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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
May 23, 2000
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FFY FINANCIAL CORP.
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(Exact name of registrant as specified in its charter)
Delaware 0-21638 34-1735753
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(State or other (Commission File Number) (IRS Employer
jurisdiction of Identification
incorporation) Number)
724 Boardman-Poland Road, Youngstown, Ohio 44512
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 330-726-3396
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N/A
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(Former name or former address, if changed since last report)
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Item 5. Other Events
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On May 23, 2000, the board of directors of FFY Financial Corp. ("FFY"), the
holding company for FFY Bank, and First Place Financial Corp. ("First Place"),
the holding company for First Federal Savings and Loan Association of Warren,
entered into a definitive agreement (the "Merger Agreement") to combine in a
merger of equals (the "Merger"). The Merger Agreement calls for a tax-free
exchange of each outstanding share of FFY common stock for 1.075 shares of First
Place common stock, with cash paid in lieu of fractional shares. In addition,
pursuant to the Merger Agreement, FFY Bank will merge with First Federal Savings
and Loan Association of Warren to become First Place Bank.
In connection with the Merger Agreement, FFY and First Place entered into
option agreements (the "Option Agreements") pursuant to which each party granted
the other party options, exercisable under certain circumstances, to purchase
shares of their respective common stock in an amount equal to 19.9% of the total
number of outstanding shares of either FFY's or First Place's common stock.
The Merger will be accounted for as a purchase and is expected to close in
the fourth quarter of 2000. The Merger Agreement has been approved by the
boards of directors of both companies. However, it is subject to certain other
conditions, including the approvals of the shareholders of both companies and
the approvals of regulatory authorities.
The foregoing information does not purport to be complete and is qualified
in its entirety by reference to the Merger Agreement and the Option Agreements
filed as exhibits hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
FFY Financial Corp.
May 24, 2000 By: /s/ Therese A. Liutkus
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Chief Financial Officer
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EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
2.1 Agreement and Plan of Merger, dated as of May 23, 2000, between First
Place Financial Corp. and FFY Financial Corp.
2.2 Stock Option Agreement dated as of May 23, 2000, between First Place
Financial Corp. and FFY Financial Corp.
2.3 Stock Option Agreement dated as of May 23, 2000, between FFY Financial
Corp. and First Place Financial Corp.
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PB Draft 5/23/00
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of May 23, 2000, by and between
First Place Financial Corp., a Delaware corporation ("First Place") and FFY
Financial Corp., a Delaware corporation ("FFY"). (First Place and FFY are
herein sometimes collectively referred to herein as the "Constituent
Corporations.")
WHEREAS, the Boards of Directors of First Place and FFY have determined
that it is in the best interests of their respective companies and their
shareholders to consummate the business combination transaction, in the form of
a merger of equals, provided for herein in which FFY will, subject to the terms
and conditions set forth herein, merge (the "Merger") with and into First Place;
and
WHEREAS, as soon as practicable after the execution and delivery of this
Agreement and Plan of Merger ("Agreement"), First Federal Savings and Loan
Association of Warren, a federally-chartered stock savings and loan association
and a wholly owned subsidiary of First Place (the "Association," and sometimes
referred to herein as the "Surviving Institution"), and FFY Bank, a federally-
chartered stock savings bank and a wholly owned subsidiary of FFY ("FFY Bank"),
will enter into a Subsidiary Agreement and Plan of Merger (the "Bank Merger
Agreement") providing for the merger (the "Subsidiary Merger") of FFY Bank with
and into the Association, with the Surviving Institution to bear the corporate
name "First Place Bank," and it is intended that the Subsidiary Merger be
consummated immediately following the consummation of the Merger; and
WHEREAS, the parties desire to make certain representations, warranties and
agreements in connection with the Merger and also to prescribe certain
conditions to the Merger.
NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreements contained herein, and intending to be legally bound
hereby, the parties agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. Subject to the terms and conditions of this Agreement, in
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accordance with the Delaware General Corporation Law (the "DGCL"), at the
Effective Time (as defined in Section 1.2 hereof), FFY shall merge with and into
First Place. First Place shall be the surviving corporation (hereinafter
sometimes called the "Surviving Corporation") in the Merger, and shall continue
its corporate existence under the laws of the State of Delaware. The name of
the Surviving Corporation shall be First Place Financial Corp., or such other
name as may be determined by First Place and FFY. Upon consummation of the
Merger, the separate corporate existence of FFY shall terminate.
1.2 Effective Time. The Merger shall become effective as set forth in the
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certificate of merger (the "Certificate of Merger") which shall be filed with
appropriate authorities in the State of Delaware (the "Authorities") on the
Closing Date (as defined in Section 9.1 hereof). The
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term "Effective Time" shall be the date and time when the Merger becomes
effective, as set forth in the Certificate of Merger.
1.3 Effects of the Merger. At and after the Effective Time, the Merger
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shall have the effects set forth in the DGCL including Sections 259 and 261.
1.4 Conversion of FFY Common Stock.
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(a) At the Effective Time, subject to Section 2.2 (e) hereof, each
share of the common stock, par value $0.01 per share, of FFY (the "FFY Common
Stock") issued and outstanding immediately prior to the Effective Time (other
than shares of FFY Common Stock held (x) in FFY's treasury or (y) directly or
indirectly by First Place or FFY or any of their respective Subsidiaries (as
defined below) (except for Trust Account Shares and DPC shares, as such terms
are defined in Section 1.4 (b) hereof)) shall, by virtue of this Agreement and
without any action on the part of the holder thereof, be converted into and
exchangeable for 1.075 shares (the "Exchange Ratio") of the common stock, par
value $0.01 per share, of First Place ("First Place Common Stock"). All of the
shares of FFY Common Stock converted into First Place Common Stock pursuant to
this Article I shall no longer be outstanding and shall automatically be
cancelled and shall cease to exist, and each certificate (each a "Certificate")
previously representing any such shares of FFY Common Stock shall thereafter
only represent the right to receive (i) the number of whole shares of First
Place Common Stock and (ii) the cash in lieu of fractional shares into which the
shares of FFY Common Stock represented by such Certificate have been converted
pursuant to this Section 1.4(a) and Section 2.2(e) hereof. Certificates
previously representing shares of FFY Common Stock shall be exchanged for
certificates representing whole shares of First Place Common Stock and cash in
lieu of fractional shares issued in consideration therefor upon the surrender of
such Certificates in accordance with Section 2.2 hereof, without any interest
thereon. If prior to the Effective Time First Place or FFY should merge,
reclassify its shares, recapitalize, declare a stock dividend, stock split or
other similar change in capitalization, or other distribution in such common
stock, then the Exchange Ratio shall be appropriately adjusted to reflect such
action.
(b) At the Effective Time, all shares of FFY Common Stock that are
owned by FFY as treasury stock and all shares of FFY Common Stock that are owned
directly or indirectly by First Place or FFY or any of their respective
Subsidiaries (other than shares of FFY Common Stock (x) held directly or
indirectly in trust accounts, managed accounts and the like or otherwise held in
a fiduciary capacity that are beneficially owned by third parties (any such
shares, and shares of First Place Common Stock which are similarly held, whether
held directly or indirectly by First Place or FFY, as the case may be, being
referred to herein as "Trust Account Shares") and (y) shares of FFY Common Stock
held by First Place or FFY or any of their respective Subsidiaries in respect of
a debt previously contracted (any such shares of FFY Common Stock, and shares of
First Place Common Stock which are similarly held, whether held directly or
indirectly by First Place or FFY being referred to herein as "DPC Shares"))
shall be cancelled and shall cease to exist and no stock of First Place or other
consideration shall be delivered in exchange therefor. All shares of First
Place Common Stock that are owned by FFY or any of its Subsidiaries (other than
Trust Account Shares and DPC Shares) shall become treasury stock of First Place.
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1.5 Stock Options.
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(a) At the Effective Time, all options granted by FFY ("FFY Options")
to purchase shares of FFY Common Stock which are outstanding and unexercised
immediately prior thereto shall be converted, in their entirety, automatically
into options to purchase shares of First Place Common Stock (the "Continuing
Options") in an amount and at an exercise price determined as provided below
(and otherwise subject to the terms of FFY's Amended and Restated Stock Option
and Incentive Plan (the "FFY Stock Plan")):
(1) The number of shares of First Place Common Stock to be
subject to the Continuing Options shall be equal to the product of
the number of shares of FFY Common Stock subject to the FFY Options
and the Exchange Ratio, provided that any fractional shares of First
Place Common Stock resulting from such multiplication shall be rounded
down to the nearest share; and
(2) The exercise price per share of First Place Common Stock
under the Continuing Options shall be equal to the exercise price per
share of FFY Common Stock under the FFY Options divided by the
Exchange Ratio, provided that such exercise price shall be rounded up
to the nearest cent.
The adjustment provided herein with respect to any options which are "incentive
stock options" (as defined in Section 422 of the Internal Revenue Code of 1986,
as amended (the "Code")) shall be and is intended to be effected in a manner
which is consistent with Section 424(a) of the Code. The duration and other
terms of the Continuing Options shall be the same as the FFY Options, except
that all references to FFY shall be deemed to be references to First Place.
(b) At all times after the Effective Time, First Place shall reserve
for issuance such number of shares of First Place Common Stock as necessary so
as to permit the exercise of Continuing Options in the manner contemplated by
this Agreement and in the instruments pursuant to which such options were
granted. Shares of First Place Common Stock issuable upon exercise of FFY Stock
Options shall be covered by an effective registration statement on Form S-8, and
First Place shall file a registration statement on Form S-8 covering such shares
as soon as practicable after the Effective Time, but in no event later than 30
days after the Effective Time.
(c) It is understood that the holders of an FFY Option may exercise
such options, in accordance with the terms of the option, and applicable
regulations, prior to the Effective Time.
1.6 First Place Common Stock. Except for shares of First Place Common
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Stock owned by FFY or any of its Subsidiaries (other than Trust Account Shares
and DPC Shares), which shall be converted into treasury stock of First Place as
contemplated by Section 1.4 hereof, the shares of First Place Common Stock
issued and outstanding immediately prior to the Effective Time shall be
unaffected by the Merger and at the Effective Time, such shares shall remain
issued and outstanding.
1.7 Certificate of Incorporation. At the Effective Time, the Certificate
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of Incorporation of First Place, as in effect at the Effective Time, shall be
amended and restated as
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of the Effective Time so as to read in its entirety in the form set forth as
Exhibit 1.7 and, as so amended and restated, such Certificate of Incorporation
shall be the Certificate of Incorporation of the Surviving Corporation until
thereafter changed or amended as provided therein or by applicable law.
1.8 By-Laws. At the Effective Time, the By-Laws of First Place, as in
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effect immediately prior to the Effective Time, shall be the By-Laws of the
Surviving Corporation until thereafter changed or amended as provided therein or
by applicable law.
1.9 Directors and Officers. The boards of directors and certain officers
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of the Surviving Corporation and the Surviving Institution shall be as set forth
on and designated in accordance with Exhibit 1.9 hereto until the earlier of the
resignation, retirement or removal of any individual set forth on or designated
in accordance with Exhibit 1.9 or until their respective successors are duly
elected and qualified, as the case may be, it being agreed that if any director
shall be unable or unwilling to serve as director at the Effective Time the
party which designated such individual as indicated in Exhibit 1.9 shall
designate another individual to serve in such individual's place. It is further
agreed that, immediately following the Effective Time, the Boards of Directors
shall consist of 16 persons, eight (8) of whom shall be designated by FFY and
eight (8) of whom shall be designated by First Place. Upon the first
resignation, removal or other termination of service of a director following the
Effective Time, such director, if initially designated by FFY, shall be replaced
by a person designated by the remaining FFY directors, or such director, if
initially designated by First Place, shall be replaced by a director designated
by the remaining First Place directors. Thereafter, upon the second
resignation, removal or other termination of service of a director, if such
director is an FFY designated director, a First Place designated director shall
resign and immediately be appointed by the board as a director emeritus for a
term of five (5) years or, if such director is a First Place designated
director, an FFY designated director shall resign and immediately be appointed
by the board as a director emeritus for a term of five (5) years, whereupon the
Boards shall be reduced to fourteen (14) members. If any officer set forth on
and designated in accordance with Exhibit 1.9 ceases to be an employee of First
Place, the Association, FFY or FFY Bank at or before the Effective Time or shall
be unable or unwilling to serve as an officer of the Surviving Corporation or
the Surviving Institution at the Effective Time, the parties will agree upon
another individual to serve in such individual's stead.
1.10 Tax Consequences. It is intended that the Merger and the Subsidiary
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Merger each constitute a reorganization within the meaning of Section 368(a) of
the Code, and that this Agreement shall constitute a "plan of reorganization"
for the purposes of Section 368 of the Code.
1.11 Offices. After the Effective Time, the headquarters of the Surviving
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Corporation shall be at 185 East Market Street, Warren, Ohio, and the staff for
headquarter operations shall be located at the current executive offices of both
First Place and FFY. The number of employees for headquarter operations housed
at each location will be approximately equal.
1.12 Staff Reductions. Any reductions in staff one year following the
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Effective Time shall be shared approximately equally between FFY staff and First
Place staff.
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ARTICLE II
EXCHANGE OF SHARES
2.1 First Place to Make Shares Available. At or prior to the Effective
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Time, First Place shall deposit, or shall cause to be deposited, with a bank or
trust company (the "Exchange Agent"), selected by First Place and reasonably
satisfactory to FFY, for the benefit of the holders of Certificates, for
exchange in accordance with this Article II, certificates representing the
shares of First Place Common Stock and the cash in lieu of fractional shares
(such cash and certificates for shares of First Place Common Stock, together
with any dividends or distributions with respect thereto, being hereinafter
referred to as the "Exchange Fund") to be issued pursuant to Section 1.4 and
paid pursuant to Section 2.2(a) in exchange for outstanding shares of FFY Common
Stock.
2.2 Exchange of Shares.
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(a) As soon as practicable after the Effective Time, and in no
event more than five business days thereafter, the Exchange Agent shall mail to
each holder of record of a Certificate or Certificates a letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss and title
to the Certificates shall pass, only upon delivery of the Certificates to the
Exchange Agent) and instructions for use in effecting the surrender of the
Certificates in exchange for certificates representing the shares of First Place
Common Stock and the cash in lieu of fractional shares into which the shares of
FFY Common Stock represented by such Certificate or Certificates shall have been
converted pursuant to this Agreement. FFY shall have the right to review both
the letter of transmittal and the instructions prior to the Effective Time and
provide reasonable comments thereon. Upon surrender of a Certificate for
exchange and cancellation to the Exchange Agent, together with such letter of
transmittal, duly executed, the holder of such Certificate shall be entitled to
receive in exchange therefor (x) a certificate representing that number of whole
shares of First Place Common Stock to which such holder of FFY Common Stock
shall have become entitled pursuant to the provisions of Article I hereof and
(y) a check representing the amount of cash in lieu of fractional shares, if
any, which such holder has the right to receive in respect of the Certificate
surrendered pursuant to the provisions of this Article II, and the Certificate
so surrendered shall forthwith be cancelled. No interest will be paid or accrued
on the cash in lieu of fractional shares and unpaid dividends and distributions,
if any, payable to holders of Certificates.
(b) No dividends or other distributions declared after the
Effective Time with respect to First Place Common Stock and payable to the
holders of record thereof shall be paid to the holder of any unsurrendered
Certificate until the holder thereof shall surrender such Certificate in
accordance with this Article II. After the surrender of a Certificate in
accordance with this Article II, the record holder thereof shall be entitled to
receive any such dividends or other distributions, without any interest thereon,
which theretofore had become payable with respect to shares of First Place
Common Stock represented by such Certificate. No holder of an unsurrendered
Certificate shall be entitled, until the surrender of such Certificate, to vote
the shares of First Place Common Stock into which his FFY Common Stock shall
have been converted.
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(c) If any certificate representing shares of First Place
Common Stock is to be issued in a name other than that in which the Certificate
surrendered in exchange therefor is registered, it shall be a condition of the
issuance thereof that the Certificate so surrendered shall be properly endorsed
(or accompanied by an appropriate instrument of transfer) and otherwise in
proper form for transfer, and that the person requesting such exchange shall pay
to the Exchange Agent in advance any transfer or other taxes required by reason
of the issuance of a certificate representing shares of First Place Common Stock
in any name other than that of the registered holder of the Certificate
surrendered, or required for any other reason, or shall establish to the
satisfaction of the Exchange Agent that such tax has been paid or is not
payable.
(d) After the Effective Time, there shall be no transfers on the
stock transfer books of FFY of the shares of FFY Common Stock which were issued
and outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates representing such shares are presented for transfer to the
Exchange Agent, they shall be cancelled and exchanged for certificates
representing shares of First Place Common Stock as provided in this Article II.
(e) Notwithstanding anything to the contrary contained herein,
no certificates or scrip representing fractional shares of First Place Common
Stock shall be issued upon the surrender for exchange of Certificates, no
dividend or distribution with respect to First Place Common Stock shall be
payable on or with respect to any fractional share, and such fractional share
interests shall not entitle the owner thereof to vote or to any other rights of
a shareholder of First Place. In lieu of the issuance of any such fractional
share, First Place shall pay to each former stockholder of FFY who otherwise
would be entitled to receive a fractional share of First Place Common Stock
(after taking into account all certificates delivered by such holder) an amount
in cash determined by multiplying (i) the Average Closing Price by (ii) the
fraction of a share of First Place Common Stock to which such holder would
otherwise be entitled to receive pursuant to Section 1.4 hereof. As used herein,
the term "Average Closing Price" means the average of the last reported daily
sales price (or if no sale on such date, then the mean of the closing bid/ask
price) per share of First Place Common Stock on the Nasdaq Stock Market
("Nasdaq"), for the 10 consecutive trading days (the "Valuation Period") ending
on the fifth business day prior to the date of the Effective Time.
(f) Any portion of the Exchange Fund that remains unclaimed by
the stockholders of FFY for six months after the Effective Time shall be paid to
First Place at the end of such time. Any stockholders of FFY who have not
theretofore complied with this Article II shall thereafter look only to First
Place for payment of their shares of First Place Common Stock, cash in lieu of
fractional shares and unpaid dividends and distributions on First Place Common
Stock deliverable in respect of each share of FFY Common Stock such stockholder
holds as determined pursuant to this Agreement, in each case, without any
interest thereon. Notwithstanding the foregoing, none of First Place, FFY, the
Exchange Agent or any other person shall be liable to any former holder of
shares of FFY Common Stock for any amount properly delivered to a public
official pursuant to applicable abandoned property, escheat or similar laws.
(g) In the event any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or
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destroyed and the posting by such person of a bond in such amount as First Place
may direct as indemnity against any claim that may be made against it with
respect to such Certificate, the Exchange Agent will issue in exchange for such
lost, stolen or destroyed Certificate the shares of First Place Common Stock and
cash in lieu of fractional shares deliverable in respect thereof pursuant to
this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF FFY
Prior to the date hereof, First Place has delivered to FFY a schedule and
FFY has delivered to First Place a schedule (respectively, its "Disclosure
Schedule") setting forth, among other things, items the disclosure of which is
necessary or appropriate either in response to an express disclosure requirement
contained in a provision hereof or as an exception to one or more
representations or warranties contained in Article III or IV or to one or more
of its covenants contained in Article V; provided, that (a) no such item is
required to be set forth in a Disclosure Schedule as an exception to a
representation or warranty if its absence would not be reasonably likely to
result in the representation or warranty being deemed materially untrue or
incorrect, and (b) the mere inclusion of an item in a Disclosure Schedule as an
exception to a representation or warranty shall not be deemed an admission by a
party that such item represents a material exception or fact, event or
circumstance.
Subject to the foregoing, FFY hereby represents and warrants to First Place
as follows:
3.1 Corporate Organization.
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(a) FFY is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware. FFY has the corporate
power and authority to own or lease all of its properties and assets and to
carry on its business as it is now being conducted, and is duly licensed or
qualified to do business in each jurisdiction in which the nature of the
business conducted by it or the character or location of the properties and
assets owned or leased by it makes such licensing or qualification necessary,
except where the failure to be so licensed or qualified would not have a
Material Adverse Effect (as defined in Section 8.1(e)) on FFY. FFY is duly
registered as a unitary savings and loan holding company under the Home Owners'
Loan Act of 1933, as amended (the "HOLA"). The Certificate of Incorporation and
By-laws of FFY, copies of which have previously been delivered to First Place,
are true, complete and correct copies of such documents as in effect as of the
date of this Agreement. As used in this Agreement, the word "Subsidiary" when
used with respect to any party means any corporation, partnership or other
organization, whether incorporated or unincorporated, which is consolidated with
such party for financial reporting purposes.
(b) FFY Bank is a savings bank duly organized and validly
existing under the laws of the United States of America and the rules and
regulations (the "OTS Regulations") of the Office of Thrift Supervision (the
"OTS"). The deposit accounts of FFY Bank are insured by the Federal Deposit
Insurance Corporation (the "FDIC") through the Savings Association Insurance
Fund to the fullest extent permitted by law, and all premiums and assessments
required to be paid in connection therewith have been paid when due by FFY Bank.
Each of FFY's other
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Subsidiaries is duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation or organization. Each of FFY's
Subsidiaries has the corporate power and authority to own or lease all of its
properties and assets and to carry on its business as it is now being conducted
and is duly licensed or qualified to do business in each jurisdiction in which
the nature of the business conducted by it or the character or the location of
the properties and assets owned or leased by it makes such licensing or
qualification necessary, except where the failure to be so licensed or qualified
would not have a Material Adverse Effect on FFY. The articles of incorporation,
by-laws and similar governing documents of each Subsidiary of FFY, copies of
which have previously been delivered to First Place, are true, complete and
correct copies of such documents as in effect as of the date of this Agreement.
(c) The minute books of FFY and each of its Subsidiaries
contain true, complete and accurate records in all material respects of all
meetings and other corporate actions held or taken since June 30, 1995 of their
respective stockholders and Boards of Directors (including committees of their
respective Boards of Directors).
3.2 Capitalization.
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(a) The authorized capital stock of FFY consists of 15,000,000
shares of FFY Common Stock and 5,000,000 shares of preferred stock (the "FFY
Preferred Stock"). As of the date of this Agreement, there are (x) 6,778,498
shares of FFY Common Stock issued and outstanding and 810,868 shares of FFY
Common Stock held in FFY's treasury, (y) no shares of FFY Common Stock reserved
for issuance upon exercise of outstanding stock options or otherwise except for
(i) 578,564 shares of FFY Common Stock reserved for issuance pursuant to FFY's
Stock Plan and described in Section 3.2(a) of the Disclosure Schedule and (ii)
1,355,698 shares of FFY Common Stock reserved for issuance upon exercise of the
option issued to First Place pursuant to the Stock Option Agreement, dated May
23, 2000, between First Place and FFY (the "First Place Option Agreement" and,
together with the FFY Option Agreement (as defined herein), the "Option
Agreements") and (z) no shares of FFY Preferred Stock issued or outstanding,
held in FFY's treasury or reserved for issuance upon exercise of outstanding
stock options or otherwise. All of the issued and outstanding shares of FFY
Common Stock have been duly authorized and validly issued and are fully paid,
nonassessable and free of preemptive rights. Except as referred to above or
reflected in Section 3.2(a) of the FFY Disclosure Schedule, and except for First
Place Option Agreement, FFY does not have and is not bound by any outstanding
subscriptions, options, warrants, calls, commitments or agreements of any
character calling for the purchase or issuance of any shares of FFY Common Stock
or FFY Preferred Stock or any other equity security of FFY or any securities
representing the right to purchase or otherwise receive any shares of FFY Common
Stock or any other equity security of FFY. The names of the optionees, the date
of each option to purchase FFY Common Stock granted, the number of shares
subject to each such option, the expiration date of each such option, and the
price at which each such option may be exercised under FFY's Stock Plan are set
forth in Section 3.2(a) of the FFY Disclosure Schedule.
(b) Section 3.2(b) of the FFY Disclosure Schedule sets forth a
true and correct list of all of the Subsidiaries of FFY as of the date of this
Agreement. Except as set forth in Section 3.2(b) of the FFY Disclosure Schedule,
FFY owns, directly or indirectly, all of the issued and outstanding shares of
the capital stock of each of such Subsidiaries, free and clear of all
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liens, charges, encumbrances and security interests whatsoever, and all of such
shares are duly authorized and validly issued and are fully paid, nonassessable
and free of preemptive rights. No Subsidiary of FFY has or is bound by any
outstanding subscriptions, options, warrants, calls, commitments or agreements
of any character calling for the purchase or issuance of any shares of capital
stock or any other equity security of such Subsidiary or any securities
representing the right to purchase or otherwise receive any shares of capital
stock or any other equity security of such Subsidiary. Assuming compliance by
First Place with Section 1.5 hereof, at the Effective Time, there will not be
any outstanding subscriptions, options, warrants, calls, commitments or
agreements of any character by which FFY or any of its Subsidiaries will be
bound calling for the purchase or issuance of any shares of the capital stock of
FFY or any of its Subsidiaries.
3.3 Authority; No Violation.
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(a) FFY has full corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly approved by the
Board of Directors of FFY. The Board of Directors of FFY has directed that this
Agreement be submitted to FFY's stockholders for adoption at a meeting of such
stockholders and, except for the adoption of this Agreement by the requisite
vote of FFY's stockholders, no other corporate proceedings (except for
regulatory approvals) on the part of FFY are necessary to approve this Agreement
and to consummate the transactions contemplated hereby. This Agreement has been
duly and validly executed and delivered by FFY and (assuming due authorization,
execution and delivery by First Place) constitutes a valid and binding
obligation of FFY, enforceable against FFY in accordance with its terms, except
as enforcement may be limited by general principles of equity whether applied in
a court of law or a court of equity and by bankruptcy, insolvency and similar
laws affecting creditors' rights and remedies generally.
(b) FFY Bank has full corporate power and authority to execute
and deliver the Bank Merger Agreement and to consummate the transactions
contemplated thereby. The execution and delivery of the Bank Merger Agreement
and the consummation of the transactions contemplated thereby will be duly and
validly approved by the Board of Directors of FFY Bank. Upon the due and valid
approval of the Bank Merger Agreement by FFY as the sole stockholder of FFY Bank
and by the Board of Directors of FFY Bank, no other corporate proceedings on the
part of FFY Bank will be necessary to consummate the transactions contemplated
thereby. The Bank Merger Agreement, upon execution and delivery by FFY Bank,
will be duly and validly executed and delivered by FFY Bank and will (assuming
due authorization, execution and delivery by the Association) constitute a valid
and binding obligation of FFY Bank, enforceable against FFY Bank in accordance
with its terms, except as enforcement may be limited by general principles of
equity whether applied in a court of law or a court of equity and by bankruptcy,
insolvency and similar laws affecting creditors' rights and remedies generally.
(c) Except as set forth in Section 3.3(c) of the FFY Disclosure
Schedule, neither the execution and delivery of this Agreement by FFY or the
Bank Merger Agreement by FFY Bank, nor the consummation by FFY or FFY Bank, as
the case may be, of the transactions contemplated hereby or thereby, nor
compliance by FFY or FFY Bank, as the case may be, with any of the terms or
provisions hereof or thereof, will (i) violate any provision of the Certificate
of
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Incorporation or By-Laws of FFY or the certificate of incorporation, by-laws
or similar governing documents of any of its Subsidiaries, or (ii) assuming that
the consents and approvals referred to in Section 3.4 hereof are duly obtained,
(x) violate any statute, code, ordinance, rule, regulation, judgment, order,
writ, decree or injunction applicable to FFY or any of its Subsidiaries, or any
of their respective properties or assets, or (y) violate, conflict with, result
in a breach of any provision of or the loss of any benefit under, constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, result in the termination of or a right of
termination or cancellation under, accelerate the performance required by,
result in the obligation to sell or result in the creation of any lien, pledge,
security interest, charge or other encumbrance upon any of the respective
properties or assets of FFY or any of its Subsidiaries under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, deed of trust,
license, lease, agreement or other instrument or obligation to which FFY or any
of its Subsidiaries is a party, or by which they or any of their respective
properties or assets may be bound or affected.
3.4 Consents and Approvals. Except for (a) the filing of applications
----------------------
with the OTS, and approval of such applications, (b) the filing with the
Securities and Exchange Commission (the "SEC") of a joint proxy statement in
definitive form relating to the meetings of FFY's stockholders and First Place's
stockholders to be held in connection with this Agreement and the transactions
contemplated hereby (collectively, the "Proxy Statement"), (c) the adoption of
this Agreement by the requisite vote of the stockholders of FFY, (d) the filing
of the Certificate of Merger with the Secretary of State of the State of
Delaware pursuant to the DGCL, (e) the filings required by the Bank Merger
Agreement, (f) the approval of the Bank Merger Agreement by FFY as the sole
stockholder of FFY Bank and (g) such filings, authorizations or approvals as may
be set forth in Section 3.4 of the FFY Disclosure Schedule, no consents or
approvals of or filings or registrations with any court, administrative agency
or commission or other governmental authority or instrumentality (each a
"Governmental Entity") or with any third party are necessary in connection with
(1) the execution and delivery by FFY of this Agreement, (2) the consummation by
FFY of the Merger and the other transactions contemplated hereby, (3) the
execution and delivery by FFY Bank of the Bank Merger Agreement, and (4) the
consummation by FFY Bank of the Subsidiary Merger and the transactions
contemplated thereby.
3.5 Reports. FFY and each of its Subsidiaries have timely filed all
-------
material reports, registrations and statements, together with any amendments
required to be made with respect thereto, that they were required to file since
June 30, 1995 with (i) the OTS, (ii) the FDIC, (iii) any other state regulatory
authority (each a "State Regulator") and (iv) any other self-regulatory
organization ("SRO") (collectively, the "Regulatory Agencies" and individually a
"Regulatory Agency"), and all other material reports and statements required to
be filed by them since June 30, 1995, including, without limitation, any report
or statement required to be filed pursuant to the laws, rules or regulations of
the United States, the OTS, the FDIC, any State Regulator or any SRO, and have
paid all fees and assessments due and payable in connection therewith. Except
for normal examinations conducted by a Regulatory Agency in the regular course
of the business of FFY and its Subsidiaries and except as set forth in Section
3.5 of the FFY Disclosure Schedule, no Regulatory Agency has initiated any
proceeding or, to the best knowledge of FFY, investigation into the business or
operations of FFY or any of its Subsidiaries since June 30, 1995. There is no
unresolved material violation, criticism, or exception by any Regulatory
10
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Agency with respect to any report or statement relating to any examinations of
FFY or any of its Subsidiaries.
