A to the proxy statement/prospectus which accompanies
this notice.
(2) To transact such other business as may properly come before the
Special Meeting, or any adjournment or postponement (including
adjournment of the Special Meeting to allow for additional solicitation
of shareholder votes in order to obtain a quorum or to obtain the
required vote in favor of the merger agreement).
Only holders of Milton Federal Financial Corporation common shares of
record as of the close of business on _____________, 2000, are entitled to
notice of and to vote at the Special Meeting and any adjournment or
postponement.
The transaction will not be completed unless the merger agreement is
adopted by the affirmative vote of the holders of a majority of the Milton
Federal Financial Corporation common shares entitled to vote at the Special
Meeting.
Whether or not you plan to be present at the Special Meeting, please
complete, date and sign the enclosed proxy card and return it in the enclosed
postage paid envelope. If you plan to attend the Special Meeting, please mark
the appropriate space on the enclosed proxy card.
THE MILTON FEDERAL FINANCIAL CORPORATION BOARD OF DIRECTORS RECOMMENDS
THAT YOU VOTE "FOR" THE ADOPTION OF THE MERGER AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED BY THE MERGER AGREEMENT, INCLUDING THE MERGER OF MILTON FEDERAL
FINANCIAL CORPORATION WITH AND INTO BANCFIRST OHIO, AT THE SPECIAL MEETING SO
THAT THE TRANSACTION MAY BE COMPLETED.
By Order Of The Board Of Directors,
West Milton, Ohio
__________ __, 2000
YOUR VOTE IS IMPORTANT.
PLEASE COMPLETE, SIGN, DATE AND RETURN YOUR PROXY PROMPTLY. DO NOT SEND ANY
SHARE CERTIFICATES AT THIS TIME.
3
<PAGE> 4
PROXY STATEMENT
FOR SPECIAL MEETING OF
SHAREHOLDERS OF
MILTON FEDERAL FINANCIAL CORPORATION
[LOGO]
Subject to the satisfaction of the conditions set forth in the merger
agreement, BancFirst Ohio and Milton Federal Financial Corporation have agreed
to merge Milton Federal Financial Corporation into BancFirst Ohio. If the merger
is consummated, shareholders of Milton Federal Financial Corporation will become
shareholders of BancFirst Ohio.
On __________, 2000, the last reported sales prices on the Nasdaq
National Market of Milton Federal Financial Corporation common shares and
BancFirst Ohio common shares were $____ and $____ per share, respectively.
The merger cannot occur unless the holders of a majority of the
outstanding common shares of Milton Federal Financial Corporation approve it.
The Milton Federal Financial Corporation Board of Directors has scheduled a
Special Meeting of Milton Federal Financial Corporation shareholders to vote on
the merger as follows:
June 9, 2000
2:00 p.m. local time
American Legion building
2334 South Miami Street
West Milton, Ohio 45383
4
<PAGE> 5
Subject to Completion, Dated March 21, 2000
PROSPECTUS
OF
BANCFIRST OHIO CORP.
[LOGO]
COMMON STOCK
This document provides you with detailed information about the proposed
merger. Milton Federal Financial Corporation has provided the information
concerning Milton Federal Financial Corporation and BancFirst Ohio has provided
the information concerning BancFirst Ohio. Please see "Where You Can Find More
Information" for additional information about Milton Federal Financial
Corporation and BancFirst Ohio on file with the Securities and Exchange
Commission. This document also incorporates important business and financial
information about Milton Federal Financial Corporation and BancFirst Ohio that
is not delivered with this document. You may obtain documents incorporated by
reference in this document by requesting them in writing or by telephone from
Milton Federal Financial Corporation and BancFirst Ohio at the following
addresses:
Milton Federal Financial Corporation BancFirst Ohio Corp.
25 Lowry Drive 422 Main Street, P.O. Box 4658
West Milton, Ohio 45383 Zanesville, Ohio 43702
ATTN: Glenn E. Aidt ATTN: Gary N. Fields
(937) 698-4168 (740) 452-8444
If you would like to request documents from Milton Federal Financial
Corporation or BancFirst Ohio, please do so by __________ ____, 2000, to receive
them before the Milton Federal Financial Corporation Special Meeting. If you
request any such documents, the companies will mail them to you by first-class
mail, or other equally prompt means, within one business day of receipt of your
request.
This document and proxy card, along with a copy of the BancFirst Ohio
1999 Annual Report to Shareholders, are being mailed to shareholders of Milton
Federal Financial Corporation beginning about ___________, 2000.
------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
REGULATOR HAS APPROVED OR DISAPPROVED THE BANCFIRST OHIO COMMON STOCK TO BE
ISSUED IN ACCORDANCE WITH THE MERGER AGREEMENT OR DETERMINED IF THIS DOCUMENT IS
ACCURATE OR ADEQUATE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
YOU SHOULD BE AWARE THAT THIS IS A COMPLICATED TRANSACTION. WE URGE
MILTON FEDERAL FINANCIAL CORPORATION SHAREHOLDERS TO READ AND CONSIDER CAREFULLY
THIS DOCUMENT IN ITS ENTIRETY, INCLUDING THE MATTERS REFERRED TO BEGINNING ON
PAGE ____ UNDER "RISK FACTORS".
The date of this document is ________ __, 2000
5
<PAGE> 6
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
QUESTIONS AND ANSWERS ABOUT THE MERGER....................................................7
SUMMARY...................................................................................9
RISK FACTORS.............................................................................13
FORWARD LOOKING STATEMENTS...............................................................16
BANCFIRST OHIO SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA...........................17
MILTON FEDERAL FINANCIAL CORPORATION SELECTED CONSOLIDATED HISTORICAL
FINANCIAL DATA.......................................................................19
BANCFIRST OHIO UNAUDITED PRO FORMA FINANCIAL STATEMENTS..................................21
COMPARATIVE PER SHARE DATA...............................................................25
COMPARATIVE STOCK PRICE AND DIVIDEND INFORMATION.........................................25
THE SPECIAL MEETING......................................................................27
THE MERGER...............................................................................30
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES...................................40
THE MERGER AGREEMENT.....................................................................43
STOCK OPTION AGREEMENT BETWEEN BANCFIRST OHIO AND MILTON FEDERAL FINANCIAL
CORPORATION..........................................................................51
BANCFIRST OHIO CORP......................................................................53
MILTON FEDERAL FINANCIAL CORPORATION.....................................................55
DESCRIPTION OF BANCFIRST OHIO CAPITAL STOCK..............................................55
COMPARISON OF SHAREHOLDER RIGHTS.........................................................56
ANTI-TAKEOVER STATUTES UNDER OHIO LAW....................................................59
VOTING SECURITIES AND OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
OF MILTON FEDERAL FINANCIAL CORPORATION..............................................60
LEGAL MATTERS............................................................................61
EXPERTS..................................................................................62
SHAREHOLDER PROPOSALS FOR 2000 ANNUAL MEETING............................................62
WHERE YOU CAN FIND MORE INFORMATION......................................................62
</TABLE>
6
<PAGE> 7
QUESTIONS AND ANSWERS ABOUT THE MERGER
Q. WHY DO MILTON FEDERAL FINANCIAL CORPORATION AND BANCFIRST OHIO WANT TO MERGE?
A. Milton Federal Financial Corporation believes that shareholder value will be
maximized and that its customers will benefit through an affiliation with
BancFirst Ohio. BancFirst Ohio wants to serve its customers in Milton Federal
Financial Corporation's service areas more effectively and expand BancFirst
Ohio's presence in those markets.
Q. HOW WILL I BENEFIT?
A. The Milton Federal Financial Corporation Board of Directors believes that you
will benefit by becoming a shareholder of a bank holding company with a strong
financial performance record. The Milton Federal Financial Corporation Board of
Directors also believes that you will benefit from receiving cash as partial
consideration, and for the opportunity for potential future appreciation of
BancFirst Ohio shares that you receive in connection with the merger.
Q. WHAT WILL I RECEIVE FOR MY MILTON FEDERAL FINANCIAL CORPORATION SHARES?
A. You will receive $6.80 in cash and .444 of a common share of BancFirst Ohio
for each common share of Milton Federal Financial Corporation you own.
Q: WILL I OWE ANY FEDERAL INCOME TAX AS A RESULT OF THE MERGER?
A. In general, for federal income tax purposes you will not recognize any gain
or loss with respect to the common stock you receive as a result of the merger,
but you will have a gain, in certain circumstances taxable as ordinary income,
with respect to any cash payment you receive.
Q: WHEN DO YOU EXPECT THE MERGER TO BE COMPLETED?
A: We plan to complete the transaction as soon as possible after the Special
Meeting, assuming the required shareholder approval is obtained. The transaction
is also subject to the approval of federal bank regulatory authorities and the
satisfaction of other closing conditions. We expect the transaction to be
completed in June 2000.
Q. WHEN AND WHERE WILL THE SPECIAL MEETING TAKE PLACE?
A. The Special Meeting will be held at 2:00 p.m. local time on Friday, June 9,
2000 at the American Legion building, 2334 South Miami Street, West Milton, Ohio
45383.
Q: WHAT DO I NEED TO DO NOW?
A: Just mail your completed, signed and dated proxy card in the enclosed return
envelope as soon as possible so that your Milton Federal Financial Corporation
shares will be represented at the Special Meeting, which will take place on June
9, 2000.
Q: WHAT IS THE DIFFERENCE BETWEEN HOLDING SHARES AS A SHAREHOLDER OF RECORD AND
AS A BENEFICIAL OWNER?
A: Many Milton Federal Financial Corporation shareholders hold their shares
through a stockbroker, bank or other nominee rather than directly in their own
name. As summarized below, there are some distinctions between shares held of
record and those owned beneficially.
SHAREHOLDER OF RECORD
If your shares are registered directly in your name with Milton Federal
Financial Corporation's Transfer
7
<PAGE> 8
Agent, you are considered, with respect to those shares, the shareholder of
record and these proxy materials are being sent directly to you by Milton
Federal Financial Corporation. As a shareholder of record, you have the right to
grant your voting proxy directly to Milton Federal Financial Corporation or to
vote in person at the meeting. Milton Federal Financial Corporation has enclosed
a proxy card for your use.
BENEFICIAL OWNER
If your shares are held in a stock brokerage account or by a bank or
other nominee, you are considered the beneficial owner of the shares held in
street name and these proxy materials are being forwarded to you by your broker
or nominee who is considered, with respect to those shares, the shareholder of
record. As the beneficial owner, you have the right to direct your broker on how
to vote and are also invited to attend the meeting. However, since you are not
the shareholder of record, you may not vote these shares in person at the
meeting. Your broker or nominee has enclosed a voting instruction card for your
use.
Q: IF MY SHARES ARE HELD IN "STREET NAME" BY MY BROKER, WILL MY BROKER VOTE MY
SHARES FOR ME?
A: Your broker will vote your Milton Federal Financial Corporation shares only
if you provide instructions on how to vote. You should follow the directions
provided by your broker regarding how to instruct your broker to vote your
shares.
Q: MAY I CHANGE MY VOTE AFTER I HAVE MAILED MY SIGNED PROXY CARD?
A: Yes. You can change your vote at any time before your proxy is voted at the
Special Meeting. If you are the record holder of the shares, you can do this in
three ways. First, you can send Milton Federal Financial Corporation a written
statement that you would like to revoke your proxy. Second, you can send Milton
Federal Financial Corporation a new signed and later-dated proxy card. Third,
you can attend the Special Meeting and vote in person. However, your attendance
alone will not revoke your proxy.
For shares held beneficially by you, but not as record holder, you may
change your vote by submitting new voting instructions to your broker or
nominee.
Q: HOW CAN I VOTE MY SHARES IN PERSON AT THE MEETING?
A: Shares held directly in your name as the shareholder of record may be voted
in person at the annual meeting. If you choose to do so, please bring the
enclosed proxy card or proof of identification.
Q. HOW WILL MY SHARES BE VOTED IF I RETURN A BLANK PROXY CARD?
A. If you are the record holder of the shares and you sign and send in your
proxy and do not indicate how you want to vote, your proxy will be counted as a
vote in favor of the merger.
Q. WHAT WILL BE THE EFFECT IF I DO NOT VOTE?
A. Not voting will have the same effect as voting against the merger.
Q: SHOULD I SEND IN MY STOCK CERTIFICATE NOW?
A: No. If the merger is completed, Milton Federal Financial Corporation
shareholders will receive written instructions for exchanging their share
certificates.
Q. WHO CAN ANSWER MY QUESTIONS ABOUT THE MERGER?
A. If you have more questions about the merger, please call Glenn Aidt or Tom
Eyer at (937) 698-4168.
8
<PAGE> 9
SUMMARY
This summary highlights selected information from this
document and may not contain all of the information that is important to you. To
understand the merger more fully and for a complete description of the legal
terms of the merger, you should read carefully this entire document and the
documents we have referred to you. See the section of this document entitled
"Where You Can Find More Information" appearing on page __.
Throughout this document, the term "merger" refers to the merger of
Milton Federal Financial Corporation with and into BancFirst Ohio. The term
"merger agreement" refers to the Agreement and Plan of Reorganization dated
January 13, 2000, a copy of which is included at the back of this document as
Annex A. The term "stock option agreement" refers to the Stock Option Agreement
dated as of January 13, 2000.
THE COMPANIES
MILTON FEDERAL FINANCIAL CORPORATION
25 Lowry Drive
West Milton, Ohio 45383
(937) 698-4168
Milton Federal Financial Corporation is a savings and loan holding
company which owns all of the outstanding stock of Milton Federal Savings Bank.
Milton Federal Savings Bank is a federally chartered savings bank which serves
the financial needs of families and local businesses in the West Milton, Ohio
area, its primary market area, through its main office and three branch offices.
BANCFIRST OHIO CORP.
422 Main Street, P.O. Box 4658
Zanesville, Ohio 43702
(740) 452-8444
BancFirst Ohio is a bank holding company which conducts a full-service
commercial and retail banking business through its wholly-owned subsidiary, The
First National Bank of Zanesville. BancFirst Ohio also owns a full-service
financial planning company that conducts business under the name Chornyak &
Associates, Inc.
BancFirst Ohio is headquartered in Zanesville, Ohio, the county seat of
Muskingum County. Through The First National Bank of Zanesville, BancFirst Ohio
operates 22 full-service banking facilities which serve Muskingum, Licking,
Franklin, Greene and Montgomery Counties, Ohio. Its primary market extends along
Interstate 70 in Central Ohio and includes the markets of Zanesville, Newark,
Columbus and Dayton. BancFirst Ohio primarily focuses on providing personalized,
high quality and comprehensive banking services in order to develop and maintain
long-term relationships with its customers.
REASONS FOR THE MERGER
Milton Federal Financial Corporation and BancFirst Ohio have proposed
the merger in order to serve the long-term interests of Milton Federal Financial
Corporation and its shareholders and to strengthen BancFirst Ohio. The merger
will enable Milton Federal Financial Corporation shareholders to participate in
the future growth of the combined businesses of Milton Federal Financial
Corporation and BancFirst Ohio, which are expected to benefit from opportunities
for significant cost savings and revenue enhancements. The merger will also
provide Milton Federal Financial Corporation customers with a broader range of
products and services.
RECOMMENDATION TO SHAREHOLDERS
The Milton Federal Financial Corporation Board of Directors unanimously
recommends that Milton Federal Financial Corporation shareholders adopt the
merger agreement and approve the transactions contemplated by the merger
agreement, including the merger, so that the transaction may be completed.
9
<PAGE> 10
THE MERGER
In the merger, Milton Federal Financial Corporation will merge with and
into BancFirst Ohio. After the merger, Milton Federal Savings Bank will merge
with and into First National. The shareholders of Milton Federal Financial
Corporation will become shareholders of BancFirst Ohio. You will receive $6.80
in cash and .444 of a common share of BancFirst Ohio for each common share of
Milton Federal Financial Corporation you own. For a complete description of what
Milton Federal Financial Corporation shareholders will receive in the merger,
see "The Merger Agreement - Terms of the Merger" on page ____ of this document.
We encourage you to read the merger agreement because it is the legal document
that governs the merger.
CONDITIONS TO COMPLETING THE MERGER
Completion of the merger depends upon the satisfaction of a number of
conditions, including, among others, the following:
- Milton Federal Financial Corporation's shareholders must adopt the
merger agreement by a vote of a majority of the outstanding shares;
- the Federal Reserve Board and the Office of the Comptroller of the
Currency must approve the merger;
- BancFirst Ohio's tax counsel must provide a tax opinion that the
merger will be a tax-free reorganization to the shareholders of
Milton Federal Financial Corporation, to the extent of the share
exchange; and
- the mean average of the closing bid and asked prices for a share
of BancFirst Ohio common stock for the ten trading days ending two
days before the closing must not be less than $17.25.
To the extent permitted by law, the merger agreement provides that
certain of the closing conditions may be waived by the party entitled to assert
them. The Milton Federal Financial Corporation Board of Directors does not
currently intend to resolicit shareholder approval for its waiver of any of the
conditions, including the conditions above.
TERMINATION OF THE MERGER AGREEMENT
The merger agreement may be terminated for a number of reasons
including, among others, the following:
- by mutual agreement of the Board of Directors of BancFirst Ohio,
Milton Federal Financial Corporation, The First National Bank of
Zanesville, and Milton Federal Savings Bank; or
- by the Board of Directors of BancFirst Ohio or Milton Federal
Financial Corporation if the merger is not completed on or before
December 31, 2000 or if any of the conditions of the merger are not
satisfied.
STOCK OPTION AGREEMENT
In connection with the execution of the merger agreement, Milton
Federal Financial Corporation granted BancFirst Ohio an option to purchase
417,899 common shares of Milton Federal Financial Corporation at a price of
$13.15 per share. Subject to specific terms and conditions, the option is
exercisable only upon the occurrence of specific transactions with someone other
than BancFirst Ohio. For a complete description of the stock option agreement,
you should read "Stock Option Agreement Between BancFirst Ohio and Milton
Federal Financial Corporation."
10
<PAGE> 11
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
Milton Federal Financial Corporation and BancFirst Ohio have structured
the merger to qualify as a reorganization for federal income tax purposes.
Assuming that the merger qualifies as a reorganization, Milton Federal Financial
Corporation shareholders will not recognize any gain or loss for federal income
tax purposes with respect to the shares of BancFirst Ohio received in the merger
and will recognize gain, in certain circumstances taxable as ordinary income,
with respect to any cash received. No ruling has been or will be sought from the
Internal Revenue Service as to the federal income tax consequences of the
merger. TAX MATTERS ARE VERY COMPLICATED AND THE TAX CONSEQUENCES OF THE MERGER
TO YOU MAY DEPEND ON THE FACTS OF YOUR OWN SITUATION. YOU SHOULD CONSULT YOUR
OWN TAX ADVISOR TO UNDERSTAND FULLY THE TAX CONSEQUENCES OF THE MERGER TO YOU.
For information on calculating your basis in the BancFirst Ohio common
shares and cash you receive in the merger, you should see "Tax Consequences"
beginning on page ____.
COMPARATIVE STOCK PRICES
BancFirst Ohio common shares are traded on Nasdaq under the symbol
"BFOH". Milton Federal Financial Corporation common shares are traded on Nasdaq
under the symbol "MFFC". On January 12, 2000, the last trading day ending prior
to the public announcement of the proposed merger, the Nasdaq sales price for
Milton Federal Financial Corporation common shares was $11.50 and for BancFirst
Ohio common shares was $20.375. On ________, 2000 the last reported sales price
for Milton Federal Financial Corporation common shares was $_____ and for
BancFirst Ohio common shares was $_____.
BancFirst Ohio will file an application to list the shares of BancFirst
Ohio common stock to be issued in the merger for trading on Nasdaq.
ACCOUNTING TREATMENT
The merger will be accounted for by BancFirst Ohio under the purchase
method of accounting.
REQUIRED REGULATORY APPROVALS
Consummation of the merger is subject to approval by the Federal
Reserve Board and the Office of the Comptroller of the Currency.
DISSENTERS' RIGHTS
If you are a shareholder of Milton Federal Financial Corporation as of
the record date and you do NOT vote in favor of the merger agreement, you will
have the right under Section 1701.85 of Ohio's General Corporation Law to demand
the fair cash value for your common shares of Milton Federal Financial
Corporation. The right to make this demand is known as "dissenters' rights." To
perfect your dissenters' rights, you must deliver to Milton Federal Financial
Corporation a written demand for payment of the fair cash value of your common
shares. You must state in your notice the amount that, in your opinion, is the
fair cash value for your common shares. Your written demand must be delivered to
Milton Federal Financial Corporation NOT LATER THAN TEN DAYS after the Milton
Federal Financial Corporation Special Meeting. For additional information on
your dissenters' rights, see the section of this document after this summary
entitled "The Special Meeting - Dissenter's Rights."
VOTE REQUIRED
The affirmative vote of the holders of at least a majority of the
outstanding common shares of Milton Federal Financial Corporation is required to
approve the merger agreement. Directors and executive officers of Milton Federal
Financial Corporation are entitled to vote 338,414 shares or approximately
13.42% of the outstanding common shares of Milton Federal Financial Corporation.
11
<PAGE> 12
COMPARISON OF SHAREHOLDER RIGHTS
BancFirst Ohio and Milton Federal Financial Corporation are each
incorporated under Ohio's General Corporation Law. The material differences
between the Articles of Incorporation and Codes of Regulations of BancFirst Ohio
and Milton Federal Financial Corporation are described after this summary in the
section of this document entitled "Comparison of Shareholder Rights."
OPINION OF FINANCIAL ADVISOR
In deciding to approve the merger, Milton Federal Financial
Corporation's Board of Directors considered, among other things, the oral
opinion of its financial advisor, McDonald Investments Inc., that the financial
consideration to be received by Milton Federal Financial Corporation
shareholders in the merger was fair to the shareholders of Milton Federal
Financial Corporation, from a financial point of view, as of January 12, 2000.
McDonald Investments Inc. has also provided a written opinion that the financial
consideration to be received by Milton Federal Financial Corporation
shareholders was fair to the shareholders of Milton Federal Financial
Corporation from a financial point of view, as of the date of this document. The
written opinion of McDonald Investments Inc. is attached as Annex C to this
document. We encourage you to read this opinion.
12
<PAGE> 13
RISK FACTORS
In considering whether to approve and adopt the merger agreement, the
shareholders of Milton Federal Financial Corporation should consider, in
addition to the other information contained in this document, the following
matters.
FLUCTUATION IN THE MARKET PRICE OF BANCFIRST OHIO COMMON SHARES WILL AFFECT THE
VALUE OF THE CONSIDERATION YOU RECEIVE IN THE MERGER.
If the merger closes, EACH outstanding common share of Milton Federal
Financial Corporation will be cancelled on the day of the closing in exchange
for the following:
- .444 of a common share of BancFirst Ohio, and
- $6.80 cash
The value of the total consideration which you will receive on the day
of the closing in exchange for each Milton Federal Financial Corporation common
share will depend on the market value of a share of BancFirst Ohio on Nasdaq on
the day of the closing. On January 12, 2000, the last trading day before the
announcement of the execution of the merger agreement, the closing price of a
common share of BancFirst Ohio on Nasdaq was $20.375. On __________, 2000, the
closing price of a common share of BancFirst Ohio on Nasdaq was $______.
On the day the merger closes, the market price of BancFirst Ohio may be
higher or lower than the market price on the date the merger agreement was
signed, on the date this document was mailed to you or on the date of the
Special Meeting. Therefore, you cannot be assured of receiving any specific
market value of BancFirst Ohio common shares on the date of the closing of the
merger and we encourage you to determine the stock price of BancFirst Ohio
common shares on Nasdaq prior to making your voting decision regarding the
merger. However, Milton Federal Financial Corporation will have the right to
terminate the merger agreement and abandon the merger before the closing if the
average closing price per share of BancFirst Ohio common stock for the ten
trading days ending two trading days before the closing falls below $17.25. You
should refer to "The Merger Agreement - Terms of Merger" for more information
about the value of the consideration you will receive in the merger.
Although the Milton Federal Financial Corporation Board of Directors
has the power to terminate the merger agreement and abandon the merger if the
average closing price of a BancFirst Ohio common share for the ten days ending
two trading days before the closing falls below $17.25, there is no assurance
that the Board of Directors will exercise such power by terminating the merger
agreement. If the average closing price falls below $17.25, the Board of
Directors will evaluate the circumstances existing at the time and, in the
exercise of the Directors' fiduciary duties, determine whether a termination is
in the best interest of shareholders.
BANCFIRST OHIO MAY NOT BE ABLE TO SUCCESSFULLY MANAGE ITS GROWTH BY SUCCESSFULLY
INTEGRATING THE OPERATIONS OF ACQUIRED ENTITIES.
BancFirst Ohio's general strategy for growth has been to acquire banks
and related businesses that it believes are compatible with its business.
BancFirst Ohio completed the acquisition of County Savings Bank in 1996. At that
time, County had total assets approximately equal to BancFirst Ohio's total
assets. Since the completion of the acquisition, BancFirst Ohio has worked to
integrate County's operations and personnel with First National. Because
BancFirst Ohio did not have the systems and infrastructure in place at the time
of the acquisition to accommodate the resulting doubling of its size, a
significantly greater amount of time than initially anticipated has been spent
developing systems to accommodate the growth that resulted from this
acquisition. At present, BancFirst Ohio believes that its infrastructure is now
in place to accommodate growth from additional acquisitions. To the extent that
BancFirst Ohio continues to grow, it cannot assure you that it will be able to
adequately and efficiently manage such growth. Moreover, it may not be able to
obtain regulatory approval for any acquisitions it may want to make. If
BancFirst Ohio fails to manage its growth effectively, its business, financial
condition and results of operations could be materially and adversely affected.
13
<PAGE> 14
The earnings, financial condition and prospects of BancFirst Ohio after
the merger with Milton Federal Financial Corporation will depend in part on
BancFirst Ohio's ability to integrate successfully the operations of the
acquired institution and to continue to implement its own business plan. Among
the issues which BancFirst Ohio could face are:
- unexpected problems with risks, operations, personnel, technology or
credit;
- loss of customers and employees of the acquired institution;
- difficulty in working with the acquired institution's employees and
customers;
- the assimilation of new operations, sites and personnel could divert
resources from regular banking operations;
- generation of enough revenue from operations acquired by BancFirst
Ohio to offset acquisition costs; and
- instituting and maintaining uniform standards, controls, procedures
and policies.
Further, although BancFirst Ohio's Board of Directors anticipates cost
savings as a result of the merger to be meaningful, BancFirst Ohio may be unable
to fully realize any of the potential cost savings expected. Finally, any cost
savings which are realized may be offset by losses in revenues or other charges
to earnings.
CHANGING ECONOMIC CONDITIONS AND GEOGRAPHIC CONCENTRATION IN ONE MARKET MAY
UNFAVORABLY IMPACT BANCFIRST OHIO.
The operations of BancFirst Ohio and Milton Federal Financial
Corporation are concentrated in the State of Ohio. As a result of this
geographic concentration, BancFirst Ohio's and Milton Federal Financial
Corporation's results depend largely upon economic conditions in this area. A
deterioration in economic conditions in these markets could:
- increase loan delinquencies;
- increase problem assets and foreclosures;
- increase claims and lawsuits;
- decrease the demand for BancFirst Ohio's products and services; and
- decrease the value of collateral for loans, especially real estate,
in turn reducing customers' borrowing power, the value of assets
associated with problem loans and collateral coverage.
BANCFIRST OHIO MAY BE UNABLE TO MANAGE INTEREST RATE RISKS, WHICH COULD REDUCE
ITS NET INTEREST INCOME.
BancFirst Ohio's results of operations are affected principally by net
interest income, which is the difference between interest earned on loans and
investments and interest expense paid on deposits and other borrowings. We
cannot predict or control changes in interest rates. Regional and local economic
conditions and the policies of regulatory authorities, including monetary
policies of the Board of Governors of the Federal Reserve System, affect
interest income and interest expense. BancFirst Ohio takes measures intended to
manage the risks from changes in market interest rates. However, changes in
interest rates can still have a material adverse effect on BancFirst Ohio's
profitability.
In addition, certain assets and liabilities may react in different
degrees to changes in market interest rates. For example, interest rates on some
types of assets and liabilities may fluctuate prior to changes in broader market
interest rates, while interest rates on other types may lag behind. Some of
BancFirst Ohio's assets, such as adjustable rate mortgages, have features,
including rate caps, which restrict changes in their interest rates.
14
<PAGE> 15
Interest rates are highly sensitive to many factors that are beyond
BancFirst Ohio's control. Some of these factors include:
- inflation;
- recession;
- unemployment;
- money supply;
- international disorders; and
- instability in domestic and foreign financial markets.
Changes in interest rates may affect:
- the level of voluntary prepayments on its loans; and
- the receipt of payment in its mortgage-backed securities resulting in
the receipt of proceeds that may be reinvested at a lower rate than
the loan or mortgage-backed security being prepaid.
Although BancFirst Ohio pursues an asset-liability management strategy
designed to control its risk from changes in market interest rates, changes in
interest rates can still have a material adverse effect on its profitability.
CHANGES IN THE SBA PROGRAM OR INCREASED COMPETITION FOR SUCH LOANS COULD
ADVERSELY AFFECT BANCFIRST OHIO'S PROFITABILITY.
The SBA lending program is a federal government program. The U.S.
Congress continues to scrutinize government programs, including the SBA lending
program. BancFirst Ohio cannot assure you that its participation in the SBA
lending program will continue in its present manner. BancFirst Ohio's strategic
plan includes an emphasis on continued growth of its SBA lending program. Loans
generated through this program contain portions (typically 75%) which are
guaranteed by the government. BancFirst Ohio has sold these guaranteed portions
in the secondary market. The non-interest income it generates from these sales
has been an important source of revenue for BancFirst Ohio, and continues to
play a significant role in earnings. For the year ended December 31, 1999, gains
on sales of SBA and other government guarantee loan originations totaled $1.8
million, and represented 16.9% of non-interest income. Future non-interest
income from these activities depends on BancFirst Ohio's ability to generate and
sell loans under the SBA lending program. If the U.S. Congress changes the SBA
lending program, or if BancFirst Ohio has increased competition for such loans,
its operating results could be adversely affected.
15
<PAGE> 16
FORWARD LOOKING STATEMENTS
The Private Securities Litigation Reform Act of 1995 provides a safe
harbor from civil litigation for certain forward-looking statements.
Forward-looking statements include the information concerning future results of
operations, cost savings and synergies of BancFirst Ohio and Milton Federal
Financial Corporation after the merger set forth in "Questions and Answers About
the Merger," "Summary," "The Merger," and those preceded by, followed by or that
otherwise include the statements "should," "believe," "expect," "anticipate,"
"intend," "may," "will," "continue," "estimate" and other expressions that
indicate future events and trends. Although Milton Federal Financial Corporation
and BancFirst Ohio believe that in making such statements their expectations are
based on reasonable assumptions, such statements may be influenced by risks and
uncertainties which could cause actual results and trends to be materially
different from historical results or those anticipated depending on a variety of
factors. These include, without limitation:
- expected cost savings from the merger may not be fully realized or
realized within the expected time frame;
- revenues following the merger may be lower than expected or deposit
withdrawals, operating costs or customer loss and business disruption
following the merger may be greater than expected;
- competitive pressures among depository and other financial services
companies may increase significantly;
- costs or difficulties related to the integration of the businesses
acquired by BancFirst Ohio are greater than expected;
- changes in the interest rate environment reduce interest margins,
cause an increase in the prepayment rate on mortgages held and
securitized and other loans or reduce the demand for new loans;
- general economic or business conditions, either internationally or in
the markets in which the combined company will be doing business, are
less favorable than expected, resulting in, among other things, a
deterioration in credit quality or a reduced demand for credit;
- legislation or regulatory requirements or changes adversely affect
the businesses in which BancFirst Ohio is engaged; and
- changes in the securities markets.
You should understand that these factors, in addition to those
discussed elsewhere in this document and in documents which have been
incorporated by reference, could affect the future results of BancFirst Ohio and
Milton Federal Financial Corporation, and could cause those results to be
materially different from those expressed in their forward-looking statements.
BancFirst Ohio and Milton Federal Financial Corporation do not undertake any
obligation to update any forward looking statements to reflect events or
circumstances arising after the date of this document.
16
<PAGE> 17
BANCFIRST OHIO
SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA
The following information presents selected consolidated financial data
of BancFirst Ohio and its subsidiaries. Certain financial data has been derived
from BancFirst Ohio's audited consolidated financial statements. The following
information is only a summary and you should read it in conjunction with
BancFirst Ohio's consolidated financial statements and related notes included in
BancFirst Ohio's Form 10-K for the year ended December 31, 1999, which is
incorporated in this document by reference.
<TABLE>
<CAPTION>
AT OR FOR THE YEAR ENDED DECEMBER 31,
1999 1998 1997 1996(9) 1995
------------- ------------- ------------ ------------ ----------
(Dollars in Thousands Except per Share Data)
<S> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Interest income $ 88,114 $ 86,657 $ 84,692 $ 53,177 $ 34,063
Interest expense 49,647 50,150 48,256 28,630 16,357
------------- ------------- ------------- ------------- -----------
Net interest income 38,467 36,507 36,436 24,547 17,706
Provision for possible loan losses 1,580 1,225 1,221 1,257 967
Non-interest income 10,753 9,948 7,768 6,258 4,984
Non-interest expense 29,651 29,827 26,677 21,235 12,805
------------- ------------- ------------- ------------- -----------
Income before income taxes and
extraordinary item 17,989 15,403 16,306 8,313 8,918
Provision for federal income tax 5,685 4,835 5,536 2,354 2,706
------------- ------------- ------------- ------------- -----------
Income before extraordinary item 12,304 10,568 10,770 5,959 6,212
Extraordinary item - prepayment charges
on early repayment of Federal Home
Loan Bank Advances, net of tax -- 400 -- -- --
------------- ------------- ------------- ------------- -----------
Net income $ 12,304 $ 10,168 $ 10,770 $ 5,959 $ 6,212
============= ============= ============= ============= ===========
PER SHARE DATA: (1)
Income before extraordinary item $ 1.58 $ 1.33 $ 1.35 $ .89 $ 1.04
Net income 1.58 1.28 1.35 .89 1.04
Dividends .57 .55 .53 .51 .47
Book value 10.55 11.09 10.72 9.79 8.42
Tangible book value 8.89 9.58 9.13 8.01 8.40
BALANCE SHEET DATA:
Total assets $1,274,206 $ 1,181,011 $ 1,081,618 $ 1,056,920 $ 476,429
Loans 849,767 777,063 761,027 721,855 268,818
Allowance for possible loan losses 7,431 6,643 6,617 6,599 3,307
Securities 331,235 327,615 271,521 284,576 178,252
Deposits 799,176 789,622 747,047 732,689 348,545
Borrowings 385,498 296,750 239,449 236,609 74,135
Shareholders' equity 80,108 87,535 85,333 77,894 50,010
PERFORMANCE RATIOS:
Return on average assets (2) 1.02% 0.89% 0.98% 0.85% 1.38%
Return on average equity (3) 14.29 11.55 13.20 10.05 13.05
Net interest margin (4) 3.47 3.48 3.55 3.78 4.27
Interest rate spread (4) 3.12 3.05 3.08 3.22 3.55
Non-interest income to average assets 0.89 0.88 0.71 0.90 1.11
Non-interest expense to average assets(5) 2.33 2.36 2.30 2.59 2.84
Efficiency ratio(6) 56.56 56.81 56.67 57.33 56.63
ASSET QUALITY RATIOS (7):
Non-performing loans to total loans 0.42% 0.48% 0.29% 0.35% 0.38%
Non-performing assets to total assets 0.30 0.37 0.28 0.29 0.22
Allowance for possible loan losses to total loans 0.87 0.85 0.87 0.91 1.23
Allowance for possible loan losses to
non-performing loans 209.0 178.3 298.3 258.0 322.9
Net charge-offs to average loans 0.10 0.16 0.16 0.19 0.29
(continued on following page)
</TABLE>
17
<PAGE> 18
<TABLE>
<CAPTION>
CAPITAL RATIOS (8):
<S> <C> <C> <C> <C> <C>
Shareholders' equity to total assets 6.29% 7.41% 7.89% 7.37% 10.50%
Tier 1 capital to average total assets 7.77 6.52 6.52 6.06 10.49
Tier 1 capital to risk-weighted assets 11.37 10.34 10.37 10.08 17.70
</TABLE>
(1) Per share data has been restated to reflect all stock dividends and stock
splits.
(2) Excluding the effects of non-recurring charges and income (including the
extraordinary item in 1998), the return on average assets was 1.02%, 1.02%,
.95%, 1.10%, and 1.38% for the years ended December 31, 1999, 1998, 1997,
1996, and 1995, respectively.
(3) Excluding the affects of non-recurring charges and income (including the
extraordinary item in 1998), the return on average equity was 14.29%,
13.21%, 12.80%, 12.98%, and 13.05% for the years ended December 31, 1999,
1998, 1997, 1996, and 1995, respectively.
(4) Interest rate spread represents the difference between the weighted average
yield on interest earning assets and the weighted average cost of
interest-bearing liabilities, and net interest margin represents net
interest income as a percentage of average interest-earning assets.
(5) Excludes amortization of intangibles and non-recurring charges totaling
$1,629,000 for the year ended December 31, 1998 for merger, restructuring
and branch closing costs and $2,632,000 in 1996 related to the special
one-time SAIF assessment and restructuring costs.
(6) The efficiency ratio is equal to non-interest expense (excluding
non-recurring charges and amortization of intangible assets) divided by net
interest income determined on a fully tax equivalent basis plus
non-interest income less gains or losses on securities transactions and
non-recurring income.
(7) At December 31, 1999, the Company had one restructured loan with an
aggregate principal amount of $2,986,000 that was considered impaired
though on accrual status, and had a specific reserve assigned to it in the
amount of $448,000. Including restructured loans, the Company's asset
quality ratios at December 31, 1999 would be as follows: non-performing
loans plus restructured loans to total loans, 0.77%; non-performing assets
plus restructured loans to total assets, 0.53%; allowance for possible loan
losses to non-performing loans plus restructured loans, 113.6%.
(8) For definitions and information relating to our regulatory capital
requirements, see "Regulation and Supervision."
(9) BancFirst Ohio's acquisition of County Savings in August 1996 significantly
affects the comparability of its results of operations for prior years.
18
<PAGE> 19
MILTON FEDERAL FINANCIAL CORPORATION SELECTED CONSOLIDATED HISTORICAL
FINANCIAL DATA
The following is a summary of selected financial data for Milton
Federal Financial Corporation and its subsidiary at and for the three month
periods ended December 31, 1999, and December 31, 1998, and at and for the years
ended September 30, 1999, 1998, 1997, 1996 and 1995. This summary should be read
in conjunction with the financial statements and their notes which are
incorporated by reference to this document.
<TABLE>
<CAPTION>
AT OR FOR THE THREE MONTHS
ENDED DECEMBER 31, AT OR FOR THE YEAR ENDED SEPTEMBER 30,
---------------------------- ------------------------------------------------------------------------
1999 1998 1999 1998 1997 1996 1995
-------------- ------------- -------------- -------------- -------------- -------------- ------------
(Dollars in thousands, except per share amounts)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Interest income $ 4,536 $ 4,215 $ 17,364 $ 16,219 $ 13,773 $ 12,665 $ 11,139
Interest expense 2,860 2,761 11,033 10,348 8,149 6,819 5,236
-------------- ------------- -------------- -------------- -------------- -------------- ------------
Net interest income 1,676 1, 454 6,331 5,871 5,624 5,846 5,903
Provision for possible loan
losses 25 30 120 229 75 154 64
Non-interest income 142 157 552 796 497 457 257
Non-interest expense 1,113 1,108 4,337 4,146 3,959 4,410 3,300
-------------- ------------- -------------- -------------- -------------- -------------- ------------
Income before income taxes 680 473 2,426 2,292 2,087 1,739 2,796
Provision for federal
income tax 231 162 823 790 709 595 947
-------------- ------------- -------------- -------------- -------------- -------------- ------------
Net income $ 449 $ 311 $ 1,603 $ 1,502 $ 1,378 $ 1,144 $ 1,849
============== ============= ============== ============== ============== ============== ============
PER SHARE DATA:
Net income, basic $ 0.23 $ 0.15 $ 0.80 $ 0.72 $ 0.65 $ 0.51 $ 0.77
Net income, diluted 0.23 0.15 0.80 0.71 0.65 0.50 0.77
Dividends 0.15 0.15 0.60 0.60 3.09 1.43 0.19
Tangible book value 12.75 12.64 12.67 12.63 12.58 15.16 16.28
BALANCE SHEET DATA:
Total assets $259,963 $249,052 $ 256,677 $235,276 $209,958 $ 180,831 $ 161,680
Loans 199,863 184,140 195,507 172,023 127,958 117,236 101,091
Allowance for possible loan
losses 791 706 765 676 562 487 333
Securities 51,304 58,751 52,118 54,286 70,755 58,215 55,261
Deposits 166,315 166,975 168,471 154,647 142,832 128,554 117,898
Borrowings 66,359 53,306 61,483 52,430 39,570 17,489 5,260
Shareholders' equity 25,289 25,983 25,028 26,283 26,388 33,479 37,502
PERFORMANCE RATIOS:
Return on average assets 0.69% 0.51% 0.64% 0.67 % 0.73% 0.67% 1.22%
Return on average equity 7.13 4.75 6.31 5.82 5.08 3.28 5.01
Net interest margin (1) 2.66 2.44 2.61 2.68 3.08 3.50 4.01
Interest rate spread (1) 2.30 1.97 2.19 2.16 2.42 2.55 2.95
Non-interest income to
average assets 0.22 0.26 0.22 0.35 0.27 0.27 0.17
Non-interest expense to
average assets 1.73 1.83 1.74 1.84 2.11 2.58 2.18
Efficiency ratio (2) 61.17 70.80 64.05 66.66 67.16 72.56 53.38
ASSET QUALITY RATIOS:
Non-performing loans to
total loans 0.23% 0.56% 0.32% 0.64 % 0.49% 0.51% 0.51%
Non-performing assets to
total assets 0.25 0.41 0.26 0.47 0.30 0.35 0.34
Allowance for possible loan
losses to total loans 0.40 0.39 0.40 0.39 0.44 0.42 0.33
Allowance for possible loan
losses to non-performing loans 173.86 70.19 116.46 61.40 90.06 81.57 64.04
Net charge-offs to average loans -- -- 0.02 0.08 -- -- --
(continued on following page)
</TABLE>
19
<PAGE> 20
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
CAPITAL RATIOS:
Shareholders' equity to 9.00 % 8.90 % 8.90 % 9.30 % 10.34 % 11.56 % 15.76 %
total assets
Tier 1 capital to total 9.00 8.90 8.90 9.30 10.34 11.56 15.76
assets
Tier 1 capital to 17.80 17.40 17.70 18.50 22.83 24.25 34.04
risk-weighted assets
</TABLE>
(1) Interest rate spread represents the difference between the weighted average
yield on interest earning assets and the weighted average cost of
interest-bearing liabilities, and net interest margin represents net
interest income as a percentage of average interest-earning assets.
