As filed with the Securities and Exchange Commission on June 4, 1997
Registration Nos. 333-27943-01
333-27943
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------
PRE-EFFECTIVE AMENDMENT NO. ^2
TO
FORM S-1
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
--------------------------------
PFBI CAPITAL TRUST
PREMIER FINANCIAL BANCORP, INC.
----------------------------------------------------------
(Exact Name of Registrants as Specified in their Charters)
Delaware Requested
Kentucky ^6022 61-1206757
- ------------------------------ --------------------------- --------------------
(States or Other Jurisdictions (Primary Standard Industry (I.R.S. Employer
of Incorporation Classification Code Number) Identification Nos.)
or Organization)
120 N. Hamilton Street, Georgetown, Kentucky 40324
(502) 863-7500
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(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrants' Principal Executive Offices)
Mr. J. Howell Kelly
President and Chief Executive Officer
Premier Financial Bancorp, Inc.
120 N. Hamilton Street, Georgetown, Kentucky 40324
(502) 863-7500
- --------------------------------------------------------------------------------
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
Please send copies of all communications to:
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John J. Spidi, Esq. David W. Harper, Esq. Steven L. Kaplan, Esq.
MALIZIA, SPIDI, SLOANE & FISCH, P.C. 2450 Meidinger Tower ARNOLD & PORTER
1301 K Street, N.W., Suite 700 East Louisville, KY 40202 555 Twelfth Street,
Washington, D.C. 20005 Washington, D.C. 20004
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED
SALE TO THE PUBLIC: As soon as practicable after
this registration statement becomes effective.
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, 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(c) 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. [ ]
If the delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box.[ ]
The prospectus contained in this Registration Statement will be used in
connection with the offering of the following securities: (1)______% Preferred
Securities of PFBI Capital Trust; (2)______% Junior Subordinated Debentures of
Premier Financial Bancorp, Inc.; and (3) a Guarantee of Premier Financial
Bancorp, Inc. of certain obligations under the Preferred Securities.
<PAGE>
PART II: INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution
* Registration Fees................................ $ 8,700
* Legal Services................................... 150,000
* Printing and Engraving........................... 25,000
* Nasdaq Listing Fees.............................. 10,600
* Accounting Fees.................................. 15,000
* Trustee Fees and Expenses........................ 20,000
* Blue Sky Fees and Expenses....................... 5,000
* Miscellaneous.................................... 5,700
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* TOTAL............................................ $240,000
=======
Item 16. Exhibits and Financial Statement Schedules:
The financial statements and exhibits filed as part of this
Registration Statement are as follows:
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(a) List of Exhibits:
1.1 Form of Underwriting Agreement.^
3.1 Articles of Incorporation of Premier Financial Bancorp, Inc. (the "Company")
(included as Exhibits 3.1 and 3.2 to the Company's Registration Statement on
Form S-1, Registration No. 333-1702, as amended, filed with the Securities and
Exchange Commission and incorporated herein by reference).
3.2 Bylaws of Premier Financial Bancorp, Inc. (included as Exhibit 3.2 to the
Company's Registration Statement on Form S-1, Registration No. 333-1702, filed
on February 28, 1996, with the Securities and Exchange Commission and
incorporated herein by reference).
4.1 Form of Junior Subordinated Indenture.*
4.2 Form of Junior Subordinated Debenture Certificate.*
4.3 Form of Trust Agreement.*
4.4 Form of Amended and Restated Trust Agreement.*
4.5 Form of Preferred Security.*
4.6 Form of Guarantee.*
5.1 Opinion of Richards, Layton & Finger.^
5.2 Opinion of Malizia, Spidi, Sloane, & Fisch, P.C.^*
8.1 Tax Opinion of Malizia, Spidi, Sloane, & Fisch, P.C.^*
10.1 Amended and Restated Preferred Stock Purchase Agreement dated as of
September 29, 1994, between First Guaranty Bank,
Hammon, Louisiana, and the Company (included as
Exhibit 10.3 to the Company's Registration Statement
on Form S-1, Registration No. 333-1702, filed on
February 28, 1996, with the Securities and Exchange
Commission and incorporated herein by reference).
10.2 Employment Agreement dated March 16, 1992, between Georgetown Bank &
Trust Company and Gardner E. Daniel (included as Exhibit 10.4 to the
Company's Registration Statement on Form S-1, Registration No. 333-1702, filed
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on February 28, 1996, with the Securities and
Exchange Commission and incorporated herein by
reference).
10.3 Deferred Compensation Agreement dated December 17,
1992, between Georgetown Bank & Trust Company and
Gardner E. Daniel (included as Exhibit 10.5 to the
Company's Registration Statement on Form S-1,
Registration No. 333-1702, filed on February 28,
1996, with the Securities and Exchange Commission and
incorporated herein by reference).
10.4 Premier Financial Bancorp, Inc. 1996 Employee Stock Ownership Incentive Plan
(included as Exhibit 10.6 to the Company's Registration Statement on Form S-1,
Registration No. 333-1702, filed on February 28, 1996, with the Securities and
Exchange Commission and incorporated herein by reference).
^10.5 Agreement and Plan of Merger dated May 28, 1997, by
and between the registrant and the Sabina Bank.
23.1 Consent of Eskew & Gresham, P.S.C.*
23.2 Consent of McNeal, Williamson & Co.*
23.3 Consent of Richards, Layton & Finger (included in Exhibit 5.1).
23.4 Consent of Malizia, Spidi, Sloane & Fisch, P.C. (included in Exhibit 5.2).
25.1 Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of
Bankers Trust Company, as trustee under the Junior Subordinated Indenture, the
Amended and Restated Trust Agreement and the Guarantee Agreement relating
to PFBI Capital Trust.^
(b) Financial Statements Schedules**
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* Previously filed.
** All schedules are omitted because they are not required or applicable
or the required information is shown in the financial statements or the
notes thereto.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in Georgetown, Kentucky,
as of June ^4, 1997.
PREMIER FINANCIAL BANCORP, INC.
By: /s/ J. Howell Kelly
-------------------------------------
J. Howell Kelly
President and Chief Executive Officer
(Duly Authorized Representative)
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed below by the following persons in
the capacities indicated as of June ^4, 1997.
/s/ J. Howell Kelly /s/ Marshall T. Reynolds
- ------------------------------------- ------------------------------------
J. Howell Kelly Marshall T. Reynolds
President and Chief Executive Officer Chairman of the Board
(Principal Executive, Financial and
Accounting Officer)
/s/ Toney K. Adkins /s/ E. V. Holder, Jr.
- ------------------------------------- ------------------------------------
Toney K. Adkins E. V. Holder, Jr.
Director Secretary and Director
/s/ Wilbur M. Jenkins
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Gardner E. Daniel Wilbur M. Jenkins
Senior Vice President, Director
Assistant Secretary and Director
/s/ Benjamin T. Pugh
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Benjamin T. Pugh
Executive Vice President, Treasurer and Director
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Registrant has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in Georgetown,
Kentucky, as of June ^4, 1997.
PFBI CAPITAL TRUST
By: PREMIER FINANCIAL BANCORP, INC.
as Depositor
By: /s/ J. Howell Kelly
-----------------------------------------
J. Howell Kelly
President and Chief Executive Officer
EXHIBIT 1.1
Form of Underwriting Agreement
<PAGE>
$25,000,000*
PFBI CAPITAL TRUST
PREMIER FINANCIAL BANCORP, INC.
% Preferred Securities
(Liquidation Amount $25 per Preferred Security)
UNDERWRITING AGREEMENT
----------------------
June , 1997
ADVEST, INC.
As Representative of the Several
Underwriters
One Rockefeller Plaza, 20th Floor
New York, New York 10020
Ladies and Gentlemen:
PFBI Capital Trust (the "Trust"), a statutory business trust
organized under the Business Trust Act (the "Delaware Act") of the
State of Delaware (Chapter 38, Title 12, of the Delaware Business Code,
12 Del. C. Section 3801 et seq.), and Premier Financial Bancorp, Inc.,
a Kentucky corporation (the "Company"), as depositor of the Trust and
as guarantor, hereby confirms its agreement with you and the several
underwriters, on whose behalf you have been duly authorized to act as
their representative (the "Representative"), as follows:
SECTION 1. Introduction. The Company agrees, upon the terms and
conditions set forth in this Underwriting Agreement (this "Agreement"),
to issue and sell to the several underwriters identified in Schedule A
annexed hereto (the "Underwriters"), who are acting severally and not
jointly, an aggregate liquidation amount of $25,000,000 (the "Firm
Securities") of the Trust's % preferred securities (the "Preferred
Securities"). The Trust and the Company also propose to issue and sell
to the Underwriters, at the Underwriters' option, up to an additional
$3,750,000 aggregate
----------------------
* Plus an option to acquire up to an additional $3,750,000 aggregate
liquidation amount of Preferred Securities from the Trust to cover
over-allotments.
<PAGE>
Liquidation Amount of Preferred Securities (the "Option Securities") as
set forth herein. The term "Preferred Securities" as used herein,
unless indicated otherwise, shall mean the Firm Securities and the
Option Securities.
The Preferred Securities and the Common Securities (as defined
herein) are to be issued pursuant to the terms of an Amended and
Restated Trust Agreement dated as of June , 1997 (the "Trust
Agreement"), among the Company, as depositor, and, together with the
Trust, the "Offerors," and Bankers Trust Company ("Trust Company"), a
New York banking corporation, as property trustee ("Property Trustee")
and Bankers Trust (Delaware) ("Trust Delaware"), a Delaware banking
corporation, as Delaware trustee ("Delaware Trustee") and the holders
from time to time of undivided interests in the assets of the Trust.
The Preferred Securities will be guaranteed by the Company on a
subordinated basis and subject to certain limitations with respect to
distributions and payments upon liquidation, redemption or otherwise
(the "Guarantee") pursuant to the Guarantee Agreement dated as of June
, 1997 (the "Guarantee Agreement"), between the Company and the Trust
Company, as Trustee (the "Guarantee Trustee"). The assets of the Trust
will consist of % junior subordinated deferrable interest debentures,
due , 2027 (the "Subordinated Debentures") of the Company which will be
issued under a Junior Subordinated Indenture dated as of June , 1997
(the "Indenture"), between the Company and the Trust Company, as
Trustee (the "Indenture Trustee"). Under certain circumstances, the
Subordinated Debentures will be distributable to the holders of
undivided beneficial interests in the assets of the Trust. The entire
proceeds from the sale of the Preferred Securities will be combined
with the entire proceeds from the sale by the Trust to the Company of
the Trust's common securities (the "Common Securities"), and will be
used by the Trust to purchase an equivalent amount of the Subordinated
Debentures.
The Offerors have filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-1
(Nos. 333- and 333- -01) and a related preliminary prospectus for the
registration of the Preferred Securities, the Guarantee and the
Subordinated Debentures under the Securities Act of 1933, as amended
(the "Securities Act"), and the rules and regulations thereunder (the
"Securities Act Regulations"). The Offerors have prepared and filed
such amendments thereto, if any, and such amended preliminary
prospectuses, if any, as may have been required to the date hereof, and
will file such additional amendments thereto and such amended
prospectuses as may hereafter be required. The registration statement
has been declared effective under the Securities Act by the Commission.
The registration statement as amended at the time it became effective
(including the prospectus and all information deemed to be a part
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<PAGE>
of the registration statement at the time it became effective pursuant
to Rule 430A(b) of the Securities Act Regulations) is hereinafter
called the "Registration Statement," except that, if the Company files
a post-effective amendment to such registration statement which becomes
effective prior to the Closing Date (as defined below), "Registration
Statement" shall refer to such registration statement as so amended.
Each prospectus included in the registration statement, or amendments
thereof, before it became effective under the Securities Act and any
prospectus filed with the Commission by the Company with the consent of
the Underwriters pursuant to Rule 424(a) of the Securities Act
Regulations (including the documents incorporated by reference therein)
is hereinafter called the "Preliminary Prospectus." The term
"Prospectus" means the final prospectus (including the documents
incorporated by reference therein, if any), as first filed with the
Commission pursuant to paragraph (1) or (4) of Rule 424(b) of the
Securities Act Regulations. The Commission has not issued any order
preventing or suspending the use of any Preliminary Prospectus.
SECTION 2. Representations and Warranties. Each of the
Offerors represents and warrants to, and agrees with, each of the
Underwriters as follows:
(a) The Company is duly incorporated and validly existing
as a corporation in good standing under the laws of the Commonwealth of
Kentucky with full power and authority (corporate and other) to own,
lease, and operate its properties and conduct its business as described
in the Prospectus (as defined in Section 2(e) of this Agreement); the
Company is duly registered under the Bank Holding Company Act of 1956,
as amended; the Company has no subsidiaries except those described in
the Registration Statement (each a "Subsidiary"); the Company owns,
directly or indirectly, beneficially and of record all of the
outstanding capital stock of each Subsidiary free and clear of any
claim, lien, encumbrance or security interest, except as described in
the Prospectus. The Company and each of its Subsidiaries is duly
qualified to do business and is in good standing as a foreign
corporation in each jurisdiction in which any of them own or lease
properties, has an office, or in which the business conducted by any of
them make such qualification necessary, except where the failure to so
qualify would not have a material adverse effect on the condition
(financial or otherwise), business, prospects, assets, properties,
results of operations, or net worth of the Company and its Subsidiaries
taken as a whole ("Material Adverse Effect"); and no proceeding has
been instituted in any jurisdiction revoking, limiting or curtailing,
or seeking to revoke, limit or curtail, such power and authority or
qualification.
- 3 -
<PAGE>
(b) The Preferred Securities have been duly and validly
authorized for issuance and sale to the Underwriters pursuant to this
Agreement and, when executed and authenticated in accordance with the
terms of the Trust Agreement and delivered to the Underwriters against
payment of the consideration set forth herein, will constitute valid
and legally binding obligations of the Trust enforceable in accordance
with their terms and entitled to the benefits provided by the Trust
Agreement (except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, receivership, readjustment of
debt, moratorium, fraudulent conveyance or similar laws relating to or
affecting creditors' rights generally or general equity principles
(whether considered in a proceeding in equity or at law)). The Trust
Agreement has been duly authorized and, when executed by the proper
officers of the Trust and delivered by the Trust, will have been duly
executed and delivered by the Trust and will constitute the valid and
legally binding instrument of the Trust, enforceable in accordance with
its terms (except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, receivership, readjustment of
debt, moratorium, fraudulent conveyance or similar laws relating to or
affecting creditors' rights generally or general equity principles
(whether considered in a proceeding in equity or at law)). The
Subordinated Debentures have been duly and validly authorized for
delivery by the Company and, when duly authenticated in accordance with
the terms of the Indenture and delivered to the Trust against payment
of the consideration set forth herein, will constitute valid and
legally binding obligations of the Company enforceable against the
Company in accordance with their terms (except as such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization,
receivership, readjustment of debt, moratorium, fraudulent conveyance
or similar laws relating to or affecting creditors' rights generally or
general equity principles (whether considered in a proceeding in equity
or at law)) and entitled to the benefits provided by the Indenture. The
Indenture has been duly authorized and, when executed by the proper
officers of the Company and delivered by the Company, will have been
duly executed and delivered by the Company and will constitute the
valid and legally binding instrument of the Company, enforceable in
accordance with its terms, (except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization,
receivership, readjustment of debt, moratorium, fraudulent conveyance
or similar laws relating to or affecting creditors' rights generally or
general equity principles (whether considered in a proceeding in equity
or at law)). The Trust Agreement, the Guarantee Agreement, and the
Indenture have been duly qualified under the Trust Indenture Act; and
the Preferred Securities, the Common Securities, the Trust Agreement,
the Guarantee Agreement, the Subordinated Debentures and the Indenture
conform in all
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<PAGE>
material respects to the descriptions thereof contained in the
Registration Statement and the Prospectus.
(c) Neither the Trust nor the Company or any Subsidiary,
is, or with the giving of notice or lapse of time or both will be, in
violation or breach of, or in default under, nor will the execution or
delivery of, or the performance and consummation of the transactions
contemplated by this Agreement (including the offer, sale, or delivery
of the Preferred Securities), conflict with, or result in a violation
or breach of, or constitute a default under, any provision of the
organization documents of the Trust or the Articles of Incorporation,
Bylaws (as amended or restated) of the Company, or other governing
documents of the Trust, the Company or any Subsidiary, or of any
provision of any agreement, contract, mortgage, deed of trust, lease,
loan agreement, indenture, note, bond, or other evidence of
indebtedness, or other material agreement or instrument to which the
Trust, the Company or any Subsidiary is a party or by which any of them
is bound or to which any of their properties is subject, nor will the
performance by the Offerors of their obligations hereunder violate any
rule, regulation, order, or decree, applicable to the Trust, the
Company or any Subsidiary of any court or any regulatory body,
administrative agency, or other governmental body having jurisdiction
over the Trust, the Company or any Subsidiary or any of their
respective properties, or any order of any court or governmental agency
or authority entered in any proceeding to which the Trust, the Company
or any Subsidiary was or is now a party or by which it is bound, except
those, if any, described in the Prospectus or which are not material to
the Company and the Trust taken as a whole. No consent, approval,
filing, authorization, registration, qualification, or order, including
with or by any bank regulatory agency, is required for the execution,
delivery, and performance of this Agreement or the consummation of the
transactions contemplated by this Agreement, other than such that have
been obtained or made, except for compliance with the Securities Act,
the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and the Blue Sky Laws applicable to the public offering of the
Preferred Securities by the Underwriters, the clearance of such
offering and the underwriting arrangements evidenced hereby with the
National Association of Securities Dealers, Inc. ("NASD"), and the
listing of the Preferred Securities on the Nasdaq Stock Market. This
Agreement has been duly authorized, executed and delivered by the
Company and the Trust and constitutes a valid and binding obligation of
the Company and the Trust and is enforceable against the Company and
the Trust in accordance with its terms.
(d) The Commission has not issued any order preventing or
suspending the use of any Preliminary Prospectus, and each Preliminary
Prospectus complies in all material respects
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<PAGE>
with the requirements of the Securities Act and the Securities Act
Regulations. As of the effective date of the Registration Statement,
and at all times subsequent thereto up to the Closing Date or any
Option Closing Date (as defined below), the Registration Statement and
the Prospectus, and any amendments or supplements thereto, contained or
will contain all material statements that are required to be stated
therein in accordance with the Securities Act and the Securities Act
Regulations and conformed or will conform in all material respects to
the requirements of the Securities Act and the Securities Act
Regulations, and neither the Registration Statement nor the Prospectus,
nor any amendment or supplement thereto included or will include any
untrue statement of a material fact or omitted or will omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, that no
representation or warranty is made as to information contained in or
omitted from the Registration Statement, the Prospectus or any
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company and the Trust by or on behalf of
the Underwriters.
(e) Eskew & Gresham, PSC which has audited, reviewed, and
expressed its opinion with respect to certain of the financial
statements and schedules filed with the Commission as a part of the
Registration Statement and included or to be included, as the case may
be, in the Prospectus and in the Registration Statement, and whose
report is included in the Prospectus and the Registration Statement are
independent accountants as required by the Securities Act and the
Securities Act Regulations.
(f) The financial statements and schedules and the related
notes thereto included or to be included, as the case may be, in the
Registration Statement, the Preliminary Prospectus, and the Prospectus
present fairly the financial position of the entities purported to be
shown thereby as of the respective dates of such financial statements
and schedules, and the results of operations and changes in equity and
in cash flows of the entities purported to be shown thereby for the
respective periods covered thereby, all in conformity with generally
accepted accounting principles consistently applied throughout the
periods involved, except as may be disclosed in the Prospectus. All
adjustments necessary for a fair presentation of the results of such
periods have been made. The Company had an outstanding capitalization
as set forth under "Capitalization" in the Prospectus as of the date
indicated therein and there has been no material change therein since
such date except as disclosed in the Prospectus. The financial,
operating, and statistical information set forth in the Prospectus
under captions "Summary," "Selected Consolidated Financial Data," "Use
of Proceeds," "Capitalization," "Management's Discussion and Analysis
of Financial Condition and
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<PAGE>
Results of Operations," "Business of the Company" and "Management" are
fairly presented and prepared on a basis consistent with the audited
financial statements of the Company.
(g) There is no litigation or governmental proceeding,
action, or investigation pending or, to the knowledge of the Trust or
the Company, threatened, to which the Trust, the Company or any
Subsidiary is or may be a party or to which property owned or leased by
the Company or any Subsidiary is or may be subject, or related to
environmental or discrimination matters, which is required to be
disclosed in the Registration Statement or the Prospectus by the
Securities Act or the Securities Act Regulations and is not so
disclosed, or which questions the validity of this Agreement or any
action taken or to be taken pursuant hereto.
(h) Either the Company or a Subsidiary, as the case may be,
has good and marketable title in fee simple to all items of real
property and good and marketable title to all the personal properties
and assets reflected as owned by the Company or a Subsidiary in the
Prospectus (or elsewhere in the Registration Statement), in each case
clear of all liens, mortgages, pledges, charges, or encumbrances of any
kind or nature except those, if any, reflected in the financial
statements described above (or elsewhere in the Registration Statement)
or which are not material to the Company and its Subsidiaries taken as
a whole; all properties held or used by the Company or a Subsidiary
under leases, licenses, franchises or other agreements are held by them
under valid, existing, binding, and enforceable leases, franchises,
licenses, or other agreements with respect to which it is not in
default.
(i) Neither the Trust nor the Company or any Subsidiary has
taken or will take, directly or indirectly, any action designed to
cause or result in, or which has constituted or which might reasonably
be expected to constitute, stabilization or manipulation, under the
Exchange Act or otherwise, of the price of the Preferred Securities.
(j) Except as reflected in or contemplated by the
Registration Statement, since the respective dates as of which
information is given in the Registration Statement and prior to the
Closing Date and Option Closing Date (as such terms are hereinafter
defined):
(i) neither the Company nor any Subsidiary has or will
have incurred any material liabilities or obligations, direct or
contingent, or entered into any material transaction not in the
ordinary course of business without the prior consent of the
Representative;
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<PAGE>
(ii) neither the Company nor any Subsidiary has or will
have paid or declared any dividend or other distribution with respect
to its capital stock and neither the Company nor any Subsidiary has or
will be delinquent in the payment of principal or interest on any
outstanding debt obligations; and
(iii) there has not been and will not be any change in
the capital stock or any material change in the indebtedness of the
Company or any Subsidiary (except as may result from the closing of the
transactions contemplated by this Agreement), or any adverse change in
the condition (financial or otherwise), or any development involving a
prospective adverse change in their respective businesses (resulting
from litigation or otherwise), prospects, properties, condition
(financial or otherwise), net worth, or results of operations which is
material to the Company and its Subsidiaries taken as a whole.
(k) There is no contract or other document, transaction, or
relationship required to be described in the Registration Statement, or
to be filed as an exhibit to the Registration Statement, by the
Securities Act or by the Securities Act Regulations that has not been
described or filed as required.
(l) All documents delivered or to be delivered by the
Offerors or any of their representatives in connection with the
issuance and sale of the Preferred Securities were on the dates on
which they were delivered, or will be on the dates on which they are to
be delivered, true, complete, and correct in all material respects.
(m) The Company and each Subsidiary have filed all
necessary federal and all state and foreign income and franchise tax
returns and paid all taxes shown as due thereon; and no tax deficiency
has been asserted or threatened against the Company or any Subsidiary
that would have a Material Adverse Effect, except as described in the
Prospectus.