3.6 Financial Statements. FFY has previously delivered to First Place
--------------------
copies of (a) the consolidated balance sheets of FFY and its Subsidiaries as of
June 30 for the fiscal years 1998 and 1999, and the related consolidated
statements of income, changes in stockholders' equity and cash flows for the
fiscal years 1997 through 1999, inclusive, as reported in FFY's Annual Report on
Form 10-K for the fiscal year ended June 30, 1999 filed with the SEC under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), in each case
accompanied by the audit report of KPMG LLP, independent public accountants with
respect to FFY, and (b) the unaudited consolidated balance sheets of FFY and its
Subsidiaries as of March 31, 2000 and March 31, 1999 and the related unaudited
consolidated statements of income, cash flows and changes in stockholders'
equity for the three and nine month periods then ended as reported in FFY's
Quarterly Report on Form 10-Q for the period ended March 31, 2000 filed with the
SEC under the Exchange Act. The June 30, 1999 consolidated balance sheet of FFY
(including the related notes, where applicable) fairly presents the consolidated
financial position of FFY and its Subsidiaries as of the date thereof, and the
other financial statements referred to in this Section 3.6 (including the
related notes, where applicable) fairly present, and the financial statements
referred to in Section 6.9 hereof will fairly present (subject, in the case of
the unaudited statements, to recurring audit adjustments normal in nature and
amount and the absence of footnotes), the results of the consolidated operations
and consolidated financial position of FFY and its Subsidiaries for the
respective fiscal periods or as of the respective dates therein set forth; each
of such statements (including the related notes, where applicable) comply, and
the financial statements referred to in Section 6.9 hereof will comply, in all
material respects with applicable accounting requirements and with the published
rules and regulations of the SEC with respect thereto; and each of such
statements (including the related notes, where applicable) has been, and the
financial statements referred to in Section 6.9 hereof will be, prepared in
accordance with generally accepted accounting principles ("GAAP") consistently
applied during the periods involved, except as indicated in the notes thereto
or, in the case of unaudited statements, as permitted by Form 10-Q. The books
and records of FFY and its Subsidiaries have been, and are being, maintained in
all material respects in accordance with GAAP and any other applicable legal and
accounting requirements and reflect only actual transactions.
3.7 Broker's Fees. Neither FFY nor any Subsidiary of FFY nor any of their
-------------
respective officers or directors has employed any broker or finder or incurred
any liability for any broker's fees, commissions or finder's fees in connection
with any of the transactions contemplated by this Agreement, the Bank Merger
Agreement or the Option Agreements, except that FFY has engaged, and will pay a
fee or commission to Sandler O'Neill & Partners, L.P. ("Sandler O'Neill") in
accordance with the terms of a letter agreement between Sandler O'Neill and FFY
concerning the issuance of an opinion regarding the fairness of the Exchange
Ratio, a true, complete and correct copy of which has been previously delivered
by FFY to First Place.
3.8 Absence of Certain Changes or Events.
------------------------------------
(a) Except as may be set forth in Section 3.8(a) of the FFY
Disclosure Schedule or as disclosed in FFY's Quarterly Report on Form 10-Q for
the quarter ended March 31, 2000 (a true, complete and correct copy of which has
previously been delivered to
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First Place), since June 30, 1999, (i) neither FFY nor any of its Subsidiaries
has incurred any material liability, except in the ordinary course of their
business consistent with their past practices, and (ii) no event has occurred
which has caused, or is reasonably likely to cause, individually or in the
aggregate, a Material Adverse Effect on FFY.
(b) Except as set forth in Section 3.8(b) of the FFY Disclosure
Schedule, since March 31, 2000, FFY and its Subsidiaries have carried on their
respective businesses in the ordinary course consistent with their past
practices.
(c) Except as set forth in Section 3.8(c) of the FFY Disclosure
Schedule, since March 31, 2000, neither FFY nor any of its Subsidiaries has (i)
increased the wages, salaries, compensation, pension, or other fringe benefits
or perquisites payable to any executive officer, employee, or director from the
amount thereof in effect as of March 31, 2000 (which amounts have been
previously disclosed to First Place), granted any severance or termination pay,
entered into any contract to make or grant any severance or termination pay, or
paid any bonus other than year-end bonuses for fiscal 1999 as listed in Section
3.8 of the FFY Disclosure Schedule or (ii) suffered any strike, work stoppage,
slow-down, or other labor disturbance.
3.9 Legal Proceedings.
-----------------
(a) Except as set forth in Section 3.9 of the FFY Disclosure
Schedule, neither FFY nor any of its Subsidiaries is a party to any, and there
are no pending or, to the best of FFY's knowledge, threatened, legal,
administrative, arbitral or other proceedings, claims, actions or governmental
or regulatory investigations of any nature against FFY or any of its
Subsidiaries or challenging the validity or propriety of the transactions
contemplated by this Agreement, the Bank Merger Agreement or First Place Option
Agreement as to which there is a reasonable probability of an adverse
determination and which, if adversely determined, would, individually or in the
aggregate, have or be reasonably likely to have a Material Adverse Effect on
FFY.
(b) There is no injunction, order, judgment, decree, or
regulatory restriction imposed upon FFY, any of its Subsidiaries or the assets
of FFY or any of its Subsidiaries which has had, or could reasonably be expected
to have, a Material Adverse Effect on FFY.
3.10 Taxes. Except as set forth in Section 3.10 of the FFY
-----
Disclosure Schedule, each of FFY and its Subsidiaries has (i) duly and timely
filed or will duly and timely file (including applicable extensions granted
without penalty) all Tax Returns (as hereinafter defined) required to be filed
at or prior to the Effective Time, and such Tax Returns which have heretofore
been filed are, and those to be hereinafter filed will be, complete and accurate
in all material respects, and (ii) paid in full or have made adequate provision
for on the financial statements of FFY (in accordance with GAAP) all Taxes (as
hereinafter defined) and will pay in full or make adequate provision for all
Taxes. There are no material liens for Taxes upon the assets of either FFY or
its Subsidiaries except for statutory liens for current Taxes not yet due.
Except as set forth in Section 3.10 of the FFY Disclosure Schedule, neither FFY
nor any of its Subsidiaries has requested any extension of time within which to
file any Tax Returns in respect of any fiscal year which have not since been
filed and no request for waivers of the time to assess any Taxes are pending or
outstanding. The federal and state income Tax Returns of FFY and its
Subsidiaries have been audited by the Internal Revenue Service or appropriate
state tax
12
<PAGE>
authorities with respect to those periods and jurisdictions set forth on Section
3.10 of the FFY Disclosure Schedule. Except as set forth in Section 3.10 of the
FFY Disclosure Schedule, neither FFY nor any of its Subsidiaries (i) is a party
to any agreement providing for the allocation or sharing of Taxes (other than
the allocation of federal income taxes as provided by Regulation 1.1552-l(a)(l)
under the Code; (ii) is required to include in income any adjustment pursuant to
Section 481(a) of the Code, by reason of the voluntary change in accounting
method (nor has any taxing authority proposed in writing any such adjustment or
change of accounting method); or (iii) has filed a consent pursuant to Section
341(f) of the Code.
For the purposes of this Agreement, "Taxes" shall mean all taxes, charges,
fees, levies, penalties or other assessments imposed by any United States
federal, state, local or foreign taxing authority, including, but not limited to
income, excise, property, sales, transfer, franchise, payroll, withholding,
social security or other taxes, including any interest, penalties or additions
attributable thereto.
For purposes of this Agreement, "Tax Return" shall mean any return, report,
information return or other document (including any related or supporting
information) with respect to Taxes.
3.11 Employees.
---------
(b) Section 3.11(a) of the FFY Disclosure Schedule sets forth a
true and complete list of each employee benefit plan, arrangement or agreement
that is maintained or contributed to or required to be contributed to as of the
date of this Agreement (the "Plans") by FFY, any of its Subsidiaries or by any
trade or business, whether or not incorporated (an "ERISA Affiliate"), all of
which together with FFY would be deemed a "single employer" within the meaning
of Section 4001 of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), for the benefit of any employee or former employee of FFY,
any Subsidiary or any ERISA Affiliate.
(c) FFY has heretofore delivered to First Place true and
complete copies of each of the Plans and all related documents, including but
not limited to (i) the actuarial report for any Plan (if applicable) for each of
the last two years, and (ii) the most recent determination letter from the
Internal Revenue Service (if applicable) for any Plan.
(d) Except as set forth in Section 3.11(c) of the FFY Disclosure
Schedule, (i) each of the Plans has been operated and administered in all
material respects in accordance with its terms and applicable law, including but
not limited to ERISA and the Code, (ii) each of the Plans intended to be
"qualified" within the meaning of Section 401(a) of the Code either (1) has
received a favorable determination letter from the IRS, or (2) is or will be the
subject of an application for a favorable determination letter, and FFY is not
aware of any circumstances likely to result in the revocation or denial of any
such favorable determination letter, (iii) with respect to each Plan which is
subject to Title IV of ERISA, the present value of accrued benefits under such
Plan, based upon the actuarial assumptions used for funding purposes in the most
recent actuarial report prepared by such Plan's actuary with respect to such
Plan, did not, as of its latest valuation date, exceed the then current value of
the assets of such Plan allocable to such accrued benefits, (iv) no Plan
provides benefits, including without limitation death or medical benefits
(whether or not insured), with respect to current or former employees of FFY,
its
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<PAGE>
Subsidiaries or any ERISA Affiliate beyond their retirement or other termination
of service, other than (w) coverage mandated by applicable law, (x) death
benefits or retirement benefits under any "employee pension plan," as that term
is defined in Section 3(2) of ERISA, (y) deferred compensation benefits accrued
as liabilities on the books of FFY, its Subsidiaries or the ERISA Affiliates or
(z) benefits the full cost of which is borne by the current or former employee
(or his beneficiary), (v) no liability under Title IV of ERISA has been incurred
by FFY, its Subsidiaries or any ERISA Affiliate that has not been satisfied in
full, and no condition exists that presents a material risk to FFY, its
Subsidiaries or an FFY ERISA Affiliate of incurring a material liability
thereunder, (vi) no Plan is a "multiemployer pension plan," as such term is
defined in Section 3(37) of ERISA, (vii) all contributions or other amounts
payable by FFY, its Subsidiaries or any ERISA Affiliates as of the Effective
Time with respect to each Plan in respect of current or prior plan years have
been paid or accrued in accordance with GAAP and Section 412 of the Code, (viii)
neither FFY, its Subsidiaries nor any ERISA Affiliate has engaged in a
transaction in connection with which FFY, its Subsidiaries or any ERISA
Affiliate could be subject to either a civil penalty assessed pursuant to
Section 409 or 502(i) of ERISA or a tax imposed pursuant to Section 4975 or 4976
of the Code, (ix) there are no pending, or, to the best knowledge of FFY,
threatened or anticipated claims (other than routine claims for benefits) by, on
behalf of or against any of the Plans or any trusts related thereto and (x) the
consummation of the transactions contemplated by this Agreement will not (y)
entitle any current or former employee or officer of FFY or any ERISA Affiliate
to severance pay, termination pay or any other payment, except as expressly
provided in this Agreement or (z) accelerate the time of payment or vesting or
increase the amount of compensation due any such employee or officer.
3.12 SEC Reports. FFY has previously made available to First Place an
-----------
accurate and complete copy of each (a) final registration statement, prospectus,
report, schedule and definitive proxy statement filed since June 30, 1999 by FFY
with the SEC pursuant to the Securities Act of 1933, as amended (the "Securities
Act") or the Exchange Act (the "FFY Reports") and (b) communication mailed by
FFY to its stockholders since June 30, 1999, and no such registration statement,
prospectus, report, schedule, proxy statement or communication contained any
untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances in which they were made, not misleading,
except that information as of a later date shall be deemed to modify information
as of an earlier date. FFY has timely filed all FFY Reports and other documents
required to be filed by it under the Securities Act and the Exchange Act, and,
as of their respective dates, all FFY Reports complied in all material respects
with the published rules and regulations of the SEC with respect thereto.
3.13 FFY Information. The information provided by and relating to FFY and
---------------
its Subsidiaries to be contained in, or incorporated by reference in, the Proxy
Statement and the Registration Statement on Form S-4 (the "S-4"), or in any
other document filed with any other regulatory agency in connection herewith,
will not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in light of the
circumstances in which they are made, not misleading. The information provided
by FFY for inclusion in, or incorporated by reference in, the sections of the
Proxy Statement relating to FFY will comply in all material respects with the
provisions of the Exchange Act and the rules and regulations thereunder.
14
<PAGE>
3.14 Ownership of First Place Common Stock: Affiliates and Associates.
----------------------------------------------------------------
Except for the FFY Option Agreement and as set forth in Section 3.14 of the FFY
Disclosure Schedule, none of FFY, any of its Subsidiaries, (i) beneficially own,
directly or indirectly, or (ii) is a party to any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or disposing of, in
each case, any shares of capital stock of First Place (other than Trust Account
Shares and DPC Shares).
3.15 Compliance with Applicable Law. FFY and each of its Subsidiaries hold
------------------------------
all material licenses, franchises, permits and authorizations necessary for the
lawful conduct of their respective businesses under and pursuant to all, and are
in compliance with and are not, to its knowledge, in default in any respect
under any applicable law, statute, order, rule, regulation, policy and/or
guideline of any Governmental Entity relating to FFY or any of its Subsidiaries,
except where the failure to hold such license, franchise, permit or
authorization or such noncompliance or default would not, individually or in the
aggregate, have or be reasonably likely to have a Material Adverse Effect on
FFY, and neither FFY nor any of its Subsidiaries knows of, or has received
notice of, any material violations of any of the above since December 31, 1994.
3.16 Certain Contracts.
-----------------
(a) Except as set forth in Section 3.16(a) of the FFY Disclosure
Schedule, neither FFY nor any of its Subsidiaries is a party to or bound by any
contract, arrangement, commitment or understanding (whether written or oral) (i)
with respect to the employment of any directors, officers, employees or
consultants, (ii) which, upon the consummation of the transactions contemplated
by this Agreement or the Bank Merger Agreement will (either alone or upon the
occurrence of any additional acts or events) result in any payment (whether of
severance pay or otherwise) becoming due from First Place, FFY, the Surviving
Corporation, the Surviving Institution or any of their respective Subsidiaries
to any officer or employee thereof, (iii) which is a material contract (as
defined in Item 601(b)(10) of Regulation S-K of the SEC) to be performed after
the date of this Agreement that has not been filed or incorporated by reference
in FFY Reports, (iv) which is a consulting agreement (including data processing,
software programming and licensing contracts) not terminable on 60 days or less
notice involving the payment of more than $50,000 per annum, in the case of any
such agreement with an individual, or $100,000 per annum, in the case of any
other such agreement, (v) which materially restricts the conduct of any line of
business by FFY or any of its Subsidiaries, (vi) with or to a labor union or
guild (including any collective bargaining agreement) or (vii) (including any
stock option plan, stock appreciation rights plan, restricted stock plan or
stock purchase 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 Bank Merger 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 or the Bank Merger
Agreement. Each contract, arrangement, commitment or understanding of the type
described in this Section 3.16(a), whether or not set forth in Section 3.16(a)
of the FFY Disclosure Schedule, is referred to herein as a "FFY Contract." FFY
has previously delivered to First Place true and correct copies of each FFY
Contract.
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(b) Except as set forth in Section 3.16(b) of the FFY Disclosure
Schedule, (i) each FFY Contract is valid and binding and in full force and
effect, (ii) FFY and each of its Subsidiaries have in all material respects
performed all obligations required to be performed by it to date under each FFY
Contract, except where such noncompliance, individually or in the aggregate,
would not have or be reasonably likely to have a Material Adverse Effect on FFY,
(iii) no event or condition exists which constitutes or, after notice or lapse
of time or both, would constitute, a material default on the part of FFY or any
of its Subsidiaries under any such FFY Contract, except where such default,
individually or in the aggregate, would not have or be reasonably likely to have
a Material Adverse Effect on FFY and (iv) no other party to such FFY Contract
is, to the best knowledge of FFY, in default in any respect thereunder.
3.17 Agreements with Regulatory Agencies. Except as set forth in Section
-----------------------------------
3.17 of the FFY Disclosure Schedule, neither FFY nor any of its Subsidiaries is
subject to any cease-and-desist or other order issued by, or is a party to any
written agreement, consent agreement or memorandum of understanding with, or is
a party to any commitment letter or similar undertaking to, or is subject to any
order or directive by, or is a recipient of any extraordinary supervisory letter
from, or has adopted any board resolutions at the request of (each, whether or
not set forth on Section 3.17 of the FFY Disclosure Schedule, a "Regulatory
Agreement"), any Regulatory Agency or other Governmental Entity that restricts
the conduct of its business or that in any manner relates to its capital
adequacy, its credit policies, its management or its business, nor has FFY or
any of its Subsidiaries been advised by any Regulatory Agency or other
Governmental Entity that it is considering issuing or requesting any Regulatory
Agreement.
3.18 Investment Securities. Section 3.18 of the FFY Disclosure Schedule
---------------------
sets forth the book and market value as of March 31, 2000 of the investment
securities, mortgage backed securities and securities held for sale of FFY and
its Subsidiaries. Section 3.18 of the FFY Disclosure Schedule sets forth an
investment securities report which includes, security descriptions, CUSIP
numbers, pool face values, book values, coupon rates and current market values.
3.19 Intellectual Property. Except where there would be no Material
---------------------
Adverse Effect on FFY, FFY and each of its Subsidiaries owns or possesses valid
and binding licenses and other rights to use without payment all material
patents, copyrights, trade secrets, trade names, servicemarks, trademarks and
computer software used in its businesses; and neither FFY nor any of its
Subsidiaries has received any notice of conflict with respect thereto that
asserts the right of others. FFY and each of its Subsidiaries have in all
material respects performed all the obligations required to be performed by them
and are not in default in any material respect under any contract, agreement,
arrangement or commitment relating to any of the foregoing, except where such
non-performance or default would not, individually or in the aggregate, have or
be reasonably likely to have a Material Adverse Effect on FFY.
3.20 Undisclosed Liabilities. Except (a) as set forth in Section 3.20 of
-----------------------
the FFY Disclosure Schedule, (b) for those liabilities that are fully reflected
or reserved against on the consolidated balance sheet of FFY as of March 31,
2000 included in its Form 10-Q for the period ended March 31, 2000 and (c) for
liabilities incurred in the ordinary course of business consistent with past
practice since March 31, 2000 that, either alone or when combined with all
similar liabilities, have not had, and could not reasonably be expected to have,
a Material Adverse Effect
16
<PAGE>
on FFY, neither FFY nor any of its Subsidiaries has incurred any liability of
any nature whatsoever (whether absolute, accrued, contingent or otherwise and
whether due or to become due).
3.21 State Takeover Laws. The provisions of Article Eight of FFY's
-------------------
Certificate of Incorporation will not, assuming the accuracy of the
representations contained in Section 4.14 hereof, apply to the Agreement, the
Bank Merger Agreement or First Place Option Agreement or any of the transactions
contemplated hereby or thereby.
3.22 Administration of Fiduciary Accounts. FFY and each of its
------------------------------------
Subsidiaries has properly administered in all material respects all accounts for
which it acts as a fiduciary, including but not limited to accounts for which it
serves as a trustee, agent, custodian, personal representative, guardian,
conservator or investment advisor, in accordance with the terms of the governing
documents and applicable state and federal law and regulation and common law.
Neither FFY nor any of its Subsidiaries nor any of their respective directors,
officers or employees has committed any breach of trust with respect to any such
fiduciary account which has had or could reasonably be expected to have a
Material Adverse Effect on FFY, and the accountings for each such fiduciary
account are true and correct in all material respects and accurately reflect the
assets of such fiduciary account.
3.23 Environmental Matters. Except as set forth in Section 3.23 of the FFY
---------------------
Disclosure Schedule:
(a) Each of FFY, its Subsidiaries, the Participation Facilities and
the Loan Properties (each as hereinafter defined) are, and have been, in
compliance with all applicable federal, state and local laws including common
law, regulations and ordinances and with all applicable decrees, orders and
contractual obligations relating to pollution, the discharge of, or exposure to
materials in the environment or workplace ("Environmental Laws"), except for
violations which, either individually or in the aggregate, have not had and
cannot reasonably be expected to have a Material Adverse Effect on FFY;
(b) There is no suit, claim, action or proceeding, pending or
threatened, before any Governmental Entity or other forum in which FFY, any of
its Subsidiaries, any Participation Facility or any Loan Property, has been or,
with respect to threatened proceedings, may be, named as a defendant (x) for
alleged noncompliance (including by any predecessor), with any Environmental
Laws, or (y) relating to the release, threatened release or exposure to any
material whether or not occurring at or on a site owned, leased or operated by
FFY or any of its Subsidiaries, any Participation Facility or any Loan Property,
except where such noncompliance or release has not resulted, and cannot be
reasonably expected to result, either individually or in the aggregate, in a
Material Adverse Effect on FFY;
(c) During the period of (x) FFY's or any of its Subsidiaries'
ownership or operation of any of their respective current properties, (y) FFY's
or any of its Subsidiaries' participation in the management of any Participation
Facility, or (z) FFY's or any of its Subsidiaries' holding of a security
interest in a Loan Property, there has been no release of materials in, on,
under or affecting any such property, except where such release has not had and
cannot reasonably be expected to result in, either individually or in the
aggregate, a Material
17
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Adverse Effect on FFY. To the knowledge of FFY, prior to the period of (x) FFY's
or any of its Subsidiaries' ownership or operation of any of their respective
current properties, (y) FFY's or any of its Subsidiaries' participation in the
management of any Participation Facility, or (z) FFY's or any of its
Subsidiaries' holding of a security interest in a Loan Property, there was no
release or threatened release of materials in, on, under or affecting any such
property, Participation Facility or Loan Property, except where such release has
not had and cannot be reasonably expected to have, either individually or in the
aggregate, a Material Adverse Effect on FFY; and
(d) The following definitions apply for purposes of this Section 3.23:
(x) "Loan Property" means any property in which FFY or any of its Subsidiaries
holds a security interest, and, where required by the context, said term means
the owner or operator of such property; and (y) "Participation Facility" means
any facility in which FFY or any of its Subsidiaries participates in the
management and, where required by the context, said term means the owner or
operator of such property.
3.24 Derivative Transactions. Except as set forth in Section 3.24 of the
-----------------------
FFY Disclosure Schedule, since June 30, 1999, neither FFY nor any of its
Subsidiaries has engaged in transactions in or involving forwards, futures,
options on futures, swaps or other derivative instruments except (i) as agent on
the order and for the account of others, or (ii) as principal for purposes of
hedging interest rate risk on U.S. dollar denominated securities and other
financial instruments. None of the counterparties to any contract or agreement
with respect to any such instrument is in default with respect to such contract
or agreement and no such contract or agreement, were it to be a Loan (as defined
below) held by FFY or any of its Subsidiaries, would be classified as "Other
Loans Specially Mentioned", "Special Mention", "Substandard", "Doubtful",
"Loss", "Classified", "Criticized", "Credit Risk Assets", "Concerned Loans" or
words of similar import. The financial position of FFY and its Subsidiaries on
a consolidated basis under or with respect to each such instrument has been
reflected in the books and records of FFY and such Subsidiaries in accordance
with GAAP consistently applied, and no open exposure of FFY or any of its
Subsidiaries which has not been previously disclosed in the FFY Reports with
respect to any such instrument (or with respect to multiple instruments with
respect to any single counterparty) exceeds $500,000.
3.25 Opinion. FFY has received a written opinion, dated the date hereof,
-------
from Sandler O'Neill & Partners, L.P. ("Sandler O'Neill") to the effect that,
subject to the terms, conditions and qualifications set forth therein, as of the
date thereof the Exchange Ratio is fair to such stockholders from a financial
point of view.
3.26 Assistance Agreements. Neither FFY nor any of its Subsidiaries is a
---------------------
party to any agreement or arrangement entered into in connection with the
consummation of a federally assisted acquisition of a depository institution
pursuant to which FFY or any of its Subsidiaries is entitled to receive
financial assistance or indemnification from any governmental agency.
3.27 Approvals. As of the date of this Agreement, FFY knows of no reason
---------
why all regulatory approvals required for the consummation of the transactions
contemplated hereby (including, without limitation, the Merger and the
Subsidiary Merger) should not be obtained without the imposition of a Burdensome
Condition (as defined below).
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3.28 Loan Portfolio.
--------------
(a) In FFY's reasonable judgment, the allowance for loan losses
reflected in FFY's audited statement of condition at June 30, 1999 was, and the
allowance for loan losses shown on the balance sheets in its Reports for periods
ending after June 30, 1999 have been and will be, adequate in all material
respects, as of the dates thereof, under GAAP, and no Regulatory Agencies have
required or requested FFY to increase the allowance for loan losses for such
periods.
(b) Except as set forth in Section 3.28 of the FFY Disclosure
Schedule, neither FFY nor any of its Subsidiaries is a party to any written or
oral (i) loan agreement, note or borrowing arrangement (including, without
limitation, leases, credit enhancements, commitments, guarantees and interest-
bearing assets) (collectively, "Loans"), other than Loans the unpaid principal
balance of which does not exceed $175,000, under the terms of which the obligor
is, as of the date of this Agreement, over 90 days delinquent in payment of
principal or interest or in default of any other provision, or (ii) Loans with
any director, executive officer or ten percent stockholder of FFY or any of its
Subsidiaries, or to the best knowledge of FFY, any person, corporation or
enterprise controlling, controlled by or under common control with any of the
foregoing. Section 3.28 of FFY Disclosure Schedule sets forth (i) all of the
Loans in original principal amount in excess of $175,000 of FFY or any of its
Subsidiaries that as of the date of this Agreement are classified by any bank
examiner (whether regulatory or internal) as "Other Loans Specially Mentioned,"
"Special Mention," "Substandard," "Doubtful," "Loss," "Classified,"
"Criticized," "Credit Risk Assets," "Concerned Loans," "Watch List" or words of
similar import, together with the principal amount of and accrued and unpaid
interest on each such Loan and the identity of the borrower thereunder, and (ii)
by category of Loan (i.e., commercial, consumer, etc.), all of the other Loans
of FFY and its Subsidiaries that as of the date of this Agreement are classified
as such, together with the aggregate principal amount of and accrued and unpaid
interest on such Loans by category. FFY shall promptly inform First Place in
writing of any Loan that becomes classified in the manner described in the
previous sentence, or any Loan the classification of which is changed, at any
time after the date of this Agreement.
(c) Each loan reflected as an asset in the FFY Reports (i) is
evidenced by notes, agreements or other evidences of indebtedness which are
true, genuine and correct in all material respects, (ii) to the extent secured,
has been secured by valid liens and security interests which have been
perfected, and (iii) is the legal, valid and binding obligation of the obligor
named therein, enforceable in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent conveyance and other laws of general applicability
relating to or affecting creditors' rights and to general equity principles, in
each case other than loans as to which the failure to satisfy the foregoing
standards would not have a Material Adverse Effect on FFY.
3.29 [Reserved]
3.30 Labor Matters. Except as set forth in Section 3.30 of the FFY
-------------
Disclosure Schedule, neither FFY nor its Subsidiaries is or has ever been a
party to, or is or has ever been bound by, any collective bargaining agreement,
contract, or other agreement or understanding with a labor union or labor
organization with respect to its employees, nor is FFY or its Subsidiaries the
subject of any proceeding asserting that it has committed an unfair labor
practice
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or seeking to compel it or any such Subsidiary to bargain with any labor
organization as to wages and conditions of employment, nor is the management of
FFY aware of any strike, other labor dispute, organizational effort or other
activity taken with a view toward unionization involving FFY or its Subsidiaries
pending or threatened. FFY and its Subsidiaries are in compliance with
applicable laws regarding employment or employees and retention of independent
contractors and are in material compliance with all applicable employment tax
laws.
3.31 Termination Benefits. Section 3.31 of the FFY Disclosure Schedule
--------------------
contains a complete and accurate schedule showing as of the date of this
Agreement the monetary amounts payable, subject to a determination of the Market
Value, and identifying the in-kind benefits due under the Specified Compensation
and Benefit Programs (as defined herein) for each Named Individual (as defined
herein) individually. For purposes hereof, "Specified Compensation and Benefit
Programs" shall include all employment agreements, change in control agreements,
severance or special termination agreements, severance plans, pension,
retirement or deferred compensation plans for non-employee directors,
supplemental executive retirement programs, tax indemnification agreements,
outplacement programs, cash bonus programs, stock appreciation right, phantom
stock or stock unit plan, and health, life, disability and other insurance or
welfare plans, but shall not include any tax-qualified pension, profit-sharing
or employee stock ownership plan. For purposes hereof, "Named Individual" shall
include each non-employee director of FFY or its Subsidiaries and each executive
officer of FFY or its Subsidiaries.
3.32 Deposits. Except as set forth in Section 3.32 of the FFY Disclosure
--------
Schedule, none of the deposits of FFY Bank is a "brokered" deposit.
3.33 Antitakeover Provisions Inapplicable. FFY and its Subsidiaries have
------------------------------------
taken all actions required to exempt FFY and the Agreement from any provisions
of an antitakeover nature in their Certificate of Incorporation and Bylaws and
any other governing documents and the provisions of any federal or state
"antitakeover," "fair price," "moratorium," "control share acquisition" or
similar laws or regulations.
3.34 Insurance. Except as set forth in Section 3.34 of the FFY Disclosure
---------
Schedule, FFY and its Subsidiaries are presently insured, and since June 30,
1997, have been insured, for reasonable amounts with financially sound and
reputable insurance companies, against such risks as companies engaged in a
similar business would, in accordance with good business practice, customarily
be insured, All of the insurance policies and bonds maintained by FFY and its
Subsidiaries are in full force and effect, FFY and its Subsidiaries are not in
default thereunder and all material claims thereunder have been filed in due and
timely fashion.