(2) The efficiency ratio is equal to non-interest expense (excluding
non-recurring charges and amortization of intangible assets) divided by net
interest income determined on a fully tax equivalent basis plus
non-interest income less gains or losses on securities transactions and
non-recurring income.
20
<PAGE> 21
BANCFIRST OHIO UNAUDITED PRO FORMA FINANCIAL STATEMENTS
Unaudited Pro Forma Condensed Consolidated Balance Sheet
December 31, 1999
<TABLE>
<CAPTION>
BancFirst Milton Pro Forma Pro Forma
Historical Historical Adjustments Consolidated
---------- ---------- ----------- ------------
<S> <C> <C> <C> <C>
ASSETS: (In thousands)
Cash and due from banks, federal
funds sold and interest bearing deposits $ 32,374 $ 3,604 $ - $ 35,978
Investment securities 331,235 51,303 (120)(2) 366,392
(16,026)(1)
Loans receivable 849,767 199,863 (7,000)(2) 1,042,630
Allowance for possible loan losses (7,431) (791) - (8,222)
--------- --------- -------- -----------
Loans receivable - net 842,336 199,072 (7,000) 1,034,408
Premises and equipment 14,789 2,576 - 17,365
Goodwill and other intangibles 12,606 - 10,008(1) 24,299
1,685(2)
Other assets 40,866 3,408 3,022(2) 47,296
--------- --------- -------- -----------
Total assets $ 1,274,206 $ 259,963 $ 8,431) $ 1,525,738
=========== ========= ========= ===========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Liabilities:
Deposits $ 799,176 $ 166,315 $ 64(2) $ 965,555
Federal funds purchased 24,100 - - 24,100
Borrowings 361,398 66,359 (550)(2) 427,207
Other liabilities 9,424 2,000 - 11,424
--------- --------- -------- -----------
Total liabilities 1,194,098 234,674 (486) 1,428,286
--------- --------- -------- -----------
Shareholders' Equity:
Common stock, no par value 66,318 25,273 (25,273)(3) 83,662
17,344(1)
Retained earnings 35,795 8,675 (8,675)(3) 35,795
Accumulated other comprehensive income (8,334) (140) 140(3) (8,334)
Treasury stock and other (13,671) (8,519) 8,519(3) (13,671)
--------- --------- -------- -----------
Total shareholders' equity 80,108 25,289 (7,945) 97,452
--------- --------- -------- -----------
Total liabilities and shareholders' equity $1,274,206 $259,963 $ (8,431) $ 1,525,738
=========== ========= ========= ===========
</TABLE>
21
<PAGE> 22
<TABLE>
<CAPTION>
Unaudited Pro Forma Condensed Consolidated Statement of Income
Year ended December 31, 1999
BancFirst Milton Pro Forma Pro Forma
Historical Historical Adjustments Consolidated
---------- ---------- ----------- ------------
(In thousands)
<S> <C> <C> <C> <C>
Interest income:
Interest and fees on loans $ 66,685 $ 14,527 $ 875(1) $ 82,087
Securities 21,429 3,158 15(1) $ 23,721
- - (881)(2) -
--------- --------- -------- ---------
Total interest income 88,114 17,685 9 105,808
--------- --------- -------- ---------
Interest expense:
Deposits 31,999 7,959 (64)(1) 39,894
Borrowings 17,648 3,173 88(1) 20,909
--------- --------- -------- ---------
Total interest expense 49,647 11,132 24 60,803
--------- --------- -------- ---------
Net interest income 38,467 6,553 (15) 45,005
Provision for possible loan losses 1,580 115 - 1,695
--------- --------- -------- ---------
Net interest income after provision
for possible loan losses 36,887 6,438 (15) 43,310
--------- --------- -------- ---------
Other income:
Trust and custodian fees 2,508 - - 2,508
Customer service fees 2,245 345 - 2,590
Gains on sales of loans 2,449 21 - 2,470
Investment securities gains, net 318 49 - 367
Other 3,233 122 - 3,355
--------- --------- -------- ---------
Total other income 10,753 537 - 11,290
--------- --------- -------- ---------
Other expenses:
Salaries and employee benefits 16,791 2,474 - 19,265
Net occupancy expense 1,699 448 - 2,147
Amortization of intangibles 1,411 - 682(1) 2,093
Other 9,750 1,420 - 11,170
--------- --------- -------- ---------
Total other expenses 29,651 4,342 682 34,675
--------- --------- -------- ---------
Income before income taxes
and extraordinary item 17,989 2,633 (697)(5)(3) 19,925
Provision for federal income taxes 5,685 892 6,572
--------- --------- -------- ---------
Net income $ 12,304 $ 1,741 $ (692) $ 13,353
========= ========= ======== =========
Earnings per share:
Basic $ 1.58 $ 0.86 $ 1.54
Diluted $ 1.58 $ 0.86 $ 1.54
Weighted average number of shares outstanding:
Basic 7,794 2,016 (2,016)(4) 8,683
889(5)
Diluted 7,802 2,016 (2,016)(4) 8,691
889(5)
</TABLE>
22
<PAGE> 23
BANCFIRST OHIO
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
BASIS OF PRESENTATION
The preceding pro forma adjustments are based on available information
and certain estimates and assumptions. Therefore, it is likely that the actual
adjustments will differ from the pro forma adjustments. BancFirst Ohio believes
that such assumptions provide a reasonable basis for presenting all of the
significant effects of the following transactions and that the pro forma
adjustments give appropriate effect to those assumptions and are properly
applied in the unaudited pro forma consolidated condensed financial statements.
ADJUSTMENTS TO PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET
(1) Represents the proposed acquisition for a total purchase price of $31,370,
subject to adjustment based on actual shares outstanding of Milton Federal
Financial Corporation as of the closing date. In addition, estimated acquisition
related costs totaling approximately $2,000 are capitalized for obligations
under employment contracts, severance payments and legal and other transaction
related fees. The proposed acquisition, which will be funded partially with the
issuance of approximately 889,000 shares of BancFirst Ohio common stock having a
market value of $19.50 per share and partially with cash obtained from sales of
investment securities, is summarized as follows:
<TABLE>
<CAPTION>
<S> <C>
Value of BancFirst Ohio common stock issued $17,344
Cash paid to Milton Federal Financial Corporation shareholders 14,026
-------
Total purchase price 31,370
Capitalized acquisition costs 2,000
-------
Total acquisition cost 33,370
Milton Federal Financial Corporation shareholders' equity 25,289
-------
Excess acquisition cost over book value 8,081
Adjustments to reflect fair value (see (2) below) 1,927
-------
Total goodwill $10,008
=======
</TABLE>
(2) Represents adjustments to reflect fair values of assets and liabilities
as follows:
Securities held to maturity $ (120)
Loans receivable (7,000)
Deposits (64)
Borrowings 550
Core deposit intangible 1,685
Deferred income tax asset 3,022
-------
Total fair value adjustments $(1,927)
=======
(3) Represents elimination of Milton Federal Financial Corporation equity
accounts.
23
<PAGE> 24
BANCFIRST OHIO
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
ADJUSTMENTS TO PRO FORMA CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(1) Represents the amortization of the purchase accounting adjustments
over the following periods:
<TABLE>
<CAPTION>
Amortization Amortization
Period Method
------ ------
<S> <C> <C>
Securities held to maturity 8 years Level yield
Loans receivable 8 years Level yield
Deposits 1 year Straight line
Borrowings 6.25 years Straight line
Core deposit intangible 10 years Straight line
Goodwill 20 years Straight line
</TABLE>
(2) Represents reduction in interest income on securities sold to provide
the cash funding for the acquisition.
(3) Represents the estimated income tax effects on the pro forma
adjustments at an effective tax rate of 35%.
(4) Eliminates common shares outstanding of Milton Federal Financial
Corporation.
(5) Represents estimated common shares of BancFirst Ohio issued in
connection with the proposed acquisition.
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<PAGE> 25
COMPARATIVE PER SHARE DATA
Set forth below are net income, cash dividends and book value per
common share data shown separately for both companies on a historical basis, for
BancFirst Ohio on a pro forma basis, for both companies on a pro forma combined
basis and on a pro forma combined basis per Milton Federal Financial Corporation
equivalent share.
The Milton Federal Financial Corporation equivalent share pro forma
information shows the effect of the merger from the perspective of an owner of
Milton Federal Financial Corporation common stock. The information was computed
by multiplying the pro forma combined information by the exchange ratios. In
reviewing this information, keep in mind that it does not reflect the payment of
$6.80 per common share to the shareholders of Milton Federal Financial
Corporation.
You should read the respective audited and unaudited consolidated
financial statements and related notes of BancFirst Ohio and Milton Federal
Financial Corporation incorporated by reference into this document.
<TABLE>
<CAPTION>
BANCFIRST BANCFIRST MILTON MILTON FEDERAL
OHIO OHIO FEDERAL EQUIVALENT
HISTORICAL PRO-FORMA HISTORICAL PRO-FORMA
---------- --------- ---------- --------------
<S> <C> <C> <C> <C>
Net income per share (diluted):
Year ended December 31, 1999 1.58 1.54 0.86 0.68
Cash dividends per share:
Year ended December 31, 1999 0.57 0.57 0.60 0.24
Book value per share at December 31, 1999 10.55 11.49 11.92 5.10
Market value per share at January 12, 2000 20.38 N/A 11.50 9.05
</TABLE>
COMPARATIVE STOCK PRICE AND DIVIDEND INFORMATION
Milton Federal Financial Corporation common shares are traded on Nasdaq
under the symbol "MFFC." BancFirst Ohio common shares are traded on Nasdaq under
the symbol "BFOH."
The following table sets forth, for the calendar quarters indicated,
the high and low sales prices per common share of Milton Federal Financial
Corporation and BancFirst Ohio as quoted on Nasdaq, and the dividends per share
declared during such quarter.
<TABLE>
<CAPTION>
BANCFIRST OHIO MILTON FEDERAL
--------------------------------------------- ------------------------------------------
Market Price Dividends Market Price Dividends
-------------------- --------------------
High Low Declared High Low Declared
---- --- -------------- ---- --- -----------
<S> <C> <C> <C> <C> <C> <C>
1999:
1st Quarter $ 30.00 $ 24.75 $ 0.140 $ 15.00 $ 13.00 $ 0.15
2nd Quarter 27.25 23.13 0.140 14.25 11.75 0.15
3rd Quarter 25.31 21.00 0.140 13.50 11.63 0.15
4th Quarter 25.25 19.13 0.145 13.00 11.00 0.15
1998:
1st Quarter 26.25 23.38 0.135 17.00 15.13 0.15
2nd Quarter 35.00 23.75 0.135 16.44 15.00 0.15
3rd Quarter 35.50 25.00 0.135 15.00 12.31 0.15
4th Quarter 31.50 27.00 0.140 15.63 12.56 0.15
</TABLE>
25
<PAGE> 26
On _________, 2000 the last reported sales prices for BancFirst Ohio
common shares and Milton Federal Financial Corporation common shares on Nasdaq
were $________ and ________, respectively, per share. As of ________, 2000 there
were approximately ________ holders of record of BancFirst Ohio common shares,
which BancFirst Ohio believes represents approximately ______ beneficial
holders. As of ________, 2000 there were approximately ________ holders of
record of Milton Federal Financial Corporation common shares, which Milton
Federal Financial Corporation believes represents approximately ________
beneficial holders.
26
<PAGE> 27
THE SPECIAL MEETING
INTRODUCTION
This document is being furnished to the shareholders of Milton Federal
Financial Corporation in connection with the solicitation of proxies by the
Board of Directors of Milton Federal Financial Corporation for use at the
Special Meeting of Milton Federal Financial Corporation shareholders to be held
on Friday, June 9, 2000 at 2:00 p.m., local time, at the American Legion
building, 2334 South Miami Street, West Milton, Ohio 45383, and at any
adjournments or postponements. Each copy of this document mailed to shareholders
is accompanied by a proxy card furnished in connection with the solicitation of
proxies by the Milton Federal Financial Corporation Board of Directors for use
at the Special Meeting.
MATTERS TO BE CONSIDERED; BOARD OF DIRECTORS RECOMMENDATION
At the Special Meeting, Milton Federal Financial Corporation
shareholders will be asked to:
- vote upon the following resolution:
Resolved, that the Agreement and Plan of Reorganization, dated
January 13, 2000, by and among BancFirst Ohio Corp., The First
National Bank of Zanesville, Milton Federal Financial Corporation
and Milton Federal Savings Bank, a copy of which is attached to
the proxy statement of Milton Federal Financial Corporation dated
_________, 2000, and the transactions contemplated thereby,
including the merger of Milton Federal Financial Corporation with
and into BancFirst Ohio Corp., and the cancellation of each
outstanding common share of Milton Federal Financial Corporation
in exchange for the rights to receive $6.80 cash and 0.444 common
share of BancFirst Ohio Corp., be and they hereby are, approved
and adopted.
- vote upon such other business as may properly come before the
Special Meeting or any adjournments or postponements thereof
(including, without limitation, adjournment or postponement of the
Special Meeting in order to allow for additional solicitation of
shareholder votes in order to obtain a quorum or in order to
obtain more votes in favor of the merger agreement).
The Board of Directors knows of no business that will be presented for
consideration at the Special Meeting other than the matters described in this
document.
The Milton Federal Financial Corporation Board of Directors has
determined that the adoption of the merger agreement is in the best interests of
Milton Federal Financial Corporation shareholders. ACCORDINGLY, THE BOARD
RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE ADOPTION OF THE MERGER AGREEMENT AND
THE APPROVAL OF THE TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT, INCLUDING
THE MERGER. SEE "THE MERGER - BACKGROUND OF THE MERGER" AND "- BACKGROUND AND
REASONS FOR THE MERGER."
SHAREHOLDERS ARE REQUESTED TO COMPLETE, DATE, SIGN AND RETURN THE
ACCOMPANYING PROXY CARD IN THE ENCLOSED POSTAGE-PAID ENVELOPE. FAILURE TO RETURN
A PROPERLY EXECUTED PROXY CARD OR TO VOTE AT THE SPECIAL MEETING WILL HAVE THE
SAME EFFECT AS A VOTE AGAINST THE MERGER AGREEMENT.
RECORD DATE AND VOTING
Only the holders of record of Milton Federal Financial Corporation
common shares as of the close of business on ________ __, 2000 are entitled to
notice of and to vote at the Special Meeting. At the close of business on the
record date, there were 2,099,995 common shares of Milton Federal Financial
Corporation outstanding and entitled to vote, held by approximately 1,004
shareholders of record and beneficially by approximately _____ shareholders.
Directors and executive officers of Milton Federal Financial Corporation and its
affiliates (as a group) were entitled to vote _____ common shares of Milton
Federal Financial Corporation, or approximately ____% of the outstanding votes
entitled to be cast at the Special Meeting. Holders of record of Milton Federal
Financial Corporation common shares as of the close of business on the record
date are entitled to one vote per share on any matter voted on at the Special
Meeting.
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<PAGE> 28
The presence, either in person or by proxy, of the holders of a
majority of the outstanding common shares of Milton Federal Financial
Corporation as of the record date is necessary to constitute a quorum at the
Special Meeting. Broker non-votes and abstentions count for the purpose of
determining a quorum at the Special Meeting. A broker non-vote will occur if a
broker who holds shares of Milton Federal Financial Corporation in street name
for its customer does not receive voting instructions from its customer.
SHAREHOLDERS SHOULD NOT FORWARD ANY SHARE CERTIFICATES WITH THEIR PROXY
CARDS. IF THE MERGER IS CONSUMMATED, SHARE CERTIFICATES SHOULD BE DELIVERED IN
ACCORDANCE WITH INSTRUCTIONS SET FORTH IN A LETTER OF TRANSMITTAL, WHICH WILL BE
SENT TO SHAREHOLDERS BY CHASEMELLON SHAREHOLDER SERVICES IN ITS CAPACITY AS THE
EXCHANGE AGENT, PROMPTLY AFTER THE MERGER IS EFFECTIVE.
VOTE REQUIRED
The affirmative vote of the holders of at least a majority of the
outstanding common shares of Milton Federal Financial Corporation entitled to
vote on the matters to be acted upon is required to adopt the merger agreement.
THE FAILURE TO SUBMIT A PROXY CARD OR VOTE IN PERSON AT THE SPECIAL MEETING HAS
THE SAME EFFECT AS A VOTE AGAINST THE MERGER AGREEMENT. ABSTENTIONS AND BROKER
NON-VOTES ALSO HAVE THE SAME EFFECT AS A VOTE AGAINST THE MERGER AGREEMENT.
BROKERS WHO HOLD COMMON SHARES OF MILTON FEDERAL FINANCIAL CORPORATION AS
NOMINEES WILL NOT HAVE DISCRETIONARY AUTHORITY TO VOTE SHARES WITH RESPECT TO
THE MERGER AGREEMENT ABSENT INSTRUCTIONS FROM THE BENEFICIAL OWNER. THEREFORE,
BY NOT GIVING SUCH INSTRUCTIONS, YOU WILL IN EFFECT BE VOTING AGAINST THE
MERGER.
The proxy holders named in the enclosed proxy card will vote all common
shares of Milton Federal Financial Corporation represented by proxy cards that
are properly signed and returned by shareholders in accordance with the
instructions contained on the proxy card. You may specify your voting choices by
marking the appropriate boxes on the proxy card. IF YOU PROPERLY SIGN AND RETURN
THE PROXY CARD SENT TO YOU BY MILTON FEDERAL FINANCIAL CORPORATION, BUT DO NOT
SPECIFY YOUR VOTING CHOICES, YOUR SHARES WILL BE VOTED "FOR" ALL PROPOSALS AND
THE ADOPTION OF THE MERGER AGREEMENT AS RECOMMENDED BY THE BOARD OF DIRECTORS.
The Milton Federal Financial Corporation Board of Directors is not
aware of any matters other than those set forth in the Notice of Special Meeting
of Shareholders that may be brought before the Special Meeting. If any other
matters properly come before the Special Meeting, the persons named in the
accompanying proxy will vote the shares represented by all properly executed
proxies on such matters in their discretion.
REVOCABILITY OF PROXIES
A shareholder of record may revoke a proxy at any time prior to its
exercise by:
- delivering to Milton Federal Financial Corporation, 25 Lowry Drive,
West Milton, Ohio 45383, attention: Glenn Aidt, a written notice of
revocation prior to the Special Meeting,
- delivering, prior to the Special Meeting, a duly executed proxy
bearing a later date, or
- attending the Special Meeting and voting in person.
For shares held beneficially, but not as record holder, a shareholder
may change a previous vote by submitting new voting instructions to the broker
or nominee.
The presence of a shareholder at the Special Meeting will not in and of
itself automatically revoke such shareholder's proxy. If shares are held of
record, you can vote at the Special Meeting. A beneficial holder may not vote or
revoke a proxy at the Special Meeting unless he/she has received an executed
proxy from the broker or nominee.
SOLICITATION OF PROXIES
All expenses of Milton Federal Financial Corporation's solicitation of
proxies, including the cost of mailing this document to you, will be paid by
Milton Federal Financial Corporation. Milton Federal has retained Kessler Blake
to assist in the solicitation of proxies at a cost of $5,000 plus reimbursement
of out-of-pocket expenses.
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<PAGE> 29
Proxies may be solicited from shareholders by Kessler Blake and by
directors, officers and employees by mail, in person or by telephone, facsimile
or other means of communication. Such directors, officers and employees will not
receive additional compensation, but may be reimbursed for their reasonable
out-of-pocket expenses in connection with such solicitation. Arrangements will
be made with brokerage houses, custodians, nominees and fiduciaries for the
forwarding of proxy solicitation materials to beneficial owners of shares held
of record by such brokerage houses, custodians, nominees and fiduciaries, and
Milton Federal Financial Corporation will reimburse such brokerage houses,
custodians, nominees and fiduciaries for their reasonable expenses incurred in
connection with such solicitation.
ADJOURNMENT OF THE SPECIAL MEETING
A vote in person by a shareholder for adjournment of the Special
Meeting, or for the last proposal on the proxy card authorizing the named
proxies to vote the shares covered by such proxy in their discretion with
respect to other business properly coming before the Special Meeting, would
allow such named proxies in their discretion to vote to adjourn the Special
Meeting. An adjournment would allow for additional solicitation of shareholder
votes in order to obtain a quorum or in order to obtain more votes in favor of
the merger agreement.
DISSENTER'S RIGHTS
Shareholders of Milton Federal Financial Corporation who so desire are
entitled to relief as dissenting shareholders under Ohio Revised Code Section
1701.85. A shareholder of Milton Federal Financial Corporation will be entitled
to such relief, however, only if such shareholder complies strictly with all of
the procedural and other requirements of Section 1701.85. The following summary
does not purport to be a complete statement of the method of compliance with
Section 1701.85 and is qualified in its entirety by reference to the copy of
Section 1701.85 attached hereto as Annex ___.
A Milton Federal Financial Corporation shareholder who wishes to
perfect the rights of a dissenting shareholder in the event the merger agreement
is adopted and the merger is approved:
(a) Must have been a record holder of the Milton Federal Financial
Corporation common shares as to which such shareholder seeks
relief on the record date for the Special Meeting.
(b) Must not have voted such shareholder's Milton Federal
Financial Corporation common shares in favor of adoption of
the merger agreement and the approval of the merger; and
(c) Must deliver to Milton Federal Financial Corporation, not
later than ten days after the Special Meeting, a written
demand for payment of the fair cash value of the shares as to
which such shareholder seeks relief. Such written demand must
state the name and address of the shareholder, the number of
shares as to which such shareholder seeks relief and the
amount claimed as the fair cash value thereof.
A vote against the adoption of the merger agreement and the approval of
the merger will not satisfy the requirements of a written demand for payment.
Any written demand for payment should be mailed or delivered to: Glenn E. Aidt,
Milton Federal Financial Corporation, 25 Lowry Drive, West Milton, Ohio 45383.
As the written demand must be delivered within the ten-day period following the
appropriate Special Meeting, it is recommended, although not required, that a
shareholder using the mails should use certified or registered mail, return
receipt requested, to confirm that such shareholder has made a timely delivery.
If Milton Federal Financial Corporation sends the dissenting
shareholder, at the address specified in the shareholder's demand, a request for
the certificate(s) representing the shareholder's shares, the shareholder must
deliver the certificate(s) to the requesting company within 15 days of the
sending of such request. Milton Federal Financial Corporation may endorse the
certificate(s) with a legend to the effect that the shareholder has demanded the
fair cash value of the shares represented by the certificate(s). Failure to
deliver the certificate(s) within 15 days of the request terminates the
shareholder's rights as a dissenting shareholder. Milton Federal Financial
Corporation must notify the shareholder of its election to terminate the rights
of the shareholder as a dissenting shareholder within 20 days after the lapse of
the 15-day period.
29
<PAGE> 30
Unless the dissenting shareholder and Milton Federal Financial
Corporation agree on the fair cash value per share of the Milton Federal
Financial Corporation common shares, either may, within three months after the
service of the written demand by the shareholder, file a petition in the Court
of Common Pleas of Miami County, Ohio. If the court finds that the shareholder
is entitled to be paid the fair cash value of any shares, the court may appoint
one or more appraisers to receive evidence and to recommend a decision on the
amount of the fair cash value.
Fair cash value: (i) will be determined as of the day prior to the
Special Meeting, (ii) will be the amount a willing seller and a willing buyer
would accept or pay with neither being under compulsion to sell or buy, (iii)
will not exceed the amount specified in the shareholder's written demand, and
(iv) will exclude any appreciation or depreciation in market value resulting
from the merger. The court will make a finding as to the fair cash value of a
share and render judgment against Milton Federal Financial Corporation for its
payment with interest at such rate and from such date as the court considers
equitable. The costs of proceedings shall be assessed or apportioned as the
court considers equitable.
The rights of any dissenting shareholder will terminate if (a) the
dissenting shareholder has not complied with Section 1701.85, unless Milton
Federal Financial Corporation by its Board of Directors, waives such failure,
(b) Milton Federal Financial Corporation abandons or is finally enjoined or
prevented from carrying out, or the shareholders of Milton Federal Financial
Corporation rescind their adoption of the merger agreement, (c) the dissenting
shareholder withdraws his written demand, with the consent of Milton Federal
Financial Corporation, by its Board of Directors, or (d) Milton Federal
Financial Corporation and the dissenting shareholder have not agreed upon the
fair cash value of the Milton Federal Financial Corporation common shares and
neither has timely filed or joined in a petition in an appropriate court for a
determination of the fair cash value of the shares. For a discussion of the tax
consequences to a shareholder who exercises dissenters' rights, see "THE MERGER
- - Income Tax Consequences."
Because a proxy which does not contain voting instructions will be
voted for the adoption of the merger agreement, a shareholder who wishes to
exercise dissenters' rights must either (i) not sign and return a proxy or, (ii)
if the shareholder signs and returns a proxy, vote against or abstain from
voting on the adoption of the merger agreement and the approval of the merger.
Milton Federal Financial Corporation shareholders who are not in favor
of the merger but who do not wish to exercise their dissenters' rights may, in
the alternative, attempt to sell their shares in the open market at the then
current market price.
THE MERGER
GENERAL
If the merger is consummated, Milton Federal Financial Corporation will
be acquired by BancFirst Ohio through the merger of Milton Federal Financial
Corporation into BancFirst Ohio. Following the merger, Milton Federal Savings
Bank will be merged with and into First National.
BACKGROUND AND REASONS FOR THE MERGER
In 1994, Milton Federal Savings Bank converted from a mutual federal
savings and loan association to a stock federal savings bank. In connection with
the conversion, Milton Federal Financial Corporation was formed as a savings and
loan holding company and issued 2,578,875 common shares to depositors of Milton
Federal Savings Bank and others. Since the consummation of the conversion, the
Board of Directors of Milton Federal Financial Corporation has periodically
monitored the financial performance of Milton Federal Financial Corporation, not
only in relation to comparable thrifts and banks in general, but also in view of
industry trends and developments. As part of the monitoring process, Milton
Federal Financial Corporation has met periodically with McDonald Investments and
Trident Securities to discuss Milton Federal Financial Corporation's position in
the market in relation to its peers.
30
<PAGE> 31
In 1996, Milton Federal began specifically concentrating on increasing
the return on assets and the return on equity to a level which was equal to or
greater than its peers and which was satisfactory to shareholders. Although the
return on assets and the return on equity of Milton Federal Financial
Corporation after the conversion continued to increase, each lagged behind
Milton Federal Financial Corporation's peer group. During the summer of 1998,
Milton Federal Financial Corporation completed a comprehensive strategic plan to
increase long-term shareholder value over a five-year period. In January 1999,
the Board of Directors met for an extended planning session with senior
management and representatives of Crowe Chizek, the independent auditors of
Milton Federal Financial Corporation, to discuss and debate the future of Milton
Federal Financial Corporation and to update the five year strategic plan. At
such time, the Directors generally wondered whether the continuation of the
independence of Milton Federal Financial Corporation would provide to
shareholders a return on their investment which eventually would equal or exceed
that of comparable institutions.
In July 1999, the Board of Directors invited representatives of
McDonald and its Trident Securities division to make their periodic presentation
on developments and trends in the industry, as well as on strategic
alternatives. Although Milton Federal Financial Corporation's progress on the
implementation of the strategic plan revealed at the time a successful trend
toward reaching plan goals, the Directors discussed Milton Federal Financial
Corporation's future in an increasingly competitive environment. As the
Directors continued to contemplate the future prospects of Milton Federal
Financial Corporation as an independent entity, they considered whether Milton
Federal Financial Corporation could continue to grow and prosper in an industry
in which competition was affected not only by significant technological change,
but also by the proliferation of alternative deposit products and independent
mortgage lenders and by the increased consolidation of financial institutions in
general. The implementation of various products and services was considered and
discussed in relation to such competition, with the eventual recognition that
there were many products and services Milton Federal Financial Corporation could
not offer because of the expense of implementation. As a result, the Directors
became increasingly concerned about whether shareholder value could be increased
if the competition could not be met. While the Directors believed that the
long-term goals of the strategic plan could possibly be reached, the impact on
shareholder value of the expense necessary to develop competitive products and
services would be adverse.
After the meeting in July 1999, the Directors individually contemplated
the future prospects of Milton Federal Financial Corporation. Each Director
realized that many of Milton Federal Financial Corporation's competitors had
many more resources available to develop and implement new products and services
than Milton Federal Financial Corporation. Collectively, the Board of Directors
discerned that in order to remain competitive in the industry, Milton Federal
Financial Corporation would need to utilize all available resources to develop
products and services similar to those of its competition. The Directors also
realized that if Milton Federal Financial Corporation were to spend its
resources in developing comparable products, the goals of the five-year
strategic plan would be in jeopardy.
In August 1999, the Board of Directors asked McDonald and Trident
Securities to prepare an analysis of potential alternatives to remaining
independent. With the assistance of McDonald and Trident Securities, the
Directors formulated a general profile of the attributes of an ideal merger or
acquisition partner. The profile revealed a bank or thrift holding company which
had a proven track record of improved shareholder value; a safe and sound
operating financial institution; a comparatively substantial asset size with a
liquid market for its stock; a potential for future growth; and an ability to
serve customers in a manner consistent with the historic customer service of
Milton Federal Financial Corporation.
During the meeting, the Directors also discussed the possibility of
merging with an institution of similar size in a so-called "merger of equals."
While the Directors realized that such a merger might be beneficial to employees
and could be beneficial to customers, the Directors believed that the desired
enhancement to shareholder value would have to await the outcome of the future
performance of the merged entities and that the liquidity in the market for the
shares of the merged entity would not necessarily materially change from Milton
Federal Financial Corporation's current liquidity. The Directors concluded that
if the historic independence of Milton Federal Financial Corporation were to
change, the directors should seek to enhance shareholder value in the
shorter-term.
In late September 1999, the Board of Directors met with McDonald to
review information on companies which fit the profile. McDonald presented a list
of twenty-one bank and thrift holding companies. After an extensive discussion
of the list, the Directors identified fifteen possible candidates on the basis
of historic financial
31
<PAGE> 32
performance; strength and relative size; compatibility of products and services
of the institution to the products and services of Milton Federal Financial
Corporation; and a variety of other factors. The Directors then authorized
McDonald to contact each of the fifteen and, if such contact revealed any
interest, to send to the interested candidate a Confidentiality Agreement. After
the Confidentiality Agreement was signed, McDonald sent a volume of financial
and other materials on Milton Federal Financial Corporation to the interested
candidate.
Of the fifteen candidates contacted, six returned non-binding
indications of interest. In October 1999, the Board of Directors met with
McDonald Investments to discuss the six proposals. McDonald provided the Board
of Directors with a detailed analysis of each of the indications of interest,
including a comprehensive financial and market analysis and additional relevant
information. The Board of Directors discussed at length each indication of
interest and analysis. During the discussion, the directors eliminated three of
the six on the basis that the value of each proposal was below the value of the
other three and that the historic financial performance of each was not on the
same level as the historic financial performance of the other three. The three
not eliminated included BancFirst Ohio, another bank holding company and a
thrift holding company. Each of BancFirst Ohio, the other bank holding company
and the thrift holding company had consolidated assets in excess of $1 billion.
During October and early November 1999, the three entities performed an
extensive review of Milton Federal Financial Corporation and the Milton Federal
Financial Corporation Board of Directors met with representatives of each. In
addition, the Board of Directors of Milton Federal Financial Corporation
reviewed publicly available and other information on each of the three. After
the completion of such due diligence, the three entities presented final,
non-binding proposals in November 1999.
At a meeting of the Board of Directors on November 22, 1999, the
Directors discussed each proposal with McDonald and counsel. The other bank
holding company proposal provided for an exchange of Milton Federal Financial
Corporation stock for stock of the other bank holding company stock. The
BancFirst Ohio proposal provided for an exchange of Milton Federal Financial
Corporation stock for a mix of cash and BancFirst Ohio stock. The thrift holding
company proposal provided for an exchange of Milton Federal Financial
Corporation stock for the thrift holding company stock, but at a valuation level
which was materially below that of the other bank holding company and of
BancFirst Ohio. As a result, the Board of Directors decided not to pursue the
thrift holding company offer.
After further discussions with McDonald on November 22 and 23, 1999,
both the other bank holding company and BancFirst Ohio slightly increased their
offers. Although the BancFirst Ohio offer was nominally higher than the other
bank holding company offer, the Directors were impressed with the return on
equity, the return on assets, the asset quality, the potential for further
growth, the relative valuation of the other bank holding company stock, and the
business plan of the other bank holding company. Nevertheless, the value of the
BancFirst Ohio proposal was higher and BancFirst Ohio's return on equity, return
on assets, asset quality and growth potential were also strong. The decision to
select one of BancFirst Ohio or the other bank holding company was very
difficult for the Directors because of the similarity of the quality of each. In
view of the relative valuation of the stock of the other bank holding company
and the subjective determination that the stock offer of the other bank holding
company might provide a slightly greater opportunity for increased shareholder
value, the Directors elected to commence negotiations with the other bank
holding company on November 23, 1999.
Between November 23, 1999, and the middle of December, however, the
market value of the other bank holding company's stock unexpectedly decreased
significantly. Although the market value of many other companies in the industry
also experienced a substantial decline during such period, the amount of the
other bank holding company stock price decline exceeded the industry average. In
view of the decline, the Board of Directors met with McDonald and counsel on
December 17, 1999, to discuss the stock price and the continued pursuit of
negotiations with the other bank holding company. Neither the Board of Directors
nor McDonald could find in the existing market any indication that the price of
the other bank holding company stock would recover in the near term. Moreover,
McDonald advised the Board of Directors that, at the then current price of the
other bank holding company stock, the value of the other bank holding company
proposal had decreased to a level below which McDonald could render an opinion
that the other bank holding company stock exchange ratio was fair to
shareholders from a financial point of view. The Board of Directors then
unanimously agreed that it could not in good faith continue to pursue
negotiations with the other bank holding company.
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<PAGE> 33
The price of the BancFirst Ohio stock had not experienced the same
decline as many other bank holding companies and had held relatively steady
since November 23, 1999. Moreover, because BancFirst Ohio offered both cash and
stock to Milton Federal Financial Corporation shareholders, the Directors
recognized that the risk of future market fluctuations was mitigated due to the
assurance of a fixed cash portion of the merger consideration. The Directors
strongly believed the BancFirst Ohio's historic financial performance, asset
quality and future prospects would give Milton Federal Financial Corporation
shareholders a good return on their investment. After extensive discussion of
BancFirst Ohio and its proposal, the Directors decided to pursue negotiations
with BancFirst Ohio.
Between December 17, 1999, and January 11, 2000, BancFirst Ohio and
Milton Federal Financial Corporation negotiated the terms and conditions of the
merger agreement, the stock option agreement and related documents. At a meeting
of the Board of Directors on January 11, 2000, McDonald and counsel reviewed the
terms of the merger agreement, the stock option agreement and the contemplated
transaction. Included in such review was a detailed analysis by McDonald of the
financial terms of the merger agreement and the stock option agreement. See "The
Merger Agreement" and "Stock Option Agreement Between BancFirst Ohio and Milton
Federal Financial Corporation." During such review, the Board of Directors
discussed the decline in the market of banks and thrifts and the position of
BancFirst Ohio in such market. Between December 17, 1999, and January 11, 2000,
the other bank holding company's stock remained significantly below the level at
which the stock had traded on November 23, 1999, and the value of the other bank
holding company's offer remained significantly below the BancFirst Ohio offer.
After a lengthy meeting, the Board of Directors agreed to adjourn until
January 12 in order to allow the Directors additional time to consider the
BancFirst Ohio transaction. Upon reconvening on January 12, the Directors again
reviewed the terms of the BancFirst Ohio offer. Following considerable
discussion, McDonald stated that, as of January 12, 2000, the financial
consideration was fair to shareholders from a financial point of view. The
Directors then unanimously agreed that the BancFirst Ohio transaction would be
in the best interest of the Milton Federal Financial Corporation shareholders
and voted unanimously to approve the merger agreement and the stock option
agreement.
The foregoing discussion of the information and factors considered by
the Board of Directors is not intended to be exhaustive, but constitutes the
material factors considered by the Board of Directors. In reaching its
determination to approve and recommend the merger agreement, the Directors did
not assign any relative or specific weights to the foregoing factors, and
individual directors may have weighed factors differently. The terms of the
merger agreement were the product of arm's length negotiations between
representatives of Milton Federal Financial Corporation and BancFirst Ohio.
FOR THE REASONS SET FORTH ABOVE, THE BOARD OF DIRECTORS OF MILTON
FEDERAL FINANCIAL CORPORATION HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND
RECOMMENDS THAT THE STOCKHOLDERS OF MILTON FEDERAL FINANCIAL CORPORATION VOTE
FOR THE APPROVAL AND ADOPTION OF THE MERGER AGREEMENT.
OPINION OF FINANCIAL ADVISOR
MERGER - GENERAL. Pursuant to an engagement letter dated September 20,
1999 between Milton Federal Financial Corporation and McDonald, Milton Federal
Financial Corporation retained McDonald to act as its sole financial advisor in
connection with a possible merger and related matters. As part of its
engagement, McDonald agreed, if requested by Milton Federal Financial
Corporation, to render an opinion with respect to the fairness, from a financial
point of view, to the holders of Milton Federal Financial Corporation common
stock, of the merger consideration as set forth in the merger agreement.
McDonald is a nationally recognized specialist in the financial services
industry. McDonald is regularly engaged in evaluations of similar businesses and
in advising institutions with regard to mergers and acquisitions, as well as
raising debt and equity capital for such institutions. Milton Federal Financial
Corporation selected McDonald as its financial advisor based upon McDonald's
qualifications, expertise and reputation in such capacity.
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<PAGE> 34
On January 12, 2000, McDonald delivered its oral opinion that the
financial consideration was fair to Milton Federal Financial Corporation
shareholders, from a financial point of view, as of the date of such opinion.
McDonald also delivered to the Milton Federal Financial Corporation Board a
written opinion dated as of January 13, 2000, confirming its oral opinion as of
such date. McDonald updated its January 13, 2000 opinion as of the date of this
document. No limitations were imposed by Milton Federal Financial Corporation on
McDonald with respect to the investigations made or the procedures followed in
rendering its opinion.
THE FULL TEXT OF MCDONALD'S WRITTEN OPINION TO THE MILTON FEDERAL
FINANCIAL CORPORATION BOARD, DATED AS OF THE DATE OF THIS DOCUMENT, WHICH SETS
FORTH THE ASSUMPTIONS MADE, MATTERS CONSIDERED AND EXTENT OF REVIEW BY MCDONALD,
IS ATTACHED AS ANNEX C AND IS INCORPORATED HEREIN BY REFERENCE. IT SHOULD BE
READ CAREFULLY AND IN ITS ENTIRETY IN CONJUNCTION WITH THIS DOCUMENT. THE
FOLLOWING SUMMARY OF MCDONALD'S OPINION IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO THE FULL TEXT OF THE OPINION. MCDONALD'S OPINION IS ADDRESSED TO
THE MILTON FEDERAL FINANCIAL CORPORATION BOARD AND DOES NOT CONSTITUTE A
RECOMMENDATION TO ANY SHAREHOLDER OF MILTON FEDERAL FINANCIAL CORPORATION AS TO
HOW SUCH SHAREHOLDER SHOULD VOTE AT THE MILTON FEDERAL FINANCIAL CORPORATION
SPECIAL MEETING DESCRIBED IN THIS DOCUMENT.