(n) Neither the Trust nor the Company or any Subsidiary
has, directly or indirectly, at any time:
(i) made any unlawful contribution to any candidate for
political office, or failed to disclose any contribution in violation
of law; or
(ii) made any payment to any federal, state, local, or
foreign government officer or official, or other person charged with
similar public or quasi-public duties, other than payments required or
permitted by the laws of the United States or any jurisdiction thereof
or applicable foreign jurisdictions.
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<PAGE>
(o) The Company or a Subsidiary owns or possesses adequate
rights to use all patents, patent applications, trademarks, service
marks, trade names, trademark registrations, servicemark registrations,
copyrights, and licenses necessary for the conduct of the business of
the Company and the Subsidiaries or ownership of their respective
properties, and neither the Company nor any Subsidiary has received
notice of conflict with the asserted rights of others in respect
thereof which has not been resolved.
(p) The Company and each Subsidiary have in place and
effective such policies of insurance, with limits of liability in such
amounts, as are normal and prudent in the ordinary scope of business
similar to that of the Company and such Subsidiary in the respective
jurisdiction in which they conduct business.
(q) The Company and each Subsidiary have and hold, and at
the Closing Date or Option Closing Date will have and hold, and are
operating in compliance with, and have fulfilled and performed all of
their material obligations with respect to, all permits, certificates,
franchises, grants, easements, consents, licenses, approvals, charters,
registrations, authorizations, and orders (collectively, "Permits")
required under all laws, rules, and regulations in connection with
their respective businesses, and all of such Permits are in full force
and effect; and there is no pending proceeding, and neither the Company
nor any Subsidiary has received notice of any threatened proceeding,
relating to the revocation or modification of any such Permits. Neither
the Company nor any Subsidiary is (by virtue of any action, omission to
act, contract to which it is a party or by which it is bound, or any
occurrence or state of facts whatsoever) in violation of any applicable
federal, state, municipal, or local statutes, laws, ordinances, rules,
regulations and/or orders issued pursuant to foreign, federal, state,
municipal, or local statutes, laws, ordinances, rules, or regulations
(including those relating to any aspect of banking, bank holding
companies, environmental protection, occupational safety and health,
and equal employment practices) heretofore or currently in effect,
except such violation that has been fully cured or satisfied without
recourse or that is not reasonably likely to have a Material Adverse
Effect.
(r) The provisions of any employee pension benefit plan
("Pension Plan") as defined in Section 3(2) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), in which the Company
or any Subsidiary is a participating employer are in substantial
compliance with ERISA, and neither the Company nor any Subsidiary is in
violation of ERISA. The Company, each Subsidiary, or the plan sponsor
thereof, as the case may be, has
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duly and timely filed the reports required to be filed by ERISA in
connection with the maintenance of any Pension Plans in which the
Company or any Subsidiary is a participating employer, and no facts,
including any "reportable event" as defined by ERISA and the
regulations thereunder, exist in connection with any Pension Plan in
which the Company or any Subsidiary is a participating employer which
might constitute grounds for the termination of such plan by the
Pension Benefit Guaranty Corporation or for the appointment by the
appropriate U.S. District Court of a trustee to administer any such
plan. The provisions of any employee benefit welfare plan, as defined
in Section 3(1) of ERISA, in which the Company or any Subsidiary is a
participating employer, are in substantial compliance with ERISA, and
the Company, any Subsidiary, or the plan sponsor thereof, as the case
may be, has duly and timely filed the reports required to be filed by
ERISA in connection with the maintenance of any such plans.
(s) Neither the Company nor the Trust is an open-end
investment company, unit investment trust or face-amount certificate
company that is, or is required to be, registered under Section 8 of
the Investment Company Act of 1940, as amended, or subject to
regulation under such Act.
(t) The deposits of Georgetown Bank & Trust Company, Bank
of Germantown, Citizens Deposit Bank & Trust, Citizens Bank and Farmers
Deposit Bank are each insured by the Federal Deposit Insurance
Corporation ("FDIC") up to the legal limits.
(u) Neither this Agreement nor any certificate, statement
or other document delivered or to be delivered by the Offerors or any
Subsidiary contains or will contain any untrue statement of a material
fact or omits or will omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading.
Any certificate signed by any director or officer of the Company
or the Trust, as the case may be, and delivered to the Representative
or to counsel for the Underwriters shall be deemed a representation and
warranty of the Company or the Trust, as the case may be, to the
Underwriters as to the matters covered thereby.
Any certificate delivered by the Company or the Trust, as the
case may be, to their respective counsel for purposes of enabling such
counsel to render an opinion pursuant to Section 8 will also be
furnished to the Representative and counsel for the Underwriters and
shall be deemed to be additional representations and warranties to the
Underwriters by the Company and the Trust as to the matters covered
thereby.
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SECTION 3. Purchase Sale and Delivery to Underwriters, Closing.
On the basis of the representations and warranties herein contained and
subject to the terms and conditions herein set forth, the Trust and the
Company, as the case may be, agree that the Trust will issue and sell
to the Underwriters, and each of the Underwriters agrees, severally and
not jointly to purchase from the Trust, the number of Firm Securities
set forth opposite the name of such Underwriter in Schedule A at a
purchase price of $25 per Firm Security.
Payment of the purchase price for, and delivery of, the Firm
Securities shall be made at the offices of Arnold & Porter, 555 Twelfth
Street, N.W., Washington, D.C., or at such other place as shall be
agreed upon by the Representative, the Trust and the Company, at 9:00
A.M. Eastern Standard Time, on the fourth business day (unless
postponed in accordance with the provisions of Section 14) following
the date of this Agreement, or such other time not later than ten (10)
business days after such date as shall be agreed upon by the
Representative, the Trust and the Company (such time and date of
payment and delivery being herein called the "Closing Date").
As compensation (the "Underwriting Commission") for the
commitments of the Underwriters contained in this Section 3, the
Company hereby agrees to pay to the Underwriters an amount equal to
4.0% of the public offering price of the Preferred Securities. Such
payment will be made on the Closing Date or on the Option Closing Date
(as defined below) with respect to the Option Securities.
Payment for the Firm Securities shall be made to the Trust by
wire transfer of immediately available funds, against delivery to the
Underwriter of the Firm Securities to be purchased by it. The Firm
Securities shall be issued in the form of one or more fully registered
global securities (the "Global Securities") in book-entry form in such
denominations and registered in the name of the nominee of The
Depository Trust Company (the "DTC") or in such names as the
Representative may request in writing at least two business days before
the Closing Date. The Global Securities representing the Firm
Securities shall be made available for examination by the
Representative and counsel to the Underwriters not later than 9:30 A.M.
Eastern Standard Time on the last business day prior to the Closing
Date.
In addition, on the basis of the representations, warranties,
and agreements contained herein, but subject to the terms and
conditions set forth herein, the Trust hereby grants to the
Underwriters an option to purchase, severally and not jointly, from the
Trust the Option Securities in the same proportion as the number of
Preferred Securities set forth opposite their names on
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Schedule A bears to the total number of Firm Securities, at the same
purchase price per Preferred Security to be paid for the Firm
Securities, for use solely in covering any over-allotments made by the
Underwriters in the sale and distribution of the Firm Securities. The
option granted hereunder may be exercised at any time (but not more
than once) within thirty (30) days after the date of this Agreement,
upon notice by the Representative to the Trust which sets forth the
aggregate liquidation amount of Option Securities as to which the
Underwriters are exercising the option, and the time and place at which
the certificate representing the Option Securities will be delivered.
Such time of delivery may not be earlier than the Closing Date and
herein is called the "Option Closing Date." The Option Closing Date
shall be determined by the Representative, but if at any time other
than the Closing Date, shall not be earlier than three nor later than
five full business days after delivery of such notice to exercise.
Certificates for the Option Securities will be made available for
inspection at least 24 hours prior to the Option Closing Date at the
offices of the DTC, or its designated custodian, or at such other
location as specified by the Representative. The manner of payment for
a delivery of the Option Securities shall be the same as for the Firm
Securities as specified in this Section 3.
SECTION 4. Representations and Warranties of the Underwriters.
The Representative, on behalf of the Underwriters, represents and
warrants to the Company that the information set forth on the inside
front cover page of the Prospectus relating to stabilization and in the
third and eighth paragraphs of the section in the Prospectus entitled
"Underwriting" was the only written information furnished to the
Company by and on behalf of any Underwriter expressly for use in
connection with the preparation of the Registration Statement, and is
correct and complete in all material respects and does not include 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.
SECTION 5. Offering by the Underwriters. The Trust and the
Company are advised by the Representative that the Underwriters propose
to make a public offering of the Preferred Securities, on the terms and
conditions set forth in the Registration Statement from time to time as
and when the Underwriters deem advisable after the Registration
Statement becomes effective. Because the NASD is expected to view the
Preferred Securities as interests in a direct participation program,
the offering of the Preferred Securities is being made in compliance
with the applicable provisions of Rule 2810 of the NASD's Conduct
Rules.
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SECTION 6. Agreements of the Offerors. Each of the
Offerors covenants and agrees with the Underwriter that:
(a) If any information shall have been omitted from the
Registration Statement in reliance upon Rule 430A, the Company, at the
earliest possible time, will furnish the Representative with a copy of
the Prospectus to be filed by the Offerors with the Commission to
comply with Rule 424(b) and Rule 430A under the Securities Act, and,
will file such Prospectus with the Commission in compliance with such
Rules. Upon compliance with such Rules, the Company will so advise the
Representative promptly. The Company will advise the Representative and
counsel to the Underwriters promptly of the issuance by the Commission
of any stop order suspending the effectiveness of the Registration
Statement or of the institution of any proceedings for that purpose, or
of any notification received by the Company of the suspension of
qualification of the Preferred Securities for sale in any jurisdiction
or the initiation or threatening of any proceedings for that purpose,
or of any notification received by the Company of the suspension of
qualification of the Preferred Securities for sale in any jurisdiction
or the initiation or threatening of any proceedings for that purpose.
The Company also will advise the Representative and counsel to the
Underwriters promptly of any request of the Commission for amendment or
supplement of the Registration Statement, of any Preliminary
Prospectus, or of the Prospectus, or for additional information, and
the Offerors will not file any amendment or supplement to the
Registration Statement (either before or after it becomes effective),
to any Preliminary Prospectus, or to the Prospectus (including a
prospectus filed pursuant to Rule 424(b)) if the Representative has not
been furnished with a copy prior to such filing or if the
Representative reasonably objects to such filing.
(b) For the period during which a Prospectus relating to
the Preferred Securities is required to be delivered under the
Securities Act, the Offerors shall comply with all requirements imposed
on them by the Securities Act, as now and hereafter amended, and by the
Securities Act Regulations, as from time to time in force, so far as is
necessary to permit the continuance of sales or dealings in the
Preferred Securities as contemplated by the provisions hereof and the
Prospectus. If any event occurs as a result of which the Prospectus,
including any subsequent amendment or supplement, would include an
untrue statement of a material fact, or would omit to state any
material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading, or if it becomes necessary at any time to
amend the Prospectus, including any amendment or supplement thereto, to
comply with the Securities Act, the Company promptly will advise the
Representative and counsel to the Underwriters thereof and the
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Offerors will promptly prepare and file with the Commission an
amendment or supplement that will correct such statement or omission or
an amendment that will effect such compliance; and, if any Underwriter
is required to deliver a prospectus nine (9) months or more after the
effective date of the Registration Statement, the Company, upon request
of the Representative but at the expense of such Underwriter, will
prepare promptly such prospectus or prospectuses as may be necessary to
permit compliance with the requirements of Section 10(a)(3) of the
Securities Act.
(c) The Offerors will not, prior to the Option Closing Date
or thirty (30) days after the date of this Agreement, whichever occurs
first, without the prior consent of the Representative, incur any
material liability or obligation, direct or contingent, or enter into
any material transaction, other than in the ordinary course of
business, or any transaction with a related party which is required to
be disclosed in the Prospectus pursuant to Item 404 of Regulation S-K
under the Securities Act, except as contemplated by the Prospectus.
(d) The Company will make generally available to its
security holders and the Representative an earnings statement of the
Company as soon as practicable, but in no event later than fifteen (15)
months after the end of the Company's current fiscal quarter, covering
a period of twelve (12) consecutive calendar months beginning after the
effective date of the Registration Statement, but beginning not later
than four (4) months after such effective date, which will satisfy the
provisions of the last subsection of Section 11(a) of the Securities
Act and Rule 158 promulgated thereunder.
(e) During such period as a prospectus is required by law
to be delivered in connection with sales by an underwriter or dealer,
the Company will furnish to the Representative, at the expense of the
Company, copies of the Registration Statement, the Prospectus, any
Preliminary Prospectus, and all amendments and supplements to any such
documents in each case as soon as available and in such quantities as
the Representative may reasonably request, for the purposes
contemplated by the Securities Act.
(f) The Offerors will use their best efforts to take or
cause to be taken in cooperation with the Representative and counsel to
the Underwriters all actions required in qualifying or registering the
Preferred Securities for sale under the Blue Sky Laws of such
jurisdictions as the Representative may reasonably designate, provided
the Offerors shall not be required to qualify generally as foreign
corporations or as a dealer in securities or to consent generally to
the service of process under the law of
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<PAGE>
any such state (except with respect to the offering and sale of the
Preferred Securities), and will continue such qualifications or
registrations in effect so long as reasonably requested by the
Representative to effect the distribution of the Preferred Securities
(including, without limitation, compliance with all undertakings given
pursuant to such qualifications or registrations). In each jurisdiction
where any of the Preferred Securities shall have been qualified as
provided above, the Offerors will file such reports and statements as
may be required to continue such qualification for a period of not less
than one (1) year from the date of this Agreement.
(g) The Company will furnish to its security holders annual
reports containing financial statements audited by independent public
accountants. During the period ending three (3) years after the date of
this Agreement, (i) as soon as practicable after the end of the fiscal
year, the Company will furnish to the Representative two copies of the
annual report of the Company containing the audited consolidated
balance sheet of the Company as of the close of such fiscal year and
corresponding audited consolidated statements of earnings,
stockholders' equity and cash flows for the year then ended, and (ii)
the Company will file promptly and will furnish to the Representative
at or before the filing thereof copies of all reports and any
definitive proxy or information statements required to be filed by the
Company with the Commission pursuant to Section 13, 14, or 15 of the
Exchange Act. During such three-year period the Company also will
furnish to the Representative one copy of the following:
(i) as soon as practicable after the filing thereof,
each other report, statement, or other document filed by the Company
with the Commission;
(ii) as soon as practicable after the filing thereof,
all reports, statements, other documents and financial statements
furnished by the Company to Nasdaq pursuant to requirements of or
agreements with Nasdaq; and
(iii) as soon as available, each report, statement, or
other document of the Company mailed to its stockholders.
(h) The Offerors will use their best efforts to satisfy or
cause to be satisfied the conditions to the obligations of the
Underwriters in Section 8 hereof.
(i) The Offerors shall deliver the requisite notice of
issuance to the NASD and shall take all necessary or appropriate action
within its power to maintain the authorization for trading of the
Preferred Securities on the Nasdaq Stock Market
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<PAGE>
for a period of at least thirty-six (36) months after the date of
this Agreement.
(j) The Trust shall comply in all respects with the
undertakings given by the Trust in connection with the qualification or
registration of the Preferred Securities for offering and sale under
the Blue Sky Laws.
(k) The Trust shall apply the proceeds from its sale of the
Preferred Securities, combined with the entire proceeds from the sale
by the Trust to the Company of the Trust's Common Securities, to
purchase an equivalent amount of Subordinated Debentures. All the
proceeds to be received by the Company from the sale of the
Subordinated Debentures will be used in the manner and for the purposes
specified under the heading "Use of Proceeds" in the Prospectus. The
Offerors shall file, and will furnish or cause to be furnished to the
Underwriter and counsel to the Underwriters copies of all reports as
may be required in accordance with Rule 463 under the Securities Act.
(l) Except for the sale of Preferred Securities pursuant to
this Agreement, neither the Company nor any Subsidiary shall, directly
or indirectly, offer, sell, contract to sell, issue, distribute, grant
any option, right, or warrant to purchase or otherwise dispose of any
shares of the Preferred Securities or substantially similar securities,
in the open market or otherwise, for a period of one hundred eighty
(180) days after the later of the effective date of the Registration
Statement or the date of this Agreement, without the express prior
written consent of the Representative.
SECTION 7. Payment of Expenses and Fees
(a) Whether or not the transactions contemplated hereunder
are consummated, or if this Agreement is terminated for any reason, the
Company will pay or cause to be paid the costs, fees, and expenses
incurred in connection with the offering of the Preferred Securities as
follows:
(i) All costs, fees, and expenses incurred in
connection with the performance of the Company and the Trust's
obligations hereunder, including all fees and expenses of the Company
and the Trust's accountants and counsel, all costs and expenses
incurred in connection with the preparation, printing, filing, and
distribution (including delivery and shipping costs) of the
Registration Statement, each Preliminary Prospectus, and the Prospectus
(including all amendments and exhibits thereto and the financial
statements therein), and agreements and supplements provided for
herein, this Agreement and other underwriting
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documents, including various Underwriters' letters, and the Preliminary
and Supplemental Blue Sky Memoranda.
(ii) All filing and registration fees and expenses,
including the legal fees and disbursements of counsel, incurred in
connection with qualifying or registering all or any part of the
Preferred Securities, the Guarantee and the Subordinated Debentures for
offer and sale under the Blue Sky Laws.
(iii) All fees and expenses of the Offerors' registrar
and transfer agent; all transfer taxes, if any, and all other fees and
expenses incurred in connection with the sale and delivery of the
Preferred Securities to the Underwriters.
(iv) The filing fees of the NASD and applicable fees
charged by Nasdaq for inclusion of the Preferred Securities for
quotation on the National Market System, and
(v) All other costs and expenses incident to the
performance of the Company's and the Trust's obligations hereunder
which are not otherwise provided for in this Section 7(a).
(b) On the consummation of the offering of the
Preferred Securities, the Company shall pay Advest, Inc. $25,000
as a financial advisory fee.
SECTION 8. Conditions to the Obligations of the Underwriters.
The obligations of the Underwriters under this Agreement shall be
subject to the accuracy of the representations and warranties on the
part of the Company and the Trust set forth herein as of the Closing
Date, and if applicable, as of the Option Closing Date, as the case may
be, to the accuracy of the statements of the Offerors' directors and
officers, to the performance by the Company and the Trust of their
obligations hereunder, and to the following additional conditions,
except to the extent expressly waived in writing by the Representative:
(a) The Registration Statement and all post-effective
amendments thereto shall have been declared effective by the Commission
no later than 5:30 p.m. eastern time, on the date of this Agreement, or
such later time as shall have been consented to by the Representative,
but in any event not later than 5:30 p.m., eastern time, on the third
full business day following the date hereof; if the Offerors omitted
information from the Registration Statement at the time it became
effective in reliance on Rule 430A under the Securities Act, the
Prospectus shall have been filed with the Commission in compliance with
Rule 424(b) and Rule 430A under the Securities Act; no stop order
suspending the effectiveness of the Registration Statement or any
amendment or
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supplement thereto shall have been issued; no proceeding for the
issuance of such an order shall have been initiated or shall be pending
or, to the knowledge of the Offerors or the Representative, threatened
or contemplated by the Commission; and any request of the Commission
for additional information (to be included in the Registration
Statement or the Prospectus or otherwise) shall have been disclosed to
the Representative and complied with to the Representative's
satisfaction.
(b) The Preferred Securities, the Guarantee and the
Subordinated Debentures shall have been qualified or registered for
sale, or subject to an available exemption from such qualification or
registration, under the Blue Sky Laws of such jurisdictions as shall
have been reasonably specified by the Representative and the offering
contemplated by this Agreement shall have been cleared by the NASD.
(c) Since the dates as of which information is given
in the Registration Statement:
(i) There shall not have been any material adverse
change, or any development involving a prospective material adverse
change, in the ability of the Company or any Subsidiary to conduct
their respective business (whether by reason of any court, legislative,
other governmental action, order, decree, or otherwise), or in the
general affairs, condition (financial and otherwise) business,
prospects, properties, management, financial position or earnings,
results of operations, or net worth of the Company or any Subsidiary,
whether or not arising from transactions in the ordinary course of
business; and
(ii) Neither the Company nor any Subsidiary shall have
sustained any loss or interference from any labor dispute, strike,
fire, flood, windstorm, accident, or other calamity (whether or not
insured) or from any court or governmental action, order, or decree.
The effect of which on the Company or any Subsidiary, in any such case
described in clause (c)(i) or (ii) above, is in the reasonable opinion
of the Representative so material and adverse as to make it
impracticable or inadvisable to proceed with the public offering or the
delivery of the Preferred Securities on the terms and in the manner
contemplated in the Registration Statement and the Prospectus.
(d) There shall have been furnished to the Representative
on the Closing Date, except as otherwise expressly provided below:
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(i) An opinion of Malizia, Spidi, Sloane & Fisch, P.C.,
counsel to the Company, dated as of the Closing Date and any Option
Closing Date, in form and substance substantially in the form attached
hereto as Exhibit A.
(ii) The favorable opinion, dated the Closing Date, of
White & Case, counsel to the Trust Company and Trust Delaware,
substantially in the form attached hereto as Exhibit B.
(iii) The favorable opinion, dated the Closing Date, of
Richards, Layton & Finger, special Delaware counsel to the Company and
the Trust, substantially to the effect and in the form attached hereto
as Exhibit C.
(iv) The favorable opinion, dated the Closing Date, of
Arnold & Porter, counsel to the Underwriters as to such matters as the
Representative shall reasonably request.
In rendering such opinions specified in clause (d)(ii),
(iii) or (iv) above, counsel may rely upon an opinion or opinions, each
dated the Closing Date, of other counsel retained by them or the
Company as to laws of any jurisdiction other than the United States or
the State of New York, provided that (A) such reliance is expressly
authorized by each opinion so relied upon and a copy of each such
opinion is delivered to the Representative, and (B) counsel shall state
in their opinion that they believe that they and the Underwriters are
justified in relying thereon. Insofar as such opinions involve factual
matters, such counsel may rely, to the extent such counsel deems
proper, upon certificates of officers of the Company, its subsidiaries
and the Trust and certificates of public officials.
(e) At the time this Agreement is executed and also on the
Closing Date and the Option Closing Date, as the case may be, there
shall be delivered to the Representative a letter addressed to the
Representative from Eskew & Gresham, PSC, the Company's independent
accountants, the first letter to be dated the date of this Agreement,
the second letter to be dated the Closing Date, and the third letter to
be dated the Option Closing Date, if any, which shall be in form and
substance reasonably satisfactory to the Representative and shall
contain information as of a date within five days of the date of such
letter. There shall not have been any change set forth in any letter
referred to in this subsection (e) that makes it impracticable or
inadvisable in the judgment of the Representative to proceed with the
public offering or purchase of the Preferred Securities as contemplated
hereby.
