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): June 14, 1996
SEVEN HILLS FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
OHIO
(State or other jurisdiction of incorporation)
0-23060 31-1388412
(Commission File No.) (IRS Employer I.D. No.)
1440 Main Street, Cincinnati, Ohio 45210
(Address of principal executive offices) (Zip Code)
(513) 621-9143
(Registrant's telephone number, including area code)
<PAGE>
Item 5. Other Events.
On June 14, 1996, Seven Hills Financial Corporation ("SHFC") and
its wholly owned subsidiary, Seven Hills Savings Association, executed an
agreement with Western Ohio Financial Corporation ("WOFC") for the merger of
SHFC into WOFC. The Agreement and Plan of Merger and Reorganization (the
"Agreement") is attached hereto and incorporated herein by reference. The
consummation of the transactions contemplated by the Agreement is subject to
regulatory and shareholder approvals and various other conditions set forth in
the Agreement.
Item 7. Financial Statements and Exhibits.
The following exhibit is filed as part of this report:
(c) Exhibits.
Exhibit 99.1 Agreement and Plan of Merger
and Reorganization
2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SEVEN HILLS FINANCIAL CORPORATION
Arthur W. Wendel, Jr.
President
Date: June 17, 1996
-3-
EXHIBIT 99.1
---------------------------------
AGREEMENT AND PLAN OF REORGANIZATION
by and among
SEVEN HILLS FINANCIAL CORPORATION
SEVEN HILLS SAVINGS ASSOCIATION
and
WESTERN OHIO FINANCIAL CORPORATION
---------------------------------
---------------------
June 14, 1996
--------------------
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE ONE - TERMS OF THE MERGER AND CLOSING
Section 1.01 Formation of Acquisition Subsidiary............ 2
Section 1.02 Merger; Surviving Corporation.................. 2
Section 1.03 Effective Time of the Merger................... 2
Section 1.04 Company Merger................................. 3
Section 1.05 Closing........................................ 7
Section 1.06 Actions At Closing............................. 7
ARTICLE TWO - REPRESENTATIONS AND WARRANTIES OF SHFC AND THE ASSOCIATION
Section 2.01 Organization and Capital Stock................. 9
Section 2.02 Authorization; No Defaults..................... 10
Section 2.03 No Subsidiaries; Equity Interests.............. 11
Section 2.04 Financial Information.......................... 12
Section 2.05 Absence of Changes............................. 12
Section 2.06 Regulatory Enforcement Matters................. 13
Section 2.07 Tax Matters.................................... 13
Section 2.08 Litigation..................................... 14
Section 2.09 Employment and Severance Agreements............ 14
Section 2.10 Reports........................................ 14
Section 2.11 Investment Portfolio........................... 15
Section 2.12 Loan Portfolio................................. 15
Section 2.13 Employee Matters and ERISA..................... 15
Section 2.14 Title to Properties; Insurance;
Personal Property............................ 16
Section 2.15 Environmental Matters.......................... 18
Section 2.16 Compliance with Laws........................... 19
Section 2.17 Brokerage...................................... 19
Section 2.18 Undisclosed Liabilities........................ 19
Section 2.19 Statements True and Correct.................... 20
Section 2.20 Material Contracts............................. 20
Section 2.21 No Sensitive Transactions...................... 21
Section 2.22 Certain Payments............................... 21
ARTICLE THREE - REPRESENTATIONS AND WARRANTIES OF ACQUIROR
Section 3.01 Organization and Capital Stock................. 22
Section 3.02 Authorization.................................. 22
Section 3.03 Subsidiaries................................... 24
Section 3.04 Financial Information.......................... 24
Section 3.05 Absence of Changes............................. 24
Section 3.06 Litigation..................................... 24
Section 3.07 Reports........................................ 24
Section 3.08 Compliance With Laws........................... 25
Section 3.09 Statements True and Correct.................... 25
Section 3.10 Undisclosed Liabilities........................ 25
Section 3.11 Regulatory Enforcement Matters................. 25
Section 3.12 Tax Matters.................................... 26
Section 3.13 Investment Portfolio........................... 26
Section 3.14 Stock Ownership................................ 26
Section 3.15 Availability of Funds.......................... 26
ARTICLE FOUR - AGREEMENTS OF SHFC AND THE ASSOCIATION
Section 4.01 Business in Ordinary Course.................... 27
Section 4.02 Breaches....................................... 30
Section 4.03 Submission to Shareholders..................... 31
Section 4.04 Consents to Contracts and Leases............... 31
Section 4.05 Conforming Accounting and Reserve
Policies; Restructuring Expenses............. 31
Section 4.06 Consummation of Agreement...................... 32
Section 4.07 Access to Information.......................... 32
Section 4.08 Subsequent Disclosure Schedule................. 32
Section 4.09 Unallocated Recognition and Retention
Plan Shares.................................. 33
Section 4.10 Delivery of Reports............................ 33
Section 4.11 Report of Funds Received from ODGF............. 33
Section 4.12 Amendment of Association Articles of
Incorporation................................ 33
ARTICLE FIVE - AGREEMENTS OF ACQUIROR
Section 5.01 Regulatory Approvals and Proxy Statement....... 33
Section 5.02 Breach......................................... 33
Section 5.03 Consummation of Agreement...................... 34
Section 5.04 Directors and Officers' Liability Insurance
and Indemnification.......................... 34
Section 5.05 Employee Benefit and Related Matters........... 34
Section 5.06 The Association's Employee Stock
Ownership Plan............................... 35
Section 5.07 Board of Directors of the Association.......... 35
Section 5.08 Managing Officer of the Association............ 36
Section 5.09 Shareholder Approval for Conversion of
SHFC Stock Options........................... 36
Section 5.10 Delivery of Reports............................ 36
Section 5.11 Distribution of RRP Proceeds................... 36
ARTICLE SIX - CONDITIONS PRECEDENT TO THE MERGER
Section 6.01 Conditions to Acquiror's Obligations........... 36
Section 6.02 Conditions to SHFC's Obligations............... 38
ARTICLE SEVEN - TERMINATION OR ABANDONMENT
Section 7.01 Mutual Agreement............................... 38
Section 7.02 Breach of Agreement............................ 38
Section 7.03 Failure of Conditions.......................... 39
Section 7.04 Denial of Regulatory Approval.................. 29
Section 7.05 Failure of Stockholders to Adopt............... 39
Section 7.06 Regulatory Enforcement Matters................. 39
Section 7.07 Automatic Termination.......................... 40
Section 7.08 Termination Fee................................ 40
ARTICLE EIGHT - GENERAL
Section 8.01 Confidential Information....................... 40
Section 8.02 Publicity...................................... 41
Section 8.03 Return of Documents............................ 41
Section 8.04 Notice......................................... 41
Section 8.05 Liabilities.................................... 42
Section 8.06 Expenses....................................... 42
Section 8.07 Nonsurvival of Representations
and Warranties............................... 42
Section 8.08 Entire Agreement............................... 42
Section 8.09 Headings and Captions.......................... 42
Section 8.10 Waiver, Amendment or Modification.............. 42
Section 8.11 Rules of Construction.......................... 43
Section 8.12 Counterparts................................... 43
Section 8.13 Successors and Assigns......................... 43
Section 8.14 Governing Law; Assignment...................... 43
Section 8.15 Specific Performance and Injunctive Relief..... 43
SIGNATURES
EXHIBIT A Shareholder Agreement
EXHIBIT B Optionholder Agreement
EXHIBIT C Plan of Merger
EXHIBIT D Plan of Subsidiary Merger
EXHIBIT E SHFC and Target Association's Legal Opinion
EXHIBIT F Acquiror's Legal Opinion
EXHIBIT G Directors of Target Association
EXHIBIT H Director Emeritus of Target Association
<PAGE>
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
THIS AGREEMENT AND PLAN OF MERGER AND REORGANIZATION (this "Agreement"),
dated June 14, 1996, is by and among Western Ohio Financial Corporation, a
Delaware corporation ("Acquiror"); Seven Hills Financial Corporation, an Ohio
corporation ("SHFC"); and Seven Hills Savings Association, an Ohio savings and
loan association and a wholly owned subsidiary of SHFC (the "Association").
A. Acquiror, SHFC and the Association wish to provide for the terms and
conditions of the following described business transaction in which an
inactive transitory subsidiary to be formed by Acquiror and incorporated under
the laws of the State of Ohio ("Acquisition Subsidiary") will be merged with
and into SHFC and the separate existence of Acquisition Subsidiary shall cease
("Company Merger"), SHFC will be merged with and into Acquiror and the
separate existence of SHFC shall cease ("Subsidiary Merger") and, as a result
of the Company Merger and the Subsidiary Merger, the Association will become a
wholly owned subsidiary of Acquiror. The Company Merger and the Subsidiary
Merger are collectively referred to as the "Merger."
B. For federal income tax purposes, it is intended that the Company
Merger be deemed a stock purchase of all of the outstanding capital stock of
SHFC by Acquiror and the Subsidiary Merger shall qualify as a tax-free
liquidation under Section 332 and Section 337 of the Internal Revenue Code of
1986, as amended (the "Code").
C. For accounting purposes, it is intended that the Merger shall be
accounted for as a purchase.
D. The parties hereto desire to make certain representations, warranties,
covenants and agreements in connection with the Merger and also to prescribe
various conditions to the Merger.
E. Concurrently with the execution and delivery of this Agreement, and as
a condition and material inducement to Acquiror's willingness to enter into
this Agreement, each of the directors of SHFC has entered into a shareholder
agreement (each a "Shareholder Agreement") in the form attached hereto as
Exhibit A.
F. Concurrently with the execution and delivery of the Agreement, and as
a condition and material inducement to Acquiror's willingness to enter into
this Agreement, each holder of an SHFC option (as defined in Section
1.04(d)(i) hereof) has executed an agreement not to exercise his or her SHFC
Options prior to the Effective Time (as hereinafter defined) and during the
time period described in Section I .04(d)(iv) hereof (each, an "Optionholder
Agreement") in the form attached hereto as Exhibit B.
Accordingly, and in consideration of the representations, warranties,
covenants, agreements and conditions herein contained, the parties hereto
agree as follows:
<PAGE>
ARTICLE ONE
TERMS OF THE MERGER AND CLOSING
Section 1.01. Formation of Acquisition Subsidiary. Acquiror shall
organize Acquisition Subsidiary, an Ohio corporation, as a wholly-owned
subsidiary of Acquiror and shall cause Acquisition Subsidiary to fulfill the
obligations of Acquisition Subsidiary under this Agreement.
Section 1.02. Merger; Surviving Corporation. Subject to the terms and
conditions of this Agreement, and pursuant to the provisions of the Ohio
General Corporation Law ("OGCL"), the Delaware General Corporation Law
("DGCL"), the Home Owners' Loan Act ("HOLA") and the rules and regulations
promulgated thereunder (the "Thrift Regulations"), and Chapter 1151 of Title
II of the Ohio Revised Code, the following shall occur:
(a) At the Effective Time, Acquisition Subsidiary shall be
merged with and into SHFC pursuant to the terms and conditions set
forth herein and pursuant to a Plan of Merger attached hereto as
Exhibit C ("Plan of Merger") which shall be executed by Acquiror,
SHFC and Acquisition Subsidiary at least two (2) days prior to the
Effective Time. Upon consummation of the Company Merger, the separate
existence of Acquisition Subsidiary shall cease and SHFC shall
continue as the surviving corporation. The name of SHFC, as the
surviving corporation, shall by virtue of the Company Merger remain
"Seven Hills Financial Corporation." From and after the consummation
of the Company Merger, SHFC, as the surviving corporation, shall
possess all assets and property of every description, and every
interest in the assets and property, wherever located, and the
rights, privileges, immunities, powers, franchises and authority, of
a public as well as a private nature, of SHFC and Acquisition
Subsidiary, and all obligations belonging or due to each of them.
(b) Upon consummation of the Company Merger as set forth in
(a), above, SHFC will be merged with and into Acquiror in accordance
with applicable state law pursuant to a Plan of Merger, attached
hereto as Exhibit D ("Plan of Subsidiary Merger"), which shall be
executed by the parties thereto immediately after the completion of
the Company Merger. Upon completion of the Subsidiary Merger, the
separate existence of SHFC shall cease and Acquiror shall continue as
the surviving corporation. The name of Acquiror, as the surviving
corporation, shall by virtue of the Subsidiary Merger remain "Western
Ohio Financial Corporation." From and after the Subsidiary Merger,
Acquiror, as the surviving corporation, shall possess all assets and
property of every description, and every interest in the assets and
property, wherever located, and the rights, privileges, immunities,
powers, franchises and authority, of a public as well as a private
nature, of SHFC and Acquiror, and all obligations belonging or due to
each of them.
Section 1.03. Effective Time of the Merger. As soon as practicable
after each of the conditions set forth in Article Six hereof have been
satisfied or waived, SHFC and Acquisition Subsidiary will file or cause to be
filed a certificate of merger with the Secretary of State of the State of Ohio
for the Company Merger, and Acquiror and SHFC will file or cause to be filed
certificates of merger with the Secretaries of State of the States of Delaware
and Ohio for the Subsidiary Merger, which certificates of merger shall in each
case be in the form required by and executed in accordance with the applicable
provisions of the OGCL and the DGCL. The Company Merger and the Subsidiary
Merger shall each become effective at the time specified in the respective
certificate of merger for such merger as filed with the Secretaries of State
of the appropriate states (the "Effective Time"). The parties shall cause the
Company Merger to become effective prior to the Subsidiary Merger.
Section 1.04. Company Merger.
(a) (i) Each common share of SHFC, no par value (the "SHFC Common"),
issued and outstanding immediately prior to the Effective Time
(except for Dissenting Shares, as defined in Section 1.04(b) below)
shall, by virtue of the Company Merger and without any action on the
part of the holder thereof be converted to a right to receive in cash
from Acquiror the sum of the following subparagraphs (A) and (B)
(hereinafter referred to as the "Per Share Merger Consideration"):
(A) Nineteen Dollars and Sixty-Five cents ($19.65); plus
(B) The quotient of
(I) The difference between (x) the amount(s)
actually received from the liquidation and
winding up of the Ohio Deposit Guarantee
Fund ("ODGF") between the date of the
Agreement and the Effective Time, less (y)
the out-of-pocket expenses and estimated
federal and state income tax liabilities
attributable to such amount(s), as set
forth in the statement referred to in
Section 4.11; divided by
(II) Five hundred eighty-three thousand seven
hundred sixty-three (583,763).
The holders of certificates representing shares of
SHFC Common shall cease to have any rights as shareholders of SHFC,
except such rights, if any, as they may have pursuant to the OGCL.
Except as provided below with respect to Dissenting Shares, until
certificates representing shares of SHFC Common are surrendered for
exchange, each such certificate shall, after the Effective Time,
represent for all purposes only the right to receive the Per Share
Merger Consideration for the number of shares represented by such
certificate.
(ii) Each share of Acquisition Subsidiary capital stock
issued and outstanding or held in treasury immediately prior to the
Effective Time shall be and constitute the issued and outstanding
shares of SHFC Common at the Effective Time.
(b) Dissenting Shares. Any shares of SHFC Common held by a holder who
dissents from the Company Merger and who pursues and perfects the rights of a
dissenter in accordance with Section 1701.85 of the OGCL shall be herein
called "Dissenting Shares." Notwithstanding ally other provision of this
Agreement, any Dissenting Shared shall not, after the Effective Time of the
Company Merger, be entitled to vote for any purpose or receive any dividends
or other distributions and shall be entitled only to such rights as are
afforded in respect of Dissenting Shares pursuant to the OGCL. If, after the
Effective Time, such holder's rights shall terminate in accordance with
Section 1701.85(D) of the OGCL, such shares of SHFC Common shall be treated as
if they had been converted as of the Effective Time into a right to receive
the Per Share Merger Consideration.
(c) Exchange of SHFC Common
(i) As soon as practicable after the Effective Time of the
Company Merger, holders of record of certificates formerly
representing shares of SHFC Common (the "Certificates") shall be
instructed by Acquiror to tender such Certificates to Acquiror, or,
at the election of Acquiror, to an exchange agent designated by
Acquiror (the "Exchange Agent"), pursuant to a letter of transmittal
that Acquiror shall deliver or cause to be delivered to such holders.
Such letters of transmittal shall specify that risk of loss and title
to Certificates shall pass only upon delivery of such Certificates as
specified in the letter of transmittal.
(ii) After the Effective Time of the Company Merger, each
holder of a Certificate that surrenders such Certificate to Acquiror
or, at the election of Acquiror, to the Exchange Agent, will, upon
acceptance thereof by Acquiror or the Exchange Agent, be entitled to
the Per Share Merger Consideration for the number of shares
represented by such Certificate, which shall be paid promptly (but in
no event later than five business days) after acceptance of such
Certificate.
(iii) Acquiror or, at the election of Acquiror, the Exchange
Agent shall accept Certificates upon compliance with such reasonable
terms and conditions as Acquiror or the Exchange Agent may impose to
effect an orderly exchange thereof in accordance with customary
exchange practices. Certificates shall be appropriately endorsed or
accompanied by such instruments of transfer as Acquiror or the
Exchange Agent may require.
(iv) Each outstanding Certificate shall, until duly
surrendered to Acquiror or the Exchange Agent, be deemed to evidence
the right to receive the Per Share Merger Consideration for the
number of shares represented by such Certificate.
(v) After the Effective Time of the Company Merger, holders
of Certificates shall cease to have rights with respect to the SHFC
Common previously represented by such Certificates, and their sole
rights shall be to exchange such Certificates for, and to receive,
the Per Share Merger Consideration for the number of shares
represented by such Certificate. After the Effective Time of the
Company Merger, there shall be no further transfer on the records of
SHFC of Certificates, and if any Certificates are presented to SHFC
for transfer, they shall be canceled in exchange for the Per Share
Merger Consideration for the number of shares represented by such
Certificates. Acquiror shall not be obligated to deliver the Per
Share Merger Consideration to any former holder of SHFC Common until
such holder surrenders the Certificates as provided herein. Neither
the Exchange Agent nor any party to this Agreement nor any affiliate
thereof shall be liable to any holder of SHFC Common represented by
any Certificate for any consideration paid to a public official
pursuant to applicable abandoned property, escheat or similar laws.
SHFC and the Exchange Agent shall be entitled to rely upon the stock
transfer books of SHFC to establish the identity of those persons
entitled to receive consideration specified in this Agreement, which
books shall be conclusive with respect thereto. In the event of a
dispute with respect to ownership of stock represented by any
Certificate, Acquiror and the Exchange Agent shall be entitled to
deposit any consideration in respect thereof in escrow with an
independent third party and thereafter be relieved with respect to
any claims thereto.
(vi) If the Per Share Merger Consideration is to be issued
to a person other than a person in whose name a surrendered
Certificate is registered, it shall be a condition of issuance that
the surrendered Certificate shall be properly endorsed or otherwise
in proper form for transfer and that the person requesting such
issuance shall pay to Acquiror or the Exchange Agent any required
transfer or other taxes or establish to the satisfaction of Acquiror
or the Exchange Agent that such tax has been paid or is not
applicable.
(vii) In the event any Certificate shall have been lost,
stolen or destroyed, the owner of such lost, stolen or destroyed
Certificate shall deliver to Acquiror or the Exchange Agent an
affidavit stating such fact, in form satisfactory to Acquiror, and,
at Acquiror's discretion, a bond in such reasonable sum as Acquiror
or the Exchange Agent may direct as indemnity against any claim that
may be made against Acquiror or the Association or its successor or
any other party with respect to the Certificate alleged to have been
lost, stolen or destroyed. Upon such delivery, the owner shall have
the right to receive the Per Share Merger Consideration with respect
to the shares represented by the lost, stolen or destroyed
Certificate.