3.35 Indemnification. Except as provided in FFY's employment agreements,
---------------
its indemnification agreement with Sandler O'Neill, or the Certificate of
Incorporation or Bylaws of FFY, neither FFY nor its Subsidiaries is a party to
any indemnification agreement with any of its present or future directors,
officers, employees, agents or other persons who serve or served in any other
capacity with any other enterprise at the request of FFY (a "Covered Person"),
and, except as set forth in Section 3.35 of the FFY Disclosure Schedule, there
are no claims for which any Covered Person would be entitled to indemnification
under the Certificate of Incorporation
20
<PAGE>
or Bylaws of FFY or any Subsidiary of FFY, applicable law, regulation or any
indemnification agreement.
3.36 Disclosure. The representations and warranties contained in this
----------
Article III do not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements and
information contained in this Article III not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF FIRST PLACE
Subject to the first paragraph under Article III, First Place hereby
represents and warrants to FFY as follows:
4.1 Corporate Organization.
----------------------
(a) First Place is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware. First Place has the
corporate power and authority to own or lease all of its properties and assets
and to carry on its business as it is now being conducted, and is duly licensed
or qualified to do business in each jurisdiction in which the nature of the
business conducted by it or the character or location of the properties and
assets owned or leased by it makes such licensing or qualification necessary,
except where the failure to be so licensed or qualified would not have a
Material Adverse Effect on First Place. First Place is duly registered as a
savings and loan holding company under the HOLA. The Certificate of
Incorporation and By-laws of First Place, copies of which have previously been
made available to FFY, are true, complete and correct copies of such documents
as in effect as of the date of this Agreement.
(b) The Association is a savings and loan association duly organized,
validly existing and in good standing under the laws of the United States of
America and the OTS Regulations. The deposit accounts of the Association are
insured by the FDIC through the SAIF Insurance Fund to the fullest extent
permitted by law, and all premiums and assessments required in connection
therewith have been paid by the Association. Each of First Place's other
Subsidiaries is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation. Each Subsidiary of First Place
has the corporate power and authority to own or lease all of its properties and
assets and to carry on its business as it is now being conducted, and is duly
licensed or qualified to do business in each jurisdiction in which the nature of
the business conducted by it or the character or location of the properties and
assets owned or leased by it makes such licensing or qualification necessary,
except where the failure to be so licensed or qualified would not have a
Material Adverse Effect on First Place. The Certificate of Incorporation and
Bylaws of each subsidiary of First Place, copies of which have previously been
made available to FFY, are true, complete and correct copies of such documents
as in effect as of the date of this Agreement.
(c) The minute books of First Place and each of its Subsidiaries
contain true, complete and accurate records in all material respects of all
meetings and other corporate actions held or taken since June 30, 1995 of their
respective stockholders and Boards of Directors (including committees of their
respective Boards of Directors).
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4.2 Capitalization.
--------------
(a) As of the date of this Agreement, the authorized capital stock of
First Place consists of 33,000,000 shares of First Place Common Stock and
3,000,000 shares of preferred stock, par value $.01 per share ("First Place
Preferred Stock"). As of the date of this Agreement, there were 11,241,250
shares of First Place Common Stock and no shares of First Place Preferred Stock
issued and outstanding, and 333,490 shares of First Place Common Stock held in
First Place's treasury. As of the date of this Agreement, no shares of First
Place Common Stock or First Place Preferred Stock were reserved for issuance,
except that (i) 1,124,125 shares of First Place Common Stock were reserved for
issuance upon the exercise of stock options pursuant to First Place Financial
Corp. 1999 Incentive Plan (the "First Place Stock Plan") and (ii) 2,248,249
shares of First Place Common Stock reserved for issuance upon the exercise of
the option issued to FFY pursuant to the Stock Option Agreement, dated May 23,
2000, between FFY and First Place (the "FFY Option Agreement"). All of the
issued and outstanding shares of First Place Common Stock have been duly
authorized and validly issued and are fully paid, nonassessable and free of
preemptive rights, with no personal liability attaching to the ownership
thereof. As of the date of this Agreement, except as referred to above or
reflected in Section 4.2(a) of the First Place Disclosure Schedule and except
for FFY Option Agreement, First Place does not have and is not bound by any
outstanding subscriptions, options, warrants, calls, commitments or agreements
of any character calling for the purchase or issuance of any shares of First
Place Common Stock or First Place Preferred Stock or any other equity securities
of First Place or any securities representing the right to purchase or otherwise
receive any shares of First Place Common Stock or First Place Preferred Stock.
The shares of First Place Common Stock to be issued pursuant to the Merger will
be duly authorized and validly issued and, at the Effective Time, all such
shares will be fully paid, nonassessable and free of preemptive rights.
(b) Section 4.2(b) of the First Place Disclosure Schedule sets forth a
true and correct list of all of First Place Subsidiaries as of the date of this
Agreement. Except as set forth in Section 4.2(b) of the First Place Disclosure
Schedule, First Place owns, directly or indirectly, all of the issued and
outstanding shares of capital stock of each of the Subsidiaries of First Place,
free and clear of all liens, charges, encumbrances and security interests
whatsoever, and all of such shares are duly authorized and validly issued and
are fully paid, nonassessable and free of preemptive rights. No Subsidiary of
First Place has or is bound by any outstanding subscriptions, options, warrants,
calls, commitments or agreements of any character with any party that is not a
direct or indirect Subsidiary of First Place calling for the purchase or
issuance of any shares of capital stock or any other equity security of such
Subsidiary or any securities representing the right to purchase or otherwise
receive any shares of capital stock or any other equity security of such
Subsidiary.
4.3 Authority. No Violation.
------------------------
(a) First Place has full corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly approved by the
Board of Directors of First Place. The Board of Directors of First Place has
directed that this Agreement be submitted to First Place's stockholders for
adoption at a meeting of such stockholders and, except for the adoption of this
Agreement by the
22
<PAGE>
requisite vote of First Place's stockholders, no other corporate proceedings on
the part of First Place are necessary to consummate the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by First Place and (assuming due authorization, execution and delivery
by FFY) constitutes a valid and binding obligation of First Place, enforceable
against First Place in accordance with its terms, except as enforcement may be
limited by general principles of equity whether applied in a court of law or a
court of equity and by bankruptcy, insolvency and similar laws affecting
creditors' rights and remedies generally.
(b) The Association has full corporate power and authority to execute
and deliver the Bank Merger Agreement and to consummate the transactions
contemplated thereby. The execution and delivery of the Bank Merger Agreement
and the consummation of the transactions contemplated thereby will be duly and
validly approved by the Board of Directors of the Association. Upon the due and
valid approval of the Bank Merger Agreement by First Place as the sole
stockholder of the Association, and by the Board of Directors of the
Association, no other corporate proceedings on the part of the Association will
be necessary to consummate the transactions contemplated thereby. The Bank
Merger Agreement, upon execution and delivery by the Association, will be duly
and validly executed and delivered by the Association and will (assuming due
authorization, execution and delivery by FFY Bank) constitute a valid and
binding obligation of the Association, enforceable against the Association in
accordance with its terms, except as enforcement may be limited by general
principles of equity whether applied in a court of law or a court of equity and
by bankruptcy, insolvency and similar laws affecting creditors' rights and
remedies generally.
(c) Except as set forth in Section 4.3(c) of the First Place
Disclosure Schedule, neither the execution and delivery of this Agreement by
First Place or the Bank Merger Agreement by the Association, nor the
consummation by First Place or the Association, as the case may be, of the
transactions contemplated hereby or thereby, nor compliance by First Place or
the Association, as the case may be, with any of the terms or provisions hereof
or thereof, will (i) violate any provision of the Certificate of Incorporation
or By-Laws of First Place, or the articles of incorporation or by-laws or
similar governing documents of any of its Subsidiaries or (ii) assuming that the
consents and approvals referred to in Section 4.4 are duly obtained, (x) violate
any statute, code, ordinance, rule, regulation, judgment, order, writ, decree or
injunction applicable to First Place or any of its Subsidiaries or any of their
respective properties or assets, or (y) violate, conflict with, result in a
breach of any provision of or the loss of any benefit under, constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, result in the termination of or a right of
termination or cancellation under, accelerate the performance required by, or
result in the creation of any lien, pledge, security interest, charge or other
encumbrance upon any of the respective properties or assets of First Place or
any of its Subsidiaries under, any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, deed of trust, license, lease, agreement or
other instrument or obligation to which First Place or any of its Subsidiaries
is a party, or by which they or any of their respective properties or assets may
be bound or affected.
4.4 Consents and Approvals. Except for (a) the filing of applications
----------------------
with the OTS and approval of such applications, (b) the filing with the SEC of
the Proxy Statement and the S-4, (c) the approval of this Agreement by the
requisite vote of the stockholders of First Place, (d) the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware, (e)
23
<PAGE>
such filings and approvals as are required to be made or obtained under the
securities or "Blue Sky" laws of various states in connection with the issuance
of the shares of First Place Common Stock pursuant to this Agreement, (f)
filings required by the Bank Merger Agreement, (g) the approval of the Bank
Merger Agreement by the stockholder of the Association, and (h) such filings,
authorizations or approvals as may be set forth in Section 4.4 of the First
Place Disclosure Schedule, no consents or approvals of or filings or
registrations with any Governmental Entity or with any third party are necessary
in connection with (1) the execution and delivery by First Place of this
Agreement, (2) the consummation by First Place of the Merger and the other
transactions contemplated hereby, (3) the execution and delivery by the
Association of the Bank Merger Agreement, and (4) the consummation of the
Association of the transactions contemplated by the Bank Merger Agreement.
4.5 Reports. First Place and each of its Subsidiaries have timely filed
-------
all material reports, registrations and statements, together with any amendments
required to be made with respect thereto, that they were required to file since
June 30, 1995 with any Regulatory Agency, and all other material reports and
statements required to be filed by them since June 30, 1995, including, without
limitation, any report or statement required to be filed pursuant to the laws,
rules or regulations of the United States, the OTS, the FDIC, any State
Regulator or any SRO, and have paid all fees and assessments due and payable in
connection therewith. Except for normal examinations conducted by a Regulatory
Agency in the regular course of the business of First Place and its
Subsidiaries, and, except as set forth in Section 4.20 of the First Place
Disclosure Schedule, no Regulatory Agency has initiated any proceeding or, to
the best knowledge of First Place, investigation into the business or operations
of First Place or any of its Subsidiaries since June 30, 1995. There is no
unresolved material violation, criticism, or exception by any Regulatory Agency
with respect to any report or statement relating to any examinations of First
Place or any of its Subsidiaries.
4.6 Financial Statements.
--------------------
(a) First Place has previously delivered to FFY copies of (i) the
consolidated balance sheets of First Place as of June 30, 1999 and of the
Association as of June 30, 1998 and the related consolidated statements of
income, changes in shareholders' equity and cash flows for First Place for the
fiscal year ended June 30, 1999 and for the Association for the fiscal years
ended June 30, 1997 and 1998, in each case accompanied by the audit report of
Crowe, Chizek and Packer, Thomas & Co., independent public accountants with
respect to First Place and the Association, and (ii) the unaudited consolidated
balance sheet of First Place and its Subsidiaries as of March 31, 2000 and March
31, 1999 and the related unaudited consolidated statements of income, changes in
shareholders' equity and cash flows for the three and nine month periods then
ended as reported in First Place's Quarterly Report on Form 10-Q for the period
ended March 31, 2000 filed with the SEC under the Exchange Act. The June 30,
1999 consolidated balance sheet of First Place (including the related notes,
where applicable) fairly presents the consolidated financial position of First
Place and its Subsidiaries as of the date thereof, and the other financial
statements referred to in this Section 4.6 (including the related notes, where
applicable) fairly present and the financial statements referred to in Section
6.9 hereof will fairly present (subject, in the case of the unaudited
statements, to recurring audit adjustments normal in nature and amount and the
absence of footnotes), the results of the consolidated operations and changes in
shareholders' equity and consolidated financial position of First Place and its
Subsidiaries for the
24
<PAGE>
respective fiscal periods or as of the respective dates therein set forth; each
of such statements (including the related notes, where applicable) comply, and
the financial statements referred to in Section 6.9 hereof will comply, in all
material respects with applicable accounting requirements and with the published
rules and regulations of the SEC with respect thereto; and each of such
statements (including the related notes, where applicable) has been, and the
financial statements referred to in Section 6.9 hereof will be, prepared in
accordance with GAAP consistently applied during the periods involved, except as
indicated in the notes thereto or, in the case of unaudited statements, as
permitted by Form 10-Q. The books and records of First Place and its
Subsidiaries have been, and are being, maintained in all material respects in
accordance with GAAP and any other applicable legal and accounting requirements
and reflect only actual transactions.
(b) First Place has previously delivered to FFY copies of (i) the
consolidated balance sheets of Ravenna Savings Bank ("Ravenna") and its
Subsidiary as of June 30 for the fiscal years 1996, 1997, 1998 and 1999, and the
related consolidated statements of income, changes in stockholders' equity and
cash flows for the fiscal years 1995 through 1999, inclusive, in each case
accompanied by the audit report of KPMG Peat Marwick LLP, independent public
accountants with respect to Ravenna, and (ii) the unaudited consolidated balance
sheets of Ravenna and its Subsidiary as of March 31, 2000 and March 31, 1999 and
the related unaudited consolidated statements of income, cash flows and changes
in stockholders' equity for the three and nine month periods then ended.
4.7 Broker's Fees. Neither First Place nor any Subsidiary of First Place,
-------------
nor any of their respective officers or directors, has employed any broker or
finder or incurred any liability for any broker's fees, commissions or finder's
fees in connection with any of the transactions contemplated by this Agreement,
the Bank Merger Agreement or the Option Agreements, except that First Place has
engaged, and will pay a fee or commission to, Keefe, Bruyette and Woods, Inc.
("KBW") in accordance with the terms of a letter agreement between KBW and First
Place concerning the issuance of an opinion regarding the fairness of the
Exchange Ratio, a true, complete and correct copy of which has been previously
delivered by First Place to FFY.
4.8 Absence of Certain Changes or Events.
------------------------------------
(a) Except as may be set forth in Section 4.8(a) of the First Place
Disclosure Schedule, or as disclosed in First Place's Quarterly Report on Form
10-Q for the quarter ended March 31, 2000 (a true, complete and correct copy of
which has previously been delivered to FFY), since June 30, 1999, (i) neither
First Place nor any of its Subsidiaries has incurred any material liability,
except in the ordinary course of their business consistent with their past
practices, and (ii) no event has occurred which has caused, or is reasonably
likely to cause, individually or in the aggregate, a Material Adverse Effect on
First Place.
(b) Except as set forth in Section 4.8(b) of the First Place
Disclosure Schedule, since March 31, 2000, First Place and its Subsidiaries have
carried on their respective businesses in the ordinary course consistent with
their past practices.
(c) Except as set forth in Section 4.8(c) of the First Place
Disclosure Schedule, since March 31, 2000, neither First Place nor any of its
Subsidiaries has (i) increased
25
<PAGE>
the wages, salaries, compensation, pension, or other fringe benefits or
perquisites payable to any executive officer, employee, or director from the
amount thereof in effect as of March 31, 2000 (which amounts have been
previously disclosed to FFY), granted any severance or termination pay, entered
into any contract to make or grant any severance or termination pay, or paid any
bonus other than year-end bonuses for fiscal 1999 as listed in Section 4.8 of
the First Place Disclosure Schedule or (ii) suffered any strike, work stoppage,
slowdown or other labor disturbance.
4.9 Legal Proceedings.
-----------------
(a) Except as set forth in Section 4.9 of the First Place
Disclosure Schedule, neither First Place nor any of its Subsidiaries is a party
to any and there are no pending or to the best of First Place's knowledge,
threatened, legal, administrative, arbitral or other proceedings, claims,
actions or governmental or regulatory investigations of any nature against First
Place or any of its Subsidiaries or challenging the validity or propriety of the
transactions contemplated by this Agreement, the Bank Merger Agreement or FFY
Option Agreement as to which there is a reasonable probability of an adverse
determination and which, if adversely determined, would, individually or in the
aggregate, have or be reasonably likely to have a Material Adverse Effect on
First Place.
(b) There is no injunction, order, judgment, decree, or regulatory
restriction imposed upon First Place, any of its Subsidiaries or the assets of
First Place or any of its Subsidiaries which has had, or could reasonably be
expected to have, a Material Adverse Effect on First Place.
4.10 Taxes. Except as set forth in Section 4.10 of the First Place
-----
Disclosure Schedule, each of First Place and its Subsidiaries has (i) duly and
timely filed or will duly and timely file (including applicable extensions
granted without penalty) all Tax Returns required to be filed at or prior to the
Effective Time, and such Tax Returns which have heretofore been filed are, and
those to be hereinafter filed will be, complete and accurate in all material
respects, and (ii) paid in full or have made adequate provision for on the
financial statements of First Place (in accordance with GAAP) all Taxes and will
pay in full or make adequate provision for all Taxes. There are no material
liens for Taxes upon the assets of either First Place or its Subsidiaries except
for statutory liens for current Taxes not yet due. Except as set forth in
Section 4.10 of the First Place Disclosure Schedule, neither First Place nor any
of its Subsidiaries has requested any extension of time within which to file any
Tax Returns in respect of any fiscal year which have not since been filed and no
request for waivers of the time to assess any Taxes are pending or outstanding.
The federal and state income Tax Returns of First Place and its Subsidiaries
have been audited by the Internal Revenue Service or appropriate state tax
authorities with respect to those periods and jurisdictions set forth on Section
4.10 of the First Place Disclosure Schedule. Except as set forth in Section 4.10
of First Place Disclosure Schedule, neither First Place nor any of its
Subsidiaries (i) is a party to any agreement providing for the allocation or
sharing of Taxes (other than the allocation of federal income taxes as provided
by Regulation 1.1552 l(a)(1) under the Code); (ii) is required to include in
income any adjustment pursuant to Section 481(a) of the Code, by reason of the
voluntary change in accounting method (nor has any taxing authority proposed in
writing any such adjustment or change of accounting method); or (iii) has filed
a consent pursuant to Section 341(f) of the Code.
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4.11 Employees.
---------
(a) Section 4.11(a) of the First Place Disclosure Schedule sets forth
a true and complete list of each employee benefit plan, arrangement or agreement
that is maintained or contributed to or required to be contributed to as of the
date of this Agreement (the "First Place Plans") by First Place, any of its
Subsidiaries or by any trade or business, whether or not incorporated (a "First
Place ERISA Affiliate"), all of which together with First Place would be deemed
a "single employer" within the meaning of Section 4001 of ERISA, for the benefit
of any employee or former employee of First Place, any Subsidiary or any First
Place ERISA Affiliate.
(b) First Place has heretofore delivered to FFY true and complete
copies of each of the Plans and all related documents, including but not limited
to (i) the actuarial report for any Plan (if applicable) for each of the last
two years, and (ii) the most recent determination letter from the Internal
Revenue Service (if applicable) for any Plan.
(c) Except as set forth in Section 4.11(c) of the First Place
Disclosure Schedule, (i) each of First Place Plans has been operated and
administered in all material respects in accordance with its terms and
applicable law, including but not limited to ERISA and the Code, (ii) each of
First Place Plans intended to be "qualified" within the meaning of Section
401(a) of the Code has either (1) received a favorable determination letter from
the IRS, or (2) is or will be the subject of an application for a favorable
determination letter, and First Place is not aware of any circumstances likely
to result in the revocation or denial of any such favorable determination
letter, (iii) with respect to each First Place Plan which is subject to Title IV
of ERISA, the present value of accrued benefits under such First Place Plan,
based upon the actuarial assumptions used for funding purposes in the most
recent actuarial report prepared by such First Place Plan's actuary with respect
to such First Place Plan, did not, as of its latest valuation date, exceed the
then current value of the assets of such First Place Plan allocable to such
accrued benefits, (iv) no Plan provides benefits, including without limitation
death or medical benefits (whether or not insured), with respect to current or
former employees of First Place, its Subsidiaries or any First Place ERISA
Affiliate beyond their retirement or other termination of service, other than
(w) coverage mandated by applicable law, (x) death benefits or retirement
benefits under any "employee pension plan," as that term is defined in Section
3(2) of ERISA, (y) deferred compensation benefits accrued as liabilities on the
books of First Place, its Subsidiaries or the First Place ERISA Affiliates or
(z) benefits the full cost of which is borne by the current or former employee
(or his beneficiary), (v) no liability under Title IV of ERISA has been incurred
by First Place, its Subsidiaries or any First Place ERISA Affiliate that has not
been satisfied in full, and no condition exists that presents a material risk to
First Place, its Subsidiaries or any First Place ERISA Affiliate of incurring a
material liability thereunder, (vi) no First Place Plan is a "multiemployer
pension plan," as such term is defined in Section 3(37) of ERISA, (vii) all
contributions or other amounts payable by First Place, its Subsidiaries or any
First Place ERISA Affiliate as of the Effective Time with respect to each Plan
in respect of current or prior plan years have been paid or accrued in
accordance with GAAP and Section 412 of the Code, (viii) neither First Place,
its Subsidiaries nor any First Place ERISA Affiliate has engaged in a
transaction in connection with which First Place, its Subsidiaries or any First
Place ERISA Affiliate could be subject to either a civil penalty assessed
pursuant to Section 409 or 502(i) of ERISA or a tax imposed pursuant to Section
4975 or 4976 of the Code, (ix) there are no
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pending, or, to the best knowledge of First Place, threatened or anticipated
claims (other than routine claims for benefits) by, on behalf of or against any
of First Place Plans or any trusts related thereto and (x) the consummation of
the transactions contemplated by this Agreement will not (y) entitle any current
or former employee or officer of First Place or any First Place ERISA Affiliate
to severance pay, termination pay or any other payment, except as expressly
provided in this Agreement or (z) accelerate the time of payment or vesting or
increase the amount of compensation due any such employee or officer.
4.12 SEC Reports. First Place has previously made available to FFY an
-----------
accurate and complete copy of each (a) final registration statement, prospectus,
report, schedule and definitive proxy statement filed since September 1, 1999 by
First Place with the SEC pursuant to the Securities Act or the Exchange Act (the
"First Place Reports") and (b) communication mailed by First Place to its
shareholders since September 1, 1999, and no such registration statement,
prospectus, report, schedule, proxy statement or communication contained any
untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances in which they were made, not misleading,
except that information as of a later date shall be deemed to modify information
as of an earlier date. First Place has timely filed all First Place Reports and
other documents required to be filed by it under the Securities Act and the
Exchange Act, and, as of their respective dates, all First Place Reports
complied in all material respects with the published rules and regulations of
the SEC with respect thereto.
4.13 First Place Information. The information relating to First Place and
-----------------------
its Subsidiaries to be contained in, or incorporated by reference in, the Proxy
Statement and the S-4, or in any other document filed with any other regulatory
agency in connection herewith, will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
therein, in light of the circumstances in which they are made, not misleading.
The S-4 (except for such portions thereof that relate only to FFY or any of its
Subsidiaries) will comply in all material respects with the provisions of the
Securities Act of 1933 and the rules and regulations thereunder and the Exchange
Act and the rules and regulations thereunder.
4.14 Ownership of FFY Common Stock: Affiliates and Associates.
------------------------------ -------------------------
(a) Except for the First Place Stock Option Agreement and as set
forth in Section 4.14 of the First Place Disclosure Schedule, none of First
Place, any of its Subsidiaries, (i) beneficially own, directly or indirectly, or
(ii) is a party to any agreement, arrangement or understanding for the purpose
of acquiring, holding, voting or disposing of, in each case, any shares of
capital stock of FFY (other than Trust Account Shares and DPC Shares); and
(b) Neither First Place nor any of its Subsidiaries is an "affiliate"
(as such term is defined in DGCL 203(c)(1)), an "associate" (as such term is
defined in DGCL 203(c)(2)) of FFY or an "Interested Stockholder" (as such term
is defined in Section 8 of FFY's Certificate of Incorporation).
4.15 Compliance with Applicable Law. First Place and each of its
------------------------------
Subsidiaries holds all material licenses, franchises, permits and authorizations
necessary for the lawful conduct of their respective businesses under and
pursuant to all, and are in compliance with and are not, to
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its knowledge, in default in any respect under any, applicable law, statute,
order, rule, regulation, policy and/or guideline of any Governmental Entity
relating to First Place or any of its Subsidiaries, except where the failure to
hold such license, franchise, permit or authorization or such non-compliance or
default would not, individually or in the aggregate, have, or be reasonably
likely to have, a Material Adverse Effect on First Place, and neither First
Place nor any of its Subsidiaries knows of, or has received notice of, any
material violations of any of the above since December 31, 1994.
4.16 Certain Contracts.
-----------------
(a) Except as set forth in Section 4.16(a) of the First Place
Disclosure Schedule, neither First Place nor any of its Subsidiaries is a party
to or bound by any contract, arrangement, commitment or understanding (whether
written or oral) (i) with respect to the employment of any directors, officers,
employees or consultants, (ii) which, upon the consummation of the transactions
contemplated by this Agreement or the Bank Merger Agreement will (either alone
or upon the occurrence of any additional acts or events) result in any payment
(whether of severance pay or otherwise) becoming due from FFY, First Place, the
Surviving Corporation, the Surviving Institution or any of their respective
Subsidiaries to any officer or employee thereof, (iii) which is a material
contract (as defined in Item 601(b)(10) of Regulation S-K of the SEC) to be
performed after the date of this Agreement that has not been filed or
incorporated by reference in First Place Reports, (iv) which is a consulting
agreement (including data processing, software programming and licensing
contracts) not terminable on 60 days or less notice involving the payment of
more than $50,000 per annum, in the case of any such agreement with an
individual, or $100,000 per annum, in the case of any other such agreement, (v)
which materially restricts the conduct of any line of business by First Place or
any of its Subsidiaries, (vi) with or to a labor union or guild (including any
collective bargaining agreement) or (vii) (including any stock option plan,
stock appreciation rights plan, restricted stock plan or stock purchase 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 Bank Merger 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 or the Bank Merger Agreement. Each
contract, arrangement, commitment or understanding of the type described in this
Section 4.16(a), whether or not set forth in Section 4.16(a) of the First Place
Disclosure Schedule, is referred to herein as a "First Place Contract." The
First Place has previously delivered to FFY true and correct copies of each
First Place Contract.
(b) Except as set forth in Section 4.16(b) of the First Place
Disclosure Schedule, (i) each First Place Contract is valid and binding and in
full force and effect, (ii) First Place and each of its Subsidiaries have in all
material respects performed all obligations required to be performed by it to
date under each First Place Contract, except where such noncompliance,
individually or in the aggregate, would not have or be reasonably likely to have
a Material Adverse Effect on First Place, (iii) no event or condition exists
which constitutes or, after notice or lapse of time or both, would constitute, a
material default on the part of First Place or any of its Subsidiaries under any
such First Place Contract, except where such default, individually or in the
aggregate, would not have or be reasonably likely to have a Material Adverse
Effect on First
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Place and (iv) no other party to such First Place Contract is, to the best
knowledge of First Place, in default in any respect thereunder.
4.17 Agreements with Regulatory Agencies. Except as set forth in Section
-----------------------------------
4.17 of the First Place Disclosure Schedule, neither First Place nor any of its
Subsidiaries is subject to any cease-and-desist or other order issued by, or is
a party to any written agreement, consent agreement or memorandum of
understanding with, or is a party to any commitment letter or similar
undertaking to, or is subject to any order or directive by, or is a recipient of
any extraordinary supervisory letter from, or has adopted any board resolutions
at the request of (each, whether or not set forth in Section 4.17 of First Place
Disclosure Schedule, a "First Place Regulatory Agreement"), any Regulatory
Agency or other Governmental Entity that restricts the conduct of its business
or that in any manner relates to its capital adequacy, its credit policies, its
management or its business, nor has First Place or any of its Subsidiaries been
advised by any Regulatory Agency or other Governmental Entity that it is
considering issuing or requesting any Regulatory Agreement.
4.18 Investment Securities. Section 4.18 of the First Place Disclosure
---------------------
Schedule sets forth the book and market value as of March 31, 2000 of the
investment securities, mortgage backed securities and securities held for sale
of First Place and its Subsidiaries. Section 4.18 of First Place Disclosure
Schedule sets forth an investment securities report which includes security
descriptions, CUSIP numbers, pool face values, book values, coupon rates and
current market values.
4.19 Intellectual Property. Except where there would be no Material
---------------------
Adverse Effect on First Place, First Place and each of its Subsidiaries owns or
possesses valid and binding licenses and other rights to use without payment all
material patents, copyrights, trade secrets, trade names, servicemarks,
trademarks and computer software used in its businesses; and neither First Place
nor any of its Subsidiaries has received any notice of conflict with respect
thereto that asserts the right of others. First Place and each of its
Subsidiaries have in all material respects performed all the obligations
required to be performed by them and are not in default in any material respect
under any contract, agreement, arrangement or commitment relating to any of the
foregoing, except where such non-performance or default would not, individually
or in the aggregate, have or be reasonably likely to have a Material Adverse
Effect on First Place.
4.20 Undisclosed Liabilities. Except (a) as set forth in Section 4.20 of
-----------------------
the First Place Disclosure Schedule, (b) for those liabilities that are fully
reflected or reserved against on the consolidated balance sheet of First Place
included in its Form 10-Q for the period ended March 31, 2000 and (c) for
liabilities incurred in the ordinary course of business consistent with past
practice since March 31, 2000 that, either alone or when combined with all
similar liabilities, have not had, and could not reasonably be expected to have,
a Material Adverse Effect on First Place, neither First Place nor any of its
Subsidiaries has incurred any liability of any nature whatsoever (whether
absolute, accrued, contingent or otherwise and whether due or to become due).
4.21 State Takeover Laws. The provisions of Article VIII of First Place's
-------------------
Certificate of Incorporation will not, assuming the accuracy of the
representations contained in Section 3.14
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hereof, apply to the Agreement, the Bank Merger Agreement or the FFY Stock
Option Agreement or any of the transactions contemplated hereby or thereby.
4.22 Administration of Fiduciary Accounts. First Place and each of its
------------------------------------
Subsidiaries has properly administered in all material respects all accounts for
which it acts as a fiduciary, including but not limited to accounts for which it
serves as a trustee, agent, custodian, personal representative, guardian,
conservator or investment advisor, in accordance with the terms of the governing
documents and applicable state and federal law and regulation and common law.
Neither First Place nor any of its Subsidiaries nor any of their respective
directors, officers or employees has committed any breach of trust with respect
to any such fiduciary account which has or could reasonably be expected to have
a Material Adverse Effect on First Place, and the accountings for each such
fiduciary account are true and correct in all material respects and accurately
reflect the assets of such fiduciary account.