(f) On the Closing Date, a certificate signed by the
Chairman of the Board, the President, a Vice Chairman of the Board
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or any Executive or Senior Vice President and the principal financial
or accounting officer of the Company, dated the Closing Date, to the
effect that the signers of such certificate have carefully examined the
Registration Statement and this Agreement and that:
(i) The representations and warranties of the Offerors
in this Agreement are true and correct in all material respects on and
as of the Closing Date with the same effect as if made on the Closing
Date and the Offerors have complied in all material respects with all
the agreements and satisfied in all material respects all the
conditions on its part to be performed or satisfied at or prior to the
Closing Date; and
(ii) The Commission has not issued an order preventing
or suspending the use of the Prospectus or any Preliminary Prospectus
or any amendment thereto; no stop order suspending the effectiveness of
the Registration Statement has been issued; and, to the knowledge of
the respective signatories, no proceeding for that purpose has been
instituted or is pending or contemplated under the Securities Act;
(iii) Each of the respective signatories of the
certificate has carefully examined the Registration Statement, the
Prospectus, and any amendments or supplements thereto, and such
documents contain all material statements and information required to
be made therein, and neither the Registration Statement nor any
amendment or supplement thereto includes any untrue statement of a
material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein not misleading and,
since the date on which the Registration Statement was initially filed,
no event has occurred that was required to be set forth in an amended
or supplemented prospectus or in an amendment to the Registration
Statement that has not been so set forth; provided, however, that no
representation need be made as to information contained in or omitted
from the Registration Statement or any amendment or supplement in
reliance upon and in conformity with written information furnished to
the Company and the Trust by or on behalf of any Underwriter through
the Representative; and
(iv) Since the date on which the Registration Statement
was initially filed with the Commission, there has not been any
material adverse change or a development involving a prospective
material adverse change in the business, properties, financial
condition, or earnings of the Company and its Subsidiaries taken as a
whole, whether or not arising from transactions in the ordinary course
of business, except as disclosed in the Registration Statement as
heretofore amended or (but only if the Representative expressly
consents thereto in
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writing) as disclosed in an amendment or supplement thereto filed with
the Commission and delivered to the Representative after the execution
of this Agreement; since such date and except as so disclosed or in the
ordinary course of business, neither the Company nor any Subsidiary has
incurred any liability or obligation, direct or indirect, or entered
into any transaction that is material to the Company or such
Subsidiary, as the case may be, not contemplated in the Prospectus;
since such date and except as so disclosed there has not been any
change in the outstanding capital stock of the Company, or any change
that is material to the Company and its Subsidiaries taken as a whole
in the short-term debt or long-term debt of the Company or any
Subsidiary; since such date and except as so disclosed, neither the
Company nor any of its Subsidiaries have incurred any material
contingent obligations, and no material litigation is pending or, to
their knowledge threatened against the Company or any Subsidiary; and,
since such date and except as so disclosed, neither the Company nor any
of its Subsidiaries have sustained any material loss or interference
from any strike, fire, flood, windstorm, accident or other calamity
(whether or not insured) or from any court or governmental action,
order, or decree.
(g) Prior to the Closing Date, the Company shall have
furnished to the Representative such further information, certificates
and documents as the Representative may reasonably request in
connection with the offering of the Preferred Securities.
If any condition specified in this Section shall not have been
fulfilled when and as required to be fulfilled, this Agreement may be
terminated by the Underwriters by notice from the Representative to the
Company at any time without liability on the part of any Underwriters,
including the Representative, or the Company, except for expenses to be
paid by the Company pursuant to Section 7 hereof or reimbursed by the
Company pursuant to Section 9 and except to the extent provided in
Section 11.
SECTION 9. Reimbursement of Underwriters' Expenses. If the sale
of the Preferred Securities to the Underwriters on the Closing Date is
not consummated because the offering is terminated or indefinitely
suspended by the Company or by the Representative for any reason
permitted by this Agreement, other than the Underwriter's inability to
legally act as Underwriter, the Company will reimburse the Underwriter
for the Underwriter's reasonable out-of-pocket expenses, including fees
and disbursements of its counsel, that shall have been incurred by the
Underwriter in connection with the proposed purchase and sale of the
Preferred Securities in an aggregate amount not to exceed $75,000,
provided, however, that, if the offering is terminated by the Company
due to legislation which adversely affects the federal income tax
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advantages to the Company of the Securities, the Company's
reimbursement to the Underwriter pursuant to this Section 9 shall be
limited to $50,000 in the aggregate. Any such termination or suspension
shall be without liability of any party to the other except that the
provisions of this Section 9, and Sections 7 and 11 shall remain
effective and shall apply.
SECTION 10. Maintain Effectiveness of Registration Statement.
The Representative and the Company will use their respective best
efforts to prevent the issuance of any stop order or other such order
suspending the effectiveness of the Registration Statement and, if such
stop order is issued, to obtain the lifting thereof as soon as
possible.
SECTION 11. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter
within the meaning of the Securities Act or the Exchange Act, against
any losses, claims, damages, expenses, liabilities, or actions in
respect thereof ("Claims"), joint or several to which such Underwriter
or each such controlling person may become subject under the Securities
Act, the Exchange Act, the Securities Act Regulations, Blue Sky Laws or
other federal or state statutory laws or regulations, at common law or
otherwise (including payments made in settlement of any litigation, if
such settlement is effected with the written consent of the Company,
which consent shall not be unreasonably withheld), insofar as such
Claims arise out of or are based upon the inaccuracy or breach of any
representation, warranty, or covenant of the Company or the Trust
contained in this Agreement, any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement,
any Preliminary Prospectus, the Prospectus, or any amendment or
supplement thereto, or in any application filed under any Blue Sky Law
or other document executed by the Offerors for that purpose or based
upon written information furnished by the Offerors and filed in any
state or other jurisdiction to qualify or register any or all of the
Preferred Securities under the securities laws thereof (any such
document, application, or information being hereinafter called a "Blue
Sky Application"), or arise out of or are based upon the omission or
alleged omission to state in any of the foregoing a material fact
required to be stated therein or necessary to make the statements
therein not misleading. The Company agrees to reimburse each
Underwriter and each such controlling person promptly for any legal
fees or other expenses incurred by such Underwriter or any such
controlling person in connection with investigating or defending any
such Claim or appearing as a third-party witness in connection with any
such Claim; provided,
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<PAGE>
however, that the Company will not be liable in any such case to the
extent that:
(i) Any such Claim arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged
omission made in the Registration Statement, any Preliminary
Prospectus, the Prospectus, or any amendment or supplement thereto or
in any Blue Sky Application in reliance upon and in conformity with the
written information furnished by or on behalf of the Underwriters to
the Offerors expressly for use therein pursuant to Section 4 of this
Agreement; or
(ii) Such statement or omission was contained or made
in any Preliminary Prospectus and corrected in the Prospectus and (1)
any such Claim suffered or incurred by any Underwriter (or any person
who controls such Underwriter) resulted from an action, claim, or suit
by any person who purchased Preferred Securities that are the subject
thereof from such Underwriter in the offering of the Preferred
Securities, and (2) such Underwriter failed to deliver a copy of the
Prospectus (as then amended if the Offerors shall have amended the
Prospectus) to such person at or prior to the confirmation of the sale
of such Preferred Securities in any case where such delivery is
required by the Securities Act, unless such failure was due to failure
by the Company to provide copies of the Prospectus (as so amended) to
the Underwriter as required by this Agreement.
(b) Each Underwriter severally, but not jointly, agrees to
indemnify and hold harmless the Offerors, each of their directors, each
of their officers who sign the Registration Statement, and each person
who controls the Company or the Trust within the meaning of the
Securities Act, against any Claim to which the Offerors, or any such
director, officer, or controlling person may become subject under the
Securities Act, the Exchange Act, the Securities Act Regulations, Blue
Sky Laws, or other federal or state statutory laws or regulations, at
common law or otherwise (including in settlement of any litigation, if
such settlement is effected with the written consent of such
Underwriter and the Representative, which consent shall not be
unreasonably withheld), insofar as such Claim arises out of or is based
upon any untrue or alleged untrue statement of any material fact
contained in the Registration Statement, any Preliminary Prospectus,
the Prospectus, or any amendment or supplement thereto, or in any Blue
Sky Application, or arises out of or is based upon the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission
was made in the Registration Statement, any Preliminary Prospectus, the
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<PAGE>
Prospectus, or any amendment or supplement thereto, or in any Blue Sky
Application, in reliance upon and in conformity with the written
information furnished by or on behalf of such Underwriter to the
Offerors pursuant to Section 4 of this Agreement. Each Underwriter will
severally reimburse any legal fees or other expenses reasonably
incurred by the Offerors, or any such director, officer, or controlling
person in connection with investigating or defending any such Claim,
and from any and all Claims resulting from failure of such Underwriter
to deliver a copy of the Prospectus, if the person asserting such Claim
purchased Preferred Securities from such Underwriter and a copy of the
Prospectus (as then amended if the Offerors shall have amended the
Prospectus) was not sent or given by or on behalf of such Underwriter
to such person, if required by law so to have been delivered, at or
prior to the written confirmation of the sale of the Preferred
Securities to such person, and if the Prospectus (as so amended) would
have cured the defect giving rise to such Claim (unless such failure
was due to a failure by the Company and the Trust to provide sufficient
copies of the Prospectuses (as so amended) to each Underwriter).
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) of this Section 11 of notice of the commencement
of any action in respect of a Claim, such indemnified party will, if a
Claim in respect thereof is to be made against an indemnifying party
under such subsection, notify the indemnifying party in writing of the
commencement thereof. In case any such action is brought against any
indemnified party, and such indemnified party notifies an indemnifying
party of the commencement thereof, the indemnifying party will be
entitled to participate in and, to the extent that it may wish, jointly
with all other indemnifying parties, similarly notified, assume the
defense thereof, with counsel reasonably satisfactory to such
indemnified party; provided, however, if the defendants in any such
action include both the indemnified party and the indemnifying party
and the indemnified party shall have reasonably concluded that there
may be legal defenses available to the indemnified party and/or other
indemnified parties that are different from or additional to those
available to the indemnifying party, the indemnified party or parties
shall have the right to select separate counsel to assume such legal
defenses and to otherwise participate in the defense of such action on
behalf of such indemnified party or parties.
(d) Upon receipt of notice from the indemnifying party to
such indemnified party of the indemnifying party's election to assume
the defense of such action and upon approval by the indemnified party
of counsel selected by the indemnifying party, the indemnifying party
will not be liable to such indemnified party under subsection (a) or
(b) of this Section 11
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<PAGE>
for any legal fees or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof, unless:
(i) the indemnified party shall have employed separate
counsel in connection with the assumption of legal defenses in
accordance with the proviso to the last sentence of subsection (c) of
this Section 11 (it being understood, however, that the indemnified
party shall not be liable for the legal fees and expenses of more than
one separate counsel (plus local counsel), approved by the
Representative if one or more of the Underwriters or their controlling
persons are the indemnified parties); or
(ii) the indemnifying party shall not have employed
counsel reasonably satisfactory to the indemnified party to represent
the indemnified party within a reasonable time after the indemnified
party's notice to the indemnifying party of commencement of the action;
(e) If the indemnification provided for in this Section 11
is unavailable to an indemnified party or insufficient to hold harmless
an indemnified party under subsection (a) or (b) of this Section 11 in
respect of any Claim referred to therein, then each indemnifying party,
in lieu of indemnifying such indemnified party, shall, subject, to the
limitations hereinafter set forth, contribute to the amount paid or
payable by such indemnified party as a result of such Claim:
(i) in such proportion as is appropriate to reflect the
relative benefits received by the Offerors on the one hand and the
Underwriters on the other hand from the offering of the Preferred
Securities; or
(ii) if the allocation provided by clause (e)(i) above
is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in
clause (e)(i) above, but also the relative fault of the Offerors on the
one hand and the Underwriters on the other hand in connection with the
statements or omissions that resulted in such Claim, as well as any
other relevant equitable considerations.
The respective relative benefits received by the Offerors on the
one hand and the Underwriters on the other hand shall be deemed to be
in such proportion that the Underwriters are responsible for that
portion of a Claim represented by the percentage that the amount of the
Underwriting Commission bears to the public offering price of the
Preferred Securities, and the Company (including the Company's
directors, officers, and controlling persons) is responsible for the
remaining portion of such Claim.
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<PAGE>
The relative fault of the Offerors on the one hand and the
Underwriters on the other hand shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material
fact relates to information supplied by the Offerors on the one hand or
the Underwriters on the other hand and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent
such untrue statement or omission. The amount paid or payable by a
party as a result of the Claims referred to above shall be deemed to
include, subject to the limitations set forth in subsections (c) and
(d) of this Section 11, any legal or other fees or expenses reasonably
incurred by such party in connection with investigating or defending
any action or claim.
(f) The Offerors and the Underwriters agree that it would
not be just and equitable if contribution pursuant to this Section 11
were determined by pro rata or per capita allocation or by any other
method or allocation that does not take into account the equitable
considerations referred to in subsection (e) of this Section 11.
Notwithstanding the other provisions of this Section 11, no underwriter
shall be required to contribute any amount in excess of the amount by
which the total price at which the Preferred Securities underwritten by
it and distributed to the public exceeds the amount of any damages
which such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation. The Underwriters'
obligation to contribute pursuant to this Section 11 are several in
proportion to their respective underwriting commitments and not joint.
(g) The obligations of the Company, the Trust and the
Underwriters under this Section 11 shall be in addition to any
liability that the Company, the Trust or the Underwriters may otherwise
have.
SECTION 12. Default of Underwriters. It shall be a
condition to this Agreement and to the obligations of the Trust to sell and
deliver the Preferred Securities hereunder, and to the obligations of each
Underwriter to purchase the Preferred Securities in the manner described herein,
that, except as hereinafter provided in this Section 12, each of the
Underwriters (except a defaulting Underwriter) shall purchase and pay for all
the Preferred Securities agreed to be purchased by such Underwriter hereunder
upon tender to the Representative of all such Preferred Securities in accordance
with the terms hereof. If
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<PAGE>
any Underwriter or Underwriters default in its or their obligations to
purchase Preferred Securities hereunder on either the Closing Date or
the Option Closing Date and the aggregate number of Preferred
Securities that such defaulting Underwriter or Underwriters agreed but
failed to purchase does not exceed ten percent (10%) of the liquidation
amount of Preferred Securities the Underwriters are obligated to
purchase on such Closing Date, the Representative may make arrangements
for the purchase of such Preferred Securities by other persons,
including any of the Underwriters, but if no such arrangements are made
by such Closing Date or Option Closing Date the nondefaulting
Underwriters shall be obligated severally, in proportion to their
respective commitments hereunder, to purchase the Preferred Securities
such defaulting Underwriters agreed but failed to purchase on such
Closing Date or Option Closing Date. If any Underwriter or Underwriters
so default and the liquidation amount of Preferred Securities with
respect to which such default or defaults occur is greater than the
above percentage and arrangements satisfactory to the Representative
for the purchase of such Preferred Securities by other person are not
made within thirty-six (36) hours after such default, this Agreement
will terminate without liability on the part of any nondefaulting
Underwriter or the Company, except to the extent provided in Section
11.
If Preferred Securities to which a default relates are to be
purchased by the nondefaulting Underwriters or by another party or
parties, the Representative or the Company shall have the right to
postpone the Closing Date or Option Closing Date, as the case may be,
for not more than seven (7) business days in order that the necessary
changes, if any, in the Registration Statement, Prospectus, and any
other documents, as well as any other arrangements, may be effected. As
used in this Agreement, the term "Underwriter" includes any person
substituted for an Underwriter under this Section 12. Nothing herein
will relieve a defaulting Underwriter from liability for its default.
SECTION 13. Effective Date. This Agreement shall become
effective immediately on the date hereof.
SECTION 14. Termination. Without limiting the right to terminate
this Agreement pursuant to any other provision hereof, this Agreement
may be terminated by the Representative prior to the Closing Date and
the option from the Company and the Trust referred to in Section 3, if
exercised, may be canceled by the Representative at any time prior to
the Option Closing Date, if:
(a) The Offerors shall have failed, refused, or been
unable, at or prior to the Closing Date or Option Closing Date, as the
case may be to perform any agreement on its part to be performed
hereunder.
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<PAGE>
(b) Any other condition to the obligations of the
Underwriters hereunder is not fulfilled; or
(c) In the Representative's reasonable judgment, payment
for and delivery of the Preferred Securities is rendered impracticable
or inadvisable because:
(i) Additional governmental restrictions, not in force
and effect on the date hereof, shall have been imposed upon trading in
securities generally or minimum or maximum prices shall have been
generally established on any national securities exchange or
over-the-counter market, or trading in securities generally shall have
suspended on any national securities exchange or on the Nasdaq Stock
Market, or a general banking moratorium shall have been established by
federal or state authorities;
(ii) Any event shall have occurred or shall exist that
makes untrue or incorrect in any material respect any statement or
information contained in the Registration Statement or that is not
reflected in the Registration Statement but should be reflected therein
to make the statements or information contained therein not misleading
in any material respect; or
(iii) Any outbreak or escalation of major hostilities
or other national or international calamity or any substantial change
in political, financial or economic conditions shall have occurred or
shall have accelerated to such extent, in the Representative's
reasonable judgment, as to have a material adverse effect on the
general securities market or make it impracticable or inadvisable to
proceed with completion of the sale and payment for the Preferred
Securities as provided in this Agreement.
Any termination pursuant to this Section 14 shall be without
liability on the part of any Underwriter to the Company or on the part
of the Company to any Underwriter (except for expenses to be paid by
the Company pursuant to Section 7 or reimbursed by the Company pursuant
to Section 9 and except as to indemnification and contribution to the
extent provided in Section 11).
SECTION 15. Representations and Indemnities to Survive Delivery.
The respective indemnity and contribution agreements of the Company and
the Underwriters, and the representations, warranties, covenants, other
statements of the Offerors and of their directors and officers set
forth in or made pursuant to this Agreement will remain in full force
and effect, regardless of any investigation made by or on behalf of any
Underwriter, the Offerors, or any of its or their partners, officers,
directors, or any controlling person, as the case may be, and will
survive
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<PAGE>
delivery of and payment for the Preferred Securities sold hereunder.
The respective indemnity and contribution of the Company and the
Underwriters, the provisions of Section 7(a) and Section 9 of this
Agreement, and the representations and warranties of the Offerors will
survive the termination or cancellation of this Agreement.
SECTION 16. Notices. All communications hereunder shall be
in writing and, if sent to the Representative, will be mailed,
delivered, or telecopied (with receipt confirmed) to Advest, Inc., at
One Rockefeller Plaza, 20th Floor, New York, New York 10020, Attention:
Michael T. Mayes, Managing Director (Fax No. (212) 584-4292) with a
copy to Steven Kaplan, Arnold & Porter, 555 Twelfth Street, N.W.,
Washington, D.C. 20004, (Fax No. (202) 942-5999; and if sent to the
Company or the Trust will be mailed, delivered, or telecopied (with
receipt confirmed) to Premier Financial Bancorp, Inc., 120 N. Hamilton
Street, Georgetown, Kentucky 40324, Attention: J. Howell Kelly,
President and Chief Executive Officer (Fax No. (502) 863-7503) with a
copy to John J. Spidi, Malizia, Spidi, Sloane & Fisch, P.C., One
Franklin Square, 1301 K Street, N.W., Suite 700 East, Washington, D.C.
20005 (Fax No. (202) 434-4661).
SECTION 17. Successors. This Agreement will inure to the benefit
of and be binding upon the parties hereto and their respective
successors or assigns, and to the benefit of the directors and officers
(and their personal representatives) and controlling persons referred
to in Section 11, and no other person shall acquire or have any right
or obligation hereunder. The terms "successors or assigns," as used in
this Agreement, shall not include any purchaser of the Preferred
Securities from any Underwriter merely by reason of such purchase.
SECTION 18. Partial Unenforceability. If any section,
subsection, clause, or provision of this Agreement is for any reason
determined to be invalid or unenforceable, such determination shall not
affect the validity or enforceability of any other section, subsection,
clause, or provision hereof.
SECTION 19. Applicable Law. This Agreement shall be governed
by and construed in accordance with the internal laws of the State of
New York.
SECTION 20. Entire Agreement. This Agreement embodies the entire
agreement among the parties hereto with respect to the transactions
contemplated herein, and there have been and are no agreements among
the parties with respect to such transactions other than as set forth
or provided for herein.
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<PAGE>
SECTION 21. Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall be deemed an original, but
all of which taken together shall constitute one and the same
instrument.
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us the enclosed counterparts
hereof, whereupon it will become a binding agreement among the Company,
the Trust and the Underwriters, including the Representative, in
accordance with its terms.
Very truly yours,
PREMIER FINANCIAL BANCORP, INC.
By:
Title:
PFBI CAPITAL TRUST
By: PREMIER FINANCIAL BANCORP, INC.
as Depositor
By:
Title:
ADVEST, INC.
As representative of the several Underwriters
listed in Schedule A.
By:
Title:
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<PAGE>
PFBI CAPITAL TRUST
PREMIER FINANCIAL BANCORP, INC.
SCHEDULE A
Liquidation Amount of
Firm Securities to be
Name of Underwriter Purchased
Advest, Inc................................ $
Aggregate Liquidation Amount............... $25,000,000
<PAGE>
EXHIBIT A
The opinion of special counsel to the Company to be delivered
pursuant to Section 8(d)(i) of the Underwriting Agreement shall be
substantially to the effect that:
1. The Company is a corporation existing and in good standing
under the laws of the Commonwealth of Kentucky, with requisite
corporate power and authority to own its properties and conduct
its business as described in the Registration Statement, except
for such power and authority the absence of which would not have a
material adverse effect on the Company, and is registered as bank
holding company under the Bank Holding Company Act of 1956, as
amended.
2. The Company and each Subsidiary have been duly incorporated or
organized and are validly existing as corporations or banking
associations in good standing under the laws of the jurisdiction
of organization, with full corporate power and authority to own,
lease, and operate their respective properties and conduct their
respective businesses as described in the Registration Statement;
the Company and each Subsidiary are qualified to do business as
foreign corporations under the corporation laws of each
jurisdiction in which the Company or such Subsidiary, as the case
may be, owns or leases properties, has an office, or in which
business is conducted and such qualification is required, except
where the failure to so qualify would not have a material adverse
effect.
3. The Company and the Trust each has full corporate power and
authority to execute, deliver, and perform the Underwriting
Agreement and to issue, sell, and deliver the Preferred Securities
to be sold by it to the Underwriters as provided herein; the
Underwriting Agreement has been duly authorized, executed and
delivered by the Company and the Trust, and constitutes a legal,
valid, and binding obligation of each of the Company and the Trust
and is enforceable against each of the Company and the Trust in
accordance with its terms, except as enforceability of this
Agreement may be limited by bankruptcy, insolvency,
reorganization, moratorium, or similar laws affecting creditors'
rights generally, and by equitable principles limiting the right
to specific performance or other equitable relief and except as
the obligations of the Company under the indemnification and
contribution provisions of
<PAGE>
Section 11 of the Agreement may be limited by laws or
unenforceable as against public policy, as to which no opinion is
expressed, and an implied covenant of good faith and fair dealing.
4. The Trust Agreement has been duly authorized, executed and
delivered by the Company, and is a valid and binding obligation of
the Company, enforceable against the Company in accordance with
its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, receivership,
readjustment of debt, moratorium, fraudulent conveyance or similar
laws relating to or affecting creditors' rights generally, general
equity principles (whether considered in a proceeding in equity or
at law) and an implied covenant of good faith and fair dealing.
5. The Guarantee Agreement has been duly authorized, executed and
delivered by the Company and is a valid and binding obligation of
the Company enforceable against the Company in accordance with its
terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, receivership, readjustment
of debt, moratorium, fraudulent conveyance or similar laws
relating to or affecting creditors' rights generally, general
equity principles (whether considered in a proceeding in equity or
at law) and an implied covenant of good faith and fair dealing.
6. The Indenture has been duly authorized, executed and delivered
by the Company, has been duly qualified under the Trust Indenture
Act, and is a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms,
except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, receivership, readjustment
of debt, moratorium, fraudulent conveyance or similar laws
relating to or affecting creditors' rights generally, general
equity principles (whether considered in a proceeding in equity or
at law) and an implied covenant of good faith and fair dealing.