(d) Stock Options.
Acquiror shall assume the obligations of SHFC under the SHFC
Stock Option Plan in the following manner:
(i) At the Effective Time of the Company Merger by virtue of
the Company Merger and without any action on the part of any holder
of any option, each option granted by SHFC to purchase shares of SHFC
Common Stock which is outstanding prior to the date of this Agreement
and unexercised immediately prior to the Effective Time of the
Company Merger (each an "SHFC Option") shall continue outstanding as
an option (a "Substitute Option") to purchase shares of Acquiror
Common (as defined in Section 3.01(c) hereof) in an amount and at an
exercise price determined as provided below and otherwise subject to
the terms of the SHFC Stock Option Plan under which they were issued
and the agreements evidencing grants thereunder:
(A) The number of shares of Acquiror Common to be
subject to a Substitute Option shall be equal to the product
of the number of shares of SHFC Common Stock subject to the
original option and the Exchange Ratio (as defined below),
provided that any fractional shares of Acquiror Common
resulting from such multiplication shall be rounded down to
the nearest whole share; and
(B) The exercise price per share of Acquiror Common
under the Substitute Option shall be equal to the exercise
price per share of SHFC Common Stock under the original
option divided by the Exchange Ratio, provided that such
exercise price shall be rounded down to the nearest whole
cent.
(ii) The term "Exchange Ratio" shall mean the Per Share
Merger Consideration divided by the Average Price (as defined below)
for Acquiror Common.
(iii) The term "Average Price" shall mean the average
closing prices for a share of Acquiror Common on the NASDAQ National
Market System reported for the five (5) consecutive trading days
ending on the first trading day immediately prior to the date of this
Agreement.
(iv) No exercise of options for Acquiror Common will be
permitted until the shareholders of Acquiror approve the assumption
of the obligations of SHFC under the SHFC Stock Option Plan as
contemplated by Section 5.09 hereof. Acquiror shall seek approval of
its shareholders at its April 1997 annual meeting of shareholders
("Annual Meeting") to reserve for issuance sufficient shares of
Acquiror Common, from authorized and unissued shares or treasury
shares of Acquiror, to effect the substitution of Acquiror Common for
SHFC Common Stock under the SHFC Stock Option Plan. At all times
after receipt of such shareholder approval, Acquiror shall reserve
for issuance such number of shares of Acquiror Common s is necessary
to permit the exercise of options granted under the SHFC Stock Option
Plan in the manner contemplated by this Agreement and the instruments
pursuant to which such options were granted. Notwithstanding the
foregoing, in the event that Acquiror does not receive the
shareholder approval contemplated by Section 5.09 hereof, then the
outstanding options under the SHFC Stock Option Plan shall be
converted to a right to receive the Per Share Merger Consideration,
less the exercise price per share for each share of SHFC Common Stock
subject to an option. As a condition to receipt of the cash payment
pursuant to the preceding sentence, each holder of an outstanding
option to acquire SHFC Common Stock shall be required to execute a
stock option cancellation agreement in form and substance reasonably
satisfactory to Acquiror. No interest shall be paid or payable with
respect to the cash amount to be paid for the cancellation of SHFC
stock options.
(e) Articles of Incorporation and Code of Regulations of
SHFC as the Surviving Corporation. The Articles of Incorporation and
Code of Regulations of SHFC, as in effect immediately prior to the
Effective Time of the Company Merger, shall be the Articles of
Incorporation and Code of Regulations of the surviving corporation of
the Company Merger, until either is thereafter amended in accordance
with applicable law.
(f) Directors and Officers of SHFC as the Surviving
Corporation. The directors and officers of Acquisition Subsidiary
immediately prior to the Effective Time of the Company Merger shall
be and become the directors and officers of SHFC immediately
following the Effective Time of the Company Merger.
Section 1.05. Closing. Subject to the provisions of this Agreement,
the closing of the Company Merger (the "Closing") shall take place as soon as
practicable after satisfaction or waiver of all of the conditions to Closing.
Subject to the preceding sentence, the date, time and location of the Closing
shall be as designated in writing by Acquiror to SHFC but shall be no sooner
than the first business day after receipt of all necessary regulatory and
shareholder approvals and the expiration of any applicable waiting periods.
The date on which the Closing actually occurs is herein referred to as the
"Closing Date." Time is of the essence for Closing.
Section 1.06. Actions At Closing.
(a) At the Closing, SHFC shall deliver to Acquiror:
(i) a certificate signed by an appropriate officer of
SHFC stating that all of the conditions set forth in Sections 6.01(a), (b),
(c), (d), (f), (g) and (h) of this Agreement (but, as to Section 6.01(d),
relating only to approvals which SHFC is required by law to obtain) have been
satisfied or waived as provided therein;
(ii) a certified copy of the resolutions of SHFC's Board
of Directors and shareholders, as required for valid approval of the execution
of this Agreement and the Plan of Merger (which certification shall be signed
by the Secretary or Assistant Secretary of SHFC, shall specify that such
resolutions remain in effect a- of the Effective Time of the Company Merger
and have not been modified or rescinded, and which shall be in a form
reasonable; acceptable to counsel to Acquiror); the Plan of Merger, executed
by SHFC; and a Certificate of Merger for the Company Merger, executed by SHFC
and in proper form for filing with the Ohio Secretary of State;
(iii) certificates of the Ohio Secretary of State, each
dated a recent date, as to the good standing of SHFC and of the Association,
and a certificate of the Federal Deposit Insurance Corporation ("FDIC"), dated
a recent date, as to the existence of deposit insurance of the Association;
(iv) a legal opinion from counsel for SHFC and the
Association, in the form attached hereto as Exhibit E hereto;
(v) the Subsequent Disclosure Schedule required by
Section 4.08 hereof; if the Subsequent Disclosure Schedule was previously
delivered, a statement signed by an appropriate officer of SHFC to that
effect; or, if no Subsequent Disclosure Schedule is necessary, a statement
signed by an appropriate officer of SHFC and dated as of the Closing Date to
such effect; and
(vi) resignations of the Board of Directors of the
Association, effective as of the Effective Time of the Company Merger, pur-
suant to Section 5.07 of this Agreement.
(b) At the Closing, Acquiror shall deliver to SHFC:
(i) a certificate signed by an appropriate officer of
Acquiror stating that all of the conditions set forth in Sections 6.02(a),
(b), (c) and (d) of this Agreement (but, as to Section 6.02(d), excluding the
approval of SHFC's Board of Directors and shareholders) have been satisfied;
(ii) a certified copy of the resolutions of Acquiror's
Board of Directors authorizing the execution of this Agreement and the
consummation of the transactions contemplated hereby;
(iii) a certified copy of the resolutions of Acquisition
Subsidiary's Board of Directors and sole shareholder, authorizing the
execution of the Plan of Merger and the consummation of the transactions
contemplated hereby and thereby; the Plan of Merger, executed by Acquisition
Subsidiary; and a Certificate of Merger for the Company Merger, executed by
Acquisition Subsidiary and in proper form for filing with the Ohio Secretary
of State; and
(iv) a legal opinion from counsel for Acquiror, in the
form attached hereto as Exhibit F hereto.
ARTICLE TWO
REPRESENTATIONS AND WARRANTEES OF SHFC AND THE ASSOCIATION
SHFC and the Association hereby make the following representations and
warranties:
Section 2.01. Organization and Capital Stock.
(a) SHFC is a corporation organized under the OGCL and the
Association is a stock-form savings and loan association, organized under
Chapter 1151 of the Ohio Revised Code, and each is duly organized, validly
existing and in good standing under the laws of the State of Ohio with full
corporate power and all necessary governmental authorizations to own all of
its properties and assets, to incur all of its liabilities and to carry on its
business as presently conducted. The minute books of each contain complete and
accurate records of all meetings and other corporate actions of their
respective Boards of Directors and shareholders, as well as actions by
committees of their respective Boards of Directors, either in committee
minutes or in the minutes of the meetings of the Boards of Directors, except
for minutes of meetings within the preceding month for which draft minutes
have not been reviewed and approved by the Board. Attached as Section 2.01(a)
of that certain confidential writing delivered by SHFC to Acquiror
concurrently with the delivery and execution of this Agreement (the
"Disclosure Schedule") are copies of the Articles of Incorporation of SHFC and
the Association certified by the Secretary of State of the State of Ohio, a
copy of the Code of Regulations of SHFC certified by the Secretary of SHFC and
copies of the Constitution and Bylaws of the Association certified by the Ohio
Division of Financial Institutions (the "Division"), including all amendments.
(b) The authorized capital stock of SHFC consists of one million
(1,000,000) common shares of SHFC, no par value, of which, as of the date
hereof, five hundred thirty-six thousand four hundred seventy-two (536,472)
shares are issued and outstanding, of which two thousand one hundred fifteen
(2,115) shares are unallocated shares in the Seven Hills Savings Association
Recognition and Retention Plan). All of the issued and outstanding shares of
SHFC Common are duly and validly issued and outstanding and are fully paid and
non-assessable, except for the shares of SHFC Common which are held by the
Association ESOP (as defined in Section 5.06) and which are not allocated to
the accounts of the participants, but as to which the Association ESOP has all
of the rights of a shareholder. None of the outstanding shares of SHFC Common
has been issued in violation of any preemptive rights of the current or past
shareholders of SHFC. Each Certificate representing shares of SHFC Common
issued by SHFC in replacement of any certificate theretofore issued by it
which was claimed by the record holder thereof to have been lost, stolen or
destroyed, if any, was issued by SHFC only upon receipt of an affidavit of
lost stock certificate and a bond sufficient to indemnify SHFC against any
claim that may be made against it on account of the alleged loss, theft or
destruction of any such certificate or the issuance of such replacement
Certificate.
The authorized capital stock of the Association consists of five
million (5,000,000) shares of the Association Common, par value One Dollar ($
1.00) per share, of which five hundred sixty- four thousand seven hundred
seven (564,707) shares are issued and outstanding and held by SHFC. Such
shares are held by SHFC free and clear of all liens, encumbrances, rights of
first refusal, options or other restrictions of any nature whatsoever. The
deposits of the Association are insured up to applicable limits by the Savings
Association Insurance Fund ("SAIF") of the Federal Deposit Insurance
Corporation (the "FDIC"). The Association is a member of the Federal Home Loan
Bank of Cincinnati ("FHLB Cincinnati"). The Association is a "domestic
building and loan association" as defined in Section 7701(a)(19) of the Code
and a "qualified thrift lender" as defined in 12 U.S.C. ss. 1467a(m) and the
Thrift Regulations.
(c) Except as set forth in Section 2.01(b) of this Agreement, and
except for the forty- nine thousand four hundred six (49,406) shares of SHFC
Common subject to options granted under the SHFC Stock Option Plan, there are
no shares of capital stock or other equity securities of SHFC or the
Association outstanding and no outstanding options, warrants, rights to
subscribe for, calls, or commitments of any character whatsoever relating to,
or securities or rights convertible in or exchangeable for, shares of the
capital stock of SHFC or the Association, or contracts, commitments,
understandings or arrangements by which SHFC or the Association is or may be
obligated to issue additional shares of its capital stock or options, warrants
or rights to purchase or acquire any additional shares of its capital stock.
Section 2.02. Authorization; No Defaults.
(a) The Board of Directors of SHFC and the Board of Directors of the
Association each has, by all appropriate action, approved this Agreement and
authorized the execution and delivery hereof on its behalf by its duly
authorized officers and the performance by SHFC and the Association of its
respective obligations here under.
(b) This Agreement has been duly and validly executed and delivered
by SHFC and the Association and, subject to (i) the approval of the SHFC
shareholders of an amendment to Article EIGHTH of the SHFC Articles of
Incorporation and approval of SHFC of an amendment to Article NINTH of the
Association's Articles of Incorporation to permit Acquiror to offer to acquire
and to acquire all of the outstanding shares of SHFC (the "Amendment"), (ii)
the approval of the OTS of the offer to acquire SHFC, as evidenced by this
Agreement, and (iii) the approval of the Division of such amendment to Article
NINTH of the Association's Articles of Association, constitutes a legal, valid
and binding obligation of SHFC and the Association, enforceable against each
in accordance with its terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, receivership, conservatorship,
moratorium or other laws affecting creditors' rights generally or the rights
of creditors of savings institutions the accounts of which are insured by the
FDIC or laws relating to the safety and soundness of insured financial
institutions and by judicial discretion in applying principles of equity.
Neither SHFC nor the Association is in default under or in violation of any
provision of their respective articles of incorporation, constitution, code of
regulations or bylaws, or any promissory note, indenture or any evidence of
indebtedness or security therefor, lease, contract, purchase or other
commitment or any other agreement of SHFC or the Association, except for
defaults and violations which will not have a material adverse effect on the
operations, business or financial condition of SHFC and the Association, taken
as a whole, and except to the extent that this Agreement may be deemed by a
court to be a default under or violation of Article EIGHTH of the SHFC
Articles of Incorporation or Article NINTH of the Association's Articles of
Incorporation. No other corporate proceeding of SHFC or the Association is
required for approval of this Agreement and the Company Merger or the
performance of SHFC's or the Association's obligations under this Agreement
other than adoption of the Amendment, this Agreement and the Plan of Merger by
the holders of at least the minimum portion of the outstanding shares of SHFC
Common required under the OGCL for approval of the Merger (the "Minimum
Portion"). Except for the requisite approvals of the Division and the OTS
("Regulatory Approvals"), and filings with the OTS, the Division and the
Secretaries of State of Ohio and Delaware, no notice to, filing with',
authorization by, or consent or approval of, any federal or state regulatory
authority or other third party is necessary for the execution and delivery of
this Agreement or consummation of the Merger by SHFC or the Association.
(c) Neither the execution and delivery of this Agreement nor the
consummation of the Company Merger, nor compliance by SHFC and the Association
with the provisions of this Agreement will (i) conflict with or result in a
breach of the articles of incorporation or constitution, or bylaws or code of
regulations, of SHFC or the Association, except to the extent that this
Agreement may be deemed by a court to be a default under or violation of
Article EIGHTH of the SHFC Articles of Incorporation or Article NINTH of the
Association's Articles of Incorporation; (ii) result in a breach or
termination of or accelerate the performance required by, any note, bond,
mortgage, lease, agreement or other instrument to which SHFC or the
Association is a party or may be bound; or (iii) violate any judgment, ruling,
order, writ, injunction, decree, statute, rule or regulation applicable to
SHFC or the Association.
Section 2.03. No Subsidiaries Equity Interests. The term "subsidiary"
means an organization or entity which is consolidated with a party to this
Agreement for financial reporting purposes. Except for the Association, SHFC
has no subsidiaries. The Association has no subsidiaries. Except as set forth
in Section 2.03 of the Disclosure Schedule, and except for shares of the
Association Common owned by SHFC and shares of stock of the FHLB Cincinnati
owned by the Association, neither SHFC nor the Association owns, beneficially
or otherwise, any shares of Equity Securities (as defined below) or similar
interests of any corporation, bank, business trust, association or similar
organization. "Equity Securities" of an issuer means capital stock or other
equity securities of such issuer, options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, shares of any capital stock or other
equity securities of such issuer, or contracts, commitments, understandings or
arrangements by which such issuer is or may become bound to issue additional
shares of its capital stock or other equity securities of such issuer, or
options, warrants, scrip or rights to purchase, acquire, subscribe to, calls
on or commitments for any shares of its capital stock or other equity
securities. Neither SHFC nor the Association is a party to any partnership or
joint venture.
Section 2.04. Financial Information. The consolidated balance sheets
of SHFC and its subsidiary as of June 30, 1995 and 1994, and the consolidated
statements of earnings, changes in shareholders' equity and cash flows for
each of the three (3) fiscal years ended as of June 30, 1995, 1994 and 1993,
together with the notes thereto, and the unaudited consolidated balance sheet
of SHFC as of March 31, 1996, and the related unaudited consolidated income
statement and statement of changes in shareholders' equity and cash flows for
the nine (9) months then ended, all of which are included in Section 2.04 of
the Disclosure Schedule (together, the "SHFC Financial Statements"), have been
prepared in accordance with generally accepted accounting principles applied
on a consistent basis ("GAAP"), except as disclosed therein, and fairly
present in all material respects the consolidated financial position and the
consolidated results of operations, changes in shareholders' equity and cash
flows of SHFC as of the dates and for the periods indicated (subject, in the
case of interim financial statements, to normal recurring year-end
adjustments, none of which are material, and the absence of footnotes). The
books and records of SHFC and the Association have been and are being
maintained in accordance with applicable legal and accounting requirements.
Neither SHFC nor the Association is aware of any event or circumstances, or
series of events or circumstances, which is reasonably likely to result in a
Material Adverse Change (as defined in Section 2.05 of this Agreement) to SHFC
or the Association.
Section 2.05. Absence of Changes.
(a) The term "Material Adverse Change" shall mean a material adverse
change in the consolidated financial condition, results of operations, assets,
deposit liabilities (except for decreases in deposit liabilities due to the
withdrawal of funds owned by SHFC held on deposit with the Association for
purposes of paying permitted dividends and expenses) or business (including
its future prospects) of an entity, other than changes resulting from or
attributable to expenses incurred in connection with the transactions
contemplated by this Agreement and the Merger; provided that the term
"Material Adverse Change" shall exclude any reduction in the net income or
shareholders' equity of SHFC attributable to (i) any special assessment levied
against the Association as part of an assessment against financial
institutions which are insured by the SAIF, (ii) any recapture of bad debt
reserves of the Association attributable to any federal legislation
eliminating or altering the exclusion from taxable federal income of bad debt
reserves of thrift institutions or (iii) any accounting adjustment required
pursuant to Section 4.05 hereof. Since March 31, 1996, to the date hereof,
SHFC on a consolidated basis has not experienced or suffered a Material
Adverse Change.
(b) Since March 31, 1996, neither SHFC nor the Association has,
except as set forth in Section 2.05 of the Disclosure Schedule, (i) issued or
sold any corporate debt securities; (ii) declared or set aside or paid any
dividend or other distribution in respect of its capital stock (or other
ownership interests) other than its regular quarterly dividend of $.09 per
share; (iii) incurred any material obligation or liability (absolute or
contingent), except obligations or liabilities incurred in the ordinary course
of business; (iv) mortgaged, pledged or subjected to lien or encumbrance
(other than statutory liens for taxes not yet delinquent and landlord liens)
any of its assets or properties except pledges to secure government deposits,
FHLB advances and in connection with repurchase or reverse repurchase
agreements; (v) discharged or satisfied any lien or encumbrance or paid any
obligation or liability (absolute or contingent), other than current
liabilities included in SHFC's balance sheet as of March 31, 1996, and current
liabilities incurred since the date thereof in the ordinary course of
business; (vi) sold, exchanged or otherwise disposed of any of its assets
other than in the ordinary course of business; (vii) made or modified any
general wage or salary increase other than in the ordinary course of business
consistent with past practices, entered into or modified any employment
contract with any officer or salaried employee or instituted, modified or
changed the contribution level to, any employee welfare, bonus, stock option,
profit sharing, retirement or similar plan or arrangement; (viii) suffered any
damage, destruction or loss, whether or not covered by insurance, materially
and adversely affecting its business, property or assets or waived any rights
of value that are material in the aggregate, considering its business taken as
a whole; (ix) entered, or agreed to enter, into any agreement or arrangement
granting any preferential right to purchase any of its assets, properties or
rights or requiring the consent of any party to the transfer and assignment of
any such assets, properties or rights; or (x) entered into any transaction
outside the ordinary course of business, or sold or otherwise disposed of any
of its securities.