McDonald, in connection with rendering its opinion:
- Reviewed Milton Federal Financial Corporation's Annual Reports to
Shareholders and Annual Reports on Form 10-K for each of the years
ended September 30, 1999, 1998 and 1997, including the audited
financial statements contained therein;
- Reviewed BancFirst Ohio's Annual Reports to Shareholders and
Annual Reports on Form 10-K for each of the years ended December
31, 1998, 1997 and 1996, including the audited financial
statements contained therein, and BancFirst Ohio's Quarterly
Reports on Form 10-Q for the each of the quarters ended September
30, 1999, June 30, 1999 and March 31, 1999;
- Reviewed certain other public and non-public information,
primarily financial in nature, relating to the respective
businesses, earnings, assets and prospects of Milton Federal
Financial Corporation and BancFirst Ohio provided to McDonald or
publicly available;
- Participated in meetings and telephone conferences with members of
senior management of Milton Federal Financial Corporation and
BancFirst Ohio concerning the financial condition, business,
assets, financial forecasts and prospects of the respective
companies, as well as other matters McDonald believed to be
relevant to its inquiry;
- Reviewed certain stock market information for Milton Federal
Financial Corporation Common Shares and BancFirst Ohio Common
Shares, and compared it with similar information for certain
companies, the securities of which are publicly traded;
- Compared the results of operations and financial condition of
Milton Federal Financial Corporation and BancFirst Ohio with that
of certain companies, which McDonald deemed to be relevant for
purposes of this opinion;
- Reviewed the financial terms, to the extent publicly available, of
certain acquisition transactions, which McDonald deemed to be
relevant for purposes of this opinion;
- Reviewed the merger agreement and certain related documents; and
- Performed such other reviews and analyses as McDonald deemed
appropriate.
The oral and written opinions provided by McDonald to Milton Federal
Financial Corporation were necessarily based upon economic, monetary, financial
market and other relevant conditions as of the dates thereof.
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<PAGE> 35
In connection with its review and arriving at its opinion, McDonald
relied upon the accuracy and completeness of the financial information and other
pertinent information provided by Milton Federal Financial Corporation and
BancFirst Ohio to McDonald for purposes of rendering its opinion. McDonald did
not assume any obligation to independently verify any of the provided
information as being complete and accurate in all material respects. With regard
to the financial forecasts established and developed for Milton Federal
Financial Corporation and BancFirst Ohio with the input of the respective
managements, as well as projections of cost savings, revenue enhancements and
operating synergies, McDonald assumed that these materials had been reasonably
prepared on bases reflecting the best available estimates and judgments of
Milton Federal Financial Corporation and BancFirst Ohio as to the future
performance of the separate and combined entities and that the projections
provided a reasonable basis upon which McDonald could formulate its opinion.
Neither Milton Federal Financial Corporation nor BancFirst Ohio publicly
discloses such internal management projections of the type utilized by McDonald
in connection with McDonald's role as financial advisor to Milton Federal
Financial Corporation with respect to the review of the merger. Therefore, such
projections cannot be assumed to have been prepared with a view towards public
disclosure. The projections were based upon numerous variables and assumptions
that are inherently uncertain, including, among others, factors relative to the
general economic and competitive conditions facing Milton Federal Financial
Corporation and BancFirst Ohio. Accordingly, actual results could vary
significantly from those set forth in the respective projections.
McDonald does not claim to be an expert in the evaluation of loan
portfolios or the allowance for loan losses with respect thereto and therefore
assumes that such allowances for Milton Federal Financial Corporation and
BancFirst Ohio are adequate to cover such losses. In addition, McDonald does not
assume responsibility for the review of individual credit files and did not make
an independent evaluation, appraisal or physical inspection of the assets or
individual properties of Milton Federal Financial Corporation or BancFirst Ohio,
nor was McDonald provided with such appraisals. Furthermore, McDonald assumes
that the merger will be consummated in accordance with the terms set forth in
the merger agreement, without any waiver of any material terms or conditions by
Milton Federal Financial Corporation, and that obtaining the necessary
regulatory approvals for the merger will not have an adverse effect on either
separate institution or the combined entity. McDonald assumes that the merger
will be recorded as a "purchase" in accordance with generally accepted
accounting principles.
In connection with rendering its January 13, 2000, opinion to the
Milton Federal Financial Corporation's Board of Directors, McDonald performed a
variety of financial and comparative analyses, which are briefly summarized
below. Such summary of analyses does not purport to be a complete description of
the analyses performed by McDonald. Moreover, McDonald believes that these
analyses must be considered as a whole and that selecting portions of such
analyses and the factors considered by it, without considering all such analyses
and factors, could create an incomplete understanding of the scope of the
process underlying the analyses and, more importantly, the opinion derived from
them. The preparation of a financial advisor's opinion is a complex process
involving subjective judgments and is not necessarily susceptible to partial
analyses or a summary description of such analyses. In its full analysis,
McDonald also included assumptions with respect to general economic, financial
market and other financial conditions. Furthermore, McDonald drew from its past
experience in similar transactions, as well as its experience in the valuation
of securities and its general knowledge of the banking industry as a whole. Any
estimates in McDonald's analyses were not necessarily indicative of actual
future results or values, which may significantly diverge more or less favorably
from such estimates. Estimates of company valuations do not purport to be
appraisals nor to necessarily reflect the prices at which companies or their
respective securities actually may be sold.
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<PAGE> 36
COMPARABLE COMPANY ANALYSIS. McDonald reviewed and compared actual
stock market data and actual and estimated selected financial information for
Milton Federal Financial Corporation with corresponding information for 20
publicly traded midwestern thrifts with assets between $200 million and $500
million and a return on average assets between 0.25% and 1.0%, (the "Milton
Federal Financial Corporation Peer Group"). The Milton Federal Financial
Corporation Peer Group is listed below:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1. Ameriana Bancorp New Castle, IN 11. FSF Financial Corp. Hutchinson, MN
2. Bank West Financial Corp. Grand Rapids, MI 12. Hemlock Federal Financial Corp. Oak Forest, IL
3. Big Foot Financial Corp. Long Grove, IL 13. Home Bancorp Fort Wayne, IN
4. Cameron Financial Corp. Cameron, MO 14. HopFed Bancorp Inc. Hopkinsville, KY
5. Citizens First Financial Corp. Bloomington, IL 15. Kankakee Bancorp Inc. Kankakee, IL
6. EFC Bancorp Inc. Elgin, IL 16. Landmark Bancshares Inc. Dodge City, KS
7. Equality Bancorp Inc. St. Louis, MO 17. LSB Financial Corp. Lafayette, IN
8. FFW Corp. Wabash, IN 18. Pulaski Financial Corp. Mishawaka, IN
9. First Federal Bancorp Inc. Zanesville, OH 19. MFB Corp. St. Louis, MO
10. First Franklin Corp. Cincinnati, OH 20. Winton Financial Corp. Cincinnati, OH
</TABLE>
The following table below represents a summary analysis of the Milton
Federal Financial Corporation Peer Group based on market prices as of January
10, 2000 and the latest publicly available financial data as of or for the last
twelve months ended September 30, 1999:
<TABLE>
<CAPTION>
Milton
Mean Median Federal
---- ------ -------
<S> <C> <C> <C>
Price to last twelve month earnings 15.0x 13.7x 15.1x
Price to 2000 estimated earnings 12.8x 14.4x NA
Price to book value 90.9% 88.7% 92.7%
Price to tangible book value 92.4% 88.7% 92.7%
Dividend yield 2.94% 2.70% 5.11%
Return on average assets 0.67% 0.72% 0.63%
Return on average equity 6.22% 5.84% 6.19%
Leverage ratio 11.40% 9.17% 9.75%
Efficiency ratio 66.8% 65.0% 63.6%
</TABLE>
McDonald reviewed and compared actual stock market data and actual and
estimated selected financial information for BancFirst Ohio with corresponding
information for 25 publicly traded midwestern banks with assets between $800
million and $2.0 billion and a return on average equity greater than 10.0%, (the
"BancFirst Ohio Peer Group"). The BancFirst Ohio Peer Group is listed below:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1. Brenton Banks Inc. Des Moines, IA 17. First Busey Corp. Urbana, IL
2. Chemical Financial Corp. Midland, MI 18. Peoples Bancorp Inc. Marietta, OH
3. First Financial Corp. Terre Haute, IN 19. Lakeland Financial Corp. Warsaw, IN
4. Independent Bank Corp. Ionia, MI 20. Shoreline Financial Corp. Benton Harbor, MI
5. Irwin Financial Corp. Columbus, IN 21. Farmers Capital Bank Corp. Frankfort, KY
6. Wintrust Financial Corp. Lake Forest, IL 22. Old Second Bancorp Inc. Aurora, IL
7. Mississippi Valley Bancshares St. Louis, MO 23. Indiana United Bancorp Greensburg, IN
8. Mid-America Bancorp Louisville, KY 24. UNB Corp. Canton, OH
9. First Merchants Corp. Muncie, IN 25. First Banks America Inc. Clayton, MO
10. Republic Bancorp Inc. Louisville, KY
11. Gold Banc Corp. Leawood, KS
12. Capitol Bancorp Ltd. Lansing, MI
13. MB Financial Inc. Chicago, IL
14. Midwest Banc Holdings Inc. Melrose Park, IL
15. First Oak Brook Bancshares Oak Brook, IL
16. National City Bancorp. Minneapolis, MN
</TABLE>
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<PAGE> 37
The table below represents a summary analysis of the BancFirst Ohio
Peer Group based on market prices as of January 10, 2000 and the latest publicly
available financial data as of or for the last twelve months ended September 30,
1999:
Bancfirst
Mean Median Ohio
---- ------ ----
Price to last twelve months earnings 13.8x 13.4x 13.8x
Price to 1999 estimated earnings 12.7x 12.5x 13.0x
Price to 2000 estimated earnings 11.2x 11.2x 12.0x
Price to book value 172.4% 162.6% 189.8%
Price to tangible book value 195.5% 187.3% 224.6%
Dividend yield 2.22% 2.61% 2.72%
Return on average assets 1.10% 1.13% 0.98%
Return on average equity 12.98% 12.17% 13.33%
Leverage ratio 7.6% 7.1% 5.8%
Efficiency ratio 60.2% 60.3% 57.0%
COMPARABLE TRANSACTION ANALYSIS. McDonald reviewed and compared actual
information for groups of comparable pending (through January 10, 2000) and
completed transactions (since January 1, 1999) it deemed pertinent to an
analysis of the merger. The implied acquisition price was compared to the median
ratios of (i) price to last twelve months earnings, (ii) price to book value,
(iii) price to tangible book value, and (iv) price to assets for each of the
following five pending and recently completed transaction comparable groups:
- all thrift acquisitions with the selling thrift headquartered in
Illinois, Indiana, Kentucky, Michigan, Ohio, Pennsylvania, and West
Virginia;
- all thrift acquisitions with the selling thrift having assets
between $100 million and $600 million;
- all thrift acquisitions with the selling thrift having an equity to
assets ratio between 8.0% and 15.0%;
- all thrift acquisitions with the selling thrift having a return on
average equity between 4.0% and 8.0%;
- all thrift acquisitions with the selling thrift having a
nonperforming assets to assets ratio of between 0.01% and 0.50%.
Based on the above, McDonald concluded that this analysis showed an
imputed reference range of $39.6 million to $48.4 million. McDonald discussed
with the Milton Federal Financial Corporation Board of Directors the limitations
of the comparable transaction analysis in an environment in which bank and
thrift stock price levels had been in a period of prolonged decline. In view of
the general decline in bank and thrift stocks over the past twelve months,
McDonald noted that the comparable valuation approach overstated transaction
values due to the fact that a substantial number of the transactions were
announced at a time when the general level of bank and thrift stock prices was
considerably higher. This analysis indicated a somewhat higher imputed
transaction price range than may be reflective of current market conditions.
Based on these factors, McDonald placed less consideration on the comparable
transaction analysis in arriving at its opinion.
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<PAGE> 38
CONTRIBUTION ANALYSIS. McDonald analyzed the contribution of each
company to the pro forma company relative to the approximate ownership of the
pro forma company. The analysis indicated that Milton Federal Financial
Corporation shareholders would hold approximately 10.8% of the pro forma diluted
shares (17.6% assuming 100% stock consideration). Milton Federal Financial
Corporation's approximate contributions are listed below by category:
Milton
Federal
-----------------
Assets 17.2%
Loans 19.1%
Deposits 17.6%
Equity 13.0%
Tangible equity 25.8%
Last twelve month earnings 12.1%
2000 estimated earnings 13.3%
2001 estimated earnings 13.5%
ACCRETION/DILUTION ANALYSIS. On the basis of financial projections and
estimates of ongoing cost savings accruing to the pro forma company provided to
McDonald by management of BancFirst Ohio and Milton Federal Financial
Corporation, as well as estimated one-time costs related to the transaction,
McDonald compared pro forma per share equivalent earnings, cash dividends, book
value and tangible book value to the stand-alone projections for Milton Federal
Financial Corporation and BancFirst Ohio.
The accretion/dilution analysis demonstrated, among other things, that
the merger would result in:
- 36.1% accretion to earnings per share for Milton Federal Financial
Corporation shareholders in fiscal 2001, the assumed first full
year of combined operations, and decreasing over the period of the
analysis;
- 0.9% accretion to earnings per share for BancFirst Ohio
shareholders in fiscal 2001 and beyond, and increasing over the
period of the analysis;
- 25.7% lower cash dividends for Milton Federal Financial Corporation
shareholders, assuming the BancFirst Ohio Board maintained its
current dividend policy;
- no change in cash dividends for BancFirst Ohio shareholders;
- 17.6% and 31.9% dilution to book value and tangible book value per
share for Milton Federal Financial Corporation shareholders
initially, and decreasing over the period of the analysis; and
- 5.7% accretion to book value and 2.6% dilution to tangible book
value per share for BancFirst Ohio shareholders over the period of
the analysis.
DISCOUNTED CASH FLOW ANALYSIS. McDonald performed a discounted cash
flow analysis with regard to Milton Federal Financial Corporation in an
acquisition scenario. This analysis utilized a range of discount rates of 15% to
18% and a range of terminal earnings multiples of 10.5x to 15.5x. The analysis
resulted in a range of present values of $31.6 million to $47.1 million for
Milton Federal Financial Corporation in an acquisition scenario. As indicated
above, this analysis was based on Milton Federal Financial Corporation's and
BancFirst Ohio's senior management estimates and is not necessarily indicative
of actual values or actual future results and does not purport to reflect the
prices at which any securities may trade at the present or at any time in the
future. McDonald noted that the discounted cash flow analysis was included
because it is a widely used valuation methodology, but noted that the results of
such methodology are highly dependent upon the numerous assumptions that must be
made, including earnings growth rates, discount rates, and terminal values.
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<PAGE> 39
OTHER ANALYSES. McDonald also reviewed certain other information
including pro forma estimated balance sheet composition, pro forma financial
performance and pro forma deposit market share.
No company used as a comparison in the above analyses is identical to
Milton Federal Financial Corporation, BancFirst Ohio or the combined entity and
no other transaction is identical to the merger. Accordingly, an analysis of the
results of the foregoing is not purely mathematical; rather, such analyses
involve complex considerations and judgments concerning differences in financial
market and operating characteristics of the companies and other factors that
could affect the public trading volume of the companies to which Milton Federal
Financial Corporation, BancFirst Ohio and the combined entity are being
compared.
IN CONNECTION WITH DELIVERY OF ITS OPINION DATED AS OF THE DATE OF THIS
DOCUMENT, MCDONALD PERFORMED PROCEDURES TO UPDATE, AS NECESSARY, CERTAIN OF THE
ANALYSES DESCRIBED ABOVE AND REVIEWED THE ASSUMPTIONS ON WHICH SUCH ANALYSES
DESCRIBED ABOVE WERE BASED AND THE FACTORS CONSIDERED IN CONNECTION THEREWITH.
MCDONALD DID NOT PERFORM ANY ANALYSES IN ADDITION TO THOSE DESCRIBED ABOVE IN
UPDATING THE OPINION.
For its financial advisory services provided to Milton Federal
Financial Corporation, McDonald has been paid fees of $65,000 to date and will
be paid a fee of approximately $325,000 at the time of closing of the merger. In
addition, Milton Federal Financial Corporation has agreed to reimburse McDonald
for all reasonable out-of-pocket expenses, incurred by it on Milton Federal
Financial Corporation's behalf, as well as indemnify McDonald against certain
liabilities, including any which may arise under the federal securities laws.
MCDONALD IS A MEMBER OF ALL PRINCIPAL SECURITIES EXCHANGES IN THE
UNITED STATES AND IN THE CONDUCT OF ITS BROKER-DEALER ACTIVITIES HAS FROM TIME
TO TIME PURCHASED SECURITIES FROM, AND SOLD SECURITIES TO, MILTON FEDERAL
FINANCIAL CORPORATION AND/OR BANCFIRST OHIO. AS A MARKET MAKER MCDONALD MAY ALSO
HAVE PURCHASED AND SOLD THE SECURITIES OF MILTON FEDERAL FINANCIAL CORPORATION
AND BANCFIRST OHIO FOR MCDONALD'S OWN ACCOUNT AND FOR THE ACCOUNTS OF ITS
CUSTOMERS.
FEDERAL SECURITIES LAW CONSEQUENCES
All common shares of BancFirst Ohio received by Milton Federal
Financial Corporation shareholders in the merger will be freely transferable.
However, common shares of BancFirst Ohio received by any person who is deemed to
be an "affiliate" (as such term is defined under the Securities Act of 1933) of
Milton Federal Financial Corporation prior to the merger or of BancFirst Ohio
after the merger may be resold by them only in compliance with the volume and
manner-of-sale requirements of Rules 144 and 145 under the Securities Act.
Affiliates of BancFirst Ohio will be governed by additional provisions of Rule
144. Affiliates of BancFirst Ohio or Milton Federal Financial Corporation
generally include individuals or entities that control, are controlled by, or
are under common control with, such party and may include certain officers and
directors of such party as well as principal shareholders of such party.
CERTAIN EFFECTS OF THE MERGER
Milton Federal Financial Corporation will be merged with and into
BancFirst Ohio, and shareholders of Milton Federal Financial Corporation will
become shareholders of BancFirst Ohio. When the merger is effective, Milton
Federal Financial Corporation common shares will no longer be traded on Nasdaq,
and the registration of Milton Federal Financial Corporation common shares under
the Securities Exchange Act of 1934 will be terminated.
CONDUCT OF BUSINESS IF THE MERGER IS NOT CONSUMMATED
If the merger is not consummated, Milton Federal Financial Corporation
will continue its current operations. However, for reasons discussed under the
caption, "The Merger--Background and Reasons for the Merger," Milton Federal
Financial Corporation may continue to explore strategic alternatives, including
a business combination or sale of Milton Federal Financial Corporation.
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<PAGE> 40
REGULATORY FILINGS AND APPROVALS
BancFirst Ohio and Milton Federal Financial Corporation have agreed to
use their reasonable best efforts to obtain all regulatory approvals required to
consummate the acquisition, which include notice to the Board of Governors of
the Federal Reserve System and application to the Office of the Comptroller of
the Currency, and have completed the applicable regulatory filings prior to the
date of this document. The acquisition cannot proceed in the absence of these
regulatory approvals. There can be no assurance that these regulatory approvals
will be obtained, and, if obtained, there can be no assurance as to the date of
any such approvals or the absence of any litigation challenging such approvals.
BancFirst Ohio and Milton Federal Financial Corporation are not aware of any
other material governmental approvals or actions that are required prior to the
parties' consummation of the acquisition other than those described below.
FEDERAL RESERVE. The merger of Milton Federal Financial Corporation
into BancFirst Ohio requires prior notice to and the approval of the Federal
Reserve pursuant to the Bank Holding Company Act of 1956. BancFirst Ohio has
filed the required notice with the Federal Reserve.
THE OCC. The merger of Milton Federal Savings Bank into First National
requires the prior written approval of the OCC under the Bank Merger Act. Before
acting on the merger application, the OCC will request reports on competitive
factors from the United States Department of Justice, the FDIC, the OTS, and the
Federal Reserve. These agencies have 30 days to submit their views and
recommendations to the OCC. If it approves the transaction, the OCC will
immediately notify the DOJ. Assuming OCC approval, the depository institution
merger may not be consummated until thirtieth calendar day after such approval,
during which time the DOJ may challenge the acquisition on antitrust grounds. If
the DOJ has not adversely commented, then with the approval of the OCC and the
DOJ, the waiting period may be reduced to no less than fifteen days.
The OCC is prohibited from approving any merger transaction that would
result in a monopoly, or that would be in furtherance of any combination or
conspiracy to monopolize or to attempt to monopolize the business of banking in
any part of the United States, or whose effect in any section of the United
States might be substantially to lessen competition, or to tend to create a
monopoly, or that would result in a restraint of trade, unless the OCC finds
that the anticompetitive effects of the transaction are clearly outweighed in
the public interest by the probable effect of the transaction in meeting the
convenience and needs of the communities to be served. In reviewing a merger
application under the Bank Merger Act, the OCC will consider the financial and
managerial resources and future prospects of both depository institutions and
the resulting institution as well as the convenience and needs of the
communities to be served.
The DOJ may reach a conclusion different from that of the OCC regarding
the depository institution merger's competitive effects. If the DOJ were to
commence an antitrust action, it would stay the effectiveness of OCC approval of
the acquisition unless a court specifically ordered otherwise.
Under the Community Reinvestment Act of 1977, in administering the Bank
Merger Act, the OCC will take into account the record of The First National Bank
of Zanesville and Milton Federal Savings Bank in meeting the credit needs of the
entire community.
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of material United States federal income tax
consequences of the merger to Milton Federal Financial Corporation shareholders.
It is assumed for purposes of this discussion that the common shares are held as
"capital assets" within the meaning of Section 1221 of the Internal Revenue
Code. The tax consequences to each shareholder will depend in part upon such
shareholder's particular situation. Special tax consequences not described in
this document may be applicable to particular classes of taxpayers, such as
financial institutions, insurance companies, tax-exempt organizations,
broker-dealers, traders in securities that elect to mark to market, persons that
hold common shares as part of a straddle or conversion transaction, persons who
are not citizens or residents of the United States and shareholders who acquired
their common shares through the exercise of an employee stock option or
otherwise as compensation. The following disclosure is for general information
only and is based upon the Internal Revenue Code, its legislative history,
existing and proposed regulations thereunder, published rulings and decisions,
all as currently in effect as of the date hereof, and all of which are subject
to
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<PAGE> 41
change, possibly with retroactive effect. No ruling has been or will be sought
from the Internal Revenue Service on the United States federal income tax
consequences of the merger. Tax consequences under state, local and foreign laws
are not addressed in this document. ALL SHAREHOLDERS SHOULD CONSULT WITH THEIR
OWN TAX ADVISORS AS TO THE PARTICULAR TAX CONSEQUENCES OF THE MERGER, INCLUDING
THE APPLICABILITY AND EFFECT OF THE ALTERNATIVE MINIMUM TAX AND ANY STATE, LOCAL
OR FOREIGN INCOME AND OTHER TAX LAWS AND OF CHANGES IN SUCH TAX LAWS.
TAX CONSEQUENCES OF THE MERGER GENERALLY
Based upon representation letters from each of BancFirst Ohio and
Milton Federal Financial Corporation delivered to counsel on the closing date,
and subject to the qualifications set forth in this document, in the opinion of
Baker & Hostetler LLP, counsel to BancFirst Ohio, the merger will constitute a
reorganization within the meaning of Section 368(a)(1)(A) of the Internal
Revenue Code. The opinion is based upon current law and assumes that the merger
will be consummated in the manner described in this document and in accordance
with the merger agreement (without amendment). In addition, the opinion is based
on the assumption that the fair market value of the stock consideration provided
in the merger will, at the effective date of the merger, be at least 50% of the
fair market value of the total consideration received by Milton Federal
Financial Corporation shareholders pursuant to the merger. Consummation of the
merger is conditioned upon the receipt of a favorable opinion from Baker &
Hostetler LLP.
Based on the foregoing assumptions and qualifications, for United
States federal income tax purposes:
- The merger will constitute a reorganization under Section
368(a)(1)(A) of the Internal Revenue Code.
- No gain or loss will be recognized by Milton Federal Financial
Corporation pursuant to merger.
- A Milton Federal Financial Corporation shareholder who receives a
combination of cash and BancFirst Ohio common stock in the merger
will not recognize loss but will recognize gain, if any, on the
shares exchanged to the extent of any cash received. Such gain will
be short or long-term capital gain depending upon a shareholder's
holding period for Milton Federal Financial Corporation shares,
unless the receipt by that shareholder of cash has the effect of a
dividend, in which event that gain will be taxable as ordinary
income.
The aggregate adjusted tax basis of the BancFirst Ohio shares to be
received by a Milton Federal Financial Corporation shareholder will be equal to
the basis of the Milton Federal Financial Corporation shares surrendered in
exchange therefor, decreased by the amount of cash received, and increased by
the amount of gain (including any amount which is characterized as a dividend)
which was recognized on the exchange. The holding period of BancFirst Ohio
shares to be received by such Milton Federal Financial Corporation shareholder
will be the same as the holding period of the Milton Federal Financial
Corporation shares surrendered in exchange therefor.
EXCHANGE OF MILTON FEDERAL FINANCIAL CORPORATION COMMON SHARES FOR BANCFIRST
OHIO COMMON STOCK AND CASH
A Milton Federal Financial Corporation shareholder who receives a
combination of cash and shares of BancFirst Ohio common stock in exchange for
Milton Federal Financial Corporation common shares in the merger will not
recognize loss but will recognize gain, if any, on the shares so exchanged to
the extent of any cash received. Any such recognized gain will be treated as
capital gain unless the receipt of the cash has the effect of the distribution
of a dividend for United States federal income tax purposes, in which case such
gain will be treated as ordinary dividend income to the extent of such
shareholder's ratable share of Milton Federal Financial Corporation's
accumulated earnings and profits. Any capital gain will be long-term capital
gain if, as of the date of the exchange, the shareholder's holding period for
such shares is greater than one year. The following is a brief discussion of
such potential tax treatment; however, Milton Federal Financial Corporation
shareholders should consult their own advisors as to the possibility that all or
a portion of any cash received in exchange for their common shares will be
treated as a dividend.
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The stock redemption provisions of Section 302 of the Internal Revenue
Code apply in determining whether cash received by a Milton Federal Financial
Corporation shareholder pursuant to the merger has the effect of a distribution
of a dividend under Section 356(a)(2) of the Internal Revenue Code (the
"Hypothetical Redemption Analysis"). Under the Hypothetical Redemption Analysis,
a Milton Federal Financial Corporation shareholder will be treated as if the
portion of the common shares exchanged for cash in the merger had been instead
exchanged for shares of BancFirst Ohio common stock (the "Hypothetical Shares"),
followed immediately by a redemption of the Hypothetical Shares by BancFirst
Ohio for cash. Under the principles of Section 302 of the Internal Revenue Code,
a Milton Federal Financial Corporation shareholder will recognize capital gain
rather than dividend income with respect to the cash received if the
hypothetical redemption is "not essentially equivalent to a dividend" or is
"substantially disproportionate" with respect to such shareholder. In applying
the principles of Section 302, the constructive ownership rules of Section 318
of the Internal Revenue Code will apply in comparing shareholder's ownership
interest in Milton Federal Financial Corporation both immediately after the
merger (but before the hypothetical redemption) and after the hypothetical
redemption.
Whether the hypothetical redemption by BancFirst Ohio of the
Hypothetical Shares for cash is "not essentially equivalent to a dividend" with
respect to a Milton Federal Financial Corporation shareholder will depend upon
such shareholder's particular circumstances. However, the hypothetical
redemption must, in any event, result in a "meaningful reduction" in such
shareholder's percentage ownership of BancFirst Ohio stock. In determining
whether the hypothetical redemption by BancFirst Ohio results in a meaningful
reduction in the shareholder's percentage ownership of BancFirst Ohio stock and
therefore does not have the effect of a distribution of a dividend, a Milton
Federal Financial Corporation shareholder should compare his or her interest in
BancFirst Ohio (including interests owned actually, hypothetically and
constructively) immediately after the merger (but before the hypothetical
redemption) to his or her interest after the hypothetical redemption. The
Internal Revenue Service has indicated, in Revenue Ruling 76-385, that a
shareholder in a publicly held corporation whose relative stock interest in the
corporation is minimal and who exercises no "control" over corporate affairs is
generally treated as having had a meaningful reduction in his or her stock after
a redemption transaction if his or her percentage stock ownership in the
corporation has been reduced to any extent, taking into account the
shareholder's actual and constructive ownership before and after the
hypothetical redemption. In Revenue Ruling 76-385, the Internal Revenue Service
found a reduction from .0001118% to .0001081% to be a meaningful reduction.
The hypothetical redemption transaction would be "substantially
disproportionate" and, therefore, would not have the effect of a distribution of
a dividend with respect to a Milton Federal Financial Corporation shareholder
who owns less than 50% of the voting power of the outstanding BancFirst Ohio
common stock if the percentage of BancFirst Ohio common stock actually and
constructively owned by such shareholder immediately after the hypothetical
redemption is less than 80% of the percentage of BancFirst Ohio common stock
actually, hypothetically and constructively owned by such shareholder
immediately before the hypothetical redemption.
The aggregate adjusted tax basis of the shares of BancFirst Ohio common
stock received in such exchange will be equal to the aggregate tax basis of the
shares surrendered therefor, decreased by the cash received and increased by the
amount of gain (including any amount which is characterized as a dividend)
recognized, if any. The holding period of BancFirst common stock will include
the holding period of the common shares surrendered therefor.
CASH RECEIVED IN LIEU OF A FRACTIONAL INTEREST OF BANCFIRST OHIO COMMON STOCK
Cash received in lieu of a fractional share of BancFirst Ohio common
stock will be treated as received in redemption of such fractional interest and
gain or loss will be recognized, measured by the difference between the amount
of cash received and the portion of the basis of the share of common stock
allocable to such fractional interest. Such gain or loss will be long-term
capital gain or loss if, as of the date of the exchange, the holding period for
such share is greater than one year.
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BACKUP WITHHOLDING AND INFORMATION REPORTING
Payments of cash to a Milton Federal Financial Corporation shareholder
surrendering shares of common stock will be subject to information reporting and
"backup" withholding at a rate of 31% of the cash payment to the shareholder,
unless the shareholder furnishes its taxpayer identification number in the
manner prescribed in applicable Treasury Regulations, certifies that such number
is correct, certifies as to no loss of exemption from backup withholding and
meets certain other conditions. Any amounts withheld from payments to a holder
under the backup withholding rules will be allowed as a refund or credit against
the holder's United States federal income tax liability, provided the required
information is furnished to the Internal Revenue Service.
THE PRECEDING DISCUSSION IS NOT A COMPLETE ANALYSIS OR DISCUSSION OF
ALL POTENTIAL TAX EFFECTS RELEVANT TO THE MERGER. THUS, YOU ARE URGED TO CONSULT
YOUR OWN TAX ADVISOR AS TO THE SPECIFIC TAX CONSEQUENCES TO YOU IN THE MERGER,
INCLUDING TAX RETURN REPORTING REQUIREMENTS, THE APPLICABILITY AND EFFECT OF
FEDERAL, STATE, LOCAL, AND OTHER APPLICABLE TAX LAWS AND THE EFFECT OF ANY
PROPOSED CHANGES IN THE TAX LAWS.
THE MERGER AGREEMENT
The description of the merger agreement set forth below is not
complete. For full information, you should read the merger agreement, a copy of
which is attached to this document as Annex A.
TERMS OF THE MERGER
THE MERGER. The merger agreement contemplates the merger of Milton
Federal Financial Corporation with and into BancFirst Ohio. Following the
merger, Milton Federal Savings Bank will merge with and into First National.
BancFirst Ohio and First National will be surviving these mergers and the
separate existences of Milton Federal Financial Corporation and Milton Federal
Savings Bank will cease.
EFFECTIVE TIME. As promptly as practicable after the satisfaction or
waiver of the conditions set forth in the merger agreement, the parties will
complete the merger by filing a Certificate of Merger with the Secretary of
State of Ohio. Once this certificate is filed, the mergers will be effective.
CONVERSION OF MILTON FEDERAL FINANCIAL CORPORATION COMMON STOCK IN THE MERGER.
If the merger closes after the satisfaction or waiver of all of the closing
conditions, EACH outstanding common share of Milton Federal Financial
Corporation will be cancelled on the day of the closing in exchange for the
following:
- .444 of a common share of BancFirst Ohio, and
- $6.80 cash
The value of the total consideration which you will receive on the day
of the closing in exchange for each Milton Federal Financial Corporation common
share will depend on the market value of a share of BancFirst Ohio on Nasdaq on
the day of the closing. On January 12, 2000, the last trading day before the
announcement of the execution of the merger agreement, the closing price of a
common share of BancFirst Ohio on Nasdaq was $20.375. On __________, 2000, the
closing price of a common share of BancFirst Ohio on Nasdaq was $______.
On the day the merger closes, the market price of BancFirst Ohio may be
higher or lower than the market price on the date the merger agreement was
signed, on the date this document was mailed to you or on the date of the
Special Meeting. Therefore, you cannot be assured of receiving any specific
market value of BancFirst Ohio common shares on the date of the closing of the
merger and we encourage you to determine the stock price of BancFirst Ohio
common shares on Nasdaq prior to making your voting decision regarding the
merger. However, Milton Federal Financial Corporation will have the right to
terminate the merger agreement and abandon the merger before the closing if the
average closing price per share of BancFirst Ohio common stock for the ten
trading days ending two trading days before the closing falls below $17.25. You
should refer to "The Merger Agreement - Terms of Merger" for more information
about the value of the consideration you will receive in the merger.
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<PAGE> 44
In order to provide you with a range of possible values for the total
consideration you will receive from BancFirst Ohio for each of your Milton
Federal Financial Corporation shares if the merger closes, we have set forth
below a table. The following is an explanation of each of the columns in the
table:
COLUMN A:
We have set forth a range of possible market prices of BancFirst Ohio
on Nasdaq, beginning with the $17.25 termination value and ending with
$30.00, the highest closing price of BancFirst Ohio during the last 52
weeks.
COLUMN B:
We have calculated the value of .444 of a share of BancFirst Ohio based
on the corresponding market price set forth in Column A.
COLUMN C:
We have set forth in each line the constant $6.80 cash which will be
paid by BancFirst Ohio for each share of Milton Federal Financial
Corporation, regardless of the market price of BancFirst Ohio shares.
COLUMN D:
We have set forth the total value of the sum of the $6.80 cash (Column
C), plus the value of .444 of a BancFirst Ohio share (Column B) based
upon the specific closing price of a share of BancFirst Ohio on Nasdaq
(Column A).
<TABLE>
<CAPTION>
A B C D
Total value of the
Closing price of a Market value of sum of .444 of a
share of BancFirst Ohio .444 of a BancFirst Add $6.80 share of BancFirst Ohio,
on Nasdaq: Ohio share cash value plus $6.80
----------- ------------------------- ---------- ------------
<S> <C> <C> <C>
$17.25 $7.659 + $6.80 = $14.46
18.00 7.992 + 6.80 = 14.79
19.00 8.436 + 6.80 = 15.24
20.00 8.88 + 6.80 = 15.68
21.00 9.324 + 6.80 = 16.12
22.00 9.768 + 6.80 = 16.56
23.00 10.212 + 6.80 = 17.01
24.00 10.656 + 6.80 = 17.46
25.00 11.100 + 6.80 = 17.90
26.00 11.544 + 6.80 = 18.30
27.00 11.988 + 6.80 = 18.79
28.00 12.432 + 6.80 = 19.23
29.00 12.876 + 6.80 = 19.68
30.00 13.320 + 6.80 = 20.12
</TABLE>
Although the Milton Federal Financial Corporation Board of Directors
has the power to terminate the merger agreement and abandon the merger if the
average closing price of a BancFirst Ohio common share for the ten days ending
two trading days before the closing falls below $17.25, there is no assurance
that the Board of Directors will exercise such power by terminating the merger
agreement. If the average closing price falls below $17.25, the Board of
Directors will evaluate the circumstances existing at the time and, in the
exercise of the Directors' fiduciary duties, determine whether a termination is
in the best interest of shareholders.
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<PAGE> 45
TREATMENT OF EMPLOYEE STOCK OPTIONS. At the time the merger is
effective, each outstanding employee stock option to purchase Milton Federal
Financial Corporation common shares will be cancelled and extinguished, and the
holders of such employee options will be entitled to receive from BancFirst Ohio
cash in the amount of the difference between the sum of $6.80, plus the product
of .444 multiplied by the mean average of the closing bid and asked prices for
BancFirst Ohio common shares on the Nasdaq system for the ten trading days
ending two trading days before the closing, less $13.69 (the exercise price of
the option).
For example, if an employee or director of Milton Federal Financial
Corporation, has an option to purchase 100 common shares of Milton Federal
Financial Corporation, then at the time the merger is effective, this option
will be cancelled and this person will receive cash. For purposes of this
example, assume the price of BancFirst Ohio's common shares have averaged $18.00
per share prior to the closing. In this example, the person will receive $110.20
in cash for the cancellation of the option to purchase 100 common shares. The
$110.20 is calculated as follows:
([$6.80 + (.444 x $18.00)] - $13.69) x 100.
There are currently options outstanding to purchase 228,227 common
shares of Milton Federal Financial Corporation held by 11 individuals, as
follows:
Glenn E. Aidt 51,578
Thomas P. Eyer 38,683
Debbie A. Jones 25,789
Michael J. Hufford 15,471
John E. Frigge 19,342
E. Lynn App 12,894
Kenneth J. Faze 12,894
David R. Hayes 12,894
Robert E. Hine 12,894
Christopher S. Long 12,894
Cletus O. Minnich 12,894
------
Total: 228,227
=======
FRACTIONAL SHARES. No fractional shares of BancFirst Ohio will be
issued. BancFirst Ohio shall, in lieu of issuing fractional shares, pay holders
of fractional shares cash in an amount equal to the fractional amount multiplied
by the financial consideration for such fractional share.
EXCHANGE OF CERTIFICATES
EXCHANGE AGENT. ChaseMellon Shareholder Services will act as exchange
agent for the exchange of stock certificates pursuant to the merger.
EXCHANGE PROCEDURES. As soon as reasonably practicable after the merger
is effective, BancFirst Ohio will instruct ChaseMellon Shareholder Services in
its capacity as exchange agent to mail to each record holder of Milton Federal
Financial Corporation common shares at the time the merger is effective a letter
of transmittal and instructions for exchanging certificates representing Milton
Federal Financial Corporation common shares for certificates evidencing
BancFirst Ohio common shares and cash. You will have to follow the instructions
and surrender your certificates for Milton Federal Financial Corporation common
shares, together with the properly executed letter of transmittal, and any other
required documents, to the exchange agent. You then will be entitled to receive:
- certificates for that number of whole common shares of BancFirst
Ohio which you have the right to receive in the merger,
- the cash portion of the purchase price you are entitled to
receive,
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<PAGE> 46
- any dividends or other distributions on the BancFirst Ohio common
shares declared or made after the merger is effective to which you
may be entitled, and
- cash for any fractional share of BancFirst Ohio common stock.
Until so surrendered, each outstanding certificate that, prior to
the time the merger is effective, represented common shares of
Milton Federal Financial Corporation will be deemed, for all
corporate purposes other than the payment of dividends, and
subject to the payment of cash in lieu of fractional shares, to
evidence the ownership of the number of whole common shares of
BancFirst Ohio into which such common shares of Milton Federal
Financial Corporation are to be converted and the cash you are
entitled to receive.
DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. If any dividends or
other distributions are declared or made after the time the merger is effective
on BancFirst Ohio common shares, you will not receive them until you surrender
your Milton Federal Financial Corporation share certificates. When you do
surrender your certificates, BancFirst Ohio will pay you, without interest, any
dividends or other distributions previously paid to holders of BancFirst Ohio
common shares with a record date after the time the merger is effective.
TRANSFERS OF OWNERSHIP. If you want any certificate for common shares
of BancFirst Ohio to be issued in a name other than that in which the Milton
Federal Financial Corporation certificate surrendered in exchange is registered,
your Milton Federal Financial Corporation certificate must be properly endorsed
and otherwise in proper form for transfer. You also must pay to BancFirst Ohio
or its agent any resulting transfer or other tax, or establish to the
satisfaction of BancFirst Ohio that such tax has been paid or is not payable.
ESCHEAT AND WITHHOLDING. Neither BancFirst Ohio nor Milton Federal
Financial Corporation will be liable to you for any common shares of BancFirst
Ohio which were delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law. BancFirst Ohio or the exchange agent
will deduct from the BancFirst Ohio common shares paid to you any amounts that
BancFirst Ohio or the exchange agent is required to withhold under any provision
of federal, state, local or foreign tax law.
LOST, STOLEN OR DESTROYED CERTIFICATES. The exchange agent will issue
BancFirst Ohio common shares in exchange for a lost, stolen or destroyed Milton
Federal Financial Corporation share certificate upon receipt of an affidavit of
that fact by the owner of the certificate. However, BancFirst Ohio will require
you to deliver a reasonable indemnity bond against any claim that may be made
against BancFirst Ohio or the exchange agent with respect to a certificate
alleged to have been lost, stolen or destroyed.
DETAILED INSTRUCTIONS, INCLUDING A TRANSMITTAL LETTER, WILL BE MAILED
TO MILTON FEDERAL FINANCIAL CORPORATION SHAREHOLDERS PROMPTLY FOLLOWING THE TIME
THE MERGER IS EFFECTIVE EXPLAINING HOW TO EXCHANGE MILTON FEDERAL FINANCIAL
CORPORATION CERTIFICATES FOR BANCFIRST OHIO CERTIFICATES. YOU SHOULD NOT SEND IN
YOUR MILTON FEDERAL FINANCIAL CORPORATION SHARE CERTIFICATES UNTIL YOU RECEIVE A
LETTER OF TRANSMITTAL.