7. The Subordinated Debentures have been duly authorized, executed
and delivered by the Company and when duly authenticated in
accordance with the Indenture and delivered and paid for in
accordance with the Junior Subordinated Debenture Purchase
Agreement dated as of June , 1997, by and between the Company and
the Trust, will be valid and binding obligations of the Company,
entitled to the benefits of the Indenture and enforceable against
the Company in accordance with their
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<PAGE>
terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, receivership, readjustment
of debt, moratorium, fraudulent conveyance or similar laws
relating to or affecting creditors' rights generally, general
equity principles (whether considered in a proceeding in equity or
at law) and an implied covenant of good faith and fair dealing.
8. The Trust is not an "investment company" or an entity
"controlled" by an "investment company," as such terms are defined
in Investment Company Act of 1940, as amended.
9. The statements set forth in the Registration Statement under
the captions "Supervision and Regulation," "Description of
Preferred Securities," "Description of Junior Subordinated
Debentures," "Description of Guarantee" and "Relationship Among
the Preferred Securities, the Junior Subordinated Debentures and
the Guarantee," insofar as they purport to describe the provisions
of the laws referred to therein, fairly summarize the legal
matters described therein.
10. The statements of law or legal conclusions and opinions set
forth in the Registration Statement under the caption "Certain
Federal Income Tax Consequences," subject to the assumptions and
conditions described therein, constitute such counsel's opinion.
11. The Registration Statement was declared effective under the
Securities Act as of the date and time specified in such opinion
and, to such counsel's knowledge and information, no stop order
suspending the effectiveness of the Registration Statement has
been issued under the Securities Act and no proceedings therefor
have been initiated or threatened by the Commission.
12. The Registration Statement and the Prospectus and any
amendment or supplement thereto made by the Company prior to the
Closing Date or any Option Closing Date (other than the financial
statements and financial and statistical data included therein, as
to which no opinion need be rendered), when it or they became
effective or were filed with the Commission, as the case may be,
and in each case at the Closing Date or any Option Closing Date,
complied as to form in all material respects with the requirements
of the Securities Act, the Trust Indenture Act and the applicable
rules and regulations under said acts, and such counsel has no
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<PAGE>
reason to believe that the Registration Statement, at the time it
became effective, contained any untrue statement of a material
fact or omitted to state a material fact necessary in order to
make the statements contained therein, not misleading, or that the
Prospectus, at the time it was filed with the Commission or at the
Closing Date or any Option Closing Date, contained any untrue
statement of a material fact or omitted to state a material fact
necessary in order to make the statements contained therein, in
the light of the circumstances under which they were made, not
misleading.
13. Such counsel knows of no material legal or governmental
proceedings pending to which the Company or any Subsidiary is a
party or of which any property of the Company or any Subsidiary is
the subject which are required to be disclosed in the Registration
Statement or which would affect the consummation of the
transactions contemplated in this Agreement, the Indenture or the
Preferred Securities; and such counsel knows of no such
proceedings which are threatened or contemplated by governmental
authorities or threatened by others.
14. Such counsel knows of no contracts, indentures, mortgages,
loan agreements, notes, leases or other instruments required to be
described in the Registration Statement or to be filed as exhibits
thereto other than those described therein or filed or
incorporated by reference as exhibits thereto, and such
instruments as are summarized in the Registration Statement are
fairly summarized in all material respects.
15. No approval, authorization, consent, registration,
qualification or other order of any public board or body is
required in connection with the execution and delivery of this
Agreement, the Trust Agreement, the Guarantee Agreement, and the
Indenture or the issuance and sale of the Preferred Securities or
the consummation by the Company of the other transactions
contemplated by this Agreement, the Trust Agreement, the Guarantee
Agreement, or the Indenture, except such as have been obtained
under the Securities Act, the Exchange Act and the Trust Indenture
Act or such as may be required under the blue sky or securities
laws of various states in connection with the offering and sale of
the Preferred Securities (as to which such counsel need express no
opinion).
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<PAGE>
16. The execution and delivery of this Agreement, the Trust
Agreement, the Guarantee Agreement, and the Indenture, the issue
and sale of the Preferred Securities and the Subordinated
Debentures, the compliance by the Company with the provisions of
the Preferred Securities, the Subordinated Debentures, the
Indenture and this Agreement and the consummation of the
transactions herein and therein contemplated will not conflict
with or constitute a breach of, or default under, the articles of
incorporation or by-laws of the Company or a breach or default
under any contract, indenture, mortgage, loan agreement, note,
lease or other instrument known to such counsel to which either
the Company or any Subsidiary is a party or by which either of
them or any of their respective properties may be bound except for
such breaches as would not have a material adverse effect on the
Company and its Subsidiaries considered as one enterprise, nor
will such action result in a violation on the part of the Company
or any Subsidiary of any applicable law or regulation or of any
administrative, regulatory or court decree known to such counsel.
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<PAGE>
EXHIBIT B
The opinion of counsel to the Trust Company and Trust Delaware to
be delivered pursuant to Section 8(d)(ii) of the Underwriting
Agreement shall be substantially to the effect that:
1. The Trust Company is duly incorporated and is validly existing
in good standing as a banking corporation with trust powers under
the laws of the State of New York.
2. The Indenture Trustee has the requisite power and authority to
execute, deliver and perform its obligations under the Indenture,
and has taken all necessary corporate action to authorize the
execution, delivery and performance by it of the Indenture.
3. The Guarantee Trustee has the requisite power and authority to
execute, deliver and perform its obligations under the Guarantee
Agreement, and has taken all necessary corporate action to
authorize the execution, delivery and performance by it of the
Guarantee Agreement.
4. The Property Trustee has the requisite power and authority to
execute and deliver the Trust Agreement, and has taken all
necessary corporate action to authorize the execution and delivery
of the Trust Agreement.
5. Each of the Indenture and the Guarantee Agreement has been duly
executed and delivered by the Indenture Trustee and the Guarantee
Trustee, respectively, and constitutes a legal, valid and binding
obligation of the Indenture Trustee and the Guarantee Trustee,
respectively, enforceable against the Indenture Trustee and the
Guarantee Trustee, respectively in accordance with its respective
terms, except that certain payment obligations may be enforceable
solely against the assets of the Trust and except that such
enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium, liquidation, fraudulent conveyance and
transfer or other similar laws affecting the enforcement of
creditors' rights generally, and by general principles of equity,
including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing (regardless of whether
such enforceability is considered in a proceeding in equity or at
law), and by the effect of applicable public policy on the
<PAGE>
enforceability of provisions relating to indemnification or
contribution.
6. The Subordinated Debentures delivered on the date hereof have
been duly authenticated by the Indenture Trustee in accordance
with the terms of the Indenture.
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<PAGE>
EXHIBIT C
The opinion of counsel, as special Delaware counsel to the Company
and the Trust to be delivered pursuant to Section 8(d)(iii) of the
Underwriting Agreement shall be substantially to the effect that:
1. The Trust has been duly created and is validly existing in good
standing as a business trust under the Delaware Business Trust
Act, 12 Del. C. Section 3801 et seq. (the "Delaware Act"), and all
filings required under the laws of the State of Delaware with
respect to the creation and valid existence of the Trust as a
business trust have been made.
2. Under the Delaware Act and the Trust Agreement the Trust has
the trust power and authority to own its property and to its
conduct its business, all as described in the Prospectus.
3. The Trust Agreement constitutes a valid and binding obligation
of the Company and the Property Trustee and the Delaware Trustee,
and is enforceable against the Company and the Trustees, in
accordance with its terms.
4. Under the Delaware Act and the Trust Agreement, the Trust has
the trust power and authority to execute and deliver, and to
perform its obligations under, the Underwriting Agreement and to
issue and perform its obligations under the Preferred Securities
and the Common Securities.
5. Under the Delaware Act and the Trust Agreement, the execution
and delivery by the Trust of the Underwriting Agreement, and the
performance by the Trust of its obligations thereunder, have been
duly authorized by all necessary trust action on the part of the
Trust.
6. The Preferred Securities have been duly authorized by the Trust
Agreement and are duly and validly issued and, subject to the
qualifications set forth herein, fully paid and nonassessable
undivided beneficial interests in the assets of the Trust and are
entitled to the benefits of the Trust Agreement. The Holders, as
beneficial owners of the Trust, will be entitled to the same
limitation of personal liability extended to stockholders of
private corporations for profit organized under the General
Corporation Law of the State of Delaware. We note that the Holders
may be obligated
<PAGE>
pursuant to the Trust Agreement, (i) to provide indemnity and/or
security in connection with and pay taxes or governmental charges
arising from transfers or exchanges of Preferred Securities
Certificates and the issuance of replacement Preferred Securities
Certificates, and (ii) to provide security or indemnity in
connection with requests of or directions to the Property Trustee
to exercise its rights and powers under the Trust Agreement.
7. Under the Delaware Act and the Trust Agreement, the issuance of
the Preferred Securities and Common Securities is not subject to
preemptive rights.
8. The Common Securities have been duly authorized by the Trust
Agreement and are duly and validly issued undivided beneficial
interests in the assets of the Trust and are entitled to the
benefits of the Trust Agreement.
9. The issuance and sale by the Trust of the Preferred Securities
and Common Securities, the purchase by the Trust of the
Subordinated Debentures, the execution, delivery and performance
by the Trust of the Underwriting Agreement, the consummation by
the Trust of the transactions contemplated by the Underwriting
Agreement and the compliance by the Trust with its obligations
thereunder will not violate (i) any of the provisions of the
Certificate of Trust or the Trust Agreement or (ii) any applicable
Delaware law or administrative regulation.
10. Trust Delaware is duly incorporated and is validly existing in
good standing as a banking corporation with trust powers under the
laws of the State of Delaware.
11. The Delaware Trustee has the requisite power and authority to
execute and deliver the Trust Agreement, and has taken all
necessary corporate action to authorize the execution and delivery
of the Trust Agreement.
- 2 -
EXHIBIT 5.1
Opinion of Richards, Layton & Finger
<PAGE>
[Richards, Layton & Finger Letterhead]
PFBI Capital Trust
c/o Premier Financial Bancorp, Inc.
120 N. Hamilton Street
Georgetown, KY 40234
Re: PFBI Capital Trust
------------------
Ladies and Gentlemen:
We have acted as special Delaware counsel for PFBI Capital Trust, a
Delaware business trust (the "Trust"), in connection with the matters set forth
herein. At your request, this opinion is being furnished to you.
For purposes of giving the opinions hereinafter set forth, our examination
of documents has been limited to the examination of originals or copies of the
following:
(a) The Certificate of Trust of the Trust, dated May 27, 1997 (the
"Certificate"), as filed in the office of the Secretary of State of the State of
Delaware (the "Secretary of State") on May 27, 1997;
(b) The Trust Agreement of the Trust, dated as of May 27, 1997, among
Premier Financial Bancorp, Inc., a Kentucky corporation (the "Company"), and
Bankers Trust (Delaware), a Delaware banking corporation (the "Trustee");
(c) The Registration Statement (the "Registration Statement") on Form S-1,
including a prospectus (the "Prospectus") relating to the Preferred Securities
of the Trust representing undivided beneficial interests in the assets of the
Trust (each, a "Preferred Security" and collectively, the "Preferred
Securities"), as filed by the Company and the Trust with the Securities and
Exchange Commission on May 29, 1997;
(d) A Certificate of Good Standing for the Trust, dated May 28, 1997,
obtained from the Secretary of State; and
(e) A form of Amended and Restated Trust Agreement of the Trust, to be
entered into among the Company, the trustees of the Trust named therein, and the
holders, from time to time, of undivided beneficial interests in the Trust (the
"Trust Agreement"), attached as an exhibit to the Registration Statement.
<PAGE>
PFBI Capital Trust
May 30, 1997
Page 2
Initially capitalized terms used herein and not otherwise defined are used
as defined in the Trust Agreement.
For purposes of this opinion, we have not reviewed any documents other than
the documents listed above, and we have assumed that there exists no provision
in any document that we have not reviewed that bears upon or is inconsistent
with the opinions stated herein. We have conducted no independent factual
investigation of our own but rather have relied solely upon the foregoing
documents, the statements and information set forth therein and the additional
matters recited or assumed herein, all of which we have assumed to be true,
complete and accurate in all material respects.
With respect to all documents examined by us, we have assumed (i) the
authenticity of all documents submitted to us as authentic originals, (ii) the
conformity with the originals of all documents submitted to us as copies or
forms, and (iii) the genuineness of all signatures.
For purposes of this opinion, we have assumed (i) that the Trust Agreement
constitutes the entire agreement among the parties thereto with respect to the
subject matter thereof, including with respect to the creation, operation and
termination of the Trust, and that the Trust Agreement and the Certificate are
in full force and effect and have not been amended, (ii) except to the extent
provided in paragraph 1 below, the due creation or due organization or due
formation, as the case may be, and valid existence in good standing of each
party to the documents examined by us under the laws of the jurisdiction
governing its creation, organization or formation, (iii) the legal capacity of
natural persons who are parties to the documents examined by us, (iv) that each
of the parties to the documents examined by us has the power and authority to
execute and deliver, and to perform its obligations under, such documents, (v)
the due authorization, execution and delivery by all parties thereto of all
documents examined by us, (vi) the receipt by each Person to whom a Preferred
Security is to be issued by the Trust (collectively, the "Preferred Security
Holders") of a Preferred Security Certificate for such Preferred Security and
the payment for the Preferred Security acquired by it, in accordance with the
Trust Agreement and the Prospectus, and (vii) that the Preferred Securities are
issued and sold to the Preferred Security Holders in accordance with the Trust
Agreement and the Prospectus. We have not participated in the preparation of the
Registration Statement and assume no responsibility for its contents.
This opinion is limited to the laws of the State of Delaware (excluding the
securities laws of the State of Delaware), and we have not considered and
express no opinion on the laws of any other jurisdiction, including federal laws
and rules and regulations relating thereto. Our opinions are rendered only with
respect to Delaware laws and rules, regulations and orders thereunder which are
currently in effect.
<PAGE>
PFBI Capital Trust
May 30, 1997
Page 3
Based upon the foregoing, and upon our examination of such questions of law
and statutes of the State of Delaware as we hare considered necessary or
appropriate, and subject to the assumptions, qualifications, limitations and
exceptions set forth herein, we are of the opinion that:
1. The Trust has been duly created and is validly existing in good standing
as a business trust under the Delaware Business Trust Act, 12 Del. C. Section
3801, et seq. ------
-- ---
2. The Preferred Securities will represent valid and, subject to the
qualifications set forth in paragraph 3 below, fully paid and nonassessable
undivided beneficial interests in the assets of the Trust.
3. The Preferred Security Holders, as beneficial owners of the Trust, will
be entitled to the same limitation of personal liability extended to
stockholders of private corporations for profit organized under the General
Corporation Law of the State of Delaware. We note that the Preferred Security
Holders may be obligated to make payments as set forth in the Trust Agreement.
We consent to the filing of this opinion with the Securities and Exchange
Commission as an exhibit to the Registration Statement. In addition, we hereby
consent to the use of our name under the heading "Validity of Securities" in the
Prospectus. In giving the foregoing consents, we do not thereby admit that we
come within the category of Persons whose consent is required under Section 7 of
the Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission thereunder. Except as stated above, without
our prior written consent, this opinion may not be furnished or quoted to, or
relied upon by, any other Person for any purpose.
Very truly yours,
/s/ Richards, Layton & Finger
-----------------------------
EXHIBIT 10.5
Agreement and Plan of Merger dated May 28, 1997,
by and between the registrant and the Sabina Bank
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of May 28, 1997, among
PREMIER FINANCIAL BANCORP, INC., a Kentucky corporation ("Parent"), PFBI INTERIM
BANK, an Ohio banking corporation in organization and a wholly owned subsidiary
of Parent ("Merger Sub"), and THE SABINA BANK, an Ohio banking corporation (the
"Company").
R E C I T A L S:
A. The Boards of Directors of Parent, Merger Sub and the Company each have
determined that a business combination involving the merger of Merger Sub into
the Company and the Company becoming a wholly owned subsidiary of Parent is in
the best interests of their respective companies and shareholders and presents
an opportunity for Parent and the Company and their respective shareholders to
achieve long-term strategic and financial benefits, and accordingly have agreed
to effect the merger provided for herein (the "Merger") upon the terms and
subject to the conditions set forth herein.
B. Parent, Merger Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and to prescribe various conditions to the Merger.
C. For federal income tax purposes, it is intended that the Merger qualify
as a reorganization under the provisions of Section 368 of the Internal Revenue
Code of 1986, as amended (the "Code").
D. It is intended that the Merger shall be recorded for
accounting purposes as a pooling of interests.
A G R E E M E N T:
NOW, THEREFORE, in consideration of the foregoing and the representations,
warranties, covenants and agreements contained herein, the parties hereto agree
as follows:
ARTICLE I
THE MERGER
1.1 Effective Time of the Merger. Subject to the provisions of this
Agreement, a certificate of merger (the "Certificate of Merger") shall be duly
executed and acknowledged by Merger Sub and the Company and thereafter delivered
to the Secretary of State of the State of Ohio, for filing, as provided in the
General Corporation Law of the State of Ohio (the "OGCL"), as soon as
1
<PAGE>
practicable on or after the Closing Date (as defined in Section 1.2). The Merger
shall become effective upon the filing of the Certificate of Merger with the
Secretary of State of the State of Ohio or at such time thereafter as is
provided in the Certificate of Merger (the "Effective Time").
1.2 Closing. The closing of the Merger (the "Closing") will take place at
10:00 a.m. on a date to be specified by the parties, which shall be the first
day which is five business days after satisfaction of the latest to occur of the
conditions set forth in Sections 6.1, 6.2(b) and 6.3(b) (other than the delivery
of the officers' certificates referred to in Sections 6.2(b) and 6.3(b)),
provided that the other closing conditions set forth in Article VI have been met
or waived as provided in Article VI at or prior to the Closing (the "Closing
Date"), at the offices of Vorys, Sater, Seymour and Pease, 221 East Fourth
Street, Suite 2100, Cincinnati, Ohio, unless another time, date or place is
agreed to in writing by the parties hereto.
1.3 Effects of the Merger. At the Effective Time, (a) the separate
existence of Merger Sub shall cease and Merger Sub shall be merged with and into
the Company, (b) the articles of incorpora tion of the Company as in effect
immediately prior to the Effective Time shall be the articles of incorporation
of the Surviving Corporation until thereafter changed or amended as provided
therein or by applicable law and (c) the code of regulations of the Company as
in effect immediately prior to the Effective Time shall be the bylaws of the
Surviving Corporation until thereafter changed or amended as provided therein or
by applicable law. As used in this Agreement, "Surviving Corporation" shall mean
the Company. At and after the Effective Time, the Merger will have the effects
set forth in Section 1701.82 of the OGCL.
ARTICLE II
EFFECT OF THE MERGER ON THE STOCK OF THE COMPANY
AND MERGER SUB; EXCHANGE OF CERTIFICATES
2.1 Effect on Capital Stock. At the Effective Time, by virtue of the Merger
and without any action on the part of the holder of any common stock, $1.00 par
value, of the Company ("Company Common Stock"):
(a) Cancellation of Parent- or Merger Sub-Owned Shares. All Company
Common Stock that is owned by Parent, Merger Sub or any other Subsidiary (as
defined in Section 3.1(a)) of Parent (other than shares in trust accounts,
managed accounts and the like that are beneficially owned by third parties (any
such shares, "trust account shares")) shall be cancelled and shall cease to
exist and no shares of common stock of Parent or other consideration shall be
delivered in exchange therefor.
2
<PAGE>
(b) Conversion of Merger Sub Common Stock. Each of the shares of
common stock of Merger Sub ("Merger Sub Common Stock") issued and outstanding
immediately prior to the Effective Time of the Merger shall be converted into
1,000 shares of common stock of the Surviving Corporation, $1.00 par value per
share.
(c) Conversion of Company Common Stock. Each of the shares of Company
Common Stock issued and outstanding immediately prior to the Effective Time of
the Merger shall be converted into 4.33 (such number being referred to as the
"Conversion Number") fully paid and non-assessable shares of common stock of
Parent, without par value ("Parent Common Stock"), all in accordance with
Section 2.2.
(d) Dissenting Shares. Notwithstanding any other provisions of this
Agreement to the contrary, Company Common Stock that is outstanding immediately
prior to the Effective Time and which is held by shareholders who shall not have
voted in favor of the Merger or consented thereto in writing and who shall have
properly demanded in writing appraisal for such shares in accordance with
Section 1701.85 of the OGCL (collectively, the "Dissenting Shares") shall not be
converted into or represent the right to receive the consideration provided in
Section 2.1(c). Such shareholders ("Dissenting Holders") shall be entitled to
receive payment of the appraised value of such Company Common Stock held by them
in accordance with the provisions of Section 1701.85 of the OGCL, except that
all Dissenting Shares held by shareholders who shall have failed to perfect or
who effectively shall have withdrawn or lost their rights to appraisal of such
Company Common Stock under such Section 1701.85 shall thereupon be deemed to
have been converted into and to have become exchangeable for, as of the
Effective Time, the right to receive the consideration provided in Section
2.1(c), without any interest thereon, upon surrender of the certificate or
certificates that formerly evidenced such Company Common Stock in accordance
with Section 2.2.
(e) Adjustment to Conversion Number. If, prior to the Effective Time
of the Merger, Parent shall pay a dividend in, subdivide, combine into a smaller
number of shares or issue by reclassification of its shares any Parent Common
Stock, the Conversion Number shall be multiplied by a fraction, the numerator of
which shall be the number of shares of Parent Common Stock outstanding
immediately after, and the denominator of which shall be the number of such
shares outstanding immediately before, the occurrence of such event, and the
product shall be the Conversion Number for purposes of Section 2.1(c).
2.2 Exchange of Certificates.
(a) Exchange Agent. Parent shall authorize a commercial bank (or such
other person or persons as shall be acceptable to Parent and the Company) to act
as exchange agent hereunder (the
3
<PAGE>
"Exchange Agent"). As soon as practicable, but not later than three business
days after the Effective Time, Parent shall deposit with the Exchange Agent, in
trust for the holders of certificates which immediately prior to the Effective
Time represented Company Common Stock converted in the Merger (the "Company
Certificates"), certificates representing the shares of Parent Common Stock
(such shares of Parent Common Stock, together with any dividends or
distributions with respect thereto in accordance with Section 2.2(c), being
hereinafter referred to as the "Exchange Fund") issuable pursuant to Section
2.1(c) in exchange for the outstanding Company Common Stock (the "Parent
Certificates").
(b) Exchange Procedures.
(i) As soon as practicable after the Effective Time, the Exchange
Agent shall mail to each recordholder of a Company Certificate a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Company Certificates shall pass, only upon actual delivery
thereof to the Exchange Agent and shall contain instructions for use in
effecting the surrender of the Company Certificates in exchange for the
consideration described in the next sentence). Upon surrender for cancellation
to the Exchange Agent of all Company Certificates held by any recordholder of a
Company Certificate, together with such letter of transmittal duly executed,
such holder shall be entitled to receive in exchange therefor a Parent
Certificate(s) representing the number of whole shares of Parent Common Stock
into which the Company Common Stock represented by the surrendered Company
Certificate(s) shall have been converted at the Effective Time pursuant to this
Article II, cash in lieu of any fractional share of Parent Common Stock in
accordance with Section 2.2(e) and certain dividends and other distributions in
accordance with Section 2.2(c), and the Company Certificate(s) so surrendered
shall forthwith be cancelled; provided, however, that Company Certificates
surrendered for exchange by any person constituting an "affiliate" of the
Company for purposes of Rule 145(c) under the Securities Act of 1933, as amended
(the "Securities Act"), shall not be exchanged for Parent Certificates until
Parent has received a written agreement from such person as provided in Section
5.6.