Section 2.06. Regulatory Enforcement Matters. Except as disclosed in
Section 2.06 of the Disclosure Schedule, neither SHFC nor the Association is
subject to, or has received any notice or advice that it is not in substantial
compliance with any statute or regulation, or that it is or may become subject
to any order, agreement or memorandum of understanding with any federal or
state agency charged with the supervision or regulation of savings banks or
savings associations or engaged in the insurance of deposits or any other
governmental agency having supervisory or regulatory authority with respect to
SHFC or the Association, and SHFC and the Association have received no notice
from any governmental authority threatening to revoke any license, franchise,
permit or governmental authorization.
Section 2.07. Tax Matters.
(a) SHFC and the Association have filed all federal, state and local
tax returns and reports due with respect to any of their employees,
depositors, borrowers, operations, businesses or properties in a timely
fashion and have paid or made provision for all amounts due or claimed to be
due. All such returns and reports fairly reflect the information required to
be presented therein. All provisions for accrued but unpaid taxes contained in
the SHFC Financial Statements were made in accordance with GAAP and provide
for anticipated tax liabilities including interest and penalties. Except as
disclosed in Section 2.07(a) of the Disclosure Schedule, there are no federal,
state or local tax returns or reports not filed which would be due but for an
extension of time for filing having been granted.
(b) Neither SHFC nor the Association has executed or filed with the
Internal Revenue Service ("IRS") or any state or local tax authority any
agreement extending the period for assessment and collection of any tax, nor
is SHFC or the Association a party to any action or proceeding by any
governmental authority for assessment or collection of taxes, except tax liens
or levies against customers of the Association. There is no outstanding
assessment or claim for collection of taxes against SHFC or the Association.
Neither SHFC nor the Association has, except as disclosed in Section 2.07(b)
of the Disclosure Schedule, received any notice of deficiency, proposed
deficiency or assessment from the IRS or any other governmental agency, with
respect to any federal, state or local taxes. No tax return of SHFC or the
Association is currently the subject of any audit by the IRS or any other
governmental agency. No material deficiencies have been asserted in connection
with the tax returns of SHFC or the Association and SHFC and the Association
have no reason to believe that any deficiency would be asserted relating
thereto. Neither SHFC nor the Association is required to include in income any
adjustment pursuant to Section 481(a) of the Code, by reason of a voluntary
change in accounting method (nor to the best knowledge of SHFC and the
Association has the IRS proposed any such adjustment or change of accounting
method). Neither SHFC nor the Association have filed a consent pursuant to
Section 341(f) of the Code or agreed to have Section 341(f)(2) of the Code
apply. Except as disclosed in Section 2.07(b) of the Disclosure Schedule, (i)
neither SHFC nor the Association has ever been a member of an "affiliated
group of corporations" (within the meaning of Section 1504(a) of the Code)
filing consolidated returns, other than the affiliated group of which SHFC is
the parent; and (ii) neither SHFC nor the Association is a party to any
tax-sharing agreement.
Section 2.08. Litigation. Except as disclosed in Section 2.08 of the
Disclosure Schedule, there is no litigation, claim or other proceeding pending
or, to the knowledge of SHFC or the Association, threatened, against SHFC or
the Association, or any of their respective directors or officers, or to which
the property of SHFC or the Association is or would be subject. Each of SHFC
and the Association has taken all requisite action (including without
limitation the making of claims and the giving of notices) pursuant to its
directors and officers' liability insurance policy or policies in order to
preserve all rights thereunder with respect to all matters (other than matters
arising in connection with this Agreement and the transactions contemplated
hereby) occurring prior to the Effective Time of the Company Merger that are
known to either. Each matter as to which SHFC or the Association has given
notice to the insurer under a directors and officers liability policy is
described in Section 2.08 of the Disclosure Schedule.
Section 2.09. Employment and Severance Agreements. Except as
disclosed in Section 2.09 of the Disclosure Schedule, neither SHFC nor the
Association is a party to or bound by any agreement or policy for the
employment, retention or engagement of any officer, employee, agent,
consultant or other person or entity, any employment or severance agreement or
policy, or agreement, policy or arrangement to provide post-retirement,
post-termination or change-of-control benefits, by acceleration or otherwise,
to any current or former officer, employee or director. A true, accurate and
complete copy of each such agreement, policy and arrangement is included in
Section 2.09 of the Disclosure Schedule.
Section 2.10. Reports. SHFC and the Association each has filed all
reports and statements, together with any amendments required to be made with
respect thereto, that it was required to file with (i) the OTS, (ii) the FDIC,
(iii) any applicable state securities or banking or savings and loan
authorities, and (iv) any other governmental authority with jurisdiction over
SHFC or the Association, except as may be disclosed in Section 2. 10 of the
Disclosure schedule or, to the extent that any report or statement has not
been filed, such failure will not have a material adverse effect on SHFC's or
the Association's regulatory compliance status. As of their respective dates,
each of such reports and documents, including the financial statements,
exhibits and schedules thereto, complied in all material respects with the
relevant statutes, rules and regulations enforced or promulgated by the
regulatory authority with which they were filed, and did not contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
Section 2.1l. Investment Portfolio. All United States Treasury
securities, obligations of other United States Government agencies and
corporations, obligations of states and political subdivisions of the United
States and other investment securities held by SHFC or the Association are
carried in the aggregate at no more than cost adjusted for amortization of
premiums and accretion of discounts, except as otherwise required by FAS No.
115 and which adjustments are disclosed in Section 2. 11 of the Disclosure
Schedule.
Section 2.12. Loan Portfolio. Except as may be disclosed in Section
2.12 of the Disclosure Schedule, (i) all loans shown on the SHFC Financial
Statements at March 31, 1996, or which were entered into after March 31, 1996,
but before the Effective Time of the Company Merger, were and will be made for
good, valuable and adequate consideration in the ordinary course of the
business of the Association and its subsidiaries, in accordance with sound
banking practices, and are not subject to any known defenses, set-offs or
counterclaims, including without limitation any such as are afforded by usury
or truth in lending laws, except as may be provided by bankruptcy, insolvency
or similar laws or by general principles of equity; (ii) to the knowledge of
SHFC and the Association, the notes or other evidences of indebtedness
evidencing such loans and all forms of pledges, mortgages and other collateral
documents and security agreements are and will be what they purport to be and
enforceable in all material respects in accordance with their terms, subject
to bankruptcy, insolvency fraudulent conveyance and other laws of general
applicability relating to or affecting creditors' rights and to general equity
principles; and (iii) SHFC and the Association have complied with all laws and
regulations relating to such loans, or to the extent there has not been such
compliance, such failure to comply will not materially interfere with the
collection of any such loan.
Section 2.13. Employee Matters and ERISA.
(a) Neither SHFC nor the Association has entered into any collective
bargaining agreement with any labor organization with respect to any group of
employees of SHFC or the Association and, to the knowledge of SHFC and the
Association, there is no present effort nor existing proposal to attempt to
unionize any group of employees of SHFC or the Association.
(b) Except as may be disclosed in Section 2.13(b) of the Disclosure
Schedule, (i) SHFC and the Association are and have been in material
compliance with all applicable laws respecting employment and employment
practices, teams and conditions of employment and wages and hours, including,
without limitation, any such laws respecting employment discrimination and
occupational safety and health requirements, and neither SHFC nor the
Association is engaged in any unfair labor practice; (ii) there are no unfair
labor practice charges or other complaints by any employee or former employee
of either SHFC or the Association pending before any governmental agency and
there are no administrative charges or court complaints against SHFC or the
Association concerning alleged employment discrimination or other employment
related matters pending or threatened before the U.S. Equal Employment
Opportunity Commission or any state or federal court or agency; (iii) there is
no labor dispute, strike, slowdown or stoppage actually pending or, to the
knowledge of SHFC and the Association, threatened against or directly
affecting SHFC or the Association; and (iv) neither SHFC nor the Association
has experienced any work stoppage or other labor difficulty.
(c) Except as may be disclosed in Section 2.13(c) of the Disclosure
Schedule, neither SHFC nor the Association maintains, contributes to or
participates in or has any liability under any employee benefit plans, as
defined in Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), or any nonqualified employee benefit plans or
deferred compensation, bonus, stock or incentive plans, or other employee
benefit or fringe benefit programs for the benefit of former or current
directors or employees of SHFC or the Association (the "Employee Plans"). No
present or former director, employee or fiduciary of SHFC or the Association
has been charged with breaching or, to the knowledge of SHFC, has breached a
fiduciary duty under any of the Employee Plans. Except as may be disclosed in
Section 2.13(c) of the Disclosure Schedule, neither the Association nor any of
its subsidiaries participates in, nor has it participated in, nor has it any
present or future obligation or liability under, any multi-employer plan (as
defined at Section 3(37) of ERISA). Except as may be disclosed in Section
2.13(c) of the Disclosure Schedule, neither the Association nor any of its
subsidiaries maintains, contributes to, or participates in, any plan that
provides health, major medical, disability or life insurance benefits to
former employees of SHFC or the Association except as provided in Section
4980B of the Code.
(d) Except as set forth in Section 2.13(d) of the Disclosure
Schedule, neither SHFC nor the Association maintains, or has maintained during
the past ten (10) years, any Employee Plans subject to Title IV of ERISA or
Section 412 of the Code. No reportable event (as defined in Section 4043 of
ERISA) has occurred with respect to any Employee Plans as to which a notice
would be required to be filed with the Pension Benefit Guaranty Corporation.
No claim is pending, and SHFC and the Association have not received notice of
any threatened or imminent claim with respect to any Employee Plan (other than
a routine claim for benefits for which plan administrative review procedures
have not been exhausted) for which the Association or any of its subsidiaries
would be liable after June 30, 1995, except as set forth in Section 2.13(d) of
the Disclosure Schedule. SHFC and the Association do not have any liabilities
for excise taxes under Sections 4971, 4975, 4976, 4977, 4979 or 4980B of the
Code or for a fine under Section 502 of ERISA with respect to any Employee
Plan. All Employee Plans have been operated, administered and maintained in
all material respects in accordance with the terms thereof and in compliance
with the requirements of all applicable laws, including, without limitation,
ERISA and the Code to the extent applicable.
Section 2.14. Title to Properties; Insurance; Personal Property.
(a) Except as disclosed in Section 2.14(a) of the Disclosure
Schedule, SHFC and the Association have marketable title, insurable at
standard rates, free and clear of all liens, charges and encumbrances (except
taxes which are a lien but not yet payable, liens, charges or encumbrances
explicitly reflected in the SHFC Financial Statements and easements, rights-of
way, and other restrictions which do not materially and adversely affect the
current use, value or marketability of the property and further excepting in
the case of Real Estate Owned as such real estate is internally classified on
the books of the Association, rights of redemption under applicable law) to
all real properties reflected on the SHFC Financial Statements or acquired
subsequent to the date thereof. All leasehold interests held by SHFC or the
Association in real estate are held pursuant to lease agreements which are
valid add enforceable in accordance with their terms subject to bankruptcy,
insolvency, fraudulent conveyance and other laws of general applicability
relating to or affecting creditors' rights and to general equity principles.
All such owned real properties comply in all material respects with all
applicable private agreements and, to the knowledge of SHFC, all zoning
requirements and other governmental laws and regulations relating thereto and
there are no condemnation proceedings pending or, to the knowledge of either
SHFC or the Association, threatened with respect to such properties. SHFC and
the Association each have valid title or other rights under licenses to all
material intangible personal or intellectual property used in their respective
businesses, free and clear of any claim, defense or right of any other person
or entity which is material to such property, subject only to rights of the
licensors pursuant to applicable license agreements, which rights do not
materially adversely interfere with the use of such property.
(b) All material insurable properties owned or held by SHFC or the
Association are insured in amounts deemed adequate by the senior management of
the Association and against fire and other risks insured against by extended
coverage and public liability insurance, as is customary with thrift
institutions of similar size. SHFC and the Association have delivered to
Acquiror as part of Section 2.14(b) of the Disclosure Schedule true, accurate
and complete copies of all insurance policies and fidelity bonds of SHFC and
the Association. Except as disclosed in Section 2.14(b) of the Disclosure
Schedule, there are no outstanding claims alone or in the aggregate in excess
of Ten Thousand Dollars ($ 10,000) with respect to SHFC or the Association
under such bonds and insurance policies, and neither SHFC nor the Association
is aware of any acts of dishonesty or losses which would form the basis of a
material claim under such bonds or insurance coverage. Each such policy is in
full force and effect, with all premiums due thereon on or prior to the
Closing Date having been paid as and when due. Neither SHFC nor the
Association have been notified that its fidelity or insurance coverage will
not be renewed by the carrier on substantially the same terms as the existing
coverage.
(c) Except as set forth in Section 2. 14(c) of the Disclosure
Schedule, all of the personal property reflected in the SHFC Financial
Statements as being owned by SHFC or the Association is owned free and clear
of any lien, encumbrance, right of first refusal, options or other
restrictions, and all such personal property other than items with nominal
book value, is in good condition and repair (ordinary wear and tear excepted)
and is sufficient to carry on the business of SHFC or the Association as it is
presently conducted.
Section 2.15. Environmental Matters.
(a) As used in this Agreement, "Environmental Laws" means all local,
state and federal environmental, health and safety laws and regulations as in
effect from time to time in all jurisdictions in which SHFC and the
Association have done business or owned or leased property, including, without
limitation, the Federal Resource Conservation and Recovery Act, the Federal
Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA"), the Federal Clean Water Act, the Federal Clean Air Act, and the
Federal Occupational Safety and Health Act.
For purposes of this Agreement, "Hazardous Substances" means (i) any
"hazardous substance" as defined in Section 101(14) of CERCLA or regulations
promulgated thereunder; (ii) any "solid waste," "hazardous waste" or
"infectious waste," as such terms are defined in any Environmental Law; (iii)
asbestos, urea formaldehyde, polychlorinated biphenyls ("PCBs"), nuclear fuel
or material, chemical waste, radioactive material, explosives, known
carcinogens, petroleum products and by-products and other dangerous, toxic or
hazardous pollutants, contaminants, chemicals, materials or substances listed
or identified in, or regulated by, any Environmental Law; and (iv) any
additional substances or materials which are classified or considered to be
hazardous or toxic under any Environmental Law.
(b) Except as disclosed in Section 2.15(b) of the Disclosure
Schedule, to the knowledge of SHFC and the Association neither the conduct nor
operation of SHFC or the Association nor any condition of any property ever
owned (including, without limitation, REO), leased or operated by either of
them ("Real Property") materially violates or materially violated any
Environmental Laws and no condition or event has occurred with respect to any
of them or any such property that, with notice or the passage of time, or
both, would constitute a material violation of Environmental Laws or obligate
(or potentially obligate) SHFC or the Association to remedy, stabilize,
neutralize or otherwise alter the environmental condition of any such
property. Except as disclosed in Section 2. 15(b) of the Disclosure Schedule,
neither SHFC nor the Association has received any notice from any person or
entity that SHFC or the Association or the operation of any facilities or any
property ever owned (including, without limitation, REO), leased or operated
by either of them are or were in violation of any Environmental Laws or that
any of them are responsible (or potentially responsible) for the cleanup of
any pollutants, contaminants or hazardous or toxic wastes, substances or
materials at, on or beneath any such property.
(c) Except as disclosed in Section 2.15(c) of the Disclosure
Schedule, neither SHFC nor the Association has received notice or has
knowledge that any property in which SHFC or the Association has a security
interest, lien or other encumbrance violates or violated Environmental Laws in
any material respect.
(d) To the knowledge of SHFC and the Association, neither SHFC nor
the Association has caused any Hazardous Substances to be integrated into the
Real Properties or any component thereof in such manner or quantity as may
reasonably be expected to or in fact would pose an unlawful threat to human
health or materially and adversely affect the value of any such Real
Properties. To the knowledge of SHFC and the Association, none of the Real
Properties has been used by SHFC or the Association for the storage or
disposal of Hazardous Substances, except as disclosed in Section 2.15(d) of
the Disclosure Schedule or as permitted under Environmental Laws. To the
knowledge of SHFC and the Association, neither SHFC nor the Association has
any interest, direct or indirect, in property owned by a third party which is
or has been contaminated by Hazardous Substances, except as permitted under
Environmental Laws. To the knowledge of SHFC and the Association, no property
which is subject to such a security interest is or has been so contaminated
except for the properties listed in Section 2.15(d) of the Disclosure
Schedule, except as permitted under Environmental Laws. To the knowledge of
SHFC and the Association, no Real Property contains or formerly contained
underground storage tanks, except as disclosed in Section 2.
15(d) of the Disclosure Schedule.
(e) With respect to each of the nonresidential Real Properties in
which SHFC or the Association has held or currently holds indicia of ownership
to protect a security interest in the facility (as such terms are defined in
42 U.S.C. ss. 9601 et seq.), SHFC and the Association have not, to their
knowledge, "participated in the management of the facility" or otherwise acted
in a manner such that SHFC or the Association would lose its statutory
exemption from liability under Section 101 (20)(A) of CERCLA and as further
defined in the currently vacated Environmental Protection Agency's Final Rule
on Lender Liability, 40 C.F.R. Part 300 Subpart L, ss. 300.1100, 57 FR 18343,
April 29, 1992.
Section 2.16. Compliance with Laws. Except as disclosed in Section
2.16 of the Disclosure Schedule, SHFC and the Association each have all
licenses, franchises, permits and other governmental authorizations that are
legally required to enable them to conduct their respective businesses in all
material respects and such businesses have been and are being conducted in
compliance in all material respects with all applicable laws and regulations.
Section 2.17. Brokerage. Except for the amounts payable to Charles Webb &
Co., as disclosed in Section 2. 17 of the Disclosure Schedule, there are no
claims or agreements for brokerage commissions, finders' fees or similar
compensation in connection with the transactions contemplated by this
Agreement payable by SHFC or the Association.
Section 2.18. Undisclosed Liabilities. Except for (i) liabilities and
obligations fully reflected, disclosed or provided for in the SHFC Financial
Statements as of June 30, 1995, (including related notes), (ii) liabilities
and obligations incurred since June 30, 1995 in the ordinary course of
business or related to the transaction contemplated by this Agreement, and
(iii) liabilities and obligations fully disclosed in Section 2.18 of the
Disclosure Schedule, neither SHFC nor the Association has any material
liabilities or obligations, whether absolute, known or unknown, accrued or
unaccrued, contingent or otherwise, (and there is no asserted or unasserted
claim against SHFC or the Association giving rise to any such liabilities or
obligations). For purposes of this Section 2.18, the term "liabilities"
includes without limitation liabilities as a guarantor and liabilities for
taxes in each case material to the condition of either SHFC or the
Association.
Section 2.19. Statements True and Correct. None of the information
supplied or to be supplied by SHFC or the Association for inclusion in (i) the
Proxy Statement (as defined in Section 4.03 hereof) and (ii) any document to
be filed with any regulatory authority in connection with the transactions
contemplated hereby will, at the respective times such documents are filed,
and, with respect to the Proxy Statement, when first mailed to the
shareholders of SHFC, be false or misleading with respect to any material
fact, or omit to state any material fact necessary in order to make the
statements therein not misleading, or, in the case of the Proxy Statement or
any amendment thereof or supplement thereto, at the time of the Shareholders'
Meeting (as defined in Section 4.03 hereof), be false or misleading with
respect to any material fact, or omit to state any material fact necessary to
correct any statement in any earlier communication with respect to the
solicitation of any proxy for the Shareholders' Meeting. All documents that
SHFC or the Association is responsible for filing with any regulatory
authority in connection with the transactions contemplated hereby will comply
as to form in all material respects with the provisions of applicable law and
the applicable rules and regulations thereunder.
Section 2.20. Material Contracts.