REPRESENTATIONS AND WARRANTIES
In the merger agreement, each of BancFirst Ohio, First National, Milton
Federal Savings Bank and Milton Federal Financial Corporation provide customary
representations and warranties relating to, among other things:
- Incorporation, good standing and corporate power;
- Corporate authority;
- No conflicts with other agreements;
- Capitalization;
- Financial statements;
- SEC and banking regulatory reports;
- Litigation;
- Permits and licenses;
- Tax matters;
- Insurance;
- Year 2000;
- Environmental matters;
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<PAGE> 47
- Stock ownership;
- Brokers and finders; and
- Conduct of business.
In the merger agreement, Milton Federal Financial Corporation and
Milton Federal Savings Bank also make additional representations and warranties
relating to, among other things:
- Title to real property;
- Allowance for Loan Losses;
- Investments;
- Material contracts;
- Employee matters and employee benefit plans;
- Employment agreements;
- Other regulatory matters;
- Non-banking activities of Milton Federal Financial
Corporation and its subsidiaries;
- Fiduciary responsibilities; and
- Certain operational matters.
CONDUCT OF BUSINESS PENDING THE MERGER
Before the time the merger is effective, Milton Federal Financial
Corporation and its subsidiaries will conduct their business in the ordinary and
usual course, consistent with past practice, and will seek to preserve intact
its business organization and goodwill and keep in full force and effect all of
its material rights. Specifically, the merger agreement provides that Milton
Federal Financial Corporation and its subsidiaries will not, unless in some
cases consistent with past practice:
- Issue any capital stock or any options, warrants, or other rights
to subscribe for or purchase capital stock or any securities
convertible into or exchangeable for capital stock;
- Redeem, purchase or otherwise acquire any capital stock or effect
a reclassification, recapitalization, splitup, exchange of shares,
readjustment or other similar change;
- Change the Articles of Incorporation, Code of Regulations or other
charter or governing documents;
- Increase the compensation payable to employees;
- Borrow or agree to borrow any material amount of funds or
guarantee or agree to guarantee any material obligations of
others;
- Make or commit to make any new loan or letter of credit or any new
or additional discretionary advance under any existing line of
credit;
- Purchase or otherwise acquire any investment security for its own
account;
- Materially increase or decrease the rate of interest paid on time
deposits, or on certificates of deposit;
- Enter into any agreement, contract or commitment of a material
nature;
- Place on any of its material assets or properties any mortgage,
pledge, lien, charge, or other encumbrance of a material nature.
- Cancel or accelerate any material indebtedness, or any claims
which it may possess or waive any material rights with respect
thereto;
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<PAGE> 48
- Sell, assign, transfer, convey, license, subcontract, cancel,
amend or alter any loan servicing rights;
- Except as stated, sell any material real or personal property and
other than properties acquired in foreclosure or otherwise in the
ordinary collection of indebtedness;
- With respect to the branch operations of Milton Federal Savings
Bank, take any action to close any existing branch or open or
acquire new branches;
- Except as stated, foreclose upon or otherwise take title to or
possession of or control of any real property without performing
an environmental audit; or
- Purchase any real or personal property or make any other capital
expenditure in excess of $50,000.
NO SOLICITATION. The merger agreement provides that Milton Federal
Financial Corporation and Milton Federal Savings Bank shall not, directly or
indirectly, solicit, initiate or encourage discussions or negotiations with any
person in connection with:
- any acquisition or purchase of all or a material amount of the
assets of Milton Federal Financial Corporation or Milton Federal
Savings Bank,
- any equity securities of Milton Federal Financial Corporation or
Milton Federal Savings Bank, or
- any merger, consolidation or business combination with Milton
Federal Financial Corporation or Milton Federal Savings Bank.
However, the merger agreement does not prohibit Milton Federal Financial
Corporation or Milton Federal Savings Bank from furnishing information to, or
entering into discussions, negotiations or an agreement with any person who
makes an unsolicited proposal for any transaction described above, if:
- the Board of Directors, after consulting with and being advised by
legal counsel, determines that such action is required to fulfill
its fiduciary obligations under the law, and
- before providing the information to or entering into discussions
or negotiations with such person, Milton Federal Financial
Corporation provides written notice to BancFirst Ohio.
In the event Milton Federal Financial Corporation enters into an
agreement for the acquisition of Milton Federal Financial Corporation or Milton
Federal Savings Bank with a person other than BancFirst Ohio because the Board
of Directors believes the directors have a fiduciary duty to do so, then Milton
Federal Financial Corporation can terminate the merger agreement with BancFirst
Ohio. In such event, BancFirst Ohio may exercise the stock option to purchase
shares of Milton Federal Financial Corporation. You should see "Stock Option
Agreement Between BancFirst Ohio and Milton Federal Financial Corporation."
ADDITIONAL AGREEMENTS
CONFIDENTIALITY. Each party will be afforded reasonable access to the
other parties' properties, books, contracts, commitments and records and will
furnish promptly to the other all information concerning its business,
properties and personnel as the other may reasonably request. Each party has
agreed to keep such information confidential.
EMPLOYEE BENEFITS. BancFirst Ohio has agreed to provide certain
employees of Milton Federal Financial Corporation the opportunity to participate
in BancFirst Ohio employee benefit plans, or any non-qualified employee benefit
plans or deferred compensation, stock option, bonus or incentive plans,
severance plans (unless such person is an executive and party to an employment
agreement in which case such executive will receive the benefits set forth in
such agreement) or other employee benefit or fringe benefit programs that may be
in effect generally for employees of BancFirst Ohio's subsidiaries if such
employee would otherwise satisfy the eligibility requirements of such plans.
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<PAGE> 49
Milton Federal Financial Corporation has agreed to use reasonable
efforts to terminate its Employee Stock Ownership Plan effective at the time the
merger is effective. At the time of closing of the merger, all amounts accrued
on Milton Federal Financial Corporation's financial statements will be
contributed by Milton Federal Savings Bank to the ESOP trustee and will then be
paid to Milton Federal Financial Corporation to reduce the outstanding loan of
$1,031,550. After such payments, the Milton Federal Financial Corporation common
shares will be allocated to the participants of the ESOP in accordance with the
plan provisions. All of the Milton Federal Financial Corporation common shares
held by the ESOP trustee will be exchanged in the merger for cash and BancFirst
Ohio common shares. The ESOP trustee will dispose of any shares it holds to
repay any remaining loan balance, and any remaining shares or assets will be
allocated to the participants of the ESOP.
Milton Federal Savings Bank established a Recognition and Retention
Plan, which has purchased an aggregate of 103,155 common shares of Milton
Federal Financial Corporation in the open market since 1995. Of these shares,
72,720 have been awarded to participants. Of these awarded shares, 58,785 have
been vested and distributed and 13,935 have not yet vested. All of the unawarded
shares will be transferred to Milton Federal Financial Corporation prior to the
time the merger is effective as treasury shares and will not be awarded to
participants. When the merger is effective, the unvested shares will be
exchanged for cash and BancFirst Ohio common shares. The trustee of the plan
will distribute the following to plan participants:
- the cash and BancFirst Ohio common shares received in exchange for
the Milton Federal Financial Corporation common shares,
- all dividends previously paid by Milton Federal Financial
Corporation on the unvested shares, with interest, and
- 50% of all dividends previously paid by Milton Federal Financial
Corporation on the unawarded shares, with interest.
REGULATORY FILINGS/COOPERATION. BancFirst Ohio will prepare and cause
to be filed applications and other documents with the Board of Governors of the
Federal Reserve System, the OCC, and any other governmental agencies as are
required to secure the requisite approval of such agencies to the consummation
of the transactions provided for in the merger agreement.
ADVISORY BOARD. BancFirst Ohio will use its best efforts to establish
an advisory board comprised of the non-employee members of the Milton Federal
Financial Corporation Board of Directors which will serve as an adjunct to
BancFirst Ohio's Board of Directors. Members of the advisory board will be paid
$250 per month and will serve for a term of one year.
DIRECTOR AND OFFICER INSURANCE. BancFirst Ohio will provide director
and officer liability insurance to the former directors and executive officers
of Milton Federal Financial Corporation and Milton Federal Savings Bank for
three years after consummation of the merger. Such insurance shall be comparable
to that in effect for such persons prior to the merger.
EMPLOYMENT AGREEMENTS. Milton Federal Financial Corporation previously
entered into employment agreements with Glenn E. Aidt, Thomas P. Eyer, Debbie A.
Jones, Dennis J. Piper and John E. Frigge, as previously described by Milton
Federal Financial Corporation in filings with the SEC and communications to
shareholders. Under the terms of these employment agreements, the employees are
entitled to receive severance payments if their employment is terminated
following a change of control. At the time the merger is effective and assuming
BancFirst Ohio does not retain these individuals as employees, the following
payments will be due under the employment agreements, Glenn E. Aidt - $423,577;
Thomas P. Eyer - $268,632; Debbie A. Jones - $255,528; Dennis J. Piper -
$249,600; John E. Frigge - $214,033.
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<PAGE> 50
CONDITIONS TO THE MERGER
CONDITIONS TO OBLIGATIONS OF BANCFIRST OHIO, FIRST NATIONAL, MILTON
FEDERAL FINANCIAL CORPORATION AND MILTON FEDERAL SAVINGS BANK. The obligations
of all parties to effect the merger is subject to the satisfaction or waiver of
the following conditions:
- The merger agreement must be validly adopted by the affirmative
vote of the shareholders of Milton Federal Financial Corporation;
- All necessary approvals, consents, authorizations, exemptions or
waivers (including any required by any federal or state
governmental body or agency) must be obtained and all waiting
periods required by law must have expired;
- Milton Federal Financial Corporation must receive the written
opinions of McDonald Investments, dated January 13, 2000 and the
date of this document, to the effect that the consideration to be
received by the shareholders of Milton Federal Financial
Corporation as of such dates was fair from a financial point of
view;
- No order or decision from any court and no federal or state law
rule or regulation that would prevent or materially delay the
consummation of the merger can be in effect;
- BancFirst Ohio and Milton Federal Financial Corporation must
receive an opinion from Baker & Hostetler LLP to the effect that
the merger will constitute a tax-free reorganization under the
Internal Revenue Code to the extent of the share exchange; and
- The registration statement filed with the Securities and Exchange
Commission in connection with the merger must be in effect.
CONDITIONS TO OBLIGATIONS OF BANCFIRST OHIO AND FIRST NATIONAL. The
obligations of BancFirst Ohio to effect the merger is subject to the
satisfaction or waiver of the following conditions:
- The representations and warranties made by Milton Federal Financial
Corporation and Milton Federal Savings Bank in the merger agreement
must be true and correct in all material respects;
- Milton Federal Financial Corporation and Milton Federal Savings
Bank must comply in all material respects with their obligations
under the merger agreement; and
- There cannot be any material adverse change after the date of the
merger agreement in the financial condition, assets, liabilities,
obligations, properties or business of Milton Federal Financial
Corporation or Milton Federal Savings Bank (except any change
resulting from circumstances set forth in the merger agreement).
CONDITIONS TO OBLIGATIONS OF MILTON FEDERAL FINANCIAL CORPORATION AND
MILTON FEDERAL SAVINGS BANK. The obligations of Milton Federal Financial
Corporation and Milton Federal Savings Bank to effect the merger shall be
subject to the satisfaction (or waiver) of the following conditions:
- The representations and warranties made by BancFirst Ohio and
First National in the merger agreement must be true and correct in
all material respects;
- BancFirst Ohio and First National must comply in all material
respects with their obligations under the merger agreement;
- There cannot be any material adverse change after the date of the
merger agreement in the financial condition, assets, liabilities,
obligations, properties, business or prospects of BancFirst Ohio
or First National; and
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<PAGE> 51
- The mean average of the closing bid and asked prices for a share
of BancFirst Ohio common stock for the ten trading days ending two
days before the closing must not be less than $17.25.
TERMINATION. The merger agreement may be terminated:
- by mutual agreement of the Board of Directors of BancFirst Ohio,
Milton Federal Financial Corporation, The First National Bank of
Zanesville, and Milton Federal Savings Bank; or
- by the Board of Directors of BancFirst Ohio or Milton Federal
Financial Corporation if the merger is not completed on or before
December 31, 2000 or if any of the conditions of the merger are not
satisfied.
STOCK OPTION AGREEMENT BETWEEN BANCFIRST OHIO
AND MILTON FEDERAL FINANCIAL CORPORATION
At the same time as the merger agreement was executed and delivered,
Milton Federal Financial Corporation and BancFirst Ohio entered into a stock
option agreement, under which Milton Federal Financial Corporation granted
BancFirst Ohio an option to purchase up to 417,899 common shares of Milton
Federal Financial Corporation representing approximately 19.9% of the
outstanding common shares of Milton Federal Financial Corporation at a per share
price of $13.15. The option will become exercisable only upon the occurrence of
certain events described below.
The stock option agreement is intended to increase the likelihood that
the merger will be completed on the terms set forth in the merger agreement. As
a result, some aspects of the stock option agreement may have the effect of
discouraging persons who might now or before the time the merger is effective be
interested in acquiring all of or a significant interest in Milton Federal
Financial Corporation from considering or proposing such an merger, even if they
were prepared to offer consideration per share for Milton Federal Financial
Corporation common shares higher than the consideration set forth in the merger
agreement.
EXERCISE OF STOCK OPTION
BancFirst Ohio may elect to exercise the option in whole or in part
only upon:
- Milton Federal Financial Corporation's completion of a merger or
consolidation with anyone other than BancFirst Ohio;
- Milton Federal Financial Corporation's completion of a sale,
transfer or conveyance of all or substantially all of the assets of
Milton Federal Financial Corporation to someone other than
BancFirst Ohio; or
- The acquisition by anyone other than BancFirst Ohio of 25% or more
of the outstanding shares of Milton Federal Financial Corporation.
TERMINATION OF STOCK OPTION
The option will terminate and be of no further force or effect:
- by mutual consent of Milton Federal Financial Corporation and
BancFirst Ohio;
- by BancFirst Ohio if any regulatory agency issues an order denying
approval of the merger;
- by BancFirst Ohio if any governmental entity has issued a final
non-appealable permanent order enjoining or otherwise prohibiting
the merger;
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<PAGE> 52
- by Milton Federal Financial Corporation if BancFirst Ohio is in
material breach of any of its covenants and agreements in the
merger agreement, such that Milton Federal Financial Corporation
would be entitled to terminate the merger agreement;
- by Milton Federal Financial Corporation or BancFirst Ohio if the
option is not exercised on or before December 31, 2000, except that
if an event occurs before December 31, 2000 that, if closed and
consummated, would constitute an event that would permit BancFirst
Ohio to exercise the option, then the option agreement may be
terminated by Milton Federal Financial Corporation or BancFirst
Ohio if the option is not exercised on or before December 31, 2001.
ADJUSTMENT OF NUMBER OF SHARES SUBJECT TO OPTION
The number and type of securities subject to the option and the
purchase price of shares will be adjusted for any stock split, reverse split,
dividend, exchange of shares or similar transaction relating to the Milton
Federal Financial Corporation common shares, so that BancFirst Ohio will receive
upon exercise of the option the same number and type of securities as if the
option had been exercised immediately before the change in Milton Federal
Financial Corporation common shares.
REPURCHASE OF OPTION SHARES
At any time following 12 months from the date that the option is
exercisable, BancFirst Ohio can require that Milton Federal Financial
Corporation repurchase the option and repurchase the shares that have been
issued to BancFirst Ohio from previous option exercises. In such an event,
Milton Federal Financial Corporation would be required to pay BancFirst Ohio:
- For Milton Federal Financial Corporation common stock acquired
pursuant to the option, the product of the number of shares,
multiplied by the "applicable price," which is defined in the stock
option agreement to be the higher of:
- The highest price paid for a share of Milton Federal Financial
Corporation common stock by the person or group involved in
the transaction giving rise to the exercisability of the
option, or
- The price per share of the Milton Federal Financial
Corporation common stock received by holders of Milton Federal
Financial Corporation common stock in connection with any
merger or other business combination transaction which gives
rise to the exercisability of the option.
- For Milton Federal Financial Corporation common stock subject to
an unexercised option, the difference between:
- The product of the number of such shares, multiplied by the
applicable price, less
- The product of the number of such shares, multiplied by the
per share exercise price of the option.
- For Milton Federal Financial Corporation common stock as to which
the option has been exercised, but the closing has not occurred,
the difference between:
- The product of the number of such shares, multiplied by the
applicable price, less
- The product of the number of such shares, multiplied by the
per share exercise price of the option.
In no event shall BancFirst Ohio purchase a number of Milton Federal
Financial Corporation common shares for which the difference between the product
of:
- the sum of the total number of Milton Federal Financial Corporation
common shares BancFirst Ohio intends to purchase by exercising the
option and shares previously purchased by exercising the option;
times
- the closing price of Milton Federal Financial Corporation common
shares as quoted on Nasdaq on the last trading day before the
exercise of the option;
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<PAGE> 53
less the product of:
- the sum of the total number of Milton Federal Financial
Corporation common shares BancFirst Ohio intends to purchase by
exercising the option and shares previously purchased by
exercising the option; times
- $13.15;
exceeds $2,000,000.
In no event will the purchase price of the Milton Federal Financial
Corporation common stock repurchased from BancFirst Ohio exceed $2,000,000, plus
the aggregate exercise price actually paid by BancFirst Ohio to acquire the
Milton Federal Financial Corporation common stock.
REGISTRATION RIGHTS
BancFirst Ohio has certain rights to require registration under the
securities laws of any common shares of Milton Federal Financial Corporation
purchased pursuant to the stock option agreement if necessary to enable
BancFirst Ohio to sell the shares.
BANCFIRST OHIO CORP.
GENERAL
BancFirst Ohio was organized as a bank holding company under the laws
of the State of Ohio. It conducts a full-service commercial and retail banking
business through its wholly-owned subsidiary, The First National Bank of
Zanesville. Effective May 16, 1998, BancFirst Ohio merged its two other banking
subsidiaries, Bellbrook Community Bank and County Savings Bank, with First
National under the national bank charter of First National. BancFirst Ohio also
owns a full service financial planning company that conducts business under the
name Chornyak & Associates, Inc., which was acquired in April 1999.
BancFirst Ohio is headquartered in Zanesville, Ohio, the county seat of
Muskingum County. Through First National, BancFirst Ohio operates 22
full-service banking facilities which serve Muskingum, Licking, Franklin, Greene
and Montgomery Counties, Ohio. Its primary market extends along Interstate 70 in
central Ohio and includes the markets of Zanesville, Newark, Columbus, and
Dayton. BancFirst Ohio primarily focuses on providing personalized, high quality
and comprehensive banking services in order to develop and maintain long-term
relationships with its customers. BancFirst Ohio offers a range of banking
services, including:
- commercial and commercial real estate loans;
- Small Business Administration loans;
- residential real estate loans;
- consumer loans;
- personal and business checking accounts;
- savings accounts;
- demand and time deposits;
- safe deposit services; and
- trust, private banking, financial planning and investment
services.
At December 31, 1999, on a consolidated basis, BancFirst Ohio had total
assets of $1.3 billion, total liabilities of $1.2 billion, including total
deposits of $799 million, total loans of $850 million, and total shareholders'
equity of $80 million.
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<PAGE> 54
BANCFIRST OHIO STRATEGY
BancFirst Ohio believes its profitability in recent years is in part
attributable to the growth strategy that it began implementing in 1992. At
December 31, 1991, BancFirst Ohio had nine branch offices with assets of $298.2
million, an equity to assets ratio of 11.82%, and operations heavily
concentrated in Muskingum County. Management believed that increased size would
allow it to:
- take advantage of increased operating efficiencies associated with
the attendant economies of scale;
- achieve greater diversification of its markets and products;
- enhance shareholder value by more effectively leveraging its equity
capital; and
- more effectively position itself to take advantage of acquisition
opportunities in the rapidly changing financial services industry.
Given its significant market share in its primary market area,
BancFirst Ohio recognized that its desired growth would have to come primarily
from expansion into new markets. In recognition of these factors, management
undertook a growth strategy which emphasized:
- acquiring existing branch locations from competing institutions as
well as de novo branching;
- increasing lending to small businesses through the formation of
small business lending centers outside Muskingum County;
- acquiring bank and thrift holding companies;
- expanding trust, private banking and investment services; and
- improving technology to enhance services and manage the cost of
operations.
BancFirst Ohio believes that it has been successful in implementing
this strategy. In 1992, First National acquired a $30.6 million branch of a
savings and loan association in Dresden, Ohio. Later in 1992, First National
opened the first of four small business lending centers to serve small
businesses in Columbus, Ohio, and specialize in loans guaranteed by the U.S.
Department of Commerce, SBA. During 1997 and 1998, First National was the
largest originator of SBA Section 7(a) loans in Ohio and was awarded the
designation of preferred lender by the SBA. Currently, First National has small
business lending centers located in Cleveland, Columbus, Cincinnati and Dayton,
Ohio, Indianapolis, Indiana, Louisville, Kentucky and Detroit, Michigan.
The 1995 acquisition of Bellbrook Community Bank provided access to the
Dayton metropolitan market. In August 1996, BancFirst Ohio acquired County
Savings Bank which had total assets of approximately $554 million. In October
1998, First National opened a new branch location in Washington Township, Ohio,
located in the Dayton metropolitan market. BancFirst Ohio has also opened an
additional branch location in New Albany, Ohio, a rapidly growing suburb of
Columbus, Ohio. In April 1999, BancFirst Ohio acquired Chornyak & Associates, a
full service financial planning company. As a result of this strategic growth
strategy, BancFirst Ohio assets have increased by more than $800 million since
December 31, 1991.
BancFirst Ohio's Board of Directors and management intend to seek
continued controlled growth of the organization through selective acquisitions
of banks and/or savings and loan associations. The objectives of these
acquisitions will be to:
- increase the opportunity for quality earning asset growth, deposit
generation and fee-based income opportunities;
- diversify the earning assets portfolio and core deposit base
through expansion into new geographic markets;
- improve the potential profits from BancFirst Ohio's combined
operations through economies of scale; and
- enhance shareholder value.
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<PAGE> 55
In furtherance of these objectives, BancFirst Ohio intends to continue
its pursuit of business combinations which fit the strategic objectives of
growth, diversification and market expansion and which provide the potential for
enhanced shareholder value. At the present time, BancFirst Ohio does not have
any understanding or agreements for any acquisition or combination, except for
the merger discussed in this document.
MILTON FEDERAL FINANCIAL CORPORATION
Milton Federal Financial Corporation is a savings and loan holding
company incorporated under the laws of the State of Ohio. Milton Federal
Financial Corporation owns all issued and outstanding common stock of Milton
Federal Savings Bank, a savings bank chartered under the laws of the United
States.
Serving the West Milton, Ohio area since 1887, Milton Federal Savings
Bank conducts business from its main office at 25 Lowry Drive in West Milton and
from its full service branch offices located in Englewood, Brookville and Tipp
City, Ohio. Milton Federal Savings Bank is engaged principally in making first
mortgage loans secured by one-to four-family residential real estate located in
its designated lending area, and also originates loans for the construction of
one- to four-family residential real estate, loans secured by multi-family
residences (over four units), nonresidential real estate, deposits, automobiles,
recreational vehicles and boats and home improvement and commercial loans.
Milton Federal Savings Bank also invests in U.S. Government and agency
obligations, interest-bearing deposits in other financial institutions,
mortgage-backed securities, which include collateralized mortgage obligations,
real estate mortgage investment conduits and other investments permitted by
applicable law. Funds for lending and other investment activities come primarily
from savings deposits, borrowed funds and loan and security sales and principal
repayments.
DESCRIPTION OF BANCFIRST OHIO CAPITAL STOCK
Ohio General Corporation Law and BancFirst Ohio's Articles of
Incorporation, as amended, and Code of Regulations govern the terms of BancFirst
Ohio's common stock. The following summary is qualified in its entirety by
reference to Ohio General Corporation Law and BancFirst Ohio's Articles of
Incorporation and Code of Regulations.
BancFirst Ohio's Articles of Incorporation authorize the issuance of
20,000,000 shares of common stock, without par value. At __________, 2000
approximately _______ record holders owned the __________ outstanding shares,
all of which are fully paid, validly issued and non-assessable.
Holders of BancFirst Ohio common stock are entitled to one vote for
each share held of record on all matters submitted to a vote of shareholders.
Shareholders may cumulate their votes when electing directors.
Holders of BancFirst Ohio common stock are entitled to share in the
dividends that the Board of Directors validly declares from legally available
funds. If BancFirst Ohio liquidates, holders of BancFirst Ohio common stock also
are entitled to participate ratably in the assets remaining after BancFirst Ohio
pays its liabilities.
Holders of BancFirst Ohio common stock do not have preemptive rights or
other rights to subscribe for or purchase additional shares of any class of
stock or any other securities of BancFirst Ohio. BancFirst Ohio common stock has
no redemption or sinking fund provisions. Approving amendments to Articles 7, 8
and 9 of the Articles of Incorporation and certain mergers, reorganizations and
similar transactions requires the affirmative vote of the holders of at least
75% of all outstanding shares of BancFirst Ohio common stock. Articles 7, 8 and
9 provide, respectively, for the indemnification of officers and directors of
BancFirst Ohio, a super-majority vote in regard to specific kinds of
transactions with related persons, and a majority vote in regard to transactions
that otherwise would require a two-thirds vote under Ohio's General Corporation
Law. ChaseMellon Shareholder Services serves as Registrar and Transfer Agent for
BancFirst Ohio common stock.
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<PAGE> 56
COMPARISON OF SHAREHOLDER RIGHTS
GENERAL
After the merger, shareholders of Milton Federal Financial Corporation
will become shareholders of BancFirst Ohio. Their rights will then be governed
by BancFirst Ohio's Articles of Incorporation, BancFirst Ohio's Code of
Regulations and Ohio General Corporation Law. Presently, Milton Federal
Financial Corporation shareholders' rights are governed by Milton Federal
Financial Corporation's Articles of Incorporation, Milton Federal Financial
Corporation's Code of Regulations, and Ohio General Corporation Law. The
following summary, which is not a complete statement of all differences between
the rights of the holders of BancFirst Ohio common stock and Milton Federal
Financial Corporation common stock, discusses material differences between
Milton Federal Financial Corporation's Articles of Incorporation and Code of
Regulations and BancFirst Ohio's Articles of Incorporation and Code of
Regulations. While BancFirst Ohio believes that the provisions of its Articles
of Incorporation and its Code of Regulations are in its shareholders' best
interests, shareholders of Milton Federal Financial Corporation should be aware
that these provisions could be disadvantageous to them because their overall
effect may be to render more difficult or to discourage the removal of incumbent
directors and management or the assumption of effective control by other
persons. This summary is qualified by the full text of each document. For
information as to how to get those documents, see "Where You Can Find More
Information" on page _____.
CLASSIFIED BOARD OF DIRECTORS
BancFirst Ohio's Board of Directors is divided into three classes with
each class elected in staggered elections and serving a three-year term, which
means that the terms of office of approximately one-third of the members of the
Board of Directors expire each year. Milton Federal Financial Corporation's
Board of Directors is divided into two classes, and each director serves for a
term of two years.
Classification of directors makes it more difficult for shareholders to
change the composition of the Board of Directors. At least two annual meetings
of shareholders, instead of one, will generally be required to change the
majority of the Board of Directors. If a company were confronted by a holder
attempting to force a proxy contest, a tender or exchange offer or other
extraordinary corporate transaction, this classification and time period would
allow the Board of Directors sufficient time to review the proposal. The Board
of Directors would also have the opportunity to review any available
alternatives to the proposal and to act in what it believes to be the best
interests of the shareholders.
The classification provisions could also discourage a third party from
starting a proxy contest, making a tender offer or otherwise attempting to
obtain control of BancFirst Ohio. That transaction could be beneficial to
BancFirst Ohio or its shareholders.
NUMBER OF DIRECTORS
BancFirst Ohio's Board of Directors consists of nine directors, and
Milton Federal Financial Corporation's Board of Directors consists of seven
directors. BancFirst Ohio's Articles of Incorporation establish the minimum and
maximum number of directors that BancFirst Ohio is permitted to have. The
minimum number of directors is nine; the maximum is fifteen. BancFirst Ohio's
Board of Directors, by majority vote, is permitted to increase or decrease the
number of directors within these limits between annual meetings of shareholders
and to fill any vacancy created by an increase in the number of directors.
Milton Federal Financial Corporation's Articles of Incorporation contain the
same kind of provision except that the maximum number of directors authorized
under Milton Federal Financial Corporation's Code of Regulations is fifteen and
the minimum is three.
REMOVAL OF DIRECTORS
BancFirst Ohio's Articles of Incorporation and Code of Regulations do
not provide for the removal of directors. As a result, BancFirst Ohio's
directors are subject to removal as provided by Ohio General Corporation Law or
by other lawful procedures.
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Milton Federal Financial Corporation's shareholders may remove any
director or the entire Board of Directors from office, without assigning any
cause, by the vote of the holders of a majority of the voting power entitling
them to elect directors in place of the director or directors removed.
VACANCIES
Vacancies on BancFirst Ohio's Board of Directors may be filled by a
majority of the remaining directors, although less than a quorum. Any director
so elected shall serve for the remainder of the unexpired term. Vacancies on
Milton Federal Financial Corporation's Board of Directors may be filled in the
same manner, and any director so elected also serves for the remainder of the
unexpired term.
SPECIAL MEETINGS
Special meetings of BancFirst Ohio's shareholders may be called only by
the Chairman of the Board of Directors, the President, a majority of directors,
or any three or more shareholders holding, in the aggregate, not less than
twenty-five percent of the voting power of BancFirst Ohio.
Special meetings of Milton Federal Financial Corporation may be called
only by the Chairman of the Board of Directors, the President, the Vice
President authorized to exercise the authority of the President (in the event of
the President's absence, death, or disability), the secretary, the directors by
action at a meeting or a majority of the directors acting without a meeting, or
the holders of at least twenty-five percent of all outstanding shares of Milton
Federal Financial Corporation that are entitled to vote at the meeting.
CUMULATIVE VOTING
BancFirst Ohio's shareholders may cumulate votes in the election of
directors, which means that shareholders are able to concentrate their voting
power in the election of directors by casting all of their votes (which equals
the number of shares they own multiplied by the number of nominees up for
election) for a single nominee or by distributing their votes among any two or
more nominees. The purpose of cumulative voting is to give minority shareholders
an opportunity to elect directors.
Cumulative voting is not available to Milton Federal Financial
Corporation shareholders.
ADVANCE NOTICE PROVISIONS FOR SHAREHOLDER NOMINATIONS AND SHAREHOLDER PROPOSALS
BancFirst Ohio's Articles of Incorporation and Code of Regulations do
not contain provisions allowing shareholders to nominate individuals for
election as directors or to submit proposals to be voted upon by shareholders.
Consequently, these matters are governed by Ohio's General Corporation Law,
which authorizes the directors to nominate individuals for election as
directors, and federal law, which governs shareholder proposals.
Milton Federal Financial Corporation's Regulations provide that
nominees for election as directors may be proposed only by the directors or by a
shareholder entitled to vote for directors if such shareholder has submitted a
written nomination to the Secretary of Milton Federal Financial Corporation by
the later of the November 30 immediately preceding the annual meeting of
shareholders or the sixtieth day before the first anniversary of the most recent
annual meeting of shareholders held for the election of directors. Each such
written nomination must state the name, age, business or residence address of
the nominee, the principal occupation or employment of the nominee, the number
of common shares of Milton Federal Financial Corporation owned either
beneficially or of record by each such nominee and the length of time such
shares have been so owned.
AMENDMENTS TO CHARTER DOCUMENTS
BancFirst Ohio's Articles of Incorporation and Code of Regulations may
each be amended by the vote of holders of shares representing a majority of the
voting power of BancFirst Ohio, except that amendments to certain Articles of
the Articles of Incorporation require the affirmative vote of the holders of at
least 75% of such voting power. See "Description of Capital Stock."
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Milton Federal Financial Corporation's Articles of Incorporation may be
amended by the affirmative vote of the holders of a majority of Milton Federal
Financial Corporation's outstanding voting shares unless the Board of Directors
recommends that shareholders do not vote to approve the proposed amendment. If
the Board of Directors fails to recommend approval of the proposed amendment,
then the Articles of Incorporation may be amended only by the affirmative vote
of the holders of at least 75% of Milton Federal Financial Corporation's
outstanding voting shares. The same voting requirements apply to proposed
amendments to Milton Federal Financial Corporation's Regulations.
MERGERS, ACQUISITIONS AND OTHER TRANSACTIONS
Generally speaking, the affirmative vote of the holders of a majority
of BancFirst Ohio's voting power is required to approve mergers, dissolutions,
dispositions of all or substantially all of BancFirst Ohio's assets and mergers
and combinations involving the issuance of shares representing one-sixth or more
of the voting power of the corporation other than so-called parent-subsidiary
mergers. However, if the merger or consolidation is with a related person
(defined in BancFirst Ohio's Articles of Incorporation to mean, generally
speaking, any person who owns 10% or more of BancFirst Ohio's outstanding voting
securities) or an affiliate of a related person, then the merger or
consolidation may require the affirmative vote of 75% of BancFirst Ohio's voting
power. This 75% approval requirement may also apply (depending in part on the
size or effect of the transaction, as described in BancFirst Ohio's Articles of
Incorporation) to a disposition of assets, an issuance or transfer of
securities, or a reclassification of securities or recapitalization of BancFirst
Ohio if these transactions are with a related person or an affiliate of a
related person. The 75% approval requirement may also apply to any liquidation
or dissolution of BancFirst Ohio.
The voting requirements that apply to proposed amendments to Milton
Federal Financial Corporation's Articles of Incorporation and Regulations
(described above) also apply to the following transactions:
- an agreement of merger or consolidation providing for the proposed
merger or consolidation of the corporation with or into one or more
other corporations;
- a proposed combination or majority share acquisition involving the
issuance of shares of the corporation and requiring shareholder
approval;
- a proposal to sell, exchange, transfer or otherwise dispose of all,
or substantially all, of the assets, with or without the goodwill,
of the corporation; or
- a proposed dissolution of the corporation.
LIABILITY OF DIRECTORS AND EXECUTIVE OFFICERS
Under Ohio law, shareholders are entitled to bring suit, generally in
an action on behalf of the corporation, to recover damages caused by breaches of
the duty of care and the duty of loyalty owed to a corporation and its
shareholders by directors and, to a certain extent, executive officers. Ohio law
has codified the traditional business judgment rule. Ohio law provides that the
business judgment presumption of good faith may be overcome only by clear and
convincing evidence, rather than the preponderance of the evidence standard
applicable in most states.
Further, Ohio law provides specific statutory authority for directors
to consider, in addition to the interests of the corporation's shareholders,
other factors such as the interests of the corporation's employees, suppliers,
creditors and customers; the economy of the state and the nation; community and
societal considerations; the long-term and short-term interests of the
corporation and the shareholders; and the possibility that these interests may
be best served by the continued independence of the corporation.
Directors of Ohio corporations are, unless the corporation's articles
or regulations otherwise provide, liable to the corporation for money damages
for actions taken or failed to be taken as a director only if it is proven by
clear and convincing evidence that the act or failure to act involved an act or
omission undertaken with deliberate intent to cause injury to the corporation or
reckless disregard for the best interests of the corporation.
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BancFirst Ohio's Code of Regulations provides that it shall indemnify
its directors and officers to the fullest extent provided by applicable Ohio law
as currently exists or may be broadened by amendment and shall advance to
officers and directors, under certain circumstances, funds for expenses,
liabilities and loss actually and reasonably incurred or suffered in connection
with defending pending or threatened suits. Additionally, BancFirst Ohio
maintains insurance on behalf of its directors, officers, employees and agents.
Milton Federal Financial Corporation's Code of Regulations contains
provisions relating to the indemnification of its officers and directors, the
advancement of expenses incurred by its officers and directors in defending
actions brought against them, and the purchase of insurance that are similar in
all material respects to the provisions contained in BancFirst Ohio's Code of
Regulations.
ANTI-TAKEOVER STATUTES UNDER OHIO LAW
TRANSACTIONS WITH INTERESTED SHAREHOLDERS
Ohio has laws that delay or prevent unsolicited third party takeover
attempts. These statutes encourage an acquiring company to negotiate seriously
with a target company's Board of Directors in advance of a takeover attempt.
MERGER MORATORIUM STATUTES. Chapter 1704 of the Ohio Revised Code, the
Ohio Merger Moratorium Statute, applies to BancFirst Ohio and Milton Federal
Financial Corporation.
The Ohio Merger Moratorium Statute governs business combinations and
other transactions between an Ohio public company (such as BancFirst Ohio or
Milton Federal Financial Corporation) and an "interested shareholder." An
interested shareholder is a person who beneficially owns or has the right to
vote 10% or more of a company's outstanding shares and who acquired the shares
or voting rights without the prior approval of its board of directors.
For three years after a person becomes an interested shareholder, the
following transactions between the company and the interested shareholder or
persons related to that shareholder are prohibited:
- the sale or merger of any interest in assets,
- mergers and similar transactions,
- a voluntary dissolution,
- the issuance or transfer of shares or any rights to acquire shares
in excess of 5% of the company's outstanding shares,
- a transaction that increases the interested shareholder's
proportionate ownership of the company, and
- any other benefit that is not shared proportionately by all
shareholders.
After three years, transactions between the company and an interested
shareholder generally require:
- approval by at least a two-thirds majority shareholder vote,
including a majority of shares not owned or controlled by the
interested shareholder, or
- satisfaction of the statutory fair price requirements that apply
to shares held by persons other than the interested shareholder.
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PROFIT RECAPTURE PROVISION. Section 1707.043 of the Ohio Revised Code
applies to BancFirst Ohio and Milton Federal Financial Corporation. This section
provides that:
- if a shareholder disposes of an Ohio company's stock for a profit
of more than $250,000 within 18 months after announcing an
intention to make a proposal to acquire control of the company;
- then, the company may recover the profit unless the shareholder
proves in court that:
- its sole purpose in making the proposal was to acquire
control of the company and it had reasonable grounds to
believe it would succeed,
- it did not make the proposal for the purpose of manipulating
the market, increasing its profit or decreasing its loss,
and
- the proposal did not have a material adverse effect on the
price or trading volume of the shares.
APPRAISAL RIGHTS
Dissenting shareholders of BancFirst Ohio and Milton Federal Financial
Corporation who dissent to mergers and similar transactions submitted for
shareholder vote are entitled to appraisal rights if:
- an amendment to the articles of incorporation changes the
preference or dividend terms of issued shares, changes
substantially the purpose of the corporation or changes the
corporation into a nonprofit corporation,
- a merger or consolidation with another corporation occurs, or
- an merger of another corporation in a merger, combination or
majority share merger which involves the transfer to the target of
shares having one-sixth or more of the acquiror's voting power
occurs.
VOTING SECURITIES AND OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT OF MILTON FEDERAL FINANCIAL CORPORATION
The following table sets forth certain information with respect to the
only persons known to Milton Federal Financial Corporation to own beneficially
more than five percent of the outstanding common shares of Milton Federal
Financial Corporation as of March ___, 2000:
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT OF
NAME AND ADDRESS BENEFICIAL OWNERSHIP SHARES OUTSTANDING
<S> <C> <C>
United National Bank & Trust 187,339 (1) 8.92%
220 Market Avenue South
Canton, Ohio 44702
</TABLE>
(1) Consists of shares held by United National Bank & Trust as the Trustee
for the Milton Federal Financial Corporation Employee Stock Ownership
Plan (the "ESOP").
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The following table sets forth certain information with respect to the
number of common shares of Milton Federal Financial Corporation beneficially
owned by directors of Milton Federal Financial Corporation and by all directors
and executive officers of Milton Federal Financial Corporation as a group as of
March ___, 2000:
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP
--------------------
SOLE VOTING AND SHARED VOTING AND PERCENT OF
NAME AND ADDRESS (1) INVESTMENT POWER INVESTMENT POWER SHARES OUTSTANDING
- -------------------- ---------------- ---------------- ------------------
<S> <C> <C> <C>
Glenn E. Aidt 65,695 (2) 10,000 3.54%
E. Lynn App 15,436 (3) 47,067 (4) 2.96%
Kenneth J. Faze 14,454 (3) 15,000 1.40%
David R. Hayes 14,436 (3) 50,120 (4) 3.06%
Robert E. Hine 20,650 (3) 6,397 1.28%
Christopher S. Long 24,436 (3) 44,370 (4) 3.26%
Thomas L. Ratliff 0 40,000 1.90%
All directors and executive officers of
Milton Federal Financial Corporation as a
group (7 persons) 214,195 (5) 124,219 (6) 13.42%
</TABLE>
(1) Each of the persons listed in this table, may be contacted at the
address of Milton Federal Financial Corporation.
(2) This number includes 41,260 shares that may be acquired upon the
exercise of options awarded pursuant to the Milton Federal Financial
Corporation 1995 Stock Option and Incentive Plan (the "Stock Option
Plan") and 17,214 shares allocated to Mr. Aidt's ESOP account, with
respect to which Mr. Aidt has voting control.
(3) This number includes 10,312 shares that may be acquired upon the
exercise of options awarded pursuant to the Stock Option Plan.
(4) This number includes 44,370 shares held by the Milton Federal Savings
Bank Recognition and Retention Plan and Trust (the "RRP"), with respect
to which Messrs. App, Hayes and Long have shared voting power as
Trustees of the RRP.
(5) This number includes 123,764 shares that may be acquired upon the
exercise of options awarded pursuant to the Stock Option Plan and
27,105 shares allocated to the ESOP accounts of executive officers.
(6) The 44,370 shares held by the RRP Trust are reflected in each of three
directors' amounts, but counted only once in the total amount
beneficially owned by all directors and executive officers of Milton
Federal Financial Corporation as a group.