4.23 Environmental Matters. Except as set forth in Section 4.23 of the
---------------------
First Place Disclosure Schedule:
(a) Each of First Place, its Subsidiaries, the Participation
Facilities and the Loan Properties (each as hereinafter defined) are, and have
been, in compliance with Environmental Laws, except for violations which, either
individually or in the aggregate, have not had and cannot reasonably be expected
to have a Material Adverse Effect on First Place;
(b) There is no suit, claim, action or proceeding, pending or
threatened, before any Governmental Entity or other forum in which First Place,
any of its Subsidiaries, any Participation Facility or any Loan Property, has
been or, with respect to threatened proceedings, may be, named as a defendant
(x) for alleged noncompliance (including by any predecessor), with any
Environmental Laws, or (y) relating to the release, threatened release or
exposure to any material whether or not occurring at or on a site owned, leased
or operated by First Place or any of its Subsidiaries, any Participation
Facility or any Loan Property, except where such noncompliance or release has
not resulted, and cannot be reasonably expected to result, either individually
or in the aggregate, in a Material Adverse Effect on First Place;
(c) During the period of (x) First Place's or any of its
Subsidiaries' ownership or operation of any of their respective current
properties, (y) First Place's or any of its Subsidiaries' participation in the
management of any Participation Facility, or (z) First Place's or any of its
Subsidiaries' holding of a security interest in a Loan Property, there has been
no release of materials in, on, under or affecting any such property, except
where such release has not had and cannot reasonably be expected to result in,
either individually or in the aggregate, a Material Adverse Effect on First
Place. To the knowledge of First Place, prior to the period of (x) First Place's
or any of its Subsidiaries' ownership or operation of any of their respective
current properties, (y) First Place's or any of its Subsidiaries' participation
in the management of any Participation Facility, or (z) First Place's or any of
its Subsidiaries' holding of a security interest in a Loan Property, there was
no release or threatened release of materials in, on, under or affecting any
such property, Participation Facility or Loan Property, except where such
release has not had and cannot be reasonably expected to have, either
individually or in the aggregate, a Material Adverse Effect on First Place; and
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(d) The following definitions apply for purposes of this Section
4.23: (x) "Loan Property" means any property in which First Place or any of its
Subsidiaries holds a security interest, and, where required by the context, said
term means the owner or operator of such property; and (y) "Participation
Facility" means any facility in which First Place or any of its Subsidiaries
participates in the management and, where required by the context, said term
means the owner or operator of such property.
4.24 Derivative Transactions. Except as set forth in Section 4.24 of the
-----------------------
First Place Disclosure Schedule, since June 30, 1999, neither First Place nor
any of its Subsidiaries has engaged in transactions in or involving forwards,
futures, options on futures, swaps or other derivative instruments except (i) as
agent on the order and for the account of others, or (ii) as principal for
purposes of hedging interest rate risk on U.S. dollar denominated securities and
other financial instruments. None of the counterparties to any contract or
agreement with respect to any such instrument is in default with respect to such
contract or agreement and no such contract or agreement, were it to be a Loan
held by First Place or any of its Subsidiaries, would be classified as "Other
Loans Specially Mentioned," "Special Mention," "Substandard," "Doubtful,"
"Loss," "Classified," "Criticized," "Credit Risk Assets," "Concerned Loans" or
words of similar import. The financial position of First Place and its
Subsidiaries on a consolidated basis under or with respect to each such
instrument has been reflected in the books and records of First Place and such
Subsidiaries in accordance with GAAP consistently applied, and no open exposure
of First Place or any of its Subsidiaries which has not been previously
disclosed in the First Place Reports with respect to any such instrument (or
with respect to multiple instruments with respect to any single counterparty)
exceeds $500,000.
4.25 Opinion. The First Place has received a written opinion, dated the
-------
date hereof, from KBW to the effect that, subject to the terms, conditions and
qualifications set forth therein, as of the date thereof the Exchange Ratio is
fair to such stockholders from a financial point of view.
4.26 Assistance Agreements. Neither First Place nor any of its
---------------------
Subsidiaries is a party to any agreement or arrangement entered into in
connection with the consummation of a federally assisted acquisition of a
depository institution pursuant to which First Place or any of its Subsidiaries
is entitled to receive financial assistance or indemnification from any
governmental agency.
4.27 Approvals. As of the date of this Agreement, First Place knows of no
---------
reason why all regulatory approvals required for the consummation of the
transactions contemplated hereby (including, without limitation, the Merger and
the Subsidiary Merger) should not be obtained without the imposition of a
Burdensome Condition.
4.28 Loan Portfolio.
--------------
(a) In First Place's reasonable judgment, the allowance for loan
losses reflected in First Place's audited statement of condition at June 30,
1999 was, and the allowance for loan losses shown on the balance sheets in its
Reports for periods ending after June 30, 1999 have been and will be, adequate
in all material respects, as of the dates thereof, under GAAP,
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and no Regulatory Agencies have required or requested First Place to increase
the allowance for loan losses for such periods.
(b) Except as set forth in Section 4.28 of the First Place Disclosure
Schedule, neither First Place nor any of its Subsidiaries is a party to any
written or oral (i) Loan, other than Loans the unpaid principal balance of which
does not exceed $175,000, under the terms of which the obligor is, as of the
date of this Agreement, over 90 days delinquent in payment of principal or
interest or in default of any other provision, or (ii) Loans as of the date of
this Agreement with any director, executive officer or ten percent stockholder
of First Place or any of its Subsidiaries, or to the best knowledge of First
Place, any person, corporation or enterprise controlling, controlled by or under
common control with any of the foregoing. Section 4.28 of the First Place
Disclosure Schedule sets forth (i) all of the Loans in original principal amount
in excess of $175,000 of First Place or any of its Subsidiaries that as of the
date of this Agreement are classified by any bank examiner (whether regulatory
or internal) as "Other Loans Specially Mentioned", "Special Mention",
"Substandard", "Doubtful", "Loss", "Classified", "Criticized", "Credit Risk
Assets", "Concerned Loans", "Watch List" or words of similar import, together
with the principal amount of and accrued and unpaid interest on each such Loan
and the identity of the borrower thereunder, and (ii) by category of Loan (i.e.,
commercial, consumer, etc.), all of the other Loans of First Place and its
Subsidiaries that as of the date of this Agreement are classified as such,
together with the aggregate principal amount of and accrued and unpaid interest
on such Loans by category. First Place shall promptly inform FFY in writing of
any loan that becomes classified in the manner described in the previous
sentence, or any Loan the classification of which is changed, at any time after
the date of this Agreement.
(c) Each loan reflected as an asset in the First Place Reports (i) is
evidenced by notes, agreements or other evidences of indebtedness which are
true, genuine and correct in all material respects, (ii) to the extent secured,
has been secured by valid liens and security interests which have been
perfected, and (iii) is the legal, valid and binding obligation of the obligor
named therein, enforceable in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent conveyance and other laws of general applicability
relating to or affecting creditors' rights and to general equity principles, in
each case other than loans as to which the failure to satisfy the foregoing
standards would not have a Material Adverse Effect on First Place.
4.29 [Reserved]
4.30 Labor Matters. Except as set forth in Section 4.30 of the First Place
-------------
Disclosure Schedule, neither First Place nor its Subsidiaries is or has ever
been a party to, or is or has ever been bound by, any collective bargaining
agreement, contract, or other agreement or understanding with a labor union or
labor organization with respect to its employees, nor is First Place or its
Subsidiaries the subject of any proceeding asserting that it has committed an
unfair labor practice or seeking to compel it or any such Subsidiary to bargain
with any labor organization as to wages and conditions of employment, nor is the
management of First Place aware of any strike, other labor dispute,
organizational effort or other activity taken with a view toward unionization
involving First Place or its Subsidiaries pending or threatened. First Place
and its Subsidiaries are in compliance with applicable laws regarding employment
or employees
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and retention of independent contractors and are in material compliance with all
applicable employment tax laws.
4.31 Termination Benefits. Section 4.31 of the First Place Disclosure
--------------------
Schedule contains a complete and accurate schedule showing as of the date of
this Agreement the monetary amounts payable, subject to a determination of the
Market Value, and identifying the in-kind benefits due under the Specified
Compensation and Benefit Programs (as defined herein) for each Named Individual
(as defined herein) individually. For purposes hereof, "Specified Compensation
and Benefit Programs" shall include all employment agreements, change in control
agreements, severance or special termination agreements, severance plans,
pension, retirement or deferred compensation plans for non-employee directors,
supplemental executive retirement programs, tax indemnification agreements,
outplacement programs, cash bonus programs, stock appreciation right, phantom
stock or stock unit plan, and health, life, disability and other insurance or
welfare plans, but shall not include any tax-qualified pension, profit-sharing
or employee stock ownership plan. For purposes hereof, "Named Individual" shall
include each non-employee director of First Place or its Subsidiaries and each
executive officer of First Place or its Subsidiaries.
4.32 Deposits. None of the deposits of the Association is a "brokered"
--------
deposit.
4.33 Antitakeover Provisions Inapplicable. First Place and its
------------------------------------
Subsidiaries have taken all actions required to exempt First Place and the
Agreement from any provisions of an antitakeover nature in their Certificate of
Incorporation, Bylaws and any other governing documents and the provisions of
any federal or state "antitakeover," "fair price," "moratorium," "control share
acquisition" or similar laws or regulations.
4.34 Insurance. First Place and its Subsidiaries are presently insured,
---------
and since June 30, 1997, have been insured, for reasonable amounts with
financially sound and reputable insurance companies, against such risks as
companies engaged in a similar business would, in accordance with good business
practice, customarily be insured. All of the insurance policies and bonds
maintained by First Place and its Subsidiaries are in full force and effect,
First Place and its Subsidiaries are not in default thereunder and all material
claims thereunder have been filed in due and timely fashion.
4.35 Indemnification. Except as provided in First Place's employment
---------------
agreements, its indemnification agreement with KBW, or the Certificate of
Incorporation or Bylaws of First Place, neither First Place nor its Subsidiaries
is a party to any indemnification agreement with any of its present or future
directors, officers, employees, agents or other persons who serve or served in
any other capacity with any other enterprise at the request of First Place (a
"Covered Person"), and, except as set forth in Section 4.35 of the First Place
Disclosure Schedule, there are no claims for which any Covered Person would be
entitled to indemnification under the Certificate of Incorporation, or Bylaws of
First Place or any Subsidiary of First Place, applicable law, regulation or any
indemnification agreement.
4.36 Disclosure. The representations and warranties contained in this
----------
Article IV do not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements and
information contained in this Article IV not misleading.
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ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 Covenants. During the period from the date of this Agreement and
---------
continuing until the Effective Time, except as expressly contemplated or
permitted by this Agreement, the Bank Merger Agreement or the Option Agreements
or with the prior written consent of the other party, each of FFY and First
Place, and their respective Subsidiaries, shall carry on their respective
businesses in the ordinary course consistent with past practice and consistent
with prudent banking practice. Each of FFY and First Place will use its best
efforts to (x) preserve its business organization and that of its Subsidiaries
intact, (y) keep available to itself and the other party hereto the present
services of its employees of and (z) preserve for itself and the other parties
hereto its goodwill of its customers and others with whom business relationships
exist. Without limiting the generality of the foregoing, and except as set forth
in Section 5.1 of the FFY Disclosure Schedule, Section 5.1 of the First Place
Disclosure Schedule or as otherwise contemplated by this Agreement or consented
to in writing by the other party hereto, each of FFY and First Place shall not,
and shall not permit any of its Subsidiaries to:
(a) solely in the case of FFY or First Place, as the case may be,
declare or pay any dividends on, or make other distributions in respect of, any
of its capital stock, other than normal quarterly dividends in an amount of no
more than $0.125 per share with respect to shares of FFY Common Stock and no
more than $0.10 per share with respect to shares of First Place Common Stock;
(b) split, combine or reclassify any shares of its capital stock or
issue or authorize or propose the issuance of any other securities in respect
of, in lieu of or in substitution for shares of its capital stock except upon
the exercise or fulfillment of rights or options issued or existing pursuant to
employee benefit plans, programs or arrangements, all to the extent outstanding
and in existence on the date of this Agreement and in accordance with their
present terms, and except pursuant to the Option Agreements;
(c) issue, deliver or sell, or authorize or propose the issuance,
delivery or sale of, any shares of its capital stock or any securities
convertible into or exercisable for, or any rights, warrants or options to
acquire, any such shares, or enter into any agreement with respect to any of the
foregoing, other than (i) the issuance of FFY Common Stock or First Place Common
Stock pursuant to stock options or similar rights to acquire FFY Common Stock or
First Place Common Stock granted pursuant to FFY Stock Plan or First Place Stock
Plan and outstanding prior to the date of this Agreement, in each case in
accordance with their present terms and (ii) pursuant to the Option Agreements;
(d) amend its Certificate of Incorporation, By-laws or other similar
governing documents;
(e) with the exception of matters set forth in Section 5.1(e) of the
FFY Disclosure Schedule or the First Place Disclosure Schedule, authorize or
permit any of its officers, directors, employees or agents to directly or
indirectly solicit, initiate or encourage any inquiries relating to, or the
making of any proposal which constitutes, a "takeover proposal" (as
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defined below), or, except to the extent legally required for the discharge of
the fiduciary duties of its Board of Directors, recommend or endorse any
takeover proposal, or participate in any discussions or negotiations, or provide
third parties with any nonpublic information, relating to any such inquiry or
proposal or otherwise facilitate any effort or attempt to make or implement a
takeover proposal. Each of FFY and First Place will immediately cease and cause
to be terminated any existing activities, discussions or negotiations previously
conducted with any other parties with respect to any of the foregoing with the
exception of matters set forth in Section 5.1(e) of the FFY Disclosure Schedule
or the First Place Disclosure Schedule. The parties hereto will take all actions
necessary or advisable to inform the appropriate individuals or entities
referred to in the first sentence hereof of the obligations undertaken in this
Section 5.1(e). Each party will notify the other immediately if any such
inquiries or takeover proposals are received by, any such information is
requested from, or any such negotiations or discussions are sought to be
initiated or continued with, a party, and that party will promptly inform the
other in writing of all of the relevant details with respect to the foregoing.
As used in this Agreement, "takeover proposal" shall mean any tender or exchange
offer, proposal for a merger, consolidation or other business combination
involving FFY or First Place or any Subsidiary of FFY or First Place or any
proposal or offer to acquire in any manner a substantial equity interest in, or
a substantial portion of the assets of FFY or First Place or any Subsidiary of
FFY or First Place other than the transactions contemplated or permitted by this
Agreement, the Bank Merger Agreement and the Option Agreements;
(f) make any capital expenditures other than the expenses which are
set forth in Section 5.1(f) of the FFY or First Place Disclosure Schedules and
expenses which (i) are made in the ordinary course of business or are necessary
to maintain existing assets in good repair, or (ii) in an amount of no more than
$100,000 individually and $150,000 in the aggregate;
(g) except as disclosed in Section 5.1(g) of the FFY Disclosure
Schedules, enter into any new line of business;
(h) except as disclosed in Section 5.1(h) of the FFY or the First
Place Disclosure Schedules, acquire or agree to acquire, by merging or
consolidating with, or by purchasing a substantial equity interest in or a
substantial portion of the assets of, or by any other manner, any business or
any corporation, partnership, association or other business organization or
division thereof or otherwise acquire any assets, which would be material,
individually or in the aggregate, to that party, other than in connection with
foreclosures, settlements in lieu of foreclosure or troubled loan or debt
restructurings in the ordinary course of business consistent with prudent
banking practices;
(i) take any action that is intended or may reasonably be expected to
result in any of its representations and warranties set forth in this Agreement
being or becoming untrue in any material respect, or in any of the conditions to
the Merger set forth in Article VII not being satisfied, or in a violation of
any provision of this Agreement or the Bank Merger Agreement, except, in every
case, as may be required by applicable law;
(j) change its methods of accounting in effect at June 30, 1999,
except as required by changes in GAAP or regulatory accounting principles as
concurred to by its independent auditors;
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(k) (i) except as set forth in Section 5.1(k) of the FFY or First
Place Disclosure Schedule, as required by applicable law, or to maintain
qualification pursuant to the Code, adopt, amend, renew or terminate any Plan or
any agreement, arrangement, plan or policy between FFY or First Place or any
Subsidiary of FFY or First Place and one or more of their current or former
directors, officers or employees or (ii) except for normal increases in the
ordinary course of business consistent (including, in the case of First Place,
any adjustment to salaries and bonuses to be made by the First Place Board of
Directors based on the study prepared by First Place's compensation consultants)
with past practice, or except as required by applicable law, increase in any
manner the compensation or fringe benefits of any director, officer or employee
or pay any benefit not required by any plan or agreement as in effect as of the
date hereof (including, without limitation, the granting of stock options, stock
appreciation rights, restricted stock, restricted stock units or performance
units or shares);
(l) take or cause to be taken any action which would disqualify the
Merger as a tax free reorganization under Section 368 of the Code;
(m) except as set forth in Section 5.1(m) of FFY or First Place
Disclosure Schedule, other than activities in the ordinary course of business
consistent with past practice, sell, lease, encumber, assign or otherwise
dispose of, or agree to sell, lease, encumber, assign or otherwise dispose of,
any of its material assets, properties or other rights or agreements;
(n) other than in the ordinary course of business consistent with
past practice, incur any indebtedness for borrowed money, assume, guarantee,
endorse or otherwise as an accommodation become responsible for the obligations
of any other individual, corporation or other entity;
(o) except as set forth in Section 5.1(o) of the FFY or First Place
Disclosure Schedule, file any application to relocate or terminate the
operations of any banking office of it or any of its Subsidiaries;
(p) commit any act or omission which constitutes a material breach or
default by FFY or First Place or any of their Subsidiaries under any Regulatory
Agreement or under any material contract or material license to which FFY or
First Place or any of its Subsidiaries is a party or by which any of them or
their respective properties is bound;
(q) except as set forth in Section 3.28 of the FFY Disclosure
Schedule or Section 4.28 of the First Place Disclosure Schedule, compromise,
extend or restructure any real estate loan, construction loan or commercial loan
with an unpaid principal balance except in the ordinary course of business
consistent with past practices;
(r) except as set forth in Section 5.1(r) of the FFY or First Place
Disclosure Schedule, make or commit to any commercial business loan (including,
without limitation, lines of credit and letters of credit) or any commercial
real estate or construction loan (including, without limitation, lines of credit
and letters of credit) secured by any non-1-4 family residential properties,
except in the ordinary course of business consistent with past practices;
(s) purchase or commit to purchase any bulk loan portfolio;
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(t) engage in or enter into any structured transactions, derivative
securities, arbitrage or hedging activity;
(u) except as set forth in Section 5.1(u) of the FFY and First Place
Disclosure Schedule make any equity investment or commitment to make such an
investment in real estate or in any real estate development project, other than
in connection with foreclosures, settlements in lieu of foreclosure or troubled
loan or debt restructurings in the ordinary course of business consistent with
prudent banking practices, or for goods, services or other items necessary in
the ordinary course of business relating to foreclosures, settlements in lieu of
foreclosure or troubled loan or debt restructurings;
(v) create, renew, amend or terminate or give notice of a proposed
renewal, amendment or termination of, any material contract, agreement or lease
for goods, services or office space to which FFY or First Place or any of its
Subsidiaries is a party or by which FFY or First Place or any of its
Subsidiaries or their respective properties is bound;
(w) take any action which would cause the termination or cancellation
by the FDIC of insurance in respect of FFY Bank's deposits or the Association's
deposits;
(x) settle any claim, action or proceeding involving any liability of
it or its Subsidiaries for money damages in excess of $50,000 or material
restrictions upon its operation or its Subsidiaries operation;
(y) elect to the Board of Directors of itself or its Subsidiaries or
to any office any person who is not a member of the Board of Directors or an
officer of FFY or First Place or their Subsidiaries as of the date of this
Agreement, except to replace a director or officer who has terminated service
with FFY or First Place or either of their Subsidiaries; or
(z) agree to do any of the foregoing.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Regulatory Matters.
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(a) FFY and First Place shall promptly prepare and file with the SEC
the Proxy Statement and First Place shall promptly prepare and file with the SEC
the S-4, in which the Proxy Statement will be included as a prospectus. Each of
FFY and First Place shall use all reasonable efforts to have the S-4 declared
effective under the Securities Act as promptly as practicable after such filing,
and each of FFY and First Place shall thereafter mail the Proxy Statement to
each of its respective stockholders. First Place shall also use all reasonable
efforts to obtain all necessary state securities law or "Blue Sky" permits and
approvals required to carry out the transactions contemplated by this Agreement
and the Bank Merger Agreement, and FFY shall furnish all information concerning
FFY and the holders of FFY Common Stock as may be reasonably requested in
connection with any such action.
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(b) The parties hereto shall cooperate with each other and use their
best efforts to promptly prepare and file all necessary documentation, to effect
all applications, notices, petitions and filings, and to obtain as promptly as
practicable all permits, consents, approvals and authorizations of all third
parties and Governmental Entities which are necessary or advisable to consummate
the transactions contemplated by this Agreement (including without limitation
the Merger and the Subsidiary Merger) (it being understood that any amendments
to the S-4 or a resolicitation of proxies as a consequence of a subsequent
proposed merger, stock purchase or similar acquisition by First Place or any of
its Subsidiaries shall not violate this covenant). FFY and First Place shall
have the right to review in advance, and to the extent practicable each will
consult the other on, in each case subject to applicable laws relating to the
exchange of information, all the information relating to FFY or First Place, as
the case may be, and any of their respective Subsidiaries, which appears in any
filing made with, or written materials submitted to, any third party or any
Governmental Entity in connection with the transactions contemplated by this
Agreement. In exercising the foregoing right, each of the parties hereto shall
act reasonably and as promptly as practicable. The parties hereto agree that
they will consult with each other with respect to the obtaining of all permits,
consents, approvals and authorizations of all third parties and Governmental
Entities necessary or advisable to consummate the transactions contemplated by
this Agreement and each party will keep the other apprised of the status of
matters relating to completion of the transactions contemplated herein.
(c) First Place and FFY shall, upon request, furnish each other with
all information concerning themselves, their Subsidiaries, directors, officers
and stockholders and such other matters as may be reasonably necessary or
advisable in connection with the Proxy Statement, the S-4 or any other
statement, filing, notice or application made by or on behalf of First Place,
FFY or any of their respective Subsidiaries to any Governmental Entity in
connection with the Merger and the other transactions contemplated by this
Agreement.
(d) First Place and FFY shall promptly furnish each other with copies
of written communications received by First Place or FFY, as the case may be, or
any of their respective Subsidiaries, Affiliates or Associates (as such terms
are defined in Rule 12b-2 under the Exchange Act as in effect on the date of
this Agreement) from, or delivered by any of the foregoing to, any Governmental
Entity in respect of the transactions contemplated hereby.
6.2 Access to Information.
---------------------
(a) Upon reasonable notice and subject to applicable laws relating to
the exchange of information, FFY shall, and shall cause each of its Subsidiaries
to, afford to the officers, employees, accountants, counsel and other
representatives of First Place, access, during normal business hours during the
period prior to the Effective Time, to all its properties, books, contracts,
commitments, records, officers, employees, accountants, counsel and other
representatives and, during such period, FFY shall, and shall cause its
Subsidiaries to, make available to First Place (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 which FFY is not
permitted to disclose under applicable law) and (ii) all other information
concerning its business, properties and personnel as First Place may reasonably
request. Neither FFY nor any of its Subsidiaries shall be required to provide
access to or to disclose information where such
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access or disclosure would violate or prejudice the rights of FFY's customers,
jeopardize any attorney-client privilege or contravene any law, rule,
regulation, order, judgment, decree, fiduciary duty or binding agreement entered
into prior to the date of this Agreement. The parties hereto will make
appropriate substitute disclosure arrangements under circumstances in which the
restrictions of the preceding sentence apply. First Place will hold all such
information in confidence to the extent required by, and in accordance with, the
provisions of the confidentiality agreement, dated May 8, 2000, between First
Place and FFY (the "First Place Confidentiality Agreement").
(b) Upon reasonable notice and subject to applicable laws relating to
the exchange of information, First Place shall, and shall cause its Subsidiaries
to, afford to the officers, employees, accountants, counsel and other
representatives of FFY, access, during normal business hours during the period
prior to the Effective Time, to such information regarding First Place and its
Subsidiaries as shall be reasonably necessary for FFY to fulfill its obligations
pursuant to this Agreement to prepare the Proxy Statement or which may be
reasonably necessary for FFY to confirm that the representations and warranties
of First Place contained herein are true and correct and that the covenants of
First Place contained herein have been performed in all material respects.
Neither First Place nor any of its Subsidiaries shall be required to provide
access to or to disclose information where such access or disclosure would
violate or prejudice the rights of First Place's customers, jeopardize any
attorney-client privilege or contravene any law, rule, regulation, order,
judgment, decree, fiduciary duty or binding agreement entered into prior to the
date of this Agreement. The parties hereto will make appropriate substitute
disclosure arrangements under circumstances in which the restrictions of the
preceding sentence apply. FFY will hold all such information in confidence to
the extent required by, and in accordance with, the provisions of the
confidentiality agreement, dated May 8, 2000, between FFY and First Place (the
"FFY Confidentiality Agreement").
(c) All information furnished by First Place to FFY or its
representatives pursuant hereto shall be treated as the sole property of First
Place and, if the Merger shall not occur, FFY and its representatives shall
return to First Place all of such written information and all documents, notes,
summaries or other materials containing, reflecting or referring to, or derived
from, such information. FFY shall, and shall use its best efforts to cause its
representatives to, keep confidential all such information, and shall not
directly or indirectly use such information for any competitive or other
commercial purpose. The obligation to keep such information confidential shall
continue for two years from the date the proposed Merger is abandoned and shall
not apply to (i) any information which (x) was already in FFY's possession prior
to the disclosure thereof by First Place; (y) was then generally known to the
public; or (z) was disclosed to FFY by a third party not bound by an obligation
of confidentiality or (ii) disclosures made as required by law. It is further
agreed that, if in the absence of a protective order or the receipt of a waiver
hereunder FFY is nonetheless, in the opinion of its counsel, compelled to
disclose information concerning First Place to any tribunal or governmental body
or agency or else stand liable for contempt or suffer other censure or penalty,
FFY may disclose such information to such tribunal or governmental body or
agency without liability hereunder.
(d) All information furnished by FFY to First Place or its
representatives pursuant hereto shall be treated as the sole property of FFY
and, if the Merger shall not occur, First Place and its representatives shall
return to FFY all of such written information and all
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documents, notes, summaries or other materials containing, reflecting or
referring to, or derived from, such information. First Place shall, and shall
use its best efforts to cause its representatives to, keep confidential all such
information, and shall not directly or indirectly use such information for any
competitive or other commercial purpose. The obligation to keep such information
confidential shall continue for two years from the date the proposed Merger is
abandoned and shall not apply to (i) any information which (x) was already in
First Place's possession prior to the disclosure thereof by FFY; (y) was then
generally known to the public; or (z) was disclosed to First Place by a third
party not bound by an obligation of confidentiality or (ii) disclosures made as
required by law. It is further agreed that, if in the absence of a protective
order or the receipt of a waiver hereunder First Place is nonetheless, in the
opinion of its counsel, compelled to disclose information concerning FFY to any
tribunal or governmental body or agency or else stand liable for contempt or
suffer other censure or penalty, First Place may disclose such information to
such tribunal or governmental body or agency without liability hereunder.
(e) No investigation by either of the parties or their respective
representatives shall affect the representations, warranties, covenants or
agreements of the other set forth herein.
(f) Each of FFY and First Place shall give timely notice of and shall
permit a representative of the other to attend meetings of its Board of
Directors or the Executive Committee thereof, except to the extent that such
meeting, or portion thereof, relates to the Merger.
6.3 Stockholder Meetings.
--------------------
(a) First Place and FFY agree to take, in accordance with applicable
law or Nasdaq rules and their certificates of incorporation and bylaws, all
action necessary to convene an appropriate meeting of their stockholders to
consider and vote upon the adoption of this Agreement, and in each case any
other matter required to be approved or adopted by such stockholders for
consummation of the Merger (including any adjournment or postponement, the
"First Place Meeting" or "FFY Meeting," whichever is applicable), in each case
as promptly as practicable after the S-4 is declared effective. The First Place
Board of Directors and the FFY Board of Directors shall each declare the Merger
advisable and recommend adoption of the Agreement and First Place and FFY shall
take all reasonable, lawful action to solicit such adoption by its stockholders,
unless either Board of Directors, after having received a takeover proposal, as
applicable, and after having consulted with and considered the advice of outside
counsel and its investment banking firm, has determined in good faith that to do
so would result in a failure by the directors to discharge properly their
fiduciary duties in accordance with the applicable law. First Place and FFY
shall coordinate and cooperate with respect to the foregoing matters, with a
view towards, among other things, holding the respective meetings of each
party's stockholders on the same day.
(b) Voting Agreements. Each of FFY's and First Place's directors and
-----------------
certain officers, as set forth in Section 6.3(b) of the FFY and First Place
Disclosure Schedules, have entered into a Voting Agreement, forms of which are
attached as Exhibit 6.3(b), hereto.
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6.4 Legal Conditions to Merger. Each of First Place and FFY shall, and
--------------------------
shall cause its Subsidiaries to, use their best efforts (a) to take, or cause to
be taken, all actions necessary, proper or advisable to comply promptly with all
legal requirements which may be imposed on such party or its Subsidiaries with
respect to the Merger or the Subsidiary Merger and, subject to the conditions
set forth in Article VII hereof, to consummate the transactions contemplated by
this Agreement and (b) to obtain (and to cooperate with the other party to
obtain) any consent, authorization, order or approval of, or any exemption by,
any Governmental Entity and any other third party which is required to be
obtained by FFY or First Place or any of their respective Subsidiaries in
connection with the Merger and the Subsidiary Merger and the other transactions
contemplated by this Agreement, and to comply with the terms and conditions of
such consent, authorization, order or approval; provided, however, that neither
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First Place nor FFY shall be obligated to take any action pursuant to the
foregoing if the taking of such action or such compliance or the obtaining of
such consent, authorization, order or approval is likely, in the good faith
reasonable opinion of First Place or FFY, to result in the imposition of a
Burdensome Condition.