(a) Section 2.20 of the Disclosure Schedule contains a complete and
correct list of all written or oral agreements, leases, and other obligations
and commitments of the following types, to which either SHFC or the
Association is a party, or by which any of their respective property is bound,
or which has been authorized by SHFC or the Association:
(i) Promissory note, guaranty, mortgage, security
agreement or other evidence of indebtedness owed by SHFC or the Association in
an amount in excess of Twenty Five Thousand Dollars ($25,000);
(ii) Partnership or joint venture agreements;
(iii) Employee Plans;
(iv) Insurance contracts or policies;
(v) Agreement or commitment for sale or purchase of
any asset or assets for more than Twenty Five Thousand Dollars ($25,000);
(vi) Agreements or commitments for any single capital
expenditure in excess of Five Thousand Dollars ($5,000) or capital
expenditures in excess of Ten Thousand Dollars ($ 10,000) in the aggregate;
(vii) Agreement or other document creating a monetary
lien or security interest in excess of Twenty Five Thousand Dollars ($25,000)
or other encumbrance relating to any real or personal property owned, rented
or leased by SHFC or the Association;
(viii) Lease of, commitment to lease and any other
agreements relating to the lease or rental of, real or personal property by
SHFC or the Association involving an annual payment in excess of Ten Thousand
Dollars ($10,000);
(ix) Any direct or indirect loan or guaranty of a loan
to any director, officer, or 5 % shareholder of SHFC or the Association or any
director or officer of any of its subsidiaries or a spouse or child of such
person, or any partnership, corporation, or other entity in which any such
director, officer or shareholder or a spouse or child of such person holds
(directly or indirectly) an interest of ten percent (10%) or more;
(x) Any contract or agreement (A) that has a remaining
term as of the date of this Agreement in excess of six (6) months, (B) is not
terminable by SHFC or the Association on thirty (30) or fewer days' notice
without penalty or premium and (C) involves a monetary obligation on the part
of SHFC or the Association in excess of Ten Thousand Dollars ($ 10,000); and
(xi) All other material contracts and commitments not
made in the ordinary course of business.
(b) Concurrently with its delivery of the Disclosure Schedule, SHFC
and the Association will deliver complete and correct copies of all written
agreements, leases, policies and commitments listed in the Disclosure
Schedule, together with all amendments thereto, and a complete and correct
written description of all oral agreements listed in Section 2.20 of the
Disclosure Schedule.
Section 2.21. No Sensitive Transactions. Neither SHFC nor the
Association nor, to the knowledge of SHFC or the Association, any employee or
agent of either, nor any shareholder (beneficial or otherwise) of SHFC or the
Association has used funds or other assets of SHFC or the Association directly
or indirectly for (a) illegal contributions, gifts, entertainment or other
expenses related to political activities, (b) payments to or for the benefit
of any governmental official or employee, other than payments required or
permitted by law, (c) illegal payments to or for the benefit of any person,
firm, corporation or other entity, or any officer, employee , agent or
representative thereof or (d) the establishment or maintenance of a secret or
unrecorded fund. In addition, to the knowledge of SHFC and the Association, no
employee or agent of SHFC or the Association has taken any act or omitted to
take any act that would cause a violation of federal currency reporting laws.
Section 2.22. Certain Payments.
Neither the execution nor delivery of this Agreement, nor the
consummation of any of the transactions contemplated hereby, will (i) result
in any material payment (including, without limitation, severance,
unemployment compensation or golden parachute payment) becoming due to any
director or employee of SHFC or the Association from any of such entities,
(ii) materially increase any benefit otherwise payable under any of the SHFC
employee benefit plans or (iii), except for the acceleration of certain
benefits under the RRP (as defined in Section 4.09) and the termination of the
Association ESOP pursuant to Section 5.06, result in the acceleration of the
time of payment of any such benefit. In addition, the transactions
contemplated by this Agreement would constitute a change in control for
purposes of Section 4(a) of each of the employment agreements referred to in
Section 2.09 of the Disclosure Schedule, as a result of which, a termination
other than for cause during the earlier of the one-year period following such
change in control or the expiration of the term of such agreements would give
rise to severance benefits. No holder of an option to acquire stock of SHFC
has or will have at any time through the Effective Time the right to receive
any cash or other payment (other than as contemplated by Section I.04(d)(iv)
hereof) in exchange for or with respect to all or any portion of such option.
No amounts paid or payable by SHFC, the Association or Acquiror to or with
respect to any employee or former employee of SHFC or the Association will
fail to be deductible for federal income tax purposes by reason of Section
280G of the Code or otherwise.
ARTICLE THREE
REPRESENTATIONS AND WARRANTIES OF ACQUIROR
Acquiror hereby makes the following representations and warranties:
Section 3.01. Organization and Capital Stock.
(a) Acquiror is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of Delaware with full corporate
power and authority to carry on its business as it is now being conducted.
(b) Acquiror is duly licensed, as a foreign corporation, to transact
business in the State of Ohio.
(c) The authorized capital stock of Acquiror consists of (i)
7,250,000 shares of common stock, par value One Cent ($.01) per share
("Acquiror Common"), of which, as of the date of this Agreement, 2,367,310
shares were issued and outstanding, and (ii) 250,000 shares of preferred
stock, par value One Cent ($0.01) per share, none of which have been issued or
are outstanding. All of the issued and outstanding shares of Acquiror Common
are duly and validly issued and outstanding and are fully paid and
non-assessable.
(d) At the Effective Time of the Company Merger, Acquisition
Subsidiary shall be a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Ohio with full corporate power
and authority to carry on its business and perform its obligations under this
Agreement and the Plan of Merger.
Section 3.02. Authorization. (a) The Board of Directors of Acquiror
has, by all appropriate action, approved this Agreement and the Merger and
authorized the execution and delivery hereof on its behalf by its duly
authorized officers and the performance of its obligations hereunder. Except
for approval of the Merger and the Plan of Merger by the Board of Directors
and the sole shareholder of Acquisition Subsidiary (which shall be obtained
upon the formation of Acquisition Subsidiary as provided herein), no other
corporate proceeding is required for the approval by Acquiror of this
Agreement or the Merger or the performance by Acquiror or Acquisition
Subsidiary of their obligations under this Agreement or the Plan of Merger.
(b) This Agreement has been duly and validly executed and delivered
by Acquiror and constitutes a legal, valid and binding obligation of Acquiror,
enforceable against Acquiror in accordance with its terms, except as such
enforcement may be limited by bankruptcy, insolvency, reorganization,
receivership, conservatorship, moratorium or other laws affecting creditors'
rights generally or the rights of creditors of savings institutions, the
accounts of which savings institutions are insured by the SAIF or laws
relating to the safety and soundness of insured financial institutions and by
judicial discretion in applying principles of equity. Acquiror and each of its
significant subsidiaries (as defined in Section 3.03 of this Agreement) are
not in default under or in violation of any provision of its respective
certificate or articles of incorporation, charter, bylaws or any promissory
note, indenture or any evidence of indebtedness or security there for, lease,
contract, purchase or other commitment or any other agreement of any of them
which is material to Acquiror, except for defaults and violations which will
not have a material adverse effect on the ability of Acquiror to consummate
the transaction contemplated by this Agreement. Except for the Regulatory
Approvals and related filings, no notice to, filing with, authorization by, or
consent or approval of, any federal or state regulatory authority is necessary
for the execution and delivery of this Agreement by Acquiror or consummation
of the Merger by Acquiror or Acquisition Subsidiary.
(c) Neither the execution and delivery of this Agreement or the Plan
of Merger nor the consummation of the Merger, nor compliance by Acquiror with
the provisions of this Agreement and the Plan of Merger, will (i) conflict
with or result in a breach of Acquiror's certificate of incorporation or
bylaws; or (ii) violate any judgment, ruling, order, writ, injunction, decree,
statute, rule or regulation applicable to Acquiror.
(d) Prior to the Effective Time of the Company Merger, (i) the Board
of Directors of Acquisition Subsidiary shall have, by all appropriate action,
approved the Plan of Merger and the Company Merger and authorized the
execution and delivery thereof on its behalf by its duly authorized officers
and the performance of its obligations thereunder; (ii) Acquiror, as the sole
shareholder of Acquisition Subsidiary, shall have adopted the Plan of Merger;
and (iii) the Plan of Merger shall have been duly and validly executed and
delivered by Acquisition Subsidiary and shall constitute a legal, valid and
binding obligation of Acquisition Subsidiary, enforceable against Acquisition
Subsidiary in accordance with its terms, except as such enforcement may be
limited by bankruptcy, insolvency, reorganization, receivership,
conservatorship, moratorium or other laws affecting creditors' rights
generally.
(e) Neither the execution and delivery of the Plan of Merger nor the
consummation of the Merger, nor compliance by Acquisition Subsidiary with the
provisions of this Agreement and the Plan of Merger, will (i) conflict with or
result in a breach of Acquisition Subsidiary's articles of incorporation, code
of regulations or bylaws; or (ii) violate any judgment, ruling, order, writ,
injunction, decree, statute, rule or regulation applicable to Acquisition
Subsidiary.
Section 3.03. Subsidiaries. Each of Acquiror's significant
subsidiaries (as such term is defined under regulations promulgated by the
Securities and Exchange Commission ("SEC")) is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has the corporate power to own its respective properties and
assets, to incur its respective liabilities and to carry on its business as
now being conducted. All of the outstanding shares of capital stock of each
significant subsidiary of Acquiror are owned by Acquiror, directly or
indirectly, free and clear of any material liens, encumbrances or security
interests of third parties. All of the issued and outstanding shares of each
significant subsidiary are duly and validly issued and outstanding and are
fully paid and nonassessable.
Section 3.04. Financial Information. The consolidated balance sheets
of Acquiror and its subsidiaries as of December 31, 1995 and 1994 and the
consolidated statements of earnings, changes in shareholders' equity and cash
flows for each of the three (3) fiscal years ended June 30, 1995, 1994 and
1993, together with the notes thereto and the unaudited consolidated balance
sheet of Acquiror as of March 31, 1996, and the related unaudited consolidated
income statement and statement of changes in shareholders' equity and cash
flows for the three (3) months then ended included in Acquiror's Quarterly
Report on Form 10-Q for the quarter then ended, as currently on file with the
SEC (together, the "Acquiror Financial Statements"), have been prepared in
accordance with GAAP except as disclosed therein and fairly present in all
material respects the consolidated financial position and the consolidated
results of operations, changes in shareholders' equity and cash flows of
Acquiror and its consolidated subsidiaries as of the dates and for the periods
indicated therein (subject to normal, recurring yearend adjustments, none of
which are material, and the absence of footnotes).
Section 3.05. Absence of Changes. Since December 31, 1995 to the date
hereof, Acquiror, on a consolidated basis, has not experienced or suffered a
Material Adverse Change or entered into any contract, agreement or
understanding which would adversely affect its ability to perform its
obligations under this Agreement.
Section 3.06. Litigation. There is no litigation, claim or other
proceeding pending or, to the knowledge of Acquiror, threatened, against
Acquiror or any of its significant subsidiaries, or to which the property of
Acquiror or any of its significant subsidiaries is or would be subject which,
if adversely determined, would have a material adverse effect on the business
of Acquiror and its subsidiaries taken as a whole.
Section 3.07. Reports. Since, January 1, 1993, Acquiror has filed all
reports and statements, together with any amendments required to be made with
respect thereto, that it was required to file with (i) the OTS, (ii) the FDIC,
(iii) any applicable state or federal securities or banking or savings and
loan authorities and (iv) any other governmental authority with jurisdiction
over Acquiror. As of their respective dates, each of such reports and
documents, including the financial statements, exhibits and schedules thereto,
complied in all material respects with the relevant statutes, rules and
regulations enforced or promulgated by the regulatory authority with which
they were filed, and did not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading.
Section 3.08. Compliance With Laws. Acquiror and its significant
subsidiaries have all licenses, franchises, permits and other government
authorizations that are legally required to enable them to conduct their
respective businesses in all material respects and are in compliance in all
material respects with all applicable laws and regulations.
Section 3.09. Statements True and Correct. None of the information
supplied or to be supplied by Acquiror for inclusion in (i) the Proxy
Statement and (ii) any document to be filed with any regulatory authority in
connection with the transactions contemplated hereby, will, at the respective
times such documents are filed, and, with respect to the Proxy Statement, when
first mailed to the shareholders of SHFC, be false or misleading with respect
to any material fact, or omit to state any material fact necessary in order to
make the statements therein not misleading, or, in the case of the Proxy
Statement or any amendment thereof or supplement thereto, at the time of the
Shareholders' Meeting, be false or misleading with respect to any material
fact, or omit to state any material fact necessary to correct any statement in
any earlier communication with respect to the solicitation of any proxy for
the Shareholders' Meeting. All documents that Acquiror is responsible for
filing with the OTS or any other regulatory authority in connection with the
transactions contemplated hereby will comply as to form in all material
respects with the provisions of applicable law and any rules and regulations
thereunder.
Section 3.10. Undisclosed Liabilities. Acquiror has no liabilities or
obligations, whether absolute, known or unknown, accrued or unaccrued,
contingent or otherwise (and there is no asserted or unasserted claim against
Acquiror giving rise to any such liabilities or obligations) that could
adversely affect its ability to consummate the transactions contemplated by
this Agreement. For purposes of this Section 3. 10, the term "liabilities"
includes without limitation liabilities as guarantor and liabilities for taxes
in each case material to the condition of Acquiror.
Section 3.11. Regulatory Enforcement Matters. Acquiror is not subject
to, nor has it received any notice or advice that it is not in substantial
compliance with any statute or regulation, or that it is or may become subject
to any order, agreement or memorandum of understanding with any federal or
state agency charged with the supervision or regulation of savings banks,
savings associations or holding companies of savings banks or savings
associations or engaged in the insurance of deposits or any other governmental
agency having supervisory or regulatory authority with respect to Acquiror,
and Acquiror has received no notice from any governmental authority
threatening to revoke any license, franchise, permit or governmental
authorization.
Section 3.12. Tax Matters.
(a) Acquiror has filed all federal, state and local tax returns and
reports due with respect to any of its employees, depositors, borrowers,
operations, businesses or properties in a timely fashion and has paid or made
provision for all amounts due or claimed to be due. All such returns and
reports fairly reflect the information required to be presented therein. All
provisions for accrued but unpaid taxes contained in Acquiror's Financial
Statements were made in accordance with GAAP and do not fail to provide for
anticipated tax liabilities including interest and penalties. There are no
federal, state or local tax returns or reports not filed which would be due
but for an extension of time for filing having been granted.
(b) Acquiror has neither executed nor filed with the IRS or any state
or local tax authority any agreement extending the period for assessment and
collection of any tax, nor is Acquiror a party to any action or proceeding by
any governmental authority for assessment or collection of taxes, except tax
liens or levies against customers of Acquiror. There is no outstanding
assessment or claim for collection of taxes against Acquiror. Acquiror has
received no notice of deficiency, proposed deficiency or assessment from the
IRS or any other governmental agency, with respect to any federal, state or
local taxes. No tax return of Acquiror is currently the subject of any audit
by the IRS or any other governmental agency. No material deficiencies have
been asserted in connection with the tax return of Acquiror and Acquiror has
no reason to believe that any deficiency would be asserted relating thereto.
Section 3.13. Investment Portfolio. All United States Treasury
securities, obligations of other United States Government agencies and
corporations, obligations of States and political subdivisions of the United
States and other investment securities held by Acquiror are carried in the
aggregate at no more than cost adjusted for amortization of premiums and
accretion of discounts, except as otherwise required by FAS No. 115.
Section 3.14. Stock Ownership. Neither Acquiror nor any of its
"affiliates" or "associates," as such terms are defined in Section
1704.01(C)(l) of the Ohio Revised Code, are "beneficial owners," as such term
is defined in Section 1704.0I(C)(4) of the Ohio Revised Code, of any of the
outstanding shares of any class of stock of SHFC.
Section 3.15. Availability of Funds. Acquiror has on the date hereof, and
will have at the Effective Time, the financial capacity to consummate the
transactions contemplated hereby.
ARTICLE FOUR
AGREEMENTS OF SHFC AND THE ASSOCIATION
Section 4.01. Business in Ordinary Course.
(a) SHFC and the Association shall not declare or pay any dividend or
make any other distribution with respect to their capital stock or ownership
interests whether in cash, stock or other property, after the date of this
Agreement except (i) payment by SHFC of its regular quarterly cash dividend
for the quarter ended June 30, 1996 in the amount of $.09 (or less) per share
of SHFC Common and (ii) if Closing does not occur by the respective following
quarter ends, then, for the quarters ended September 30, 1996 and December 31,
1996, SHFC may declare and pay an additional regular quarterly dividend in the
amount of $.09 per share of SHFC Common for each such quarter. Notwithstanding
the previous sentence, no dividend will be permitted if it would exceed the
net income of SHFC (excluding any net income arising from any liquidating
distribution received from the ODGF) in the calendar quarter for which such
dividend is declared.
(b) SHFC and the Association shall continue to carry on, after the
date hereof, their respective businesses and the discharge or incurrence of
obligations and liabilities, only in the usual, regular and ordinary course of
business, as heretofore conducted, and by way of amplification and not
limitation, SHFC and the Association will not, without the prior written
consent of Acquiror acting through its Chief Executive Officer or such other
officer as Acquiror may specify in a written notice to the Association,
provided in the case of subsections (vi), (vii), (viii), (ix), (xi), (xiii)
and (xviii) below such consent shall not be unreasonably withheld or delayed:
(i) issue any SHFC Common or the Association Common or
other capital stock or any options, warrants or other rights to subscribe for
or purchase SHFC Common or the Association Common or any other capital stock
or any securities convertible into or exchangeable for any capital stock;
(ii) directly or indirectly redeem, purchase or
otherwise acquire any SHFC Common or the Association Common or any other
capital stock or ownership interests of SHFC or the Association;
(iii) effect a reclassification, recapitalization
split-up, exchange of shares, readjustment or other similar change in or to
any capital stock or otherwise reorganize or recapitalize;
(iv) change its Articles of Incorporation or Constitu-
tion or Bylaws or Code of Regulations except in respect of the Amendment;
(v) enter into, modify or renew any employment
agreement or severance agreement or plan; or grant any increase in the
compensation payable or to become payable to any director, officer or
employee, except for increases in salaries consistent with SHFC's and the
Association's past practices; grant any stock options; or, except as required
by law, pay or agree to pay any bonus, adopt or make any change in any bonus,
insurance, pension, or other Employee Plan, payment or arrangement made to,
for or with any director, officer or employees, except for payments of and
changes in salaries and bonuses consistent with SHFC's and the Association's
past practices, or promote any persons employed as of the date hereof or hire
any new employees;
(vi) except for FHLB of Cincinnati advances having a
maturity of one year or less (or a longer period if such advances may be
prepaid without penalty or premium) the aggregate amount of which at any time
shall not exceed One Million Dollars ($1,000,000) and deposit-taking in the
ordinary course of its business, borrow or agree to borrow any funds,
including but not limited to repurchase transactions, or indirectly guarantee
or agree to guarantee any obligations of others;
(vii) except pursuant to the Association's outstanding
commitment to the Cincinnati Development Fund, make or commit to make any new
loan or letter of credit or any new or additional discretionary advance under
any existing line of credit, in a principal amount in excess of One Hundred
Thousand Dollars ($100,000) or that would increase the aggregate credit
outstanding to any one borrower (or group of affiliated borrowers) to more
than One Hundred Thousand Dollars ($100,000) (excluding for this purpose any
accrued interest or overdrafts); provided, however, that the Association may
make one-to-four family residential mortgage loans that conform to the
Association's mortgage lending policies as of the date hereof in principal
amounts of up to Two Hundred Seven Thousand Dollars ($207,000);
(viii) establish any new lending programs or make any
changes in its policies concerning which persons may approve loans;
(ix) enter into any securities transaction for its own
account or purchase or otherwise acquire any investment security for its own
account other than U.S. Treasury obligations and deposits in an overnight
account at the FHLB of Cincinnati or securities issued or guaranteed by the
Government National Mortgage Association, the Federal National Mortgage
Association or the Federal Home Loan Mortgage Corporation;
(x) increase or decrease the rate of interest paid on
time deposits or on certificates of deposit, except in a manner and pursuant
to policies consistent with past practices in relation to rates prevailing in
the Association's market;
(xi) enter into any agreement, contract or commitment
out of the ordinary course of business or having a term in excess of three (3)
months and involving an expenditure in excess of Five Thousand Dollars
($5,000) other than letters of credit, loan agreements, deposit agreements,
and other lending, credit and deposit agreements and documents made in the
ordinary course of business;
(xii) except in the ordinary' course of business, place
on any of its assets or properties any mortgage, pledge, lien, charge, or
other encumbrance;
(xiii) cancel or accelerate any material indebtedness
owing to SHFC or the Association or any claims which SHFC or the Association
may possess or waive any rights of material value;
(xiv) sell or otherwise dispose of any real property or
any material amount of any tangible or intangible personal property other
than, (a) properties acquired in foreclosure or otherwise in the ordinary
collection of indebtedness owed to the Association, (b) student loans, or (c)
fixed rate loans which are held for sale upon origination and sold within
sixty (60) days thereafter;
(xv) foreclose upon or otherwise take title to or
possession or control of any real property without first obtaining a Phase One
environmental report thereon which indicates that the property is free of
pollutants, contaminants or hazardous or toxic waste materials; provided,
however, that the Association shall not be required to obtain such a report
with respect to single family, non-agricultural residential property of one
acre or less to be foreclosed upon unless it has reason to believe that such
property might contain any such pollutants, contamination, or waste materials;
(xvi) voluntarily commit any act or omission which will
cause a breach of any material agreement, contract or commitment;
(xvii) violate any law, statute, rule, governmental
regulation, or order, which violation might have a material adverse effect on-
SHFC's or the Association's business, financial condition, or earnings, taken
as a whole; or
(xviii) purchase any real or personal property or make any
other capital expenditure where the amount paid or committed therefor is in
excess of Five Thousand Dollars ($5,000).