(ii) Until Company Certificates have been sur
rendered and exchanged for Parent Certificates as herein provided, each
outstanding Company Certificate shall be deemed at any time after the Effective
Time to represent only the right to receive upon such surrender a Parent
Certificate(s) representing a whole number of shares of Parent Common Stock and
cash in lieu of any fractional share as contemplated by this Section 2.2. No
transfer taxes shall be payable in connection with any such exchange, except
that if any Parent Certificate (or any check representing cash in lieu of a
fractional share) is to be issued in the name other than that in which the
Company Certificate surrendered in exchange therefor is registered, it shall be
a condition of such exchange
4
<PAGE>
that the person requesting such exchange shall pay to the Exchange Agent any
transfer or other taxes required by reason of the issuance of the Parent
Certificate (or check) in a name other than that of the registered holder of the
Company Certificate, or shall establish to the satisfaction of the Exchange
Agent that such tax has been paid or is not applicable. Parent or the Exchange
Agent shall be entitled to deduct and withhold from the consideration otherwise
payable pursuant to this Agreement to any holder of Company Common Stock such
amounts as Parent or the Exchange Agent are required to deduct and withhold
under the Code, or any provision of state, local or foreign tax law, with
respect to the making of such payment. To the extent that amounts are so
withheld by Parent or the Exchange Agent, such withheld amounts shall be treated
for all purposes of this Agreement as having been paid to the holder of the
Company Common Stock in respect of whom such deduction and withholding was made
by Parent or the Exchange Agent. If outstanding Company Certificates are not
surrendered prior to six years after the Effective Time of the Merger (or, in
any par ticular case, prior to such earlier date on which dividends and other
distributions, if any, described above would otherwise escheat to or become the
property of any governmental unit or agency), the amount of dividends and other
distributions, if any, that have become payable and that thereafter become
payable on Parent Common Stock evidenced by such Company Certificates as pro
vided herein shall, to the extent permitted by applicable law, become the
property of Parent (and, to the extent not in its possession, shall be paid over
to it), free and clear of all claims or interest of any person previously
entitled thereto.
(c) Distributions with Respect to Unexchanged Shares. No
dividends or other distributions declared or made after the Effective Time with
respect to Parent Common Stock with a record date after the Effective Time shall
be paid to the holder of any unsurrendered Company Certificate with respect to
the Parent Common Stock represented thereby, and no cash payment in lieu of
fraction al shares shall be paid to any such holder pursuant to Section 2.2(e),
until the holder of such Company Certificate shall surrender it. Subject to the
effect of applicable laws, following surrender of any such Company Certificate,
there shall be paid to the holder of the Parent Certificate representing whole
shares of Parent Common Stock issued in exchange therefor, without interest, (i)
at the time of such surrender or promptly thereafter as is practicable, the
amount of any cash payable with respect to a fractional share of Parent Common
Stock to which such holder is entitled pursuant to Section 2.2(e) and the amount
of dividends or other distributions with a record date after the Effective Time
theretofore paid with respect to such whole number of shares of Parent Common
Stock and (ii) at the appropriate payment date, the amount of dividends or other
distributions with a record date after the Effective Time but prior to surrender
and a payment date subsequent to surrender payable with respect to such whole
number of shares of Parent Common Stock.
5
<PAGE>
(d) No Further Ownership Rights in Company Common Stock. All Parent
Common Stock issued upon conversion of Company Common Stock in accordance with
the terms hereof (including any cash paid pursuant to Section 2.2(e)) shall be
deemed to have been issued in full satisfaction of all rights pertaining to such
Company Common Stock, subject, however, to the Surviving Corporation's
obligation to pay any dividends or make any other distributions with a record
date prior to the Effective Time that may have been declared or made by the
Company on Company Common Stock in accordance with the terms of this Agreement
on or prior to the Effective Time and which remain unpaid at the Effective Time.
At the Effective Time, the stock transfer books of the Company shall be closed
to holders of Company Common Stock immediately prior to the Effective Time and
no transfer of Company Common Stock by any such holder shall thereaf ter be made
or recognized. If, after the Effective Time, Company Certificates are presented
to the Surviving Corporation for any reason, they shall be cancelled and
exchanged as provided in this Article II.
(e) No Fractional Shares.
(i) Notwithstanding any other provision hereof, no fractional
share of Parent Common Stock and no certificate or scrip therefor, or other
evidence of ownership thereof, will be issued, and no right to receive cash in
lieu thereof shall entitle the holder thereof to any voting or other rights of a
holder of shares or fractional share interests.
(ii) Each holder of Company Common Stock shall be paid an
amount in cash equal to the product obtained by multiplying the fractional share
interest to which such holder (after taking into account all shares of Company
Common Stock then held by such holder) would otherwise be entitled by the
midpoint between the highest "bid" and lowest "asked" price for a share of
Parent Common Stock in the over-the-counter market for the business day immedi
ately preceding the Closing Date.
(iii) As soon as practicable after the determination of the amount of
cash, if any, to be paid to holders of Company Common Stock with respect to any
fractional share interests, the Exchange Agent shall make available such amounts
to such holders of Company Common Stock subject to and in accordance with the
terms of Section 2.2(b).
(f) Termination of Exchange Fund. Any portion of the Exchange Fund
which remains undistributed to the shareholders of the Company for six months
after the Effective Time shall be delivered to Parent, upon demand, and any
shareholders of the Company who have not theretofore complied with this Article
II shall thereafter look only to Parent for payment of their claim for Parent
Common Stock, any cash in lieu of fractional shares of
6
<PAGE>
Parent Common Stock and any dividends or distributions with respect to Parent
Common Stock.
(g) No Liability. Neither Parent, Merger Sub, the Company nor the
Surviving Corporation shall be liable to any holder of Company Common Stock for
any amount paid or property delivered in good faith to a public official
pursuant to any applicable aban doned property, escheat or similar law.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Company. The
Company represents and warrants to Parent and Merger Sub that:
(a) Organization, Standing and Power. The Company is a banking
corporation duly organized, validly existing and in good standing under the laws
of the State of Ohio. The Company is a bank duly organized under Chapter 1113 of
the Ohio Revised Code validly existing and in good standing under the laws of
the State of Ohio, and all of its deposits are insured by the Bank Insurance
Fund of the Federal Deposit Insurance Corporation ("FDIC") to the maximum extent
permitted by law. The Company has all requisite power and authority to own,
lease and operate its properties and to carry on its business as now being
conducted, and is duly qualified and in good standing to do business in each
jurisdiction in which the nature of its business or the ownership or leasing of
its properties makes such qualification necessary, except where the failure to
be so qualified would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company. For purposes of this
Agreement: (i) "Material Adverse Change" or "Material Adverse Effect" means,
when used with respect to Parent, the Company or the Surviving Corporation, as
the case may be, any change or effect that is or would reasonably be expected
(so far as can be foreseen at the time) to be materially adverse to the
business, properties, assets, liabilities, condition (financial or otherwise) or
results of the operations of Parent and its Subsidiaries taken as a whole, the
Company, or the Surviving Corporation, as the case may be; provided, however,
that no Material Adverse Change or Material Adverse Effect shall be deemed to
have occurred by reason of a change or effect resulting from general economic
conditions, general industry conditions, changes in banking laws or regulations
of general applicability or interpretations thereof, or a general deterioration
in the financial markets; and (ii) "Subsidiary" means any corporation,
partnership, joint venture or other legal entity of which Parent or the Company,
as the case may be (either alone or through or together with any other
Subsidiary), owns, directly or indirectly, 50% or more of the capital stock or
other equity interest the holders of which are generally entitled to vote for
the election of
7
<PAGE>
the board of directors or other governing body of such corporation, partnership,
joint venture or other legal entity.
(b) Capital Structure.
(i) The authorized capital stock of the Company con sists of
110,000 shares of Company Common Stock, all of which are outstanding.
(ii) No bonds, debentures, notes or other indebted ness having
the right to vote (or convertible into or exercisable for securities having the
right to vote) on any matters on which shareholders of the Company may vote
("Voting Debt") are issued or outstanding. All outstanding shares of Company
Common Stock are, and any Company Common Stock that may be issued pursuant to
the exercise of any outstanding stock option will be, duly authorized, validly
issued, fully paid and nonassessable and not subject to preemptive rights.
(iii) Except as set forth in the letter dated and delivered to
Parent on the date hereof (the "Company Letter"), which relates to this
Agreement and is designated therein as being the Company Letter, there is no
option, warrant, call, right (including any preemptive right), commitment or any
other agreement of any character that the Company is a party to, or may be bound
by, requiring it to issue, transfer, sell, purchase or redeem any shares of
capital stock, any Voting Debt, or any securities or rights convertible into,
exchangeable for, or evidencing the right to subscribe for any shares of capital
stock of the Company, or to provide funds to, or make an investment, in the form
of a loan, capital contribution or otherwise (excepting loans made in the
ordinary course of a commercial banking business), in any other corporation,
partnership, firm, individual, trust or other legal entity (each, and any group
of any two or more of the foregoing, a "Person").
(iv) Except as set forth in the Company Letter, there is no
voting trust or other agreement or understanding to which the Company is a
party, or may be bound by, with respect to the voting of the capital stock of
the Company.
(v) Since December 31, 1994, except as set forth in the Company
Letter, the Company has not (A) issued or permitted to be issued any shares of
capital stock, or securities exercisable for or convertible into shares of
capital stock, of the Company; (B) repurchased, redeemed or otherwise acquired
any shares of capital stock of the Company (other than the acquisition of trust
account shares); or (C) declared, set aside, made or paid to shareholders of the
Company dividends or other distributions on the outstanding shares of capital
stock of the Company, other than regular semi-annual cash dividends at a rate
not in excess of the
8
<PAGE>
regular semi-annual cash dividends most recently declared by the Company prior
to March 31, 1997.
(c) Authority.
(i) The Company has all requisite corporate power and authority
to execute and deliver this Agreement and to consummate the transactions
contemplated hereby. This Agreement and the consummation by the Company of the
transactions contemplat ed hereby have been duly and validly authorized by the
Board of Directors of the Company and no other corporate proceedings on the part
of the Company are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby (other than the approval of this Agreement by
the shareholders of the Company in accordance with the OGCL and the Company's
articles of incorpora tion). This Agreement has been duly and validly executed
and delivered by the Company and, assuming this Agreement constitutes the valid
and binding agreement of Parent and Merger Sub, consti tutes the valid and
binding agreement of the Company, enforceable in accordance with its terms,
except that the enforcement hereof may be limited by (A) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect,
relating to creditors' rights generally, (B) general principles of equity
(regardless of whether enforceability is considered in a proceeding in equity or
at law) and (C) judicial discretion.
(ii) Except as set forth in the Company Letter, the execution and
delivery of this Agreement does not, and the consummation of the transactions
contemplated hereby (subject to approval by the shareholders of the Company of
this Agreement) will not, conflict with or result in any violation of, or
default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, amendment, cancellation, acceleration or payment of
any obligation or the loss of a material benefit under, or the creation of a
lien, pledge, security interest, charge or other encumbrance on assets (any such
conflict, violation, default, right of termination, amendment, cancellation,
acceleration or payment, loss or creation, a "Violation") pursuant to, any provi
sions of the articles of incorporation or code of regulations of the Company or,
except as set forth in the Company Letter, and sub ject to obtaining or making
the consents, approvals, orders, authorizations, registrations, declarations and
filings referred to in Subsection (iii) below, result in any Violation of any
loan or credit agreement, note, mortgage, indenture, lease, Benefit Plan (as
defined in Section 3.1(o)) or other agreement, obligation, instrument, permit,
concession, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to the Company or its properties or
assets.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, any federal or state court,
administrative agency or commission or other govern mental authority or
instrumentality (a "Governmental Entity") is required by or with respect to the
Company in connection with the execution and delivery of this Agreement, or the
consummation by the Company of the transactions contemplated hereby, the failure
to obtain which would have a Material Adverse Effect on the Company, except for
(A) the filing by Parent of an application with the Board of Governors of the
Federal Reserve System (the "Federal Reserve") under the Bank Holding Company
Act of 1956, as amended ("BHC Act"), and approval of same, (B) the filing by
Merger Sub and/or the Company of an application with the Federal Reserve under
the Bank Merger Act and approval of same, (C) the filing by Parent of a
Registration Statement on Form S-4 ("S-4") with the Securities and Exchange
Commission ("SEC"), and the declaration by the SEC of its effectiveness, (D) the
filing by the Company of the Certificate of Merger with the Secretary of State
of the State of Ohio, and appropriate documents with the relevant authorities of
other states in which the Company is qualified to do business, (E) the filing of
applications by Parent and/or Merger Sub with the Ohio Superintendent of
Financial Institutions (the "Superintendent"), and approval thereof, (F) the
filing of an application by Parent with the Commissioner of the Department of
Financial Institutions of the Commonwealth of Kentucky ("KDFI"), and approval
thereof, (G) notices to or filings with the Small Business Administration
("SBA"), or the Internal Revenue Service (the "IRS") or the Pension Benefit
Guaranty Corporation (the "PBGC") with respect to any Benefit Plans, and (H)
such filings and approvals as may be required under the "blue sky" laws of
various states.
(d) Financial Statements. The Company has made avail able to Parent
true and complete copies of the audited statements of financial position and the
related statements of operations, shareholders' equity and cash flows (including
the related notes thereto) of the Company for the years ended December 31, 1996,
1995 and 1994, certified by Grant Thornton LLP, independent certified public
accountants (the "Company Audited Financial Statements"). The Company also has
made available to Parent true and complete copies of the monthly and quarterly
unaudited statements of financial position and the related statements of
operations, shareholders' equity and cash flows of the Company for the monthly
and quarterly periods ended during the period of January 1, 1997 through April
30, 1997 (the "Company Unaudited Financial State ments"). (The Company Audited
Financial Statements, the Company Unaudited Financial Statements and those
audited and unaudited financial statements that the Company hereafter shall
deliver to Parent pursuant to Section 5.5 are collectively referred to as the
"Company Financial Statements"). Except as set forth in the Company Letter, the
Company Financial Statements are or, as the context requires shall be, in
compliance as to form in all material respects with applicable accounting
requirements, have been (or shall be) prepared in accordance with generally
accepted accounting principles applied on a consistent basis during the periods
involved (except as otherwise noted therein) and fairly (or shall
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fairly) present (subject, in the case of unaudited financial statements, to
normal year-end audit adjustments and any other adjustments described therein
which individually or in the aggregate will not be material in amount or effect)
the financial position of the Company as of their respective dates and the re
sults of its operations and cash flows for the periods presented therein.
(e) Absence of Certain Changes or Events. Except as set forth in the
Company Letter, since December 31, 1996, the Company has not incurred any
material liability or obligation (indirect, direct or contingent), except in the
ordinary course of its busi ness consistent with past practices, taken any of
the prohibited actions set forth in Section 4.1, or suffered any change, or any
event involving a prospective change, in its business, financial condition or
results of operations that has had, or is reasonably likely to have, a Material
Adverse Effect on the Company.
(f) Absence of Undisclosed Liabilities. Except as set forth in the
Company Letter or reflected or reserved against in the Company Audited Financial
Statements for the 1996 year, the Company has no obligations or liabilities
(contingent or otherwise) that might reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the Company. The
Company has set forth in the Company Letter, as of the date hereof, all in
terest rate and currency exchange agreements, and all trading positions
regarding any form or type of derivative financial product the value of which is
linked to, or derived from, the value of an underlying asset, rate or index.
(g) Allowance for Credit Losses. Except as set forth in the Company
Letter, the allowance for credit losses (the "Allowance") shown on the
statements of financial position of the Company as of April 30, 1997 included in
the Company Financial Statements was, and the Allowance shown on each of the
statements of condition of the Company as of a date subsequent to the execution
of this Agreement will be, in each case as of the dates thereof, determined in
accordance with safe and sound banking practices and the guidelines and policies
of the FDIC, and are (and will be) adequate, in the reasonable judgment of
management, to provide for losses relating to or inherent in the loan and lease
portfolios (including accrued interest receivable) of the Company and other
extensions of credit (including letters of credit and commitments to make loans
or extend credit) by the Company.
(h) Environmental Matters. Except as set forth in the Company Letter,
to the knowledge of the Company, neither the Company nor any properties
presently or previously owned or operated by the Company has been or is in
violation of or liable under any Environmental Law (as hereinafter defined).
There are no actions, suits or proceedings, or demands, claims, notices or, to
the knowledge of the Company, investigations (including notices,
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demand letters or requests for information from any environmental agency),
instituted or pending, or to the knowledge of the Company, threatened, relating
to the liability of any properties owned or operated by the Company under any
Environmental Law. "Environmental Law" means any federal, state or local law,
statute, ordinance, rule, regulation, code, license, permit, authorization,
approval, consent, order, judgment, decree, injunction or agreement between the
Company and any Governmental Entity relating to (i) the protection, preservation
or restoration of the environment (including, without limitation, air, water
vapor, surface water, ground water, drinking water supply, surface soil,
subsurface soil, plant and animal life or any other natural resource), and/or
(ii) the use, storage, recycling, treatment, generation, transportation,
processing, handling, labeling, production, release or disposal of any substance
presently listed, defined, designated or classified as hazardous, toxic,
radioactive or dangerous, or otherwise regulated, whether by type or by
quantity, including any material containing any such substance as a component;
and includes, without limitation, the Resource Conservation and Recovery Act,
the Clean Air Act, the Federal Water Pollution Control Act, the Toxic Substances
Control Act and the Comprehensive Environmental Response, Compensation and
Liability Act.
(i) Information Supplied. None of the information supplied or to be
supplied by the Company for inclusion in (i) the S-4 to be filed with the SEC by
Parent in connection with the issuance of Parent Common Stock in the Merger
will, at the time the S-4 is filed with the SEC and at the time it becomes
effective under the Securities Act, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not mis leading, and (ii) the proxy statement of the
Company contained within the S-4 (the "Proxy Statement") will, at the date of
mailing to shareholders of the Company and at the time of the meeting of
shareholders of the Company to be held in connection with the Merger, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circum stances under which they were made, not
misleading. The Proxy Statement (except for such portions thereof that relate
only to Parent and Merger Sub) will comply as to form in all material respects
with the provisions of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the rules and regula tions thereunder, to the extent
applicable. The information set forth in the Company Letter by the Company for
purposes of this Agreement is true and accurate in all material respects.
(j) No Default. Except as set forth in the Company Letter, no Violation
exists on the part of the Company with respect to any term, condition or
provision of (i) its articles of incorporation or bylaws, (ii) any note,
mortgage, indenture, other
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evidence of indebtedness, guaranty, license, agreement or other contract,
instrument or contractual obligation to which the Company is now a party or by
which it or any of its properties or assets may be bound, or (iii) any order,
writ, injunction or decree applicable to the Company, except for possible
Violations that, individually or in the aggregate, do not, and, insofar as
reasonably can be foreseen, in the future will not, have a Material Adverse
Effect on the Company.
(k) Compliance with Licenses, Permits and Applicable Laws. The Company
has received such certificates, permits, licenses, franchises, consents,
approvals, orders, authorizations and clearances from appropriate governmental
entities (the "Company Permits") as are necessary to own or lease and operate
its properties and to conduct its business as currently owned or leased and
conducted, and all such Company Permits are valid and in full force and effect.
The Company is in compliance in all material respects with its obligations under
the Company Permits, with only such exceptions as, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect on
the Company, and no event has occurred that allows, or after notice of lapse of
time, or both, would allow, revocation or termination of any material Company
Permit. Except as set forth in the Company Letter, the business of the Company
is not being conducted in violation of any law, ordinance or regulation of any
Governmental Entity, except for possible violations that individually or in the
aggregate do not, and in the future will not, have a Material Ad verse Effect on
the Company. Except for routine examinations by Governmental Entities charged
with the supervision or regulation of banks or bank holding companies or the
insurance of bank deposits ("Bank Regulators"), as of the date of this
Agreement, to the knowledge of the Company, no investigation by any Governmental
Entity with respect to the Company is pending or threatened.
(l) Actions and Proceedings. Except as set forth in the Company
Letter, there are no outstanding orders, judgments, injunctions, awards or
decrees of any Governmental Entity against or affecting the Company, any of its
current or former directors, employees, consultants, agents or shareholders, as
such, any of its properties, assets or business or any Company Benefit Plan (as
defined in Section 3.1(o)). Except as set forth in the Company Letter, there are
no actions, suits or claims or legal, administrative or arbitration proceedings
or, to the knowledge of the Company, investigations pending or threatened,
against or affecting the Company, any of its current or former directors,
officers, employees, consultants, agents or shareholders, as such, any of its
properties, assets or business or any Company Benefit Plan that if brought (if
not now pending) would reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company. There are no actions, suits
or claims or legal, administrative or arbitration proceedings or, to the
knowledge of the Company, investigations or labor disputes
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pending or threatened, against or affecting the Company, any of its current or
former directors, officers, employees, consultants, agents or shareholders, as
such, any of its properties, assets or business or any Company Benefit Plan
relating to the transactions contemplated by this Agreement.
(m) Taxes. To the Company's knowledge, the Company has filed all tax
returns required to be filed by it and has paid, or has set up an adequate
reserve for the payment of, all Taxes required to be paid as shown on such
returns, and the most recent Company Financial Statements reflect an adequate
reserve for all Taxes payable by the Company accrued through the date of such
financial statements. No material deficiencies for any Taxes have been proposed,
asserted or assessed against the Company that are not adequately reserved for.
Except with respect to claims for refund, the federal income tax returns of the
Company have been examined by and settled with the IRS, or the statute of
limitations with respect to such years has expired (and no waiver extending the
statute of limitations has been requested or granted), for all years through
1993. For the purpose of this Agreement, the term "Taxes" (including, with
correlative meaning, the term "tax") shall include, except where the context
otherwise requires, all federal, state, local and foreign income, profits,
franchise, gross receipts, payroll, sales, employment, unemployment (including
unemployment insurance premiums or contributions), use, property, withholding,
excise, occupancy, and other taxes, duties or assessments of any nature
whatsoever, together with all interest, penalties and additions imposed with
respect to such amounts.
(n) Certain Agreements. Except as set forth in the Company Letter, and
except for this Agreement, as of the date of this Agreement, the Company is not
a party to any oral or written (i) employment or other agreement, contract,
commitment, program, policy or arrangement requiring the Company to pay
compensation (including any salary, bonus, deferred compensation, incentive
compensation, severance, vacation or sick pay, or any other fringe benefit
payment) or any other type of remuneration to any Person, (ii) agreement or
plan, including any stock option plan, any of the benefits of which will be
increased, or the vesting of the benefits of which will be accelerated, by the
occurrence of any of the transactions contemplated by this Agreement, or the
value of any of the benefits of which will be calculated on the basis of any of
the transactions contemplated by this Agreement, (iii) contract or agreement not
terminable on 30 days' or less notice involving the payment of more than $5,000
in any 12 month period; (iv) contract or agreement that materially limits the
ability of Company to compete in any line of business or with any Person or in
any geographic area or during any period of time, or (v) any other material
contract the disclosure and inclusion as an exhibit of which would be required
by Item 601 of Regulation S-K of the SEC if the Company were a corporation
making filings with the SEC under
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the periodic reporting requirements of Section 13 of the Exchange Act and the
rules and regulations of the SEC thereunder.
(o) Benefit Plans.