6.5 Affiliates. FFY shall use its best efforts to cause each director,
----------
executive officer and other person who is an "affiliate" (for purposes of Rule
145 under the Securities Act) of FFY to deliver to First Place, as soon as
practicable after the date of this Agreement, and in any event prior to the date
of the stockholders meeting called by FFY to adopt this Agreement, a written
agreement, in the form of Exhibit 6.5(a) hereto, providing that such person will
not sell, pledge, transfer or otherwise dispose of shares of First Place Common
Stock to be received by such "affiliate" in the Merger, except in compliance
with the applicable provisions of the Securities Act and the rules and
regulations thereunder.
6.6 Stock Exchange Listing. First Place shall cause the shares of First
----------------------
Place Common Stock to be issued in the Merger to be approved for listing on the
Nasdaq, subject to official notice of issuance, as of the Effective Time.
6.7 Benefit Plans; Existing Agreements.
-----------------------------------
(a) The employees of FFY (the "FFY Employees") shall be entitled to
participate in First Place's employee benefit plans in which similarly situated
employees of First Place participate, to the same extent as comparable employees
of First Place, except as outlined below. As of the Effective Time, First Place
shall permit FFY Employees to participate in First Place's group health, life
and disability insurance plans on the same terms and conditions as applicable to
comparable employees of First Place and its Subsidiaries; provided, however,
that all FFY employees and dependents will be eligible to participate in medical
insurance plans of the Association upon the merger without regard to any pre-
existing conditions or exclusions and with no uninsured waiting periods, and the
carry over of all current plan year deductibles and annual out-of-pocket
contribution. As of the next entry date immediately following the Effective
Time, First Place shall permit FFY Employees to participate in First Place's
401(k) savings plan on the same terms and conditions as employees of First Place
and its Subsidiaries. First Place shall give effect to years of service with
First Place, FFY and its Subsidiaries (to the extent FFY gave effect) as if such
service were with First Place, for purposes of eligibility and vesting. As of
the next entry date which occurs following the 1 year anniversary of the
Effective Time, First Place shall permit FFY Employees to participate in the
Association's employee stock ownership
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plan ("ESOP") on the same terms and conditions as employees of First Place and
its Subsidiaries. First Place shall give effect to years of service with First
Place, FFY and its Subsidiaries (to the extent FFY gave effect) as if such
service were with First Place, for purposes of eligibility and vesting. Except
as otherwise required by applicable law, it is the intent of the parties to
provide equitable treatment to employees of FFY or its subsidiaries who are not
qualified for membership in the FFY ESOP and/or are detrimentally impacted by
the aforementioned ESOP treatment. FFY employees may take cash for accumulated
sick leave per current FFY policy as long as FFY has fully accrued such sick
leave termination benefits. FFY employees , or may alternatively elect to
receive full credit under the First Place plan for each day of sick leave
accumulated under the FFY plan as long as , provided, in both cases, FFY has
fully accrued such benefits as if the employee terminated service and received
cash for his or her accumulated sick leave under the First Place plan.sick leave
termination benefits. With respect to First Place's welfare benefit plans,
(including by example, vacation, sick leave, severance), FFY employees shall
have prior service with FFY recognized for purposes of eligibility to
participate, vesting and benefits accrual purposes. Except as specifically set
forth herein, it is the intent of the parties that all non-contract employees of
both parties are to be treated comparably regardless whether such persons were
FFY or First Place employees prior to the Effective Time.
(b) Following the Effective Time, First Place shall honor and shall
cause the Surviving Entity to honor in accordance with their terms all
employment, severance and other compensation agreements and arrangements,
including, but not limited to, severance benefit plans listed in Section
6.7(b)(1) of the FFY Disclosure Schedule, existing prior to the execution of
this Agreement and the agreements and arrangement, as set forth in Section
6.7(b)(2) of the FFY Disclosure Schedule which are between FFY and any director,
officer or employee thereof and which have been disclosed in FFY Disclosure
Schedule and previously have been delivered to First Place and agrees to make
the payments and provide the benefits pursuant thereto described in Section
6.7(b) of the FFY Disclosure Schedule.
(c) Prior to or at the Closing Date, Jeffrey L. Francis shall enter
into a waiver agreement in the form of Exhibit 6.7(c) hereto, waiving his rights
to any benefits under his contract that might otherwise be payable if this
Merger were considered to be a Change in Control as defined in his amended and
restated employment contract unless he is involuntarily terminated within 12
months after the Effective Time.
(d) The FFY Financial Corp. combination 401(k) and Employee Stock
Ownership Plan (the "FFY ESOP") shall be terminated as of the Effective Time
(all shares held by the ESOP shall be converted into the right to receive First
Place Common Stock pursuant to Section 1.4 hereof), all outstanding FFY ESOP
indebtedness shall be repaid, and the balance shall be allocated to FFY
employees, as provided for in the FFY ESOP, subject to the Code and ERISA, and
rules and regulations promulgated thereunder. In connection with the
termination of the FFY ESOP, FFY shall promptly apply to the IRS for a favorable
determination letter on the tax-qualified status of the FFY ESOP on termination
and any amendments made to the FFY ESOP in connection with its termination or
otherwise, if such amendments have not previously received a favorable
determination letter from the IRS with respect to their qualification under Code
Section 401(a). Any and all distributions from the FFY ESOP after the
termination which are intended to be made as quickly as permissible shall be
made consistent with the aforementioned determination letter.
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(e) As of the Effective Time, the FFY retirement policy for directors
shall terminate and all directors shall at that time become subject to the
retirement policy of First Place previously provided to FFY.
(f) Following the Effective Time, severed employees of First Place
and FFY shall be treated equally.
6.8 Indemnification.
---------------
(a) In the event of any threatened or actual claim, action, suit,
proceeding or investigation, whether civil or administrative, including, without
limitation, any such claim, action, suit, proceeding or investigation in which
any person who is now, or has been at any time prior to the date of this
Agreement, or who becomes prior to the Effective Time, a director or officer or
employee of FFY or any of its Subsidiaries (the "Indemnified Parties") is, or is
threatened to be, made a party based in whole or in part on, or arising in whole
or in part out of, or pertaining to (i) the fact that he is or was a director,
officer or employee of FFY, any of the Subsidiaries of FFY or any of their
respective predecessors or (ii) this Agreement or any of the transactions
contemplated hereby, whether in any case asserted or arising before or after the
Effective Time, the parties hereto agree to cooperate and use their best efforts
to defend against and respond thereto. It is understood and agreed that after
the Effective Time, First Place shall indemnify and hold harmless, as and to the
extent permitted by Delaware law, each such Indemnified Party against any
losses, claims, damages, liabilities, costs, expenses (including reasonable
attorney's fees and expenses in advance of the final disposition of any claim,
suit, proceeding or investigation to each Indemnified Party to the fullest
extent permitted by law upon receipt of any undertaking required by applicable
law), judgments, fines and amounts paid in settlement in connection with any
such threatened or actual claim, action, suit, proceeding or investigation, and
in the event of any such threatened or actual claim, action, suit, proceeding or
investigation (whether asserted or arising before or after the Effective Time),
the Indemnified Parties may retain counsel reasonably satisfactory to them after
consultation with First Place; provided, however, that (1) First Place shall
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have the right to assume the defense thereof and upon such assumption First
Place shall not be liable to any Indemnified Party for any legal expenses of
other counsel or any other expenses subsequently incurred by any Indemnified
Party in connection with the defense thereof, except that if First Place elects
not to assume such defense or counsel for the Indemnified Parties reasonably
advises that there are issues which raise conflicts of interest between First
Place and the Indemnified Parties, the Indemnified Parties may retain counsel
reasonably satisfactory to them after consultation with First Place, and First
Place shall pay the reasonable fees and expenses of such counsel for the
Indemnified Parties, (2) First Place shall in all cases be obligated pursuant to
this paragraph to pay for only one firm of counsel for all Indemnified Parties
except in the event of conflicts of interest and (3) First Place shall not be
liable for any settlement effected without its prior written consent (which
consent shall not be unreasonably withheld). Any Indemnified Party wishing to
claim Indemnification under this Section 6.8, upon learning of any such claim,
action, suit, proceeding or investigation, shall notify promptly First Place
thereof, provided that the failure to so notify shall not affect the obligations
of First Place under this Section 6.8 except to the extent such failure to
notify materially prejudices First Place. Notwithstanding anything to the
contrary contained in this Section 6.8(a), in no event shall First Place's
obligations under this Section 6.8(a) with respect to indemnification or the
advancement of expenses be greater than the
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obligations of FFY and its Subsidiaries with respect thereto set forth as of the
date of this Agreement in the Certificate of Incorporation, By-laws or similar
governing documents of FFY and its Subsidiaries.
(b) In the event First Place or the Surviving Corporation or any of
its successors or assigns (i) consolidates with or merges into any other person
and shall not be the continuing or surviving corporation or entity of such
consolidation or merger, or (ii) transfers or conveys all or substantially all
of its properties and assets to any person, then, and in each such case, proper
provision shall be made so that the successors and assigns of First Place or the
Surviving Corporation, as the case may be, assume the obligations set forth in
this section.
(c) The provisions of this Section 6.8 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party and his or her
heirs and representatives; and the provisions of this Section 6.8 will survive
the Effective Time.
(d) First Place shall cause the persons serving as officers and
directors of FFY immediately prior to the Effective Time to be covered for a
period of three years from the Effective Time by the directors' and officers'
liability insurance policy maintained by FFY (provided that First Place may
substitute therefor policies of at least the same coverage and amounts
containing terms and conditions which are not less advantageous than such
policy) with respect to acts or omissions occurring prior to the Effective Time
which were committed by such officers and directors in their capacity as such so
long as the annual premium therefore is not in excess of 150% of the aggregate
premiums paid by FFY in 2000 on an annualized basis for such purpose (which
aggregate premiums on an annualized basis are disclosed in Section 6.8(d) of the
FFY Disclosure Schedule), but if the annual premiums therefor so exceeds such
amount, First Place will obtain as much directors' and officers' liability
insurance as can be obtained for the remainder of such period for a premium not
in excess of 150% of the aggregate premiums paid by FFY in 2000 on an annualized
basis for such purpose.
6.9 Subsequent Interim and Annual Financial Statements. As soon as
-------------------------------------- ----------
reasonably available, but in no event later than October 1, 2000, First Place
will deliver to FFY and FFY will deliver to First Place their respective Annual
Reports on Form 10-K for the year ending June 30, 2000, as filed with the SEC
under the Exchange Act. As soon as reasonably available, but in no event more
than 45 days after the end of each fiscal quarter ending after the date of this
Agreement, First Place will deliver to FFY and FFY will deliver to First Place
their respective Quarterly Reports on Form 10-Q, as filed with the SEC under the
Exchange Act.
6.10 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 the Bank Merger Agreement, or to vest the Surviving Corporation or
the Surviving Institution with full title to all properties, assets, rights,
approvals, immunities and franchises of any of the parties to the Merger or the
Subsidiary Merger, the proper officers and directors of each party to this
Agreement and their respective Subsidiaries shall take all such necessary action
as may be reasonably requested by First Place.
6.11 Advice of Changes. First Place and FFY shall promptly advise the
-----------------
other party of any change or event having a Material Adverse Effect on it or
which it believes would or would
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be reasonably likely to cause or constitute a material breach of any of its
representations, warranties or covenants contained herein. From time to time
prior to the Effective Time (and on the date prior to the Closing Date), each
party will promptly supplement or amend the Disclosure Schedules delivered in
connection with the execution of this Agreement to reflect any matter which, if
existing, occurring or known at the date of this Agreement, would have been
required to be set forth or described in such Disclosure Schedules or which is
necessary to correct any information in such Disclosure Schedules which has been
rendered inaccurate thereby. No supplement or amendment to such Disclosure
Schedules shall have any effect for the purpose of determining satisfaction of
the conditions set forth in Sections 7.2(a) or 7.3(a) hereof, as the case may
be, or the compliance by FFY or First Place, as the case may be, with the
respective covenants and agreements of such parties contained herein.
6.12 Current Information. During the period from the date of this
-------------------
Agreement to the Effective Time, each Party will cause one or more of its
designated representatives to notify on a regular and frequent basis (not less
than monthly) representatives of the other Party and to report (i) the general
status of the ongoing operations of FFY or First Place, and its Subsidiaries;
(ii) the status of, and the action proposed to be taken with respect to, those
Loans held by it or any Subsidiary which, individually or in combination with
one or more other Loans to the same borrower thereunder, have an original
principal amount of $250,000 or more and are non-performing assets; (iii) the
origination of all loans other than 1-4 family residential mortgage loans and
consumer loans; and (iv) any material changes in its pricing of deposits. Each
will promptly notify the other of any material change in the normal course of
business or in the operation of its properties or the properties of any of its
Subsidiaries and of any governmental complaints, investigations or hearings (or
communications indicating that the same may be contemplated), or the institution
or the threat of significant litigation involving itself or any of its
Subsidiaries, and will keep the other Party fully informed of such events.
6.13 Execution and Authorization of Bank Merger Agreement. As soon as
----------------------------------- ----------------
reasonably practicable after the date of this Agreement, (a) First Place shall
(i) cause the Board of Directors of the Association to approve the Bank Merger
Agreement, (ii) cause the Association to execute and deliver the Bank Merger
Agreement, and (iii) approve the Bank Merger Agreement as the sole stockholder
of the Association, and (b) FFY shall (i) cause the Board of Directors of FFY
Bank to approve the Bank Merger Agreement, (ii) cause FFY Bank to execute and
deliver the Bank Merger Agreement, and (iii) approve the Bank Merger Agreement
as the sole stockholder of FFY Bank. The Bank Merger Agreement shall contain
terms that are normal and customary in light of the transactions contemplated
hereby and such additional terms as are necessary to carry out the purposes of
this Agreement.
6.14 Coordination of Dividends. Until the Effective Time, FFY and First
-------------------------
Place shall coordinate with the other the declaration of any dividend or other
distributions with respect to FFY Common Stock and First Place Common Stock and
the record dates and payment dates relating thereto, it being the intention of
the parties that holders of shares of FFY Common Stock or First Place Common
Stock shall not receive more than one dividend, or fail to receive one dividend,
for any single calendar quarter on their shares of FFY Common Stock and First
Place Common Stock (including any shares of Surviving Corporation Common Stock
received in the Merger), as the case may be.
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<PAGE>
6.15 First Dividend Subsequent to Closing. Subject to the directors'
------------------------------------
fiduciary duties and statutory and regulatory restrictions, the Board of
Directors of the Surviving Corporation shall declare a cash dividend of no less
than $0.125 per share for the first quarter immediately following the Closing
Date.
ARTICLES VII
CONDITIONS PRECEDENT
7.1 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 at or prior to the Effective Time of the following conditions:
(a) Stockholder Approval. This Agreement shall have been adopted by
--------------------
the affirmative vote of the holders of at least a majority of the outstanding
shares of FFY Common Stock entitled to vote thereon and by the affirmative vote
of the holders of at least a majority of the outstanding shares of First Place
Common Stock entitled to vote thereon.
(b) Nasdaq Stock Market Listing. The shares of First Place Common
---------------------------
Stock which shall be issued to the stockholders of FFY upon consummation of the
Merger shall have been authorized for listing on the Nasdaq Stock Market,
subject to official notice of issuance.
(c) Other Approvals. All regulatory approvals required to consummate
---------------
the transactions contemplated hereby (including the Merger and the Subsidiary
Merger) shall have been obtained and shall remain in full force and effect and
all statutory waiting periods in respect thereof shall have expired (all such
approvals and the expiration of all such waiting periods being referred to
herein as the "Requisite Regulatory Approvals").
(d) S-4. The S-4 shall have become effective under the Securities
---
Act and no stop order suspending the effectiveness of the S-4 shall have been
issued and no proceedings for that purpose shall have been initiated or
threatened by the SEC.
(e) No Injunctions or Restraints; Illegality. No order, injunction or
----------------------------------------
decree issued by any court or agency of competent jurisdiction or other legal
restraint or prohibition (an "Injunction") preventing the consummation of the
Merger, the Subsidiary Merger or any of the other transactions contemplated by
this Agreement or the Bank Merger Agreement shall be in effect. No statute,
rule, regulation, order, injunction or decree shall have been enacted, entered,
promulgated or enforced by any Governmental Entity which prohibits, restricts or
makes illegal consummation of the Merger or the Subsidiary Merger.
(f) No Burdensome Condition. None of the Requisite Regulatory
-----------------------
Approvals shall impose any term, condition or restriction upon First Place, FFY,
FFY Bank, the Surviving Corporation, the Surviving Institution or any of their
respective Subsidiaries that First Place, or FFY, in good faith, reasonably
determines would so materially adversely affect the economic or business
benefits of the transactions contemplated by this Agreement to First Place or
FFY as to render inadvisable in the reasonable good faith judgment of First
Place or FFY, the consummation of the Merger (a "Burdensome Condition").
47
<PAGE>
7.2 Conditions to Obligations of First Place. The obligation of First
----------------------------------------
Place to effect the Merger is also subject to the satisfaction or waiver by
First Place at or prior to the Effective Time of the following conditions:
(a) Representations and Warranties. The representations and
------------------------------
warranties of FFY set forth in this Agreement shall be true and correct in all
material respects as of the date of this Agreement and (except to the extent
such representations and warranties speak as of an earlier date) as of the
Closing Date as though made on and as of the Closing Date. First Place shall
have received a certificate signed on behalf of FFY by the Chief Executive
Officer and the Chief Financial Officer of FFY to the foregoing effect.
(b) Performance of Obligations of FFY. FFY shall have performed in
---------------------------------
all material respects all obligations required to be performed by it under this
Agreement at or prior to the Closing Date, and First Place shall have received a
certificate signed on behalf of FFY by the Chief Executive Officer and the Chief
Financial Officer of FFY to such effect.
(c) [Reserved]
(d) Consents Under Agreements. The consent, approval or waiver of
-------------------------
each person (other than the Governmental Entities) whose consent or approval
shall be required in order to permit the succession by the Surviving Corporation
or the Surviving Institution pursuant to the Merger or the Subsidiary Merger, as
the case may be, to any obligation, right or interest of FFY or any Subsidiary
of FFY under any loan or credit agreement, note, mortgage, indenture, lease,
license or other agreement or instrument shall have been obtained, except where
the failure to obtain such consent, approval or waiver would not so materially
adversely affect the economic or business benefits of the transactions
contemplated by this Agreement to First Place as to render inadvisable, in the
reasonable good faith judgment of First Place, the consummation of the Merger.
(e) No Pending Governmental Actions. No proceeding initiated by any
-------------------------------
Governmental Entity seeking an Injunction shall be pending.
(f) Federal Tax Opinion. First Place shall have received an opinion
-------------------
of Patton Boggs LLP, counsel to First Place ("First Place's Counsel"), in form
and substance reasonably satisfactory to First Place, substantially to the
effect that, on the basis of facts, representations and assumptions set forth in
such opinion which are consistent with the state of facts existing at the
Effective Time, the Merger and Subsidiary Merger will be treated as
reorganizations within the meaning of Section 368(a) of the Code and that,
accordingly, for federal income tax purposes:
(i) No gain or loss will be recognized by First Place as a
result of the Merger;
(ii) No gain or loss will be recognized by the Association as a
result of the Subsidiary Merger;
(iii) No gain or loss will be recognized by FFY as a result of
the Merger;
48
<PAGE>
(iv) No gain or loss will be recognized by FFY Bank as a result
of the Subsidiary Merger;
(v) No gain or loss will be recognized by the shareholders of
FFY who exchange all of their FFY Common Stock solely for First Place
Common Stock pursuant to the Merger (except with respect to cash
received in lieu of a fractional share interest in First Place Common
Stock);
(vi) The aggregate tax basis of First Place Common Stock
received by shareholders who exchange all of their FFY Common Stock
solely for Common Stock pursuant to the Merger will be the same as the
aggregate tax basis of FFY Common Stock surrendered in exchange
therefor (reduced by any amount allocable to a fractional share
interest for which cash is received).
In rendering such opinion, First Place's Counsel may require and rely upon
representations and covenants contained in certificates of officers of First
Place, FFY, FFY Bank and others, including certain shareholders of FFY.
7.3 Conditions to Obligations of FFY. The obligation of FFY to effect the
--------------------------------
Merger is also subject to the satisfaction or waiver by FFY at or prior to the
Effective Time of the following conditions:
(a) Representations and Warranties. The representations and
------------------------------
warranties of First Place set forth in this Agreement shall be true and correct
in all material respects as of the date of this Agreement and (except to the
extent such representations and warranties speak as of an earlier date) as of
the Closing Date as though made on and as of the Closing Date. FFY shall have
received a certificate signed on behalf of First Place by the Chief Executive
Officer and the Chief Financial Officer of First Place to the foregoing effect.
(b) Performance of Obligations of First Place. First Place shall have
-----------------------------------------
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Closing Date, and FFY shall have
received a certificate signed on behalf of First Place by the Chief Executive
Officer and the Chief Financial Officer of First Place to such effect.
(c) Consents Under Agreements. The consent, approval or waiver of
-------------------------
each person (other than the Governmental Entities) whose consent or approval
shall be required in order to permit the succession by the Surviving Corporation
or the Surviving Institution pursuant to the Merger or the Subsidiary Merger, as
the case may be, to any obligation, right or interest of First Place or any
Subsidiary of First Place under any loan or credit agreement, note, mortgage,
indenture, lease, license or other agreement or instrument shall have been
obtained, except those where the failure to obtain such consent, approval or
waiver would not so materially adversely affect the economic or business
benefits of the transactions contemplated by this Agreement to FFY as to render
inadvisable, in the reasonable good faith judgment of FFY, the consummation of
the Merger.
(d) No Pending Governmental Actions. No proceeding initiated by any
-------------------------------
Governmental Entity seeking an injunction shall be pending.
49
<PAGE>
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 Termination. This Agreement may be terminated at any time prior to
-----------
the Effective Time, whether before or after approval of the matters presented in
connection with the Merger by the stockholders of both FFY and First Place:
(a) by mutual consent of FFY and First Place in a written instrument,
if the Board of Directors of each so determines by a vote of a majority of the
members of its entire Board;
(b) by either First Place or FFY upon written notice to the other
party (i) 60 days after the date on which any request or application for a
Requisite Regulatory Approval shall have been denied or withdrawn at the request
or recommendation of the Governmental Entity which must grant such Requisite
Regulatory Approval, unless within the 60-day period following such denial or
withdrawal a petition for rehearing or an amended application has been filed
with the applicable Governmental Entity, provided, however, that no party shall
-------- -------
have the right to terminate this Agreement pursuant to this Section 8.1(b)(i) if
such denial or request or recommendation for withdrawal shall be due to the
failure of the party seeking to terminate this Agreement to perform or observe
the covenants and agreements of such party set forth herein or (ii) if any
Governmental Entity of competent jurisdiction shall have issued a final
nonappealable order enjoining or otherwise prohibiting the consummation of any
of the transactions contemplated by this Agreement;
(c) by either First Place or FFY if the Merger shall not have been
consummated on or before December 31, 2000, unless the failure of the Closing to
occur by such date shall be due to the failure of the party seeking to terminate
this Agreement to perform or observe the covenants and agreements of such party
set forth herein;
(d) by either First Place or FFY (provided that the terminating party
shall not be in material breach of any of its obligations under Section 6.3) if
any approval of the stockholders of either of FFY or First Place required for
the consummation of the Merger shall not have been obtained by reason of the
failure to obtain the required vote at a duly held meeting of such stockholders
or at any adjournment or postponement thereof;
(e) by either First Place or FFY (provided that the terminating party
is not then in material breach of any representation, warranty, covenant or
other agreement contained herein) if there shall have been a material breach of
any of the representations or warranties set forth in this Agreement on the part
of the other party, which breach is not cured within thirty days following
written notice to the party committing such breach, or which breach, by its
nature, cannot be cured prior to the Closing. No representation or warranty of
FFY or First Place shall be deemed untrue or incorrect, and no party hereto
shall be deemed to have breached a representation or warranty, as a consequence
of the existence of any fact, event or circumstance unless such fact, event or
circumstance, individually or taken together with all other facts, events or
circumstances inconsistent with any representation or warranty has had or is
reasonably likely to have a Material Adverse Effect. For purposes of this
Agreement, "knowledge" shall mean,
50
<PAGE>
with respect to a party hereto, actual knowledge of any officer of that party
with the title, if any, ranking not less than senior vice president and that
party's in-house counsel, if any. Material Adverse Effect means any effect that
(i) is material and adverse to the financial position, results of operations or
business of First Place and its Subsidiaries taken as a whole or FFY and its
Subsidiaries taken as a whole, respectively, or (ii) would materially impair the
ability of First Place or FFY to perform its obligations under this Agreement or
otherwise materially threaten or materially impede the consummation of the
Merger and the other transactions contemplated by this Agreement; provided,
however, that Material Adverse Effect shall not be deemed to include the impact
of (a) changes in thrift, banking and similar laws of general applicability or
interpretations thereof by courts or governmental authorities, or other changes
affecting depository institutions generally, including changes in general
economic conditions and changes in prevailing interest and deposit rates, (b)
changes in GAAP or regulatory accounting requirements applicable to thrifts,
banks and their holding companies generally, (c) any modifications or changes to
valuation policies and practices in connection with the Merger or Subsidiary
Merger or restructuring charges taken in connection with the Merger or
Subsidiary Merger, in each case in accordance with GAAP, (d) changes resulting
from expenses (such as legal, accounting and investment bankers' fees) incurred
in connection with this Agreement and (e) actions or omissions of First Place or
FFY taken with the prior written consent of FFY or First Place, as applicable,
in contemplation of the transactions contemplated hereby;
(f) by either First Place or FFY (provided that the terminating party
is not then in material breach of any representation, warranty, covenant or
other agreement contained herein) if there shall have been a material breach of
any of the covenants or agreements set forth in this Agreement on the part of
the other party, which breach shall not have been cured within thirty days
following receipt by the breaching party of written notice of such breach from
the other party hereto; provided, however, that neither party shall have the
-------- -------
right to terminate this Agreement pursuant to this Section 8.1(f) unless such
breach shall have a Material Adverse Effect, as defined in Section 8.1(e) above,
on the other party; or
(g) by either First Place or FFY, if the Board of Directors of the
other Party does not recommend in the Proxy Statement that its stockholders
adopt this Agreement or if, after recommending in the Proxy Statement that
stockholders adopt this Agreement, the Board of Directors shall have withdrawn,
modified or qualified such recommendation in any respect adverse to the
terminating Party.
8.2 Effect of Termination; Expenses. In the event of termination of this
-------------------------------
Agreement by either First Place or FFY as provided in Section 8.1, this
Agreement shall forthwith become void and have no effect except (i) the last
sentences of Sections 6.2(a) and (b), and Sections 6.2(c), 6.2(d), 8.2 and 9.4
shall survive any termination of this Agreement, (ii) that notwithstanding
anything to the contrary contained in this Agreement, no party shall be relieved
or released from any liabilities or damages arising out of its willful breach of
any provision of this Agreement, and (iii) in the event this Agreement is
terminated by either First Place or FFY pursuant to Section 8.1(e) or (f), then
the terminating party shall receive from the other party, in addition to any
other amounts payable by such party pursuant to the Agreement, its reasonable
costs and expenses incurred in connection with the transactions contemplated by
this Agreement.
51
<PAGE>
8.3 Amendment. Subject to compliance with applicable law, this Agreement
---------
may be amended by the parties hereto, by action taken or authorized by their
respective Boards of Directors, at any time before or after adoption of the
Agreement by the stockholders of either FFY or First Place; provided, however,
-------- -------
that after adoption of the Agreement by FFY's stockholders, there may not be,
without further approval of such stockholders, any amendment of this Agreement
which reduces the amount or changes the form of the consideration to be
delivered to FFY stockholders hereunder other than as contemplated by this
Agreement. This Agreement may not be amended except by an instrument in writing
signed on behalf of each of the parties hereto.
8.4 Extension; Waiver. At any time prior to the Effective Time, the
-----------------
parties hereto, by action taken or authorized by their respective Boards of
Directors, may, to the extent legally allowed, (a) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(b) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto and (c) waive compliance
with any of the agreements or conditions contained herein. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in a written instrument signed on behalf of such party, but such
extension or waiver or failure to insist on strict compliance with an
obligation, covenant, agreement or condition shall not operate as a waiver of,
or estoppel with respect to, any subsequent or other failure.
ARTICLE IX
GENERAL PROVISIONS
9.1 Closing. Subject to the terms and conditions of this Agreement and
-------
the Bank Merger Agreement, 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 (a) the last business day of a month and (b) at least two
business days after the satisfaction or waiver (subject to applicable law) of
the latest to occur of the conditions set forth in Article VII hereof (the
"Closing Date"), at the offices of First Place's counsel unless another time,
date or place is agreed to in writing by the parties hereto.
9.2 Alternative Structure. Notwithstanding anything to the contrary
---------------------
contained in this Agreement, subject to FFY's consent, which consent shall not
be unreasonably withheld, prior to the Effective Time, First Place shall be
entitled to revise the structure of the Merger and/or the Subsidiary Merger and
related transactions provided that each of the transactions comprising such
revised structure shall (i) fully qualify as, or fully be treated as part of,
one or more tax-free reorganizations within the meaning of Section 368(a) of the
Code, and not subject any of the stockholders of FFY to adverse tax consequences
or change the amount of consideration to be received by such stockholders, (ii)
be capable of consummation in as timely a manner as the structure contemplated
herein and (iii) not otherwise be prejudicial to the interests of the
stockholders of FFY. This Agreement and any related documents shall be
appropriately amended in order to reflect any such revised structure.
9.3 Nonsurvival of Representations, Warranties and Agreements. None of
---------------------------------------------------------
the representations, warranties, covenants and agreements in this Agreement or
in any instrument
52
<PAGE>
delivered pursuant to this Agreement (other than pursuant to the Option
Agreements, which shall terminate in accordance with their terms) shall survive
the Effective Time, except for those covenants and agreements contained herein
and therein which by their terms apply in whole or in part after the Effective
Time.
9.4 Expenses. Except as costs and expenses may be payable pursuant to
--------
Section 8.2 of this Agreement, all costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby shall be paid by
the party incurring such expense, provided, however, that the costs and expenses
-------- -------
of printing and mailing the Proxy Statement to the stockholders of FFY and First
Place shall be borne equally by First Place and FFY, provided, however, that all
--------- -------
filing and other fees paid to the SEC or any other Governmental Entity in
connection with the Merger, the Subsidiary Merger and other transactions
contemplated thereby shall be borne by First Place, provided, further, however,
-------- ------- -------
that nothing contained herein shall limit either party's rights to recover any
liabilities or damages arising out of the other party's willful breach of any
provision of this Agreement.