(c) SHFC and the Association shall promptly notify Acquiror in
writing of the occurrence of any matter or event known to and directly
involving SHFC or the Association (except matters or events that affect the
thrift industry generally) that is materially adverse to the business,
operations, properties, assets, or condition (financial or otherwise) of SHFC
or the Association.
(d) Unless and until this Agreement shall have been properly
terminated by a party pursuant to Article Seven hereof and except as provided
below in this Section 4.01(d) hereof, each of SHFC and the Association shall
(i) not, directly or indirectly, through any of their respective officers,
directors, agents, shareholders, or affiliates, solicit, encourage or initiate
any negotiations or discussions with respect to inquiries, offers, or
proposals relating to the possible sale or other disposition of shares of its
capital stock by its shareholders or the possible sale or other disposition
(except in the ordinary course of business) of a substantial portion of its
assets to, or merger or consolidation with, any other person, (ii) not
disclose to any person any information not customarily disclosed publicly or
provide access to its properties, books, or records or otherwise assist or
encourage any person in connection with any of the foregoing, and (iii) give
Acquiror prompt notice of any such inquiries, offers, or proposals. The
foregoing shall not apply, however, to the consideration and facilitation of
an inquiry, offer, or proposal not solicited by SHFC or the Association or any
of their respective officers, directors, shareholders, agents or affiliates
which relates to the possible sale or other disposition of SHFC Common or the
Association Common by shareholders or the possible sale or other disposition
of all or substantially all of SHFC's or the Association's assets to, or
merger or consolidation with, another corporation or association (an
"Unsolicited Acquisition Proposal") if and to the extent that the Board of
Directors of SHFC reasonably determines in good faith after consultation with
its financial advisor and counsel to SHFC that failure to consider such
Unsolicited Acquisition Proposal could reasonably be expected to constitute a
breach of its fiduciary duties to the shareholders of SHFC; provided, however,
that SHFC shall give Acquiror prompt notice of such Unsolicited Acquisition
Proposal and keep Acquiror promptly informed regarding the substance thereof
and the response of the Board of Directors of SHFC thereto.
(e) SHFC and the Association shall permit representatives of Acquiror
to attend each meeting of its respective board of directors and executive
committee, and shall give reasonable prior notice of all such meetings to
Acquiror; provided, however, that the representatives of Acquiror may be
excluded from portions of such meetings where sensitive matters (including but
not limited to an Unsolicited Acquisition Proposal and discussions with legal
counsel with respect to the transactions contemplated by this Agreement) are
being discussed or voted upon.
(f) SHFC shall provide to Acquiror such reports on litigation
involving SHFC or the Association as Acquiror shall reasonably request,
provided that SHFC shall not be required to divulge information to the extent
that, in the good faith opinion of its counsel, by doing so, it would waive
the attorney-client privilege.
(g) the Association will use reasonable efforts to prevent the
decline in its level of deposits (except for declines due to withdrawals of
deposits of SHFC held by the Association for payment of permitted dividends
and expenses) and in its mortgage loan portfolio in a manner consistent with
the safe and sound operations of the Association and the terms of this
Agreement.
Section 4.02. Breaches. In the event that SHFC or the Association has
knowledge of the occurrence, or impending or threatened occurrence, of any
event or condition which would cause or constitute a breach by either (or
would have caused or constituted a breach had such event occurred or been
known prior to the date hereof) of any representations or agreements contained
or referred to herein, it shall give prompt written notice thereof to Acquiror
and use its reasonable efforts to prevent or promptly remedy the same.
Section 4.03. Submission to Shareholders. SHFC shall cause to be duly
called and held, on a timely basis, a special meeting of its shareholders for
submission of the Amendment, this Agreement and the Plan of Merger for
adoption by such shareholders as required by applicable law (the
"Shareholders' Meeting"). Subject to receipt by SHFC of all information
concerning Acquiror and its significant subsidiaries as SHFC may reasonably
request, SHFC shall prepare a Proxy Statement (the "Proxy Statement"), and,
after providing Acquiror and Acquirors counsel reasonable opportunity to
comment on the Proxy Statement, SHFC shall, within forty-five (45) days of the
date of this Agreement, provided that Acquiror shall not have caused any
unreasonable delay, file a draft Proxy Statement with the SEC. As soon as
practicable thereafter, SHFC shall deliver the Proxy Statement to its
shareholders. The Board of Directors of SHFC shall recommend to its
shareholders the adoption of the Amendment, this Agreement and the Plan of
Merger and, subject to the terms of this Agreement, use its best efforts to
obtain such shareholder approval; provided, however, that if the Board of
Directors of SHFC, based (i) solely on an Unsolicited Acquisition Proposal or
(ii) on a refusal by Charles Webb & Company to deliver the Fairness Opinion
required by Section 6.02(f) on or about the dissemination date of the Proxy
Statement, based in whole or in part on an Unsolicited Acquisition Proposal,
shall have reasonably determined in good faith (after consultation with its
counsel) that such recommendation is reasonably likely to constitute a breach
of its fiduciary duties to the shareholders of SHFC, then the Board of
Directors of SHFC shall not be obligated to recommend to its shareholders
adoption of the Amendment, this Agreement and the Plan of Merger, or to
present the Amendment, this Agreement and the Plan of Merger to the
shareholders of SHFC for their adoption at the Shareholders' Meeting or to
hold the Shareholders' Meeting for such purpose, but SHFC shall be subject to
Section 7.08 below.
Section 4.04. Consents to Contracts and Leases. SHFC and the
Association shall, subject to the consent of Acquiror, use reasonable efforts
to obtain all necessary consents with respect to all interests of SHFC and the
Association in any material leases, licenses, contracts, instruments and
rights which require the consent of another person for their transfer or
assumption pursuant to the Merger.
Section 4.05. Conforming Accounting and Reserve Policies;
Restructuring Expenses. After the receipt of all approvals set forth in
Section 6.01(d) of this Agreement, and provided that at such time all of the
conditions to closing set forth in Sections 6.01(a), (b), (c), (f), (g) and
(h) of this Agreement have been satisfied, to the extent they are capable of
being satisfied as of such time, and further provided that no basis for
termination of this Agreement by either party pursuant to Article Seven of
this Agreement is then extant, at the request of Acquiror, the Association
shall, on or before or effective as of the date specified by Acquiror,
establish and take such reserves and accruals as Acquiror reasonably shall
request to conform the Association's loan, accrual, reserve and other
accounting policies to Acquiror's policies. Notwithstanding the foregoing, the
Association shall not be required to take any action under this Section 4.05
which it believes, based upon a written opinion of independent counsel, that
will constitute a breach of its fiduciary duties, or, based upon a written
opinion of its independent public accountants, will constitute violation of
GAAP.
Section 4.06. Consummation of Agreement. SHFC and the Association
shall use their best efforts to perform and fulfill all conditions and
obligations to be performed or fulfilled under this Agreement by it and each
of its subsidiaries and to effect the Merger in accordance with the terms and
provisions hereof. The Association shall furnish to Acquiror in a timely
manner all information, data and documents in the possession of SHFC or the
Association requested by Acquiror as may be required to obtain the Regulatory
Approvals or other necessary approvals of the Merger and-shall otherwise
cooperate fully with Acquiror to carry out the purpose and intent of this
Agreement.
Section 4.07. Access to Information. SHFC and the Association shall
permit Acquiror reasonable access to their properties in a manner which will
avoid undue disruption or interference with normal operations and shall
disclose and make available to Acquiror all books, documents, papers and
records relating to assets, stock, ownership, properties, operations,
obligations and liabilities, including but not limited to all books of account
(including the general ledger), tax records, minute books of directors' and
shareholders' meetings, organizational documents, material contracts and
agreements, loan files, filings with any regulatory authority, accountants'
workpapers, litigation files, plans affecting employees, and any other
business activities or prospects in which Acquiror may have a reasonable and
legitimate interest in furtherance of the transactions contemplated by this
Agreement. Acquiror will hold any such information which is nonpublic in
confidence in accordance with the provisions of Section 8.01 hereof.
Section 4.08. Subsequent Disclosure Schedule. If subsequent to the
date of this Agreement and prior to the Effective Time, an event occurs which
renders untrue any representation or warranty of SHFC or the Association made
at the date of this Agreement (a "Trigger Event"), SHFC or the Association
shall deliver to Acquiror in accordance with the following sentence a
supplement to the Disclosure Schedule (a "Subsequent Disclosure Schedule"),
which shall contain a detailed description of any and all such matters. A
Subsequent Disclosure Schedule (if any) shall be delivered by SHFC or the
Association to Acquiror within two (2) business days after SHFC or the
Association learns of the Trigger Event, but in no event later than two (2)
business days before the Closing. If there is no subsequent Disclosure
Schedule, SHFC shall deliver a statement to such effect to Acquiror no later
than two (2) business days before the Closing. The delivery of a Subsequent
Disclosure Schedule and the matters therein contained shall not constitute a
default or breach by SHFC or the Association of any of its representations and
warranties under this Agreement with respect to events occurring subsequent to
the date of this Agreement; provided, however, that all matters therein
disclosed, together with all other events, circumstances and occurrences, may
be taken into account by Acquiror in determining whether SHFC or the
Association has experienced a Material Adverse Change; provided, further,
however, that this Section 4.08 is not intended to permit SHFC or the
Association to alter or amend its representations and warranties as made
herein (including the Disclosure Schedule) as of the date of this Agreement,
and any Subsequent Disclosure Schedule shall not cure the inaccuracy thereof
as of the date of this Agreement for any purpose under this Agreement.
Section 4.09. Unallocated Recognition and Retention Plan Shares. SHFC
shall cause the unallocated shares in its Recognition and Retention Plan
("RRP") as of the date of the Agreement to be cancel led, retired or returned
to treasury prior to the Effective Time without payment of any consideration
therefor. No such unallocated shares of SHFC Common shall be allocated or
awarded to any person.
Section 4. 10 Delivery of Reports. SHFC shall deliver to Acquiror,
upon request, a copy of each report, statement or other filing or document
filed with SEC since the date hereof not previously delivered to Acquiror.
Section 4. 11 Report of Funds Received from ODGF. In the event that
the Association receives any payment from the ODGF, the Association shall
promptly, but in no event later than the business day prior to the Closing
Date, give to Acquiror a statement setting forth the date and amount of the
payment, the estimated federal, state and local tax liability of the
Association or SHFC attributable thereto and any out-of-pocket expenses
incurred after the date of this Agreement, including any accounting fees,
attributable thereto.
Section 4.12 Amendment of Association Articles of Incorporation.
Within sixty (60) days after the date of this Agreement, SHFC shall seek
approval of the Division for an amendment of Article NINTH of the Articles of
Incorporation of the Association to permit Acquiror to offer to acquire and to
acquire all of the outstanding shares of the Association, and immediately upon
receipt of such approval, SHFC, as the sole shareholder of the Association,
shall cause Article NINTH of the Articles of Incorporation of the Association
to be so amended.
ARTICLE FIVE
AGREEMENTS OF ACQUIROR
Section 5.01. Regulatory Approvals and Proxy Statement. Acquiror
shall use its best efforts to file within sixty (60) days after the date
hereof all applications for the Regulatory Approvals required in order to
consummate the Merger. Acquiror shall keep SHFC reasonably informed as to the
status of such applications and make available to SHFC copies of such
applications as filed and any supplementally filed materials. Acquiror shall
timely provide all information reasonably requested by SHFC for inclusion in
the Proxy Statement and shall fully cooperate with SHFC in the preparation of
the Proxy Statement.
Section 5 02. Breach. In the event that Acquiror has knowledge of the
occurrence, or impending or threatened occurrence, of any event or condition
which would cause or constitute a breach (or would have caused or constituted
a breach had such event occurred or been known prior to the date hereof) of
any of its representations or agreements contained or referred to herein, it
shall give prompt written notice thereof to SHFC and use its best efforts to
prevent or promptly remedy the same.
Section 5.03. Consummation of Agreement. Acquiror shall use its best
efforts to perform and fulfill all conditions and obligations to be performed
or fulfilled by it under this Agreement and to effect the Merger in accordance
with the terms and conditions of this Agreement.
Section 5.04. Directors and Officers' Liability Insurance and Indem-
nification.
(a) From the Effective Time of the Company Merger and continuing for
a period of three years thereafter, the current officers and directors of SHFC
shall be indemnified by Acquiror from their acts and omissions occurring prior
to the Effective Time of the Company Merger to the maximum extent permitted by
the Certificate of Incorporation and Bylaws of Acquiror but subject to any
applicable limitations of Delaware law. From the Effective Time of the Company
Merger and continuing for a period of three years thereafter, the current
officers and directors of the Association shall be indemnified by the
Association for their acts and omissions occurring prior to the Effective Time
to the extent permitted by the Thrift Regulations.
(b) Subject to SHFC and the Association providing all requested
information and representations to Acquiror's directors' and officers'
liability insurance carrier, Acquiror shall use its best efforts to add a
rider, at standard rates, to its existing directors' and officers' liability
insurance policy covering the acts and omissions of the officers and directors
of SHFC and the Association occurring prior to the Effective Time and to
continue such rider for a period of three years.
Section 5.05. Employee Benefit and Related Matters. All employees of
the Association immediately prior to the Effective Time of the Company Merger
shall remain employees of the Association at the Effective Time of the Company
Merger and, with respect to employees who are not currently covered by a
written employment agreement with the Association, shall be employed by the
Association as at-will employees at the same salary they are receiving from
the Association. Any employee who is currently covered by a written employment
agreement will continue his or her employment in accordance with the terms of
such written agreement. Acquiror does not intend to impose job eliminations at
the Association as a result of the Merger. All employees of the Association
shall become participants in a medical plan, a life insurance plan, a short
term disability insurance plan and a long term disability insurance plan, each
to be maintained by the Association and each of which shall be the same plans,
or substantially equivalent to the plans, maintained by Acquiror or its
subsidiary for the benefit of the employees of Acquiror's subsidiary,
Mayflower Federal Savings Bank ("Mayflower Federal"). Employees of the
Association shall be given credit for years of service to the Association for
the calculation of vacation and sick time. Upon termination of the
Association's employee stock ownership trust (the "Association ESOP Trust"),
the employees of the Association shall become eligible to participate in the
Acquiror's 401(k) plan on the next entry date and they shall be given credit
for their past service with the Association for purposes of vesting under such
plan. Except as specifically provided herein, no employee of the Association
shall be entitled to be eligible for or participate in any other qualified or
non-qualified employee benefit program or plan maintained by Acquiror or
Mayflower Federal.
Section 5.06. The Association's Employee Stock Ownership Plan. Prior
to the Effective Time and without any requirement to make application to the
Key District Office of the IRS in Cincinnati (the "Key District Office"), the
Association may amend the Association's employee stock ownership plan (the
"Association ESOP") to provide for (i) full vesting of benefits by
participants and (ii) elimination of any requirement for a participant to be
employed as of the last day of the year to receive an employer contribution,
other annual additions or allocations, in each case effective as of the
Effective Time. From and after the date of this Agreement, the Association
shall make no further contributions to the Association ESOP, except in an
amount to pay any required installment payment on the Association ESOP loan.
From and after the date of this Agreement and prior to the Effective Time,
Acquiror and its representatives, with the full cooperation of the
Association, shall use their best efforts to (i) submit to the Key District
Office an Application for Determination upon Termination relating to the
Association ESOP which discloses the proposed allocation of the cash remaining
in the suspense account (after the repayment of the Association ESOP Loan)
without regard to Section 415 of the Code; and (ii) maintain the status of the
Association ESOP as a plan qualified under Section 401(a) and 4975 of the
Code. At the Effective Time or as soon thereafter as is practicable and
permissible under the Code, the Association and Acquiror shall cause the
Association ESOP loan to be repaid with cash proceeds from the sale of SHFC
Common received by the Association ESOP with respect to unallocated shares of
SHFC Common. If the Key District Office issues a favorable determination
letter with respect to the repayment of the Association ESOP loan and proposed
allocation of the remaining suspense account to participants, Acquiror and
SHFC shall, as soon thereafter as practicable, (a) cause the Association ESOP
to repay the Association ESOP loan and make the proposed allocation to
participants in accordance with such favorable determination letter, (b)
terminate the Association ESOP and (c) distribute the Association ESOP
benefits to the Association ESOP participants pursuant to the terms of the
Association ESOP. If the Key District Office determines that it will not issue
a favorable determination letter with respect to the proposed allocation, then
the Association ESOP loan shall nevertheless be repaid and such remaining cash
received by the Association ESOP attributable to unallocated shares of SHFC
Common shall remain in the suspense account and, to the extent that such cash
can be allocated to the accounts of participants without violating the
limitations of Section 415 of the Code, the cash shall be allocated in the
current Plan Year in which the Effective Time occurs and during the next
ensuing Plan Year to those participants in the Association ESOP as of the
Effective Time to the maximum extent permitted by Section 415 of the Code and
provided that the continued maintenance of the Association ESOP shall not
adversely affect the tax-qualified status of the Association ESOP. At the
expiration of said subsequent Plan Year, the Association ESOP Trust shall be
terminated with any amounts then remaining in the suspense account, if any,
being transferred to another qualified plan of Acquiror.
Section 5.07. Board of Directors of the Association.
(a) At the Closing, the members of the Board of Directors of the
Association shall submit letters of resignation, effective as of the Effective
Time, to the Acquiror. The Acquiror shall elect the persons listed on Exhibit
G hereto to be Directors of the Association for the terms set forth therein
and shall appoint the person listed on Exhibit H hereto as Director Emeritus.