(i) The Company has disclosed in the Company Letter each employee
benefit plan (including, without limitation, any "em ployee benefit plan," as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended, ("ERISA")) (all the foregoing being herein called "Benefit Plans"),
maintained or contributed to by the Company (the "Company Benefit Plans"). The
Company will make available to Parent a true and correct copy of (a) the most
recent annual report (Form 5500) filed with the IRS, (B) each such Company
Benefit Plan, (C) each trust agreement relating to such Company Benefit Plan,
(D) the most recent summary plan description for each Company Benefit Plan for
which a summary plan description is required, (E) the most recent actuarial
report or valuation relating to a Company Benefit Plan subject to Title IV of
ERISA and (F) the most recent determination letter issued by the IRS with
respect to any Company Benefit Plan qualified under Section 401(a) of the Code.
(ii) With respect to the Company Benefit Plans, individually and
in the aggregate, except as set forth in the Company Letter, no event has
occurred and, to the knowledge of the Company, there exists no condition or set
of circumstances, in connection with which the Company could be subject to any
liability (except liability for benefits, claims and funding obligations payable
in the ordinary course) under ERISA, the Code or any other applicable law.
(p) Subsidiaries. The Company has no Subsidiaries.
(q) Agreements With Bank Regulators. The Company is not a party to any
written agreement or memorandum of understanding with, or a party to any
commitment letter or similar undertaking to, or subject to any order or
directive by, nor is it a recipient of any extraordinary supervisory letter
from, any Bank Regulator which restricts materially the conduct of its business,
or in any manner relates to its capital adequacy, its credit policies or its
management, nor has the Company been advised by any Bank Regulator that it is
contemplating issuing or requesting (or is considering the appropriateness of
issuing or requesting) any such order, directive, agreement, memorandum of
understanding, extraordinary supervisory letter, commitment letter or similar
submission.
(r) Vote Required. The affirmative vote of the holders of two-thirds
of the outstanding shares of Company Common Stock entitled to vote thereon is
the only vote of the holders of any class or series of Company capital stock
necessary to approve this Agreement and the transactions contemplated hereby.
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(s) Properties.
(i) Except as set forth in the Company Letter, the Company (A)
has good, valid and marketable title to all the properties and assets reflected
in the latest audited financial statements included in the Company Financial
Statements as being owned by the Company, or acquired after the date thereof
(except properties sold or otherwise disposed of since the date thereof in the
ordinary course of business), free and clear of all mortgages, pledges, security
interests, claims, liens, charges, options or other encumbrances of any nature
whatsoever (including, without limitation, in the case of real property,
easements and rights-of-way) (collectively, "Liens"), except (x) statutory Liens
securing payments not yet due, (y) Liens on assets of the Company incurred in
the ordinary course of a commercial banking business and (z) such Liens and
imperfections or irregularities of title that do not materially affect the use
of the properties or assets subject thereto or affected thereby or otherwise
materially impair business operations at such properties, and (B) is the lessee
of all leasehold estates reflected in the latest audited financial statements
included in the Company Financial Statements or acquired after the date thereof
(except for leases that have expired by their terms since the date thereof) and
is in possession of the properties purported to be leased thereunder, and each
such lease is valid without default thereunder by the lessee or, to the
Company's knowledge, the lessor.
(ii) The Company has set forth in the Company Letter the street
address of all real property currently owned by the Company, including
properties held by the Company as a result of foreclosure or repossession or
carried on the Company's books as "other real estate owned" (the "Current Real
Properties"). Except as set forth in the Company Letter, the Current Real
Properties are in generally good condition and have been well maintained in
accor dance with reasonable and prudent business practices applicable to like
facilities. Except as set forth in the Company Letter, there are no proceedings,
claims, disputes or conditions affecting any of the Current Real Properties or
leasehold interests of the Company that, insofar as reasonably can be foreseen,
may curtail or interfere with the use of such property.
(t) Corporate Documents, Books and Records. The Company has made
available to Parent true and complete copies of the articles of incorporation
and code of regulations of the Company. The minute books of the Company contain
complete and accurate records in all material respects of all meetings and other
corporate actions of its shareholders and Board of Directors (including
committees of the Board of Directors). The stock transfer records of the Company
are, to the knowledge of the Company, complete and accurate in all material
respects.
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(u) Insurance. The Company maintains with financially sound and
reputable insurance companies insurance policies and bonds in force in such
amounts and against such liabilities and risks as companies engaged in a similar
business, in accordance with good business practice, customarily would be
insured. Except as set forth in the Company Letter, to the Company's knowledge,
the Company is not liable for any material, retroactive premium adjust ments.
All such insurance policies and bonds are valid, enforceable and in full force
and effect and, except as set forth in the Company Letter, the Company has not
received any notice of premium increases or cancellation and, to the Company's
knowledge, no grounds for any cancellation notice exists. Except as set forth in
the Company Letter, since December 31, 1994, the Company has not failed to make
a timely claim with respect to any matter giving rise to a claim or potential
claim under any such insurance policies and bonds where such failure to make a
timely claim would have a Material Adverse Effect on the Company.
(v) Potential Competing Interests. Except as set forth in the Company
Letter, (i) no director, officer or key employee or, to the Company's knowledge,
any beneficial owner of 10% or more of any class of capital stock (a "Ten
Percent Owner") of the Company directly or indirectly beneficially owns a 5% or
more interest in any institution that is engaged in the business of making loans
and/or taking deposits, (ii) neither the Company, nor any director, officer or
key employee of the Company has any interest, direct or indirect, in any
contract or agreement with, commitment or obligation of or to, or claim against,
the Company (excluding contracts, agreements or obligations with respect to
monies borrowed from, or claims for deposits maintained with, the Company in the
ordinary course of a commercial banking business consistent with safe and sound
banking practices), and (iii) the Company does not use any real or personal
property in which any director, officer or key employee or, to the Company's
knowledge, Ten Percent Owner of the Company directly or indirectly beneficially
owns a 5% or more interest in any such real or personal property.
(w) Pooling of Interests. To the Company's knowledge, the Company has
not taken or failed to take any action that would prevent the accounting for the
Merger as a pooling of interests in accordance with Accounting Principles Board
Opinion No. 16, the interpretive releases issued pursuant thereto, and the
pronouncements of the SEC.
3.2 Representations and Warranties of Parent and Merger Sub.
Each of Parent and Merger Sub jointly and severally represent and
warrant to the Company as follows:
(a) Organization, Standing and Power. Parent is a
corporation duly organized, validly existing and in good standing
under the laws of the Commonwealth of Kentucky. Each of Parent's
Subsidiaries is a corporation duly organized, validly existing and
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in good standing under the laws of its state of incorporation or organization.
Each of Parent and its Subsidiaries has all requisite power and authority to
own, lease and operate its properties and to carry on its business as now being
conducted, and is duly qualified and in good standing to do business in each
jurisdiction in which the nature of its business or the ownership or leasing of
its properties makes such qualification necessary, except where the failure to
be so qualified would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on Parent.
(b) Capital Structure.
(i) The authorized capital stock of Parent consists of 10,000,000
shares of common stock, without par value ("Parent Common Stock"), and 1,000,000
shares of preferred stock, without par value ("Parent Preferred Stock"), of
which 4,209,090 shares of Common Stock are outstanding, 100,000 shares of Common
Stock are reserved for issuance under Parent's 1996 Employee Stock Ownership
Incentive Plan and no shares of Common Stock are held by Parent in its treasury.
There are no shares of Parent Preferred Stock outstanding, reserved for issuance
or held by Parent in its treasury.
(ii) No Voting Debt of Parent is issued or outstand ing. All
outstanding shares of Parent Common Stock are duly authorized, validly issued,
fully paid and nonassessable and not subject to preemptive rights.
(iii) Except as set forth in the Parent SEC Documents (as defined
in Section 3.2(d)) or the letter dated and delivered to the Company on the date
hereof (the "Parent Letter"), which relates to this Agreement and is designated
therein as the Parent Letter, there is no option, warrant, call, right
(including any preemptive right), commitment or any other agreement of any
character that Parent or any Subsidiary is a party to, or may be bound by,
requiring it to issue, transfer, sell, purchase or redeem any shares of capital
stock, any Voting Debt, or any securities or rights convertible into,
exchangeable for, or evidencing the right to subscribe for any shares of capital
stock of Parent or any Subsidiary, or to provide funds to, or make an investment
(in the form of a loan, capital contribution or otherwise) in, any of Parent's
Subsidiaries or (excepting loans made in the ordinary course of a commercial
banking business) any other Person.
(iv) Except as set forth in the Parent SEC Documents or the
Parent Letter, and except for this Agreement, there is no voting trust or other
agreement or understanding to which Parent or any Subsidiary is a party, or may
be bound by, with respect to the voting of the capital stock of Parent or any
Subsidiary.
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(v) Since December 31, 1994, except as set forth in the Parent
SEC Documents or the Parent Letter, Parent has not (A) issued or permitted to be
issued any shares of capital stock, or securities exercisable for or convertible
into shares of capital stock, of Parent or any Subsidiary; (B) repurchased,
redeemed or otherwise acquired, directly or indirectly through any Subsidiary,
any shares of capital stock of Parent or any Subsidiary (other than the
acquisition of trust account shares); or (C) declared, set aside, made or paid
to shareholders of Parent dividends or other distributions on the outstanding
shares of capital stock of Parent, other than regular quarterly cash dividends.
(c) Authority.
(i) Each of Parent and Merger Sub has all requisite corporate
power and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. This Agreement and the consummation by Parent
and Merger Sub of the transactions contemplated hereby have been duly and
validly autho rized by the Board of Directors of Parent and Merger Sub, and by
Parent as the shareholder of Merger Sub, and no other corporate proceedings on
the part of Parent or Merger Sub are necessary to authorize this Agreement or to
consummate the transactions contem plated hereby. This Agreement has been duly
and validly executed and delivered by Parent and Merger Sub, and assuming this
Agreement constitutes the valid and binding agreement of the Company, consti
tutes the valid and binding agreement of Parent and Merger Sub, en forceable in
accordance with its terms, except that the enforcement hereof may be limited by
(A) bankruptcy, insolvency, reorganiza tion, moratorium or other similar laws
now or hereafter in effect, relating to creditors' rights generally, (B) general
principles of equity (regardless of whether enforceability is considered in a
proceeding in equity or at law) and (C) judicial discretion.
(ii) The execution and delivery of this Agreement does not, and
the consummation of the transactions contemplated hereby will not, create any
Violation under any provisions of the articles of incorporation or bylaws of
Parent or any Subsidiary or, except as set forth in the Parent Letter and
subject to obtaining or making the consents, approvals, orders, authorizations,
registrations, declarations and filings referred to in Subsection (iii) below,
result in any Violation of any loan or credit agree ment, note, mortgage,
indenture, lease, Benefit Plan (as defined in Section 3.1(o)) or other
agreement, obligation, instrument, permit, concession, franchise, license,
judgment, order, decree, statute, law, ordinance, rule or regulation applicable
to Parent or any Subsidiary or their respective properties or assets.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity is required by
or with respect to Parent or any Subsidiary in connection with the execution and
delivery of this Agreement, or
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<PAGE>
the consummation by Parent and Merger Sub of the transactions contemplated
hereby, the failure to obtain which would have a Material Adverse Effect on
Parent, except for (A) the filing by Parent of an application with the Federal
Reserve under the BHC Act, and approval of same, (B) the filing by Merger Sub
and/or the Company of an application with the Federal Reserve under the Bank
Merger Act and approval of same, (C) the filing by Parent of the S-4 with the
SEC, and the declaration by the SEC of its effective ness, (D) the filing by the
Company of the Certificate of Merger with the Secretary of State of the State of
Ohio and appropriate documents with the relevant authorities of other states in
which the Company or any Subsidiary is qualified to do business, (E) the filing
of applications by Parent and/or Merger Sub with the Superintendent, and the
approval thereof, (F) the filing of an application by Parent with the KDFI, and
approval thereof, (G) notices to or filings with the SBA, or the IRS or the PBGC
with respect to any Benefit Plans, and (H) such filings and approvals as may be
required under the "blue sky" laws of various states.
(d) SEC Documents: Financial Statements. Parent has made available to
the Company each document filed by it since December 31, 1994 with the SEC under
the Securities Act or the Exchange Act, including without limitation, (i)
Parent's Annual Report on Form 10-K for the year ended December 31, 1996, (ii)
Parent's Quarterly Report on Form 10-Q for the period ended March 31, 1997, and
(iii) Parent's definitive proxy statement for its 1997 Annual Meeting of
Shareholders held May 6, 1997, each in the form (including exhibits and any
amendments) filed with the SEC (collectively, the "Parent SEC Documents"). As of
their respective dates, each of the Parent SEC Documents did not, and each of
the Parent SEC Documents filed with the SEC subsequent to the date hereof will
not, contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements made
therein, in light of the circumstances in which they were made, not misleading,
provided, that Parent makes no representation with respect to information
supplied by the Company for use in Parent SEC Documents after the date hereof.
Each of the consolidated balance sheets included in or incorporated by reference
into the Parent SEC Documents (including their related notes and schedules)
fairly presents the consolidated financial condition of Parent and its
consolidated Subsidiaries as of its date and each of the consolidated statements
of income and of changes in financial position included or incorporated by
reference into the Parent SEC Documents (including any related notes and
schedules) fairly presents the results of operations, retained earnings and
changes in financial position, as the case may be, of Parent and its
consolidated Subsidiaries for the periods set forth therein (subject, in the
case of unaudited statements to normal year-end adjustments and any other
adjustments described therein which individually or in the aggregate will not be
material in amount or effect), in each case in accordance with
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generally accepted accounting principals consistently applied during the periods
involved, except as may be noted therein.
(e) Absence of Certain Changes or Events. Except as set forth in the
Parent Letter, since December 31, 1996, neither Parent nor any Subsidiary has
incurred any material liability or obligation (indirect, direct or contingent),
except in the ordinary course of its business consistent with past practices, or
suffered any change, or any event involving a prospective change, in its
business, financial condition or results of operations that has had, or is
reasonably likely to have, a Material Adverse Effect on Parent.
(f) Absence of Undisclosed Liabilities. Except as set forth in the
Parent Letter or disclosed in the Parent SEC Documents, neither Parent nor any
Subsidiary has any obligations or liabilities (contingent or otherwise) that
might reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on Parent. Parent has set forth in the Parent Letter, as
of the date hereof, all interest rate and currency exchange agreements, and all
trading positions regarding any form or type of derivative financial product the
value of which is linked to, or derived from, the value of an underlying asset,
rate or index.
(g) Information Supplied. None of the information supplied or to be
supplied by Parent for inclusion in (i) the S-4 to be filed with the SEC by
Parent in connection with the issuance of Parent Common Stock in the Merger
will, at the time the S-4 is filed with the SEC and at the time it becomes
effective under the Securities Act, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circum stances under
which they were made, not misleading, and (ii) the Proxy Statement will, at the
date of mailing to shareholders of the Company and at the time of the meeting of
shareholders of the Company to be held in connection with the Merger, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The Proxy Statement (except for such portions thereof that relate
only to the Company) will comply as to form in all material respects with the
provisions of the Exchange Act and the rules and regulations thereunder. The
information set forth in the Parent Letter by Parent for purposes of this
Agreement is true and accurate in all material respects.
(h) Corporate Documents, Books and Records. Parent has made available
to the Company true and complete copies of the articles of incorporation and
bylaws of Parent and each Subsidiary. The minute books of Parent and each
Subsidiary contain complete and accurate records in all material respects of all
meetings and other
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corporate actions of its shareholders and Board of Directors (including
committees of the Board of Directors). The stock transfer records of Parent and
each Subsidiary are, to the knowledge of Parent, complete and accurate in all
material respects.
(i) Pooling of Interests. To Parent's knowledge, neither Parent nor
any Subsidiary has taken or failed to take any action that would prevent the
accounting for the Merger as a pooling of interests in accordance with
Accounting Principles Board Opinion No. 16, the interpretive releases issued
pursuant thereto, and the pronouncements of the SEC.
(j) Independent Operation. It has been the practice of Parent
since its formation to maintain the separate charters of commercial banks that
become affiliated with, and Subsidiaries of, Parent. It has also been the
practice of Parent to continue the directorships of directors and the employment
of officers and employees of commercial banks that become affiliated with, and
Subsidiaries of, Parent following consummation of transactions resulting in such
affiliations with Parent.
ARTICLE IV
CONDUCT OF THE COMPANY PRIOR TO CLOSING
4.1 Conduct of Business.
(a) Except as set forth in the Company Letter, the Company agrees that
during the period from the date of this Agreement to the Effective Time (unless
Parent shall otherwise agree in writing and except as otherwise contemplated by
this Agreement), the Company will conduct its operations according to its
ordinary and usual course of business consistent with past practice and, to the
extent consistent therewith, with no less diligence and effort than would be
applied in the absence of this Agreement, seek to preserve intact its current
business organiza tion, keep available the service of its current directors,
officers and employees and preserve its relationships with customers, suppliers
and others having business dealings with it to the end that goodwill and ongoing
business shall not be impaired in any material aspect at the Effective Time.
Without limiting the generality of the foregoing, and except as otherwise
permitted in this Agreement prior to the Effective Time or except as set forth
in the Company Letter, the Company will not, without the prior written consent
of Parent:
(i) issue, sell, grant, dispose of, pledge or otherwise encumber,
or authorize or propose the issuance, sale, disposition or pledge or other
encumbrance of (A) any additional shares of capital stock of any class
(including shares of Company Common Stock), or any securities or rights
convertible into,
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exchangeable for, or evidencing the right to subscribe for any shares of capital
stock, or any rights, warrants, options, calls, commitments or any other
agreements of any character to purchase or acquire any shares of capital stock
or any securities or rights convertible into, exchangeable for, or evidencing
the right to subscribe for, any shares of capital stock, or any other ownership
interest (including, without limitation, any phantom interest), or (B) any other
securities in respect of, in lieu of, or in substitu tion for, shares of Company
Common Stock outstanding on the date hereof;
(ii) redeem, purchase or otherwise acquire, or propose to redeem,
purchase or otherwise acquire, any of its outstanding shares of Company Common
Stock (except for the acquisition of trust account shares);
(iii) split, combine, subdivide or reclassify any shares of
Company Common Stock or declare, set aside for payment or pay any dividend, or
make any other actual, constructive or deemed distribution, whether in cash,
stock, property or otherwise, in respect of any shares of Company Common Stock
or otherwise make any payments to shareholders in their capacity as such; except
that if the Effective Time has not occurred before the record date for dividends
on Parent Common Stock for the calendar quarter ended December 31, 1997 the
Company may declare a special dividend on Company Common Stock to holders of
record of such shares as of the record date established therefor (which record
date shall be prior to the date of the Effective Time) with a payment date that
is the same as the Closing Date, in an amount per share equal to the product of
(x) 4.33 multiplied by (y) the dividend per share declared on Parent Common
Stock by Parent for the calendar quarter ended December 31, 1997;
(iv) adopt a plan of complete or partial liquida tion,
dissolution, merger, consolidation, restructuring, recapital ization or other
reorganization of the Company (other than the Merger);
(v) adopt any amendments to its articles of
incorporation or code of regulations;
(vi) make any acquisition or disposition of assets or securities,
except in the ordinary course of business consistent with past practices;
(vii) incur any indebtedness for borrowed money or guarantee any
such indebtedness or make any loans, advances or capital contributions to, or
investments in, any other Person, other than in the ordinary course of a
commercial banking business consistent with past practices, it being understood
and agreed that the incurrence of indebtedness in the ordinary course of a
commercial banking business shall include the creation of deposit
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liabilities, purchases of federal funds, sales of certificates of deposit and
entering into repurchase agreements;
(viii) offer any new deposit or loan product or service or change
its lending, investment, liability management, loan loss provision, loan loss
charge-off or other material banking policies;
(ix) grant any increases in the compensation of any of its
directors, officers or employees, except in the ordinary course of business and
in accordance with past practice or as may be approved on a case by case basis
by Parent;
(x) pay or agree to pay any pension, retirement allowance,
severance or other employee benefit not required or contemplated by any of the
existing Company Benefit Plans or any agreements or arrangements as in effect on
the date hereof to any such director, officer or employee, whether past or
present;
(xi) enter into any new or amend any existing
employment or severance or termination agreement with any director,
officer or employee;
(xii) except in the ordinary course of business consistent with
past practice or as may be required to comply with applicable law, become
obligated under any new Benefit Plan or amend any Company Benefit Plan in
existence on the date hereof if such amendment would have the effect of
materially enhancing any benefits thereunder;
(xiii) make any capital expenditures or commitments for any
capital expenditures, other than capital expenditures or commitments for any
capital expenditures set forth in the Company Letter;
(xiv) make any material changes in its customary
methods of marketing;
(xv) take, or agree to commit to take, any action that would make
any representation or warranty of the Company contained herein inaccurate in any
respect at, or as of any time prior to, the Effective Time; or
(xvi) change its method of accounting in effect at December 31,
1996, except as required by changes in generally accepted accounting principles
as concurred in by each party's independent auditors, or change its fiscal year;
(xvii) take any action that would, or reasonably might be
expected to, adversely affect the ability of the Company or Parent to obtain any
of the Requisite Regulatory Approvals (as
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defined in Section 6.1(b)) without imposition of a condition or restriction of
the type referred to in Section 6.1(f);
(xviii) authorize, recommend, propose or announce an intention to
do any of the foregoing, or enter into any contract, agreement, commitment or
arrangement to do any of the foregoing.
4.2 Acquisition Proposals.
(a) The Company shall not, and the Company shall direct and
use its best efforts to cause its officers, directors, employees, agents and
representatives (including without limitation any attorney, accountant,
investment banker or other advisor retained by it) not to, initiate, solicit or
encourage, directly or indirectly, any inquiries or the making or implementation
of any proposal or offer (including, without limitation, any proposal or offer
to its shareholders) with respect to a merger, acquisition, consolidation or
similar transaction involving, or any purchase of all or any significant portion
of the assets or any equity securities of, the Company (any such proposal or
offer being hereinafter referred to as an "Acquisition Proposal") or engage in
any negotiations or discussions with, or furnish any information or data to, any
third party relating to an Acquisition Proposal. The Company and its officers,
directors, employees, agents and representatives shall immediately cease any
existing discussions or negotiations with any parties conducted heretofore with
respect to any Acquisition Proposal.
(b) Notwithstanding anything to the contrary contained in this
Section 4.2, the Company and the Board of Directors of the Company (A) may
furnish information to, and participate in discussions or negotiations with any
third party that after the date hereof submits an unsolicited bona fide written
Acquisition Proposal to the Company if the Company's Board of Directors
determines in good faith, based upon the written advice of outside legal
counsel, that the failure to furnish such information or participate in such
discussions or negotiations may reasonably constitute a breach of the Board's
fiduciary duties under applica ble law, and (B) shall be permitted to (y) take
and disclose to the Company's shareholders a position with respect to the Merger
or an Acquisition Proposal, or amend or withdraw such position, or (z) make
disclosure to the Company's shareholders, in each case either with respect to or
as a result of an Acquisition Proposal, if the Company's Board of Directors
determines in good faith, based upon the written advice of outside legal
counsel, that the failure to take such action may reasonably constitute a breach
of the Board's fiduciary duties under applicable law; provided, that the Company
shall not enter into any acquisition agreement with respect to any Acquisition
Proposal except concurrently with the termination of this Agreement in
accordance with the provisions of Section 7.1(d) and shall not enter into any
other agreements with respect to an
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Acquisition Proposal except concurrently with such termination unless, and only
to the extent that, such other agreements would facilitate the process of
providing information to, or conducting discussions or negotiations with, the
parties submitting such an Acquisition Proposal, such as confidentiality and
standstill agreements.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Access to Information. Upon reasonable notice, the Company and Parent
shall each (and Parent shall cause its Subsidiaries to) afford to the officers,
directors, employees, accountants, counsel and other authorized representatives
of the other ("Representatives") reasonable access, during normal business hours
throughout the period prior to the Effective Time, to its books and records,
properties, officers, directors, employees, counsel, accountants and other
representatives, and, during such period, shall (and Parent shall cause its
Subsidiaries to) make available to such Representatives (i) a copy of each
report, schedule, registration statement and other document filed or received by
it during such period pursuant to the requirements of federal securities laws or
federal or state banking laws (other than reports or documents that such party
is not permitted to disclose under applicable law) and (ii) all other
information concerning its business, properties and personnel and all financial
operating and other data as may reasonably be requested. The parties will hold
any such information that is non-public in confidence and, without limitation on
its obligations under the preceding clause, Parent will hold any such
information in confidence to the extent required by, and in accordance with, the
provisions of the Confidentiality Agreement dated March 26, 1997 between Parent
and the Company (the "Confidentiality Agreement"), which is incorporated herein
by reference. No investigation by either Parent or Merger Sub, on the one hand,
or the Company on the other hand, shall affect the representations and
warranties of the other, except to the extent such representations and
warranties are by their terms qualified by information set forth in the Parent
Letter (in the case of Parent and Merger Sub) or the Company Letter (in the case
of the Company) to the other party.