9.5 Notices. All notices and other communications hereunder shall be in
-------
writing and shall be deemed given if delivered personally, telecopied (with
confirmation), mailed by registered or certified mail (return receipt requested)
or delivered by an express courier (with confirmation) 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 First Place, to:
First Place Financial Corp.
185 East Market Street
Warren, Ohio 44482
Attention: Steven R. Lewis
President and Chief Executive Officer
with a copy to:
Patton Boggs LLP
2550 M Street, N.W.
Washington, D.C. 20037
Attention: Joseph G. Passaic, Jr.
(b) if to FFY, to:
FFY Financial Corp.
724 Boardman-Poland Road
Youngstown, Ohio 44512
Attention: Jeffrey L. Francis
President and Chief Executive Officer
53
<PAGE>
with a copy to:
Silver, Freedman & Taff, L.L.P.
1100 New York Avenue, N.W.
Suite 700
Washington, D.C. 20005
Attention: James S. Fleischer
9.6 Interpretation. When a reference is made in this Agreement to
--------------
Sections, Exhibits or Schedules, such reference shall be to a Section of or
Exhibit or Schedule to this Agreement unless otherwise indicated. The headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. Whenever the words
"include", "includes" or ''including'' are used in this Agreement, they shall be
deemed to be followed by the words "without limitation". 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 23, 2000.
9.7 Counterparts. This Agreement may be executed in counterparts, all of
------------
which shall be considered one and the same agreement and shall become effective
when counterparts have been signed by each of the parties and delivered to the
other parties, it being understood that all parties need not sign the same
counterpart.
9.8 Entire Agreement. This Agreement (including the documents and the
----------------
instruments referred to herein) constitutes the entire agreement and supersedes
all prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof, other than the
Confidentiality Agreements, the Bank Merger Agreement and the Option Agreements.
9.9 Governing Law. This Agreement shall be governed and construed in
-------------
accordance with the law of the State of Delaware, without regard to any
applicable conflicts of law.
9.10 Enforcement of Agreement. The parties hereto agree that irreparable
------------------------
damage would occur in the event that the provisions contained in the last
sentences of Sections 6.2(a) and (b) and in Sections 6.2(c) and (d) of this
Agreement were not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of the last sentences of
Sections 6.2(a) and (b) and Sections 6.2(c) and (d) of this Agreement and to
enforce specifically the terms and provisions thereof in any court of the United
States or any state having jurisdiction, this being in addition to any other
remedy to which they are entitled at law or in equity.
9.11 Severability. Any term or provision of this Agreement which is
------------
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of
this Agreement is so broad as to be unenforceable, the provision shall be
interpreted to be only so broad as is enforceable.
54
<PAGE>
9.12 Publicity. Except as otherwise required by law or the rules of the
---------
Nasdaq Stock Market, so long as this Agreement is in effect, neither First Place
nor FFY shall, or shall permit any of its Subsidiaries to, issue or cause the
publication of any press release or other public announcement with respect to,
or otherwise make any public statement concerning, the transactions contemplated
by this Agreement without the consent of the other party, which consent shall
not be unreasonably withheld.
9.13 Assignment; No Third Party Beneficiaries. Neither this Agreement nor
----------------------------------------
any of the rights, interests or obligations hereunder shall be assigned by any
of the parties hereto (whether by operation of law or otherwise) without the
prior written consent of the other parties. Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of and be enforceable
by the parties and their respective successors and assigns. Except as otherwise
expressly provided herein, this Agreement (including the documents and
instruments referred to herein) is not intended to confer upon any person other
than the parties hereto any rights or remedies hereunder.
55
<PAGE>
IN WITNESS WHEREOF, First Place and FFY have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the date
first above written.
FIRST PLACE FINANCIAL CORP.
/s/ Steven R. Lewis
By: _________________________
Name: Steven R. Lewis
Title: President and Chief Executive Officer
Attest:
/s/ Dominique Stoeber
___________________________
Name: Dominique Stoeber
Corporate Secretary
FFY FINANCIAL CORP.
/s/ Jeffrey L. Francis
By: _________________________
Name: Jeffrey L. Francis
Title: President and Chief Executive Officer
Attest:
/s/ J. Craig Carr
___________________________
Name: J. Craig Carr
Vice President, General Counsel
and Secretary
56
<PAGE>
THE TRANSFER OF THIS AGREEMENT IS SUBJECT
TO CERTAIN PROVISIONS CONTAINED HEREIN AND TO
RESALE RESTRICTIONS UNDER THE SECURITIES
ACT OF 1933, AS AMENDED
STOCK OPTION AGREEMENT, dated as of May 23, 2000 (this "Agreement"),
between First Place Financial Corp., a Delaware corporation ("Grantee"), and FFY
Financial Corporation, a Delaware corporation ("Issuer").
RECITALS
A. Merger Agreement. Grantee and Issuer have entered into an Agreement
----------------
and Plan of Merger, dated as of May 23, 2000 (the "Merger Agreement"), which
agreement was executed and delivered on the date of this Stock Option Agreement,
pursuant to which Grantee is to merge with and into Issuer (the "Merger"); and
B. Option. As a condition to Grantee's entering into the Merger
------
Agreement and in consideration therefor, Issuer has agreed to grant Grantee the
Option (as hereinafter defined).
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements set forth herein and in the Merger Agreement, the parties hereto
agree as follows:
1. Grant of Option. (a) Issuer hereby grants to Grantee an unconditional,
---------------
irrevocable option (the "Option") to purchase, subject to the terms hereof, up
to an aggregate of 1,348,921 fully paid and nonassessable shares of the common
stock, par value $0.01 per share, of Issuer ("Common Stock") at a price per
share equal to $10.00 (the "Option Price"); provided, however, that in no event
shall the number of shares for which this Option is exercisable exceed 19.9% of
the issued and outstanding shares of Common Stock. The number of shares of
Common Stock that may be received upon the exercise of the Option and the Option
Price are subject to adjustment as herein set forth.
(b) In the event that any additional shares of Common Stock are issued
or otherwise become outstanding after the date of this Agreement (other than
pursuant to this Agreement and other than pursuant to an event described in
Section 5 hereof), the number of shares of Common Stock subject to the Option
shall be increased so that, after such issuance, such number together with any
shares of Common Stock previously issued pursuant hereto, equals 19.9% of the
number of shares of Common Stock then issued and outstanding without giving
effect to any shares subject or issued pursuant to the Option. Nothing contained
in this Section 1(b) or elsewhere in this Agreement shall be deemed to authorize
Issuer to issue shares in breach of any provision of the Merger Agreement.
2. Exercise. (a) The Holder (as hereinafter defined) may exercise the
--------
Option, in whole or part, if, but only if, both an Initial Triggering Event (as
hereinafter defined) and a Subsequent Triggering Event (as hereinafter defined)
shall have occurred prior to the occurrence of an Exercise Termination Event (as
hereinafter defined), provided that the Holder shall have sent the written
notice of such exercise (as provided in subsection (e) of this Section 2) within
six
<PAGE>
(6) months following the first such Subsequent Triggering Event (or such later
period as provided in Section 10). Each of the following shall be an Exercise
Termination Event: (i) the Effective Time (as defined in the Merger Agreement)
of the Merger; (ii) termination of the Merger Agreement in accordance with the
provisions thereof if such termination occurs prior to the occurrence of an
Initial Triggering Event except a termination by Grantee pursuant to Section
8.1(e) or (f) of the Merger Agreement (unless the breach by Issuer giving rise
to such right of termination is non-volitional) (a "Listed Termination"); or
(iii) the passage of eighteen (18) months (or such longer period as provided in
Section 10) after termination of the Merger Agreement if such termination
follows the occurrence of an Initial Triggering Event or is a Listed
Termination. The term "Holder" shall mean the holder or holders of the Option.
Notwithstanding anything to the contrary contained herein, the Option may not be
exercised at any time when Grantee shall be in material breach of any of its
covenants or agreements contained in the Merger Agreement such that Issuer shall
be entitled to terminate the Merger Agreement pursuant to Sections 8.1(e) or
8.1(f) thereof.
(b) The term "Initial Triggering Event" shall mean any of the following
events or transactions occurring on or after the date hereof:
(i) Issuer or any of its Significant Subsidiaries (as defined in
Rule 1-02 of Regulation S-X promulgated by the Securities and Exchange
Commission (the "SEC")) (the "Issuer Subsidiaries"), without having
received Grantee's prior written consent, shall have entered into an
agreement to engage in an Acquisition Transaction (as hereinafter defined)
with any person (the term "person" for purposes of this Agreement having
the meaning assigned thereto in Sections 3(a)(9) and 13(d)(3) of the
Securities Exchange Act of 1934, as amended (the "1934 Act"), and the rules
and regulations thereunder) other than Grantee or any of its Subsidiaries
(each a "Grantee Subsidiary") or the Board of Directors of Issuer (the
"Issuer Board") shall have recommended that the stockholders of Issuer
approve or accept any Acquisition Transaction other than as contemplated by
the Merger Agreement. For purposes of this Agreement, (a)"Acquisition
Transaction" shall mean (x) a merger or consolidation, or any similar
transaction, involving Issuer or any Issuer Subsidiary (other than mergers,
consolidations or similar transactions involving solely Issuer and/or one
or more wholly-owned Subsidiaries of the Issuer, provided, any such
transaction is not entered into in violation of the terms of the Merger
Agreement), (y) a purchase, lease or other acquisition of all or any
substantial part of the assets or deposits of Issuer or any Issuer
Subsidiary, or (z) a purchase or other acquisition (including by way of
merger, consolidation, share exchange or otherwise) of securities
representing 10% or more of the voting power of Issuer or any Issuer
Subsidiary and (b) "Subsidiary" shall have the meaning set forth in Rule
12b-2 under the 1934 Act;
(ii) Any person other than the Grantee or any Grantee Subsidiary,
alone or together with such person's affiliates and associates (as such
terms are defined in Rule 12b-2 under the 1934 Act) shall have acquired
beneficial ownership or the right to acquire beneficial ownership of 10% or
more of the outstanding shares of Common Stock (the term "beneficial
ownership" for purposes of this Agreement having the meaning assigned
thereto in Section 13(d) of the 1934 Act, and the rules and regulations
thereunder);
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(iii) The stockholders of Issuer shall have voted and failed to adopt
the Merger Agreement at a meeting which has been held for that purpose or
any adjournment or postponement thereof, or such meeting shall not have
been held in violation of the Merger Agreement or shall have been canceled
prior to termination of the Merger Agreement if, prior to such meeting (or
if such meeting shall not have been held or shall have been canceled, prior
to such termination), it shall have been publicly announced that any person
(other than Grantee or any of its Subsidiaries) shall have made, or
disclosed an intention to make, a proposal to engage in an Acquisition
Transaction;
(iv) The Issuer Board shall have withdrawn, modified or qualified (or
publicly announced its intention to withdraw, modify or qualify) in any
manner adverse in any respect to Grantee its recommendation that the
stockholders of Issuer adopt the Merger Agreement, or Issuer or any Issuer
Subsidiary shall have authorized, recommended, proposed (or publicly
announced its intention to authorize, recommend or propose) an agreement to
engage in an Acquisition Transaction with any person other than Grantee or
a Grantee Subsidiary;
(v) Any person other than Grantee or any Grantee Subsidiary shall
have filed with the SEC a registration statement or tender offer materials
with respect to a potential exchange or tender offer that would constitute
an Acquisition Transaction (or filed a preliminary proxy statement with the
SEC with respect to a potential vote by its stockholders to approve the
issuance of shares to be offered in such an exchange offer);
(vi) Issuer shall have willfully breached any covenant or obligation
contained in the Merger Agreement after an overture is made by a third
party to Issuer or its stockholders to engage in an Acquisition
Transaction, and (a) following such breach Grantee would be entitled to
terminate the Merger Agreement (whether immediately or after the giving of
notice or passage of time or both) and (b) such breach shall not have been
cured prior to the Notice Date (as defined in Section 2(e)); or
(vii) Any person other than Grantee or any Grantee Subsidiary, without
Grantee's prior written consent, shall have filed an application or notice
with the Board of Governors of the Federal Reserve System (the "Federal
Reserve Board"), the Office of Thrift Supervision (the "OTS") or other
federal or state bank regulatory or antitrust authority, which application
or notice has been accepted for processing, for approval to engage in an
Acquisition Transaction.
(c) The term "Subsequent Triggering Event" shall mean any of the following
events or transactions occurring after the date hereof:
(i) The acquisition by any person (other than Grantee or any Grantee
Subsidiary) of beneficial ownership of 25% or more of the then outstanding
Common Stock; or
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(ii) The occurrence of the Initial Triggering Event described in
clause (i) of subsection (b) of this Section 2, except that the percentage
referred to in clause (z) of the second sentence thereof shall be 25%.
(d) Issuer shall notify Grantee promptly in writing of the occurrence of
any Initial Triggering Event or Subsequent Triggering Event (together, a
"Triggering Event"), it being understood that the giving of such notice by
Issuer shall not be a condition to the right of the Holder to exercise the
Option.
(e) In the event the Holder is entitled to and wishes to exercise the
Option (or any portion thereof), it shall send to Issuer a written notice (the
date of which being herein referred to as the "Notice Date") specifying (i) the
total number of shares it will purchase pursuant to such exercise and (ii) a
place and date not earlier than three business days nor later than 60 business
days from the Notice Date for the closing of such purchase (the "Closing Date");
provided, that if prior notification to or approval of the Federal Reserve Board
or any other regulatory or antitrust agency is required in connection with such
purchase, the Holder shall promptly file the required notice or application for
approval, shall promptly notify Issuer of such filing and shall expeditiously
process the same and the period of time that otherwise would run pursuant to
this sentence shall run instead from the date on which any required notification
periods have expired or been terminated or such approvals have been obtained and
any requisite waiting period or periods shall have passed. Any exercise of the
Option shall be deemed to occur on the Notice Date relating thereto.
(f) At the closing referred to in subsection (e) of this Section 2, the
Holder shall (i) pay to Issuer the aggregate purchase price for the shares of
Common Stock purchased pursuant to the exercise of the Option in immediately
available funds by wire transfer to a bank account designated by Issuer and (ii)
present and surrender this Agreement to Issuer at its principal executive
offices, provided that the failure or refusal of the Issuer to designate such a
bank account or accept surrender of this Agreement shall not preclude the Holder
from exercising the Option.
(g) At such closing, simultaneously with the delivery of immediately
available funds as provided in subsection (f) of this Section 2, Issuer shall
deliver to the Holder a certificate or certificates representing the number of
shares of Common Stock purchased by the Holder and, if the Option should be
exercised in part only, a new Option evidencing the rights of the Holder thereof
to purchase the balance of the shares purchasable hereunder.
(h) Certificates for Common Stock delivered at a closing hereunder may be
endorsed with a restrictive legend that shall read substantially as follows:
"The transfer of the shares represented by this certificate is subject
to certain provisions of an agreement between the registered holder
hereof and Issuer and to resale restrictions arising under the
Securities Act of 1933, as amended. A copy of such agreement is on
file at the principal office of Issuer and will be provided to the
holder hereof without charge upon receipt by Issuer of a written
request therefor."
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It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act of 1933, as amended (the "1933 Act") in the above legend
shall be removed by delivery of substitute certificate(s) without such reference
if the Holder shall have delivered to Issuer a copy of a letter from the staff
of the SEC, or an opinion of counsel, in form and substance reasonably
satisfactory to Issuer, to the effect that such legend is not required for
purposes of the 1933 Act; (ii) the reference to the provisions of this Agreement
in the above legend shall be removed by delivery of substitute certificate(s)
without such reference if the shares have been sold or transferred in compliance
with the provisions of this Agreement and under circumstances that do not
require the retention of such reference in the opinion of counsel to the Holder,
in form and substance reasonably satisfactory to the Issuer; and (iii) the
legend shall be removed in its entirety if the conditions in the preceding
clauses (i) and (ii) are both satisfied. In addition, such certificates shall
bear any other legend as may be required by law.
(i) Upon the giving by the Holder to Issuer of the written notice of
exercise of the Option provided for under subsection (e) of this Section 2 and
the tender of the applicable purchase price in immediately available funds, the
Holder shall be deemed, subject to the receipt of any necessary regulatory
approvals, to be the holder of record of the shares of Common Stock issuable
upon such exercise, notwithstanding that the stock transfer books of Issuer
shall then be closed or that certificates representing such shares of Common
Stock shall not then be actually delivered to the Holder. Issuer shall pay all
expenses, and any and all United States federal, state and local taxes and other
charges that may be payable in connection with the preparation, issue and
delivery of stock certificates under this Section 2 in the name of the Holder or
its assignee, transferee or designee.
3. Covenants of Issuer. Issuer agrees: (i) that it shall at all times
-------------------
maintain, free from preemptive rights, sufficient authorized but unissued or
treasury shares of Common Stock so that the Option may be exercised without
additional authorization of Common Stock after giving effect to all other
options, warrants, convertible securities and other rights to purchase Common
Stock; (ii) that it will not, by charter amendment or through reorganization,
consolidation, merger, dissolution or sale of assets, or by any other voluntary
act, avoid or seek to avoid the observance or performance of any of the
covenants, stipulations or conditions to be observed or performed hereunder by
Issuer; (iii) promptly to take all action as may from time to time be required
(including (x) complying with all applicable premerger notification, reporting
and waiting period requirements specified in 15 U.S.C. Section 18a and
regulations promulgated thereunder and (y) in the event, under the Bank Holding
Company Act of 1956, as amended (the "BHCA"), the Home Owners' Loan Act, as
amended (the "HOLA") or the Change in Bank Control Act of 1978, as amended, or
any state or other federal banking law, prior approval of or notice to the
Federal Reserve Board, the OTS or to any state or other federal regulatory
authority is necessary before the Option may be exercised, cooperating fully
with the Holder in preparing such applications or notices and providing such
information to the Federal Reserve Board, the OTS or such state or other federal
regulatory authority as they may require) in order to permit the Holder to
exercise the Option and Issuer duly and effectively to issue shares of Common
Stock pursuant hereto; and (iv) promptly to take all action provided herein to
protect the rights of the Holder against dilution.
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4. Exchange. This Agreement (and the Option granted hereby) are
--------
exchangeable, without expense, at the option of the Holder, upon presentation
and surrender of this Agreement at the principal office of Issuer, for other
Agreements providing for Options of different denominations entitling the holder
thereof to purchase, on the same terms and subject to the same conditions as are
set forth herein, in the aggregate the same number of shares of Common Stock
purchasable hereunder. The terms "Agreement" and "Option" as used herein include
any Agreements and related Options for which this Agreement (and the Option
granted hereby) may be exchanged. Upon receipt by Issuer of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this
Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like
tenor and date. Any such new Agreement executed and delivered shall constitute
an additional contractual obligation on the part of Issuer, whether or not the
Agreement so lost, stolen, destroyed or mutilated shall at any time be
enforceable by anyone.
5. Certain Adjustments. In addition to the adjustment in the number of
-------------------
shares of Common Stock that are purchasable upon exercise of the Option pursuant
to Section 1 of this Agreement but not in duplication thereof, the number of
shares of Common Stock purchasable upon the exercise of the Option and the
Option Price shall be subject to adjustment from time to time as provided in
this Section 5. In the event of any change in Common Stock by reason of a stock
dividend, stock split, split-up, merger, recapitalization, stock combination,
exchange of shares or similar transaction, the type and number of shares or
securities subject to the Option, and the Option Price therefor, shall be
adjusted appropriately, and proper provision shall be made in the agreements
governing such transaction so that Holder shall receive, upon exercise of the
Option, at the aggregate exercise price calculated in accordance with Section 1
of this Agreement, the number and class of shares or other securities or
property that Holder would have received in respect of Common Stock if the
Option had been exercised immediately prior to such event, or the record date
therefor, as applicable.
6. Registration Rights. Upon the occurrence of a Subsequent Triggering
-------------------
Event that occurs prior to an Exercise Termination Event, Issuer shall, at the
request of Grantee delivered within six (6) months (or such later period as
provided in Section 10) of such Subsequent Triggering Event (whether on its own
behalf or on behalf of any subsequent holder of this Option (or part thereof) or
any of the shares of Common Stock issued pursuant hereto), promptly prepare,
file and keep current a registration statement under the 1933 Act covering any
shares issued and issuable pursuant to this Option and shall use its reasonable
best efforts to cause such registration statement to become effective and remain
current in order to permit the sale or other disposition of any shares of Common
Stock issued upon total or partial exercise of this Option ("Option Shares") in
accordance with any plan of disposition requested by Grantee. Issuer will use
its reasonable best efforts to cause such registration statement promptly to
become effective and then to remain effective for such period not in excess of
180 days from the day such registration statement first becomes effective or
such shorter time as may be reasonably necessary to effect such sales or other
dispositions. Grantee shall have the right to demand two such registrations. The
Issuer shall bear the costs of such registrations (including, but not limited
to, Issuer's attorneys' fees, printing costs and filing fees, except for
underwriting discounts or commissions, brokers' fees and the fees and
disbursements of Grantee's counsel related thereto).
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The foregoing notwithstanding, if, at the time of any request by Grantee for
registration of Option Shares as provided above, Issuer is in registration with
respect to an underwritten public offering by Issuer of shares of Common Stock,
and if in the good faith judgment of the managing underwriter or managing
underwriters, or, if none, the sole underwriter or underwriters, of such
offering the offer and sale of the Option Shares would interfere with the
successful marketing of the shares of Common Stock offered by Issuer, the number
of Option Shares otherwise to be covered in the registration statement
contemplated hereby may be reduced; provided, however, that after any such
required reduction the number of Option Shares to be included in such offering
for the account of the Holder shall constitute at least 33 1/3% of the total
number of shares to be sold by the Holder and Issuer in the aggregate; and
provided further, however, that if such reduction occurs, then Issuer shall file
a registration statement for the balance as promptly as practicable thereafter
as to which no reduction pursuant to this Section 6 shall be permitted or occur
and the Holder shall thereafter be entitled to one additional registration and
the six (6) month period referred to in the first sentence of this section shall
be increased to eighteen (18) months. Each such Holder shall provide all
information reasonably requested by Issuer for inclusion in any registration
statement to be filed hereunder. If requested by any such Holder in connection
with such registration, Issuer shall become a party to any underwriting
agreement relating to the sale of such shares, but only to the extent of
obligating itself in respect of representations, warranties, indemnities and
other agreements customarily included in such underwriting agreements for
Issuer. Upon receiving any request under this Section 6 from any Holder, Issuer
agrees to send a copy thereof to any other person known to Issuer to be entitled
to registration rights under this Section 6, in each case by promptly mailing
the same, postage prepaid, to the address of record of the persons entitled to
receive such copies. Notwithstanding anything to the contrary contained herein,
in no event shall the number of registrations that Issuer is obligated to effect
be increased by reason of the fact that there shall be more than one Holder as a
result of any assignment or division of this Agreement.
7. Repurchase. (a) At any time after the occurrence of a Repurchase Event
----------
(as defined below) (i) at the request of the Holder, delivered prior to an
Exercise Termination Event (or such later period as provided in Section 10),
Issuer (or any successor thereto) shall repurchase the Option from the Holder at
a price (the "Option Repurchase Price") equal to the amount by which (A) the
market/offer price (as defined below) exceeds (B) the Option Price, multiplied
by the number of shares for which this Option may then be exercised and (ii) at
the request of the owner of Option Shares from time to time (the "Owner"),
delivered prior to an Exercise Termination Event (or such later period as
provided in Section 10), Issuer (or any successor thereto) shall repurchase such
number of the Option Shares from the Owner as the Owner shall designate at a
price (the "Option Share Repurchase Price") equal to the market/offer price
multiplied by the number of Option Shares so designated. The term "market/offer
price" shall mean the highest of (i) the price per share of Common Stock at
which a tender or exchange offer therefor has been made, (ii) the price per
share of Common Stock to be paid by any third party pursuant to an agreement
with Issuer, (iii) the highest closing price for shares of Common Stock within
the six-month period immediately preceding the date the Holder gives notice of
the required repurchase of this Option or the Owner gives notice of the required
repurchase of Option Shares, as the case may be, or (iv) in the event of a sale
of all or any substantial part of Issuer's assets or deposits, the sum of the
net price paid in such sale for such assets or deposits and the current market
value of the remaining net assets of Issuer as determined by a nationally
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recognized investment banking firm selected by the Holder or the Owner, as the
case may be, and reasonably acceptable to Issuer, divided by the number of
shares of Common Stock of Issuer outstanding at the time of such sale. In
determining the market/offer price, the value of consideration other than cash
shall be determined by a nationally recognized investment banking firm selected
by the Holder or Owner, as the case may be, and reasonably acceptable to Issuer.
(b) The Holder and the Owner, as the case may be, may exercise its right
to require Issuer to repurchase the Option and any Option Shares pursuant to
this Section 7 by surrendering for such purpose to Issuer, at its principal
office, a copy of this Agreement or certificates for Option Shares, as
applicable, accompanied by a written notice or notices stating that the Holder
or the Owner, as the case may be, elects to require Issuer to repurchase this
Option and/or the Option Shares in accordance with the provisions of this
Section 7. The Owner shall also represent and warrant that it has sole record
and beneficial ownership of such Option Shares and that such Option Shares are
then free and clear of all liens. As promptly as practicable, and in any event
within five (5) business days after the surrender of the Option and/or
certificates representing Option Shares and the receipt of such notice or
notices relating thereto, Issuer shall deliver or cause to be delivered to the
Holder the Option Repurchase Price and/or to the Owner the Option Share
Repurchase Price therefor or the portion thereof that Issuer is not then
prohibited under applicable law and regulation from so delivering.
(c) To the extent that Issuer is prohibited under applicable law or
regulation, or as a consequence of administrative policy, from repurchasing the
Option and/or the Option Shares in full, Issuer shall immediately so notify the
Holder and/or the Owner and thereafter deliver or cause to be delivered, from
time to time, to the Holder and/or the Owner, as appropriate, the portion of the
Option Repurchase Price and the Option Share Repurchase Price, respectively,
that it is no longer prohibited from delivering, within five (5) business days
after the date on which Issuer is no longer so prohibited; provided, however,
that if Issuer at any time after delivery of a notice of repurchase pursuant to
paragraph (b) of this Section 7 is prohibited under applicable law or
regulation, or as a consequence of administrative policy, from delivering to the
Holder and/or the Owner, as appropriate, the Option Repurchase Price and the
Option Share Repurchase Price, respectively, in full (and Issuer hereby
undertakes to use its reasonable best efforts to obtain all required regulatory
and legal approvals and to file any required notices as promptly as practicable
in order to accomplish such repurchase), the Holder or Owner may revoke its
notice of repurchase of the Option and/or the Option Shares whether in whole or
to the extent of the prohibition, whereupon, in the latter case, Issuer shall
promptly (i) deliver to the Holder and/or the Owner, as appropriate, that
portion of the Option Repurchase Price and/or the Option Share Repurchase Price
that Issuer is not prohibited from delivering; and (ii) deliver, as appropriate,
either (A) to the Holder, a new Agreement evidencing the right of the Holder to
purchase that number of shares of Common Stock obtained by multiplying the
number of shares of Common Stock for which the surrendered Agreement was
exercisable at the time of delivery of the notice of repurchase by a fraction,
the numerator of which is the Option Repurchase Price less the portion thereof
theretofore delivered to the Holder and the denominator of which is the Option
Repurchase Price, and/or (B) to the Owner, a certificate for the Option Shares
it is then so prohibited from repurchasing. If an Exercise Termination Event
shall have occurred prior to the date of the notice by Issuer described in the
first sentence of this subsection (c), or shall be scheduled to occur at any
time before the expiration of a period ending on the thirtieth day after
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such date, the Holder shall nonetheless have the right to exercise the Option
until the expiration of such 30-day period.
(d) For purposes of this Section 7, a "Repurchase Event" shall be deemed
to have occurred upon the occurrence of any of the following events or
transactions after the date hereof:
(i) the acquisition by any person (other than Grantee or any Grantee
Subsidiary) of beneficial ownership of 50% or more of the then outstanding
Common Stock; or
(ii) the consummation of any Acquisition Transaction described in
Section 2(b)(i) hereof, except that the percentage referred to in clause
(z) shall be 25%.
8. Substitute Option. (a) In the event that prior to an Exercise
Termination Event, Issuer shall enter into an agreement (i) to consolidate with
or merge into any person, other than Grantee or a Grantee Subsidiary, or engage
in a plan of exchange with any person, other than Grantee or a Grantee
Subsidiary and Issuer shall not be the continuing or surviving corporation of
such consolidation or merger or the acquirer in such plan of exchange, (ii) to
permit any person, other than Grantee or a Grantee Subsidiary, to merge into
Issuer or be acquired by Issuer in a plan of exchange and Issuer shall be the
continuing or surviving or acquiring corporation, but, in connection with such
merger or plan of exchange, the then outstanding shares of Common Stock shall be
changed into or exchanged for stock or other securities of any other person or
cash or any other property or the then outstanding shares of Common Stock shall
after such merger or plan of exchange represent less than 50% of the outstanding
shares and share equivalents of the merged or acquiring company, or (iii) to
sell or otherwise transfer all or a substantial part of its or any Issuer
Subsidiary's assets or deposits to any person, other than Grantee or a Grantee
Subsidiary, then, and in each such case, the agreement governing such
transaction shall make proper provision so that the Option shall, upon the
consummation of any such transaction and upon the terms and conditions set forth
herein, be converted into, or exchanged for, an option (the "Substitute
Option"), at the election of the Holder, of either (x) the Acquiring Corporation
(as hereinafter defined) or (y) any person that controls the Acquiring
Corporation.
(b) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (i) the continuing or
surviving person of a consolidation or merger with Issuer (if other than
Issuer), (ii) the acquiring person in a plan of exchange in which Issuer is
acquired, (iii) the Issuer in a merger or plan of exchange in which Issuer
is the continuing or surviving or acquiring person and (iv) the transferee
of all or a substantial part of Issuer's assets or deposits (or the assets
or deposits of any Issuer Subsidiary).
(ii) "Substitute Common Stock" shall mean the shares of capital stock
(or similar equity interest) with the greatest voting power with respect to
the election of directors of the issuer of the Substitute Option.