(b) The Director Emeritus Plan of the Association shall be terminated
as of the Effective Time as to all directors of the Association and shall
thereafter be replaced with a director emeritus plan having identical terms
and conditions to the director emeritus plan of Acquiror.
(c) The director's Death Benefit Plan of the Association shall cease
to accrue any additional benefits on or after the Effective Time, but any
previously accrued benefits shall be payable as and when they would otherwise
have been payable under such plan.
Section 5.08. Managing Officer of the Association. It is the
intention of Acquiror that Diana Bowman D'Amico, the Vice President of the
Association, shall be appointed as President and Managing Officer of the
Association on or before the Closing Date.
Section 5.09 Shareholder Approval for Conversion of SHFC Stock
Options; Registration. At the Annual Meeting, Acquiror shall seek approval
from its shareholders, with the favorable recommendation of its Board of
Directors, of the assumption of the obligations of SHFC under the SHFC Stock
Option Plan consistent with the provisions of Section 1.04(d) hereof. Within
ten (lO) business days after the Annual Meeting, unless the shareholders of
Acquiror fail to approve the assumption by Acquiror of the SHFC Stock Option
Plan, Acquiror shall file with the SEC and any required state agency an
appropriate registration statement with respect to the shares of Acquiror
common to be subject to the SHFC Stock Option Plan and shall use reasonable
efforts to maintain the effectiveness of such registration statement or
statements for so long as such options remain outstanding.
Section 5. 10 Delivery of Reports. Acquiror shall deliver to SHFC,
upon request, a copy of each report, statement or other filing or document
filed with the SEC since the date hereof not previously provided to SHFC.
Section 5. 11 Distribution of RRP Proceeds. All amounts held in the
RRP representing Per Share Merger Consideration for, dividends paid on and
earnings on dividends paid on, allocated SHFC Common shall be distributed to
the participants therein immediately after the Closing.
ARTICLE SIX
CONDITIONS PRECEDENT TO THE MERGER
Section 6.0l. Conditions to Acquiror's Obligations. Acquiror's
obligations under this Agreement are conditioned upon Acquiror's receiving,
concurrently with the execution and delivery of this Agreement by SHFC and the
Association, (i) a Shareholder Agreement in the form attached as Exhibit A
executed by each of the directors of SHFC who is a shareholder of SHFC and
(ii) an Optionholder Agreement in the form attached hereto as Exhibit B
executed by each holder of SHFC Options. Each such agreement and each such
consent shall be dated as of the date of this Agreement and delivered at the
time of execution hereof. Acquiror's obligations to effect the Company Merger
shall be subject to the satisfaction (or waiver by Acquiror) prior to or on
the Closing Date of the following conditions:
(a) The representations and warranties made by SHFC and the
Association in this Agreement shall be true in all material respects on and as
of the Closing Date but as updated by any Subsequent Disclosure Schedule with
the same effect as though such representations and warranties had been made or
given on and as of the Closing Date, and for purposes of satisfying this
closing condition relative to the truth as of the date of this Agreement of
any representations of SHFC or the Association that contains a knowledge
qualification, such knowledge qualification may be disregarded by Acquiror;
(b) SHFC and the Association shall have performed and complied in all
material respects with all obligations and agreements required to be performed
by them prior to the Closing Date under this Agreement;
(c) No temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent jurisdiction or
other legal restraint or prohibition (an "Injunction") preventing the
consummation of the Merger shall be in effect, nor shall there be pending any
proceeding by any governmental agency or other person seeking any of the
foregoing; and there shall not be any action taken, or any statute, rule,
regulation or order enacted, promulgated, entered, enforced or deemed
applicable to the Merger which makes the consummation of the Merger illegal;
(d) All Regulatory Approvals and other necessary consents,
authorizations and other approvals required by law for consummation of the
Merger shall have been obtained without the imposition of any conditions that
Acquiror determines to be unduly burdensome, and all waiting periods required
by law shall have expired;
(e) Acquiror shall have received all documents reasonably required to
be received from SHFC and the Association on or prior to the Closing Date, all
in form and substance reasonably satisfactory to Acquiror;
(f) SHFC and the Association shall not have experienced a Material
Adverse Change, including but not limited to items contained in any Subsequent
Disclosure Schedule;
(g) Immediately prior to the Effective Time of the Company Merger,
the holders of no more than ten percent (10%) of the outstanding SHFC Common
shall qualify as Dissenting Shareholders;
(h) Immediately prior to the Effective Time of the Company Merger,
the amount of the total equity capital of the Association shall not be less
than the total equity capital of the Association as reported in its Thrift
Financial Report as of March 31, 1996 and the shareholders' equity of SHFC
shall not be less than its shareholders' equity as of March 31, 1996;
provided, however, that for purposes of such calculations, any special
exclusions contemplated by the definition of Material Adverse Change and
conforming reserves and accruals contemplated by Section 4.05 shall not be
taken into account; and
(i) Immediately prior to the Effective Time the number of issued and
outstanding shares of SHFC shall be no greater than Five Hundred Thirty-Four
Thousand Three Hundred Fifty-Seven (534,357).
Section 6.02. Conditions to SHFC's Obligations. SHFC's obligations
under this Agreement are conditioned upon its receipt, concurrently with the
execution and delivery of this Agreement by SHFC and the Association, of a
written opinion from Charles Webb & Company that the Per Share Merger
Consideration to be received by the holders of SHFC Common in the Company
Merger is fair to such holders from a financial point of view (the "Fairness
Opinion"). SHFC's obligation to effect the Company Merger shall be subject to
the satisfaction (or waiver by SHFC) prior to or on the Closing Date of the
following conditions:
(a) The representations and warranties made by Acquiror in this
Agreement shall be true in all material respects on and as of the Closing Date
with the same effect as though such representations and warranties had been
made or given on the Closing Date;
(b) Acquiror shall have performed and complied in all material
respects with all of its obligations and agreements hereunder required to be
performed prior to the Closing Date under this Agreement;
(c) No Injunction preventing the consummation of the Merger shall be
in effect, nor shall there be pending any proceeding by any thrift regulatory
authority or other governmental agency seeking to prevent or delay the merger;
and there shall not be any action taken, or any statute, rule, regulation or
order enacted, entered, enforced or deemed applicable to the Merger which
makes the consummation of the Merger illegal;
(d) All Regulatory Approvals and other necessary consents,
authorizations and other approvals, including the requisite approval of the
Amendment, this Agreement and the Plan of Merger by the shareholders of SHFC,
required by law for consummation of the Merger shall have been obtained and
all waiting periods required by law shall have expired;
(e) SHFC shall have received all documents required to be received
from Acquiror on or prior to the Closing Date, all in form and substance
reasonably satisfactory to SHFC.
(f) Charles Webb and Company shall not have refused to deliver to
SHFC a Fairness Opinion dated on or about the date of dissemination of the
Proxy Statement (or a reiteration of the previous Fairness Opinion or a letter
that the previous Fairness Opinion has not been withdrawn), provided that no
such refusal shall be deemed to have been made for purposes of this Section
6.02(f) unless it is in writing and gives all of the specific reasons
therefor.
ARTICLE SEVEN
TERMINATION OR ABANDONMENT
Section 7.01. Mutual Agreement. This Agreement may be terminated by
the mutual written agreement of the parties at any time prior to the Closing
Date, regardless of whether approval of this Agreement and the Plan of Merger
by the shareholders of SHFC shall have been previously obtained.
Section 7.02. Breach of Agreement. In the event that there is a
material breach of any of the representations and warranties or agreements of
Acquiror on the one hand, or SHFC or the Association on the other hand, and
such breach is not cured within ten (10) days after notice to cure such breach
is given by the non-breaching party or, if such breach is not capable of being
cured within ten (10) days, steps are not initiated within ten (10) days to
effect a cure, then the nonbreaching party, regardless of whether shareholder
approval of this Agreement and the Plan of Merger shall have been previously
obtained by SHFC, may terminate and cancel this Agreement by providing written
notice of such action to the other party hereto.
Section 7.03. Failure of Conditions. In the event any of the
conditions to the obligations of (i) Acquiror set forth in Sections 6.01 or
(ii) SHFC set forth in Section 6.02 are not satisfied or waived on or prior to
the Closing Date, and if any applicable cure period provided in Section 7.02
has lapsed, then Acquiror (in the case of conditions to its obligations) or
SHFC (in the case of conditions to its obligations) may, regardless of whether
approval of the Amendment, this Agreement and the Plan of Merger by the
shareholders of SHFC shall have been previously obtained, terminate and cancel
this Agreement by delivery of written notice of such action to the other party
on such date.
Section 7.04. Denial of Regulatory Approval. If any regulatory
application filed pursuant to Section 5.01 should be finally denied or
disapproved by the respective regulatory authority, then this Agreement may be
terminated by any party to this Agreement. It is understood, however, that a
reasonable request for additional information from or undertaking by Acquiror,
as a condition for approval, shall not be deemed to be a denial or disapproval
so long as Acquiror diligently provides the requested information or
undertaking. Notwithstanding the foregoing, Acquiror agrees to promptly and
diligently pursue any appeals available with respect to any such denial if
SHFC shall request the pursuit of such appeals based on advice of counsel to
SHFC that such appeal has a reasonable chance of success.
Section 7.05. Failure of Shareholders to Adopt.
(a) If SHFC's Board of Directors is excused, pursuant to Section 4.03
of this Agreement, from its obligation to recommend that SHFC's shareholders
vote in favor of the adoption of the Amendment and this Agreement and the Plan
of Merger, to present this Agreement and the Plan of Merger to them for
adoption or to hold the Shareholders' Meeting for such purpose, Acquiror or
SHFC may terminate this Agreement.
(b) In the event that (i) at the Shareholders' Meeting, the holders
of at least the Minimum Portion of the outstanding shares of SHFC Common do
not adopt the Amendment, this Agreement and the Plan of Merger and SHFC's
Board of Directors has recommended that SHFC's shareholders vote in favor of
the adoption of the Amendment and this Agreement and the Plan of Merger or
(ii) no Unsolicited Acquisition Proposal has been received by SHFC and Charles
Webb & Company has refused to issue the Fairness Opinion as required by
Section 6.02(f) on or about the date of dissemination of the Proxy Materials,
Acquiror or SHFC may terminate this Agreement.
Section 7.06. Regulatory Enforcement Matters. In the event that the
Association shall become a party or subject to any written agreement,
memorandum of understanding, cease and desist order, imposition of civil money
penalties or other regulatory enforcement action or proceeding with or by any
federal or state agency charged with the supervision or regulation of savings
banks or savings associations after the date of this Agreement, which is
reasonably determined by Acquiror to be significant to the Association's
business, operations or financial condition, then Acquiror may terminate this
Agreement.
Section 7.07. Automatic Termination. If the Closing Date does not
occur on or prior to March 31, 1997, then this Agreement may be terminated by
either party by giving written notice to the other; provided, however, that a
party who is then in breach of any of its representations, warranties,
covenants or agreements under this Agreement in any material respect may not
exercise such right of termination if it has received notice from the
non-breaching party that the non-breaching party is seeking specific
performance of the breaching party's obligations under this Agreement;
provided, further, however, that no such termination shall relieve the
breaching party from liability for a breach which occurs prior to such
termination.
Section 7.08. Termination Fee. In the event of termination of this
Agreement pursuant to Section 7.05(a), in consideration of Acquiror's costs
and expenses in connection with this Agreement and the transactions
contemplated hereby, its agreements hereunder, its expenditure of significant
management time and staff resources, its forbearance from consideration and
pursuit of other business alternatives, its loss of a unique and valuable
business opportunity, and the added value to any person acquiring assets or
securities of SHFC or combining with SHFC or the Association resulting from
SHFC's dealings with Acquiror and Acquiror's agreement to proceed with the
Company Merger on the terms and conditions set forth herein, SHFC and the
Association shall be jointly and severably liable to pay Five Hundred
Thirty-Five Thousand Dollars ($535,000) to Acquiror as an agreed-upon
termination fee, in immediately available funds within two (2) business days
after the occurrence of such event. If SHFC timely satisfies its obligations
under this Section 7.08, it shall have no liability under Section 8.06 of this
Agreement, nor shall it be liable for specific performance or injunctive
relief under Section 8.15 of this Agreement.
ARTICLE EIGHT
GENERAL
Section 8.01. Confidential Information. The parties acknowledge the
confidential and proprietary nature of the information as hereinafter
described which has heretofore been exchanged and which will be received from
each other hereunder ("Information") and agree to hold and keel the same
confidential. Such Information will include any and all financial, technical,
commercial, marketing, customer or other information concerning the business,
operations and affairs of a party that may be provided to the other,
irrespective of the form of the communications, by such party's employees or
agents. Such Information shall not include information which is or becomes
generally available to the public other than as a result of a disclosure by a
party or its representatives in violation of this Agreement. The parties agree
that the Information will be used solely for the purposes contemplated by this
Agreement and that such Information will not be disclosed to any person other
than employees and agents of a party who are directly involved in evaluating
the transaction. The Information shall not be used in any way detrimental to a
party, including use directly or indirectly in the conduct of the other
party's business or any business or enterprise in which such party may have an
interest, now or in the future, and whether or not now in competition with
such other party.
Section 8.02. Publicity. Acquiror and SHFC shall cooperate with each
other in the development and distribution of all news releases and other
public disclosures concerning this Agreement and the Merger and shall not
issue any news release or make any other public disclosure without prior
review by the other, unless such may be required by law or upon the written
advice of counsel.
Section 8.03. Return of Documents. Upon termination of this Agreement
prior to the Effective Time of the Company Merger, each party shall deliver to
the other originals and all copies of all Information made available to such
party and will not retain any copies, extracts or other reproductions in whole
or in part of such Information.
Section 8.04. Notice. Any notice or other communication shall be in
writing and shall be deemed to have been given or made on the date of
delivery, in the case of hand delivery, or three (3) business days after
deposit in the United States Registered Mail, postage prepaid, or upon receipt
if transmitted by facsimile telecopy or any other means, addressed (in any
case) as follows:
(a) if to Acquiror:
C. William Clark, President and
Chief Executive Officer
Western Ohio Financial Corporation
28 E. Main St.
Springfield, Ohio 45502-1205
with a copy to:
Jeffrey M. Werthan, P.C.
Silver, Freedman & Taff, L.L.P.
1100 New York Ave., N.W.
Washington, D.C. 20005
and
(b) if to SHFC or the Association:
Arthur W. Wendel, Jr., President and
Diana Bowman D'Amico, Vice President
Seven Hills Financial Corporation
1440 Main Street
Cincinnati, Ohio 45210
with a copy to:
Cynthia Shafer, Esq.
Vorys, Sater, Seymour and Pease
221 E. Fourth Street
Cincinnati, Ohio 45201-0236
or to such other address as any party may from time to time designate by
notice to the others.
Section 8.05. Liabilities. In the event that this Agreement is
terminated pursuant to the provisions of Article Seven hereof, no party hereto
shall have any liability to any other party for costs, expenses, damages or
otherwise, except (i) as provided in Section 7.08 in the event Section 7.08 is
applicable to such termination and (ii) liability of a breaching party to the
non-breaching party for damages arising from a breach of a party's
representations, warranties, covenants or agreements herein. The termination
fee provided for in Section 7.08 shall be the exclusive fee and remedy for a
proper termination of this Agreement pursuant to Section 7.05(a). SHFC shall
have no obligation to Acquiror under this Section 8.05 with respect to a
proper termination pursuant to Section 7.05(a). Except as provided in the
preceding sentence, nothing contained in this Section 8.05 is intended to
diminish or restrict a party's right to specific performance under Section
8.15.
Section 8.06. Expenses. Each of the parties shall bear its own costs,
fees and expenses incurred in connection with this Agreement and the
transactions contemplated hereby.
Section 8.07. Nonsurvival of Representations and Warranties. Except
as provided in this Section 8.07, no representation, warranty, covenant or
agreement contained in this Agreement shall survive the Effective Time or the
earlier termination of this Agreement. The agreements set forth in Sections
1.04(c), (d), (e) and (f) and 5.04, 5.05, 5.06, 5.07 and 5.09 shall survive
the Effective Time of the Company Merger and the agreements set forth in
Sections 7.08, 8.01, 8.03, 8.05, 8.06 and 8.15 hereof shall survive the
earlier termination of this Agreement.
Section 8.08. Entire Agreement. This Agreement constitutes the entire
agreement among the parties and supersedes and cancels any and all prior
discussions, negotiations, undertakings and agreement between the parties
relating to the subject matter hereof.
Section 8.09. Headings and Captions. The captions of Articles and
Sections hereof are for convenience only and shall not control or affect the
meaning or construction of any of the provisions of this Agreement.
Section 8. 10. Waiver Amendment or Modification. The conditions of
this Agreement which may be waived may be waived only by written notice by the
party waiving such condition to the other party or parties. The failure of any
party at any time or times to require performance of any provision hereof
shall in no manner affect the right at a later time to enforce the same. This
Agreement may be amended or modified by a written document duly approved by
the boards of directors of the parties, whether before or after approval of
this Agreement by the shareholders of SHFC, provided that any amendment or
modification after such shareholder approval shall not decrease the Per Share
Merger Consideration without the approval thereof of the shareholders of SHFC
by at least the Minimum Portion.
Section 8.11. Rules of Construction. Unless the context otherwise
requires: (a) a term has the meaning assigned to it; (b) an accounting term
not otherwise defined has the meaning assigned to it in accordance with GAAP;
(c) "or" is not exclusive; and (d) words in the singular may include the
plural and in the plural include the singular.
Section 8.12. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original and all of which
shall be deemed one and the same instrument.
Section 8.13. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns. Except as provided in Sections 5.04, 5.05 and 5.07,
there shall be no-third party beneficiaries hereof.
Section 8.14. Governing Law; Assignment. This Agreement shall be gov-
erned by, and construed in accordance with, the laws of the State of Ohio and
applicable federal laws and regulations. This Agreement may not be assigned by
either of the parties hereto.
Section 8. 15. Specific Performance and Injunctive Relief. Each party
to this Agreement recognizes that, if it fails to perform, observe or
discharge any of its obligations under this Agreement, remedies at law may not
provide adequate relief to the other party or parties. Therefore, each party
is hereby authorized to demand specific performance of this Agreement, and is
entitled to temporary and permanent injunctive relief, in a court of competent
jurisdiction at any time when any other party fails to comply with any of the
provisions of this Agreement applicable to it, in addition to any other remedy
which may be available in law or equity. To the extent permitted by applicable
law, each party hereby irrevocably waives any defense that it might have based
on the adequacy of a remedy at law which might be asserted as a bar to such
remedy of specific performance or injunctive relief. For purposes of this
Section 8. 15, SHFC and the Association shall constitute a single party and
either may bind both as a party.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
WESTERN OHIO FINANCIAL CORPORATION
Attest:
Susan M. Inskeep, Secretary By: David L. Dillahunt, Chairman
Susan M. Inskeep, Secretary By: C. William Clark
President and Chief Executive
Officer
SEVEN HILLS FINANCIAL CORPORATION
Henry C. Gessing, Secretary By: Arthur W. Wendel, Jr., President
SEVEN HILLS SAVINGS ASSOCIATION
Henry C. Gessing, Secretary By: Arthur W. Wendel, Jr., President
<PAGE>
EXHIBIT A
SHAREHOLDER AGREEMENT
The undersigned (the "Shareholder"), who is a shareholder of SEVEN
HILLS FINANCIAL CORPORATION (the "Company"), has executed this Shareholder
Agreement to be effective as of the ___ day of _________ 1996.
RECITALS
A. The Shareholder owns or has the power to vote, other than in a
fiduciary capacity, _____ common shares of the Company, no par value (together
with all common shares which the Shareholder subsequently acquires or obtains
the power to vote, other than in a fiduciary capacity, the "Shares").