5.2 Preparation of S-4 and the Proxy Statement. Parent shall prepare and
file with the SEC the S-4, in which the Proxy Statement will be included as a
prospectus. Parent shall use all reasonable efforts to have the S-4 declared
effective under the Securities Act as promptly as practicable after such filing.
Parent shall also take any action (other than qualifying to do business in any
jurisdiction in which it is now not so qualified) required to be taken under any
applicable state securities laws in connection with the issuance of Parent
Common Stock in the Merger and the Company shall furnish all information
concerning the Company and the
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holders of Company Common Stock as may be reasonably requested in connection
with any such action.
5.3 Shareholder Meeting. The Company shall duly call, give notice of,
convene and hold a meeting of its shareholders to be held for the purpose of
voting upon the approval of this Agreement and the transactions contemplated
hereby. Unless the Company has determined to recommend an Acquisition Proposal
in accordance with Section 4.2(ii), the Company will, through its Board of
Directors, unanimously recommend to its shareholders approval of this Agree ment
and the transactions contemplated hereby, subject to its receipt of a fairness
opinion from its financial advisor to the effect that the consideration to be
received by the shareholders of the Company pursuant to Section 2.1 is fair from
a financial point of view and such opinion shall not have been withdrawn or
materially modified. The Company shall cooperate with Parent with respect to the
timing of such meeting and shall use its best efforts to hold such meeting as
soon as reasonably practicable after the date on which the S-4 becomes
effective.
5.4 Reasonable Efforts. Each of the Company and Parent shall, and Parent
shall cause its Subsidiaries to, use all reason able efforts to take, or cause
to be taken, all actions necessary, proper or advisable to comply promptly with
all legal requirements that may be imposed on such party or (in the case of
Parent) its Subsidiaries with respect to the Merger and to consummate and make
effective the transactions contemplated by this Agreement, subject to the
appropriate vote of shareholders of the Company described in Section 3.2(r),
including using all reasonable efforts (i) to obtain (and to cooperate with the
other party to obtain) any necessary or appropriate consent, authorization,
order or approval of, or any exemption by, any Governmental Entity and/or any
other public or private third party in connection with the Merger and the
transactions contemplated by this Agreement, (ii) to effect all necessary
registrations, filings and submissions and (iii) to lift any injunction or other
legal bar to the Merger (and, in such case, to proceed with the Merger as
expeditiously as possible), subject, however, to the requisite vote of the
shareholders of the Company.
5.5 Post-April 30, 1997 Company Financial Statements. The Company shall
make available to Parent true and complete copies of the following:
(a) Unaudited Financial Statements. Any monthly and quarterly
unaudited balance sheet and the related statements of income, changes in
shareholders' equity and statements of cash flows of the party to which the
foregoing relate for any monthly or quarterly period ended subsequent to April
30, 1997 and prior to the Effective Time; and
(b) Audited Financial Statements. Any audited balance sheet and the
related statements of income, changes in
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shareholders' equity and statements of cash flows of the Company for any year
ended after December 31, 1996 and prior to the Effective Time.
5.6 Affiliates.
(a) Of the Company. At least 30 days prior to the Closing Date, the
Company shall deliver to Parent a list of names and addresses of those persons
who were, in the Company's reason able judgment, at the record date for its
meeting of shareholders to approve the Merger, "affiliates" (each such person,
an "Affili ate") of the Company within the meaning of Rule 145 of the rules and
regulations promulgated under the Securities Act. The Company shall provide
Parent such information and documents as Parent shall reasonably request for
purposes of reviewing such list. The Company shall use all reasonable efforts to
deliver or cause to be delivered to Parent and the Company, prior to the Closing
Date, from each of the Affiliates of the Company identified in the foregoing
list, an Affiliate Letter in the form attached hereto as Exhibit 5.6(a). Parent
shall be entitled to place legends as specified in such Affiliate Letters on the
certificates evidencing any Parent Common Stock to be received by such
Affiliates pursuant to the terms of this Agreement, and to issue appropriate
stop transfer instructions to the transfer agent for Parent Common Stock,
consistent with the terms of such Affiliate Letters.
(b) Of Parent. At least 30 days prior to the Closing Date, Parent
shall deliver to the Company a list of names and addresses of those persons who
were, in Parent's reasonable judgment, at the record date for the meeting of
shareholders of the Company to approve the Merger, Affiliates of Parent. Parent
shall provide the Company such information and documents as the Company shall
reasonably request for purposes of reviewing such list. Parent shall use all
reasonable efforts to deliver or cause to be delivered to Parent, prior to the
Closing Date, from each of the Affiliates of Parent identified in the foregoing
list, an Affiliate Letter in the form attached hereto as Exhibit 5.6(b).
5.7 Expenses. Whether or not the Merger is consummated, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expense, except as
expressly provided herein and except that expenses incurred in connection with
printing and mailing the Proxy Statement shall be shared equally by Parent and
the Company.
5.8 Brokers or Finders. Except as set forth in the Company Letter or the
Parent Letter, each of Parent and the Company respectively represents, as to
itself, its Subsidiaries (in the case of Parent) and its affiliates, that no
agent, broker, in vestment banker, financial advisor or other firm or person is
or will be entitled to any broker's or finder's fee or any other
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commission or similar fee in connection with any of the transactions
contemplated by this Agreement. Each party agrees to indemnify the other party
and hold the other party harmless from and against any and all claims,
liabilities or obligations with respect to any fees, commissions or expenses
asserted by any Person on the basis of any act or statement alleged to have been
made by such first party or its Subsidiary or affiliate.
5.9 Additional Agreements. In case at any time after the Effective Time any
further action is necessary or desirable to carry out the purposes of this
Agreement or to vest the Surviving Corporation with full title to all
properties, assets, rights, approvals, immunities and franchises of either of
the Company or Merger Sub, the proper officers and directors of the Company and
Merger Sub shall take all such necessary action.
5.10 Indemnification. For a period of three years from and after the
Effective Time, Parent shall indemnify, defend and hold harmless each person who
is now or who becomes prior to the Effective Time, an officer, director or
employee of the Company (each, an "Indemnified Party" and, collectively, the
"Indemnified Parties") against (i) all losses, claims, damages, costs, expenses,
liabilities or judgments or amounts that are paid in settlement with the
approval of Parent (which approval shall not be unreason ably withheld) of or in
connection with any claim, action, suit, proceeding or investigation based in
whole or in part on or arising in whole or in part out of the fact that such
person is or was a director, officer or employee of the Company, whether
pertaining to any matter existing or occurring at or prior to the Effective Time
and whether asserted or claimed prior to, or at or after, the Ef fective Time
("Indemnified Liabilities") and (ii) all Indemnified Liabilities based in whole
or in part on, or arising in whole or in part out of, or pertaining to this
Agreement or the transactions contemplated hereby, in each case to the full
extent the Company would have been permitted under Ohio law and its articles of
incor poration and code of regulations to indemnify such person (and Parent
shall pay expenses in advance of the final disposition of any such action or
proceeding to each Indemnified Party to the full extent permitted by law upon
receipt of any undertaking required by Section 1701.13(E)(5) of the OGCL).
Without limiting the foregoing, in the event any such claim, action, suit,
proceeding or investigation is brought against Indemnified Parties (whether
arising before or after the Effective Time), (i) any counsel retained by the
Indemnified Parties for any period after the Effective Time shall be reasonably
satisfactory to Parent; (ii) after the Effective Time, Parent shall pay all
reasonable fees and expenses of such counsel for the Indemnified Parties
promptly as statements therefor are received; and (iii) after the Effective
Time, Parent will use all reasonable efforts to assist in the vigorous defense
of any such matter, provided that Parent shall not be liable for any settlement
of any claim effected without its written consent, which consent, however, shall
not be unreasonably
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withheld. Any Indemnified Party wishing to claim indemnification under this
Section 5.10, upon learning of any such claim, action, suit, proceeding or
investigation, shall promptly notify Parent (but the failure so to notify Parent
shall not relieve it from any liability which it may have under this Section
5.10 except to the extent such failure materially prejudices Parent), and shall
deliver to Parent the undertaking, if any, required by Section 1701.13(E)(5) of
the OGCL. The Indemnified Parties as a group may retain only one law firm to
represent them with respect to each such matter unless there is, under
applicable standards of professional conduct, a conflict on any significant
issue between the positions of any two or more Indemnified Parties. In any case
in which the approval by the Surviving Corporation is required to effectuate any
indemnification, Parent shall cause the Surviving Corporation to direct, at the
election of any Indemnified Party (or, if more than one Indemnified Party, a
majority of the Indemnified Parties), that the determination of any such
approval shall be made by independent counsel mutually satisfactory to the
Surviving Corporation and the Indemnified Party (or, if applicable, a majority
of the Indemnified Parties).
5.11 Pooling and Tax-Free Reorganization Treatment. Neither Parent nor the
Company shall intentionally cause to be taken any action, whether before or
after the Effective Time, that would disqualify the Merger as a "pooling of
interests" for accounting purposes or as a "reorganization" within the meaning
of Section 368(a) of the Code.
5.12 The Company's ESOP. After the Effective Time, the Company shall
maintain the Company's Employee Stock Ownership Plan ("ESOP") only for such
period of time and on such terms and conditions as are set forth in Exhibit
5.12.
ARTICLE VI
CONDITIONS PRECEDENT
6.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each party to effect the Merger shall be subject to the
satisfaction prior to the Closing Date of the following conditions:
(a) Shareholder Approval. This Agreement shall have
been respectively approved and adopted by the affirmative vote of
the holders of the outstanding shares of Company Common Stock.
(b) Other Approvals. Other than the filing of the Certificate of
Merger provided for by Section 1.1, all authoriza tions, consents, orders or
approvals of, or declarations or filings with, and all expirations of waiting
periods imposed by, any Governmental Entity (all of the foregoing, "Consents")
that are necessary for the consummation of the Merger, other than immaterial
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Consents the failure to obtain which would not have a significant adverse effect
on the consummation of the Merger or on Parent and its Subsidiaries, taken as a
whole, after consummation of the Merger, shall have been filed, occurred or been
obtained (all such permits, approvals, filings and consents and the lapse of all
such waiting periods being referred to as the "Requisite Regulatory Approvals")
and all such Requisite Regulatory Approvals shall be in full force and effect.
Parent shall have received all state securities or blue sky permits and other
authorizations necessary to issue the Parent Common Stock in exchange for
Company Common Stock and to consummate the Merger.
(c) S-4. The S-4 shall have become effective under the Securities Act
and shall not be the subject of any stop order or proceeding seeking a stop
order.
(d) Pooling. Parent, Merger Sub and the Company shall have received a
letter from Eskew & Gresham, P.S.C., Parent's independent certified public
accountants, to the effect that the Merger qualifies for "pooling of interests"
accounting treatment under Accounting Principles Board Opinion No. 16, the
interpretive releases issued pursuant thereto, and the pronouncements of the SEC
if consummated in accordance with this Agreement.
(e) No Injunctions or Restraints; Illegality. No temporary restraining
order, preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition (an "Injunction")
preventing the consummation of the Merger shall be in effect, nor shall any
proceeding by any Governmental Entity seeking any of the foregoing be pending.
There shall not be any action taken, or any statute, rule, regulation or order
enacted, entered, enforced or deemed applicable to the Merger, which makes the
consummation of the Merger illegal.
(f) Burdensome Condition. There shall not be any action taken, or any
statute, rule, regulation or order enacted, entered, enforced or deemed
applicable to the Merger, by any Governmental Entity which, in connection with
the grant of a Requisite Regulato ry Approval, imposes any condition or
restriction upon Parent or its Subsidiaries, the Company or the Surviving
Corporation that would so materially adversely impact the economic or business
ben efits of the transactions contemplated by this Agreement as to render
inadvisable the consummation of the Merger.
(g) NMS Listing. The shares of Parent Common Stock issuable
pursuant to this Agreement shall have been approved for listing on the NASDAQ
National Market System, subject to official notice of issuance.
6.2 Conditions to Obligations of Parent and Merger Sub. The obligations
of Parent and Merger Sub to effect the Merger are
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subject to the satisfaction of the following conditions or waiver by Parent on
on or prior to the Closing Date:
(a) Representations and Warranties. The representations and
warranties of the Company set forth in this Agreement that are qualified as to
materiality shall be true and correct, and the representations and warranties of
the Company set forth in this Agreement that are not so qualified shall be true
and correct in all material respects, in each case as of the date of this
Agreement, and as of the Closing Date as though made on and as of the Closing
Date, except to the extent such representation or warranty expressly relates to
an earlier date (in which case as of such date), and Parent shall have received
a certificate signed on behalf of the Company by the Chief Executive Officer and
the Chief Financial Officer of the Company to such effect.
(b) Performance of Obligations of the Company. The Company
shall have performed in all material respects all obliga tions required to be
performed by it under this Agreement, at or prior to the Closing Date, and
Parent shall have received a certificate signed on behalf of the Company by the
Chief Executive Officer and the Chief Financial Officer of the Company to such
effect.
(c) Consents Under Agreements. The Company shall have obtained
the consent or approval of each person (other than the Governmental Entities
referred to in Section 6.1(b)) whose consent or approval shall be required in
order to permit the succession by the Surviving Corporation pursuant to the
Merger to any obligation, right or interest of the Company under any loan or
credit agreement, note, mortgage, indenture, lease, license or other agreement
or instrument, except those for which failure to obtain such consents and
approvals would not, in the reasonable opinion of Parent, individually or in the
aggregate, have a Material Adverse Effect on the Surviving Corporation or upon
the consummation of the transactions contemplated hereby.
(d) Tax Opinion. Parent shall have received an opinion of
Eskew & Gresham, P.S.C., dated the Closing Date, in form and substance
satisfactory to Parent, to the effect that the Merger will be treated for
federal income tax purposes as a reorganization within the meaning of Section
368(a) of the Code.
(e) Letters from the Company Affiliates. Parent shall have
received from each person named in the letter referred to in Section 5.6(a) an
executed copy of an agreement in the form of Exhibit 5.6(a).
(f) Appraisal Rights. The holders of not more than 10% of the
issued and outstanding shares of Company Common Stock shall have properly
demanded appraisal or dissenters rights pursuant to the OGCL.
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6.3 Conditions to Obligations of the Company. The obliga tions of the
Company to effect the Merger are subject to the satisfaction or waiver by the
Company on or prior to the Closing Date of the following conditions:
(a) Representations and Warranties. The representations and
warranties of Parent and Merger Sub set forth in this Agreement that are
qualified as to materiality shall be true and correct, and the representations
and warranties of Parent and Merger Sub set forth in this Agreement that are not
so qualified shall be true and correct in all material respects, in each case as
of the date of this Agreement and as of the Closing Date as though made on and
as of the Closing Date, except to the extent such representation or warranty
expressly relates to another date (in which case as of such date), and the
Company shall have received a certificate signed on behalf of Parent and Merger
Sub by the Chief Executive Officer and the Chief Financial Officer of Parent and
Merger Sub to such effect.
(b) Performance of Obligations of Parent and Merger Sub.
Parent and Merger Sub shall have performed in all material respects all
obligations required to be performed by them under this Agree ment at or prior
to the Closing Date, and the Company shall have received a certificate signed on
behalf of Parent and Merger Sub by the Chief Executive Officer and the Chief
Financial Officer of Parent and Merger Sub to such effect.
(c) Consents Under Agreements. Parent and Merger Sub shall
have obtained the consent or approval of each person (other than the
Governmental Entities referred to in Section 6.1(b)) whose consent or approval
shall be required in connection with the transactions contemplated hereby under
any loan or credit agree ment, note, mortgage, indenture, lease, license or
other agreement or instrument, except those for which failure to obtain such
consents and approvals would not, in the reasonable opinion of the Company,
individually or in the aggregate, have a Material Adverse Effect on Parent or
upon the consummation of the transactions contemplated hereby.
(d) Tax Opinion. The Company shall have received an opinion of
Vorys, Sater, Seymour and Pease dated the Closing Date, in form and substance
satisfactory to Parent and its counsel, to the effect that the Merger will be
treated for federal income tax purposes as a reorganization within the meaning
of Section 368(a) of the Code.
(e) Letters from Parent Affiliates. The Company shall have
received from each person named in the letter referred to in Section 5.6(b) an
executed copy of an agreement substantially in the form of Exhibit 5.6(b).
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(f) Price of Parent Common Stock. The Average Closing Price of a share
of Parent Common Stock shall be $14 or more. For purposes of this Agreement, the
"Average Closing Price" of a share of Parent Common Stock shall be the average
of the high bid and low asked price of a share of Parent Common Stock as
furnished by Advest, Inc. for the 20 consecutive trading days ending on the
fifth business day prior the Effective Time of the Merger.
ARTICLE VII
TERMINATION; AMENDMENT; WAIVER
7.1 Termination. This Agreement may be terminated at any time prior to
the Effective Time of the Merger, whether before or after the approval of this
Agreement by the shareholders of the Company:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company:
(i) if, at a duly held shareholders meeting of the
Company or any adjournment thereof at which approval of this Agreement is voted
upon, the approval of the shareholders of the Company shall not have been
obtained;
(ii) if the Merger shall not have been consummated
on or before December 31, 1997, unless the failure to consummate the Merger is
the result of a willful and material breach of this Agreement by the party
seeking to terminate this Agreement;
(iii) if any court of competent jurisdiction or
other Governmental Entity shall have issued an order, decree or ruling or taken
any other action permanently enjoining, restraining or otherwise prohibiting the
Merger and such order, decree, ruling or other action shall have become final
and non-appealable;
(iv) in the event of a breach by the other party of
any representation, warranty, covenant or other agreement contained in this
Agreement which (A) would give rise to the failure of a condition set forth in
Section 6.2(a) or 6.2(b) or Section 6.3(a) or 6.3(b), as applicable, and (B)
cannot be or has not been cured within 30 days after the giving of written
notice to the breaching party of such breach ("Material Breach") (provided that
the terminating party is not then in breach of any representation, warranty,
covenant or other agreement that would give rise to a failure of a condition
described in clause (A) above);
(c) by either Parent or the Company in the event that (i) all
the conditions to the obligation of such party to effect the Merger set forth in
Section 6.1 shall have been satisfied and (ii) any condition to the obligation
of such party to effect the
33
<PAGE>
Merger set forth in Section 6.2 (in the case of Parent) or Section 6.3 ( in the
case of the Company) is not capable of being satisfied prior to the date on
which this Agreement may be terminated pursuant to Section 7.1(b)(ii); or
(d) by the Company, subject to Section 7.5(b), if the Board of
Directors of the Company shall concurrently approve, and the Company shall
concurrently enter into, a definitive agreement providing for the implementation
of the transactions contemplated by an Acquisition Proposal; provided, however,
that (i) the Company is not then in breach of Section 4.2 or in breach of any
other representation, warranty, covenant or agreement that would give rise to a
failure of a condition set forth in Section 6.2(a) or 6.2(b); (ii) the Board of
Directors of the Company shall have complied with Section 7.5(b) in connection
with such Acquisition Proposal and (iii) no termination pursuant to this Section
7.1(d) shall be effective unless the Company shall simultaneously make the
payment required by Section 7.2(a).
7.2 Effect of Termination.
(a) In the event that any person shall make an Acquisition
Proposal with respect to the Company and thereafter (i) this Agreement is
terminated (A) pursuant to Section 7.1(b)(i), (B) pursuant to Section 7.1(b)(ii)
(if at the time of termination (x) the Company is in breach of any
representation, warranty, covenant or other agreement that would give rise to a
failure of a condition set forth in Section 6.2(a) or 6.2(b) and (y) such breach
cannot be or has not been cured within 30 days after the Company becomes aware
of such breach or such shorter period that may elapse between the date the
Company becomes aware of such breach and the time of termination), (C) pursuant
to Section 7.1(b)(iii) (if at the time of termination (x) the Company is in
breach of any representation, warranty, covenant or other agreement that would
give rise to a failure of a condition set forth in Section 6.2(a) or 6.2(b) and
(y) such breach cannot be or has not been cured within 30 days after the Company
becomes aware of such breach or such shorter period that may elapse between the
date the Company becomes aware of such breach and the time of termination), (D)
by Parent pursuant to Section 7.1(b)(iv), (E) by Parent pursuant to Section
7.1(c) or (F) by the Company pursuant to Section 7.1(d), and (ii) a definitive
agreement with respect to an Acquisition Proposal is executed, or an Acquisition
Proposal is consummated, at or within 12 months after such termination, then
Parent shall be paid a fee of $350,000 (reduced by any amount actually paid by
the Company pursuant to Section 7.2(b) in connection with such termination),
which amount shall be payable by wire transfer of same day funds on the date
such agreement is executed, or such Acquisition Proposal is consummated, as
applicable. The Company acknowledges that the agreements contained in this
Section 7.2(a) are an integral part of the transactions contemplated by this
Agreement, and that without these agreements, Parent would not enter into this
Agreement;
34
<PAGE>
accordingly, if the Company fails to promptly pay the amount due pursuant to
this Section 7.2(a), and, in order to obtain such payment, Parent commences a
suit that results in a judgment against the Company for the fees set forth in
this Section 7.2(a), the Company shall also pay to Parent its costs and expenses
(including reasonable attorneys' fees) in connection with such suit.
(b) In the event of termination of this Agreement by either
Parent or the Company pursuant to Section 7.1(b)(i), then the Company shall
reimburse Parent for all its reasonable out-of-pocket expenses actually incurred
in connection with this Agreement and the transactions contemplated hereby, up
to a maximum of $100,000, which amount shall be payable by wire transfer of same
day funds within three business days of written demand, accompanied by a
reasonably detailed statement of such expenses and appropriate supporting
documentation therefor.
(c) In the event of termination of this Agreement by either
Parent or the Company as provided in Section 7.1, this Agreement shall forthwith
become void and have no effect, without any liability or obligation on the part
of Parent, Merger Sub or the Company, other than the provisions of Section 5.1
(penultimate sentence), Section 5.7, this Section 7.2 and Article VIII and
except to the extent that such termination results from the willful and material
breach by a party of any its representations, warranties, covenants or other
agreements set forth in this Agreement.
7.3 Amendment. This Agreement may be amended by the parties at any time
before or after the approval of this Agreement by the shareholders of the
Company; provided, however, that after such approval by the shareholders of the
Company, there shall be made no amendment that pursuant to the OGCL requires
further approval by the shareholders of the Company 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.