LEGAL MATTERS
The legality of the BancFirst Ohio common stock offered hereby will be
passed upon for BancFirst Ohio by Baker & Hostetler LLP, Columbus, Ohio. Baker &
Hostetler LLP has also delivered opinions to BancFirst Ohio as to certain tax
matters.
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EXPERTS
The consolidated balance sheets of BancFirst Ohio as of December 31,
1999 and 1998 and the consolidated statements of income, changes in
shareholders' equity and cash flows for each of the years in the three-year
period ended December 31, 1999, incorporated by reference in this document, have
been audited by PricewaterhouseCoopers LLP, independent auditors, as stated in
their report incorporated by reference herein. Such consolidated financial
statements have been included herein in reliance upon the report of such firm
given their authority as experts in accounting and auditing.
The consolidated balance sheets of Milton Federal Financial Corporation
as of September 30, 1999 and 1998, and the related consolidated statements of
income, comprehensive income, changes in shareholders' equity and cash flows for
each of the three years in the period ended September 30, 1999, incorporated by
reference into this document, have been audited by Crowe, Chizek and Company LLP
as independent auditors as stated in their report, incorporated by reference
herein. Such consolidated financial statements have been included herein in
reliance upon such report given on the authority of such firm as experts in
accounting and auditing.
SHAREHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
In the event the merger is not consummated, any shareholder proposal
intended to be presented at the 2000 Annual Meeting must have been received by
Milton Federal Financial Corporation prior to ____________ in order to be
considered in the proxy materials for such meeting.
WHERE YOU CAN FIND MORE INFORMATION
Milton Federal Financial Corporation and BancFirst Ohio each file
reports, proxy statements and other information with the Securities and Exchange
Commission ("SEC"). You may read and copy any reports, statements or other
information that Milton Federal Financial Corporation and BancFirst Ohio file at
the SEC's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. (The address of the public reference room in Washington, D.C.
is 450 Fifth Street, N.W., Washington, D.C. 20549). Please call the SEC at
1-800- SEC-0330 for further information on the public reference rooms. Milton
Federal Financial Corporation's and BancFirst Ohio's public filings are also
available to the public from commercial document retrieval services and at the
Internet World Wide Web site maintained by the SEC at "http://www.sec.gov."
Reports, proxy statements and other information regarding Milton Federal
Financial Corporation and BancFirst Ohio also may be inspected at the offices of
Nasdaq National Market, 9801 Washingtonian Boulevard, Gaithersburg, Maryland
20878.
BancFirst Ohio has filed a Registration Statement with the SEC to
register the shares of BancFirst Ohio common stock to be issued to Milton
Federal Financial Corporation shareholders in the merger. This document is a
part of the Registration Statement and constitutes a prospectus of BancFirst
Ohio, as well as a proxy statement of Milton Federal Financial Corporation for
the Milton Federal Financial Corporation Special Meeting.
As allowed by SEC rules, this document does not contain all information
that shareholders can find in the Registration Statement or the exhibits to the
Registration Statement.
The SEC allows Milton Federal Financial Corporation and BancFirst Ohio
to "incorporate by reference" information into this document, which means that
Milton Federal Financial Corporation and BancFirst Ohio can disclose important
information to you by referring you to another document filed separately with
the SEC. The information incorporated by reference is deemed to be part of this
document, except for any information superseded by information contained
directly in the document. This document incorporates by reference the documents
set forth below that Milton Federal Financial Corporation and BancFirst Ohio
have previously filed with the SEC. These documents contain important
information about Milton Federal Financial Corporation and BancFirst Ohio and
their respective financial condition.
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MILTON FEDERAL FINANCIAL CORPORATION SEC FILINGS:
1. Annual Report on Form 10-K for the fiscal year ended September 30,
1999
2. Quarterly Reports on Form 10-Q for the fiscal quarter ended
December 31, 1999
3. Current Report on Form 8-K dated January 21, 2000
4. The description of the Milton Federal Financial Corporation common
stock contained in the pre-effective amendment no. 1 to Form S-1
filed August 5, 1994.
BANCFIRST OHIO SEC FILINGS:
1. Annual Report on Form 10-K for the fiscal year ended December 31,
1999
2. Current Report on Form 8-K dated January 21, 2000
3. The description of the BancFirst Ohio common stock contained in
the Registration Statement on Form 8-A filed ____________.
Milton Federal Financial Corporation and BancFirst Ohio are also
incorporating by reference additional documents that they may respectively file
with the SEC between the date of this document and the date of the Milton
Federal Financial Corporation Special Meeting. These include periodic reports,
such as an Annual Report on Form 10-K, Quarterly Report on Form 10-Q and Current
Reports on Form 8-K, and any amendments to these reports, as well as proxy
statements.
If you are a shareholder of Milton Federal Financial Corporation or
BancFirst Ohio, you can obtain any of the documents incorporated by reference
through Milton Federal Financial Corporation and BancFirst Ohio, respectively,
or from the SEC or the SEC's Internet World Wide Web site described above.
Documents incorporated by reference are available from Milton Federal Financial
Corporation and BancFirst Ohio without charge, excluding all exhibits.
Shareholders may obtain documents incorporated by reference in this document by
requesting them in writing or by telephone from Milton Federal Financial
Corporation and BancFirst Ohio at the following address:
BancFirst Ohio Corp.
422 Main Street, P.O. Box 4658
Zanesville, Ohio 43702
(740) 452-8444
Milton Federal Financial Corporation
25 Lowry Drive
West Milton, Ohio 45383
(937) 698-4168
If you would like to request documents from Milton Federal Financial
Corporation or BancFirst Ohio, please do so by _____________, 2000 to receive
them before the Milton Federal Financial Corporation Special Meeting. If you
request any such documents, the companies will mail them to you by first-class
mail, or other equally prompt means, within one business day of receipt of your
request.
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY
REFERENCE IN THIS DOCUMENT TO VOTE YOUR SHARES AT THE MILTON FEDERAL FINANCIAL
CORPORATION SPECIAL MEETING. MILTON FEDERAL FINANCIAL CORPORATION AND BANCFIRST
OHIO HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS
DIFFERENT FROM WHAT IS CONTAINED IN THIS DOCUMENT. YOU SHOULD NOT ASSUME THAT
THE INFORMATION CONTAINED IN THIS DOCUMENT IS ACCURATE AS OF ANY DATE OTHER THAN
THE DATE OF THIS DOCUMENT, AND NEITHER THE MAILING OF THIS DOCUMENT TO
SHAREHOLDERS NOR THE ISSUANCE OF BANCFIRST OHIO'S SECURITIES IN THE MERGER SHALL
CREATE ANY IMPLICATION TO THE CONTRARY.
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ANNEX A
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (hereinafter referred to as
the "AGREEMENT"), made and entered into this 13th day of January, 2000, by and
among BancFirst Ohio Corp., a bank holding company incorporated under the laws
of Ohio (hereinafter referred to as "BFOH"); The First National Bank of
Zanesville, a national bank incorporated under the laws of the United States
(hereinafter referred to as the "BANK"); Milton Federal Financial Corporation, a
savings and loan holding company incorporated under the laws of Ohio
(hereinafter referred to as "MFFC"); and Milton Federal Savings Bank, a federal
savings bank incorporated under the laws of the United States (hereinafter
referred to as "MFSB");
WITNESSETH:
WHEREAS, the authorized capital of BFOH consists of 20,000,000 common
shares, each without par value, 7,595,668 of which are issued and outstanding;
WHEREAS, the authorized capital of the BANK consists of 2,559,874
shares of common stock, $10 par value per share, 2,559,874 of which are issued
and outstanding and are owned of record by BFOH;
WHEREAS, the authorized capital of MFFC consists of 9,000,000 common
shares, each without par value, 2,099,995 of which are issued and outstanding,
and 1,000,000 preferred shares, each without par value, none of which is issued
or outstanding;
WHEREAS, the authorized capital of MFSB consists of 10,000,000 shares
of common stock, each without par value, 100 of which are issued and outstanding
and held of record by MFFC; and
WHEREAS, the Boards of Directors of BFOH, the BANK, MFFC and MFSB
believe that the merger of MFFC with and into BFOH and the subsequent merger of
MFSB with and into the BANK are in the best interests of each of them and their
shareholders;
NOW THEREFORE, in consideration of the premises and the mutual
covenants and agreements hereinafter set forth, BFOH, the BANK, MFFC and MFSB,
each intending to be legally bound, hereby agree as follows:
ARTICLE ONE
THE MERGER
SECTION 1.01. MERGER OF MFFC AND BFOH. (a) In accordance with the terms
and subject to the conditions of this AGREEMENT and Chapter 1701 of the Ohio
Revised Code (hereinafter referred to as the "ORC"), MFFC shall merge with and
into BFOH at the BFOH EFFECTIVE TIME (hereinafter defined); BFOH shall be the
continuing, surviving and resulting
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corporation in the merger of MFFC with and into BFOH (hereinafter referred to as
the "BFOH MERGER SURVIVOR"); BFOH shall continue to exist as a bank holding
company incorporated under the laws of Ohio; and BFOH shall be the only one of
BFOH and MFFC to continue its separate corporate existence after the BFOH
EFFECTIVE TIME.
(b) The name of the BFOH MERGER SURVIVOR in the merger of MFFC
with and into BFOH (hereinafter referred to as the "BFOH MERGER") shall be
"BancFirst Ohio Corp." The principal office of the BFOH MERGER SURVIVOR shall be
located at 422 Main Street, Zanesville, Ohio 43701.
(c) The purposes for which the BFOH MERGER SURVIVOR shall be
formed shall be identical to the purposes for which BFOH was formed.
(d) The authorized capital of the BFOH MERGER SURVIVOR shall
consist of 20,000,000 common shares, each without par value.
(e) The Articles of Incorporation of BFOH at the BFOH
EFFECTIVE TIME shall be the Articles of Incorporation of the BFOH MERGER
SURVIVOR until amended in accordance with law.
(f) The Code of Regulations of BFOH at the BFOH EFFECTIVE TIME
shall be the Code of Regulations of the BFOH MERGER SURVIVOR until amended in
accordance with law.
(g) After the BFOH EFFECTIVE TIME, the persons identified on
the schedule attached hereto as Exhibit A shall be the officers and directors of
the BFOH MERGER SURVIVOR, each to hold office in accordance with applicable law
and regulations.
(h) James H. Nicholson, whose address is 956 Southeast Court,
Zanesville, Ohio 43701, a natural person and resident of Muskingum County, the
county in which the principal office of the BFOH MERGER SURVIVOR is to be
located, shall be the statutory agent in Ohio upon whom any process, notice or
demand against BFOH, MFFC, or the BFOH MERGER SURVIVOR may be served.
SECTION 1.02. MERGER OF MFSB AND THE BANK. (a) In accordance with the
terms and subject to the conditions of this AGREEMENT, Section 5.33 of the
Regulations of the Office of the Comptroller of the Currency (hereinafter
referred to as the "OCC"), Section 552.13 of the Regulations of the Office of
Thrift Supervision (hereinafter referred to as the "OTS") and such Agreement To
Merge as may be required by the OCC or the OTS, MFSB shall merge with and into
the BANK at the BANK EFFECTIVE TIME (hereinafter defined); the BANK shall be the
continuing, surviving and resulting corporation in the merger of MFSB with and
into the BANK (hereinafter referred to as the "BANK MERGER SURVIVOR"); the BANK
shall continue to exist as a national bank incorporated under the laws of the
United States; and the BANK shall be the only one of MFSB and the BANK to
continue its separate corporate existence after the BANK EFFECTIVE TIME.
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(b) The name of the BANK MERGER SURVIVOR in the merger of MFSB
with and into the BANK (hereinafter referred to as the "BANK MERGER") shall be
"The First National Bank of Zanesville." The principal office of the BANK MERGER
SURVIVOR shall be located at 422 Main Street, Zanesville, Ohio 43701.
(c) The purposes for which the BANK MERGER SURVIVOR shall be
formed shall be identical to the purposes for which the BANK was formed.
(d) The authorized capital of the BANK MERGER SURVIVOR shall
consist of 3,236,250 shares of common stock, $10 par value per share.
(e) The Articles of Association and Bylaws of the BANK, as in
effect immediately before the BANK EFFECTIVE TIME, shall be the Articles of
Association and Bylaws of the BANK MERGER SURVIVOR after the BANK EFFECTIVE TIME
until amended in accordance with law.
(f) After the BANK EFFECTIVE TIME, the persons identified on
the schedule attached hereto as Exhibit B shall be the officers and directors of
the BANK MERGER SURVIVOR, each to hold office in accordance with applicable law
and regulations.
(g) After the BANK EFFECTIVE TIME, the offices of the BANK and
MFSB at the locations listed on the schedule attached hereto as Exhibit C shall
be the offices of the BANK MERGER SURVIVOR.
SECTION 1.03. CLOSING AND EFFECTIVE TIMES. (a) The closing of the
transactions contemplated by this AGREEMENT (hereinafter referred to as the
"CLOSING") shall take place at a time and on a date selected mutually by BFOH
and MFFC within five business days following the satisfaction or waiver of the
last of the conditions set forth in Article Seven of this AGREEMENT to be
satisfied or waived.
(b) On the day of the CLOSING, BFOH and MFFC shall cause a
Certificate of Merger in respect of the BFOH MERGER to be filed with the
Secretary of State of the State of Ohio in accordance with Chapter 1701 of the
ORC. The BFOH MERGER shall become effective at 11:58 p.m. on the date of such
filings or on such later date as may be set forth in such Certificate of Merger
(herein referred to as the "BFOH EFFECTIVE TIME").
(c) On or before the day of the CLOSING, the BANK and MFSB
shall request the OCC to deem the BANK MERGER to be effective at 11:59 p.m. on
the date of the CLOSING. The BANK MERGER shall become effective at 11:59 p.m. on
the date of the CLOSING or on such later date as may be determined by the OCC
(herein referred to as the "BANK EFFECTIVE TIME").
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ARTICLE TWO
CONVERSION AND CANCELLATION OF
SHARES IN THE BFOH MERGER AND THE BANK MERGER
SECTION 2.01. CONVERSION AND CANCELLATION OF SHARES. (a) At the BFOH
EFFECTIVE TIME and as a result of the BFOH MERGER, automatically and without
further act of BFOH, MFFC or the holders of MFFC common shares or BFOH common
shares, the following shall occur:
(i) Each outstanding MFFC common share shall be
cancelled and extinguished and, in
substitution and exchange therefor, the
holders thereof shall be entitled, subject
to and upon compliance with Section 2.02 of
this AGREEMENT, to receive from BFOH $6.80
cash (hereinafter referred to as the "CASH
CONSIDERATION") and 0.444 common share of
BFOH (hereinafter referred to as the "SHARE
CONSIDERATION"); provided, however, that, in
the event of the establishment of a record
date for the payment, or the payment, by
BFOH of any stock dividends, stock splits or
distributions in, or combinations or
subdivisions of, BFOH common shares between
the date of this AGREEMENT and the BFOH
EFFECTIVE TIME, the SHARE CONSIDERATION
shall be adjusted appropriately (hereinafter
referred to as an "APPROPRIATE ADJUSTMENT");
(ii) Each of the options to purchase 228,227 MFFC
common shares granted pursuant to the MFFC
1995 Stock Option and Incentive Plan
(hereinafter referred to as the "STOCK
OPTION PLAN"), to the extent not duly
exercised before the BFOH EFFECTIVE TIME,
shall be canceled and extinguished and, in
substitution and exchange therefor, the
holders thereof shall be entitled to receive
from BFOH cash in the amount of the
difference between (I) the sum of $6.80,
plus the product of 0.444 (subject to an
APPROPRIATE ADJUSTMENT), multiplied by the
mean average of the closing bid and asked
prices for a common share of BFOH on the
NASDAQ System for the ten trading days
ending two trading days before the CLOSING
(hereinafter referred to as the "AVERAGE"),
less (II) $13.69;
(iii) Each issued MFFC common share which is not
outstanding and which is held in the MFFC
treasury shall be cancelled and
extinguished; and
(iv) Each BFOH common share outstanding before
the BFOH EFFECTIVE TIME shall remain issued
and outstanding after the
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BFOH EFFECTIVE TIME as a common share of the
BFOH MERGER SURVIVOR.
(b) At the BANK EFFECTIVE TIME and as a result of the BANK
MERGER, automatically and without further act of the BANK, MFSB, BFOH or MFFC,
(i) each share of common stock of MFSB shall be cancelled and extinguished and
(ii) the shares of common stock of the BANK issued and outstanding immediately
before the BANK EFFECTIVE TIME shall be and constitute the issued and
outstanding shares of the BANK MERGER SURVIVOR immediately after the BANK
EFFECTIVE TIME.
SECTION 2.02. SHARE CERTIFICATES IN THE BFOH MERGER AND THE BANK
MERGER. (a) Within three business days after the BFOH EFFECTIVE TIME, BFOH shall
deposit the aggregate CASH CONSIDERATION and the aggregate SHARE CONSIDERATION
with Chase Mellon Shareholder Services, 85 Challenger Road, Ridgefield Park, New
Jersey 07660, as exchange agent, and shall cause to be mailed to each holder of
record of MFFC common shares a form letter of transmittal and instructions for
use in effecting the surrender for exchange of the certificates evidencing the
MFFC common shares cancelled and extinguished as a result of the BFOH MERGER
(hereinafter referred to collectively as the "CERTIFICATES" and individually as
the "CERTIFICATE"). Upon surrender of a CERTIFICATE for cancellation, together
with such letter of transmittal, duly executed, the holder of such CERTIFICATE
shall be entitled to receive in exchange therefor a certificate evidencing the
BFOH common shares and the cash to which the holder is entitled in accordance
with the provisions of this AGREEMENT, and the CERTIFICATE so surrendered shall
thereafter be cancelled forthwith.
(b) In the event that any holder of MFFC common shares
cancelled and extinguished in accordance with this AGREEMENT is unable to
deliver the CERTIFICATE which evidences such shares of the holder, BFOH, in the
absence of actual notice that any shares theretofore evidenced by any such
CERTIFICATE have been acquired by a bona fide purchaser, shall deliver to such
holder the amount to which such holder is entitled in accordance with the
provisions of this AGREEMENT upon the presentation of all of the following:
(i) Evidence to the reasonable satisfaction of
BFOH that any such CERTIFICATE has been
lost, wrongfully taken or destroyed;
(ii) Such security or indemnity as may be
reasonably requested by BFOH to indemnify
and hold BFOH harmless; and
(iii) Evidence to the reasonable satisfaction of
BFOH that such person is the owner of the
shares theretofore represented by each
CERTIFICATE claimed by him to be lost,
wrongfully taken or destroyed and that he is
the person who would be entitled to present
each such CERTIFICATE for exchange pursuant
to this AGREEMENT.
(c) In the event that the issuance of BFOH common shares,
payment of cash or payment of cash in lieu of fractional shares in accordance
with this AGREEMENT is to be made to a person other than the person in whose
name the CERTIFICATE surrendered is
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registered, the CERTIFICATE so surrendered shall be properly endorsed or
otherwise in proper form for transfer and the person requesting such issuance or
payment shall pay any transfer or other taxes required by reason of the issuance
or payment to a person other than the registered holder of the CERTIFICATE
surrendered or establish to the satisfaction of BFOH that such tax has been paid
or is not applicable. Until surrendered in accordance with the provisions of
this Section 2.02, each CERTIFICATE shall represent for all purposes the right
to receive the CASH CONSIDERATION and the SHARE CONSIDERATION (hereinafter
collectively referred to as the "BFOH MERGER CONSIDERATION") and cash in lieu of
fractional shares as determined pursuant to this AGREEMENT.
(d) No dividends or other distributions declared after the
BFOH EFFECTIVE TIME with respect to BFOH common shares and payable to the
holders of record thereof after the BFOH EFFECTIVE TIME shall be paid to the
holder of any unsurrendered CERTIFICATE until the holder thereof shall surrender
such CERTIFICATE. Subject to the effect, if any, of applicable law, after the
subsequent surrender and exchange of a CERTIFICATE, the record holder thereof
shall be entitled to receive any such dividends or other distributions, without
any interest thereon, which theretofore had become payable with respect to BFOH
common shares represented by such CERTIFICATE.
(e) No certificates or scrip representing fractional shares of
BFOH common shares shall be issued upon the surrender for exchange of
CERTIFICATES. No dividend or distribution with respect to BFOH common shares
shall be payable on or with respect to any such fractional shares and such
fractional shares shall not entitle the owner thereof to vote or to any other
rights of a BFOH shareholder. In lieu of any such fractional share, BFOH shall
pay to each former holder of MFFC common shares who otherwise would be entitled
to receive a fraction of a BFOH common share, an amount in cash equal to the
product of (i) the average, multiplied by (ii) such fraction.
(f) As soon as practicable after the BANK EFFECTIVE TIME, the
certificate(s) evidencing the MFSB shares of common stock cancelled and
extinguished as a result of the BANK MERGER shall be surrendered to BFOH for
cancellation. At and after the BANK EFFECTIVE TIME, the certificate(s)
evidencing the outstanding shares of stock of the BANK before the BANK EFFECTIVE
TIME shall evidence the outstanding shares of stock of the BANK MERGER SURVIVOR
after the BANK EFFECTIVE TIME.
SECTION 2.03. COMPLIANCE WITH SECTION 2.02. No BFOH common shares, cash
or payment in lieu of fractional shares shall be delivered by BFOH to any former
holder of MFFC common shares in accordance with this AGREEMENT until any such
holder shall have complied with paragraphs (a) through (e) of Section 2.02 of
this AGREEMENT.
SECTION 2.04. PAYMENT IN SATISFACTION OF RIGHTS. All payments made upon
the surrender of CERTIFICATES pursuant to this Article Two shall be deemed to
have been made in full satisfaction of all rights pertaining to the shares
evidenced by such CERTIFICATES.
SECTION 2.05. NO FURTHER REGISTRATION OF TRANSFER. After the BFOH
EFFECTIVE TIME, there shall be no further registration of transfer of MFFC
common shares on the stock transfer books of MFFC. In the event that, after the
BFOH EFFECTIVE TIME,
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CERTIFICATES evidencing such shares are presented for transfer, they shall be
cancelled and exchanged as provided in this Article Two.
SECTION 2.06. DISSENTING SHARES. (a) Notwithstanding anything in this
AGREEMENT to the contrary, the MFFC common shares which are outstanding
immediately before the BFOH EFFECTIVE TIME and which are held by shareholders
who shall not have voted such shares in favor of this AGREEMENT, who shall have
delivered to BFOH or MFFC a written demand for appraisal of such shares in the
manner provided in Section 1701.85 of the ORC and who shall have otherwise
complied fully with all of the requirements of Section 1701.85 of the ORC shall
not be converted into or be exchangeable for the right to receive the
consideration provided in this AGREEMENT; provided, however, that (a) each of
such shares (herein referred to as the "DISSENTING SHARES") shall nevertheless
be cancelled and extinguished in accordance with this AGREEMENT; (b) the holder
of DISSENTING SHARES, upon full compliance with the requirements of Section
1701.85 of the ORC, shall be entitled to payment of the appraised value of such
shares in accordance with the provisions of Section 1701.85 of the ORC; and (c)
in the event (i) any holder of DISSENTING SHARES shall subsequently withdraw
such holder's demand for appraisal of such shares within sixty days after the
BFOH EFFECTIVE TIME or shall fail to establish such holder's entitlement to
appraisal rights in accordance with Section 1701.85 of the ORC, or (ii) any
holder of DISSENTING SHARES has not filed a petition demanding a determination
of the value of such shares within the period provided in Section 1701.85 of the
ORC, such holder shall forfeit the right to appraisal of such shares and such
shares shall thereupon be deemed to have been converted into and to have become
exchangeable for the right to receive the consideration provided in this
AGREEMENT.
(b) MFFC shall give BFOH (i) prompt notice of any written
demands for appraisal of any MFFC common shares made under Section 1701.85 of
the ORC, attempted withdrawals of such demands and any other instruments served
pursuant to the ORC and received by MFFC relating to DISSENTING SHARES and (ii)
the opportunity to participate in all negotiations and proceedings with respect
to the exercise of dissenter's rights. MFFC shall not, except with the prior
written consent of BFOH, voluntarily make any payment with respect to any
demands for payment for MFFC common shares under the ORC, offer to settle or
settle any such demands or approve any withdrawal of any such demands.
SECTION 2.07. SEPARATE EXISTENCE. (a) At and after the BFOH EFFECTIVE
TIME, the separate existence of MFFC shall cease; provided, however, that
whenever a conveyance, assignment, transfer, deed or other instrument or act is
necessary to vest property or rights in the BFOH MERGER SURVIVOR, the officers
of BFOH and MFFC shall execute, acknowledge and deliver such instruments and do
such acts.
(b) At and after the BANK EFFECTIVE TIME, the separate
existence of MFSB shall cease; provided, however, that whenever a conveyance,
assignment, transfer, deed or other instrument or act is necessary to vest
property or rights in the BANK MERGER SURVIVOR, the officers of the BANK and
MFSB shall execute, acknowledge and deliver such instruments and do such acts.
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SECTION 2.08. PROPERTY. (a) At and after the BFOH EFFECTIVE TIME, all
of the assets and property of every kind and character, real, personal and
mixed, tangible and intangible, chooses in action, rights and credits owned by
BFOH and MFFC at the BFOH EFFECTIVE TIME, or which would inure to any of them,
shall immediately, by operation of law and without any conveyance or transfer
and without any further act or deed, be vested in and become the property of the
BFOH MERGER SURVIVOR, which shall have, hold and enjoy the same in its own right
as fully and to the same extent as the same were possessed, held and enjoyed by
BFOH and MFFC before the BFOH EFFECTIVE TIME. The BFOH MERGER SURVIVOR shall be
deemed to be and shall be a continuation of the entity and identity of BFOH. All
of the rights and obligations of BFOH or MFFC shall not revert or in any way be
impaired by reason of the BFOH MERGER. Any claim existing, or action or
proceeding pending, by or against either BFOH or MFFC, may be prosecuted to
judgment with right of appeal as if the BFOH MERGER had not taken place or the
BFOH MERGER SURVIVOR may be substituted in its place.
(b) At and after the BANK EFFECTIVE TIME, all of the assets
and property of every kind and character, real, personal and mixed, tangible and
intangible, chooses in action, rights and credits owned by BANK and MFSB at the
BANK EFFECTIVE TIME, or which would inure to any of them, shall immediately, by
operation of law and without any conveyance or transfer and without any further
act or deed, be vested in and become the property of the BANK MERGER SURVIVOR,
which shall have, hold and enjoy the same in its own right as fully and to the
same extent as the same were possessed, held and enjoyed by the BANK and MFSB
before the BANK EFFECTIVE TIME. The BANK MERGER SURVIVOR shall be deemed to be
and shall be a continuation of the entity and identity of the BANK. All of the
rights and obligations of the BANK or MFSB shall not revert or in any way be
impaired by reason of the BANK MERGER. Any claim existing, or action or
proceeding pending, by or against either the BANK or MFSB, may be prosecuted to
judgment with right of appeal as if the BANK MERGER had not taken place or the
BANK MERGER SURVIVOR may be substituted in its place.
SECTION 2.09. CREDITOR'S RIGHTS. (a) At and after the BFOH EFFECTIVE
TIME, all the rights of creditors of each of BFOH and MFFC shall be preserved
unimpaired, and all liens upon the property of BFOH and MFFC shall be preserved
unimpaired on only the property affected by any such lien immediately before the
BFOH EFFECTIVE TIME.
(b) At and after the BANK EFFECTIVE TIME, all the rights of
creditors of each of the BANK and MFSB shall be preserved unimpaired, and all
liens upon the property of the BANK and MFSB shall be preserved unimpaired on
only the property affected by any such lien immediately before the BANK
EFFECTIVE TIME.
SECTION 2.10. DEPOSITS. (a) At the BANK EFFECTIVE TIME and as a result
of the BANK MERGER, each MFSB savings deposit or other account then existing
shall, automatically and without further act of the BANK or MFSB or the holder
thereof, be cancelled and extinguished. In substitution and exchange for each
MFSB passbook savings deposit so cancelled and extinguished, the holder thereof
shall automatically receive from the BANK MERGER SURVIVOR a passbook savings
account with a beginning balance equal in dollar amount to the dollar amount of
the MFSB passbook savings deposit account so cancelled and
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extinguished and otherwise on the same terms as other passbook savings accounts
accepted by the BANK at the BANK EFFECTIVE TIME. In substitution for each MFSB
savings deposit, other than a passbook savings deposit, so cancelled and
extinguished, the holder thereof shall automatically receive from the BANK
MERGER SURVIVOR a savings account with a beginning balance equal in dollar
amount to the dollar amount of the MFSB savings deposit account so cancelled and
extinguished and otherwise having the same terms as the MFSB savings deposit so
cancelled and extinguished.
(b) The holder of each MFSB savings deposit or other account
cancelled and extinguished in accordance with Section 2.10(a) of this AGREEMENT
shall forthwith be entered on the records of the BANK MERGER SURVIVOR as the
holder of an appropriate savings deposit or other account in an amount
determined as provided in Section 2.10(a) and, until Section 2.10(c) of this
AGREEMENT shall have been complied with, each passbook, certificate of deposit
or other document issued by MFSB and evidencing a valid and binding MFSB savings
deposit or other document shall be deemed, for all purposes, to evidence a
savings deposit or other like account of the BANK MERGER SURVIVOR.
(c) Each person who, as a result of the BANK MERGER, holds a
passbook, certificate of deposit or other document issued by MFSB which
theretofore evidenced a MFSB savings deposit or other account shall surrender
each such passbook, certificate or other document to the BANK MERGER SURVIVOR.
Upon such surrender, the BANK MERGER SURVIVOR shall deliver in substitution
therefor an account book or other document evidencing the savings deposit or
other account received by such person in accordance with Section 2.10(c) of this
AGREEMENT.
ARTICLE THREE
REPRESENTATIONS AND WARRANTIES OF MFFC AND MFSB
MFFC and MFSB represent and warrant to BFOH that each of the following
is true and accurate in all material respects:
SECTION 3.01. ORGANIZATION AND STANDING. (a) MFFC is a corporation duly
organized, validly existing and in good standing under the laws of Ohio; is duly
registered with the OTS as a savings and loan holding company; and has the
corporate power and authority to own or hold under lease all of its properties
and assets and to conduct its business and operations as presently conducted.
Except as set forth in Section 3.01(a) of the schedule delivered by MFFC to BFOH
on January 13, 2000 (hereinafter referred to as the "DISCLOSURE SCHEDULE"), MFFC
is in compliance in all material respects with all applicable local, state or
federal laws and regulations, including, without limitation, the regulations of
the Securities and Exchange Commission (hereinafter referred to as the "SEC")
and the OTS.
(b) MFSB is a federal savings bank duly organized, validly
existing and in good standing under the laws of the United States; has the
corporate power and authority to own or hold under lease all of its properties
and assets, to incur all of its deposit liabilities and borrowings and to
conduct its business and operations as presently conducted; and is a member of
the Federal Home Loan Bank of Cincinnati (hereinafter referred to as the "FHLB
of
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Cincinnati"). The savings accounts and deposits of MFSB are insured up to
applicable limits by the FDIC. Except as set forth in Section 3.01(b) of the
DISCLOSURE SCHEDULE, MFSB is in compliance in all material respects with all
applicable local, state or federal laws and regulations, including, without
limitation, the regulations of the OTS and the Federal Deposit Insurance
Corporation (hereinafter referred to as the "FDIC").
SECTION 3.02. QUALIFICATION. Each of MFFC and MFSB is either duly
qualified to do business and in good standing in each jurisdiction in which such
qualification is required or the failure to so qualify would not have a material
adverse effect on the business of either of MFFC or MFSB.
SECTION 3.03. AUTHORITY. Subject to the approval of this AGREEMENT and
the transactions contemplated hereby, including the BFOH MERGER and the BANK
MERGER, by the appropriate regulatory authorities, by MFFC, as the sole
shareholder of MFSB, and by the requisite vote of the MFFC shareholders, (i)
each of MFFC and MFSB has all of the requisite corporate power and authority to
enter into this AGREEMENT and to perform all of its obligations hereunder; (ii)
the execution and delivery of this AGREEMENT and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action by each of MFFC and MFSB; and (iii) this AGREEMENT is the valid
and binding agreement of each of MFFC and MFSB, enforceable against each of MFFC
and MFSB in accordance with its terms, (I) subject to applicable bankruptcy,
insolvency, reorganization and moratorium laws and other laws of general
applicability affecting the enforcement of creditors' rights generally and the
effect of rules of law governing specific performance, injunctive relief and
other equitable remedies on the enforceability of such documents and (II) except
to the extent such enforceability may be limited by laws relating to safety and
soundness of insured depository institutions as set forth in 12 U.S.C. Section
1818(b) or by the appointment of a conservator by the FDIC. This AGREEMENT has
been duly executed and delivered by each of MFFC and MFSB.
SECTION 3.04. GOVERNING DOCUMENTS. MFFC and MFSB have delivered to BFOH
true and accurate copies of the Articles of Incorporation and Code of
Regulations of MFFC and the Charter and Bylaws of MFSB and have granted BFOH
access to all records of all meetings and other corporate actions by the
shareholders, Boards of Directors and Committees of the Boards of Directors of
MFFC and MSFT, other than records of meetings relating to the consideration of
transactions related to this AGREEMENT. The minute books of MFFC and MFSB
contain, in all material respects, complete and accurate records of all meetings
and other corporate actions of the MFFC and MFSB shareholders, Boards of
Directors and Committees of the Boards of Directors, other than records of
meetings relating to the consideration of transactions related to this
AGREEMENT.
SECTION 3.05. NO CONFLICTS. The execution and delivery of this
AGREEMENT and the consummation of the transactions contemplated hereby,
including the BFOH MERGER and the BANK MERGER, will not, (a) subject to the
approval of this AGREEMENT and the BFOH MERGER by MFFC, as the sole shareholder
of MFSB, and by the requisite vote of the MFFC shareholders, conflict with or
violate any provision of or result in the breach of any provision of the
Articles of Incorporation or Code of Regulations of MFFC or the Charter or
Bylaws of
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MFSB; (b) conflict with or violate any provision of or result in the breach or
the acceleration of or entitle any party to accelerate (whether upon or after
the giving of notice of lapse of time or both) any obligation under, or
otherwise materially affect the terms of, any mortgage, lien, lease, agreement,
license, instrument, order, arbitration award, judgment or decree to which
either MFFC or MFSB is a party or by which MFFC, MFSB or their property or
assets is bound; (c) require the consent of any party to any agreement or
commitment to which either MFFC or MFSB is a party or by which MFFC, MFSB or
their property or assets is bound, the failure to obtain which could,
individually or in the aggregate with all the other failures to obtain required
consents, have a material adverse effect on the business, operations or
financial condition of MFFC and MFSB, taken as a whole; (d) result in the
creation or imposition of any lien, charge, pledge, security interest or other
encumbrance upon any property or assets of either MFFC or MFSB or give rise to
any meritorious cause of action against either MFFC or MFSB; or, (e) subject to
the approval of this AGREEMENT by the appropriate regulatory authorities, by
MFFC, as the sole shareholder of MFSB, and by the requisite vote of the MFFC
shareholders, violate or conflict with any applicable law, ordinance, rule or
regulation, including, without limitation, the rules and regulations of the OTS.
SECTION 3.06. CONSENTS. No consent, approval, order or authorization
of, or registration, declaration or filing with, any governmental authority is
required by MFFC or MFSB in connection with the execution and delivery of this
AGREEMENT by MFFC or MFSB or the consummation by MFFC or MFSB of the
transactions contemplated hereby, including the BFOH MERGER and the BANK MERGER,
except for filings, authorizations, notices, consents or approvals required by
the SEC, the OTS, the Board of Governors of the Federal Reserve System
(hereinafter referred to as the "FRB"), the OCC and the Ohio Secretary of State.
SECTION 3.07. MFFC AND MFSB SHARES. (a)(i) The authorized capital of
MFFC consists of 9,000,000 common shares, each without par value, 2,099,995 of
which are issued and outstanding and 228,227 of which are reserved for issuance
upon exercise of options granted in accordance with the STOCK OPTION PLAN, and
1,000,000 preferred shares, each without par value, none of which is issued or
outstanding. All of the issued and outstanding common shares of MFFC are duly
authorized, validly issued, fully paid and nonassessable and were issued in full
compliance with all applicable laws. MFFC has no outstanding class of capital
stock other than such common shares.
(ii) Except for the options to purchase for $13.69 per share
an aggregate of 228,227 common shares of MFFC granted in accordance with the
STOCK OPTION PLAN, there are no outstanding subscription rights, options,
conversion rights, warrants or other agreements, plans or commitments of any
nature whatsoever (either firm or conditional) obligating MFFC (I) to issue,
deliver or sell, cause to be issued, delivered or sold, or restricting MFFC from
selling any additional MFFC common shares or (II) to grant, extend or enter into
any such agreement, plan or commitment. There are no outstanding stock
appreciation, phantom stock or similar rights in respect of MFFC common shares.
(iii) In accordance with the MFSB Recognition and Retention
Plan (hereinafter referred to as the "RRP"), an aggregate of 103,155 MFFC common
shares were purchased by the RRP Trustee in open market transactions in 1995,
72,720 of which have been
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awarded to RRP participants (hereinafter referred to as the "AWARDED RRP
SHARES") and 30,435 of which are not subject to outstanding awards and are owned
of record by the RRP Trustee (hereinafter referred to as the "UNAWARDED RRP
SHARES"). Of the AWARDED RRP SHARES, 58,785 have been vested and distributed to
RRP participants and 13,935 have not vested on the date hereof (hereinafter
referred to as the "UNVESTED RRP SHARES").
(iv) The MFFC Employee Stock Ownership Plan
(hereinafter referred to as the "ESOP") owns of record 187,339 common shares of
MFFC, 106,552 of which have been allocated to the accounts of ESOP participants
and 80,787 of which are unallocated. The outstanding principal balance of the
loan obtained by the ESOP from MFFC to purchase the MFFC common shares owned of
record by the ESOP (hereinafter referred to as the "ESOP LOAN") equaled
$1,031,550 on the date hereof.
(v) To the knowledge of MFFC, each certificate
evidencing MFFC common shares issued by MFFC in replacement of any certificate
which was theretofore issued by MFFC to evidence MFFC common shares and which
was claimed by the record holder thereof to have been lost, stolen or destroyed
was issued by MFFC only upon receipt of an affidavit of lost stock certificate
and indemnity agreement of such shareholder indemnifying MFFC against any claim
that may be made against MFFC on account of the alleged loss, theft or
destruction of any such certificate or the issuance of such replacement
certificate.
(b) The authorized capital of MFSB consists of 10,000,000
common shares, each without par value, 100 of which are issued and outstanding
and held of record by MFFC. All of the outstanding common shares of MFSB are
duly authorized, validly issued, fully paid and nonassessable; were issued in
full compliance with all applicable laws and regulations; and were not issued in
violation of the preemptive right of any depositor or shareholder of MFSB. MFSB
has no outstanding class of capital stock other than such common shares. There
are no outstanding subscription rights, options, conversion rights, warrants or
other agreements or commitments of any nature whatsoever (either firm or
conditional) obligating MFSB (i) to issue, deliver or sell, cause to be issued,
delivered or sold, or restricting MFSB from selling any additional MFSB shares
or (ii) to grant, extend or enter into any such agreement or commitment.
SECTION 3.08. FINANCIAL STATEMENTS. (a) The consolidated statements of
financial condition as of September 30, 1999 and 1998, of MFFC and the related
consolidated statements of income, shareholders' equity and cash flows for each
of the three years then ended, examined and reported upon by Crowe, Chizek and
Company, certified public accountants, complete copies of which have previously
been delivered to BFOH (hereinafter referred to as the "AUDITED FINANCIALS"),
have been prepared in conformity with generally accepted accounting principles
applied on a consistent basis and fairly present the consolidated financial
position of MFFC at such dates and the consolidated results of its operations
and cash flows for such periods. The books and records of MFFC and MFSB have
been, and are being, maintained in accordance with generally accepted accounting
principles and with any other applicable legal and accounting requirements and
reflect only actual transactions.
(b) The unaudited balance sheet as of November 30, 1999, of
MFFC and the related unaudited income statement for the two months then ended,
complete copies of which have previously been delivered to BFOH (hereinafter
referred to as the "INTERIM
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FINANCIALS"), fairly present the financial position of MFFC at such date and the
results of its operations for such period and have been prepared in accordance
with generally accepted accounting principles as applicable to condensed
consolidated financial statements and as applied on a consistent basis with the
AUDITED FINANCIALS. All adjustments which are necessary for a fair statement of
the INTERIM FINANCIALS have been made.
(c) The Thrift Financial Reports of MFSB for the three-month
periods ended March 31, June 30 and September 30, 1999, together with the
schedules and supplements attached thereto, each as filed with the OTS and
copies of which were previously delivered to BFOH by MFFC (hereinafter referred
to as the "TFRs"), have been prepared in accordance with accounting practices
permitted by the OTS applied on a consistent basis and fairly present the
financial position of MFSB at such dates.
(d) Except as disclosed in the INTERIM FINANCIALS, the TFRs
and Section 3.08(d) of the DISCLOSURE SCHEDULE, as of November 30, 1999, MFFC
had no liabilities or obligations material to the financial condition of MFFC,
whether accrued, absolute, contingent or otherwise, and whether due or to become
due.