B. The Company has entered into a certain Agreement and Plan of
Merger and Reorganization with Western Ohio Financial Corporation, a Delaware
corporation ("Western Ohio"), of even date herewith (the "Merger Agreement").
C. Under the terms of the Merger Agreement, the Company has agreed,
subject to certain terms and conditions, to call a meeting of its shareholders
for the purpose of voting upon the approval of the Company Merger (together
with any adjournments thereof, (the "Shareholders' Meeting").
D. The Company and Western Ohio have made it a condition to their
entering into the Merger Agreement that certain shareholders of the Company,
including the Shareholder, shall have agreed to vote their shares of the
Company's stock in favor of the Company Merger.
AGREEMENT
Accordingly, the parties hereto agree as follows:
1. Agreement to Vote. The Shareholder agrees, subject to Section 2,
below, to vote the Shares as follows:
(a) in favor of the adoption of the Merger Agreement at the
Shareholders' Meeting;
(b) against the approval of any proposal relating to a competing
merger or business combination involving an acquisition of the
Company or Seven Hills Savings Association or the purchase of
all or a substantial portion of the assets of the Company or
Seven Hills Savings Association or by any person or entity
other than Western Ohio or another affiliate of Western Ohio;
and
(c) against any other transaction which is inconsistent with the
obligation of the Company to consummate the Company Merger in
accordance with the Merger Agreement.
2. Limitation on Voting Power. It is expressly understood and
acknowledged that nothing contained herein is intended to restrict the
Shareholder from voting on any matter, or otherwise from acting, in the
Shareholder's capacity as a director of the Company with respect to any
matter, including but not limited to, the management or operation of the
Company.
3. Termination. This Agreement shall terminate on the earlier of (a) the
first anniversary of this Agreement, (b) the date on which the Merger
Agreement is terminated in accordance with Article Seven of the Merger
Agreement, (c) the date on which the Company Merger is consummated, or (d) the
death of the Shareholder.
4. Representations, Warranties, and Additional Covenants of the
Shareholder. The Shareholder hereby represents and warrants to Western Ohio
that (a) the Shareholder has the capacity and all necessary power and
authority to vote the Shares and (b) this Agreement constitutes a legal,
valid, and binding obligation of the Shareholder, enforceable in accordance
with its terms, except as may be limited by bankruptcy, insolvency, or similar
laws affecting enforcement of creditors rights generally. The Shareholder
further agrees that, during the term of this Agreement, the Shareholder will
not, without the prior written consent of Western Ohio, sell, pledge, or
otherwise voluntarily dispose of any of the Shares which are owned by the
Shareholder or take any other voluntary action which would have the effect of
removing the Shareholder's power to vote the Shares or which would be
inconsistent with this Agreement.
5. Specific Performance. The undersigned hereby acknowledges that damages
would be an inadequate remedy for any breach of the provisions of this
Agreement and agrees that the obligations of the Shareholder shall be
specifically enforceable and that Western Ohio shall be entitled to injunctive
or other equitable relief upon such a breach by the Shareholder. The
Shareholder further agrees to waive any bond in connection with the obtaining
of any such injunctive or equitable relief. This provision is without
prejudice to any other rights that Western Ohio may have against the
Shareholder for any failure to perform his obligations under this Agreement.
6. Governing Law. This Agreement shall be construed and enforced in
accordance with the laws of the State of Ohio without regard to any of its
conflict of laws principles.
7. Capitalized Terms. Capitalized terms used herein without definition
shall have the meanings attributed to such terms in the Merger Agreement.
IN WITNESS WHEREOF, the undersigned has executed this Shareholder Agreement as
of the day and year first above written.
SHAREHOLDER:
-----------------------------------------
Signature
-----------------------------------------
Print Name
<PAGE>
EXHIBIT B
OPTIONHOLDER CONSENT
The undersigned (the "Optionholder"), who is a holder options to
purchase shares of SEVEN HILLS FINANCIAL CORPORATION (the "Company"), pursuant
to the Seven Hills Financial Corporation's 1993 Stock Option and Incentive
Plan (the "Company's Stock Option Plan"), has executed this Optionholder
Consent to be effective as of the 14th day of June 1996.
RECITALS
A. The Optionholder previously has been awarded options to acquire 7,058
common shares of the Company (the "Options").
B. The Company has entered into a certain Agreement and Plan of Merger
and Reorganization with Western Ohio Financial Corporation, a Delaware
corporation ("Western Ohio"), of even date herewith (the "Merger Agreement").
C. Under the terms of the Merger Agreement, the Company has agreed,
subject to certain terms and conditions, to defer the exercise of the
outstanding Options until the next annual meeting of the shareholders of
Western Ohio at which meeting such shareholders will vote on a proposal to
approve the assumption of the Company's Stock Option Plan (together with any
adjournments thereof, the "Annual Meeting").
D. The Company and Western Ohio have made it a condition to their
entering into the Merger Agreement that all of the Optionholders of the
Company, including the Optionholder, shall have agreed to defer the exercise
of their options until after the Annual Meeting has occurred.
AGREEMENT
Accordingly, the parties hereto agree as follows:
1. Agreement to Defer Exercise of Opinions. The Optionholder agrees that
the Optionholder will not exercise the Options until after the Annual Meeting
has occurred and the shareholders of Western Ohio vote to approve the
assumption of the Company's Stock Option Plan and the options awarded
thereunder. In the event that the shareholders of Western Ohio do not approve
the assumption of the Company's Stock Option Plan and the options awarded
thereunder, the Optionholder will thereupon be entitled to receive a cash
payment, as provided in Section l.04(d)(iv) of the Merger Agreement.
2. Termination. This Agreement shall terminate on the earlier of (a) the
date on which the Merger Agreement is terminated in accordance with Article
Seven of the Merger Agreement or (b) the date after the date on which the
Annual Meeting is held and the shareholders vote on the proposal to approve
the assumption of the Company's Stock Option Plan.
3. Representations, Warranties and Additional Covenants of the
Optionholder. The Optionholder hereby represents and warrants to Western Ohio
that this Agreement constitutes a legal!, valid, and binding obligation of the
Optionholder, enforceable in accordance with its terms, except as may be
limited by bankruptcy, insolvency, or similar laws affecting enforcement of
creditors rights generally. The Optionholder further agrees that, during the
term of this Agreement, the Optionholder will not, without the prior written
consent of Western Ohio, sell, pledge, or otherwise voluntarily dispose of any
of the Options which are owned by the Optionholder or take any other voluntary
action which would have the effect of removing the Optionholder's power to
defer the exercise of the Options or which would be inconsistent with this
Agreement.
4. Specific Performance. The undersigned hereby acknowledges that damages
would be an inadequate remedy for any breach of the provisions of this
Agreement and agrees that the obligations of the Optionholder shall be
specifically enforceable and that Western Ohio shall be entitled to injunctive
or other equitable relief upon such a breach by the Optionholder. The
Optionholder further agrees to waive any bond in connection with the obtaining
of any such injunctive or equitable relief. This provision is without
prejudice to any other rights that Western Ohio may have against the
Optionholder for any failure to perform his obligations under this Agreement.
5. Governing Law. This Agreement shall be construed and enforced in
accordance with the laws of the State of Ohio without regard to any of its
conflict of laws principles.
6. Capitalized Terms. Capitalized terms used herein without definition
shall have the meanings attributed to such terms in the Merger Agreement
IN WITNESS WHEREOF, the undersigned has executed this Optionholder Agreement
as of the day and year first above written.
Optionholder:
-----------------------------------------
Signature
-----------------------------------------
Print Name
<PAGE>
EXHIBIT C
AGREEMENT AND PLAN OF MERGER OF
WESTERN OHIO ACQUISITION II CORPORATION
WITH AND INTO SEVEN HILLS FINANCIAL CORPORATION
This AGREEMENT AND PLAN OF MERGER ("Plan of Merger") dated as of
____________ 1996, sets forth the terms of a merger by and between Western
Ohio Acquisition II Corporation ("Acquisition Subsidiary"), an Ohio
corporation having its principal office at 28 East Main Street, Springfield,
Ohio 45502, and Seven Hills Financial Corporation ("Seven Hills"), an Ohio
corporation having its principal office at 1440 Main Street, Cincinnati, Ohio
45210.
W I T N E S S E T H
WHEREAS, Acquisition Subsidiary is a corporation organized under the
laws of the State of Ohio, the authorized capital stock of which consists of
______ shares of common stock, par value _____- per share ("Acquisition
Subsidiary Common Stock") all of which, as of the date hereof, are issued and
outstanding and owned by Western Ohio Financial Corporation, a Delaware
corporation ("Acquiring"); and
WHEREAS, Seven Hills is an Ohio corporation, the authorized capital
stock of which consists of 1,000,000 shares of common stock, no par value
("Seven Hills Common"), ______ shares of which are issued and outstanding as
of the date hereof; and
WHEREAS, the respective Boards of Directors of Acquisition Subsidiary
and Seven Hills deem the merger of Acquisition Subsidiary with and into Seven
Hills, under and pursuant to the terms and conditions herein set forth or
referred to, desirable and in the best interests of the respective
corporations and their respective shareholders, and have adopted resolutions
approving this Plan of Merger; and
WHEREAS, Acquiring, Seven Hills and Seven Hills Savings Association
have entered into an Agreement and Plan of Merger and Reorganization dated
June 14, 1996 ("Reorganization Agreement") relating to the transaction
contemplated by this Plan of the Merger; and
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements herein contained, the parties hereto do hereby agree that the Plan
of Merger shall be as follows:
ARTICLE I
MERGER AND NAME OF SURVIVING CORPORATION
Subject to the terms and conditions of this Plan of Merger, at the
Effective Time (as hereinafter defined), Acquisition Subsidiary shall be
merged with and into Seven Hills pursuant to the provisions of, and with the
effect provided under, Ohio law (the "Merger"). At the Effective Time, the
separate existence of Acquisition Subsidiary shall cease and Seven Hills, as
the surviving entity, shall continue unaffected and unimpaired by the Merger.
Seven Hills as existing on and after the Effective Time is hereinafter
sometimes referred to as the "Surviving Corporation." The name of the
Surviving Corporation shall remain "Seven Hills Financial Corporation."
ARTICLE II
ARTICLES OF INCORPORATION AND CODE OF REGULATIONS
The Articles of Incorporation and the Code of Regulations of
Acquisition Subsidiary in effect immediately prior to the Effective Date shall
be the Articles of Incorporation and the Code of Regulations of the Surviving
Corporation, in each case until amended in accordance with applicable law.
ARTICLE III
BOARD OF DIRECTORS AND OFFICERS
At the Effective Time, the Board of Directors of the Surviving
Corporation shall consist of those persons serving as directors of Acquisition
Subsidiary immediately prior to the Effective Time and the officers of the
Surviving Corporation shall be those persons serving as officers of
Acquisition Subsidiary immediately prior to the Effective Time, in each case
subject to the provisions of the Surviving Corporation's Code of Regulations.
ARTICLE IV
CONVERSION AND EXCHANGE OF
ACQUISITION SUBSIDIARY COMMON STOCK
Each share of Acquisition Subsidiary Common Stock issued and
outstanding immediately prior to the Effective Time shall, at the Effective
Time, be converted into one share of the common stock of the Surviving
Corporation.
ARTICLE V
CONVERSION, EXCHANGE AND PAYMENT OF SEVEN HILLS COMMON
1. At the Effective Time, except as provided in paragraphs 2 and 4 of
this Article V, each outstanding share of Seven Hills Common shall, without
any action on the part of the holder thereof, be converted into the right to
receive the Per Share Merger Consideration.
2. At the Effective Time, all shares of Seven Hills Common owned
beneficially by Seven Hills or any Seven Hills Subsidiary (other than in a
fiduciary capacity or in connection with a debt previously contracted) and all
shares of Seven Hills Common owned by Acquiring or owned beneficially by any
subsidiary of Acquiring (other than in a fiduciary capacity or in connection
with a debt previously contracted) shall be cancelled and no cash, stock or
other property shall be delivered in exchange therefor.
3. At the Effective Time, the stock transfer books of Seven Hills
shall be closed and no transfer of Seven Hills Common by any such holder shall
thereafter be made or recognized.
4. Promptly after the Effective Time, shares of Seven Hills Common
held by holders who did not vote in favor of the Company Merger and who
otherwise are entitled to and do perfect their dissenters' rights under the
OGCL, shall not be converted into the right to receive the Per Share Merger
Consideration in accordance with Section 1 of this Article V, but such shares
of Seven Hills Common shall represent only the right to receive the "fair cash
value" of such shares as provided in the OGCL. If any such holder shall have
failed to perfect or shall have effectively withdrawn or lost such dissenters'
rights, such shares of Seven Hills Common shall thereupon be deemed to have
been converted into the right to receive the Per Share Merger Consideration in
accordance with Section l of this Article V as of the Effective Time without
any interest thereon.
5. Promptly after the Effective Time, Acquiring shall cause to be
mailed to each registered holder of record of outstanding Seven Hills Common a
letter of transmittal and instructions for use in surrendering their share
certificates ("Certificate(s)") and receiving payment pursuant hereto.
Promptly following surrender to Acquiring or its agent of such Certificates,
together with such letter of transmittal, duly executed and completed in
accordance with the instructions thereto, Acquiring or its agent shall cause
to be paid to the persons entitled thereto a check in the amount to which such
persons are entitled under Article V, Section 1 hereof, after giving effect to
required tax withholdings, if any. No interest shall accrue or be payable with
respect to the consideration to be paid herein. Until so presented and
surrendered in exchange for the Per Share Merger Consideration for the shares
represented thereby, each Certificate shall be deemed for all purposes to
evidence ownership of the right to receive the Per Share Merger Consideration
for the shares represented thereby. Acquiring shall make available all funds
necessary to satisfy the obligations, if any, owed to dissenters. If payment
is to be made to a person other than the registered holder of the Certificates
surrendered, it shall be a condition of such payment that the Certificate so
surrendered shall be properly endorsed or otherwise in proper form for
transfer and that the person requesting such payment shall pay any transfer or
other taxes required by reason of the payment to a person other than the
registered holder of the Certificate surrendered, or establish to the
satisfaction of Acquiring that such tax has been paid or is not applicable.
6. Any other provision of this Plan of Merger notwithstanding, no
party hereto or agent thereof shall be liable to a holder of Seven Hills
Common for any amount paid or property delivered in good faith to a public
official pursuant to any applicable abandoned property, escheat, or similar
law.
ARTICLE VI
EFFECTIVE TIME OF THE COMPANY MERGER
A Certificate of Merger evidencing the transactions contemplated
herein shall be delivered for filing to the Secretary of State of Ohio. Such
filing shall be made by the parties prior to, on or promptly after the Closing
described in the Reorganization Agreement. The Merger shall be effective at
the time and on the date specified in such Certificate of Merger (the
"Effective Time").
ARTICLE VII
FURTHER ASSURANCES
If at any time the Surviving Corporation shall consider or be advised
that any further assignments, conveyances or assurances are necessary or
desirable to vest, perfect or confirm in the Surviving Corporation title to
any property or rights of Acquisition Subsidiary or Seven Hills, or otherwise
carry out the provisions hereof, the proper officers and directors of
Acquisition Subsidiary or Seven Hills, as of the Effective Time, and
thereafter the officers of the Surviving Corporation, acting on behalf of the
Surviving Corporation, shall execute and deliver any and all property or
assignments, conveyances and assurances, and do all things necessary or
desirable to vest, perfect or confirm title to such property or rights in the
Surviving Corporation and otherwise carry out the provisions hereof.
ARTICLE VIII
CONDITIONS PRECEDENT
The obligations of Acquisition Subsidiary and Seven Hills to effect
the Merger as herein provided shall be subject to satisfaction, unless duly
waived, of the conditions set forth in the Reorganization Agreement.
ARTICLE IX
ABANDONMENT AND TERMINATION
Anything contained in this Plan of Merger to the contrary
notwithstanding, and notwithstanding adoption hereof by the shareholders of
Seven Hills or Acquisition Subsidiary, this Plan of Merger may be terminated
and the Merger abandoned as provided in the Reorganization Agreement.
ARTICLE X
MISCELLANEOUS
1. This Plan of Merger may be amended or supplemented at any time by
Acquisition Subsidiary and Seven Hills. Any such amendment or supplement must
be in writing and approved by their respective Boards of Directors and shall
be subject to the proviso in Section 8.10 of the Reorganization Agreement.
2. Any notice or other communication required or permitted under this
Plan of Merger shall be given, and shall be effective, in accordance with the
provisions of the Reorganization Agreement.
3, The headings of the several Articles herein are inserted for
convenience of reference only and are not intended to be a part of or to
affect the meaning or interpretation of this Plan of Merger.
4. This Plan of Merger shall be governed by and construed in accordance
with the laws of the State of Ohio applicable to agreements made and entirely
to be performed in such jurisdiction.
5. The provisions of Article V and VII hereof shall survive the Effective
Time.
6. Capitalized terms used but not defined herein shall have the same
meanings as in the Reorganization Agreement.
Attest WESTERN OHIO ACQUISITION II
CORPORATION
- - ------------------------------ ------------------------------------
, C. William Clark, President
Secretary
Attest SEVEN HILLS FINANCIAL CORPORATION
- - ------------------------------ -----------------------------------
, ,
Secretary President
For purposes of Article V, Section 5 hereof this Plan is joined in and
agreed to by Western Ohio Financial Corporation.
Attest WESTERN OHIO FINANCIAL CORPORATION
- - -------------------------------------- -----------------------------------
, C. William Clark, President and
Secretary Chief Executive Officer
<PAGE>
EXHIBIT D
AGREEMENT AND PLAN OF MERGER OF
SEVEN HILLS FINANCIAL CORPORATION
WITH AND INTO WESTERN OHIO FINANCIAL CORPORATION
THIS AGREEMENT AND PLAN OF MERGER ("Plan") dated as of ____ ___ 1996,
sets forth the terms of the liquidation of SEVEN HILLS FINANCIAL CORPORATION
("Seven Hills"), an Ohio corporation having its principal office at 1440 Main
Street, Cincinnati, Ohio 45210, into WESTERN OHIO FINANCIAL CORPORATION
("Western Ohio"), a Delaware corporation having its principal place of
business at 28 East Main Street, Springfield, Ohio 45502 by the merger of
Seven Hills, a wholly owned subsidiary of Western Ohio, with and into Western
Ohio.
W I T N E S S E T H:
WHEREAS, the parties desire to merge into a single entity;
WHEREAS, the parties desire to achieve such merger by statutory
merger of Seven Hills into Western Ohio, all in a manner consistent with
Sections 332, 337 and 368(a)(l)(A) of the Internal Revenue Code of 1986 and
applicable federal and state law;
WHEREAS, Western Ohio will remain as the surviving corporation
assuming all of the assets, liabilities and obligations of Seven Hills;
NOW, THEREFORE, in consideration of the premises and for other good
and valuable consideration, the receipt and sufficiency of which is
acknowledged by the parties, the parties do hereby agree as follows:
ARTICLE I
MERGER AND NAME OF SURVIVING CORPORATION
Subject to the terms and conditions of this Plan, at the Effective
Time (as hereinafter defined), Seven Hills, an Ohio corporation, shall be
merged with and into Western Ohio, a Delaware corporation, pursuant to the
provisions of, and with the effect provided under, Ohio and Delaware law (the
"Merger"). At the Effective Time, the separate existence of Seven Hills shall
cease and Western Ohio, as the surviving entity, shall continue unaffected and
unimpaired by the Merger. Western Ohio as existing on and after the Effective
Time is hereinafter sometimes referred to as the "Surviving Corporation." The
name of the Surviving Corporation shall remain "Western Ohio Financial
Corporation," a Delaware corporation.