7.4 Extension; Waiver. At any time prior to the Effective Time of the
Merger, the parties may (i) extend the time for the performance of any of the
obligations or other acts of the other parties; (ii) waive any inaccuracies in
the representations and warranties contained in this Agreement or in any
document delivered pursuant to this Agreement; or (iii) subject to the proviso
of Section 7.3, waive compliance with any of the agreements or conditions
contained in this Agreement. Any agreement on the part of a party to any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party. The failure of any party to this Agreement to
assert any of its rights under this Agreement or otherwise shall not constitute
a waiver of such rights.
35
<PAGE>
7.5 Procedure for Termination, Amendment, Extension or Waiver.
(a) A termination of this Agreement pursuant to Section 7.1,
an amendment of this Agreement pursuant to Section 7.3 or an extension or waiver
pursuant to Section 7.4 shall, in order to be effective, require, in the case of
Parent, Merger Sub or the Company, action by its Board of Directors or, in the
case of an extension or waiver pursuant to Section 7.4, the duly authorized
designee of its Board of Directors.
(b) The Company shall provide to Parent written notice prior
to any termination of this Agreement pursuant to Section 7.1(d) advising Parent
(i) that the Board of Directors of the Company in the exercise of its good faith
judgment as to its fiduciary duties to the shareholders of the Company under
applicable law, after receipt of written advice of outside legal counsel, has
determined (on the basis of such Acquisition Proposal and the terms of this
Agreement, as then in effect) that such termination is required in connection
with an Acquisition Proposal that is more favorable to the shareholders of the
Company than the transactions contemplated by this Agreement (taking into
account all terms of such Acquisition Proposal and this Agreement, including all
conditions) and (ii) as to the material terms of any such Acquisition Proposal.
At any time after five business days following receipt of such notice, the
Company may terminate this Agreement as provided in Section 7.1(d) only if the
Board of Directors of the Company determines that such Acquisition Proposal is
more favorable to the shareholders of the Company than the transactions
contemplated by this Agreement (taking into account all terms of such
Acquisition Proposal and this Agreement, including all conditions, and which
determination shall be made in light of any revised proposal made by Parent
prior to the expiration of such five business day period) and concurrently
enters into a definitive agreement providing for the implementatation of the
transactions contemplated by such Acquisition Proposal.
ARTICLE VIII
GENERAL PROVISIONS
8.1 Non-Survival of Representations and Warranties. None of the
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Effective Time of the Merger. This
Section 8.1 shall not limit any covenant or agreement of the parties that by its
terms contemplates performance after the Effective Time of the Merger.
8.2 Notices. All notices and other communications required
to be given hereunder shall be in writing and shall be deemed given
36
<PAGE>
upon (i) transmitter's confirmation of receipt of a facsimile transmission, (ii)
confirmed delivery by a standard overnight carrier or when delivered by hand or
(iii) the expiration of five business days after the day when mailed by
certified or registered mail, postage prepaid, addressed to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
(a) If to Parent or
Merger Sub, to: Premier Financial Bancorp, Inc.
120 N. Hamilton Street
Georgetown, Kentucky 40324
Attn: J. Howell Kelly,
President and
Chief Executive Officer
Telecopy No. (502) 863-7503
With a copy to: David W. Harper, Esq.
2450 Meidinger Tower
Louisville, Kentucky 40202
Telecopy No. (502) 583-2418
and
(b) If to Company, to: The Sabina Bank
135 N. Howard Street
Sabina, Ohio 45169
Attn: Garry W. Priest,
President and Chief Executive
Officer
Telecopy No. (937) 584-2494
With a copy to: Terri Reyering Abare, Esq.
Vorys, Sater, Seymour and Pease
221 E. Fourth, Suite 2100
Cincinnati, Ohio 45202
Telecopy No. (513) 723-4056
8.3 Interpretation. Unless the context otherwise requires, words describing
the singular number shall include the plural and vice versa, and words denoting
any gender shall include all genders and words denoting natural persons shall
include corporations and other entities and vice versa. The table of contents,
index of terms and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or inter pretation of
this Agreement. When a reference is made in this Agreement to any "Section" or
"Exhibit," such reference shall be to
37
<PAGE>
a section or exhibit to this Agreement unless otherwise indicated. Whenever the
words "include," "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation." Whenever the
words "or any Subsidiary", "or any Subsidiaries," "nor any Subsidiary" or "nor
any Subsidiaries" are used in this Agreement in connection with a preceding
reference to Parent, they shall be deemed to refer to a Subsidiary or
Subsidiaries Parent. The phrase "made available" in this Agreement shall mean
that the information referred to has been made available if requested by the
party to whom such information is to be made available, and the correlative
phrase "make available" shall mean that such information shall be promptly made
available if so requested. The phrases "the date of this Agreement," "the date
hereof" and terms of similar import, unless the context otherwise requires,
shall be deemed to refer to May 28, 1997.
8.4 Assignment; Binding Effect; Benefit. Neither this Agreement nor any of
the rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by opera tion of law or otherwise) without the prior
written consent of the other parties. Subject to the preceding sentence, this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and assigns. Notwithstand ing anything
contained in this Agreement to the contrary, except for the provisions of
Article II and Section 5.10 (collectively, the "Third Party Provisions"),
nothing in this Agreement, express or implied, is intended to confer on any
person other than the parties hereto or their respective heirs, successors,
executors, administrators and assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement. The Third Party Provisions may
be enforced on behalf of the Company or the other respective beneficiaries
thereof by those individuals who were the directors of the Company immediately
prior to the Effective Time and also by the holder of Company Common Stock
converted in the Merger or the Indemnified Party that such provisions
respectively are intended to benefit and their respective heirs and
representatives. Parent shall pay all expenses, including attorneys' fees, that
may be incurred by such directors or other persons in enforcing the Third Party
Provisions.
8.5 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Ohio regardless of the laws that might
otherwise govern under applicable principles of conflicts of laws thereof.
8.6 Counterparts. This Agreement may be executed in separate counterparts,
each of which when so executed and delivered shall be an original, but all of
which shall together constitute one and the same instrument. Each counterpart
may consist of a number of copies hereof each signed by less than all, but
together signed by
38
<PAGE>
all of the parties hereto. It shall not be necessary, in making proof of this
Agreement or any counterpart hereof, to produce or account for any of the other
counterparts.
8.7 Severability. Any term or provision of this Agreement that is invalid
or unenforceable shall be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement. If any provision of this Agreement is so broad
as to be unenforce able, the provision shall be interpreted to be only so broad
as is enforceable.
8.8 Incorporation of Documents. The Company Letter, Parent Letter, the
Confidentiality Agreement, and all Annexes, Exhibits and Schedules, if any,
attached hereto and referred to herein are hereby incorporated herein and made a
part hereof for all purposes
as if fully set forth herein.
8.9 Enforcement. The parties agree that irreparable damage would occur in
the event that any of the provisions of this Agreement were not performed in
accordance with its specific terms or were otherwise breached. It is accordingly
agreed that the parties shall be entitled to seek an injunction or injunctions
to prevent breaches of this Agreement and to enforce specifically the terms and
provisions of this Agreement in any court of the United States located in the
State of Ohio or in Ohio state court, this being in addition to any other remedy
to which they are entitled at law or in equity.
8.10 Waivers. Except as provided in this Agreement or in any waiver
pursuant to Section 7.4, no action taken pursuant to this Agreement, including
any investigation by or on behalf of any party, shall be deemed to constitute a
waiver by the party taking such action of compliance with any representations,
warranties, covenants or agreements contained in this Agreement. The waiver by
any party hereto of a breach of any provision hereunder shall not operate or be
construed as a waiver of any prior or subsequent breach of the same or any other
provision hereunder.
8.11 Entire Agreement. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and supersedes all
prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof.
39
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Agree ment to be
signed on its behalf by its officers thereunto duly authorized, all as of the
day and year first above written.
PREMIER FINANCIAL BANCORP, INC.
By:
---------------------------------
J. Howell Kelly, President and Chief
Executive Officer
PFBI INTERIM BANK
By:
----------------------------------------
J. Howell Kelly, an Incorporator
THE SABINA BANK
By:
-----------------------------------------
Garry W. Priest, President and
Chief Executive Officer
40
Exhibit 25.1
<PAGE>
- --------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION
DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) ___________
------------------------------
BANKERS TRUST COMPANY
(Exact name of trustee as specified in its charter)
NEW YORK 13-4941247
(Jurisdiction of Incorporation or (I.R.S. Employer
organization if not a U.S. national bank) Identification no.)
FOUR ALBANY STREET
NEW YORK, NEW YORK 10006
(Address of principal (Zip Code)
executive offices)
Bankers Trust Company
Legal Department
130 Liberty Street, 31st Floor
New York, New York 10006
(212) 250-2201
(Name, address and telephone number of agent for service)
---------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PREMIER FINANCIAL BANCORP, INC. PFBI CAPITAL TRUST
(Exact name of Registrant as specified (Exact name of Registrant as specified
in its charter) in its charter)
KENTUCKY 61-1206757 DELAWARE REQUESTED
(State or other jurisdiction of (I.R.S. employer (State or other jurisdiction of (I.R.S. employer
Incorporation or organization) Identification no.) incorporation or organization) Identification no.)
120 N. HAMILTON STREET c/o PREMIER FINANCIAL BANCORP, INC.
GEORGETOWN, KENTUCKY 40324 120 N. HAMILTON STREET
(Address, including zip code GEORGETOWN, KENTUCKY 40324
of principal executive offices) (Address, including zip code of
principal executive offices)
</TABLE>
Preferred Securities of PFBI Capital Trust
Junior Subordinated Debentures of Premier Financial Bancorp, Inc.
Guarantee of Premier Financial Bancorp, Inc. of certain obligations under the
Preferred Securities
(Title of the indenture securities)
<PAGE>
Item 1. General Information.
Furnish the following information as to the trustee.
(a) Name and address of each examining or supervising
authority to which it is subject.
Name Address
Federal Reserve Bank (2nd District) New York, NY
Federal Deposit Insurance Corporation Washington, D.C.
New York State Banking Department Albany, NY
(b) Whether it is authorized to exercise corporate trust
powers.
Yes.
Item 2. Affiliations with Obligor.
If the obligor is an affiliate of the Trustee, describe each
such affiliation.
None.
Item 3. -15. Not Applicable
Item 16. List of Exhibits.
Exhibit 1 - Restated Organization Certificate of
Bankers Trust Company dated August 7, 1990,
Certificate of Amendment of the Organization
Certificate of Bankers Trust Company dated
June 21, 1995 - Incorporated herein by
reference to Exhibit 1 filed with Form T-1
Statement, Registration No. 33-65171, and
Certificate of Amendment of the Organization
Certificate of Bankers Trust Company dated
March 20, 1996, copy attached.
Exhibit 2 - Certificate of Authority to commence
business - Incorporated herein by reference
to Exhibit 2 filed with Form T-1 Statement,
Registration No. 33-21047.
Exhibit 3 - Authorization of the Trustee to exercise
corporate trust powers - Incorporated herein
by reference to Exhibit 2 filed with Form
T-1 Statement, Registration No. 33-21047.
Exhibit 4 - Existing By-Laws of Bankers Trust
Company, as amended on February 18, 1997 -
incorporated herein by reference to Exhibit 2
filed with Form T-1 Statement, Registration
No. 333-24509.
-2-
<PAGE>
Exhibit 5 - Not applicable.
Exhibit 6 - Consent of Bankers Trust Company
required by Section 321(b) of the Act.
Incorporated herein by reference to Exhibit
4 filed with Form T-1 Statement,
Registration No. 22-18864.
Exhibit 7 - A copy of the latest report of condition of
Bankers Trust Company dated as of March 31,
1997.
Exhibit 8 - Not Applicable.
Exhibit 9 - Not Applicable.
-3-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, Bankers Trust Company, a corporation organized and
existing under the laws of the State of New York, has duly caused this statement
of eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in The City of New York, and State of New York, on the 2nd day
of June, 1997.
BANKERS TRUST COMPANY
By: /s/Kevin Weeks
------------------------------------------------
Kevin Weeks
Assistant Treasurer
-4-
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Legal Title of Bank: Bankers Trust Company Call Date: 03/31/97 ST-BK: 36-4840 FFIEC 031
Address: 130 Liberty Street Vendor ID: D CERT: 00623 Page RC-1
City, State ZIP: New York, NY 10006 11
FDIC Certificate No.: | 0 | 0 | 6 | 2 | 3
</TABLE>
Consolidated Report of Condition for Insured Commercial
and State-Chartered Savings Banks March 31, 1997
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, reported the amount outstanding as of the last business day of the
quarter.
Schedule RC--Balance Sheet
<TABLE>
<CAPTION>
-------------------------
| C400 |
Dollar Amounts in Thousands | RCFD Bil Mil Thou |
<S> <C> <C> <C>
ASSETS | / / / / / / / / / / / / / / / / / / |
1. Cash and balances due from depository institutions (from Schedule RC-A): | / / / / / / / / / / / / / / / / / / |
a. Noninterest-bearing balances and currency and coin(1) ................ | 0081 1,589,000 |1.a.
b. Interest-bearing balances(2) ......................................... | 0071 2,734,000 |1.b.
2. Securities: | / / / / / / / / / / / / / / / / / / |
a. Held-to-maturity securities (from Schedule RC-B, column A) ........... | 1754 0 |2.a.
b. Available-for-sale securities (from Schedule RC-B, column D).......... | 1773 4,433,000 |2.b.
3 Federal funds sold and securities purchased under agreements to
resell................................................................... | 1350 26,490,000 |3
4. Loans and lease financing receivables: | / / / / / / / / / / / / / / / / / / |
a. Loans and leases, net of unearned income (from Schedule RC-C)
RCFD 2122 15,941,000 | / / / / / / / / / / / / / / / / / / |4.a.
b. LESS: Allowance for loan and lease losses.RCFD 3123 708,000 | / / / / / / / / / / / / / / / / / / |4.b.
c. LESS: Allocated transfer risk reserve ....RCFD 3128 0 | / / / / / / / / / / / / / / / / / / |4.c.
d. Loans and leases, net of unearned income, | / / / / / / / / / / / / / / / / / / |
allowance, and reserve (item 4.a minus 4.b and 4.c) ............... | 2125 15,233,000 |4.d.
5. Assets held in trading accounts ......................................... | 3545 38,115,000 |5.
6. Premises and fixed assets (including capitalized leases) ................ | 2145 924,000 |6.
7. Other real estate owned (from Schedule RC-M) ............................ | 2150 188,000 |7.
8. Investments in unconsolidated subsidiaries and associated companies
(from Schedule RC-M) | 2130 175,000 |8.
9. Customers' liability to this bank on acceptances outstanding ............ | 2155 618,000 |9.
10. Intangible assets (from Schedule RC-M) .................................. | 2143 17,000 |10.
11. Other assets (from Schedule RC-F) ....................................... | 2160 4,424,000 |11.
12. Total assets (sum of items 1 through 11) ................................ | 2170 94,940,000 |12.
</TABLE>
- ------------------------------------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held in trading accounts.
<PAGE>
<TABLE>
<CAPTION>
<C> <C> <C> <C> <C>
Legal Title of Bank: Bankers Trust Company Call Date: 03/31/97 ST-BK: 36-4840 FFIEC 031
Address: 130 Liberty Street Vendor ID: D CERT: 00623 Page RC-2
City, State Zip: New York, NY 10006 12
FDIC Certificate No.: | 0 | 0 | 6 | 2 | 3
</TABLE>
<TABLE>
<CAPTION>
Schedule RC--Continued ____________________________________
Dollar Amounts in Thousands | / / / / / / / / Bil Mil Thou __ __|
- ---------------------------------------------------------------------------------------- ------------------------------------------
<S> <C> <C> <C>
LIABILITIES | / / / / / / / / / / / / / / / / |
13. Deposits: | / / / / / / / / / / / / / / / / |
a. In domestic offices (sum of totals of columns A and C
from Schedule RC-E, part I) | RCON 2200 14,450,000 |13.a.
(1) Noninterest-bearing(1) .....................RCON 6631 2,917,000....... | / / / / / / / / / / / / / / / / |13.a.(1)
(2) Interest-bearing ............................RCON 6636 11,533,000....... | / / / / / / / / / / / / / / / / |13.a.(2)
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs
(from Schedule RC-E part II) | RCFN 2200 23,456,000 |13.b.
(1) Noninterest-bearing ........................RCFN 6631 1,062,000....... | / / / / / / / / / / / / / / / / |13.b.(1)
(2) Interest-bearing ...........................RCFN 6636 22,394,000....... | / / / / / / / / / / / / / / / / |13.b.(2)
14. Federal funds purchased and securities sold under agreements to repurchase ....... | RCFD 2800 15,195,000 |14.
15. a. Demand notes issued to the U.S. Treasury .................................... | RCON 2840 0 |15.a.
b. Trading liabilities ......................................................... | RCFD 3548 18,911,000 |15.b.
16. Other borrowed money (includes mortgage indebtedness and obligations under
capitalized leases):.............................................................. | / / / / / / / / / / / / / / / / |
a. With original maturity of one year or less .................................. | RCFD 2332 7,701,000 |16.a.
b. With original maturity of more than one year ................................ | RCFD 2333 4,438,000 |16.b.
17. Not Applicable.................................................................... | RCFD 2910 |17.
18. Bank's liability on acceptances executed and outstanding ......................... | RCFD 2920 618,000 |18.
19. Subordinated notes and debentures ................................................ | RCFD 3200 1,226,000 |19.
20. Other liabilities (from Schedule RC-G) ........................................... | RCFD 2930 3,971,000 |20.
21. Total liabilities (sum of items 13 through 20) ................................... | RCFD 2948 89,966,000 |21.
| / / / / / / / / / / / / / / / / |
22. Not Applicable.................................................................... | / / / / / / / / / / / / / / / / |22.
EQUITY CAPITAL | / / / / / / / / / / / / / / / / |
23. Perpetual preferred stock and related surplus .................................... | RCFD 3838 600,000 |23.
24. Common stock ..................................................................... | RCFD 3230 1,002,000 |24.
25. Surplus (exclude all surplus related to preferred stock) ......................... | RCFD 3839 540,000 |25.
26. a. Undivided profits and capital reserves ...................................... | RCFD 3632 3,241,000 |26.a.
b. Net unrealized holding gains (losses) on available-for-sale securities ...... | RCFD 8434 ( 31,000) |26.b.
27. Cumulative foreign currency translation adjustments .............................. | RCFD 3284 ( 378,000) |27.
28. Total equity capital (sum of items 23 through 27) ................................ | RCFD 3210 4,974,000 |28.
29. Total liabilities, limited-life preferred stock, and equity capital
(sum of items 21, 22, and 28) .................................................... | RCFD 3300 94,940,000 |29.
</TABLE>
<TABLE>
<CAPTION>
Memorandum
To be reported only with the March Report of Condition.
<S> <C> <C> <C>
1. Indicate in the box at the right the number of the statement below that
best describes the most comprehensive level of auditing work performed
for the bank by independent external Number
auditors as of any date during 1996 ........................ | RCFD 6724 1 | M.1
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1 = Independent audit of the bank conducted in accordance 4 = Directors' examination of the bank performed by other
with generally accepted auditing standards by a certified external auditors (may be required by state chartering
public accounting firm which submits a report on the bank authority)
2 = Independent audit of the bank's parent holding company 5 = Review of the bank's financial statements by external
conducted in accordance with generally accepted auditing auditors
standards by a certified public accounting firm which 6 = Compilation of the bank's financial statements by
submits a report on the consolidated holding company external auditors
(but not on the bank separately) 7 = Other audit procedures (excluding tax preparation work)
3 = Directors' examination of the bank conducted in 8 = No external audit work
accordance with generally accepted auditing standards
by a certified public accounting firm (may be required by
state chartering authority)
</TABLE>
- ----------------------
(1) Including total demand deposits and noninterest-bearing time and savings
deposits.
<PAGE>
State of New York,
Banking Department
I, PETER M. PHILBIN, Deputy Superintendent of Bank of the State of New
York, DO HEREBY APPROVE the annexed Certificate entitled "CERTIFICATE OF
AMENDMENT OF THE ORGANIZATION CERTIFICATE OF BANKERS TRUST COMPANY Under Section
8005 of the Banking Law," dated March 20, 1996, providing for an increase in
authorized capital stock from $1,351,666,670 consisting of 85,166,667 shares
with a par value of $10 each designated as Common Stock and 500 shares with a
par value of $1,000,000 each designated as Series Preferred Stock to
$1,501,666,670 consisting of 100,166,667 shares with a par value of $10 each
designated as Common Stock and 500 shares with a par value of $1,000,000 each
designated as Series Preferred Stock.
Witness, my hand and official seal of the Banking Department at the City of New
York,
this 21st day of March in the Year of our Lord one thousand
nine hundred and ninety-six.
Peter M. Philbin
----------------------------------
Deputy Superintendent of Banks
<PAGE>
CERTIFICATE OF AMENDMENT
OF THE
ORGANIZATION CERTIFICATE
OF BANKERS TRUST
Under Section 8005 of the Banking Law
-----------------------------
We, James T. Byrne, Jr. and Lea Lahtinen, being respectively a Managing
Director and an Assistant Secretary of Bankers Trust Company, do hereby certify:
1. The name of the corporation is Bankers Trust Company.
2. The organization certificate of said corporation was filed by the
Superintendent of Banks on the 5th of march, 1903.
3. The organization certificate as heretofore amended is hereby amended
to increase the aggregate number of shares which the corporation shall have
authority to issue and to increase the amount of its authorized capital stock in
conformity therewith.
4. Article III of the organization certificate with reference to the
authorized capital stock, the number of shares into which the capital stock
shall be divided, the par value of the shares and the capital stock outstanding,
which reads as follows:
"III. The amount of capital stock which the corporation is hereafter to
have is One Billion, Three Hundred Fifty One Million, Six Hundred
Sixty-Six Thousand, Six Hundred Seventy Dollars ($1,351,666,670),
divided into Eighty-Five Million, One Hundred Sixty-Six Thousand, Six
Hundred Sixty-Seven (85,166,667) shares with a par value of $10 each
designated as Common Stock and 500 shares with a par value of One
Million Dollars ($1,000,000) each designated as Series Preferred
Stock."
is hereby amended to read as follows:
"III. The amount of capital stock which the corporation is hereafter to
have is One Billion, Five Hundred One Million, Six Hundred Sixty-Six
Thousand, Six Hundred Seventy Dollars ($1,501,666,670), divided into
One Hundred Million, One Hundred Sixty Six Thousand, Six Hundred
Sixty-Seven (100,166,667) shares with a par value of $10 each
designated as Common Stock and 500 shares with a par value of One
Million Dollars ($1,000,000) each designated as Series Preferred
Stock."
<PAGE>
6. The foregoing amendment of the organization certificate was
authorized by unanimous written consent signed by the holder of all outstanding
shares entitled to vote thereon.
IN WITNESS WHEREOF, we have made and subscribed this certificate this
20th day of March , 1996.
James T. Byrne, Jr.
-------------------
James T. Byrne, Jr.
Managing Director
Lea Lahtinen
------------
Lea Lahtinen
Assistant Secretary
State of New York )
) ss:
County of New York )
Lea Lahtinen, being fully sworn, deposes and says that she is an
Assistant Secretary of Bankers Trust Company, the corporation described in the
foregoing certificate; that she has read the foregoing certificate and knows the
contents thereof, and that the statements herein contained are true.
Lea Lahtinen
-------------------
Lea Lahtinen
Sworn to before me this 20th day of March, 1996.
Sandra L. West
- ------------------------------
Notary Public
SANDRA L. WEST Counterpart filed in the
Notary Public State of New York Office of the Superintendent of
No. 31-4942101 Banks, State of New York,
Qualified in New York County This 21st day of March, 1996
Commission Expires September 19, 1996
