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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
WESTERN OHIO FINANCIAL CORPORATION
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(Exact name of Registrant as specified in its Charter)
Delaware 0-24120 31-1403116
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(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification
incorporation) No.)
28 East Main Street, Springfield, Ohio 45501-0719
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Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:(513) 325-4683
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Item 5. Other Events
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On June 14, 1996, Western Ohio Financial Corporation ("Western
Ohio") entered into an Agreement and Plan of Merger and
Reorganization (the "Merger Agreement") with Seven Hills Financial
Corporation ("Seven Hills") and Seven Hills Savings Association
("Association"), pursuant to which Seven Hills will merge with and
into Western Ohio (the "Merger"). Following the Merger, the
Association, a subsidiary of Seven Hills, will operate as a
subsidiary of Western Ohio. Upon the Merger, each share of common
stock of Seven Hills shall be converted into the right to receive
an amount in cash equal to $19.65 per share.
The Merger Agreement and the joint press release of Seven
Hills and Western Ohio are filed as Exhibits to this Report and are
incorporated herein by reference.
The foregoing information does not purport to be complete and
is qualified in its entirety by reference to the Exhibits to this
Report.
Item 7. Financial Statements and Exhibits.
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(c) Exhibits.
The Exhibits listed on the accompanying Exhibit Index are
filed as part of this Report and are incorporated herein by
reference.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned thereunto duly authorized.
WESTERN OHIO FINANCIAL CORPORATION
Date: June 21, 1996 By:/s/ C. WILLIAM CLARK
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C. William Clark
President and Chief Executive
Officer
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EXHIBIT INDEX
Exhibit
Number Description Page
- ------- ----------- ----
2 Agreement and Plan of Merger and 5
Reorganization, dated as of
June 14, 1996, between Seven
Hills Financial Corporation
and Western Ohio Financial
Corporation
99 Joint press release of Western
Ohio Financial Corporation and
Seven Hills Financial Corporation
dated June 14, 1996
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AGREEMENT AND PLAN OF REORGANIZATION
by and among
SEVEN HILLS FINANCIAL CORPORATION
SEVEN HILLS SAVINGS ASSOCIATION
and
WESTERN OHIO FINANCIAL CORPORATION
June 14, 1996
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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
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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. . . . . . . . . .39
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
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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
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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
1.04(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:
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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 11 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,
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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 any other provision of this Agreement, any
Dissenting Shares 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
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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
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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 pro-
vided 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
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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 as 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
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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 as of the Effective Time
of the Company Merger and have not been modified or rescinded, and which
shall be in a form reasonably 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,
pursuant to Section 5.07 of this Agreement.
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(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 WARRANTIES 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-
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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. section 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 hereunder.
(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
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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
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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
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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 e
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
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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
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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 2.11. 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.
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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, terms 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.
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(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 ("REO"),
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 and 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
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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
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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. section 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, section 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
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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;
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(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
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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 1.04(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.
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(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
therefor, 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
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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 year-end
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.
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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
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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)(1) of the Ohio Revised Code, are "beneficial owners," as such
term is defined in Section 1704.01(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.
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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,
splitup, 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 Constitution
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
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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 Corpora-
tion;
(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
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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
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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
Acquiror's 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
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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
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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 cancelled, 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
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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
Indemnification.
(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.
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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
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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 (10) 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.
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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 6.01. 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;
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(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
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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 non-
breaching 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.
<PAGE>
<PAGE>
(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 keep the same confidential. Such Information will include any and
<PAGE>
<PAGE>
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
<PAGE>
<PAGE>
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
<PAGE>
<PAGE>
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 governed 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.
<PAGE>
<PAGE>
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:
By: /s/ David L. Dillahunt
----------------------------
Secretary David L. Dillahunt, Chairman
By: /s/ C. William Clark
----------------------------
Secretary C. William Clark
President and Chief Executive
Officer
SEVEN HILLS FINANCIAL CORPORATION
By: /s/ Arthur W. Wendel, Jr.
----------------------------
Secretary Arthur W. Wendel, Jr.,
President
SEVEN HILLS SAVINGS ASSOCIATION
By: /s/ Arthur W. Wendel, Jr.
----------------------------
Secretary Arthur W. Wendel, Jr.,
President
<PAGE>
<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:<PAGE>
(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
<PAGE>
<PAGE>
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.
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Shareholder
Agreement as of the day and year first above written.
SHAREHOLDER:
-----------
---------------------------------
- ------------------------- Signature
---------------------------------
- ------------------------- Print Name
<PAGE>
<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.
<PAGE>
<PAGE>
AGREEMENT
---------
Accordingly, the parties hereto agree as follows:
1. Agreement to Defer Exercise of Options. 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
1.04(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.