SECTION 3.09. CONDUCT OF BUSINESSES. Between September 30, 1999, and
the date of this AGREEMENT, each of MFFC and MFSB conducted its businesses only
in the ordinary and usual course, there were no material adverse changes in the
financial condition, assets, liabilities, obligations, properties or business of
MFFC or MFSB and, except as set forth in any of the AUDITED FINANCIALS, the
INTERIM FINANCIALS, the TFRs or Section 3.09 of the DISCLOSURE SCHEDULE, neither
MFFC nor MFSB:
(a) Authorized the creation or issuance of, issued, sold
or disposed of, or created any obligation to issue,
sell or dispose of, any stock, notes, bonds or other
securities or any obligation convertible into or
exchangeable for, any shares of its capital stock;
(b) Except for a per share dividend in the amount of $.15
paid on November 15, 1999, declared, set aside, paid
or made any dividend or other distributions on its
capital stock or directly or indirectly redeemed,
purchased or acquired any shares or entered into any
agreement in respect of the foregoing;
(c) Effected any stock split, recapitalization,
combination, exchange of shares, readjustment or
other reclassification;
(d) Amended the Articles of Incorporation or Code of
Regulations of MFFC or the Charter or Bylaws of MFSB;
(e) Purchased, sold, assigned or transferred any material
tangible asset or any material patent, trademark,
trade name, copyright, license, franchise, design or
other intangible asset or property;
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(f) Mortgaged, pledged or granted or suffered to exist
any lien or other encumbrance or charge on any assets
or properties, tangible or intangible, except for
liens for taxes not yet due and payable and such
other liens, encumbrances or charges which do not
materially adversely affect its financial position;
(g) Waived any rights of material value or cancelled any
material debts or claims;
(h) Incurred any material obligation or liability
(absolute or contingent), including, without
limitation, any tax liability or any liability for
borrowings from the FHLB of Cincinnati, or paid any
material liability or obligation (absolute or
contingent), other than liabilities and obligations
incurred in the ordinary course of business;
(i) Entered into or amended any employment contract with
any of its officers or increased the compensation
payable to any officer or director, except
compensation increases and employment contract
renewals made in the ordinary course;
(j) Incurred any damage, destruction or similar loss, not
covered by insurance, materially affecting its
businesses or properties;
(k) Acquired any stock or other equity interest in any
corporation, partnership, trust, joint venture or
other entity;
(l) Made any (i) material investment (except investments
made in the ordinary course of business) or (ii)
material capital expenditure or commitment for any
material addition to property, plant or equipment; or
(m) Agreed, whether in writing or otherwise, to take any
action described in this Section 3.09.
SECTION 3.10. PROPERTIES. (a) A description of all material fixed
assets owned by each of MFFC and MFSB has been delivered to BFOH (hereinafter
referred to as the "PERSONAL PROPERTY"). All PERSONAL PROPERTY has been
maintained in good working order, ordinary wear and tear excepted. Either MFFC
or MFSB owns and has good title to all of the PERSONAL PROPERTY, free and clear
of any mortgage, lien, pledge, charge, claim, conditional sales or other
agreement, lease, right or encumbrance, except (i) as set forth in Section
3.10(a) of the DISCLOSURE SCHEDULE, (ii) to the extent stated or reserved
against in the AUDITED FINANCIALS or the INTERIM FINANCIALS and (iii) such other
exceptions which are not material in character or amount and do not materially
detract from the value of or interfere with the use of the properties or assets
subject thereto or affected thereby.
(b) A description of each parcel of real property owned by
either MFFC or MFSB is set forth in Section 3.10(b) of the DISCLOSURE SCHEDULE
(hereinafter referred to individually as a "PARCEL" and collectively as the
"REAL PROPERTIES"). Either MFFC or
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MFSB is the owner of each PARCEL in fee simple and has good and marketable title
to each such PARCEL, free of any liens, claims, charges, encumbrances or
security interests of any kind, except (i) as set forth in Section 3.10(b) of
the DISCLOSURE SCHEDULE, (ii) liens for real estate taxes and assessments not
yet delinquent and (iii) utility, access and other easements, rights of way,
restrictions and exceptions, none of which impair the REAL PROPERTIES for the
use and business being conducted thereon.
(c) A description of all real property leased by either MFFC
or MFSB is set forth in Section 3.10(c) of the DISCLOSURE SCHEDULE (hereinafter
referred to as the "LEASED REAL PROPERTY"). Except as set forth in Section
3.10(c) of the DISCLOSURE SCHEDULE, the REAL PROPERTY LEASES create, in
accordance with their terms, valid, binding and assignable leasehold interests
of either MFFC or MFSB in all of the LEASED REAL PROPERTY, free and clear of all
liens, claims, charges, encumbrances or security interests of any kind.
(d) A description of all personal property leased by either
MFFC or MFSB is set forth in Section 3.10(d) of the DISCLOSURE SCHEDULE.
(e) The documentation (hereinafter referred to as "LOAN
DOCUMENTATION") governing or relating to the loan and credit-related assets
(hereinafter referred to as the "LOAN ASSETS") included within the loan
portfolio of MFSB is legally sufficient in all material respects for the
purposes intended thereby and creates enforceable rights in favor of MFSB in
accordance with the terms of such LOAN DOCUMENTATION, subject to applicable
bankruptcy, insolvency, reorganization and moratorium laws and other laws of
general applicability affecting the enforcement of creditors' rights generally,
and the effect of rules of law governing specific performance, injunctive relief
and other equitable remedies on the enforceability of such documents.
SECTION 3.11. ALLOWANCE FOR LOAN LOSSES. Except as set forth in Section
3.11 of the DISCLOSURE SCHEDULE, there is no loan which was made by either MFFC
or MFSB and which is reflected as an asset of either MFFC or MFSB on the AUDITED
FINANCIALS or the INTERIM FINANCIALS that (i) is sixty (60) days or more
delinquent or (ii) has been classified by examiners (regulatory or internal) as
"Substandard," "Doubtful" or "Loss." The allowance for loan losses as reflected
on the AUDITED FINANCIALS and the INTERIM FINANCIALS is, in the opinion of
MFFC's management, adequate in all material respects as of their respective
dates under the requirements of generally accepted accounting principles to
provide for reasonably anticipated losses on outstanding loans, net of
recoveries.
SECTION 3.12. INVESTMENTS. (a) Section 3.12(a) of the DISCLOSURE
SCHEDULE contains (i) a true, accurate and complete list of all investments,
other than investments in the LOAN ASSETS and the REAL PROPERTIES, owned by
either MFFC or MFSB (hereinafter referred to as the "INVESTMENTS") as of the
date hereof, the name of the registered holder thereof, the location of the
certificates therefor or other evidence thereof and any stock powers or other
authority for transfer granted with respect thereto. Except as set forth in
Section 3.12(a) of the DISCLOSURE SCHEDULE, the INVESTMENTS, other than any such
investments disposed of in the ordinary course of business prior to the date
hereof, are owned by either MFFC or MFSB, free and clear of all liens, pledges,
claims, security interests, encumbrances, charges or
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restrictions of any kind and may be freely disposed of by either MFFC or MFSB at
any time. Except as set forth in Section 3.12(a) of the DISCLOSURE SCHEDULE,
neither MFFC nor MFSB is a party to, nor has any interest in, (i) any repurchase
agreement, reverse repurchase agreement, collateralized mortgage obligation or
any other derivative security or (ii) any interest rate swaps, caps, floors,
option agreements or any other interest rate risk management agreements.
(b) Except as set forth in Section 3.12(b) of the DISCLOSURE
SCHEDULE, neither MFFC nor MFSB owns of record or beneficially the outstanding
shares of, or any equity interest in, any corporation or other business entity.
SECTION 3.13. REPORTS AND RECORDS. (a) Each of MFFC and MFSB has filed
all reports and maintained all records required to be filed or maintained by it
under various rules and regulations of the SEC, the OTS, the FDIC and other
regulatory agencies with jurisdiction over MFFC or MFSB. All such documents and
reports complied in all material respects with applicable requirements of law
and regulations in effect at the time of filing such documents and contained in
all material respects the information required to be stated therein.
(b) MFFC has delivered to BFOH copies of the following
documents, each of which has been filed with the SEC (hereinafter referred to as
the "MFFC SEC FILINGS"):
(i) The MFFC Annual Reports on Form 10-K for the
fiscal years ended September 30, 1999 and
1998;
(ii) The MFFC Annual Reports to Shareholders for
the fiscal years ended September 30, 1999
and 1998;
(iii) The MFFC Proxy Statements for use in
connection with the 1999 and 1998 Annual
Meetings of Shareholders; and
(iv) The MFFC Quarterly Reports on Form 10-Q for
the quarters ended December 31, 1998 and
March 31 and June 30, 1999.
The MFFC SEC FILINGS did not, as of the dates on which such reports were filed
with the SEC, contain any untrue statement of a material fact or omit any
material fact required to be stated therein or necessary to make the statements
contained therein, in light of the circumstances under which they were made, not
misleading.
SECTION 3.14. TAXES. (a) Except as set forth in Section 3.14(a) of the
DISCLOSURE SCHEDULE, each of MFFC and MFSB has duly and timely filed all
federal, state, county and local income, profits, franchise, excise, sales,
customs, property, use, occupation, withholding, social security and other tax
and information returns and reports required to have been filed by each of MFFC
and MFSB through the date hereof, and has paid or accrued all taxes and duties
(and all interest and penalties with respect thereto) due or claimed to be due.
Neither MFFC nor MFSB has any liability for any taxes or duties (or interest or
penalties with respect thereto) of any nature whatsoever and there is no basis
for any additional material claims or assessments, other than with respect to
liabilities for taxes and duties which are reflected in the INTERIM
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FINANCIALS or which may have accrued since September 30, 1999, in the ordinary
course of business.
(b) No deficiencies for any taxes, assessments or governmental
charges have been proposed, asserted or assessed in writing by any governmental
or taxing authority against MFFC or MFSB that have not been settled or would not
be covered by existing reserves. Except as set forth in Section 3.14(b) of the
DISCLOSURE SCHEDULE, neither MFFC nor MFSB (i) is a party to any agreement
providing for the allocation or sharing of taxes or (ii) is required to include
in income any adjustment pursuant to Section 481(a) of the CODE (hereinafter
defined) by reason of the voluntary change in accounting method, nor has any
taxing authority proposed in writing any such adjustment or change of accounting
method.
(c) Any amount that will become receivable (whether in cash or
property or the vesting of property) as a result of any of the transactions
contemplated by this AGREEMENT by any employee, officer or director of MFFC or
MFSB who is a "DISQUALIFIED INDIVIDUAL," as such term is defined in proposed
Treasury Regulation Section 1.280G-1, under any employment, severance or
termination agreement, other compensation arrangements or PLAN (hereinafter
defined) currently in effect will not be characterized as an "excess parachute
payment," as such term is defined in Section 1.280G-1 of the CODE.
SECTION 3.15. MATERIAL CONTRACTS. (a) Except as set forth in Section
3.15(a) of the DISCLOSURE SCHEDULE, neither MFFC nor MFSB is a party to or bound
by any written or oral (i) contract or commitment for capital expenditures in
excess of $50,000 for any one project or $100,000 in the aggregate; (ii)
contract or commitment made in the ordinary course of business for the purchase
of materials or supplies or for the performance of services involving payments
to or by either MFFC or MFSB of an amount exceeding $50,000 in the aggregate or
extending for more than six (6) months from the date hereof; (iii) contract or
option for the purchase of any real property; (iv) letter of credit or indemnity
calling for payment, upon the conditions stated therein, of more than $100,000;
(v) guarantee agreement; (vi) instrument granting any person authority to
transact business on behalf of either MFFC or MFSB; (vii) contracts or
commitments relating to outstanding loans and/or commitments to make loans
(including unfunded commitments and lines of credit) to any one person or entity
(together with "affiliates" of such person or entity) in excess of $250,000;
(viii) employment, management, consulting, deferred compensation, severance or
other similar contract with any director, officer or employee of either MFFC or
MFSB; (ix) note, debenture or loan agreement pursuant to which either MFFC or
MFSB has incurred indebtedness, other than deposit liabilities and advances from
the FHLB of Cincinnati; (x) loan servicing agreement; (xi) contract or
commitment relating to a real estate development project consisting of the
development of more than one single family dwelling; or (xii) commitment or
agreement to do any of the foregoing. Contracts set forth in Section 3.15 of the
DISCLOSURE SCHEDULE are hereinafter collectively referred to as the "CONTRACTS."
(b) Neither MFFC nor MFSB is in material default under any of
the CONTRACTS.
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SECTION 3.16. INSURANCE. All material properties and operations of each
of MFFC and MFSB are adequately insured for its benefit. The performance by the
officers and employees of each of MFFC and MFSB of their duties is bonded in
such amounts and against such risks as are usually insured against or bonded by
entities similarly situated, under valid and enforceable policies of insurance
or bonds issued by insurers or bonding companies of recognized responsibility,
financial or otherwise.
SECTION 3.17. ACTIONS AND SUITS. Except as set forth in Section 3.17 of
the DISCLOSURE SCHEDULE, there are no actions, suits or proceedings or
investigations pending or, to the knowledge of MFFC, threatened against or
affecting the business, operations or financial condition of either MFFC or MFSB
in any court or before any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, and neither
MFFC or MFSB has any knowledge of any basis for any such action, suit,
proceeding or investigation.
SECTION 3.18. PERMITS AND LICENSES. Each of MFFC and MFSB has all
material permits, licenses, orders and approvals of all federal, state or local
governmental or regulatory bodies required for MFSB to conduct its business as
presently conducted, and all such material permits, licenses, orders and
approvals are in full force and effect, without the threat of suspension or
cancellation. None of such permits, licenses, orders or approvals will be
adversely affected by the consummation of the transactions contemplated by this
AGREEMENT.
SECTION 3.19. EMPLOYEE BENEFIT PLANS; ERISA. (a) Section 3.19 of the
DISCLOSURE SCHEDULE contains a true and complete list of all qualified pension
or profit-sharing plans, deferred compensation, consulting, bonus, group
insurance plans or agreements and all other incentive, welfare or employee
benefit plans or agreements, including, but not limited to, all "employee
benefit plans," as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended (hereinafter referred to as "ERISA"), which is
or was at any time during the last five years maintained, administered or
contributed to by MFFC or MFSB or any affiliate (as defined below) and covers
any employee or former employee of MFFC or MFSB or any affiliate or under which
MFFC or MFSB or any affiliate has any liability (hereinafter collectively
referred to as the "PLANS"). For purposes of this Section 3.19, "affiliate" of
any person or entity means any other person or entity which, together with such
person or entity, would be treated as a single employer under Section 414 of the
CODE or is an "affiliate," whether or not incorporated, as defined in Section
407(d)(7) of ERISA, of such person or entity. With respect to such PLANS, true
and complete copies of all (i) PLAN documents and amendments thereto, (ii) trust
agreements and amendments thereto, (iii) all written interpretations and
summaries, (iv) the three most recent annual reports on IRS Form 5500, (v) the
most recent Internal Revenue Service determination letters (and any pending
request for such) for each PLAN which is intended to be qualified under Section
401(a) of the CODE have been delivered to BFOH.
(b) Each PLAN which constitutes an "employee pension plan," as
defined in Section 3(2) of ERISA, is and has been administered in material
compliance with its governing documents and the applicable provisions of ERISA
and any such employee pension plan which is intended to be qualified under the
provisions of Section 401(a) of the Internal Revenue Code of
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1986, as amended (hereinafter referred to as the "CODE"), is and has been
administered in material compliance with the applicable provisions of the CODE.
(c) Each PLAN which constitutes an "employee welfare benefit
plan," as defined in Section 3(1) of ERISA, is and has been administered in
material compliance with its governing documents and the applicable provisions
of ERISA and each PLAN which constitutes a "group health plan," as defined in
Section 5000(b)(1) of the CODE, is and has been administered in material
compliance with the continuation of coverage provisions contained in Section
4980B of the CODE.
(d) Each PLAN which is not an "employee benefit plan," as
defined in Section 3(3) of ERISA, is and has been administered in material
compliance with its governing documents and with any and all state or federal
laws applicable to such PLAN. Nothing done or omitted to be done and no
transaction or holding of any asset under or in connection with any PLAN has or
will make MFFC, MFSB or any affiliate subject to any liability under Title I of
ERISA or liable for any tax pursuant to Sections 4971-4980E of the CODE. There
is no pending or threatened litigation, arbitration, disputed claim,
adjudication, audit, examination or other proceeding with respect to any PLAN or
any fiduciary or administrator thereof in their capacities as such (other than
the submission of participant claims for benefits in the ordinary course of
operation of such PLANS).
(e) The market value of assets under each "employee pension
plan" (as defined above) which is subject to the provisions of Title IV of
ERISA, equals or exceeds the present value of all vested and nonvested
liabilities thereunder determined in accordance with Pension Benefit Guaranty
Corporation (hereafter referred to as the "PBGC") methods, factors and
assumptions applicable to an employee pension plan terminating on the date for
determination. No "accumulated funding deficiency," as defined in Section 412 of
the CODE, has been incurred with respect to any PLAN, whether or not waived.
Full payment has been made of all amounts which MFFC or MFSB or any affiliate is
required to have paid as contributions to or benefits under any PLAN as of the
end of the most recent plan year thereof and there are no unfunded obligations
under any PLAN. No condition exists and no event has occurred that could
constitute grounds for termination of any PLAN, and neither MFFC, MFSB nor any
affiliate has incurred any material liability under Title IV of ERISA arising in
connection with the termination of any PLAN covered or previously covered by
Title IV of ERISA.
(f) MFFC does not maintain any PLAN which provides
post-retirement medical, dental or life insurance benefits to any former
employee of either MFFC or MFSB nor is MFFC obligated to provide any such
benefit to any current employee upon his or her retirement, except for the
continuation coverage required under Section 4980B of the CODE.
(g) Neither MFFC nor MFSB participates in, or has ever been
obligated to contribute to, any multiemployer plan as such term is defined in
Section 3(37) of ERISA.
(h) Neither MFFC, MFSB nor any PLAN maintained by either MFFC
or MFSB, nor any fiduciary of any such PLAN, has incurred any material liability
to the PBGC, the United States Department of Labor or to the Internal Revenue
Service (hereinafter referred to as the "IRS") with respect to a PLAN.
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(i) No prohibited transaction (which shall mean any
transaction prohibited by Section 406 of ERISA and not exempt under Section 408
of ERISA) has occurred with respect to any "employee benefit plan" (as defined
above) maintained by either MFFC or MFSB (i) which would result in the
imposition, directly or indirectly, of an excise tax under Section 4975 of the
CODE or (ii) the correction of which would have a material adverse effect on the
financial condition, results of operations or business of MFFC. No "reportable
event," within the meaning of Section 4043 of ERISA, and no event described in
Section 4041, 4042, 4062 or 4063 of ERISA has occurred in connection with any
PLAN.
(j) Each employee pension plan (as defined above) which is
intended to be an employee stock ownership plan, as defined in Section
4975(e)(7) of the CODE, is and has been administered in substantial compliance
with the applicable provisions of Sections 4975 and 409 of the CODE and the
regulations promulgated by the Internal Revenue Service (hereinafter referred to
as the "IRS") thereunder and, any outstanding loan to which any such employee
stock ownership plan is a party constitutes an "exempt loan," as described in
Section 54.4975-7 of the regulations promulgated by the IRS.
(k) There has been no amendment to, written interpretation or
announcement (whether or not written) relating to, or change in employee
participation or coverage under, any PLAN, which would increase the expense of
maintaining such PLAN above the level of the expense incurred in respect thereof
for the plan year ended immediately prior to the date hereof.
SECTION 3.20. ENVIRONMENTAL PROTECTION. (a) Except as set forth in
Section 3.20 of the DISCLOSURE SCHEDULE, (i) to the knowledge of MFFC, each of
MFFC, MFSB and the MFFC PROPERTY (hereinafter defined) is, and has been at all
times, in material compliance with all applicable ENVIRONMENTAL LAWS
(hereinafter defined); (ii) no investigations, inquiries, orders, hearings,
actions or other proceedings by or before any court or governmental agency have
been issued, are pending or, to the knowledge of MFFC or MFSB, threatened
against either MFFC or MFSB or in connection with the MFFC PROPERTY; (iii) no
claims have been made or, to the knowledge of MFFC or MFSB, threatened at any
time against either MFFC or MFSB or in connection with the MFFC PROPERTY
relating to actual or alleged violation of any ENVIRONMENTAL LAW or relating to
damage, contribution, cost recovery, compensation, loss or injury resulting from
any HAZARDOUS SUBSTANCE (hereinafter defined) and, to the knowledge of MFFC, no
past or present actions, activities, conditions, events or incidents, including,
without limitation, the release, emission, discharge or disposal of, or exposure
to, any HAZARDOUS SUBSTANCE have occurred that could reasonably form the basis
of any such claims against either MFFC or MFSB or in connection with the MFFC
PROPERTY; (iv) to the knowledge of MFFC, no HAZARDOUS SUBSTANCES have been
integrated into any MFFC PROPERTY or any component thereof in violation of
ENVIRONMENTAL LAWS, or which will in the future require remediation during
renovation or demolition, or in such quantities and manner as may or do pose a
threat to human health; (v) to the knowledge of MFFC, no portion of any MFFC
PROPERTY is located within 2000 feet of (I) a release of HAZARDOUS SUBSTANCES
which has been reported or is required to be reported under any ENVIRONMENTAL
LAW or (II) the location of any site used, in the past or presently, for the
disposal of any HAZARDOUS SUBSTANCES; (vi) the MFFC PROPERTY has not been used
by MFFC or MFSB for the storage, disposal or treatment of HAZARDOUS
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SUBSTANCES, except as allowed by applicable law, has not been contaminated by
HAZARDOUS SUBSTANCES, nor has been used for the storage or use of any
underground or aboveground storage tanks; and (vii) material permits,
registrations and other authorizations necessary for either MFFC or MFSB or the
MFFC PROPERTY to operate in material compliance with all ENVIRONMENTAL LAWS are
currently in force and are identified in Section 3.20 of the DISCLOSURE
SCHEDULE.
(b) As used in Sections 3.20 and 4.16 of this AGREEMENT:
(i) "MFFC PROPERTY" means all real and personal
property now or previously owned, leased,
occupied or managed by either MFFC or MFSB
or any person or entity whose liability for
any matter has or may have been related or
assumed by MFFC either contractually or are
by operation of law.
(ii) "ENVIRONMENTAL LAWS" means all federal,
state, local and other laws, regulations,
rules, standards, ordinances, orders,
decrees, and judgments relating to
pollution, the environment, occupational
health and safety, or the protection of
human health, all as may be from time to
time amended.
(iii) "HAZARDOUS SUBSTANCES" means any and all
substances or materials which are classified
or considered to be hazardous or toxic to
human health or the environment under any
applicable ENVIRONMENTAL LAWS and shall
include, without limitation, any "hazardous
substances" as defined in Section 101(14) of
CERCLA (42 USC Section 9601(14)) or
regulations promulgated thereunder, any
"toxic and hazardous substances" as defined
in 29 CFR Part 1910, petroleum and its
byproducts, asbestos, polychlorinated
biphenyls, nuclear fuel or materials, lead
and lead-containing substances, and
urea-formaldehyde.
SECTION 3.21. EMPLOYMENT MATTERS. Each of MFFC and MFSB is in material
compliance with all federal, state or other applicable laws respecting
employment and employment practices, terms and conditions of employment and
wages and hours. No unfair labor practice complaint against either MFFC or MFSB
is pending before any governmental agency or court and there is no labor strike,
dispute, slowdown or stoppage actually pending or, to the knowledge of either
MFFC or MFSB, threatened against or involving either MFFC or MFSB. No
representation question exists in respect of the employees of either MFFC or
MFSB and no labor grievance which might have a material adverse effect upon
either MFFC or MFSB or the conduct of its businesses is pending or, to the
knowledge of MFFC, threatened. No arbitration proceeding arising out of or under
any collective bargaining agreement is pending and no claim therefore has been
asserted against either MFFC or MFSB. No collective bargaining agreement is
currently being negotiated by either MFFC or MFSB.
SECTION 3.22. BROKERS. All negotiations relating to this AGREEMENT and
the transactions contemplated hereby have been carried on without the
intervention of any person,
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other than McDonald Investments Inc. (hereinafter referred to as "MCDONALD"),
acting on behalf of MFFC or MFSB in such manner as to give rise to any valid
claim against MFFC or MFSB for any broker's or finder's fee or similar
compensation.
SECTION 3.23. YEAR 2000. (a) All devices, systems, machinery,
information technology, computer software and hardware, and other date sensitive
technology owned or leased by either MFFC or MFSB (hereinafter referred to as
the "MFSB Systems") necessary for either MFFC or MFSB to carry on its business
as presently conducted and as contemplated to be conducted in the future either
(i) are Year 2000 Compliant (hereinafter defined) or (ii) will be Year 2000
Compliant within a period of time calculated to result in no material disruption
of any of the business operations of either MFFC or MFSB. For purposes of this
Section 3.25, "Year 2000 Compliant" means that the MFSB Systems are designed to
be used prior to, during and after the Gregorian calendar year 2000 A.D. and
will operate during each such time period without error relating to date data,
specifically including any error relating to, or the product of, date data which
represents or references different centuries or more than one century.
(b) Each of MFFC and MFSB has (i) undertaken a detailed
inventory, review and assessment of all areas within its business and operations
that could be adversely affected by the failure of either MFFC or MFSB to be
Year 2000 Compliant on a timely basis; (ii) developed a detailed plan and time
line for becoming Year 2000 Compliant on a timely basis; and (iii) to date,
implemented that plan in accordance with that timetable in all material
respects.
(c) Each of MFFC and MFSB has made inquiry of each of its key
suppliers, vendors and customers and has obtained confirmations from all such
persons as to whether such persons have initiated programs to become Year 2000
Compliant and on the basis of such confirmations, MFFC reasonably believes that
all such persons will be or try to become so compliant or make other suitable
arrangements so as not to likely cause a material disruption of business.
SECTION 3.24. STOCK OWNERSHIP. Except as set forth in Section 3.24 of
the DISCLOSURE SCHEDULE, neither MFFC nor any of its "affiliates" or
"associates," as the terms "affiliates" and "associates" are defined in Section
1704.01(C)(1) of the ORC, are "beneficial owners," as the term "beneficial
owners" is defined in Section 1704.01(C)(4) of the ORC, of any of the
outstanding common shares of BFOH.
SECTION 3.25. REGULATORY MATTERS. Except as set forth in Section 3.25
of the DISCLOSURE SCHEDULE, neither MFFC nor MFSB is subject or is party to, or
has received any notice or advice that it may become subject or party to, any
investigation with respect to, any cease-and-desist order, agreement, consent
agreement, memorandum of understanding or other regulatory enforcement action,
proceeding or order with or by, or is a party to any commitment letter or
similar undertaking to, or is subject to any directive by, or has been a
recipient of any supervisory letter from, or has adopted any board resolutions
at the request of, any regulatory agency that currently restricts the conduct of
its business or that currently affects its capital adequacy, credit policies,
management or business (hereinafter referred to as a "REGULATORY AGREEMENT"),
nor has MFFC or MFSB been advised by any regulatory agency that it is
considering issuing or requesting any such REGULATORY AGREEMENT. Except as set
forth
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in Section 3.25 of the DISCLOSURE SCHEDULE, there is no unresolved violation,
criticism or exception by any REGULATORY AGENCY with respect to any report or
statement relating to any examinations of MFFC or MFSB.
SECTION 3.26. NON-BANKING ACTIVITIES. MFFC is not engaged in any
activity, either directly or indirectly through one or more of its subsidiaries
or other equity investments, which is not permitted by a savings and loan
holding company or by a subsidiary or other enterprise through which such
activity is conducted. MFSB is not engaged in any activity, either directly or
indirectly through one or more of its subsidiaries or other equity investments,
which is not permitted by a federal savings bank.
SECTION 3.27. FIDUCIARY RESPONSIBILITY. During the applicable statute
of limitations period, (a) MFFC and MFSB have properly administered all accounts
(if any) for which it acts as a fiduciary or agent, including, but not limited
to, accounts for which it serves as a trustee, agent, custodian, personal
representative, guardian, conservator or investment advisor, in accordance with
the terms of the governing documents and applicable state and federal law and
regulation and common law, and (b) neither MFFC, MFSB, nor any director, officer
or employee of MFFC or MFSB acting on behalf of MFFC or MFSB, has committed any
breach of trust with respect to any such fiduciary or agency account, and the
accountings for each such fiduciary or agency account are true and correct and
accurately reflect the assets of such fiduciary or agency account. To the
knowledge of MFFC, there is no investigation or inquiry by any regulatory agency
pending or threatened against or affecting MFFC or MFSB relating to the
compliance by MFFC or MFSB with sound fiduciary principles and applicable
regulations.
SECTION 3.28. EMPLOYMENT AGREEMENTS. Section 3.15 of the DISCLOSURE
SCHEDULE lists each agreement, arrangement, commitment or contract (whether
written or oral) for the employment, retention or engagement, or with respect to
the severance, of any present or former officer, director, employee, agent,
consultant or other person or entity to which MFFC or MFSB is a party to or
bound by and which, by its terms, is not terminable by MFFC or MFSB on thirty
(30) days written notice or less without the payment of any amount by reason of
such termination. Copies of each written agreement, arrangement, commitment or
contract listed in Section 3.15 of the DISCLOSURE SCHEDULE have been previously
delivered to BFOH.
SECTION 3.29. CERTAIN OPERATIONAL MATTERS. (a) Neither MFFC nor MFSB is
a party to any agreement or subject to any arrangement which would prevent,
limit or restrict it from the sale, lease or other disposition of its main
offices or any branch office.
(b) Except as set forth in Section 3.27 of the DISCLOSURE
SCHEDULE, the consummation of the BFOH MERGER or the BANK MERGER shall not
result in the termination or cancellation before its stated expiration of any
contract to which MFFC or MFSB is a party or cause them to incur any financial
penalty, liquidated damages, assessment or other costs solely by reason of such
mergers.
SECTION 3.30. STATEMENTS. None of the information supplied or to be
supplied by MFFC and MFSB for inclusion in this AGREEMENT or in any documents
filed with any regulatory agency in connection with the transactions
contemplated by this AGREEMENT shall, at the respective times such documents are
filed, and at the time of the MFFC Shareholders' Meeting,
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contain any untrue statement of a material fact, or omit to state any material
fact necessary in order to make the statements made therein, in light of the
circumstances under which they are made, not misleading.
ARTICLE FOUR
REPRESENTATIONS AND WARRANTIES OF BFOH AND THE BANK
BFOH and the BANK represent and warrant to MFFC that each of the
following is true and accurate in all material respects:
SECTION 4.01. ORGANIZATION AND STANDING. (a) BFOH is a corporation duly
organized, validly existing and in good standing under the laws of Ohio; is duly
registered with the FRB as a bank holding company; and has the corporate power
and authority to conduct its business and operations as presently conducted.
BFOH is in compliance in all material respects with all applicable local, state
or federal laws and regulations, including, without limitation, the regulations
of the SEC, the FRB and the FDIC.
(b) The BANK is a national bank duly organized, validly
existing and in good standing under the laws of the United States and has the
corporate power and authority to own or hold under lease all of its properties
and assets and to conduct its business and operations as presently conducted.
The savings accounts and deposits of the BANK are insured up to applicable
limits by the FDIC. The BANK is in compliance in all material respects with all
applicable local, state or federal laws and regulations, including, without
limitation, the regulations of the OCC and the FDIC.
SECTION 4.02. QUALIFICATION. Each of BFOH and the BANK is either duly
qualified to do business and in good standing in each jurisdiction in which such
qualification is required or the failure to so qualify would not have a material
adverse effect on the business of BFOH or the BANK.
SECTION 4.03. AUTHORITY. Subject to the approval of this AGREEMENT and
the transactions contemplated hereby, including the BANK MERGER, by the
appropriate regulatory authorities, (a) each of BFOH and the BANK has all
requisite corporate power and authority to enter into this AGREEMENT and to
perform its obligations hereunder; (b) the execution and delivery of this
AGREEMENT and the consummation of the transactions contemplated hereby have been
duly authorized by all necessary corporate action by each of BFOH and the BANK;
and (c) this AGREEMENT is a valid and binding agreement of each of BFOH and the
BANK, enforceable against it in accordance with its terms, (i) subject to
applicable bankruptcy, insolvency, reorganization and moratorium laws and other
laws of general applicability affecting the enforcement of creditors' rights
generally, and the effect of rules of law governing specific performance,
injunctive relief and other equitable remedies on the enforceability of such
documents and (ii) except to the extent such enforceability may be limited by
laws relating to safety and soundness of insured depository institutions as set
forth in 12 U.S.C. Section 1818(b) or by the appointment of a conservator by the
FDIC. This AGREEMENT has been duly executed and delivered by each of BFOH and
the BANK.
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SECTION 4.04. GOVERNING DOCUMENTS. BFOH has delivered to MFFC true and
accurate copies of the Articles of Incorporation and Code of Regulations of BFOH
and the Articles of Association and the Bylaws of the BANK and has granted MFFC
access to all records of all meetings and other corporate actions occurring
before the BFOH EFFECTIVE TIME by the shareholders, Boards of Directors and
Committees of the Boards of Directors of BFOH and the BANK. The minute books of
BFOH and the BANK contain, in all material respects, complete and accurate
records of all meetings and other corporate actions of shareholders, Boards of
Directors and Committees of the Boards of Directors.
SECTION 4.05. NO CONFLICTS. The execution and delivery of this
AGREEMENT and, subject to the approval of the BFOH MERGER and the BANK MERGER by
the appropriate regulatory authorities, the consummation of the transactions
contemplated hereby will not (a) conflict with or violate any provision of or
result in the breach of any provision of the Articles of Incorporation or Code
of Regulations of BFOH or the Articles of Association or Bylaws of the BANK; (b)
conflict with or violate any provision of or result in the breach or the
acceleration of or entitle any party to accelerate (whether upon or after the
giving of notice of lapse of time or both) any obligation under, or otherwise
materially affect the terms of, any mortgage, lien, lease, agreement, license,
instrument, order, arbitration award, judgment or decree to which either BFOH or
the BANK is a party or by which either BFOH or the BANK or their property or
assets is bound; (c) require the consent of any party to any agreement or
commitment to which either BFOH or the BANK is a party or by which either BFOH
or the BANK or their property or assets is bound, the failure to obtain which
could, individually or in the aggregate with all the other failures to obtain
required consents, have a material adverse effect on the business, operations or
financial condition of BFOH and the BANK, taken as a whole; (d) result in the
creation or imposition of any lien, charge, pledge, security interest or other
encumbrance upon any property or assets of either BFOH or the BANK or give rise
to any meritorious cause of action against either BFOH or the BANK; or (e)
violate or conflict with any applicable law, ordinance, rule or regulation,
including, without limitation, the rules and regulations of the FRB, OCC, or the
FDIC.
SECTION 4.06. CONSENTS. Except as disclosed in writing to MFFC on the
date of this AGREEMENT (hereinafter to as the "BFOH LETTER"), no consent,
approval, order or authorization of, or registration, declaration or filing
with, any governmental authority is required in connection with the execution
and delivery of this AGREEMENT by either BFOH or the BANK or the consummation by
either BFOH or the BANK of the transactions contemplated hereby, except for
filings, authorizations, consents or approvals required by the SEC, FRB, the
OTS, the OCC and the Ohio Secretary of State. At or before the BFOH EFFECTIVE
TIME, BFOH shall obtain the consent of LaSalle National Bank to the consummation
of the transactions contemplated by this AGREEMENT.
SECTION 4.07. AUTHORIZED CAPITAL OF BFOH. As of the date hereof, the
authorized capital of BFOH consists of (a) 20,000,000 common shares, each
without par value, 7,595,668 of which are issued and outstanding and 297,467 of
which are reserved for issuance upon exercise of outstanding stock options
(hereinafter referred to as the "BFOH OPTIONS"). All of the outstanding common
shares of BFOH are duly authorized, validly issued, fully paid and nonassessable
and were issued in full compliance with all applicable laws. BFOH has no
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outstanding class of capital stock other than such common shares. Except for the
BFOH OPTIONS, shares to be issued pursuant to the BFOH Bonus Share Program and
as set forth in the BFOH LETTER, there are no outstanding subscription rights,
options, conversion rights, warrants or other agreements or commitments of any
nature whatsoever (either firm or conditional) obligating BFOH to issue, deliver
or sell, cause to be issued, delivered or sold, or restricting BFOH from selling
any additional BFOH shares, or obligating BFOH to grant, extend or enter into
any such agreement or commitment.
SECTION 4.08. FINANCIAL STATEMENTS. (a) The consolidated statements of
financial condition as of December 31, 1998 and 1997, of BFOH and the related
consolidated statements of income, shareholders' equity and cash flows for each
of the three years then ended, examined and reported upon by
PriceWaterhouseCoopers LLP, certified public accountants, complete copies of
which have previously been delivered to MFFC (hereinafter referred to as the
"BFOH AUDITED FINANCIALS"), have been prepared in conformity with generally
accepted accounting principles applied on a consistent basis and fairly present
the financial position of BFOH at such dates and the results of its operations
and cash flows for such periods.
(b) The consolidated statement of financial condition as of
November 30, 1999, of BFOH and the related consolidated statements of income,
shareholders' equity and cash flows for the eleven months then ended, complete
copies of which have previously been delivered to MFFC (hereinafter referred to
as the "BFOH INTERIM FINANCIALS"), fairly present the financial position of BFOH
at such date and the results of its operations and cash flows for such period
and have been prepared in accordance with generally accepted accounting
principles as applicable to condensed consolidated financial statements and as
applied on a consistent basis with the BFOH AUDITED FINANCIALS. All adjustments
which are necessary for a fair statement of the BFOH INTERIM FINANCIALS have
been made.
(c) The Call Reports of the BANK for the three month periods
ended March 31, June 30 and September 30, 1999, together with the schedules and
supplements attached thereto, each as filed with the FDIC and copies of which
were previously delivered to MFFC by BFOH (hereinafter referred to as the "CALL
REPORTS"), have been prepared in accordance with accounting practices permitted
by the FDIC applied on a consistent basis and fairly present the financial
position of the BANK at such dates.
(d) Except as disclosed in the BFOH INTERIM FINANCIALS and the
CALL REPORTS, as of November 30, 1999, BFOH had no liabilities or obligations
material to the financial condition of the BANK and BFOH taken as a whole,
whether accrued, absolute, contingent or otherwise, and whether due or to become
due.
SECTION 4.09. CONDUCT OF BUSINESS. Except as disclosed in the BFOH
LETTER, since September 30, 1999, BFOH and the BANK have conducted their
business only in the ordinary and usual course and there have been no material
adverse changes in the financial condition, assets, liabilities, obligations,
properties or business of BFOH or the BANK.
SECTION 4.10. REPORTS AND RECORDS. (a) Each of BFOH and the BANK has
filed all reports and maintained all records required to be filed or maintained
by them under various rules and regulations of the SEC, FRB, FDIC and the OCC.
All such documents and reports complied
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in all material respects with applicable requirements of law and regulations in
effect at the time of the filing of such documents and contained in all material
respects the information required to be stated therein.
(b) BFOH has delivered to MFFC copies of the following
documents, each of which has been filed with the SEC (hereinafter referred to as
the "BFOH SEC FILINGS"):
(i) The BFOH Annual Reports on Form 10-K for the
fiscal years ended December 31, 1998 and
1997;
(ii) The BFOH Annual Reports to Shareholders for
the fiscal years ended December 31, 1998 and
1997;
(iii) The BFOH Proxy Statements for use in
connection with the 1998 and 1997 Annual
Meetings of Shareholders; and
(iv) The BFOH Quarterly Reports on Form 10-Q for
the quarters ended December 31, 1998 and
March 31, June 30 and September 30, 1999.
The BFOH SEC FILINGS did not, as of the dates on which such reports were filed
with the SEC, contain any untrue statement of a material fact or omit any
material fact required to be stated therein or necessary to make the statements
contained therein, in light of the circumstances under which they were made, not
misleading.
SECTION 4.11. ACTIONS AND SUITS. Except as set forth in the BFOH SEC
FILINGS or in the BFOH LETTER, there are no material actions, suits or
proceedings or investigations pending or, to the knowledge of BFOH, threatened
against or affecting the business, operations or financial condition of BFOH and
the BANK in any court or before any federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
and neither BFOH nor the BANK has any knowledge of any basis for any such
action, suit, proceeding or investigation.
SECTION 4.12. PERMITS AND LICENSES. Each of BFOH and the BANK has all
material permits, licenses, orders and approvals of all federal, state or local
governmental or regulatory bodies required for them to conduct their business as
presently conducted and all such material permits, licenses, orders and
approvals are in full force and effect, without the threat of suspension or
cancellation. None of such permits, licenses, orders or approvals will be
adversely affected by the consummation of the transactions contemplated by this
AGREEMENT.
SECTION 4.13. TAXES. Except as set forth in the BFOH SEC FILINGS, each
of BFOH and the BANK has duly and timely filed all federal, state, county and
local income, profits, franchise, excise, sales, customs, property, use,
occupation, withholding, social security and other tax and information returns
and reports required to have been filed by each of BFOH and the BANK through the
date hereof, and has paid or accrued all taxes and duties (and all interest and
penalties with respect thereto) due or claimed to be due. Neither BFOH nor the
BANK has any liability for any taxes or duties (or interest or penalties with
respect thereto) of any nature
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whatsoever and there is no basis for any additional material claims or
assessments, other than with respect to liabilities for taxes and duties which
are reflected in the BFOH INTERIM FINANCIALS or which may have accrued since
September 30, 1999, in the ordinary course of business.