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(iii) "Assigned Value" shall mean the market/offer price, as defined
in Section 7.
(iv) "Average Price" shall mean the average closing price of a share
of the Substitute Common Stock for one (1) year immediately preceding the
consolidation, merger or sale in question, but in no event higher than the
closing price of the shares of Substitute Common Stock on the day preceding
such consolidation, merger or sale; provided that if Issuer is the issuer
of the Substitute Option, the Average Price shall be computed with respect
to a share of common stock issued by the person merging into Issuer or by
any company which controls or is controlled by such person, as the Holder
may elect.
(c) The Substitute Option shall have the same terms as the Option,
provided that if the terms of the Substitute Option cannot, for legal reasons,
be the same as the Option, such terms shall be as similar as possible and in no
event less advantageous to the Holder. The issuer of the Substitute Option shall
also enter into an agreement with the then Holder or Holders of the Substitute
Option in substantially the same form as this Agreement (after giving effect for
such purpose to the provisions of Section 9), which agreement shall be
applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such number of shares
of Substitute Common Stock as is equal to the Assigned Value multiplied by the
number of shares of Common Stock for which the Option was exercisable
immediately prior to the event described in the first sentence of Section 8(a),
divided by the Average Price. The exercise price of the Substitute Option per
share of Substitute Common Stock shall then be equal to the Option Price
multiplied by a fraction, the numerator of which shall be the number of shares
of Common Stock for which the Option was exercisable immediately prior to the
event described in the first sentence of Section 8(a) and the denominator of
which shall be the number of shares of Substitute Common Stock for which the
Substitute Option is exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs, shall the
Substitute Option be exercisable for more than 19.9% of the shares of Substitute
Common Stock outstanding prior to exercise of the Substitute Option. In the
event that the Substitute Option would be exercisable for more than 19.9% of the
shares of Substitute Common Stock outstanding prior to exercise but for this
clause (e), the issuer of the Substitute Option (the "Substitute Option Issuer")
shall make a cash payment to Holder equal to the excess of (i) the value of the
Substitute Option without giving effect to the limitation in this clause (e)
over (ii) the value of the Substitute Option after giving effect to the
limitation in this clause (e). This difference in value shall be determined by a
nationally recognized investment banking firm selected by a majority in interest
of the Holders.
(f) Issuer shall not enter into any transaction described in subsection
(a) of this Section 8 unless the Acquiring Corporation and any person that
controls the Acquiring Corporation assume in writing all the obligations of
Issuer hereunder.
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9. Repurchase of Substitute Option. (a) At the request of the holder of
-------------------------------
the Substitute Option (the "Substitute Option Holder"), the Substitute Option
Issuer shall repurchase the Substitute Option from the Substitute Option Holder
at a price (the "Substitute Option Repurchase Price") equal to the amount by
which (i) the Highest Closing Price (as hereinafter defined) exceeds (ii) the
exercise price of the Substitute Option, multiplied by the number of shares of
Substitute Common Stock for which the Substitute Option may then be exercised,
and at the request of the owner (the "Substitute Share Owner") of shares of
Substitute Common Stock (the "Substitute Shares"), the Substitute Option Issuer
shall repurchase the Substitute Shares at a price (the "Substitute Share
Repurchase Price") equal to the Highest Closing Price multiplied by the number
of Substitute Shares so designated. The term "Highest Closing Price" shall mean
the highest closing price for shares of Substitute Common Stock within the six-
month period immediately preceding the date the Substitute Option Holder gives
notice of the required repurchase of the Substitute Option or the Substitute
Share Owner gives notice of the required repurchase of the Substitute Shares, as
applicable.
(b) The Substitute Option Holder and the Substitute Share Owner, as the
case may be, may exercise its respective rights to require the Substitute Option
Issuer to repurchase the Substitute Option and the Substitute Shares pursuant to
this Section 9 by surrendering for such purpose to the Substitute Option Issuer,
at its principal office, the agreement for such Substitute Option (or, in the
absence of such an agreement, a copy of this Agreement) and/or certificates for
Substitute Shares accompanied by a written notice or notices stating that the
Substitute Option Holder or the Substitute Share Owner, as the case may be,
elects to require the Substitute Option Issuer to repurchase the Substitute
Option and/or the Substitute Shares in accordance with the provisions of this
Section 9. As promptly as practicable and in any event within five (5) business
days after the surrender of the Substitute Option and/or certificates
representing Substitute Shares and the receipt of such notice or notices
relating thereto, the Substitute Option Issuer shall deliver or cause to be
delivered to the Substitute Option Holder the Substitute Option Repurchase Price
and/or to the Substitute Share Owner the Substitute Share Repurchase Price
therefor or the portion thereof which the Substitute Option Issuer is not then
prohibited under applicable law and regulation from so delivering.
(c) To the extent that the Substitute Option Issuer is prohibited under
applicable law or regulation, or as a consequence of administrative policy, from
repurchasing the Substitute Option and/ or the Substitute Shares in part or in
full, the Substitute Option Issuer shall immediately so notify the Substitute
Option Holder and/or the Substitute Share Owner and thereafter deliver or cause
to be delivered, from time to time, to the Substitute Option Holder and/or the
Substitute Share Owner, as appropriate, the portion of the Substitute Option
Repurchase Price and/or the Substitute Share Repurchase Price, respectively,
which it is no longer prohibited from delivering, within five (5) business days
after the date on which the Substitute Option Issuer is no longer so prohibited;
provided, however, that if the Substitute Option Issuer is at any time after
delivery of a notice of repurchase pursuant to subsection (b) of this Section 9
prohibited under applicable law or regulation, or as a consequence of
administrative policy, from delivering to the Substitute Option Holder and/or
the Substitute Share Owner, as appropriate, the Substitute Option Repurchase
Price and the Substitute Share Repurchase Price, respectively, in full (and the
Substitute Option Issuer shall use its reasonable best efforts to receive all
required regulatory and legal approvals as promptly as practicable in
-11-
<PAGE>
order to accomplish such repurchase), the Substitute Option Holder and/or
Substitute Share Owner may revoke its notice of repurchase of the Substitute
Option or the Substitute Shares either in whole or to the extent of prohibition,
whereupon, in the latter case, the Substitute Option Issuer shall promptly (i)
deliver to the Substitute Option Holder or Substitute Share Owner, as
appropriate, that portion of the Substitute Option Repurchase Price or the
Substitute Share Repurchase Price that the Substitute Option Issuer is not
prohibited from delivering; and (ii) deliver, as appropriate, either (A) to the
Substitute Option Holder, a new Substitute Option evidencing the right of the
Substitute Option Holder to purchase that number of shares of the Substitute
Common Stock obtained by multiplying the number of shares of the Substitute
Common Stock for which the surrendered Substitute Option was exercisable at the
time of delivery of the notice of repurchase by a fraction, the numerator of
which is the Substitute Option Repurchase Price less the portion thereof
theretofore delivered to the Substitute Option Holder and the denominator of
which is the Substitute Option Repurchase Price, and/or (B) to the Substitute
Share Owner, a certificate for the Substitute Option Shares it is then so
prohibited from repurchasing. If an Exercise Termination Event shall have
occurred prior to the date of the notice by the Substitute Option Issuer
described in the first sentence of this subsection (c), or shall be scheduled to
occur at any time before the expiration of a period ending on the thirtieth day
after such date, the Substitute Option Holder shall nevertheless have the right
to exercise the Substitute Option until the expiration of such 30-day period.
10. Extension of Periods Under Certain Circumstances. The periods for
------------------------------------------------
exercise of certain rights under Sections 2, 6, 7, 9 and 14 shall be extended:
(i) to the extent necessary to obtain all regulatory approvals for the exercise
of such rights (for so long as the Holder, Owner, Substitute Option Holder or
Substitute Share Owner, as the case may be, is using commercially reasonable
efforts to obtain such regulatory approvals), and for the expiration of all
statutory waiting periods; (ii) to the extent necessary to avoid liability under
Section 16(b) of the 1934 Act by reason of such exercise; and (iii) when there
exists an injunction, order or judgment that prohibits or delays exercise of
such right.
11. Representations and Warranties. (a) Issuer hereby represents and
------------------------------
warrants to Grantee as follows:
(i) Issuer has the requisite corporate power and authority to
execute and deliver this Agreement and, subject to any required regulatory
notices or approvals, to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by
the Issuer Board prior to the date hereof and no other corporate
proceedings on the part of Issuer are necessary to authorize this Agreement
or to consummate the transactions so contemplated. This Agreement has been
duly and validly executed and delivered by Issuer.
(ii) Issuer has taken all necessary corporate action to authorize and
reserve and to permit it to issue, and at all times from the date hereof
through the termination of this Agreement in accordance with its terms will
have reserved for issuance upon the exercise of the Option, that number of
shares of Common Stock equal to the maximum number of shares of Common
Stock at any time and from time to time issuable
-12-
<PAGE>
hereunder, and all such shares, upon issuance pursuant thereto, will be
duly authorized, validly issued, fully paid, nonassessable, and will be
delivered free and clear of all claims, liens, encumbrances and security
interests and not subject to any preemptive rights.
(iii) The execution, delivery and subject to any required regulatory
notices or approvals, performance of this Agreement does not or will not,
and the consummation by Issuer of any of the transactions contemplated
hereby will not, constitute or result in (a) a breach or violation of, or a
default under, its certificate of incorporation or bylaws, or the
comparable governing instruments of any of its subsidiaries, or (b) a
breach or violation of, or a default under, any agreement, lease, contract,
note, mortgage, indenture, arrangement or other obligation of it or any of
its subsidiaries (with or without the giving of notice, the lapse of time
or both) or under any law, rule, ordinance or regulation or judgment,
decree, order, award or governmental or nongovernmental permit or license
to which it or any of its subsidiaries is subject, that would, in any case
referred to in this clause (b), give any other person the ability to
prevent or enjoin Issuer's performance under this Agreement in any material
respect.
(b) Grantee hereby represents and warrants to Issuer as follows: Grantee
has the requisite corporate power and authority to execute and deliver this
Agreement and, subject to any required regulatory notices or approvals, to
perform its obligations hereunder. The execution and delivery of this Agreement
by the Grantee and the performance of its obligations hereunder by the Grantee
have been duly and validly authorized by the Board of Directors of Grantee and
no other corporate proceedings on the part of the Grantee are necessary to
authorize this Agreement or for Grantee to perform its obligations hereunder.
This Agreement has been duly and validly executed and delivered by Grantee.
(c) This Option is not being, and any Option Shares or other securities
acquired by Grantee upon exercise of the Option will not be, acquired with a
view to the public distribution thereof and will not be transferred or otherwise
disposed of except in a transaction registered or exempt from registration under
the 1933 Act.
12. Assignment. Neither of the parties hereto may assign any of its rights
----------
or obligations under this Agreement or the Option created hereunder to any other
person, without the express written consent of the other party, except that in
the event a Subsequent Triggering Event shall have occurred prior to an Exercise
Termination Event, Grantee, subject to the express provisions hereof, may assign
in whole or in part its rights and obligations hereunder; provided, however,
that until the date fifteen (15) days following the date on which the OTS, as
the case may be, has approved an application by Grantee to acquire the shares of
Common Stock subject to the Option, Grantee may not assign its rights under the
Option except in (i) a widely dispersed public distribution, (ii) a private
placement in which no one party acquires the right to purchase in excess of 2%
of the voting shares of Issuer, (iii) an assignment to a single party (e.g., a
broker or investment banker) for the purpose of conducting a widely dispersed
public distribution on Grantee's behalf or (iv) any other manner approved by the
OTS.
-13-
<PAGE>
13. Filings, Etc. Each of Grantee and Issuer will use its reasonable best
------------
efforts to make all filings with, and to obtain consents of, all third parties
and governmental authorities necessary to the consummation of the transactions
contemplated by this Agreement, including, without limitation, applying to the
OTS under the HOLA for approval to acquire the shares issuable hereunder.
14. Surrender of Option. (a) Grantee may, at any time following a
-------------------
Repurchase Event and prior to the occurrence of an Exercise Termination Event
(or such later period as provided in Section 10), relinquish the Option
(together with any Option Shares issued to and then owned by Grantee) to Issuer
in exchange for a cash fee equal to the Surrender Price. The "Surrender Price"
shall be equal to $3.5 million (i) plus, if applicable, Grantee's purchase price
with respect to any Option Shares and (ii) minus, if applicable, the excess of
(A) the net price, if any, received by Grantee or a Grantee Subsidiary pursuant
to the sale of Option Shares (or any other securities into which such Option
Shares were converted or exchanged) to any unaffiliated party, over (B)
Grantee's purchase price of such Option Shares.
(b) Grantee may exercise its right to relinquish the Option and any Option
Shares pursuant to this Section 14 by surrendering to Issuer, at its principal
office, a copy of this Agreement together with certificates for Option Shares,
if any, accompanied by a written notice stating (i) that Grantee elects to
relinquish the Option and Option Shares, if any, in accordance with the
provisions of this Section 14 and (ii) the Surrender Price. The Surrender Price
shall be payable in immediately available funds on or before the second business
day following receipt of such notice by Issuer.
(c) To the extent that Issuer is prohibited under applicable law or
regulation, or as a consequence of administrative policy, from paying the
Surrender Price to Grantee in full, Issuer shall immediately so notify Grantee
and thereafter deliver or cause to be delivered, from time to time, to Grantee,
the portion of the Surrender Price that it is no longer prohibited from paying,
within five (5) business days after the date on which Issuer is no longer so
prohibited; provided, however, that if Issuer at any time after delivery of a
notice of surrender pursuant to paragraph (b) of this Section 14 is prohibited
under applicable law or regulation, or as a consequence of administrative
policy, from paying to Grantee the Surrender Price in full, (i) Issuer shall (A)
use its reasonable best efforts to obtain all required regulatory and legal
approvals and to file any required notices as promptly as practicable in order
to make such payments, (B) within five (5) days of the submission or receipt of
any documents relating to any such regulatory and legal approvals, provide
Grantee with copies of the same and (C) keep Grantee advised of both the status
of any such request for regulatory and legal approvals, as well as any
discussions with any relevant regulatory or other third party reasonably related
to the same and (ii) Grantee may revoke such notice of surrender by delivery of
a notice of revocation to Issuer and, upon delivery of such notice of
revocation, the Exercise Termination Date shall be extended to a date six (6)
months from the date on which the Exercise Termination Date would have occurred
if not for the provisions of this Section 14(c) (during which period Grantee may
exercise any of its rights hereunder, including any and all rights pursuant to
this Section 14).
15. Specific Performance. The parties hereto acknowledge that damages
--------------------
would be an inadequate remedy for a breach of this Agreement by either party
hereto and that the obligations
-14-
<PAGE>
of the parties hereto shall be enforceable by either party hereto through
injunctive or other equitable relief. In connection therewith, both parties
waive the posting of any bond or similar requirement.
16. Severability. If any term, provision, covenant or restriction
------------
contained in this Agreement is held by a court or a federal or state regulatory
agency of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, provisions and covenants and restrictions contained in
this Agreement shall remain in full force and effect, and shall in no way be
affected, impaired or invalidated. If for any reason such court or regulatory
agency determines that the Holder is not permitted to acquire, or Issuer is not
permitted to repurchase pursuant to Section 7, the full number of shares of
Common Stock provided in Section l(a) hereof (as adjusted pursuant to Section
l(b) or Section 5 hereof), it is the express intention of Issuer to allow the
Holder to acquire or to require Issuer to repurchase such lesser number of
shares as may be permissible, without any amendment or modification hereof.
17. Notices. All notices, requests, claims, demands and other
-------
communications hereunder shall be deemed to have been duly given when delivered
in person, by fax, telecopy, or by registered or certified mail (postage
prepaid, return receipt requested) at the respective addresses of the parties
set forth in the Merger Agreement.
18. Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of Delaware without regard to any
applicable conflicts of law.
19. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
20. Expenses. Except as otherwise expressly provided herein, each of the
--------
parties hereto shall bear and pay all costs and expenses incurred by it or on
its behalf in connection with the transactions contemplated hereunder, including
fees and expenses of its own financial consultants, investment bankers,
accountants and counsel.
21. Entire Agreement; Third-Party Rights. Except as otherwise expressly
------------------------------------
provided herein or in the Merger Agreement, this Agreement contains the entire
agreement between the parties with respect to the transactions contemplated
hereunder and supersedes all prior arrangements or understandings with respect
thereof, written or oral. The terms and conditions of this Agreement shall inure
to the benefit of and be binding upon the parties hereto and their respective
successors and permitted assignees. Nothing in this Agreement, expressed or
implied, is intended to confer upon any party, other than the parties hereto,
and their respective successors except as assignees, any rights, remedies,
obligations or liabilities under or by reason of this Agreement, except as
expressly provided herein.
22. Capitalized Terms. Capitalized terms used in this Agreement and not
-----------------
defined herein shall have the meanings assigned thereto in the meanings assigned
thereto in the Merger Agreement.
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<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be executed
on its behalf by its officers thereunto duly authorized, all as of the date
first above written.
FIRST PLACE FINANCIAL CORP.
/s/ Steven R. Lewis
By:________________________
Name: Steven R. Lewis
Title: President and Chief Executive Officer
FFY FINANCIAL CORP.
/s/ Jeffrey L. Francis
By:________________________
Name: Jeffrey L. Francis
Title: President and Chief Executive Officer
-16-
<PAGE>
THE TRANSFER OF THIS AGREEMENT IS SUBJECT
TO CERTAIN PROVISIONS CONTAINED HEREIN AND TO
RESALE RESTRICTIONS UNDER THE SECURITIES
ACT OF 1933, AS AMENDED
STOCK OPTION AGREEMENT, dated as of May 23, 2000 (this "Agreement"),
between FFY Financial Corporation, a Delaware corporation ("Grantee"), and First
Place Financial Corp., a Delaware corporation ("Issuer").
RECITALS
A. Merger Agreement. Grantee and Issuer have entered into an
----------------
Agreement and Plan of Merger, dated as of May 23, 2000 (the "Merger Agreement"),
which agreement was executed and delivered on the date of this Stock Option
Agreement, pursuant to which Grantee is to merge with and into Issuer (the
"Merger"); and
B. Option. As a condition to Grantee's entering into the Merger
------
Agreement and in consideration therefor, Issuer has agreed to grant Grantee the
Option (as hereinafter defined).
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein and in the Merger Agreement, the
parties hereto agree as follows:
1. Grant of Option. (a) Issuer hereby grants to Grantee an
---------------
unconditional, irrevocable option (the "Option") to purchase, subject to the
terms hereof, up to an aggregate of 2,158,602 fully paid and nonassessable
shares of the common stock, par value $0.01 per share, of Issuer ("Common
Stock") at a price per share equal to $9.75 (the "Option Price"); provided,
however, that in no event shall the number of shares for which this Option is
exercisable exceed 19.9% of the issued and outstanding shares of Common Stock.
The number of shares of Common Stock that may be received upon the exercise of
the Option and the Option Price are subject to adjustment as herein set forth.
(b) In the event that any additional shares of Common Stock are issued
or otherwise become outstanding after the date of this Agreement (other than
pursuant to this Agreement and other than pursuant to an event described in
Section 5 hereof), the number of shares of Common Stock subject to the Option
shall be increased so that, after such issuance, such number together with any
shares of Common Stock previously issued pursuant hereto, equals 19.9% of the
number of shares of Common Stock then issued and outstanding without giving
effect to any shares subject or issued pursuant to the Option. Nothing contained
in this Section 1(b) or elsewhere in this Agreement shall be deemed to authorize
Issuer to issue shares in breach of any provision of the Merger Agreement.
2. Exercise. (a) The Holder (as hereinafter defined) may exercise
--------
the Option, in whole or part, if, but only if, both an Initial Triggering Event
(as hereinafter defined) and a Subsequent Triggering Event (as hereinafter
defined) shall have occurred prior to the occurrence of an Exercise Termination
Event (as hereinafter defined), provided that the Holder shall have sent the
written notice of such exercise (as provided in subsection (e) of this Section
2) within six
<PAGE>
(6) months following the first such Subsequent Triggering Event (or such later
period as provided in Section 10). Each of the following shall be an Exercise
Termination Event: (i) the Effective Time (as defined in the Merger Agreement)
of the Merger; (ii) termination of the Merger Agreement in accordance with the
provisions thereof if such termination occurs prior to the occurrence of an
Initial Triggering Event except a termination by Grantee pursuant to Section
8.1(e) or (f) of the Merger Agreement (unless the breach by Issuer giving rise
to such right of termination is non-volitional) (a "Listed Termination"); or
(iii) the passage of eighteen (18) months (or such longer period as provided in
Section 10) after termination of the Merger Agreement if such termination
follows the occurrence of an Initial Triggering Event or is a Listed
Termination. The term "Holder" shall mean the holder or holders of the Option.
Notwithstanding anything to the contrary contained herein, the Option may not be
exercised at any time when Grantee shall be in material breach of any of its
covenants or agreements contained in the Merger Agreement such that Issuer shall
be entitled to terminate the Merger Agreement pursuant to Sections 8.1(e) or
8.1(f) thereof.
(b) The term "Initial Triggering Event" shall mean any of the following
events or transactions occurring on or after the date hereof:
(i) Issuer or any of its Significant Subsidiaries (as defined in
Rule 1-02 of Regulation S-X promulgated by the Securities and Exchange
Commission (the "SEC")) (the "Issuer Subsidiaries"), without having
received Grantee's prior written consent, shall have entered into an
agreement to engage in an Acquisition Transaction (as hereinafter defined)
with any person (the term "person" for purposes of this Agreement having
the meaning assigned thereto in Sections 3(a)(9) and 13(d)(3) of the
Securities Exchange Act of 1934, as amended (the "1934 Act"), and the rules
and regulations thereunder) other than Grantee or any of its Subsidiaries
(each a "Grantee Subsidiary") or the Board of Directors of Issuer (the
"Issuer Board") shall have recommended that the stockholders of Issuer
approve or accept any Acquisition Transaction other than as contemplated by
the Merger Agreement. For purposes of this Agreement, (a)"Acquisition
Transaction" shall mean (x) a merger or consolidation, or any similar
transaction, involving Issuer or any Issuer Subsidiary (other than mergers,
consolidations or similar transactions involving solely Issuer and/or one
or more wholly-owned Subsidiaries of the Issuer, provided, any such
transaction is not entered into in violation of the terms of the Merger
Agreement), (y) a purchase, lease or other acquisition of all or any
substantial part of the assets or deposits of Issuer or any Issuer
Subsidiary, or (z) a purchase or other acquisition (including by way of
merger, consolidation, share exchange or otherwise) of securities
representing 10% or more of the voting power of Issuer or any Issuer
Subsidiary and (b) "Subsidiary" shall have the meaning set forth in Rule
12b-2 under the 1934 Act;
(ii) Any person other than the Grantee or any Grantee Subsidiary,
alone or together with such person's affiliates and associates (as such
terms are defined in Rule 12b-2 under the 1934 Act) shall have acquired
beneficial ownership or the right to acquire beneficial ownership of 10% or
more of the outstanding shares of Common Stock (the term "beneficial
ownership" for purposes of this Agreement having the meaning assigned
thereto in Section 13(d) of the 1934 Act, and the rules and regulations
thereunder);
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<PAGE>
(iii) The stockholders of Issuer shall have voted and failed to adopt
the Merger Agreement at a meeting which has been held for that purpose or
any adjournment or postponement thereof, or such meeting shall not have
been held in violation of the Merger Agreement or shall have been canceled
prior to termination of the Merger Agreement if, prior to such meeting (or
if such meeting shall not have been held or shall have been canceled, prior
to such termination), it shall have been publicly announced that any person
(other than Grantee or any of its Subsidiaries) shall have made, or
disclosed an intention to make, a proposal to engage in an Acquisition
Transaction;
(iv) The Issuer Board shall have withdrawn, modified or qualified
(or publicly announced its intention to withdraw, modify or qualify) in any
manner adverse in any respect to Grantee its recommendation that the
stockholders of Issuer adopt the Merger Agreement, or Issuer or any Issuer
Subsidiary shall have authorized, recommended, proposed (or publicly
announced its intention to authorize, recommend or propose) an agreement to
engage in an Acquisition Transaction with any person other than Grantee or
a Grantee Subsidiary;
(v) Any person other than Grantee or any Grantee Subsidiary shall
have filed with the SEC a registration statement or tender offer materials
with respect to a potential exchange or tender offer that would constitute
an Acquisition Transaction (or filed a preliminary proxy statement with the
SEC with respect to a potential vote by its stockholders to approve the
issuance of shares to be offered in such an exchange offer);
(vi) Issuer shall have willfully breached any covenant or obligation
contained in the Merger Agreement after an overture is made by a third
party to Issuer or its stockholders to engage in an Acquisition
Transaction, and (a) following such breach Grantee would be entitled to
terminate the Merger Agreement (whether immediately or after the giving of
notice or passage of time or both) and (b) such breach shall not have been
cured prior to the Notice Date (as defined in Section 2(e)); or
(vii) Any person other than Grantee or any Grantee Subsidiary,
without Grantee's prior written consent, shall have filed an application or
notice with the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), the Office of Thrift Supervision (the "OTS") or
other federal or state bank regulatory or antitrust authority, which
application or notice has been accepted for processing, for approval to
engage in an Acquisition Transaction.
(c) The term "Subsequent Triggering Event" shall mean any of the
following events or transactions occurring after the date hereof:
(i) The acquisition by any person (other than Grantee or any
Grantee Subsidiary) of beneficial ownership of 25% or more of the then
outstanding Common Stock; or
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<PAGE>
(ii) The occurrence of the Initial Triggering Event described in
clause (i) of subsection (b) of this Section 2, except that the percentage
referred to in clause (z) of the second sentence thereof shall be 25%.
(d) Issuer shall notify Grantee promptly in writing of the occurrence of
any Initial Triggering Event or Subsequent Triggering Event (together, a
"Triggering Event"), it being understood that the giving of such notice by
Issuer shall not be a condition to the right of the Holder to exercise the
Option.
(e) In the event the Holder is entitled to and wishes to exercise the
Option (or any portion thereof), it shall send to Issuer a written notice (the
date of which being herein referred to as the "Notice Date") specifying (i) the
total number of shares it will purchase pursuant to such exercise and (ii) a
place and date not earlier than three business days nor later than 60 business
days from the Notice Date for the closing of such purchase (the "Closing Date");
provided, that if prior notification to or approval of the Federal Reserve Board
or any other regulatory or antitrust agency is required in connection with such
purchase, the Holder shall promptly file the required notice or application for
approval, shall promptly notify Issuer of such filing and shall expeditiously
process the same and the period of time that otherwise would run pursuant to
this sentence shall run instead from the date on which any required notification
periods have expired or been terminated or such approvals have been obtained and
any requisite waiting period or periods shall have passed. Any exercise of the
Option shall be deemed to occur on the Notice Date relating thereto.
(f) At the closing referred to in subsection (e) of this Section 2, the
Holder shall (i) pay to Issuer the aggregate purchase price for the shares of
Common Stock purchased pursuant to the exercise of the Option in immediately
available funds by wire transfer to a bank account designated by Issuer and (ii)
present and surrender this Agreement to Issuer at its principal executive
offices, provided that the failure or refusal of the Issuer to designate such a
bank account or accept surrender of this Agreement shall not preclude the Holder
from exercising the Option.
(g) At such closing, simultaneously with the delivery of immediately
available funds as provided in subsection (f) of this Section 2, Issuer shall
deliver to the Holder a certificate or certificates representing the number of
shares of Common Stock purchased by the Holder and, if the Option should be
exercised in part only, a new Option evidencing the rights of the Holder thereof
to purchase the balance of the shares purchasable hereunder.
(h) Certificates for Common Stock delivered at a closing hereunder may be
endorsed with a restrictive legend that shall read substantially as follows:
"The transfer of the shares represented by this certificate is subject
to certain provisions of an agreement between the registered holder
hereof and Issuer and to resale restrictions arising under the
Securities Act of 1933, as amended. A copy of such agreement is on
file at the principal office of Issuer and will be provided to the
holder hereof without charge upon receipt by Issuer of a written
request therefor."
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<PAGE>
It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act of 1933, as amended (the "1933 Act") in the above legend
shall be removed by delivery of substitute certificate(s) without such reference
if the Holder shall have delivered to Issuer a copy of a letter from the staff
of the SEC, or an opinion of counsel, in form and substance reasonably
satisfactory to Issuer, to the effect that such legend is not required for
purposes of the 1933 Act; (ii) the reference to the provisions of this Agreement
in the above legend shall be removed by delivery of substitute certificate(s)
without such reference if the shares have been sold or transferred in compliance
with the provisions of this Agreement and under circumstances that do not
require the retention of such reference in the opinion of counsel to the Holder,
in form and substance reasonably satisfactory to the Issuer; and (iii) the
legend shall be removed in its entirety if the conditions in the preceding
clauses (i) and (ii) are both satisfied. In addition, such certificates shall
bear any other legend as may be required by law.
(i) Upon the giving by the Holder to Issuer of the written notice of
exercise of the Option provided for under subsection (e) of this Section 2 and
the tender of the applicable purchase price in immediately available funds, the
Holder shall be deemed, subject to the receipt of any necessary regulatory
approvals, to be the holder of record of the shares of Common Stock issuable
upon such exercise, notwithstanding that the stock transfer books of Issuer
shall then be closed or that certificates representing such shares of Common
Stock shall not then be actually delivered to the Holder. Issuer shall pay all
expenses, and any and all United States federal, state and local taxes and other
charges that may be payable in connection with the preparation, issue and
delivery of stock certificates under this Section 2 in the name of the Holder or
its assignee, transferee or designee.