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Optionholder
Agreement as of the day and year first above written.
Optionholder:
------------
------------------------------------
- ------------------------- Signature
------------------------------------
- ------------------------- Print Name
<PAGE>
<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."
<PAGE>
<PAGE>
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 1 of this Article V as of the Effective Time without any
interest thereon.
<PAGE>
<PAGE>
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.
<PAGE>
<PAGE>
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.
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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
- --------------------------------- -----------------------------------
, Secretary C. William Clark, President
Attest SEVEN HILLS FINANCIAL CORPORATION
- --------------------------------- -----------------------------------
, Secretary ___________________, President
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<PAGE>
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
- --------------------------------- -----------------------------------
, Secretary C. William Clark, President and
Chief Executive Officer
<PAGE>
<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)(1)(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.
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<PAGE>
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.
<PAGE>
<PAGE>
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.
<PAGE>
<PAGE>
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
Attest SEVEN HILLS FINANCIAL
CORPORATION
- ------------------------------ ------------------------------
, Secretary ___________________, President
<PAGE>
<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 (1) the Agreement and Plan of Merger and
Reorganization dated June 14, 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:
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;
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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;
11. 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.
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<PAGE>
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
<PAGE>
<PAGE>
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; (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
<PAGE>
<PAGE>
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.
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>
<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
1.06(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.
<PAGE>
<PAGE>
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 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, marshalling 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
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<PAGE>
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>
<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>
<PAGE>
EXHIBIT H
DIRECTOR EMERITUS OF TARGET ASSOCIATION
Name
- ----
Henry C. Gessing
<PAGE>
PRESS RELEASE
June 14, 1996
Contact: C. William Clark, President Arthur W. Wendel, Jr.,
Western Ohio Financial President
Corporation Seven Hills Financial
(513) 327-1112 Corporation
(513) 621-9143
WESTERN OHIO FINANCIAL TO ACQUIRE
SEVEN HILLS FINANCIAL FOR $19.65 PER SHARE
Western Ohio Financial Corporation (Nasdaq: WOFC) and Seven Hills
Financial Corporation (Nasdaq: SHFC) jointly announced today that they
have signed a definitive agreement in which Seven Hills Financial
Corporation, Cincinnati, Ohio, will be merged into Western Ohio
Financial Corporation, Springfield, Ohio.
Following the closing of the merger, Seven Hills Savings Association, a
subsidiary of Seven Hills Financial Corporation, will operate as a
subsidiary of Western Ohio Financial Corporation.
Under the terms of the agreement, each share of Seven Hills will be
exchanged for $19.65 in cash at closing. The aggregate transaction
value is approximately $10.5 million. In addition, the price could
increase approximately six cents per share if a distribution from the
Ohio Deposit Guarantee Fund is paid to Seven Hills prior to the closing.
The acquisition price was 109 percent of Seven Hills' book value of
$17.99 as of March 31, 1996.
With this acquisition, Western Ohio will expand its presence in the
greater Cincinnati area to a total of five offices. Western Ohio
currently owns the Mayflower Federal Savings Bank in Cincinnati, as well
as Springfield Federal Savings Bank in Springfield, Ohio.
As of March 31, 1996, Seven Hills had total assets of $45.5 million,
total deposits of $35.3 million, and shareholders' equity of $9.6
million. Seven Hills will have 534,357 shares outstanding at the time
of closing.
As of March 31, 1996, Western Ohio had total assets of $319.5 million,
total deposits of $182 million, and shareholders' equity of $58.1
million. Western Ohio has 2,280,561 shares outstanding. Western Ohio
is expected to have approximately $366 million in total assets following
the merger.
C. William Clark, President and Chief Executive Officer of Western Ohio
said, "We are excited about this transaction, which represents an
excellent opportunity in our efforts to increase franchise value and
leverage our equity capital to a more rational level."
Arthur W. Wendel, Jr., President of Seven Hills said, "We are very
pleased to enter into this agreement with Western Ohio. We believe that
this transaction will be beneficial to our shareholders, customers and
employees." He also added, "We believe that Western Ohio's management
shares the same commitment to excellent customer service which has been
present at Seven Hills Savings Association. Our customers will benefit
from a broader range of products and services while still being served
by the Seven Hills employees they have come to know and trust. We
believe that our affiliation with a larger entity will enable Seven
Hills to compete more effectively in the years ahead."
<PAGE>
<PAGE>
Charles Webb & Company is serving as Seven Hills' financial advisor in
the transaction. The merger is subject to regulatory approvals and the
approval of Seven Hills Financial Corporation's shareholders. Closing
of the transaction is expected to take place during the fourth quarter
of 1996.