SECTION 4.14. INSURANCE. All material properties and operations of each
of BFOH and the BANK are adequately insured for its benefit. The performance by
the officers and employees of each of BFOH and the BANK of their duties is
bonded in such amounts and against such risks as are usually insured against or
bonded by entities similarly situated, under valid and enforceable policies of
insurance or bonds issued by insurers or bonding companies of recognized
responsibility, financial or otherwise.
SECTION 4.15 YEAR 2000. (a) All devices, systems, machinery,
information technology, computer software and hardware, and other date sensitive
technology owned or leased by either BFOH or the BANK (hereinafter referred to
as the "BANK Systems") necessary for either BFOH or the BANK to carry on its
business as presently conducted and as contemplated to be conducted in the
future either (i) are Year 2000 Compliant or (ii) will be Year 2000 Compliant
within a period of time calculated to result in no material disruption of any of
the business operations of either BFOH or the BANK. For purposes of this Section
4.15, "Year 2000 Compliant" means that the BANK Systems are designed to be used
prior to, during and after the Gregorian calendar year 2000 A.D. and will
operate during each such time period without error relating to date data,
specifically including any error relating to, or the product of, date data which
represents or references different centuries or more than one century.
(b) Each of BFOH and the BANK has (i) undertaken a detailed
inventory, review and assessment of all areas within its business and operations
that could be adversely affected by the failure of either BFOH or the BANK to be
Year 2000 Compliant on a timely basis; (ii) developed a detailed plan and time
line for becoming Year 2000 Compliant on a timely basis; and (iii) to date,
implemented that plan in accordance with that timetable in all material
respects.
(c) Each of BFOH and the BANK has made inquiry of each of its
key suppliers, vendors and customers and has obtained confirmations from all
such persons as to whether such persons have initiated programs to become Year
2000 Compliant and on the basis of such confirmations, BFOH reasonably believes
that all such persons will be or try to become so compliant or make other
suitable arrangements so as not to likely cause a material disruption of
business.
SECTION 4.16 ENVIRONMENTAL PROTECTION. (a) Except as set forth in the
BFOH LETTER, (i) to the knowledge of BFOH, each of BFOH, the BANK and the BFOH
PROPERTY (hereinafter defined) is, and has been at all times, in material
compliance with all applicable ENVIRONMENTAL LAWS; (ii) no investigations,
inquiries, orders, hearings, actions or other proceedings by or before any court
or governmental agency have been issued, are pending or, to the knowledge of
BFOH or the BANK, threatened against either BFOH or the BANK or in connection
with the BFOH PROPERTY; (iii) no claims have been made or, to the knowledge of
BFOH or the BANK, threatened at any time against either BFOH or the BANK or in
connection
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with the BFOH PROPERTY relating to actual or alleged violation of any
ENVIRONMENTAL LAW or relating to damage, contribution, cost recovery,
compensation, loss or injury resulting from any HAZARDOUS SUBSTANCE and, to the
knowledge of BFOH, no past or present actions, activities, conditions, events or
incidents, including, without limitation, the release, emission, discharge or
disposal of, or exposure to, any HAZARDOUS SUBSTANCE have occurred that could
reasonably form the basis of any such claims against either BFOH or the BANK or
in connection with the BFOH PROPERTY; (iv) to the knowledge of BFOH, no
HAZARDOUS SUBSTANCES have been integrated into any BFOH PROPERTY or any
component thereof in violation of ENVIRONMENTAL LAWS, or which will in the
future require remediation during renovation or demolition, or in such
quantities and manner as may or do pose a threat to human health; (v) to the
knowledge of BFOH, no portion of any BFOH PROPERTY is located within 2000 feet
of (I) a release of HAZARDOUS SUBSTANCES which has been reported or is required
to be reported under any ENVIRONMENTAL LAW or (II) the location of any site
used, in the past or presently, for the disposal of any HAZARDOUS SUBSTANCES;
(vi) the BFOH PROPERTY has not been used for the storage, disposal or treatment
of HAZARDOUS SUBSTANCES, except as allowed by applicable law, has not been
contaminated by HAZARDOUS SUBSTANCES, nor has been used for the storage or use
of any underground or aboveground storage tanks; and (vii) material permits,
registrations and other authorizations necessary for either BFOH or the BANK or
the BFOH PROPERTY to operate in material compliance with all ENVIRONMENTAL LAWS
are currently in force.
(b) As used in this Section 4.16, "BFOH PROPERTY" means all
real and personal property now or previously owned, leased, occupied or managed
by either BFOH or the BANK or any person or entity whose liability for any
matter has or may have been related or assumed by BFOH either contractually or
by operation of law.
SECTION 4.17. STOCK OWNERSHIP. Except as set forth in the BFOH LETTER,
neither BFOH nor any of its "affiliates" or "associates," as the terms
"affiliates" and "associates" are defined in Section 1704.01(C)(1) of the ORC,
are "beneficial owners," as the terms "beneficial owners" is defined in Section
1704.01(C)(4) of the ORC, of any of the outstanding shares of MFFC.
SECTION 4.18. BROKERS. All negotiations relating to this AGREEMENT and
the transactions contemplated hereby have been carried on without the
intervention of any person, other than Sandler O'Neill, LLC, acting on behalf of
BFOH or the BANK in such manner as to give rise to any valid claim against BFOH
or the BANK for any broker's or finder's fee or similar compensation.
ARTICLE FIVE
COVENANTS
SECTION 5.01. CONDUCT OF BUSINESSES. (a) Except as set forth in Section
5.01(b) of this AGREEMENT and except to the extent permitted by BFOH, from the
date of this AGREEMENT until the BFOH EFFECTIVE TIME, MFFC and MFSB will conduct
their businesses only in the ordinary course, in accordance with past practices
and policies and in compliance with all applicable statutes, rules and
regulations. Without limiting the generality of the foregoing, MFFC and MFSB
shall use reasonable efforts to maintain and preserve intact their
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business organizations, employees and business relationships and to retain the
services of their officers and key employees and neither MFFC nor MFSB shall,
without the prior written consent of BFOH:
(i) Issue any MFFC common shares or other
capital stock or any options, warrants, or
other rights to subscribe for or purchase
MFFC common shares or any other capital
stock or any securities convertible into or
exchangeable for any capital stock of MFFC
or MFSB, except pursuant to options granted
under the STOCK OPTION PLAN and options
granted to BFOH;
(ii) Directly or indirectly redeem, purchase or
otherwise acquire any MFFC common shares or
any other capital stock of MFFC or MFSB or
effect a reclassification, recapitalization,
split-up, exchange of shares, readjustment
or other similar change in or to any capital
stock or otherwise reorganize or
recapitalize MFFC or MFSB;
(iii) Amend the Articles of Incorporation or Code
of Regulations of MFFC or the Charter or
Bylaws of MFSB;
(iv) Grant any increase, other than ordinary and
normal increases consistent with past
practices, in the compensation payable or to
become payable to officers or salaried
employees or, except as required by law or
as required by existing contractual
obligations, adopt or make any material
change in any bonus (permitting the
continued accrual of management bonuses at
current rates and payment of such bonuses in
accordance with past practices, the MFFC and
MFSB Boards of Director being permitted to
consider the impact of the transactions
contemplated by this AGREEMENT on the
possible adverse performance of MFFC and
MFSB), insurance, pension or other PLAN
(except as otherwise permitted by this
AGREEMENT), agreement, payment or
arrangement made to, for or with any of such
officers or employees;
(v) Borrow or agree to borrow any material
amount of funds except in the ordinary
course of business, or directly or
indirectly guarantee or agree to guarantee
any material obligations of others, except
in the ordinary course of business;
(vi) Make or commit to make any new loan or
letter of credit or any new or additional
discretionary advance under any existing
line of credit, except in the ordinary
course of business;
(vii) Purchase or otherwise acquire any investment
security for its own account, except in a
manner and pursuant to policies consistent
with past practice;
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(viii) Materially increase or decrease the rate of
interest paid on time deposits, or on
certificates of deposit, except in a manner
and pursuant to policies consistent with
past practices;
(ix) Enter into any agreement, contract or
commitment of a material nature out of the
ordinary course of business;
(x) Except in the ordinary course of business,
place on any of its material assets or
properties any mortgage, pledge, lien,
charge, or other encumbrance of a material
nature;
(xi) Except in the ordinary course of business,
cancel or accelerate any material
indebtedness owing to MFFC or MFSB or any
claims which MFFC or MFSB may possess or
waive any material rights with respect
thereto;
(xii) Sell, assign, transfer, convey, license,
subcontract, cancel, amend or alter in any
other material respect any loan servicing
rights of MFFC or MFSB, except for sales on
the secondary market in the ordinary course
of business and in accordance with past
practices;
(xiii) Except as set forth in Section 5.01(a) of
the DISCLOSURE SCHEDULE, sell or otherwise
dispose of any material real property or any
material amount of any tangible or
intangible personal property other than in
the ordinary course of business and other
than properties acquired in foreclosure or
otherwise in the ordinary collection of
indebtedness to MFFC or MFSB;
(xiv) With respect to the branch operations of
MFSB, take any action to close any existing
branch, open new branches, acquire by
purchase, merger or otherwise additional
branches, or otherwise affect the number,
location, and nature of the branch
operations, or to make any public
announcement regarding the continuation or
discontinuation of any branch operations;
(xv) Foreclose upon or otherwise take title to or
possession or control of any real property
without first obtaining a Phase I
environmental report thereon which indicates
that the property is free of pollutants,
contaminants or hazardous or toxic waste
materials; provided, however, that no report
shall be required with respect to any single
family property or any non-agricultural
residential property of one acre or less,
unless there is reason to believe that such
property might contain any such waste
materials or otherwise might be
contaminated; or
(xvi) Purchase any real or personal property or
make any other capital expenditure in excess
of $50,000.
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(b) Notwithstanding Section 5.01(a) or any other provision to
the contrary in this AGREEMENT, MFFC and MFSB may, without the prior written
consent of BFOH:
(i) At or before the BFOH EFFECTIVE TIME, pay
management bonuses which have been accrued
since September 30, 1999, in accordance with
past practices;
(ii) At or before the BFOH EFFECTIVE TIME, issue
MFFC common shares upon exercise of options
granted pursuant to the STOCK OPTION PLAN;
(iii) At or before the BFOH EFFECTIVE TIME, pay
per share dividends in the amount of $.15
during each of the quarters ended March 31,
June 30 and September 30, 2000; provided,
however, that MFFC shall not pay any
dividend in the quarter of the CLOSING if
such payment would result in the payment
during such quarter of a dividend to MFFC
shareholders by both MFFC and BFOH; and
(iv) Take any other action expressly contemplated
by this AGREEMENT.
SECTION 5.02. ACQUISITION PROPOSALS. MFFC and MFSB shall not, and shall
cause the officers, directors, employees and other agents of MFFC and MFSB not
to, directly or indirectly, take any action to solicit, initiate, engage or
negotiate any proposals or offers from any person or entity, other than BFOH, or
discuss or negotiate with any such person or entity, other than BFOH, any
acquisition or purchase of all or a material amount of the assets of, any equity
securities of, or any merger, consolidation or business combination with, MFFC
or MFSB (hereinafter collectively referred to as "ACQUISITION TRANSACTIONS");
provided, however, that nothing contained in this Section 5.02 shall prohibit
MFFC or MFSB from furnishing information to, or entering into discussions,
negotiations or an agreement with, any person or entity which makes an
unsolicited proposal of an ACQUISITION TRANSACTION if and to the extent that (a)
the Board of Directors of MFFC, after consultation with and based upon the
advice of counsel, determines in good faith that such action is required to
fulfill its fiduciary duties to the shareholders of MFFC under applicable law
and (b) before furnishing such information to, or entering into discussions or
negotiations with, such person or entity, MFFC provides immediate written notice
to BFOH of such action.
SECTION 5.03. ACCOUNTING POLICIES. Before the BFOH EFFECTIVE TIME and
at the request of BFOH, MFFC and MFSB shall promptly establish and take such
reserves and accruals to conform the loan, accrual and reserve policies of MFFC
and MFSB to the policies of BFOH and the BANK; shall promptly establish and take
such accruals, reserves and charges in order to implement such policies in
respect of excess facilities and equipment capacity, severance costs, litigation
matters, write-off or write-down of various assets and other appropriate
accounting adjustments; and shall promptly recognize for financial accounting
purposes such expenses of the BFOH MERGER and restructuring charges related to
or to be incurred in connection with the BFOH MERGER, to the extent permitted by
law and consistent with generally accepted
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accounting principles and the fiduciary duties of the officers and directors of
MFFC and the MFSB; provided, however, that neither MFFC nor MFFC shall be
obligated to make any such changes or adjustments unless they have received a
written certification from BFOH that all conditions set forth in Sections 7.01
and 7.02 of this AGREEMENT have been satisfied or waived and that no basis for
the termination of this AGREEMENT by BFOH or the BANK pursuant to Article Eight
of this AGREEMENT is then extant.
ARTICLE SIX
FURTHER AGREEMENTS
SECTION 6.01. APPLICATION FOR APPROVAL OF MERGER. As soon as
practicable after the date of this AGREEMENT, BFOH and MFFC will prepare and
cause to be filed such applications and other documents with the FRB, the FDIC,
the OCC, and the OTS and any other governmental agencies as are required to
secure the requisite approval of such agencies to the consummation of the
transactions provided for in this AGREEMENT. BFOH and MFFC shall use all
reasonable efforts to file all such applications within ninety (90) days of the
date of this AGREEMENT and to secure all such approvals. MFFC and MFSB agree
that they will, as promptly as practicable after request, provide BFOH with all
information and documents concerning MFFC and MFSB as shall be required in
connection with preparing any applications, registration statements and other
documents which are to be prepared and filed by BFOH and in connection with
regulatory approvals required to be obtained by BFOH hereunder. BFOH agrees that
it will, as promptly as practicable after request, provide MFFC and MFSB with
all information and documents concerning BFOH and its subsidiaries as shall be
required in connection with preparing such applications, registration statements
and other documents which are to be prepared and filed by MFFC or MFSB in
connection with approvals required to be obtained by MFFC hereunder.
SECTION 6.02. REGISTRATION STATEMENT. (a) BFOH shall, as soon as
reasonably practicable, prepare in accordance with the Securities Act of 1933,
as amended (hereinafter referred to as the "ACT"), and file with the SEC a
Registration Statement in respect of the BFOH common shares to be issued to the
holders of MFFC common shares in accordance with ARTICLE TWO of this AGREEMENT
(hereinafter referred to as the "REGISTRATION STATEMENT"), and shall use all
reasonable efforts to have the REGISTRATION STATEMENT, as amended, declared
effective by the SEC as promptly as practicable. BFOH and MFFC shall cooperate
in the preparation of the REGISTRATION STATEMENT, including the prospectus,
proxy statement, and other documents necessary to comply with all federal and
state securities laws related to the registration and issuance of the shares of
BFOH to be issued to the shareholders of MFFC in this transaction, and any other
laws applicable to the transactions provided for in this Agreement.
(b) The information included in the REGISTRATION STATEMENT in
respect of BFOH and the BANK will not, at the time the REGISTRATION STATEMENT
becomes effective, 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.
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SECTION 6.03. AFFILIATES COMPLIANCE WITH THE SECURITIES ACT. (a) Within
30 days after the date of this AGREEMENT, MFFC shall identify to BFOH all
persons whom MFFC reasonably believes to be "affiliates," as defined in
paragraphs (c) and (d) of Rule 145 under the ACT (hereinafter referred to as the
"AFFILIATES"). Thereafter and until the BFOH EFFECTIVE TIME, MFFC shall identify
to BFOH each additional person whom it reasonably believes to have thereafter
become its AFFILIATE.
(b) MFFC shall use reasonable efforts to cause each person who
is identified as an AFFILIATE to deliver to BFOH before the BFOH EFFECTIVE DATE
a written agreement in the form of the written agreement attached hereto as
Exhibit D in which such AFFILIATE confirms that the BFOH common shares received
by such AFFILIATE in the MERGER shall not be transferable except in accordance
with Rule 145 under the ACT.
SECTION 6.04. SPECIAL MEETING OF SHAREHOLDERS. (a) MFFC shall use
reasonable efforts to duly call, give notice of, convene and hold a meeting of
its shareholders for the purpose of voting upon the AGREEMENT and the
transactions contemplated hereby, including the BFOH MERGER. MFFC shall use its
reasonable efforts to hold such meetings as soon as practicable following the
effective date of the REGISTRATION STATEMENT. The Board of Directors of MFFC, as
constituted on the date of this AGREEMENT, shall, except to the extent that the
Board of Directors of MFFC, after consultation with and based upon the written
advice of counsel, determines in good faith that such recommendation or efforts
would breach its fiduciary duties to the shareholders of MFFC under applicable
law, (i) unanimously recommend to MFFC shareholders in the MFFC proxy statement
which will form a part of the REGISTRATION STATEMENT (hereinafter referred to as
the "PROXY STATEMENT") the approval of this AGREEMENT and the transactions
contemplated hereby, including the BFOH MERGER, and the other matters to be
submitted to the shareholders in connection therewith, and (ii) use their
reasonable efforts to obtain the necessary approvals by the shareholders of this
AGREEMENT, any amendments hereto, and the transactions contemplated hereby,
including the BFOH MERGER.
(b) Immediately after the approval of this AGREEMENT by the
requisite vote of the MFFC shareholders, MFFC shall approve this AGREEMENT and
the transactions contemplated hereby, including the BANK MERGER, as the sole
shareholder of MFSB.
SECTION 6.05. ACCESS. Until the BFOH EFFECTIVE TIME, MFFC and MFSB
shall afford to BFOH, and BFOH and the BANK shall afford to MFFC, and to their
respective officers and representatives (including, without limitation, counsel,
financial advisers and independent accountants), reasonable access to their
properties, personnel, books, records and affairs. Each party shall furnish the
other party with such additional financial and operating data and other
information as to its businesses and properties as may be reasonably requested.
Such access shall include, but shall not be limited to, (i) permitting
verification, by audit or otherwise, of any representation or warranty made
hereunder; (ii) authorizing release of any information (including the work
papers of such independent auditors) and financial consultants; (iii) consistent
with applicable regulations or procedures, furnishing regular and special
examination reports since the date of this AGREEMENT to the BFOH EFFECTIVE TIME;
and (iv) delivering copies of all
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documents or reports or correspondence filed and any correspondence with any
federal regulatory or supervisory agency from the date of this AGREEMENT until
the BFOH EFFECTIVE TIME.
SECTION 6.06. CONFIDENTIALITY. MFFC, MFSB, BFOH and the BANK shall hold
confidential any information obtained hereunder which is not otherwise public
knowledge or ascertainable from public information and all non-public documents
(including copies thereof) obtained hereunder by either party from the other
party shall be returned to such party.
SECTION 6.07. PRESS RELEASES. BFOH and MFFC shall consult with each
other before issuing any press release or otherwise making any public statements
with respect to the BFOH MERGER or the BANK MERGER and shall not issue any such
press release or make any such public statement without obtaining the prior
consent of the other party, except as may be required by law or by obligations
pursuant to any listing agreement with any national securities association.
SECTION 6.08. COSTS, EXPENSES AND FEES. Whether or not the BFOH MERGER
is consummated, all costs and expenses incurred in connection with this
AGREEMENT, the PROXY STATEMENT, the REGISTRATION STATEMENT and the transactions
contemplated hereby shall be paid by the party incurring such costs and
expenses.
SECTION 6.09. REASONABLE EFFORTS. Subject to the terms and conditions
herein provided, each of the parties hereto agrees to use all reasonable efforts
to take, or cause to be taken, all action, and to do or cause to be done all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this AGREEMENT.
SECTION 6.10. NOTIFICATION OF EVENTS. At all times from the date of
this AGREEMENT until the BFOH EFFECTIVE TIME, each party shall promptly notify
the other in writing of any adverse business conditions threatening its normal
business operations or of the occurrence of any event or the failure of any
event to occur which might result in a breach of or a failure to comply with any
representation, warranty, covenant, condition or agreement contained in this
AGREEMENT or of the commencement of any action, suit, proceeding, or
investigation against it.
SECTION 6.11. LIQUIDATION ACCOUNT. The BANK MERGER shall have no effect
upon the MFSB Liquidation Account which shall be assumed by the BANK at the BANK
EFFECTIVE TIME in accordance with 12 C.F.R. Section 563b.3(j).
SECTION 6.12. ESOP TERMINATION. (a) MFFC shall use reasonable efforts
to terminate the ESOP and shall file an Application for Determination with the
IRS regarding tax qualification upon termination. All amounts accrued on the
financial statements of MFFC as ESOP expense through the end of the month
immediately before the month of the CLOSING shall be contributed by MFSB to the
ESOP Trustee and shall be paid by the ESOP Trustee to MFFC to reduce the
outstanding balance of the ESOP LOAN, after which an appropriate number of MFFC
common shares shall be allocated as promptly as possible by the ESOP Trustee to
the accounts of ESOP participants (as defined in the ESOP) in accordance with
the allocation provisions of the ESOP contained in Sections 3.01 and 3.02 and
applicable law; provided,
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however, that any such contribution shall be deductible by MFFC and MFSB under
Section 404 of the CODE and the allocations of such contribution shall otherwise
be in compliance with Section 415 of the CODE. All common shares of MFFC held by
the Trustee of the ESOP at the BFOH EFFECTIVE TIME shall be exchanged by the
Trustee for the BFOH MERGER CONSIDERATION. The Trustee for the ESOP shall
dispose of shares held in the suspense account of the ESOP for the purpose of
retiring the ESOP LOAN. Any shares and other assets remaining in the suspense
account following repayment of the ESOP LOAN in full shall be allocated as
promptly as possible by the ESOP Trustee to participants (as defined in the
ESOP) in accordance with the allocation provisions of the ESOP contained in
Sections 3.01 and 3.02 and applicable law. It is the intent of the parties that
the ESOP be terminated and distributions made concurrently with the BFOH
EFFECTIVE TIME to the extent possible.
(b) In the event that the IRS determines that the allocation
of assets remaining in the suspense account following repayment of the ESOP LOAN
in full is subject to the limits on annual additions pursuant to Section 415 of
the CODE, then BFOH will make all reasonable efforts, to the extent permissible
under applicable provisions of the CODE and related Treasury Regulations, to
continue the ESOP trust through the last day of the ESOP plan year following the
ESOP plan year during which the BFOH EFFECTIVE TIME occurs, solely for the
benefit of those individuals who are participants in the ESOP immediately before
the BFOH EFFECTIVE TIME, and to allocate such remaining assets to ESOP
participants in accordance with the terms of the ESOP to the full extent
permissible under Section 415 of the CODE between the BFOH EFFECTIVE TIME and
the last day of the ESOP plan year following the ESOP plan year during which the
BFOH EFFECTIVE TIME occurs. In the event that all assets held by the ESOP trust
are allocated prior to the last day of the ESOP plan year during which the BFOH
EFFECTIVE TIME occurs, the ESOP trust shall be immediately terminated and
participants' ESOP accounts will be distributed as soon as practicable
thereafter.
SECTION 6.13. 401(k) PLAN TERMINATION. MFFC and MFSB shall use
reasonable efforts to terminate MFFC's 401(k) Plan before the BFOH EFFECTIVE
TIME and to file an Application for Determination with the IRS regarding tax
qualification upon termination.
SECTION 6.14. WITHDRAWAL FROM RETIREMENT FUND. MFFC and MFSB shall use
reasonable efforts to withdraw from the Financial Institutions Retirement Fund
(hereinafter referred to as the "RETIREMENT FUND"). Such withdrawal shall occur
in accordance with the applicable provisions of Article XII of the Regulations
governing the Comprehensive Retirement Program (hereinafter referred to as the
"REGULATIONS"), pursuant to the provisions of Article XII, Section 1, Paragraph
(6) of the REGULATIONS, applicable to a withdrawal without the establishment of
a "successor plan." MFFC and MFSB shall file all forms and documents necessary
to carry out such withdrawal from the RETIREMENT FUND prior to the BFOH
EFFECTIVE TIME, including, but not limited to, any filings required to be made
with the sponsor of the RETIREMENT FUND and with the IRS.
SECTION 6.15. RRP. MFFC shall not award any of the UNAWARDED RRP SHARES
to any of the RRP participants and shall cause the RRP Trustee to transfer all
right, title and interest in and to the UNAWARDED RRP SHARES to MFFC immediately
before the BFOH EFFECTIVE TIME. At the BFOH EFFECTIVE TIME, all of the UNVESTED
RRP SHARES
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shall vest and shall be exchanged for the BFOH MERGER CONSIDERATION, after which
BFOH shall cause the RRP Trustee to distribute to RRP participants (a) the BFOH
MERGER CONSIDERATION for which the UNVESTED RRP SHARES have been exchanged, (b)
all dividends previously paid by MFFC on the UNVESTED RRP SHARES, together with
interest earned thereon, and (c) fifty percent (50%) of all dividends previously
paid by MFFC on the UNAWARDED RRP SHARES, together with interest earned thereon.
SECTION 6.16. DEFERRED COMPENSATION AGREEMENTS. BFOH shall honor and
assume all of the obligations of MFSB under each of the Deferred Fee Agreements
by and between MFSB and David R. Hayes, MFSB and Christopher S. Long, MFSB and
Kenneth J. Faze, MFSB and Robert E. Hine, MFSB and E. Lynn App and MFSB and
Glenn E. Aidt, as each such agreement was amended on January 12, 2000.
SECTION 6.17. EMPLOYMENT AGREEMENTS. BFOH shall honor and assume all of
the obligations of MFFC and MFSB under the Employment Agreements by and among
MFFC, MFSB and Glenn E. Aidt; MFFC, MFSB and Thomas P. Eyer; MFFC, MFSB and
Debbie A. Jones; MFFC, MFSB and Dennis J. Piper; and MFFC, MFSB and John E.
Frigge. MFFC shall pay to each such employee on or before the BFOH EFFECTIVE
TIME the amount in cash required by Section 4(a)(ii)(I) of each such agreement.
SECTION 6.18. EMPLOYEE BENEFIT PLANS. (a) All employees of MFFC and
MFSB immediately prior to the BFOH EFFECTIVE TIME who are employed by BFOH or
the BANK (hereinafter referred to collectively as the "EMPLOYERS") immediately
following the BFOH EFFECTIVE TIME (hereinafter referred to as the "TRANSFERRED
EMPLOYEES") will be covered by the EMPLOYERS' employee benefit plans
(hereinafter referred to as the "EMPLOYEE BENEFIT PLANS") on substantially the
same basis as any employee of the EMPLOYERS in a comparable position.
Notwithstanding the foregoing, BFOH and the BANK may determine to continue any
of the MFFC or MFSB benefit plans for TRANSFERRED EMPLOYEES in lieu of offering
participation in the EMPLOYEE BENEFIT PLANS providing similar benefits (e.g.,
medical and hospitalization benefits), to terminate any of MFFC's or MFSB's
benefit plans, or to merge any such benefit plans with the EMPLOYEE BENEFIT
PLANS, provided the result is the provision of benefits to TRANSFERRED EMPLOYEES
that are substantially similar to the benefits provided to the EMPLOYERS'
employees generally. Service to MFFC or MFSB by a TRANSFERRED EMPLOYEE prior to
the BFOH EFFECTIVE TIME shall be recognized as service to the EMPLOYERS for
purposes of eligibility to participate under the EMPLOYERS' sick leave policies,
paid vacation policies and any EMPLOYEE BENEFIT PLAN to the extent permissible
under governing law. BFOH and the BANK agree that any pre-existing condition,
limitation or exclusion in its EMPLOYEE BENEFIT PLANS shall not apply to
TRANSFERRED EMPLOYEES or their covered dependents who are covered under a
similar plan maintained by MFFC or MFSB on the BFOH EFFECTIVE TIME and who then
change coverage to EMPLOYEE BENEFIT PLANS at the time such TRANSFERRED EMPLOYEES
are first given the option to enroll. Nothing contained in this Section 6.18
shall prohibit the EMPLOYERS from modifying or terminating any of the EMPLOYEE
BENEFIT PLANS after the BFOH EFFECTIVE TIME, nor shall anything contained in
this Section 6.18 require the EMPLOYERS to continue the employment of any
employee of MFFC or MFSB after the BFOH EFFECTIVE TIME.
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(b) Notwithstanding the terms and conditions of any note or
loan agreement, neither BFOH nor the Bank shall increase or otherwise change
after the BFOH EFFECTIVE DATE the interest rate on any loan made to any of the
MFSB employees identified in Section 6.18(b) of the DISCLOSURE SCHEDULE above
the interest rate on any such loan on the date of this AGREEMENT.
SECTION 6.19. INDEMNIFICATION AND INSURANCE. (a) For a period of three
years after the BFOH EFFECTIVE TIME, BFOH shall indemnify each person who served
as a director or officer of MFFC and MFSB on or before the BFOH EFFECTIVE TIME
to the fullest extent permitted under the Articles of Incorporation and Code of
Regulations of BFOH or MFFC and applicable provisions of Ohio law from and
against expenses, including attorneys' fees, judgments, fines and amounts paid
in settlement in connection with any threatened, pending or completed action,
suit or proceeding by reason of the fact that such person was a director or
officer of MFFC or MFSB.
(b) At or before the BFOH EFFECTIVE TIME, BFOH shall include
the directors and executive officers of MFFC and MFSB for a period of three
years after the BFOH EFFECTIVE TIME as persons covered and insured under the
current Directors and Officers' Liability Insurance Policy of BFOH in a manner
by which such directors and executive officers of MFFC and MFSB will be covered
and insured for acts or omissions occurring before the BFOH EFFECTIVE TIME.
SECTION 6.20. STOCK OPTIONS Before the BFOH EFFECTIVE TIME, MFFC shall
use reasonable efforts to obtain from each holder of an option which was granted
pursuant to the STOCK OPTION PLAN and which is not exercised before the BFOH
EFFECTIVE TIME a written agreement in a form reasonably satisfactory to MFFC and
BFOH pursuant to which such option is cancelled and extinguished in
consideration and exchange for the payment by BFOH of the cash calculated in
accordance with Section 2.01(a)(ii) of this AGREEMENT.
SECTION 6.21. SEVERANCE. Each MFFC or MFSB employee immediately before
the BFOH EFFECTIVE TIME (a) who is not listed in Section 6.17 of this AGREEMENT
and (b)(i) who is not employed after the BFOH EFFECTIVE TIME by BFOH or the BANK
or (ii) the employment of whom by BFOH or the BANK is terminated by BFOH or the
BANK without cause within one year after the BFOH EFFECTIVE TIME shall receive
an employment severance payment equal to the product of two weeks of the
employee's then current salary, multiplied by the number of total years of
service as a MFFC or MFSB employee; provided, however, that the minimum
severance payment shall equal thirteen weeks salary and the maximum severance
payment shall equal twenty-six weeks salary.
SECTION 6.22. ADVISORY BOARD. At or before the BFOH EFFECTIVE TIME,
BFOH shall form an Advisory Board consisting of the current members of the Board
of Directors of MFFC (hereinafter referred to as the "ADVISORY BOARD"). The
ADVISORY BOARD shall advise BFOH after the BFOH EFFECTIVE TIME on issues
affecting the merger of the businesses of MFSB with the BANK and on other
matters related to the operation of the business of MFFC and MFSB. The persons
who agree to serve on the ADVISORY BOARD shall serve
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for a period of one year term and shall be paid a fee for services in the amount
of $250 for each month of service.
ARTICLE SEVEN
CLOSING MATTERS
SECTION 7.01. CONDITIONS TO OBLIGATIONS OF BFOH, THE BANK, MFFC AND
MFSB. Notwithstanding any other provision of this AGREEMENT, the obligations of
BFOH, the BANK, MFFC and MFSB to effect the BFOH MERGER and the BANK MERGER
shall be subject to the fulfillment of each of the following conditions:
(a) This AGREEMENT shall have been validly adopted by the
affirmative vote of the holders of at least the
number of outstanding MFFC shares required under Ohio
law and the MFFC Articles of Incorporation to adopt
such agreements;
(b) All permits, approvals, consents, authorizations,
exemptions or waivers of any federal or state
governmental body or agency necessary or appropriate
for consummation of the BFOH MERGER and the BANK
MERGER shall have been obtained and all required
waiting periods shall have expired;
(c) All waivers, consents and approval of every person,
in addition to those required under subsections (a)
and (b) of this Section 7.01, necessary or
appropriate for the consummation of the BFOH MERGER
and the BANK MERGER shall have been obtained;
(d) MFFC shall have received the written opinions of
MCDONALD, dated the date of this AGREEMENT and the
date of the PROXY STATEMENT to the effect that the
BFOH MERGER CONSIDERATION is fair to the holders of
the MFFC common shares from a financial point of view
as of such dates;
(e) There shall not be in effect an order or decision of
a court of competent jurisdiction which prevents or
materially delays the consummation of the BFOH MERGER
or the BANK MERGER;
(f) There shall not be in effect any federal or state
law, rule or regulation which prevents or materially
delays consummation of the BFOH MERGER and the BANK
MERGER;
(g) BFOH and MFFC shall have received an opinion of Baker
& Hostetler, LLP, to the effect that the BFOH MERGER,
when consummated in accordance with the terms hereof,
will constitute a reorganization within the meaning
of Section 368(a)(1)(A) of the CODE; and
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(h) The REGISTRATION STATEMENT (including any
post-effective amendment thereto) shall be effective
under the ACT and no proceeding shall be pending or,
to the knowledge of BFOH, threatened by the SEC to
suspend the effectiveness of the REGISTRATION
STATEMENT.
SECTION 7.02. CONDITIONS TO OBLIGATIONS OF BFOH AND THE BANK. In
addition to the conditions contained in Section 7.01 of this AGREEMENT, the
obligations of BFOH and the BANK to effect the BFOH MERGER and the BANK MERGER
shall also be subject to the fulfillment of each of the following conditions:
(a) The representations and warranties of each of MFFC
and MFSB contained in Article Three of this AGREEMENT
shall be true in all material respects at and as of
the date hereof and at and as of the BFOH EFFECTIVE
TIME as if made at and as of such time, except to the
extent that any such representation and warranty is
made as of a specified date;
(b) Each of MFFC and MFSB shall have duly performed and
complied in all material respects with all
agreements, covenants and conditions required by this
AGREEMENT to be performed or complied with by it
before or at the BFOH EFFECTIVE TIME;
(c) There shall not have been a material adverse change
in the financial condition, assets, liabilities,
obligations, properties or business of MFFC and MFSB,
taken as a whole, after the date of this AGREEMENT,
except change resulting from action taken by MFFC or
MFSB at the request of BFOH, including, but not
limited to, action pursuant to Section 5.03 of this
AGREEMENT; change resulting from or attributable to
costs and expenses incurred in connection with the
transactions contemplated by this AGREEMENT; and
change resulting from or attributable to (i) change
in law or regulation affecting financial institutions
or their holding companies, (ii) change in generally
accepted accounting principles or regulatory
accounting principles applicable to financial
institutions and their holding companies; and (iii)
change in economic conditions applicable to
depository institutions generally or in general
levels of interest rates; and
(d) Each of MFFC and MFSB shall have delivered to BFOH a
certificate dated the BFOH EFFECTIVE TIME and signed
by the President and Treasurer of MFFC and MFSB to
the effect set forth in subsections (a), (b) and (c)
of this Section 7.02.
SECTION 7.03. CONDITIONS TO OBLIGATIONS OF MFFC AND MFSB. In
addition to the conditions contained in Section 7.01 of this AGREEMENT, the
obligation of MFFC and MFSB to effect the BFOH MERGER and the BANK MERGER shall
also be subject to the fulfillment of each of the following conditions:
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(a) The representations and warranties of BFOH and the
BANK contained in Article Four of this AGREEMENT
shall be true in all material respects at and as of
the date hereof and as of the BFOH EFFECTIVE TIME as
if made at and as of such time, except to the extent
that such representations and warranties are made as
of a specific date;
(b) Each of BFOH and the BANK shall have duly performed
and complied in all material respects with all
agreements, covenants and conditions required by this
AGREEMENT to be performed or complied with by them
before or at the BFOH EFFECTIVE TIME;
(c) There shall not have been a material adverse change
in the financial condition, assets, liabilities,
obligations, properties, business or prospects of
BFOH or the BANK after the date of this AGREEMENT;
(d) BFOH shall have delivered to MFFC a certificate dated
the BFOH EFFECTIVE TIME and signed by the Chairman
and the President of BFOH to the effect set forth in
subsections (a), (b) and (c) of this Section 7.03;
and
(e) The AVERAGE shall not be less than $17.25.
ARTICLE EIGHT
TERMINATION
SECTION 8.01. TERMINATION. This AGREEMENT may be terminated at any time
prior to the BFOH EFFECTIVE TIME, whether before or after approval by the
shareholders of MFFC:
(a) By mutual consent of the Boards of Directors of MFFC,
MFSB, BFOH and the BANK; or
(b) By the Board of Directors of MFFC or BFOH if:
(i) The BFOH MERGER shall not have been
consummated on or before December 31, 2000;
or
(ii) Any event occurs which, in the reasonable
opinion of either Board, would preclude
satisfaction of any of the conditions set
forth in Section 7.01 of this AGREEMENT; or
(c) By the Board of Directors of BFOH if any event occurs
which, in the reasonable opinion of such Board, would
preclude compliance with any of the conditions set
forth in Section 7.02 of this AGREEMENT; or
(d) By the Board of Directors of MFFC if any event occurs
which, in the reasonable opinion of such Board, would
preclude compliance with any of the conditions set
forth in Section 7.03 of this AGREEMENT; or
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(e) By the Board of Directors of MFFC if MFFC accepts an
ACQUISITION TRANSACTION negotiated in accordance with
Section 5.02 of this AGREEMENT.
SECTION 8.02. WRITTEN NOTICE OF TERMINATION. In order to terminate this
AGREEMENT pursuant to Section 8.01 of this AGREEMENT, the party so acting shall
give written notice of such termination to the other party. This AGREEMENT shall
terminate on the date such notice is given.
SECTION 8.03. EFFECT OF TERMINATION. In the event of the termination of
this AGREEMENT, the provisions of this AGREEMENT shall become void and have no
effect; provided, however, that (a) the provisions set forth in Sections 6.06,
6.07 and 6.08 of this AGREEMENT shall survive such termination and shall remain
in full force and effect and (b) a termination of this AGREEMENT shall not
affect the liability of any party for an uncured and material breach of any term
or condition of this AGREEMENT; provided, however, that in the event of the
exercise by BFOH of any option to purchase MFFC common shares granted by MFFC to
BFOH, neither MFFC nor MFSB shall have any liability to BFOH or the BANK for any
breach of any term or condition of this AGREEMENT or for any other cost, expense
or damage incurred by BFOH or the BANK in connection with the transactions
contemplated by this AGREEMENT.
SECTION 8.04. AMENDMENT. This AGREEMENT may only be amended by the
unanimous consent of MFFC, MFSB, BFOH and the BANK by action taken by their
respective Boards of Directors, at any time before or after approval of this
AGREEMENT by the shareholders of MFFC, but after such approval no amendment
shall be made which materially and adversely affects the rights of such
shareholders without the further approval of such shareholders. This AGREEMENT
may not be amended except by an instrument in writing signed on behalf of each
of the parties hereto.
SECTION 8.05. WAIVER. Any term or provision of this AGREEMENT (other
than the requirement for shareholder approval) may be waived in writing at any
time by the party which is, or whose shareholders are, entitled to the benefits
thereof.
ARTICLE NINE
MISCELLANEOUS
SECTION 9.01. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations, warranties and covenants in this AGREEMENT shall expire on, and
be terminated and extinguished at, the BFOH EFFECTIVE TIME, other than Sections
6.12, 6.14, 6.15, 6.16, 6.17, 6.18, 6.19, 6.21 and 6.22; provided, however, that
no such representations, warranties or covenants shall be deemed to be
terminated or extinguished so as to deprive BFOH or the BANK (or any director,
officer or controlling person thereof) of any defense in law or equity which
otherwise would be available against the claims of any person, including,
without limitation, any shareholder or former shareholder of either BFOH or
MFFC.
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SECTION 9.02. NOTICES. All notices and other communications
hereunder shall be in writing and shall be deemed given if delivered personally
or mailed by registered or certified mail (return receipt requested) to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
If addressed to BFOH or the BANK:
Gary N. Fields
President
BancFirst Ohio Corp.
P.O. Box 4658
422 Main Street
Zanesville, Ohio 43701
with a copy to:
Amy M. Shepherd
Baker & Hostetler, LLP
65 East State Street
Suite 2100
Columbus, Ohio 43215
If addressed to MFFC or MFSB:
Glenn E. Aidt
President
Milton Federal Financial Corporation
25 Lowry Drive
West Milton, Ohio 45383
with a copy to:
John C. Vorys
Vorys, Sater, Seymour and Pease LLP
52 East Gay Street
P.O. Box 1008
Columbus, Ohio 43216-1008
SECTION 9.03. ENTIRE AGREEMENT. This AGREEMENT (including the exhibits,
documents and instruments referred to herein or therein) (a) constitutes the
entire agreement and supersedes all other prior agreements and understandings,
both written and oral, among the parties, or any of them, with respect to the
subject matter hereof; (b) is not intended to and shall not confer any rights or
remedies hereunder upon any person other than BFOH or MFFC; (c) shall not be
assigned by operation of law or otherwise; and (d) shall be governed in all
respects, including validity, interpretation and effect, by the laws of the
State of Ohio.
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<PAGE> 107
SECTION 9.04. EXECUTION IN COUNTERPARTS. This AGREEMENT may be executed
in two or more counterparts which together shall constitute a single AGREEMENT.