ARTICLE II
CERTIFICATE OF INCORPORATION AND BY-LAWS
The Certificate of Incorporation and the By-Laws of Western Ohio in
effect immediately prior to the Effective Time shall be the Certificate of
Incorporation and the By-Laws of the Surviving Corporation, in each case until
amended in accordance with applicable law.
ARTICLE III
BOARD OF DIRECTORS AND OFFICERS
At the Effective Time, the Board of Directors of the Surviving
Corporation shall consist of those persons serving as directors of Western
Ohio immediately prior to the Effective Time and the officers of the Surviving
Corporation shall be those persons serving as officers of Western Ohio
immediately prior to the Effective Time, in each case subject to the
provisions of the Surviving Corporation's By-Laws.
ARTICLE IV
SURVIVING CORPORATION'S STOCK
Each outstanding share of the capital stock of Western Ohio
outstanding immediately prior to the Effective Time shall remain outstanding
after the Effective Time and shall constitute and represent the outstanding
shares of the capital stock of the Surviving Corporation at the Effective
Time. As a result of the Merger, all outstanding shares of the capital stock
of Seven Hills will be canceled. No cash or other consideration will be paid
to any stockholder of Seven Hills as part of the Merger. No shares of the
Surviving Corporation will be issued as a result of the Merger.
ARTICLE V
EFFECTIVE TIME OF THE MERGER
Certificates of Merger evidencing the transaction contemplated herein
shall be filed with the Secretary of State of Ohio, and the Secretary of State
of Delaware, and the Merger shall be effective at the time and on the date
specified in such Certificates (the "Effective Time").
ARTICLE VI
FURTHER ASSURANCES
If at any time the Surviving Corporation shall consider or be advised
that any further assignments, conveyances or assurances are necessary or
desirable to vest, perfect or confirm in the Surviving Corporation title to
any property or rights of Seven Hills, or otherwise carry out the provisions
hereof, the proper officers and directors of Seven Hills, as of the Effective
Time, and thereafter the officers of the Surviving Corporation, acting on
behalf of the Surviving Corporation, shall execute and deliver any and all
property or assignments, conveyances and assurances, and do all things
necessary or desirable to vest, perfect or confirm title to such property or
rights in the Surviving Corporation and otherwise carry out the provisions
hereof.
ARTICLE VII
ABANDONMENT AND TERMINATION
Anything contained in this Plan to the contrary notwithstanding, this
Plan may be terminated and the Merger abandoned by the Board of Directors of
Western Ohio at any time prior to the filing of the Certificates of Merger.
ARTICLE VIII
MISCELLANEOUS
1. The location of the registered office of the Surviving Corporation in
the State of Delaware is 1209 Orange Street, in the City of Wilmington, County
of New Castle.
2. The Surviving Corporation consents to be sued in the State of Ohio and
irrevocably appoints the Secretary of State as its agent to accept service of
process in any proceeding in the State of Ohio to enforce against the
Surviving Corporation any obligation of Seven Hills.
3. No dissenters rights apply to the Merger as such transaction involves
the merger of a wholly owned subsidiary into its direct parent.
4. The Surviving Corporation desires to transact business as a foreign
corporation in the State of Ohio, is currently licensed to do so, and its
statutory agent is C. William Clark, 28 E. Main Street, Springfield, Ohio
45502-1205, upon whom process against the Surviving Corporation may be served
in the State of Ohio.
5. Within thirty (30) days after adoption of this Plan, Western Ohio
shall file Form 966 with the Internal Revenue Service regarding the
liquidation of Seven Hills into Western Ohio.
6. The headings of the several Articles herein are inserted for
convenience of reference only and are not intended to be a part of or to
affect the meaning or interpretation of this Plan.
7. This Plan shall be governed by and construed in accordance with the
laws of the State of Delaware applicable to agreements made and entirely to be
performed in such jurisdiction, except to the extent Ohio law is mandatorily
applicable.
8. A copy of this Plan shall be mailed to Western Ohio, the sole
shareholder of record of Seven Hills.
9. The provisions of Articles VI and VIII (1) hereof shall survive the
Effective Time.
Attest: WESTERN OHIO ACQUISITION CORPORATION
- - --------------------------- ------------------------------------
, Secretary C. William Clark, President and
Chief Executive Officer
Attest: SEVEN HILLS FINANCIAL CORPORATION
- - ------------------------- --------------------------------------
, Secretary ,
President
<PAGE>
EXHIBIT E
[OPINION OF COUNSEL TO SHFC]
[DATE]
Western Ohio Financial Corporation
28 East Main Street
Springfield Ohio 45502
Re: Seven Hills Financial Corporation
Ladies and Gentlemen:
We have served as counsel to Seven Hills Financial Corporation, a
savings and loan holding company incorporated under Ohio law ("SHFC"); and its
subsidiary, Seven Hills Savings Association, a savings and loan association
incorporated under Ohio law ("Seven Hills"), in connection with certain
transactions contemplated by (l) the Agreement and Plan of Merger and
Reorganization dated June l4, 1996 (the "Agreement"), by and among Western
Ohio Financial Corporation ("WOFC"). SHFC and Seven Hills and (2) the
Agreement and Plan of Merger dated __________ 1996 (the "Plan of Merger"), by
and among SHFC and Western Ohio Acquisition II Corporation ("WOAC"). The
Agreement and the Plan of Merger provide for the merger of WOAC with and into
SHFC and the cancellation and extinguishment of all of the outstanding SHFC
common shares in exchange for cash. The Agreement further provides for the
merger of SHFC with and into WOFC. The merger of WOAC with and into SHFC is
referred to herein as the "Merger."
This opinion is furnished to you pursuant to section 1 .06(a)(iv) of
the Agreement. Unless otherwise defined herein, capitalized terms used in this
opinion have the meanings set forth in the Agreement.
As counsel to SHFC and in connection with this opinion, we have reviewed
relevant statutes and regulations and examined and relied upon, without
independent investigation, documents, corporate records, and certificates of
public officials and corporate officers as we have deemed necessary for the
purposes of this opinion, including, but not limited to, originals or
photostatic copies of the following:
Western Ohio Financial Corporation
[DATE]
Page 2
1. The Agreement, including the Disclosure Schedule;
2. The Plan of Merger;
3. The Articles of Incorporation of SHFC, as certified by the Ohio
Secretary of State on _______ 1996 (the "Articles");
4. The Code of Regulations of SHFC, as certified by the Secretary of SHFC
on _______ 1996;
5. The Amended Articles of Incorporation of Seven Hills, as certified by
the Ohio Secretary of State on _______, 1996 (the "Amended Articles");
6. The Constitution of SHFC, as certified by the Ohio Department of
Commerce, Division of Financial Institutions (the "Division") on ________,
1996 (the "Constitution");
7. A Certificate from the Ohio Secretary of State with respect to the
good standing of SHFC, dated _______, 1996;
8. A Certificate from the Ohio Secretary of State with respect to the
good standing of Seven Hills, dated ________, 1996;
9. Selected minutes of the Board of Directors and the shareholders of
SHFC;
10. A Certificate of Merger executed by SHFC and WOAC;
1l. A Certificate from the Federal Deposit Insurance Corporation (the
FDIC") dated 1996, regarding the insurance of accounts of Seven Hills;
12. A letter from the Federal Home Loan Bank ("FHLB") of Cincinnati dated
________ 1996, regarding the membership of Seven Hills;
13. Certificates of certain officers of SHFC and Seven Hills;
14. A letter dated ________, 1996, from the Office of Thrift Supervision
to Silver, Freedman & Taff, L.L.P. ("SFT") approving the Merger;
15. A letter dated ,1996, from the Division to SFT approving the Merger;
and
16. A certificate of Provident Bank, the transfer agent of SHFC, in
respect of the number of issued and outstanding SHFC Common shares.
In our examinations, we have assumed, without independent
investigation, the genuineness and authenticity of all signatures on original
documents, the authenticity of all documents submitted to us as copies, the
due authorization, execution and delivery of all documents by WOFC and WOAC
and the taking by WOFC and WOAC of all appropriate action required by and
related to the transactions contemplated by the Agreement and the Plan of
Merger.
Western Ohio Financial Corporation
[DATE]
Page 3
As to questions of fact material to our opinion, we have relied upon
the truth and accuracy of the representations set forth in the Agreement, the
contents of documents specified above and the certifications and statements by
government officials and by officers and representatives of SHFC.
Whenever our opinion is indicated to be "to our knowledge," we are
referring solely to the actual and conscious awareness of facts or other
information of the individual Vorys, Sater, Seymour and Pease attorneys who
have been actively involved in the transactions contemplated by the Agreement
and the Plan of Merger and the preparation of this opinion. Except as set
forth below we have not undertaken any independent investigation or review of
the matters which are the subject of any of the opinions indicated to be "to
our knowledge" and no inference should be drawn from such opinions that any
such investigation or review has been undertaken.
With respect to our opinion set forth in paragraph 2, below, we have
reviewed the minutes of SHFC since its inception, made appropriate inquiry of
management of SHFC and the Association and reviewed the certificate of
Provident Bank.
Without limiting the generality of the foregoing, we express no
opinion in respect of any provision or matter that would require a financial,
mathematical or accounting calculation or determination.
Based solely upon and subject to the foregoing and the further
qualifications and limitations set forth below, as of the date hereof (or as
of the date of any assumption made herein or any certificate, schedule,
exhibit, or inquiry stated to have been examined, made or otherwise relied
upon by us), we are of the opinion that:
1. SHFC is duly incorporated and organized, and each of SHFC and Seven
Hills is validly existing and in good standing under the laws of Ohio and has
the power and authority to own and operate its properties and to carry on its
business as now conducted. Each of SHFC and Seven Hills has the power and
authority to enter into the Agreement. SHFC has the power and authority to
merge with WOAC in accordance with the terms of the Agreement, and each of
SHFC and Seven Hills has the power and authority to consummate the
transactions contemplated by the Agreement.
2. The authorized capital of SHFC consists of 1,000,000 common shares, no
par value per share, and no preferred shares. To our knowledge, as of the date
hereof, there were 534,357 common shares of SHFC issued and outstanding and no
preferred shares of SHFC issued or outstanding. The authorized capital of
Seven Hills consists of 5,000,000 common shares, $1.00 par value per share. To
our knowledge, as of the date hereof, there were 564,707 common shares of
Seven Hills issued and outstanding, all of which were owned of record by SHFC.
To our knowledge, (i) none of the common shares issued by either SHFC or Seven
Hills was issued in violation of the preemptive rights of any person; (ii)
except for the options to purchase 49,406 common shares of SHFC granted under
the SHFC Stock Option Plan, there are no outstanding options, warrants or
other rights to acquire, or securities convertible into, equity securities;
Western Ohio Financial Corporation
[DATE]
Page 4
(iii) SHFC has no obligation to purchase SHFC common shares; and (iv) SHFC
has not granted any stock appreciation, phantom or other similar rights.
3. SHFC and Seven Hills have duly performed all corporate actions and
other proceedings necessary or required to be taken by them to authorize the
execution, delivery and performance of the Agreement. SHFC and Seven Hills
have duly executed and delivered the Agreement, and the Agreement is a valid
and binding obligation of SHFC and Seven Hills, enforceable against SHFC and
Seven Hills in accordance with its terms except to the extent such
enforceability may be limited by bankruptcy, insolvency, moratorium,
reorganization, conservatorship, receivership or other similar laws now or
hereafter in effect relating to or affecting the enforcement of creditors'
rights generally or the rights of creditors of savings institutions and their
holding companies or by general equitable principles regardless of whether
such enforceability is considered in a proceeding in equity or at law.
4. The execution (except to the extent such execution constituted a
technical violation of Article EIGHTH of the Articles of Incorporation of SHFC
and Article NINTH of the Amended Articles of Incorporation of Seven Hills) of
the Agreement by SHFC and Seven Hills, and the consummation of the Merger and
the other transactions contemplated therein, do not violate or cause a default
under their respective articles of incorporation, code of regulations,
constitution or bylaws, or any statute, regulation or rule or, to our
knowledge, any judgment, order or decree against, or any material agreement
binding upon, SHFC or Seven Hills.
5. All required consents, approvals, orders or authorizations of, or
registrations, declaration or filings with or notices to, any court,
administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign, or, to our knowledge, any other person
or entity required to be obtained or made by SHFC and Seven Hills in
connection with the execution and delivery of the Agreement or the
consummation of the transactions contemplated therein have been received or
obtained.
6. To our knowledge, there exist no actions, suits, proceedings, orders,
investigations or claims pending or threatened against or affecting SHFC or
Seven Hills which, if adversely determined, would have a material adverse
effect upon their respective properties or assets or the transactions
contemplated by the Agreement, except as set forth in the Disclosure Schedule.
7. To our knowledge, neither SHFC nor Seven Hills is in material
violation of any law or regulation, except as set forth in the Disclosure
Schedule.
This letter is provided solely to WOFC for the purpose of complying with
the Agreement and may not be relied upon, assigned, quoted or otherwise used
in any manner or for any purpose by any other person or entity, without our
specific Written consent.
<PAGE>
Western Ohio Financial Corporation
[DATE]
Page 5
We are admitted to the bar of the State of Ohio. We express no opinion as
to the laws of any political subdivision or any jurisdiction other than the
laws of the State of Ohio and the federal laws of the United States of
America.
Very truly yours,
VORYS, SATER, SEYMOUR AND PEASE
<PAGE>
EXHIBIT F
[OPINION OF COUNSEL TO ACQUIROR]
[DATE]
Seven Hills Financial Corporation
Cincinnati, Ohio
Re: Western Ohio Financial Corporation
Ladies and Gentlemen:
This opinion is being rendered pursuant to Section I .06(b)(iv) of the
Agreement (as herein defined). Unless otherwise defined herein, all
capitalized terms used herein shall have the meanings set forth in that
certain Agreement and Plan of Merger and Reorganization, dated June 14, 1996,
by and among Western Ohio Financial Corporation ("Western Ohio"), Seven Hills
Financial Corporation ("Seven Hills Financial") and Seven Hills Savings
Association (the "Agreement'). All capitalized terms in this opinion not
defined herein have the meanings assigned to them in the Agreement.
As to all matters of fact (including factual conclusions and
characterizations and descriptions of purpose, intention or other state of
mind), we have relied entirely upon (i) the representations and warranties of
Western Ohio set forth in the Agreement and (ii) certificates delivered to us
by the management of Western Ohio, and have assumed, without independent
inquiry, the accuracy of those representations and warranties and
certificates.
In connection with this opinion, we have examined (i) the Agreement, (ii)
the Shareholder Agreements, (iii) the Certificate of Incorporation and Bylaws
of Western Ohio and Articles of Incorporation and Code of Regulations of
Acquisition Subsidiary, (iv) certain resolutions of the Boards of Directors of
Western Ohio and Acquisition Subsidiary, (v) certificates or facsimiles from
public officials as to the existence and/or good standing of Western Ohio and
Acquisition Subsidiary under the laws of the State of Delaware and the State
of Ohio, respectively, (vi) certificates of officers of Western Ohio, (vii)
copies of the Certificate of Merger concerning the merger of Acquisition
Subsidiary with and into Seven Hills Financial (the "Certificate of Merger")
to be filed with the Secretary of State of the State of Ohio, (viii) the
letter dated __________ 1996, from the Office of Thrift Supervision, approving
the transactions contemplated by the Agreement, and (ix) such other documents
as we have deemed necessary or appropriate as a basis for the opinions set
forth below, and we have discussed the transaction in detail with
representatives of the Federal Deposit insurance Corporation (the "FDIC") who
indicated that no application to or approval of the FDIC is required in
connection with the transactions contemplated by the Agreement.
This opinion is based entirely on our review of the documents and
discussions listed above, and we have made no other documentary review or
investigation of any kind whatsoever. We have assumed the genuineness of all
Seven Hills Financial Corporation
__________ 1996
Page 2
signatures, the conformity to the originals of all documents reviewed by
us as copies, the authenticity and completeness of all original documents
reviewed by us in original or copy form and the legal competence of each
individual executing any document.
We understand that all of the foregoing assumptions and limitations are
acceptable to you.
Each opinion set forth below relating to the enforceability of any
agreement or instrument against Western Ohio and/or Acquisition Subsidiary is
subject to the qualification that the enforceability of any obligation of
Western Ohio or Acquisition Subsidiary may be limited by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium, marshaling or
other laws and rules of law affecting the enforcement of creditors' rights and
remedies generally from time to time in effect (including such as may deny
giving effect to waivers of debtors' or guarantors rights), and equitable
principles relating to the granting of specific performance and other
equitable remedies as a matter of judicial discretion.
Based upon and subject to the foregoing, we are of the opinion that:
(a) Western Ohio is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has the corporate
power and authority to enter into the Agreement and the Plan of Merger and to
consummate the transactions contemplated thereby. Acquisition Subsidiary is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Ohio and has the corporate power and authority to enter
into the Plan of Merger and to consummate the transactions contemplated
thereby.
(b) All corporate acts and other proceedings required to be taken by
Western Ohio and Acquisition Subsidiary to authorize the execution, delivery
and performance of the Agreement and the Plan of Merger have been taken.
(c) The Agreement has been duly executed and delivered by Western Ohio.
The Plan of Merger has been duly executed and delivered by Western Ohio and
Acquisition Subsidiary.
(d) The Agreement is a valid and binding obligation of Western Ohio,
enforceable in accordance with its terms. The Plan of Merger is a valid and
binding obligation of Acquisition Subsidiary and Western Ohio, enforceable
against each of them in accordance with its terms.
(e) The execution and delivery of the Agreement by Western Ohio, the
execution and delivery of the Plan of Merger by Acquisition Subsidiary and
Western Ohio, and the consummation of the transactions contemplated by the
Agreement and the Plan of Merger do not conflict with, constitute a breach of
or default under, violate or create in any party the right to terminate,
modify or cancel any provision of the certificate of Incorporation or Bylaws
of Western Ohio, the Articles of Incorporation or Code of Regulations of
Acquisition Subsidiary, or any statute, regulation, rule, judgment, order,
decree or agreement binding upon Western Ohio or Acquisition Subsidiary which
conflict, breach, default, violation, acceleration, termination, modification
or cancellation would be materially adverse to the business of Western Ohio
and its subsidiaries taken as a whole.
(f) The Regulatory Approvals have been received. No other consents,
approvals, orders, authorizations, registrations, declarations or filings,
with or without notices to, any court, administrative agency, commission or
other governmental authority or instrumentality, domestic or foreign, or any
other person or entity, is required to be received in connection with the
execution and delivery of the Agreement or the Plan of Merger or the
consummation of the transactions contemplated thereby, except as to conditions
set forth in the Regulatory Approvals which by their terms are permitted to be
satisfied following the consummation of the Company Merger and the Subsidiary
Merger.
The opinions expressed herein are solely for your benefit in connection
with the transactions contemplated by the Agreement. This opinion may not be
relied upon by you for any other purpose, nor may this opinion be quoted from,
circulated, relied upon or otherwise referred to, by any other person or
entity without the prior written consent of this firm.
Very truly yours,
SILVER, FREEDMAN & TAFF, L.L.P.
<PAGE>
EXHIBIT G
DIRECTORS OF TARGET ASSOCIATION
Name Position Expiration of Term
__________________ ______________ __________________
David L. Dillahunt Chairman of the Board 1997
and Director
C. William Clark Director 1997
Diana Bowman D'Amico Director 1997
John Heckman Director 1997
Phillip Christman Director 1997
Arthur W. Wendel, Jr. Director 1997
James R. Maurer Director 1997
Roger L. Ruhl Director 1997
Robert West Director 1997
<PAGE>
EXHIBIT H
DIRECTOR EMERITUS OF TARGET ASSOCIATION
Name
Henry C. Gessing