3. Covenants of Issuer. Issuer agrees: (i) that it shall at all
-------------------
times maintain, free from preemptive rights, sufficient authorized but unissued
or treasury shares of Common Stock so that the Option may be exercised without
additional authorization of Common Stock after giving effect to all other
options, warrants, convertible securities and other rights to purchase Common
Stock; (ii) that it will not, by charter amendment or through reorganization,
consolidation, merger, dissolution or sale of assets, or by any other voluntary
act, avoid or seek to avoid the observance or performance of any of the
covenants, stipulations or conditions to be observed or performed hereunder by
Issuer; (iii) promptly to take all action as may from time to time be required
(including (x) complying with all applicable premerger notification, reporting
and waiting period requirements specified in 15 U.S.C. Section 18a and
regulations promulgated thereunder and (y) in the event, under the Bank Holding
Company Act of 1956, as amended (the "BHCA"), the Home Owners' Loan Act, as
amended (the "HOLA") or the Change in Bank Control Act of 1978, as amended, or
any state or other federal banking law, prior approval of or notice to the
Federal Reserve Board, the OTS or to any state or other federal regulatory
authority is necessary before the Option may be exercised, cooperating fully
with the Holder in preparing such applications or notices and providing such
information to the Federal Reserve Board, the OTS or such state or other federal
regulatory authority as they may require) in order to permit the Holder to
exercise the Option and Issuer duly and effectively to issue shares of Common
Stock pursuant hereto; and (iv) promptly to take all action provided herein to
protect the rights of the Holder against dilution.
-5-
<PAGE>
4. Exchange. This Agreement (and the Option granted hereby) are
--------
exchangeable, without expense, at the option of the Holder, upon presentation
and surrender of this Agreement at the principal office of Issuer, for other
Agreements providing for Options of different denominations entitling the holder
thereof to purchase, on the same terms and subject to the same conditions as are
set forth herein, in the aggregate the same number of shares of Common Stock
purchasable hereunder. The terms "Agreement" and "Option" as used herein include
any Agreements and related Options for which this Agreement (and the Option
granted hereby) may be exchanged. Upon receipt by Issuer of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this
Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like
tenor and date. Any such new Agreement executed and delivered shall constitute
an additional contractual obligation on the part of Issuer, whether or not the
Agreement so lost, stolen, destroyed or mutilated shall at any time be
enforceable by anyone.
5. Certain Adjustments. In addition to the adjustment in the number
-------------------
of shares of Common Stock that are purchasable upon exercise of the Option
pursuant to Section 1 of this Agreement but not in duplication thereof, the
number of shares of Common Stock purchasable upon the exercise of the Option and
the Option Price shall be subject to adjustment from time to time as provided in
this Section 5. In the event of any change in Common Stock by reason of a stock
dividend, stock split, split-up, merger, recapitalization, stock combination,
exchange of shares or similar transaction, the type and number of shares or
securities subject to the Option, and the Option Price therefor, shall be
adjusted appropriately, and proper provision shall be made in the agreements
governing such transaction so that Holder shall receive, upon exercise of the
Option, at the aggregate exercise price calculated in accordance with Section 1
of this Agreement, the number and class of shares or other securities or
property that Holder would have received in respect of Common Stock if the
Option had been exercised immediately prior to such event, or the record date
therefor, as applicable.
6. Registration Rights. Upon the occurrence of a Subsequent
-------------------
Triggering Event that occurs prior to an Exercise Termination Event, Issuer
shall, at the request of Grantee delivered within six (6) months (or such later
period as provided in Section 10) of such Subsequent Triggering Event (whether
on its own behalf or on behalf of any subsequent holder of this Option (or part
thereof) or any of the shares of Common Stock issued pursuant hereto), promptly
prepare, file and keep current a registration statement under the 1933 Act
covering any shares issued and issuable pursuant to this Option and shall use
its reasonable best efforts to cause such registration statement to become
effective and remain current in order to permit the sale or other disposition of
any shares of Common Stock issued upon total or partial exercise of this Option
("Option Shares") in accordance with any plan of disposition requested by
Grantee. Issuer will use its reasonable best efforts to cause such registration
statement promptly to become effective and then to remain effective for such
period not in excess of 180 days from the day such registration statement first
becomes effective or such shorter time as may be reasonably necessary to effect
such sales or other dispositions. Grantee shall have the right to demand two
such registrations. The Issuer shall bear the costs of such registrations
(including, but not limited to, Issuer's attorneys' fees, printing costs and
filing fees, except for underwriting discounts or commissions, brokers' fees and
the fees and disbursements of Grantee's counsel related thereto).
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<PAGE>
The foregoing notwithstanding, if, at the time of any request by Grantee for
registration of Option Shares as provided above, Issuer is in registration with
respect to an underwritten public offering by Issuer of shares of Common Stock,
and if in the good faith judgment of the managing underwriter or managing
underwriters, or, if none, the sole underwriter or underwriters, of such
offering the offer and sale of the Option Shares would interfere with the
successful marketing of the shares of Common Stock offered by Issuer, the number
of Option Shares otherwise to be covered in the registration statement
contemplated hereby may be reduced; provided, however, that after any such
required reduction the number of Option Shares to be included in such offering
for the account of the Holder shall constitute at least 33 1/3% of the total
number of shares to be sold by the Holder and Issuer in the aggregate; and
provided further, however, that if such reduction occurs, then Issuer shall file
a registration statement for the balance as promptly as practicable thereafter
as to which no reduction pursuant to this Section 6 shall be permitted or occur
and the Holder shall thereafter be entitled to one additional registration and
the six (6) month period referred to in the first sentence of this section shall
be increased to eighteen (18) months. Each such Holder shall provide all
information reasonably requested by Issuer for inclusion in any registration
statement to be filed hereunder. If requested by any such Holder in connection
with such registration, Issuer shall become a party to any underwriting
agreement relating to the sale of such shares, but only to the extent of
obligating itself in respect of representations, warranties, indemnities and
other agreements customarily included in such underwriting agreements for
Issuer. Upon receiving any request under this Section 6 from any Holder, Issuer
agrees to send a copy thereof to any other person known to Issuer to be entitled
to registration rights under this Section 6, in each case by promptly mailing
the same, postage prepaid, to the address of record of the persons entitled to
receive such copies. Notwithstanding anything to the contrary contained herein,
in no event shall the number of registrations that Issuer is obligated to effect
be increased by reason of the fact that there shall be more than one Holder as a
result of any assignment or division of this Agreement.
7. Repurchase. (a) At any time after the occurrence of a Repurchase
----------
Event (as defined below) (i) at the request of the Holder, delivered prior to an
Exercise Termination Event (or such later period as provided in Section 10),
Issuer (or any successor thereto) shall repurchase the Option from the Holder at
a price (the "Option Repurchase Price") equal to the amount by which (A) the
market/offer price (as defined below) exceeds (B) the Option Price, multiplied
by the number of shares for which this Option may then be exercised and (ii) at
the request of the owner of Option Shares from time to time (the "Owner"),
delivered prior to an Exercise Termination Event (or such later period as
provided in Section 10), Issuer (or any successor thereto) shall repurchase such
number of the Option Shares from the Owner as the Owner shall designate at a
price (the "Option Share Repurchase Price") equal to the market/offer price
multiplied by the number of Option Shares so designated. The term "market/offer
price" shall mean the highest of (i) the price per share of Common Stock at
which a tender or exchange offer therefor has been made, (ii) the price per
share of Common Stock to be paid by any third party pursuant to an agreement
with Issuer, (iii) the highest closing price for shares of Common Stock within
the six-month period immediately preceding the date the Holder gives notice of
the required repurchase of this Option or the Owner gives notice of the required
repurchase of Option Shares, as the case may be, or (iv) in the event of a sale
of all or any substantial part of Issuer's assets or deposits, the sum of the
net price paid in such sale for such assets or deposits and the current market
value of the remaining net assets of Issuer as determined by a nationally
-7-
<PAGE>
recognized investment banking firm selected by the Holder or the Owner, as the
case may be, and reasonably acceptable to Issuer, divided by the number of
shares of Common Stock of Issuer outstanding at the time of such sale. In
determining the market/offer price, the value of consideration other than cash
shall be determined by a nationally recognized investment banking firm selected
by the Holder or Owner, as the case may be, and reasonably acceptable to Issuer.
(b) The Holder and the Owner, as the case may be, may exercise its right
to require Issuer to repurchase the Option and any Option Shares pursuant to
this Section 7 by surrendering for such purpose to Issuer, at its principal
office, a copy of this Agreement or certificates for Option Shares, as
applicable, accompanied by a written notice or notices stating that the Holder
or the Owner, as the case may be, elects to require Issuer to repurchase this
Option and/or the Option Shares in accordance with the provisions of this
Section 7. The Owner shall also represent and warrant that it has sole record
and beneficial ownership of such Option Shares and that such Option Shares are
then free and clear of all liens. As promptly as practicable, and in any event
within five (5) business days after the surrender of the Option and/or
certificates representing Option Shares and the receipt of such notice or
notices relating thereto, Issuer shall deliver or cause to be delivered to the
Holder the Option Repurchase Price and/or to the Owner the Option Share
Repurchase Price therefor or the portion thereof that Issuer is not then
prohibited under applicable law and regulation from so delivering.
(c) To the extent that Issuer is prohibited under applicable law or
regulation, or as a consequence of administrative policy, from repurchasing the
Option and/or the Option Shares in full, Issuer shall immediately so notify the
Holder and/or the Owner and thereafter deliver or cause to be delivered, from
time to time, to the Holder and/or the Owner, as appropriate, the portion of the
Option Repurchase Price and the Option Share Repurchase Price, respectively,
that it is no longer prohibited from delivering, within five (5) business days
after the date on which Issuer is no longer so prohibited; provided, however,
that if Issuer at any time after delivery of a notice of repurchase pursuant to
paragraph (b) of this Section 7 is prohibited under applicable law or
regulation, or as a consequence of administrative policy, from delivering to the
Holder and/or the Owner, as appropriate, the Option Repurchase Price and the
Option Share Repurchase Price, respectively, in full (and Issuer hereby
undertakes to use its reasonable best efforts to obtain all required regulatory
and legal approvals and to file any required notices as promptly as practicable
in order to accomplish such repurchase), the Holder or Owner may revoke its
notice of repurchase of the Option and/or the Option Shares whether in whole or
to the extent of the prohibition, whereupon, in the latter case, Issuer shall
promptly (i) deliver to the Holder and/or the Owner, as appropriate, that
portion of the Option Repurchase Price and/or the Option Share Repurchase Price
that Issuer is not prohibited from delivering; and (ii) deliver, as appropriate,
either (A) to the Holder, a new Agreement evidencing the right of the Holder to
purchase that number of shares of Common Stock obtained by multiplying the
number of shares of Common Stock for which the surrendered Agreement was
exercisable at the time of delivery of the notice of repurchase by a fraction,
the numerator of which is the Option Repurchase Price less the portion thereof
theretofore delivered to the Holder and the denominator of which is the Option
Repurchase Price, and/or (B) to the Owner, a certificate for the Option Shares
it is then so prohibited from repurchasing. If an Exercise Termination Event
shall have occurred prior to the date of the notice by Issuer described in the
first sentence of this subsection (c), or shall be scheduled to occur at any
time before the expiration of a period ending on the thirtieth day after
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<PAGE>
such date, the Holder shall nonetheless have the right to exercise the Option
until the expiration of such 30-day period.
(d) For purposes of this Section 7, a "Repurchase Event" shall be
deemed to have occurred upon the occurrence of any of the following events or
transactions after the date hereof:
(i) the acquisition by any person (other than Grantee or any
Grantee Subsidiary) of beneficial ownership of 50% or more of the then
outstanding Common Stock; or
(ii) the consummation of any Acquisition Transaction described in
Section 2(b)(i) hereof, except that the percentage referred to in clause
(z) shall be 25%.
8. Substitute Option. (a) In the event that prior to an Exercise
Termination Event, Issuer shall enter into an agreement (i) to consolidate with
or merge into any person, other than Grantee or a Grantee Subsidiary, or engage
in a plan of exchange with any person, other than Grantee or a Grantee
Subsidiary and Issuer shall not be the continuing or surviving corporation of
such consolidation or merger or the acquirer in such plan of exchange, (ii) to
permit any person, other than Grantee or a Grantee Subsidiary, to merge into
Issuer or be acquired by Issuer in a plan of exchange and Issuer shall be the
continuing or surviving or acquiring corporation, but, in connection with such
merger or plan of exchange, the then outstanding shares of Common Stock shall be
changed into or exchanged for stock or other securities of any other person or
cash or any other property or the then outstanding shares of Common Stock shall
after such merger or plan of exchange represent less than 50% of the outstanding
shares and share equivalents of the merged or acquiring company, or (iii) to
sell or otherwise transfer all or a substantial part of its or any Issuer
Subsidiary's assets or deposits to any person, other than Grantee or a Grantee
Subsidiary, then, and in each such case, the agreement governing such
transaction shall make proper provision so that the Option shall, upon the
consummation of any such transaction and upon the terms and conditions set forth
herein, be converted into, or exchanged for, an option (the "Substitute
Option"), at the election of the Holder, of either (x) the Acquiring Corporation
(as hereinafter defined) or (y) any person that controls the Acquiring
Corporation.
(b) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (i) the continuing or
surviving person of a consolidation or merger with Issuer (if other than
Issuer), (ii) the acquiring person in a plan of exchange in which Issuer is
acquired, (iii) the Issuer in a merger or plan of exchange in which Issuer
is the continuing or surviving or acquiring person and (iv) the transferee
of all or a substantial part of Issuer's assets or deposits (or the assets
or deposits of any Issuer Subsidiary).
(ii) "Substitute Common Stock" shall mean the shares of capital
stock (or similar equity interest) with the greatest voting power with
respect to the election of directors of the issuer of the Substitute
Option.
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<PAGE>
(iii) "Assigned Value" shall mean the market/offer price, as defined
in Section 7.
(iv) "Average Price" shall mean the average closing price of a share
of the Substitute Common Stock for one (1) year immediately preceding the
consolidation, merger or sale in question, but in no event higher than the
closing price of the shares of Substitute Common Stock on the day preceding
such consolidation, merger or sale; provided that if Issuer is the issuer
of the Substitute Option, the Average Price shall be computed with respect
to a share of common stock issued by the person merging into Issuer or by
any company which controls or is controlled by such person, as the Holder
may elect.
(c) The Substitute Option shall have the same terms as the Option,
provided that if the terms of the Substitute Option cannot, for legal reasons,
be the same as the Option, such terms shall be as similar as possible and in no
event less advantageous to the Holder. The issuer of the Substitute Option shall
also enter into an agreement with the then Holder or Holders of the Substitute
Option in substantially the same form as this Agreement (after giving effect for
such purpose to the provisions of Section 9), which agreement shall be
applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such number of shares
of Substitute Common Stock as is equal to the Assigned Value multiplied by the
number of shares of Common Stock for which the Option was exercisable
immediately prior to the event described in the first sentence of Section 8(a),
divided by the Average Price. The exercise price of the Substitute Option per
share of Substitute Common Stock shall then be equal to the Option Price
multiplied by a fraction, the numerator of which shall be the number of shares
of Common Stock for which the Option was exercisable immediately prior to the
event described in the first sentence of Section 8(a) and the denominator of
which shall be the number of shares of Substitute Common Stock for which the
Substitute Option is exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs, shall the
Substitute Option be exercisable for more than 19.9% of the shares of Substitute
Common Stock outstanding prior to exercise of the Substitute Option. In the
event that the Substitute Option would be exercisable for more than 19.9% of the
shares of Substitute Common Stock outstanding prior to exercise but for this
clause (e), the issuer of the Substitute Option (the "Substitute Option Issuer")
shall make a cash payment to Holder equal to the excess of (i) the value of the
Substitute Option without giving effect to the limitation in this clause (e)
over (ii) the value of the Substitute Option after giving effect to the
limitation in this clause (e). This difference in value shall be determined by a
nationally recognized investment banking firm selected by a majority in interest
of the Holders.
(f) Issuer shall not enter into any transaction described in
subsection (a) of this Section 8 unless the Acquiring Corporation and any person
that controls the Acquiring Corporation assume in writing all the obligations of
Issuer hereunder.
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<PAGE>
9. Repurchase of Substitute Option. (a) At the request of the holder
-------------------------------
of the Substitute Option (the "Substitute Option Holder"), the Substitute Option
Issuer shall repurchase the Substitute Option from the Substitute Option Holder
at a price (the "Substitute Option Repurchase Price") equal to the amount by
which (i) the Highest Closing Price (as hereinafter defined) exceeds (ii) the
exercise price of the Substitute Option, multiplied by the number of shares of
Substitute Common Stock for which the Substitute Option may then be exercised,
and at the request of the owner (the "Substitute Share Owner") of shares of
Substitute Common Stock (the "Substitute Shares"), the Substitute Option Issuer
shall repurchase the Substitute Shares at a price (the "Substitute Share
Repurchase Price") equal to the Highest Closing Price multiplied by the number
of Substitute Shares so designated. The term "Highest Closing Price" shall mean
the highest closing price for shares of Substitute Common Stock within the six-
month period immediately preceding the date the Substitute Option Holder gives
notice of the required repurchase of the Substitute Option or the Substitute
Share Owner gives notice of the required repurchase of the Substitute Shares, as
applicable.
(b) The Substitute Option Holder and the Substitute Share Owner, as the
case may be, may exercise its respective rights to require the Substitute Option
Issuer to repurchase the Substitute Option and the Substitute Shares pursuant to
this Section 9 by surrendering for such purpose to the Substitute Option Issuer,
at its principal office, the agreement for such Substitute Option (or, in the
absence of such an agreement, a copy of this Agreement) and/or certificates for
Substitute Shares accompanied by a written notice or notices stating that the
Substitute Option Holder or the Substitute Share Owner, as the case may be,
elects to require the Substitute Option Issuer to repurchase the Substitute
Option and/or the Substitute Shares in accordance with the provisions of this
Section 9. As promptly as practicable and in any event within five (5) business
days after the surrender of the Substitute Option and/or certificates
representing Substitute Shares and the receipt of such notice or notices
relating thereto, the Substitute Option Issuer shall deliver or cause to be
delivered to the Substitute Option Holder the Substitute Option Repurchase Price
and/or to the Substitute Share Owner the Substitute Share Repurchase Price
therefor or the portion thereof which the Substitute Option Issuer is not then
prohibited under applicable law and regulation from so delivering.
(c) To the extent that the Substitute Option Issuer is prohibited under
applicable law or regulation, or as a consequence of administrative policy, from
repurchasing the Substitute Option and/ or the Substitute Shares in part or in
full, the Substitute Option Issuer shall immediately so notify the Substitute
Option Holder and/or the Substitute Share Owner and thereafter deliver or cause
to be delivered, from time to time, to the Substitute Option Holder and/or the
Substitute Share Owner, as appropriate, the portion of the Substitute Option
Repurchase Price and/or the Substitute Share Repurchase Price, respectively,
which it is no longer prohibited from delivering, within five (5) business days
after the date on which the Substitute Option Issuer is no longer so prohibited;
provided, however, that if the Substitute Option Issuer is at any time after
delivery of a notice of repurchase pursuant to subsection (b) of this Section 9
prohibited under applicable law or regulation, or as a consequence of
administrative policy, from delivering to the Substitute Option Holder and/or
the Substitute Share Owner, as appropriate, the Substitute Option Repurchase
Price and the Substitute Share Repurchase Price, respectively, in full (and the
Substitute Option Issuer shall use its reasonable best efforts to receive all
required regulatory and legal approvals as promptly as practicable in
-11-
<PAGE>
order to accomplish such repurchase), the Substitute Option Holder and/or
Substitute Share Owner may revoke its notice of repurchase of the Substitute
Option or the Substitute Shares either in whole or to the extent of prohibition,
whereupon, in the latter case, the Substitute Option Issuer shall promptly (i)
deliver to the Substitute Option Holder or Substitute Share Owner, as
appropriate, that portion of the Substitute Option Repurchase Price or the
Substitute Share Repurchase Price that the Substitute Option Issuer is not
prohibited from delivering; and (ii) deliver, as appropriate, either (A) to the
Substitute Option Holder, a new Substitute Option evidencing the right of the
Substitute Option Holder to purchase that number of shares of the Substitute
Common Stock obtained by multiplying the number of shares of the Substitute
Common Stock for which the surrendered Substitute Option was exercisable at the
time of delivery of the notice of repurchase by a fraction, the numerator of
which is the Substitute Option Repurchase Price less the portion thereof
theretofore delivered to the Substitute Option Holder and the denominator of
which is the Substitute Option Repurchase Price, and/or (B) to the Substitute
Share Owner, a certificate for the Substitute Option Shares it is then so
prohibited from repurchasing. If an Exercise Termination Event shall have
occurred prior to the date of the notice by the Substitute Option Issuer
described in the first sentence of this subsection (c), or shall be scheduled to
occur at any time before the expiration of a period ending on the thirtieth day
after such date, the Substitute Option Holder shall nevertheless have the right
to exercise the Substitute Option until the expiration of such 30-day period.
10. Extension of Periods Under Certain Circumstances. The periods for
------------------------------------------------
exercise of certain rights under Sections 2, 6, 7, 9 and 14 shall be extended:
(i) to the extent necessary to obtain all regulatory approvals for the exercise
of such rights (for so long as the Holder, Owner, Substitute Option Holder or
Substitute Share Owner, as the case may be, is using commercially reasonable
efforts to obtain such regulatory approvals), and for the expiration of all
statutory waiting periods; (ii) to the extent necessary to avoid liability under
Section 16(b) of the 1934 Act by reason of such exercise; and (iii) when there
exists an injunction, order or judgment that prohibits or delays exercise of
such right.
11. Representations and Warranties. (a) Issuer hereby represents and
------------------------------
warrants to Grantee as follows:
(i) Issuer has the requisite corporate power and authority to
execute and deliver this Agreement and, subject to any required regulatory
notices or approvals, to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by
the Issuer Board prior to the date hereof and no other corporate
proceedings on the part of Issuer are necessary to authorize this Agreement
or to consummate the transactions so contemplated. This Agreement has been
duly and validly executed and delivered by Issuer.
(ii) Issuer has taken all necessary corporate action to authorize
and reserve and to permit it to issue, and at all times from the date
hereof through the termination of this Agreement in accordance with its
terms will have reserved for issuance upon the exercise of the Option, that
number of shares of Common Stock equal to the maximum number of shares of
Common Stock at any time and from time to time issuable
-12-
<PAGE>
hereunder, and all such shares, upon issuance pursuant thereto, will be
duly authorized, validly issued, fully paid, nonassessable, and will be
delivered free and clear of all claims, liens, encumbrances and security
interests and not subject to any preemptive rights.
(iii) The execution, delivery and subject to any required regulatory
notices or approvals, performance of this Agreement does not or will not,
and the consummation by Issuer of any of the transactions contemplated
hereby will not, constitute or result in (a) a breach or violation of, or a
default under, its certificate of incorporation or bylaws, or the
comparable governing instruments of any of its subsidiaries, or (b) a
breach or violation of, or a default under, any agreement, lease, contract,
note, mortgage, indenture, arrangement or other obligation of it or any of
its subsidiaries (with or without the giving of notice, the lapse of time
or both) or under any law, rule, ordinance or regulation or judgment,
decree, order, award or governmental or nongovernmental permit or license
to which it or any of its subsidiaries is subject, that would, in any case
referred to in this clause (b), give any other person the ability to
prevent or enjoin Issuer's performance under this Agreement in any material
respect.
(b) Grantee hereby represents and warrants to Issuer as follows: Grantee
has the requisite corporate power and authority to execute and deliver this
Agreement and, subject to any required regulatory notices or approvals, to
perform its obligations hereunder. The execution and delivery of this Agreement
by the Grantee and the performance of its obligations hereunder by the Grantee
have been duly and validly authorized by the Board of Directors of Grantee and
no other corporate proceedings on the part of the Grantee are necessary to
authorize this Agreement or for Grantee to perform its obligations hereunder.
This Agreement has been duly and validly executed and delivered by Grantee.
(c) This Option is not being, and any Option Shares or other securities
acquired by Grantee upon exercise of the Option will not be, acquired with a
view to the public distribution thereof and will not be transferred or otherwise
disposed of except in a transaction registered or exempt from registration under
the 1933 Act.
12. Assignment. Neither of the parties hereto may assign any of its
----------
rights or obligations under this Agreement or the Option created hereunder to
any other person, without the express written consent of the other party, except
that in the event a Subsequent Triggering Event shall have occurred prior to an
Exercise Termination Event, Grantee, subject to the express provisions hereof,
may assign in whole or in part its rights and obligations hereunder; provided,
however, that until the date fifteen (15) days following the date on which the
OTS, as the case may be, has approved an application by Grantee to acquire the
shares of Common Stock subject to the Option, Grantee may not assign its rights
under the Option except in (i) a widely dispersed public distribution, (ii) a
private placement in which no one party acquires the right to purchase in excess
of 2% of the voting shares of Issuer, (iii) an assignment to a single party
(e.g., a broker or investment banker) for the purpose of conducting a widely
dispersed public distribution on Grantee's behalf or (iv) any other manner
approved by the OTS.
-13-
<PAGE>
13. Filings, Etc. Each of Grantee and Issuer will use its reasonable
------------
best efforts to make all filings with, and to obtain consents of, all third
parties and governmental authorities necessary to the consummation of the
transactions contemplated by this Agreement, including, without limitation,
applying to the OTS under the HOLA for approval to acquire the shares issuable
hereunder.
14. Surrender of Option. (a) Grantee may, at any time following a
-------------------
Repurchase Event and prior to the occurrence of an Exercise Termination Event
(or such later period as provided in Section 10), relinquish the Option
(together with any Option Shares issued to and then owned by Grantee) to Issuer
in exchange for a cash fee equal to the Surrender Price. The "Surrender Price"
shall be equal to $3.5 million (i) plus, if applicable, Grantee's purchase price
with respect to any Option Shares and (ii) minus, if applicable, the excess of
(A) the net price, if any, received by Grantee or a Grantee Subsidiary pursuant
to the sale of Option Shares (or any other securities into which such Option
Shares were converted or exchanged) to any unaffiliated party, over (B)
Grantee's purchase price of such Option Shares.
(b) Grantee may exercise its right to relinquish the Option and any
Option Shares pursuant to this Section 14 by surrendering to Issuer, at its
principal office, a copy of this Agreement together with certificates for Option
Shares, if any, accompanied by a written notice stating (i) that Grantee elects
to relinquish the Option and Option Shares, if any, in accordance with the
provisions of this Section 14 and (ii) the Surrender Price. The Surrender Price
shall be payable in immediately available funds on or before the second business
day following receipt of such notice by Issuer.
(c) To the extent that Issuer is prohibited under applicable law or
regulation, or as a consequence of administrative policy, from paying the
Surrender Price to Grantee in full, Issuer shall immediately so notify Grantee
and thereafter deliver or cause to be delivered, from time to time, to Grantee,
the portion of the Surrender Price that it is no longer prohibited from paying,
within five (5) business days after the date on which Issuer is no longer so
prohibited; provided, however, that if Issuer at any time after delivery of a
notice of surrender pursuant to paragraph (b) of this Section 14 is prohibited
under applicable law or regulation, or as a consequence of administrative
policy, from paying to Grantee the Surrender Price in full, (i) Issuer shall (A)
use its reasonable best efforts to obtain all required regulatory and legal
approvals and to file any required notices as promptly as practicable in order
to make such payments, (B) within five (5) days of the submission or receipt of
any documents relating to any such regulatory and legal approvals, provide
Grantee with copies of the same and (C) keep Grantee advised of both the status
of any such request for regulatory and legal approvals, as well as any
discussions with any relevant regulatory or other third party reasonably related
to the same and (ii) Grantee may revoke such notice of surrender by delivery of
a notice of revocation to Issuer and, upon delivery of such notice of
revocation, the Exercise Termination Date shall be extended to a date six (6)
months from the date on which the Exercise Termination Date would have occurred
if not for the provisions of this Section 14(c) (during which period Grantee may
exercise any of its rights hereunder, including any and all rights pursuant to
this Section 14).
15. Specific Performance. The parties hereto acknowledge that damages
--------------------
would be an inadequate remedy for a breach of this Agreement by either party
hereto and that the obligations
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<PAGE>
of the parties hereto shall be enforceable by either party hereto through
injunctive or other equitable relief. In connection therewith, both parties
waive the posting of any bond or similar requirement.
16. Severability. If any term, provision, covenant or restriction
------------
contained in this Agreement is held by a court or a federal or state regulatory
agency of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, provisions and covenants and restrictions contained in
this Agreement shall remain in full force and effect, and shall in no way be
affected, impaired or invalidated. If for any reason such court or regulatory
agency determines that the Holder is not permitted to acquire, or Issuer is not
permitted to repurchase pursuant to Section 7, the full number of shares of
Common Stock provided in Section l(a) hereof (as adjusted pursuant to Section
l(b) or Section 5 hereof), it is the express intention of Issuer to allow the
Holder to acquire or to require Issuer to repurchase such lesser number of
shares as may be permissible, without any amendment or modification hereof.
17. Notices. All notices, requests, claims, demands and other
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communications hereunder shall be deemed to have been duly given when delivered
in person, by fax, telecopy, or by registered or certified mail (postage
prepaid, return receipt requested) at the respective addresses of the parties
set forth in the Merger Agreement.
18. Governing Law. This Agreement shall be governed by and construed in
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accordance with the laws of the State of Delaware without regard to any
applicable conflicts of law.
19. Counterparts. This Agreement may be executed in two or more
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counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
20. Expenses. Except as otherwise expressly provided herein, each of the
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parties hereto shall bear and pay all costs and expenses incurred by it or on
its behalf in connection with the transactions contemplated hereunder, including
fees and expenses of its own financial consultants, investment bankers,
accountants and counsel.
21. Entire Agreement; Third-Party Rights. Except as otherwise expressly
------------------------------------
provided herein or in the Merger Agreement, this Agreement contains the entire
agreement between the parties with respect to the transactions contemplated
hereunder and supersedes all prior arrangements or understandings with respect
thereof, written or oral. The terms and conditions of this Agreement shall inure
to the benefit of and be binding upon the parties hereto and their respective
successors and permitted assignees. Nothing in this Agreement, expressed or
implied, is intended to confer upon any party, other than the parties hereto,
and their respective successors except as assignees, any rights, remedies,
obligations or liabilities under or by reason of this Agreement, except as
expressly provided herein.
22. Capitalized Terms. Capitalized terms used in this Agreement and not
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defined herein shall have the meanings assigned thereto in the Merger
Agreement.
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<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be executed
on its behalf by its officers thereunto duly authorized, all as of the date
first above written.
FIRST PLACE FINANCIAL CORP.
/s/ Steven R. Lewis
By:_________________________________
Name: Steven R. Lewis
Title: President and Chief Executive Officer
FFY FINANCIAL CORP.
/s/ Jeffrey L. Francis
By:_________________________________
Name: Jeffrey L. Francis
Title: President and Chief Executive Officer
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