SECTION 9.05. HEADINGS. The headings of articles and sections herein
are for convenience of reference only, do not constitute a part of this
AGREEMENT and shall not be deemed to limit or affect any of the provisions
hereof.
IN WITNESS WHEREOF, BFOH, the BANK, MFFC and MFSB have caused this
AGREEMENT to be executed by their duly authorized officers as of the day and
year first above written.
Attest: BancFirst Ohio Corp.
By /s/ Gary N. Fields
-----------------------------------
Gary N. Fields
/s/ Kim Taylor its President and Chief Executive
------------------------- Officer
Attest: The First National Bank of Zanesville
By /s/ Edward N. Cohn
-----------------------------------
Edward N. Cohn
/s/ Kim Taylor its Senior Vice President
-------------------------
Attest: Milton Federal Financial Corporation
By /s/ Glenn E. Aidt
-----------------------------------
Glenn E. Aidt
/s/ Thomas P. Eyer its President
-------------------------
Attest: Milton Federal Savings Bank
By /s/ Glenn E. Aidt
-----------------------------------
Glenn E. Aidt
/s/ Thomas P. Eyer its President
-------------------------
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ACKNOWLEDGMENT
STATE OF OHIO )
) SS:
COUNTY OF ____________ )
BE IT REMEMBERED that on this 13th day of January, 2000, personally
came before me, a Notary Public in and for the State and County aforesaid, Gary
N. Fields, President of BancFirst Ohio Corp., a bank holding company
incorporated under the laws of Ohio, and duly executed the Agreement and Plan of
Reorganization before me and acknowledged the same to be his act and deed and
the act and deed of said Corporation and that the facts therein are true.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 13th day
of January, 2000.
-------------------------------------
Notary Public
STATE OF OHIO )
) SS:
COUNTY OF ____________ )
BE IT REMEMBERED that on this 13th day of January, 2000, personally
came before me, a Notary Public in and for the State and County aforesaid,
Edward N. Cohn, Senior Vice President of First National Bank of Zanesville, a
national bank incorporated under the laws of the United States, and duly
executed the Agreement and Plan of Reorganization before me and acknowledged the
same to be his act and deed and the act and deed of said Corporation and that
the facts therein are true.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 13th day
of January, 2000.
-------------------------------------
Notary Public
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<PAGE> 109
STATE OF OHIO )
) SS:
COUNTY OF ____________ )
BE IT REMEMBERED that on this 13th day of January, 2000, personally
came before me, a Notary Public in and for the State and County aforesaid, Glenn
E. Aidt, President of Milton Federal Financial Corporation, a savings and loan
holding company incorporated under the laws of Ohio, and duly executed the
Agreement and Plan of Reorganization before me and acknowledged the same to be
his act and deed and the act and deed of said Corporation and that the facts
therein are true.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 13th day
of January, 2000.
-------------------------------------
Notary Public
STATE OF OHIO )
) SS:
COUNTY OF ____________ )
BE IT REMEMBERED that on this 13th day of January, 2000, personally
came before me, a Notary Public in and for the State and County aforesaid, Glenn
E. Aidt, President of Milton Federal Savings Bank, FSB, a federal savings bank
incorporated under the laws of Ohio, and duly executed the Agreement and Plan of
Reorganization before me and acknowledged the same to be his act and deed and
the act and deed of said Corporation and that the facts therein are true.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 13th day
of January, 2000.
-------------------------------------
Notary Public
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<PAGE> 110
ANNEX B
STOCK OPTION AGREEMENT
This STOCK OPTION AGREEMENT (hereinafter referred to as the
"AGREEMENT"), made and entered into this 13th day of January, 2000, by and
between BancFirst Ohio Corp., an Ohio corporation (hereinafter referred to as
"BFOH"), and Milton Federal Financial Corporation, an Ohio corporation
(hereinafter referred to as "MFFC");
WITNESSETH:
Whereas, BFOH and MFFC are entering into a definitive agreement in
respect of the proposed merger of MFFC with and into BFOH; and
Whereas, as an inducement for MFFC and BFOH to complete such process,
BFOH and MFFC desire that MFFC grant an option to BFOH for the purchase of MFFC
common shares upon the terms and subject to the conditions of this AGREEMENT;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements hereinafter set forth, BFOH and MFFC, intending to be
legally bound, hereby agree as follows:
1. Definitions. As used in this AGREEMENT, the following terms shall
have the corresponding meaning:
(a) "APPLICABLE PRICE" shall mean the higher of (i) the
highest price per share of MFFC Common Shares paid
for any such share by the person or groups described
in a PURCHASE EVENT or (ii) the price per share of
MFFC Common Shares received by holders of MFFC Common
Shares in connection with any merger or other
business combination transaction which is a PURCHASE
EVENT. In the event that the consideration offered,
paid or received pursuant to either of the foregoing
clauses (i) or (ii) shall be other than in cash, the
value of such consideration shall be determined in
good faith by an independent nationally recognized
investment banking firm mutually selected by BFOH and
MFFC, which determination shall be conclusive for all
purposes of this AGREEMENT.
(b) "MFFC Common Shares" shall mean the Common Shares, no
par value per share, of MFFC.
(c) "CLOSING" shall mean the closing of the exercise of
the OPTION in accordance with Section 3(b) of this
AGREEMENT.
(d) "COMMISSION" shall mean the Securities and Exchange
Commission.
(e) "EXCHANGE ACT" shall mean the Securities Exchange Act
of 1934, as amended.
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(f) "EXERCISE PERIOD" shall mean the period during which
the OPTION is exercisable in accordance with Section
3(c) of this AGREEMENT.
(g) "MERGER AGREEMENT" shall mean the Agreement and Plan
of Reorganization pursuant to which MFFC intends to
merge into BFOH, as fully executed.
(h) "OPTION" shall mean the option granted by MFFC under
this AGREEMENT.
(i) "PERSON" shall have the meanings specified in
Sections 3(a)(9) and 13(d)(3) of the EXCHANGE ACT.
(j) "PURCHASE EVENT" shall mean either of the following
events or transactions occurring after the date of
this AGREEMENT with respect to MFFC:
(i) MFFC, without having received BFOH's prior
written consent, shall have (I) merged,
consolidated or closed any similar
transaction with any person other than BFOH
or (II) sold, transferred or conveyed all or
substantially all of the assets of MFFC to
any person other than BFOH, or
(ii) Any person, other than BFOH, shall have
acquired beneficial ownership of 25% or more
of the outstanding MFFC Common Shares after
the date of this AGREEMENT (the term
"beneficial ownership" for purposes of this
AGREEMENT having the meaning assigned
thereto in Section 13(d) of the EXCHANGE ACT
and the regulations promulgated thereunder).
(k) "SPREAD CAP" shall mean $2,000,000.
(l) "SPREAD VALUE" shall mean the difference between the
following (I) and (II):
(I) The product of the following (1) multiplied
by (2):
(1) The sum of the total number of MFFC
Common Shares BFOH (x) intends to purchase
at the CLOSING pursuant to the exercise of
the OPTION and (y) previously purchased
pursuant to the prior exercise of the
OPTION, multiplied by
(2) The closing price of MFFC Common Shares
as quoted on Nasdaq National Market on the
last trading day immediately preceding the
CLOSING;
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less
----
(II) The product of the following (1) multiplied
by (2):
(1) The sum of the total number of MFFC
Common Shares BFOH (x) intends to purchase
at the CLOSING pursuant to the exercise of
the OPTION and (y) previously purchased
pursuant to the prior exercise of the
OPTION, multiplied by
(2) $13.15.
2. Grant of Option. Upon the terms and subject to the conditions of
this AGREEMENT, MFFC hereby grants to BFOH an irrevocable option to purchase a
maximum of 417,899 MFFC Common Shares at an exercise price of $13.15 per share,
payable in cash as provided in Section 4.
3. Exercise of Option.
(a) Upon the occurrence of a PURCHASE EVENT, BFOH may exercise
the OPTION, in whole or part, at any time or from time to time during the
EXERCISE PERIOD; provided, however, that, to the extent the OPTION shall not
have been exercised, the OPTION shall terminate and be of no further force or
effect on the effective date of the merger as set forth in the MERGER AGREEMENT.
Any exercise of an OPTION shall be subject to compliance with applicable
provisions of law.
(b) In the event that BFOH desires to exercise the OPTION,
BFOH shall send to MFFC a written notice specifying (i) the total number of MFFC
Common Shares BFOH will purchase pursuant to such exercise and (ii) a place and
date for the CLOSING of such purchase. The date of such purchase shall not be
earlier than three business days, nor later than 60 business days, after the
date of such notice. In the event that prior notification to, or approval of,
any federal or state regulatory agency is required in connection with such
purchase, BFOH shall promptly file the required notice or application for
approval and shall expeditiously process the same and the period of time that
otherwise would run pursuant to this section shall run instead from the date on
which any required notification period has expired or been terminated or any
requisite approval has been obtained and any requisite waiting period shall have
passed.
(c) The EXERCISE PERIOD shall commence upon the occurrence of
a PURCHASE EVENT and shall end on the date upon which this AGREEMENT terminates.
(d) Notwithstanding any other provision of this AGREEMENT to
the contrary, in no event shall BFOH purchase under the terms of this AGREEMENT
a number of MFFC Common Shares, the aggregate SPREAD VALUE of which exceeds the
SPREAD CAP. In the event the SPREAD VALUE exceeds the SPREAD CAP, the number of
MFFC Common Shares which BFOH is entitled to purchase at the CLOSING shall be
reduced to that number of shares necessary such that the SPREAD VALUE equals the
SPREAD CAP.
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<PAGE> 113
4. Payment and Delivery of Certificates.
(a) At the CLOSING, BFOH shall pay to MFFC the aggregate
purchase price for the MFFC Common Shares purchased pursuant to the exercise of
the OPTION in immediately available funds by a wire transfer to a bank account
designated by MFFC.
(b) At the CLOSING, simultaneously with the delivery of funds
as provided in Section 4(a), MFFC shall deliver to BFOH a certificate or
certificates evidencing the number of MFFC Common Shares purchased by BFOH and
BFOH shall deliver to MFFC a letter agreeing that BFOH will not offer to sell or
otherwise dispose of such shares in violation of applicable law or the
provisions of this AGREEMENT.
(c) Certificates for MFFC Common Shares delivered at a closing
hereunder shall be endorsed with a restrictive legend which shall read
substantially as follows:
The transfer of the shares represented by this certificate is
subject to certain provisions of a Stock Option Agreement
dated _______, 2000, by and between the registered holder
hereof and MFFC (a copy of which agreement is on file at the
principal office of MFFC). A copy of such agreement will be
provided to the holder hereof without charge within five days
after receipt by MFFC of a written request therefor. The
shares evidenced by this certificate may not be sold, pledged,
transferred or hypothecated unless they are covered by a
registration statement in accordance with applicable law and
regulations of the Securities and Exchange Commission ("SEC")
or unless such sale, pledge, transfer or hypothecation is, in
the opinion of counsel reasonably satisfactory to MFFC, exempt
under applicable law and SEC regulation.
5. Representations of MFFC. MFFC represents, warrants and covenants to
BFOH as follows:
(a) MFFC has, and shall at all times maintain, sufficient
authorized but unissued or treasury MFFC Common Shares so that the OPTION may be
exercised without authorization of additional shares of MFFC Common Shares.
(b) The shares to be issued upon exercise, in whole or in
part, of the OPTION, when paid for as provided herein, will be duly authorized,
validly issued, fully paid and nonassessable.
(c) MFFC has full corporate power and authority to execute,
deliver and perform this AGREEMENT and all corporate action necessary for
execution, delivery and performance of this AGREEMENT has been duly taken by
MFFC.
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<PAGE> 114
6. Representations of BFOH. BFOH represents, warrants and covenants as
follows:
(a) BFOH has full corporate power and authority to execute,
deliver and perform this AGREEMENT and all corporate action necessary for
execution, delivery and performance of this AGREEMENT has been duly taken by
MFFC.
(b) The OPTION is not being, and any MFFC Common Shares
acquired by BFOH upon the exercise of the OPTION will not be, acquired with a
view to public distribution thereof and will not be transferred or otherwise
disposed of except in a transaction registered or exempt from registration under
the Securities Act of 1933, as amended.
7. Adjustment Upon Changes in Capitalization.
In the event of any change in MFFC Common Shares by reason of stock
dividends, split-ups, mergers, recapitalizations, combinations, reverse stock
split, recombinations, reclassifications, exchanges of shares or the like, the
type and number of shares subject to the OPTION, and the purchase price per
share shall be adjusted appropriately. MFFC agrees that, in the event that any
additional MFFC Common Shares are issued or otherwise become outstanding after
the date of this AGREEMENT (other than pursuant to this AGREEMENT), the number
of MFFC Common Shares subject to the Option shall be adjusted so that, after
such issuance, such number equals the same percentage (as that on the date of
this AGREEMENT) of the number of MFFC Common Shares then issued and outstanding
without giving effect to any shares subject to or issued pursuant to the OPTION.
Nothing contained in this Section 7 shall be deemed to authorize MFFC to breach
any provision of the MERGER AGREEMENT.
8. Registration Rights.
If requested by BFOH after exercise of the OPTION, MFFC shall take the
action necessary, including, but not limited to, filing any applicable document
with regulatory agencies, in order to permit the sale or other disposition of
the MFFC Common Shares acquired upon exercise of the OPTION in accordance with
the intended method of sale or other disposition requested by BFOH. BFOH shall
provide all information reasonably requested by MFFC for inclusion in any such
document, including any Prospectus required under the Regulations of the
COMMISSION. MFFC will use its best efforts to cause such document first to
become effective and then to remain effective for such period not in excess of
270 days from the day such document first becomes effective as may be reasonably
necessary to effect such sales or other dispositions. The first filing effected
under this Section 8 shall be at MFFC's expense, except for underwriting
commissions and the fees and disbursements of BFOH's counsel attributable to the
preparation of any document in respect of such MFFC Common Shares. A second
filing may be requested hereunder at BFOH's expense. In no event shall MFFC be
required to effect more than two filings. The filing of any document hereunder
may be delayed for such period of time as may reasonably be required to
facilitate any public distribution by MFFC Common Shares or for up to 90 days if
MFFC's Board of Directors determines that such delay is reasonably necessary to
avoid disruption of the MFFC's affairs. If requested by BFOH, MFFC will 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
B-5
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customarily included in such underwriting agreements in respect of issuers of
shares being sold by a selling shareholder. Upon receiving any request from BFOH
or permitted assignee thereof under this Section 8, MFFC agrees to send a copy
of any document, including any prospectus and any amendment thereunto, to BFOH
and to any permitted assignee thereof known to MFFC, in each case by promptly
mailing the same, postage prepaid, to the address of record of the persons
entitled to receive such copies.
9. Repurchase at the Option of BFOH.
(a) At the request of BFOH at any time between the date on
which a PURCHASE EVENT occurs and the date which is 12 months immediately
thereafter, MFFC shall repurchase from BFOH (i) the OPTION and/or (ii) the MFFC
Common Shares purchased by BFOH pursuant hereto with respect to which BFOH then
has beneficial ownership. Such repurchase shall be at an aggregate price equal
to the sum of the following:
(I) For MFFC Common Shares acquired pursuant to the
OPTION, the product of the number of such shares,
multiplied by the APPLICABLE PRICE; plus
(II) For MFFC Common Shares subject to an
unexercised OPTION, the difference between (x) the
product of the number of such shares, multiplied by
the APPLICABLE PRICE, less (y) the product of the
number of such shares, multiplied by the per share
exercise price of the OPTION (subject to adjustment
under Section 7); plus
(III) For MFFC Common Shares as to which the OPTION
has been exercised, but the CLOSING has not occurred,
the difference between (x) the product of the number
of such shares, multiplied by the APPLICABLE PRICE,
less (y) the product of the number of such shares,
multiplied by the per share exercise price of the
OPTION (subject to adjustment pursuant to Section 7).
After the expiration of 12 months following the date on which a PURCHASE EVENT
shall occur, MFFC shall have no obligation to repurchase the OPTION or such
shares.
(b) If BFOH exercises its rights under this section,
MFFC shall, within 10 business days after such exercise, pay the amount
calculated in accordance with Section 9(a) to BFOH in immediately available
funds and, contemporaneously with such payment, BFOH shall surrender to MFFC the
OPTION and the certificates evidencing MFFC Common Shares purchased thereunder
with respect to which BFOH then has beneficial ownership.
(c) Notwithstanding any other provision of this Section 9 to
the contrary, in no event shall the purchase price of MFFC Common Shares
repurchased exceed the SPREAD CAP, plus the aggregate exercise price actually
paid by BFOH to acquire MFFC Common Shares.
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<PAGE> 116
10. Termination.
This AGREEMENT shall terminate on the date of the termination of the
OPTION in accordance with Section 3(a) and may be terminated as follows:
(a) By mutual consent of MFFC and BFOH;
(b) By BFOH if any regulatory agency shall have issued an
order denying approval of the transaction set forth
in the MERGER AGREEMENT or if any governmental entity
of competent jurisdiction shall have issued a final
nonapplicable permanent order enjoining or otherwise
prohibiting the consummation of the transactions
contemplated by this AGREEMENT or the MERGER
AGREEMENT;
(c) By MFFC at any time when BFOH shall be in material
breach of any of its covenants and agreements
contained in the MERGER AGREEMENT such that MFFC
shall be entitled to terminate the MERGER AGREEMENT
pursuant to the terms and conditions thereof as a
result of such material breach; or
(d) By MFFC or BFOH if the OPTION is not exercised on or
before December 31, 2000; provided, however, that in
the event of the occurrence before December 31, 2000,
of an event which, if closed and consummated, would
constitute a PURCHASE EVENT, this AGREEMENT may be
terminated by MFFC or BFOH if the OPTION is not
exercised on or before December 31, 2001.
11. Effect of Termination.
In the event of the termination of this AGREEMENT by any party
as provided in Section 10, this AGREEMENT shall forthwith become void and there
shall be no liability or obligation on the part of any party or their respective
officers or directors except (i) in the event the OPTION is exercised, Sections
8 and 9 shall survive the termination, and (ii) with respect to any liabilities
or damages incurred or suffered by a party as a result of the breach by another
party of any of its representations, warranties, covenants or agreements set
forth in this AGREEMENT.
12. Costs.
Except as otherwise expressly agreed, each party will be responsible
for and bear all of its own costs and expenses (including any broker's or
finder's fees and the expenses of its representatives) incurred at any time in
connection with pursuing or consummating the MERGER AGREEMENT.
B-7
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13. Severability.
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, 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 applicable law will not permit BFOH to acquire the full number of MFFC
Common Shares provided in Section 2 (as adjusted pursuant to Section 7), it is
the express intention of MFFC to allow BFOH to acquire such lesser number of
shares as may be permissible, without any amendment or modification hereof.
14. Miscellaneous.
(a) Third Parties. Nothing in this AGREEMENT, expressed or
implied, is intended to confer upon any party, other than the parties hereto,
and their respective permitted successors and assigns, any rights, remedies,
obligations or liabilities under or by reason of this Agreement, except as
expressly provided herein.
(b) Entire Agreement. Except as otherwise expressly provided
herein or in the MERGER AGREEMENT, this AGREEMENT contains the entire agreement
among the parties with respect to the transactions contemplated hereunder and
supersedes all prior arrangements or understandings with respect thereto,
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 permitted
successors and assigns.
(c) Assignment. 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.
(d) Notices. All notices or other communications which are
required or permitted hereunder shall be in writing and sufficient if delivered
by registered or certified mail, postage prepaid, express service, personal
delivery, telecopy or telefacsimile to the following addresses:
If to MFFC, to:
Glenn E. Aidt
President and Chief Executive Officer
Milton Federal Financial Corporation
25 Lowry Drive
P.O. Box 217
West Milton, OH 45383
B-8
<PAGE> 118
John C. Vorys, Esq.
Vorys, Sater, Seymour and Pease LLP
52 East Gay Street
P.O. Box 1008
Columbus, OH 43216
If to BFOH, to:
Gary N. Fields
President
BancFirst Ohio Corp.
P.O. Box 4658
422 Main Street
Zanesville, Ohio 43701
with a copy to:
Amy M. Shepherd
Baker & Hostetler, LLP
65 East State Street
Suite 2100
Columbus, Ohio 43215
(e) Counterparts. This AGREEMENT may be executed in any number
of counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
(f) Specific Performance. The parties agree that damages would
be an inadequate remedy for a breach of the provisions of this AGREEMENT by any
party hereto and that this AGREEMENT may be enforced by a party hereto through
injunctive or other equitable relief.
(g) Governing Law. This AGREEMENT shall be governed by and
construed in accordance with the laws of Ohio applicable to agreements made and
entirely to be performed within such state and such federal laws as may be
applicable.
(h) Amendments; Waiver. This AGREEMENT may be amended by the
parties hereto and the terms and conditions hereof may be waived, but, in the
case of an amendment, only by an instrument in writing signed on behalf of each
of the parties hereto, or, in the case of a waiver, by an instrument signed on
behalf of the party waiving compliance.
B-9
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IN WITNESS WHEREOF, each of the parties hereto has executed this
AGREEMENT to be effective as of the day and year set forth in the first
paragraph above.
BANCFIRST OHIO CORP.
By:
-----------------------------------
its President
MILTON FEDERAL FINANCIAL CORPORATION
By:
-----------------------------------
its President
B-10
<PAGE> 120
ANNEX C
January 13, 2000
Board of Directors
Milton Federal Financial Corporation
25 Lowry Drive
West Milton, OH 45383-1320
Attention: Mr. Glenn E. Aidt
President & Chief Executive Officer
Gentlemen:
You have requested our opinion with respect to the fairness, from a
financial point of view, as of the date hereof, to the holders of the common
stock, without par value ("MFFC Common Shares"), of Milton Federal Financial
Corporation ("MFFC"), of the financial consideration, as set forth in Section
2.01 (i) of the Agreement and Plan of Reorganization dated as of January 13,
2000 (the "Agreement"), by and among MFFC, Milton Federal Savings Bank,
BancFirst Ohio Corp. ("BFOH"), and The First National Bank of Zanesville.
The Agreement provides for the merger (the "Merger") of MFFC with and
into BFOH, pursuant to which, among other things, at the BFOH Effective Time (as
defined in the Agreement), each outstanding share of MFFC Common Shares will be
exchanged for the right to receive $6.80 in cash and 0.444 shares of the common
stock, without par value, of BFOH ("BFOH Common Shares) as set forth in Section
2.01 (i) of the Agreement. The terms and conditions of the Merger are more fully
set forth in the Agreement.
McDonald Investments Inc., as part of its investment banking business,
is customarily engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions, negotiated underwritings, secondary
distributions of listed and unlisted securities, private placements and
valuations for estate, corporate and other purposes.
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<PAGE> 121
Board of Directors
January 13, 2000
Page 2
We have acted as MFFC's financial advisor in connection with, and have
participated in certain negotiations leading to, the Agreement. In connection
with rendering our opinion set forth herein, we have among other things:
(i) Reviewed MFFC's Annual Reports to Shareholders and Annual
Reports on Form 10-K for each of the years ended September 30,
1999, September 30, 1998 and September 30, 1997, including the
audited financial statements contained therein;
(ii) Reviewed BFOH's Annual Reports to Shareholders and Annual
Reports on Form 10-K for each of the years ended December 31,
1998, December 31, 1997 and December 31, 1996, including the
audited financial statements contained therein, and BFOH's
Quarterly Reports on Form 10-Q for the each of the quarters
ended September 30, 1999, June 30, 1999 and March 31, 1999;
(iii) Reviewed certain other public and non-public information,
primarily financial in nature, relating to the respective
businesses, earnings, assets and prospects of MFFC and BFOH
provided to us or publicly available;
(iv) Participated in meetings and telephone conferences with
members of senior management of MFFC and BFOH concerning the
financial condition, business, assets, financial forecasts and
prospects of the respective companies, as well as other
matters we believed to be relevant to our inquiry;
(v) Reviewed certain stock market information for MFFC Common
Shares and BFOH Common Shares, and compared it with similar
information for certain companies, the securities of which are
publicly traded;
(vi) Compared the results of operations and financial condition of
MFFC and BFOH with that of certain companies, which we deemed
to be relevant for purposes of this opinion;
(vii) Reviewed the financial terms, to the extent publicly
available, of certain acquisition transactions, which we
deemed to be relevant for purposes of this opinion;
(viii) Reviewed the Agreement dated January 13, 2000 and certain
related documents; and
C-2
<PAGE> 122
Board of Directors
January 13, 2000
Page 3
(ix) Performed such other reviews and analyses as we have deemed
appropriate.
In our review and analysis and in arriving at our opinion, we have
assumed and relied upon the accuracy and completeness of all of the financial
and other information reviewed by us and have relied upon the accuracy and
completeness of the representations, warranties and covenants of MFFC and BFOH
contained in the Agreement. We have not been engaged to undertake, and have not
assumed any responsibility for, nor have we conducted, an independent
investigation or verification of such matters. We have not been engaged to and
we have not conducted a physical inspection of any of the assets, properties or
facilities of either MFFC or BFOH, nor have we made or obtained or been
furnished with any independent valuation or appraisal of any of such assets,
properties or facilities or any of the liabilities of either MFFC or BFOH. With
respect to financial forecasts used in our analysis, we have assumed that such
forecasts have been reasonably prepared by management of MFFC and BFOH, as the
case may be, on a basis reflecting the best currently available estimates and
judgments of the management of MFFC and BFOH, as to the future performance of
MFFC, BFOH, and MFFC and BFOH combined, as the case may be. We have not been
engaged to and we have not assumed any responsibility for, nor have we conducted
any independent investigation or verification of such matters, and we express no
view as to such financial forecasts or the assumptions on which they are based.
We have also assumed that all of the conditions to the consummation of the
Merger, as set forth in the Agreement, including the tax-free treatment of the
Merger to the holders of MFFC Common Shares receiving BFOH Common Shares, would
be satisfied and that the Merger would be consummated on a timely basis in the
manner contemplated by the Agreement.
We will receive a fee for our services as financial advisor to MFFC, a
substantial portion of which is contingent upon closing of the Merger. We will
also receive a fee for our services in rendering this opinion. In the past, we
have also provided certain other investment banking services for MFFC and BFOH
and have received customary compensation for such services.
In the ordinary course of business, we may actively trade securities of
MFFC and BFOH for our own account and for the accounts of customers and
accordingly, we may at any time hold a long or short position in such
securities.
This opinion is based on economic and market conditions and other
circumstances existing on, and information made available as of, the date
hereof. In addition, our opinion is, in any event, limited to the fairness, as
of the date hereof, from a financial point of view, of the financial
consideration, to the holders of MFFC Common Shares, and does not address the
underlying business decision by MFFC's Board of Directors to effect the Merger,
does not compare or discuss the relative merits of any competing
C-3
<PAGE> 123
Board of Directors
January 13, 2000
Page 3
proposal or any other terms of the Merger, and does not constitute a
recommendation to any MFFC shareholder as to how such shareholder should vote
with respect to the Merger. This opinion does not represent an opinion as to
what the value of MFFC Common Shares or BFOH Common Shares may be at the BFOH
Effective Time of the Merger or as to the prospects of MFFC's business or BFOH's
business.
This opinion is directed to the Board of Directors of MFFC and may not
be reproduced, summarized, described or referred to or given to any other person
without our prior written consent. Notwithstanding the foregoing, this opinion
may be included in the proxy statement to be mailed to the holders of MFFC
Common Shares in connection with the Merger, provided that this opinion will be
reproduced in such proxy statement in full, and any description of or reference
to us or our actions, or any summary of the opinion in such proxy statement,
will be in a form reasonably acceptable to us and our counsel.
Based upon and subject to the foregoing, it is our opinion that, as of
the date hereof, the financial consideration is fair to the holders of MFFC
Common Shares from a financial point of view.
Very truly yours,
MCDONALD INVESTMENTS INC.
C-4
<PAGE> 124
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Ohio Revised Code, Section 1701.13(E), allows indemnification by the
Registrant to any person made or threatened to be made a party to any
proceedings, other than a proceeding by or in the right of the Registrant, by
reason of the fact that he is or was a director, officer, employee or agent of
the Registrant, against expenses, including judgment and fines, if he acted in
good faith and in a manner reasonably believed to be in or not opposed to the
best interests of the Registrant and, with respect to criminal actions, in which
he had no reasonable cause to believe that his conduct was unlawful. Similar
provisions apply to actions brought by or in the right of the Registrant, except
that no indemnification shall be made in such cases when the person shall have
been adjudged to be liable for negligence or misconduct to the Registrant unless
deemed otherwise by the court. Indemnification may be authorized by a majority
vote of a quorum of disinterested directors or upon the written opinion of
independent counsel or by the shareholders or by court order. The Registrant's
Code of Regulations extends such indemnification.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
EXHIBIT NUMBER DESCRIPTION OF DOCUMENT
2.1 Agreement and Plan of Reorganization by and among
BancFirst Ohio Corp., The First National Bank of
Zanesville, Milton Federal Financial Corporation and
Milton Federal Savings Bank (incorporated by
reference to Annex A to the accompanying document)
5.1 Form of Opinion of Baker & Hostetler LLP
8.1 Form of Opinion of Baker & Hostetler LLP regarding
tax matters
10.1 Stock Option Agreement (incorporated by reference to
Annex B to the accompanying document)
23.1 Consent of Crowe, Chizek and Company LLP, Independent
Auditors
23.2 Consent of PricewaterhouseCoopers LLP
23.3 Consent of Baker & Hostetler LLP
24.1 Powers of Attorney (contained on the signature page)
99.1 Form of Proxy
99.2 Opinion of McDonald Investments Inc. (incorporated by
reference to Annex C to the accompanying document)
ITEM 22. UNDERTAKINGS.
The undersigned Registrant hereby undertakes as follows:
1. To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act,
(ii) to reflect in the prospectus any facts or events arising after the
effective date of the Registration Statement for the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the Registration Statement.
Notwithstanding the foregoing, any increase or decrease in volume of securities
offered (if the total value of securities offered would not exceed that which
was registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume
and price represent no more than 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" taking the
effective registration statement.
II-1
<PAGE> 125
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement.
2. That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
3. To remove from registration by means of post-effective amendment any
of the securities being registered which remain unsold in the termination of the
offering.
4. To respond to requests for information that is incorporated by
reference into the prospectus pursuant to Item 4, 10(b), 11 or 13 of this form,
within one business day of receipt of such request, and to send the incorporated
documents by first class mail or other equally prompt means. This includes
information contained in documents filed subsequent to the effective date of the
Registration Statement through the date of responding to the request.
5. To supply by means of a post-effective amendment all information
concerning a transaction, and the Company being acquired involved therein, that
was not the subject of and included in the Registration Statement when it became
effective.
6. That for purposes of determining any liability under the Securities
Act of 1933, each filing of the registrant's annual report pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to Section
15(d) of the Securities Exchange Act of 1934) that is incorporated by reference
in the registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
7. Prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is a part of this registration
statement, by any person or party who is deemed to be an underwriter within the
meaning of Rule 145(c), the issuer undertakes that such reoffering prospectus
will contain the information called for by the applicable registration form with
respect to reofferings by persons who may be deemed underwriters, in addition to
the information called for by the other items of the applicable form.
8. That every prospectus (i) that is filed pursuant to paragraph 7
immediately preceding, or (ii) that purports to meet the requirements of Section
10(a)(3) of the Act and is used in connection with an offering of securities
subject to Rule 415, will be filed as a part of an amendment to the registration
statement and will not be used until such amendment is effective, and that, for
purposes of determining any liability under the Securities Act of 1933, each
such post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
9. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the provisions described under Item 20
above, or otherwise (other than insurance), the Registrant has been advised that
in the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the Securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it, other than indemnification pursuant to court order
and not including any coverage under, or agreement to pay premiums for, any
policy of insurance, is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
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<PAGE> 126
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Zanesville,
State of Ohio, on March 21, 2000.
BANCFIRST OHIO CORP.
By: /s/ GARY N. FIELDS
-------------------------------
Gary N. Fields, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, BancFirst
Ohio Corp. certifies that it has reasonable grounds that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Zanesville, State of Ohio, on the 21st day of March,
2000.
<TABLE>
<CAPTION>
<S> <C>
/s/ Gary N. Fields Date: March 21, 2000
- ------------------------------------
Gary N. Fields, President and
Chief Executive Officer (principal
executive officer and director)
/s/ Kim M. Taylor Date: March 21, 2000
- ------------------------------------
Kim M. Taylor, Chief Financial
Officer (principal financial and
accounting officer)
/s/ Milman H. Linn, III Date: March 21, 2000
- ------------------------------------
Milman H. Linn, III, Director
/s/ Philip E. Burke Date: March 21, 2000
- ---------------------------
Philip E. Burke, Director
/s/ James L. Nichols Date: March 21, 2000
- ------------------------------------
James L. Nichols, Director
/s/ Karl C. Saunders Date: March 21, 2000
- ------------------------------------
Karl C. Saunders, Director
/s/ J.W. Straker, Jr. Date: March 21, 2000
- ------------------------------------
J.W. Straker, Jr., Director
/s/ William F. Randles Date: March 21, 2000
- ------------------------------------
William F. Randles, Director
/s/ James H. Nicholson Date: March 21, 2000
- ------------------------------------
James H. Nicholson, Director
/s/ William T. Stewart Date: March 21, 2000
- ------------------------------------
William T. Stewart, Director
</TABLE>
II-3
<PAGE> 1
[BAKER & HOSTETLER LLP LETTERHEAD]
EXHIBIT 5.1
FORM OF LEGAL OPINION
___________, 2000
BancFirst Ohio Corp.
422 Main Street
P.O. Box 4658
Zanesville, Ohio 43702
Gentlemen:
We are familiar with your Articles of Incorporation, Code of
Regulations and corporate proceedings. On this basis, we have made an
examination as to:
1. The organization of BancFirst Ohio Corp.;
2. The legal sufficiency of all corporate proceedings of BancFirst Ohio
Corp. in connection with the authorization and issuance of all presently
outstanding and issued Common Stock of BancFirst Ohio Corp.; and
3. The legal sufficiency of all corporate proceedings taken in
connection with the authorization of the issuance of shares of Common Stock
pursuant to an Agreement and Plan of Reorganization dated as of January 13, 2000
among BancFirst Ohio Corp., The First National Bank of Zanesville, Milton
Federal Financial Corporation and Milton Federal Savings Bank and included in a
Registration Statement on Form S-4 filed with the Securities and Exchange
Commission in connection with that Agreement.
Based upon such examination, we are of the opinion that:
1. BancFirst Ohio Corp. is a duly organized and validly existing
corporation under the laws of the State of Ohio;
2. BancFirst Ohio Corp. has taken all necessary and required corporate
actions in connection with the issuance of Common Stock pursuant to the
Agreement and Plan of Reorganization dated as of January 13, 2000 among
BancFirst Ohio Corp., The First National Bank of Zanesville, Milton Federal
Financial Corporation and Milton Federal Savings Bank, and when issued, those
shares of Common Stock will be validly authorized, legally issued, fully paid
and nonassessable shares of Common Stock of BancFirst Ohio Corp. free of any
preemptive rights.
We hereby consent to the reference to our firm in the Registration
Statement and the Prospectus as the attorneys who will pass upon legal matters
in connection with the issuance of such shares of Common Stock and to the filing
of this opinion as an exhibit to the Registration Statement. In providing this
consent, we do not admit that we are within the category of persons whose
consent is required under Section 7 of the Securities Act of 1933 or the rules
and regulations of the Commission promulgated thereunder.
Very truly yours,
BAKER & HOSTETLER, LLP
<PAGE> 1
[BAKER & HOSTETLER LLP LETTERHEAD]
EXHIBIT 8.1
FORM OF LEGAL OPINION
___________, 2000
Board of Directors
BancFirst Ohio Corp.
422 Main Street
P.O. Box 4658
Zanesville, Ohio 43702
Board of Directors
The First National Bank of Zanesville
422 Main Street
P.O. Box 4658
Zanesville, Ohio 43702
Gentlemen:
You have requested our opinion regarding the discussion of the material
U.S. federal income tax consequences under the caption "United States Federal
Income Tax Consequences" in the Proxy Statement/Prospectus filed in the
Registration Statement on Form S-4 by BancFirst Ohio Corp. on the date hereof
with the Securities and Exchange Commission under the Securities Act of 1933.
The Proxy Statement/Prospectus relates to the proposed merger of Milton Federal
Financial Corporation with and into BancFirst Ohio Corp. and the proposed merger
of Milton Federal Savings Bank with and into The First National Bank of
Zanesville. This opinion is delivered in accordance with Item 601(b)(8) of
Regulation S-K under the Securities Act.
We have reviewed the Proxy Statement/Prospectus and such other
materials as we have deemed necessary or appropriate as a basis for our opinion
described therein, and have considered the applicable provisions of the Internal
Revenue Code of 1986, as amended, Treasury regulations, pertinent judicial
authorities, rulings of the Internal Revenue Service, and such other authorities
as we have considered relevant to such opinion.
Based on the foregoing, it is our opinion that the statements made
under the caption "United States Federal Income Tax Consequences" in the Proxy
Statement/ Prospectus, to the extent that they constitute matters of law or
legal conclusions, are correct in all material respects.
We hereby consent to the use of our name under the caption "Legal
Matters" in the Proxy Statement/Prospectus and to the filing of this opinion as
an Exhibit to the Registration Statement.
Very truly yours,
BAKER & HOSTETLER LLP
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-4 of BancFirst Ohio Corp., of our report dated October 15,
1999 relating to the consolidated balance sheets of Milton Federal Financial
Corporation as of September 30, 1999 and 1998 and the related consolidated
statements of income, comprehensive income, changes in shareholders' equity and
cash flow for each of the three years in the period ended September 30, 1999. We
also consent to the reference to our firm under the heading "Experts" in the
prospectus, which is part of this Registration Statement.
Crowe, Chizek and Company LLP
Columbus, Ohio
March 21, 2000
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-4 of BancFirst Ohio Corp. of our report dated January 21,
2000 relating to the financial statements and financial statement schedules
appearing in BancFirst Ohio Corp.'s Annual Report on Form 10-K for the year
ended December 31, 1999. We also consent to the reference to us under the
heading "Experts" in such Registration Statement.
PricewaterhouseCoopers LLP
Columbus, Ohio
March 21, 2000
<PAGE> 1
EXHIBIT 23.3
[LETTERHEAD OF BAKER & HOSTETLER LLP]
March 21, 2000
BancFirst Ohio Corp.
BFOH Capital Trust I
422 Main Street
Zanesville, Ohio 43701
Ladies and Gentlemen:
We hereby consent to the references to us under the heading "Legal
Matters" in the Proxy Statement/Prospectus which comprises a part of the
registration statement on Form S-4 under the Securities Act of 1933,as amended
(the "Act"), of BancFirst Ohio Corp., an Ohio corporation (the "Company"), to be
used in connection with the registration of shares of the Company's common stock
to be offered to holders of common stock of Milton Federal Financial Corporation
in connection with an Agreement and Plan of Reorganization entered into between
the parties dated January 13, 2000. In giving such consent, we do not thereby
admit that we are in the category of persons whose consent is required under
Section 7 of the Act.
Very truly yours,
/s/ Baker & Hostetler LLP
Baker & Hostetler LLP
<PAGE> 1
EXHIBIT 99.1
MILTON FEDERAL FINANCIAL CORPORATION
25 LOWRY DRIVE
WEST MILTON, OHIO 45383
(937) 698-4168
THIS PROXY IS SOLICITED ON BEHALF
OF THE BOARD OF DIRECTORS
SPECIAL MEETING OF SHAREHOLDERS,
JUNE 9, 2000
The undersigned hereby appoints _________________ and ________________, or each
of them, with full power of substitution, the true and lawful attorneys in fact,
agents and proxies of the undersigned to vote at the Special Meeting of
Shareholders of Milton Federal Financial Corporation ("MFFC"), to be held on
June 9, 2000, commencing at 2:00 p.m. local time, at the American Legion
building, 2334 South Main Street, West Milton, Ohio 45383, and at any and all
adjournments and postponements thereof, according to the number of votes which
the undersigned would possess if personally present, for the purpose of
considering and taking action upon the following, as more fully set forth in the
Proxy Statement/Prospectus of MFFC dated __________, 2000.
1. Approval and adoption of the Agreement and Plan of Reorganization dated
January 13, 2000, by and among MFFC, Milton Federal Savings Bank, BancFirst Ohio
Corp. and The First National Bank of Zanesville (the "Merger Agreement") and the
transactions contemplated thereby.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. In their discretion with respect to such other business as properly may
come before the meeting (including, without limitation, adjournment or
postponement of such meeting in order to allow for additional solicitation of
stockholder votes in order to obtain a quorum or in order to obtain more votes
in favor of the Merger Agreement) or any adjournments or postponements thereof.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
<PAGE> 2
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED "FOR" EACH OF THE ABOVE PROPOSALS.
Dated: __________, 2000
----------------------------------------
Signature
----------------------------------------
Signature if held jointly
Please sign exactly as name(s) appear on
this proxy card. When shares are held by
joint tenants, both should sign. When
signing as attorney-in-fact, executor,
administrator, personal representative,
trustee or guardian, please give full
title as such. If a corporation, please
sign in full corporate name by President or
other authorized officer. If a partnership,
please sign in partnership name by
authorized person.
PLEASE PROMPTLY MARK, DATE, SIGN AND RETURN
THIS PROXY CARD USING THE ENCLOSED ENVELOPE
